Strategic planning defines the main goals and directions of the organization's actions, ensures the achievement of the chosen goals by using existing advantages and creating new ones. A strategic plan is a program of integrated actions to achieve the set goals.
Strategic planning is the process of defining the goals of an organization and the lines of action to achieve them. The decisive planning decision for the organization is the formulation of the mission and the definition of specific goals that ensure its implementation. On the basis of the adopted goals and taking into account the results of the strategic analysis, decisions are made on the main directions of action and the corresponding management procedures.
Figure 17 shows the sequence of actions that make up strategic planning in the form of a cycle. This cycle begins with the development of a mission and goals. The formulated mission allows you to define measurable goals, expressed in the relevant indicators. In practice, after clarifying the goals, the mission is often re-specified, and the cycle begins anew.
Next step strategic planning- this is the definition of the parameters of the external environment that affect the activities of the organization. This strategic planning step is exploratory in nature and is often carried out by third parties. The results of the study of the external environment often force the mission and goals to be clarified again, so the strategic planning procedure returns to the initial stage again.
At the next stage of strategic planning, a SWOT analysis is carried out, which reveals positive and negative external and internal factors of the organization or project.
The results of the SWOT analysis often force us to return to the formulation of the mission and goals and supplement the study of the external environment. It is this step in Scheme 17 that is represented by dotted lines.
The formulation of the mission, goals, SWOT analysis - all these elements of strategic planning have been successfully used and are being used in the practice of not only commercial, but also government organizations, and they were used several centuries ago.
An example of a strategic approach to public administration is the work of Jean Baptiste Colbert, Minister of the Court Louis XIV, who served as head of government for the "Sun King" for 23 years. In many of his endeavors, he proceeded from the principles of strategic planning. One of the episodes of his activity is very typical. According to his instructions, oaks were planted in large areas in France. On the territory of modern France, you can still find the remains of oak groves created by order of J.B. Colbert. These landings at the end of the 17th century. were made for the sole purpose: that by the middle of the XIX century. (!) France became the owner of the best mast forest in Europe and thus would have secured best material for shipbuilding.
Colbert was interested in creating new competitive advantages for the state as a whole, since the development of the fleet in the 17th century. was of decisive importance for the country. All the elements of strategic planning are visible in Colbert's actions: defining the mission and goals, SWOT analysis, strategy development and its implementation.
Strategic planning and long-term planning are not the same thing, although strategic plans tend to be long-term in nature. Long-term plans can be both strategic and operational. The former include the justification of goals, their hierarchy, assessment of external conditions, internal pros and cons, and main directions of action. The latter relate to simpler management tools and include a list of necessary actions, quantitative characteristics of these actions, deadlines, responsible for actions and control procedures. operating plans, being detailed plans actions, usually complement the strategic ones, being a tool for the implementation of strategic plans. At the same time, they cannot be successful without preliminary analytical study at the strategic planning stage.
Strategic planning can be carried out at different levels of the management hierarchy. For example, in a large commercial organization, you can develop a strategy at the corporate level as a whole, determining which types of business are best to go into. In this case, the issues of diversifying activities, integrating with other similar organizations, absorbing competitors, etc. will be mainly resolved. kind. Its niche in the market, pricing strategy, business geography, innovation and investment strategy are determined. At the same time, within the framework of each business, its own functional strategies are identified: financial, production, marketing strategy, R & D strategy, information strategy, etc. These strategies determine what and how to do in the implementation of the relevant functions.
In the same way, we can consider different levels of state strategic management: federal, regional, municipal. For example, a country's development strategy is reflected in the program of economic and political reforms; each region forms its own strategy in accordance with federal programs and plans, taking into account its own specifics of socio-economic development and using its own advantages. The same can be said about the city strategy in relation to the regional strategy.
To conduct a strategic analysis, each organization requires a strategic Information system. Most large organizations have special information and analytical units. V small organizations where it is not possible to have their own information and analytical unit, their own specific sources of strategic information are used, such as personal experience, reports, books, magazines, newspapers, conferences, professional meetings, subordinates, external counterparties, etc.
In the process of developing a strategy, it is useful to use forecasting, building scenarios and models, and creating a development concept.
