Strategic Planning, Mintzberg

Roll of strategic planning and implementation

Introduction

According to Mintzberg et al (2003, p.10) ‘A strategy is the pattern or plan that integrates an organisation’s major goals, policies, and action sequences into a cohesive whole. A well formulated strategy helps to marshal and allocate an organisation’s resources into a unique and viable posture based on its relative internal competencies and shortcomings, anticipated changes in the environment, and contingent moves by intelligent opponents’.

Likewise Haberburg and Rieple (2008, p.6) defined strategy as ‘ a strategy is the set of actions through which an organisation , by accident or design, develops resources and uses them to deliver services or products in a way which its users find valuable, while meeting the financial and other objectives and constraints imposed by key stakeholders.’

In contrast White (2004, p.5) defined strategy as ‘a coordinated series of actions which involve the deployment of resources to which one has access for the achievement of a given purpose.’ Furthermore strategy ‘is a process of translating perceived opportunity into successful outcomes, by means of purposive action sustained over a significant period of time.’

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Lynch (2000, p.8) defined corporate strategy as ‘ it is the pattern of major objectives, purposes or goals and essential policies or plans for achieving those goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be.’

Morden (2007, p.14) revealed, Strategic Management is concerned with the character and direction of the enterprise as a whole. It is concerned with basic decisions about what the enterprise is now, and what it is to be in the future. It determines the purpose of the enterprise. It provide the framework for decisions about people, leadership, customers or clients , risk, finance, resources, products, systems, technologies, location, competition, and time. It determines what enterprise should be capable of achieving, and what it will not choose to do. It will determine whether and how the organisation will add value, and what form that added value should take. Strategic management is also concerned with management planning and decision making for the decision making for the medium and long-term future. It is considered with the anticipation of that future and with the establishment of a vision or view of how the enterprise should develop into the future that it must face.

Strategic Planning

According to Marios I.Katsioloudes (2006) “Strategic planning is the process by which a system maintains its competitiveness within its work environment by determining where the organization is, where it wants to go, and how it wishes to get there. In other words, strategic planning involves examining what strategies will enable to corporation or association to prosper in future”

Strategic planning is a process where you determine the strengths and weakness of your business. You also can set your company’s goals, objective and mission statement during this process.

We can say this that strategic planning is a management tool for organizing. It’s also lead an organizing from where is now to future.

A good definition is strategic planning is “the process of determining a company’s long-term goals and than indentifying the best approach for achieving those goals.” Without a strategic planning an organization will never know where it going.

Importance

Strategic planning is a very important for an organization. And its help to achieve

An organizations goals and its also helps to provide direction and focus for all employees. It points to specific results that are to be achieved and establishes a course of action for achieving them. A strategic plan also helps the various work units within an organization to align themselves with common goals.

Strategic planning Process

In the earlier 1970’s, various large firms adopted an official top-down strategic planning model. With this model, strategic planning became a planned process in which top executives from time to time would prepare the firm’s strategy, and then communicate it down the organization for implementation. The following strategic planning process model discuses below.

Mission

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V

Objectives

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V

Situation Analysis

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V

Strategy Formulation

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V

Implementation

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V

Control

This process is most appropriate for strategic management at the business unit level in organization. For large corporations, strategy at the corporate level is more concerned with managing a selection of businesses. In the process outlined here, “company” or “firm” will be used to signify a single-business firm or a single business unit of a diversified firm.

Mission

A mission is important key factor of any organization. The mission often expressed in the form of a mission statement of any organization, which conveys a sense of purpose to employees and projects a company image to customers. In the strategy formulation process, the mission statement sets the mood of where the company should go.

Objectives

Objectives are actual goals that the organization will achieve, for example, an earnings growth target. The objectives should be challenging but achievable. They also should be considerable so that the company can monitor its progress and make corrections as needed.

Situation Analysis

Once the firm has specified its objectives, it starts with its current situation to set up a strategic plan to fulfil those objectives. Changes in the external environment and make new opportunities and new ways to achieve their objectives. An environmental scan is performing to find out the available opportunities. The situation analysis therefore involves an analysis of both the external and internal environment.

The external environment has two dimensions: the macro-environment affects all firms and a micro-environment that affects only the firms in a particular industry. The macro-environmental analysis includes political, economic, social, and technological factors and sometimes is called PEST analysis.

An important part of the micro-environmental analysis is the industry in which the firm operates or is considering operating. Michael Porter devised a five forces framework that is useful for industry analysis.

