Managing Strategies and Strategic PlanningIntroductionStrategic planning is an organisation's development of describing its strategy and generating resolutions on alloting its resources to pursue this strategy (Bradford et al, 2000). Among the organisation's resources are its people and its capital. According to Samson and Daft (2009), it is the formal deliberation of an organisation's future course. Michael E. Porter developed in 1979 at the Harvard Business School a tool to make an analysis of the atttractiveness of an industry structure. This is the Five Competitive Forces Model. It is an analysis tool that is made by the identification of five fundamental competitive forces.
These forces are the entry of competitors, the threat of substitutes, the bargaining power of buyers, the rivaly among the existing players and the bargaining power of suppliers. A sixth factor could be added which is the government. To describe two of Porter's strategy, the bargaining power of buyers and the bargaining power of suppliers will be discussed and examples will be given. Relationship of marketer with buyer or supplier may be lucrative but after sometime, the situation may change.
A good example is Dell. Currently it is buying its chips from Intel. However, after some time AMD may suddenly come up with new product that may make Dell seriously consider forging relations with AMD instead of Intel. On the other hand, Raymond E. Miles and Charles C. Snow developed the Organisational Type theory. Based on their theory, there are three superior performing business types. They believe that all other organizations are average, and in some cases, less than average. Their theory holds that superior organization have direct and clear match between its mission, strategies, behavior and characteristics.
These organizational types are the defenders, prospectors, analysers and reactors. To concentrate on two types of organisations, the defenders and prospectors will be discussed. Organizations with slim product-market domains are called defenders. Upper managers in defenders organisations are greatly knowledgeable and skilled in their organisation’s inadequate area of operation. This does not tend to search outside their narrow domains for new opportunities (Miles and Snow, 1978, p. 29). Among its basic strategy set are aggressively maintain prominence within its chosen market segment, ignore developments outside of this domain, penetrate deeper into current markets and normally growth occurs cautiously and incrementally.
Among its characteristics and behavior are single core technology, often vertically integrated, updates current technology to maintain efficiency, stable structure and process, dominant coalitions are finance and production, planning is intensive, not extensive, promote from within, functional structure, extensive division of labor and high degree of formalization, centralized control, vertical information flows, simple and inexpensive coordination and managers evaluated on efficiency versus the past. Prospectors, on the other hand, are organizations which almost always looking for market opportunities (Miles and Snow, 1978, p.
29). Included in its basic strategy set are broad domain in a continuous state of development, wide range of environmental conditions, trends, and events, change creators in their industries, growth primarily from new markets and new products and and uneven, spurt-like growth. Among its characteristics and behavior are inefficient, changing structure and technology. It has frequent prototype production using multiple technologies -- technologies in people not machines. Its dominant coalitions are marketing and research and development.