There is no need to dwell here in detail on forecasting methods. Suffice it to say that an organic part of the development of a strategy is the forecast of the development of the control object under various basic assumptions. For example, based on a variant forecast, it is possible to consider various development scenarios: what will happen if nothing is changed and continue to act in accordance with the old, well-established approaches and management methods, and what will happen if different strategy options are implemented.
It is advisable to analyze various development options not only for the organization as a whole, but also for its individual divisions, as well as individual aspects or types of activities.
Of the special models used in strategy development, strategy models built on the basis of various analytical matrices, including the Boston Consulting Group Matrix (BCG matrix), which are successfully used for strategy development and their analysis in many commercial organizations, are widely used. .
To develop a strategic development plan, both large and small organizations often resort to the help of professional consultants.
Strategic planning has firmly entered the life of almost all commercial organizations. Traditional strategic planning technologies are business plans and commercial projects. Practice has proven high efficiency, and in some cases the urgent need for the use of strategic planning not only in commercial activities, but also in other types of human activity. Recently, strategic planning has been increasingly used in the practice of non-profit organizations (foundations, churches, universities) and in public administration, including regional administration.
It is legitimate to raise the question of the strategy of the country as a whole, region or city, ministry, department. All these management objects are very different from a commercial firm, and therefore their development strategy has its own characteristics. At the same time, the main elements of the strategy of the country, region, city, ministry, department and commercial organization are the same.
Strategic planning is successfully used in the work of universities, hospitals, non-profit organizations. Especially fruitful is the use of strategic planning in the management of the development of the region.
All strategic planning procedures, with appropriate adaptation, are applicable to regional and city development planning. Strategic planning can be successfully used not only in the preparation of comprehensive plans for socio-economic development, but also in the implementation of anti-crisis measures in regions and cities, in the management of large-scale infrastructure projects, and in the implementation of investments.
Some strategic planning techniques formalized in business planning are already widely used in the practice of regional governments. However, in full structural elements strategic planning and strategic management have yet to be introduced into the practice of city and regional administrations
Mandrik Alina Alexandrovna, 3rd year student of the Faculty of Economics and Management, Chairman of the Scientific Student Society of FSBEI HPE "Oryol State Institute of Economics and Trade", Orelmeg [email protected]
Strategic planning of the enterprise
Annotation. The most important task of strategic planning in a market environment is to create an opportunity for an enterprise (firm) to achieve the necessary advantage over other competitors through the use of the most effective means. This article reveals the concept of strategic planning, its origin and relevance at the present time. The goals and objectives of strategic planning at the enterprise, its process are also considered. Particular attention is paid to the stages of formation of the strategic plan. Key words: strategic planning, competition, analysis, enterprise potential, macro-environment and micro-environment of the firm.
The most well-developed part of strategic management in an enterprise is strategic planning. The definition of the main long-term goals, the approval of the course of action and the allocation of resources necessary to achieve these goals - all this is an enterprise development strategy. Therefore, strategic planning for the development of an enterprise is equated with the art of research, forecasting, calculation and selection of the best alternatives. In this case, the strategy of the enterprise should be built on a hierarchical basis. Moreover, a simple organization can have one strategy, a complex one can have several strategies, at different levels of action. Thus, strategic planning is a means of achieving the goals of the company. Such planning means a set of actions and decisions that are taken by management and provide the development of specific strategies in order to help the organization achieve its global goals. The task of strategic planning is to provide innovations and changes in the organization at the right time and to the extent necessary. Also, the process of strategic planning is an assistant in making the right management decisions. The term “strategic planning” itself appeared at the turn of the 1960s and 1970s. in order to distinguish between current production-level planning and top-level planning. This was necessary in order to move to a new model for the development of the organization in a changing environment, to ensure its efficient and sustainable operation. The factors that determine the relevance of the new approach are the following: - an increase in the number of tasks that were caused by internal and external changes in the second half of the twentieth century. In this connection, most of them could not be solved using traditional methods; - increased instability of the external environment, which led to an increase in the likelihood of sudden strategic changes, their unpredictability; - expansion of the geographical scope of national economies, the acquisition of an international character by business; - increase in prices retribution for the wrong strategic choice, for the errors of the wrong forecast for organizations that choose the uncontested path of planning.