We also can use SWOT Model to Analysis Company’s internal and external situation. Strength and weakness use for internal analysis and opportunity and threats use for external analysis of any organisations as show in the diagram below.

Strategy Formulation

Once we get a clear image of the organization and its environment in hands, exact strategic alternatives can be applied. Infect different firms has different alternatives depending on their situation, there also exist generic strategies that can be applied across a wide range of firms.

Control

Once we applied the strategy, the results of the strategy need to be calculated and evaluated, with changes need to be required to keep the idea on path.

Strategy implementation

De Wit and Meyer (2005, p.278) revealed, the implementation of the strategy comprises a series of sub activities that are primarily administrative. If purpose is determined then the resources of a company can be mobilized to accomplish it. An organisational structure appropriate for the efficient performance of the required tasks must be made effective by information systems and relationships permitting coordination of subdivided activities.

Furthermore the role of personal leadership is important and sometimes decisive in the accomplishment of strategy. Although we know that organisational structure and processes of compensation, incentives, control and management development influence and constraint the formulation of strategy, we should look first at the logical proposition that structure should follow strategy on order to cope later with the organisational reality that strategy also follows structure. When we have examined both tendencies, we will understand and to some extent be prepared to deal with the interdependence of the formulation and implementation of corporate purpose.

According to Henry (2008, p.10) ‘effective implementations of strategies require the organisation to be sufficiently flexible in its organisational culture and design. Strategies need to be communicated, understood, and properly coordinated with the stakeholders inside and outside the organisation. In an age of collaboration, this may involve discussions with suppliers and partners. Although the leader of the organisation will ultimately be responsible for a strategy’s success or failure, their role should be to encourage and create an organisational culture which empowers managers to respond to opportunities. In this way each employee will be confident to try out new ideas and innovate without fear of reprisals’.

White (2004, p.618), the implementation of a successful strategy is to focus on the five Cs as the basic requirement needed to keep the separate units in any organisation to achieve the objectives of strategy. The five Cs are: Coordination, Communication, Command, Control and Conflict/consensus.

Coordination: There should be coordination at every step of strategy making, certainly in the process of formulation and implementation between the stakeholders, different cooperating enterprises and organisational levels, and between different internal units within the enterprise itself.

Communication: Coordination is only possible with the help of proper communication of information concerning objectives and threats, capabilities and threats, risks and threats. The accurate information must be communicated.

Command: “It is passed downward, reflecting the hierarchy of authority which characterizes every organisation. It should be rarely given and only when absolutely necessary, in crises or to resolve a particular conflict. It is held in reserve for when is needed. Everyone should be aware of possibility of command but it does not have to be used. There are some occasions when decisive action is necessary, but most the time staff should be aware of what they need to do without being prompted.

Control: It is often exercised indirectly and discretely, through incentive structures and globalization of a corporate culture. There are direct control systems in certain areas such as finance. It is better that all become committed to following the broad directions of the strategy without explicit instructions. The outlines of strategy provide the guidelines are internalized and do not require endless repetition. Each decision maker has their own domain or is of control, all well understood, and obtains from intervention on other domains unless invited or if there is a crisis.

Conflict / Consensus: Honest disagreements are certain in any organisation. It is a vital aspect of any creative activity, since creative thinking means thinking outside the normal boundaries. If a new idea is to change behaviour, it needs to be argued out in the forum of enterprise where there will inevitably by those who cannot agree. Any proposal for change for change almost always invites conflict of kind, hostility from those opposed to a new way of thinking or to change.”

Strategic Management Process

Thompson and Strickland (2003, p.6) defined term strategic management “it refers to the managerial process of forming a strategic vision, setting objectives, crafting a strategy, implementation and executing the strategy, and then over time initiating whatever corrective adjustment in the vision, objectives, strategy, and execution are deemed appropriate.

Strategic Vision: A strategic vision of a company reflects management’s aspirations for the organisation and its business, providing a panoramic view of ‘what we are doing’ and giving specifics about its future business plans and giving specifics about its future business plans. It brings out long-term business purpose and shape the organisational identity. A strategic vision helps an organisation in a particular direction and in a strategic path for it to follow.

Setting Objectives: ‘The purpose of setting objectives is to convert managerial statements of strategic vision and business mission into specific performance targets, i.e. results and outcomes the organisation wants to achieve’.

Crafting a Strategy: Strategy making brings into the critical managerial issue of how to achieve the targeted results in light of the organisation’s situation and prospects. Objectives are ends and the strategy is the means of achieving them.

