Preliminary Considerations

What is Strategic Planning?

essence of management includesability to plan. As you work your way uporganization, planning moves from operational to strategic. Strategic Planning is one ofprincipal responsibilities of upper-level management. Once management decides onStrategic Plan, lower-level managers implementStrategic Plan through an Operating Plan.

Strategic Planning attempts to answer a very fundamental question: Where do we want to be one year from now, two years from now, three years from now, etc.? Strategic Planning requires that an organization develop a vision of itself - how do we see ourselves infuture? Strategic Planning looks atbig picture from a long-range perspective whereasOperating Plan representsspecific tactics for carrying outStrategic Plan year to year.

Strategic Planning is a process whereby an organization makes choices about:

• Why do we exist?
• What aremajor goals of this organization?
• What resources do we need for a successful future?
• Who will be our customers?

Why do Strategic Planning?

Strategic Planning helps management understandcurrent situation. This in turn allows management to plan forfuture. In a world of rapid change, it is becoming imperative for management to think strategically (plan forfuture). And sincerate of change seems to be escalating, importance of strategic planning continues to grow. In fact, best-managed companies tend to engage in continuous strategic planning. Some organizations have intuitive thinkers who almost seem to see intofuture. Therefore, strategic planning is a way of preparing forfuture by attempting to simulatefuture.

Strategic Planning has a tendency to force people to think aboutfuture. This is extremely important since many organizations are inward thinking, focusing too much onshort-term. Strategic planning looks atlong-term which is how organizations survive and thrive. It has been proven that organizations that focus onlong-term through strategic planning outperform organizations that lack long-term planning. Consequently, one ofbenefits of strategic planning is long-term performance and growth. Another benefit of strategic planning is communication. Strategic Plans communicateintentions of management to employees, shareholders, and others.

Limitations of Strategic Planning

Strategic Planning should not be viewed as a guarantee to future success. Strategic Planning has limitations, such asfollowing:

1. Strategic Planning is not a way of making future decisions. There is no way anyone can predictfuture. Strategic Planning provides overall guidance and direction based on what we think will happen.

2. Strategic Planning is not a blueprint forfuture. There are too many changes taking place - marketplace is changing, customer preferences are changing, new competition, new technologies, new opportunities, declining financial condition, etc. Strategic Planning is a dynamic process, which is receptive to change.

3. Strategic Planning cannot resolve critical situations threateningorganization. Strategic Planning will not get you out of a crisis. organization should be stable before engaging in strategic planning.

4. Strategic Planning should not replace good intuitive judgements. If an organization is lucky enough to have good intuitive thinkers, then exercise extreme care before embarking on formal strategic planning. You do not want to destroy intuitive thinking withinorganization.

5. Strategic Planning will not identify all critical issues related toorganization. Strategic Planning attempts to identifymost significant issues that will confrontorganization. By focusing on major issues, strategic plans minimizedetail and thereby improve chances for successful implementation.

Specific Problems Associated with Strategic Planning

In addition to limitations, strategic planning can raise new problems for an organization. Some ofpitfalls associated with strategic planning include:

1. Strategic Planning is difficult. It requires that people think differently. Strategic planning needs to be a creative process with new ideas. Many people are not well suited for this type of decision making. New relationships and roles are often necessary within strategic planning. Some people are not comfortable with new activities and tasks.

2. Strategic Planning is time consuming. It requiresinvolvement of people, not to mention research time, reallocating resources, changingorganization, etc. All of this can drain organization, especially if resources are scarce. 3. Strategic Plans can be bad! Poor assumptions, overly optimistic projections, and other bad decisions can result in a bad strategic plan. A bad strategic plan will lead to serious problems fororganization.

4. Impossible to Implement. If upper-level management fails to supportStrategic Plan, then implementation will be impossible andoverall process will have been wasted. Additionally, there can be internal resistance to strategic planning. People resist strategic planning for several reasons: Does not make sense, not enough time, do not understand why we are doing this, etc.

Since strategic planning raises critical issues, it usually leads to change. Therefore, it will be important to understand how to implement change. You can reduceimpact of change on people by following these guidelines:

1. Allow some input and involvement from people. As long as people have a say in change, they tend to accept it better.

2. Try to avoid threateningsecurity of people. When change affectssecurity of people, they will resist.

3. Make sure change follows a pattern of previous decisions that were successful. If you are trying to implement change after several failed attempts, your chances of success are poor.

4. Make sure everyone understands why change is taking place.

5. Change should take place based on planning. Change should never be experimental. best way to plan for change is withinstrategic planning process. And since change is so prevalent throughout an organization, almost every manager should make strategic planning part of his or her job. next step inprocess is to organize how a strategic plan will be developed.