The purpose of strategic planning is to determine the most promising areas of the organization's activities that ensure its growth and prosperity. Also, this term was introduced abroad in order to distinguish this concept from long-term planning and reflect the difference between planning, which is carried out at the level of management of the organization as a whole or its independent business units, from planning, which is located at lower levels of management. "Strategic management" includes such component part like strategic planning. In management, four of its generalized functions are usually distinguished - planning, organization, motivation and control. In each of them, to a greater or lesser extent, a strategic orientation is represented when strategic management is considered. But to the greatest extent this applies precisely to planning, in which its special type is distinguished - strategic planning. The very term "strategic planning" was discovered in our country in the 70s in translated books by Western experts. In our country, the term "long-term forward planning" was used. There was a fundamental difference between these two concepts. The main idea that underlay the development of long-term plans was: "Today is better than it was yesterday, and tomorrow will be better than today" and any uncertainty was denied. Hence follows main principle planning - the development of plan targets "from what has been achieved", often within the framework of available resource capabilities by simple extrapolation. At the same time, the more the output of this or that product was increased, the better it was. It was also believed that the change in the external environment is practically unchanged. Emphasis was placed on the analysis of internal capabilities and resources of the organization. With this approach, the organization can determine how much product it can produce and what costs it will incur in doing so. But the value of costs and the volume of production do not satisfy such a requirement as how much the created product can be accepted by the market, which at that time was absent in our country. Only the market can determine how much will be bought and at what price. Such questions were not discussed in a non-market economy. The strategic plan, which characterizes the activities of organizations operating in a market environment, uses another statement: "Tomorrow will not necessarily be better than today." And if the situational analysis revealed a drop in demand for some product, even if the necessary resources are available, the management of this enterprise will not increase its output, but rather choose strategies to reduce output or switch to the production of other products. Thus, the simple extrapolation into the future, as used in the past in long-term planning, from the development trends that have been studied, is unsuitable. The basis for the development of a strategic plan is the analysis of the prospects for the development of the organization under certain assumptions about changes in the external environment in which it operates. Determining the position of the organization in the competition for markets for its products is essential element this analysis. On its basis, separate areas of production and economic activity are formed and strategies for achieving goals are selected. Within the framework of strategic planning, questions are being addressed about which of the existing areas should be eliminated and which ones should be developed. While the long-term and annual plans of the organization involve planning the chosen directions of the organization's development. Strategic planning is characterized by a focus on adapting the organization's activities to constantly changing environmental conditions and on taking advantage of new opportunities.
Unfortunately, strategic planning cannot fully predict the future. The picture of the future, which he forms his description according to the scenario, which is of a probabilistic nature. It is not difficult to see that an incompletely imperfect description of the future is much better than none at all. In general, strategic planning is a symbiosis of intuition and the art of the organization's top management in setting and achieving strategic goals, which are based on the development of strategic plans and the possession of specific methods of pre-plan analysis and. Often the development of a strategic plan is the main task in the implementation of strategic planning. Its most important component is also the implementation of the strategic plan. Which involves, first, the creation of an organizational (corporate) culture that allows for the achievement of a certain flexibility in the organization, the chosen strategies, the formation of systems of motivation and organization of work, that is, the use of all strategic management tools. The main goal of any company is to obtain a high return on investment. For investments to be more profitable than those of competitors, the competitive advantage must be sustainable. Goods and services that are provided to consumers are high. For profitability to be sustainable, you need to invest in developing manufacturing capabilities that maintain your competitive advantage for the future. Strategy thus depends on the definition of competitive advantage, on the development of resources and production capabilities that provide sustainable superiority in this changing world. Strategy is an indicator of a company's participation in competition. The strategy creates the industry positions of the company and ensures the internal consistency of its policies, which are aimed at achieving these positions. Moreover, the strategy determines the direction of development and what the company will do. Domestic researchers of strategic planning processes under economic strategy enterprises define a dynamic system of interrelated rules and techniques that ensure the effective formation and long-term maintenance of the firm's competitive advantages in the domestic and foreign markets of individual and public goods.The founder of modern business history, the author of one of the works in the field of strategic planning, A. Chandler, suggests that strategy is "the definition of the main long-term goals and objectives of the enterprise and the approval of a course of action, the allocation of resources necessary to achieve these goals." This interpretation is a classic view of the very essence of strategy. Strategic planning can be viewed as a dynamic set of interrelated management processes that logically flow from one another. At the same time, the existence of a stable feedback and the influence of each process on the others are repeatedly noticeable. Figure 1 shows circuit diagram contour of strategic planning.
