strategic management and planning
Strategic planning. The concept and stages of strategic planning
Strategic planning – This is one of the functions of strategic management, which is the process of choosing the goals of the organization and ways to achieve them.
Strategic planning provides the foundation for all management decisions. The functions of organization, motivation and control are focused on the development of strategic plans. Without taking advantage of strategic planning, organizations as a whole and individuals will be deprived of a clear way of assessing the goals and directions of a corporate enterprise. The strategic planning process provides a framework for managing members of the organization.
Strategic planning system enables shareholders and management of companies to determine the direction and pace of business development, outline global market trends, understand what organizational and structural changes must occur in a company in order for it to become competitive, what is its advantage, what tools are necessary for it for successful development.
Until recently, strategic planning was the prerogative of large international concerns. However, the situation began to change, and, as polls show, more and more medium-sized companies are starting to engage in strategic planning.
Strategic planning process The company consists of several stages:
- Defining the mission and objectives of the organization.
- Analysis of the environment, which includes the collection of information, analysis of the strengths and weaknesses of the company, as well as its potential capabilities on the basis of available external and internal information.
- The choice of strategy.
- The implementation of the strategy.
- Assessment and control of performance.
Defining the mission and objectives of the organization. The objective function begins with the establishment of the mission of the enterprise, expressing the philosophy and meaning of its existence.
Mission – This is a conceptual intention to move in a certain direction. Usually, it details the status of the enterprise, describes the basic principles of its work, the actual intentions of the management, and also defines the most important economic characteristics of the enterprise. The mission expresses its aspiration to the future, shows what the efforts of the organization will focus on, and what values will be given priority. Therefore, the mission should not depend on the current state of the enterprise, it should not affect financial problems and
purpose – this is the specification of the mission in the organization in a form that is available for managing the process of their implementation. Main characteristics strategic planning objectives is as follows:
- clear focus on a specific time interval;
- concreteness and measurability;
- consistency and consistency with other missions and resources;
- targeting and controllability.
Based on the mission and goals of the organization, development strategies are built and the organization’s policy is determined.
Strategic analysis or as it is also called “portfolio analysis” (in the case of analysis of a diversified company) is the main element of strategic planning. The literature notes that portfolio analysis acts as a tool of strategic management, with the help of which the company’s management identifies and evaluates its activities in order to invest in the most profitable and promising areas of its business.
The main method of portfolio analysis is the construction of two-dimensional matrices. With the help of such matrices there is a comparison of production, divisions, processes, products according to relevant criteria.
There are three approaches to the formation of matrices:
- Tabular approach, in which the values of varying parameters increase with distance from the naming column of these parameters. In this case, the analysis of the portfolio is conducted from the upper left corner to the lower right.
- Coordinate approach, in which the values of variable parameters increase with distance from the point of intersection of coordinates. Portfolio analysis here is from the lower left to the upper right.
- Logical approach, in which the analysis of the portfolio is conducted from the lower right to the upper left. This campaign was most prevalent in foreign practice.
An environmental analysis is required when performing a strategic analysis,
Strategic analysis environment involves the study of its three components:
- external environment;
- immediate surroundings;
- internal environment of the organization.
Analysis of the external environment includes the study of the impact of the economy, legal regulation and management, political processes, the natural environment and resources, the social and cultural components of society, scientific, technical and technological development of society, infrastructure and
The immediate environment is analyzed for the following main components: customers, suppliers, competitors, the labor market. An analysis of the internal environment reveals those opportunities, the potential that a firm can count on in competing in the process of achieving its goals. The internal environment is analyzed in the following areas: personnel of the company, their potential, qualifications, interests and
Strategy is a long-term qualitatively defined direction of the development of an organization, relating to the scope, means and form of its activities, the system of relationships within the organization, and the position of the organization in the environment, leading the organization to its goals.
Strategy chosen based on:
- competitive position of the company in this strategic area of management;
- prospects for the development of the strategic economic zone itself;
- in some cases, taking into account the technology that the company has.
Strategy implementation is a critical process, since it is he who, in case of successful implementation, leads the enterprise to achieve its goals. The implementation of the strategy is carried out through the development of programs, budgets and procedures that can be considered as medium-term and short-term plans for the implementation of the strategy. The main components of a successful strategy implementation are:
- the objectives of the strategy and plans are communicated to employees in order to achieve on their part an understanding of what the organization is striving for and to engage in the process of implementing the strategy;
- the management ensures in a timely manner the flow of all resources necessary for the implementation of the strategy, forms the implementation plan of the strategy in the form of targets;
- in the process of implementing the strategy, each level of management solves its tasks and performs the functions assigned to it.
Evaluation of the chosen (implemented) strategy is the answer to the question: will the chosen strategy lead to the achievement of the company’s goals? If the strategy is consistent with the objectives of the company, then its further evaluation is carried out in the following areas:
- compliance of the chosen strategy with the state and requirements of the environment;
- compliance of the chosen strategy with the potential and capabilities of the company;
- the acceptability of the risk inherent in the strategy.
The results of the implementation of the strategy are evaluated, and using the feedback system is carried out control of the organization, during which there may be an adjustment of the previous stages. I. Ansoff in his book “Strategic Management” formulates the following principles of strategic control:
- Due to the uncertainty and inaccuracy of the calculations, a strategic project can easily turn into an empty project. This can not be allowed, costs must lead to planned results. But unlike the usual practice of production control, attention should be focused on cost recovery, and not on budget control.
- At each control point, it is necessary to make an assessment of the cost recovery during the life cycle of a new product. As long as the payback exceeds the reference level, the project should be continued. When it is below this level, other possibilities should be considered, including the termination of the project.
Top management functions in the strategic planning process:
- In-depth study of the state of the environment, goals and strategy development: a final understanding of the essence of certain goals and a broader communication of the ideas of strategies and the meaning of goals to employees of the company.
- Making decisions on the effectiveness of the use of the resources available to the company.
- Decisions about the organizational structure.
- Making the necessary changes in the company.
- Revision of the implementation plan of the strategy in case of unforeseen circumstances.
Changes that are made during the execution of strategies are called strategic changes. Reorganization of the organization can be in such forms as radical transformation, moderate transformation, usual changes and insignificant changes.
Types of organizational structures: elementary, functional, divisional, structure according to SEB, matrix. The choice of organizational structure depends on the size and degree of diversity of activities, geographical location of the organization, technology, attitude to the organization from the leaders and employees of the organization, the dynamism of the external environment and the strategy implemented by the organization.
In order to make changes, it is necessary to open, analyze and predict what resistance can be met, planning changes, reduce this resistance to the minimum possible and establish the status quo of the new state. Styles of change: competitive, withdrawal, compromise, adaptation, cooperation. The task of control is to ascertain whether the implementation of the strategy will lead to the realization of goals.