Implementing and Executing the strategy: Strategy implementation concerns the managerial exercise of putting a freshly chosen strategy into place’. Likewise ‘strategy execution deals with the managerial exercise of supervising the ongoing pursuit of strategy, making it work, improving the competence with which it is executed, and showing measurable progress in achieving the target results.”

Case: British Airways

Airline industries and carriers are facing very hard time, because recession has affected the business and the industries have to reduce their prices and are not making well profit as compared to the past. As it is a worldwide fast growing industry making airlines more complex and challenging. Because of recession and increased number of unemployment’s in airline industries. British Airways is the UK’s largest international airline, flying to 6 domestic destinations over 148 international destinations at multiple times, to the all best located airports. The major place of business is Heathrow, one of the world’s premier airport locations. BA also operates a worldwide air cargo business. But still British Airways had to restructured and make some serious strategic changes to avoid the bankruptcy or the closure. BA had his vision to achieve their goal and took effective and reasonable steps to compete in the market with its performance and operation under the last couple of years. Market fell from more than 30 per cent in 1998 to about 20 per cent in 2005. This year, BA announced the worst half-year losses in its history.

During the six months to September 2009, the company face a £292m ($485m) loss, compared with £52m profits during the same period a year earlier. In order to survive and to make an easy recovery in this competitive environment and to attain a leadership in the industry BA has taken strong steps to upgrade the systems and technology, In order to increased the fleet size British Airways ordered 36 new long haul Aircraft on 27th September 2007 which includes 12 A380s,and 24 Boeing 787s. British Airways also ordered on 1st February 2008 Airbus A318s to run a premium services out from London City Airport to New York. This fitted luxury 32 lie flat beds in business class cabin. The increase in technology like online ticketing, online checking also enhances the BA business. Because customer has no need to stand in queue. Innovative flight service such as sleeper service will attract more customers. Introduction of the terminal 5 on the HEATHROW AIRPORT will help increasing of the flights of the BA and able to provide more relaxed environment to its customers. Possible merger of the BRITISH AIRWAYS and QANTAS AIRLINE could be the great opportunity to become absolute market leader of the world. Willie Walsh stated that British Airways had reduced 1,450 staff members since March 2009. They also reduced the overtime and 500 redundancies were made. Twenty percent of future capital expenditure is reduced this year from 725 million pounds to 580 million pounds and it will be the same through out this year. Mr. Willie Walsh also admitted that this structural change of British Airways is necessary for survival and long term success. British Airways managed with its comprehensive and proactive strategy to accelerate its return to profitability and economic welfare well in advance of its rivals. The airline announced that it is planning to raise £680 million of liquidity through a £350 million convertible bond issue and by gaining access to bank facilities which are currently used to provide guarantees to its pension funds. This will increase liquidity to approximately £2 billion.

Conclusion

A successful and well-organized strategic plan can recognize the organisation’s strength, and related weaknesses, determining the new opportunity and with useful action resolve the problems. These can be either from the capabilities and expertise of an organisation or from the actual market demand. Successful strategy plan is when there is a continues perfection and effective use of time and resources. The role of manager is very important to make organisation profit-making or non- profit making with taking right decisions. He should think strategically rather than operationally. The main factor of strategic planning is that how the information gained, implement and used.

References

Mintzberg, H., Lampel, L., Quinn, J. & Ghoshal, S. (2003) The Strategic Process, 4th edition, Prentice Hall publishing, New Jersey.

White, C. 2004, Strategic Management, 1st edition, Palgrave Macmillan, New York

Lynch, R., 2000, Corporate Strategy, 2nd edition, Prentice Hall, Harlow

Morden, T. 2007, Principles of Strategic Management, 3rd edition, Ashgate Publishing, Aldershot.

Haberberg, A. & Rieple, A. 2008, Strategic Management: theory and application, 1st edition, Oxford University Press, New York.

De Wit, B. & Meyer, R. 2005, Strategic Synthesis: Resolving strategy paradox to create competitive advantage, 2nd edition, Thompson, London.

Henry, A. 2008, Understanding Strategic Management, 1st edition, Oxford University Press, New York.

Thompson, A., Strickland A.J., 2003, Strategic Management: concepts and cases, 13th edition, McGraw-Hill, New York.

Marios I.Katsioloudes Ph. D, (2006) Strategic Management, Global Cultural perspectives for profit and non-profit organisation, p 2, 6

Lynch, R., 2003, Corporate Strategy, 3rd edition, Prentice Hall, Harlow

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