Fig. 1. Scheme of the strategic planning contour
Thus, the process of strategic planning includes: 1) defining the mission of an enterprise, organization; 2) formulating the goals and objectives of the functioning of an enterprise, organization; 3) assessment and analysis of the external environment; 4) assessment and analysis of the internal environment; 5) development and analysis of strategic alternatives; 6) choice of strategy. The process of strategic management (in addition to strategic planning) also includes: 1) implementation of the strategy; 2) evaluation and control of the implementation of the strategy. The main components of strategic planning are as follows: 1. Definition of the mission of the organization. This process is to establish the meaning of the existence of the company, its purpose, and what role and place it takes in a market economy. The direction in which firms are oriented based on market needs, the nature of consumers, product characteristics and the presence of competitive advantages is characterized through this process.2. Formulation of goals and objectives. To describe the nature and level of business claims, the terms “goals” and “objectives” are used. Goals and objectives should reflect the level of customer service. They should be the motivation for people working in the firm. The target picture should have at least four types of goals: - qualitative goals; - quantitative goals; - strategic goals; Goals for the lower levels of the company are considered as tasks. 2) hierarchical structure; 3) achievability; 4) stimulation to achieve the desired result; 5) flexibility; 6) clarity of wording.3. Analysis and assessment of the external environment. Strategic analysis requires a clear understanding of what phase of development the company is in. To determine the "current situation" and identify the conditions for the further functioning and development of the enterprise, methods of strategic analysis are used, which allow you to systematically analyze the factors of the external environment and the resource potential of the enterprise. The main purpose of strategic analysis is to inform the procedure of strategic planning and management. Evaluation of this information makes it possible to effectively carry out the process of goal setting and selection of strategic alternatives. Since this process provides a basis for developing a behavior strategy, it is considered the initial process of strategic planning. The analysis of the environment involves the study of its two components: – the macro environment; – the immediate environment. Analysis of the macro environment includes the study of the impact on the company of such components of the environment as: - political processes; - natural environment and resources; - state of the economy; - legal regulation; - social and cultural components of society; - scientific and technological level; The immediate environment is analyzed according to the following main components: -buyer; -supplier; -competitors; -labor market.4. Analysis and assessment of the internal environment. Analysis of the internal environment determines the internal capabilities and potential that a company can count on in the competition in the process of achieving its goals. It also allows you to formulate the mission of the company and better understand its goals. The internal environment is investigated in the following areas: - finance; - marketing; - personnel potential; - production; - organizational structure, etc.5. Development and analysis of strategic alternatives, strategy selection (stage 5, 6). At this stage, decisions are made on how the company will achieve its goals and realize the corporate mission. Senior managers must have a shared vision of the firm in order to make effective strategic choices. The strategic choice must be definite and unambiguous. It should be noted that at the stage of strategic choice there are: 1) the development of a basic (business) strategy for the development of the enterprise as a whole; 2) the development of its functional strategies that provide support and implementation of the basic strategy. The development cycle of an enterprise shows that in the process of its operation there is a situation when, with some external threats and internal weaknesses, it moves from successful development to a deterioration in its financial and economic activity, i.e. . goes through these stages. Therefore, the task of the management of the enterprise is to minimize the time to pass the second and third stages and maximize the time of economic growth.
In accordance with the development cycle of an enterprise, three basic strategies are distinguished: growth, stabilization and survival. A simple growth strategy can be implemented using I. Ansoff's opportunity matrix, which involves the use of four strategies (Figure 2).
Fig. 2. Opportunity Matrix by I. Ansoff
The stabilization strategy is applied at the stage of instability, is defensive in nature and is aimed at the transition to the growth stage. Its implementation occurs most often through cost savings and structural restructuring of financial and economic activities. The survival strategy is purely defensive in nature and is used at the survival stage, setting itself the goal of reaching a stable functioning mode. This strategy cannot be long-term, as it requires decisive and quick action in the conditions of strict centralization of management and is associated with a radical restructuring of the entire activity of the enterprise.6. Implementation of the strategy. Execution of the strategic plan is a critical process, because in the case of a real plan leads the company to success. It also happens the other way around: a well-designed strategic plan can “fail” if steps are not taken to implement it. There are many cases when firms are unable to implement the chosen strategy. The reasons for this can be: - unforeseen changes in the external environment; - incorrect analysis and erroneous conclusions; - the inability of the company to involve its internal potential in the implementation of the strategy. It is necessary to have a clear action plan for the implementation of the strategy, which provides for providing the plan with all the necessary resources.7. Evaluation and control of the strategy. This stage is characterized by providing feedback between the process of achieving the goals that are provided for by the strategic plan, and the goals themselves. The main task of such control is to find out to what extent the implementation of the strategy leads to the achievement of the goals and mission of the company. Therefore, the adjustment based on the results of strategic control can relate to both the goals of the company and the strategy. In accordance with the above, the following main stages in the formation of a strategic plan can be distinguished (Table 1).
Table 1 Stages of forming a strategic plan
№ p / p Stage name 1. Strategic analysis: - analysis of the external business environment; - analysis of the resource potential of the enterprise (internal capabilities). 2. Determination of the enterprise policy (goal setting). choice of strategic alternatives. 4. Formulation of functional strategies: - marketing strategy; - financial strategy; - R & D strategy; - production strategy; - social strategy; - organizational change strategy; - environmental strategy. 5. Formulation of product strategy (business projects).
Steps 13 can clearly be attributed to strategic planning, also including the basic strategy of the enterprise. The process of forming functional and product strategies can also be referred to the process of strategic management (45). The plan is defined as a prepared program for the socio-economic development of an enterprise (firm) and all its divisions for a certain period. Therefore, it can be stated that the plan of the enterprise is also the ultimate goal of the company, the guiding line of personnel behavior, a list of the main types of work and services performed, advanced technology and organization of production, the necessary means and economic resources. In the process of generating the plan, the leaders of each management link outline a common program of their actions, establish the main goal and result of joint work, determine the participation of each department or employee in common activities, combine individual parts of the plan into a single economic system, coordinate the work of all planners and develop decisions on a single line of labor behavior in the process of implementing the adopted plans. When developing a master plan and choosing the lines of behavior of all employees, one should not only ensure compliance with certain rules and principles of planning, but also achieve the adopted plans and selected goals in the future. Any plan should be drawn up as accurately as the organization itself wishes, taking into account its financial condition and position on the market and many other factors. In other words, any degree of accuracy of the plans is possible, but it is important not to forget about ensuring acceptable production efficiency. In most cases, it is determined by the applied professional training of planner economists, planning methods and the accuracy of the regulatory framework. With operational or short-term planning, they require a higher degree of accuracy of planned indicators (57%), with strategic or long-term planning, they are limited to choosing a common goal and make approximate calculations with an error (2030%). The result of work on the strategic planning of an enterprise is a document called "Strategic enterprise plan” and including the following sections: 1) Goals and objectives of the enterprise;
2) Current operations and long-term tasks; 3) Enterprise strategy (basic strategy, main strategic alternatives); 4) Functional strategies; 5) The most significant projects (programs); 6) Non-economic activities; 7) Capital investments and resource allocation; 8) Planning surprises (formation of backup strategies, “quick response systems). A study of foreign literature on strategic planning showed that the number, content of the stages of drawing up a strategic plan, as well as its form, can vary significantly and are determined by many factors, among which the following are the main ones: 1) Form of ownership of the enterprise; 2) Type of enterprise (specialized or differentiated); 3) Industry affiliation of the enterprise; 4) Size of the enterprise. 5) The management system existing at the enterprise. There is also no general horizon of strategic planning. As well-known experts in the field of strategic planning D. Cleland and W. King emphasize, the length of the strategic planning interval is of great methodological importance. Often, the planning period should be based on economic projections that take into account joint trends rather than cyclical fluctuations in the economy. The organization should be assumed from such a perspective as is useful to it, but no more than is reasonably accurate. It is an axiom: the farther into the future planning extends, the less reliable the forecast becomes. For example, the British Steel Corporation makes plans for 10 years, American companies mostly use five-year plans, while Japan uses three-year plans. plans. American experts pay attention to the fact that the time horizons of plans of different firms identical in purpose depend on the sectoral affiliation of the latter and the level of their technical equipment. R. Weber emphasizes that "a clothing company requires long-term planning for 6 months, just like General Motors requires a ten-year plan." In general, you need to understand that the planning horizon depends on:
average time from the creation of an idea to its implementation;
the duration of the impact of decisions;
the degree of predictability of the future. Therefore, these formation schemes and the form of presentation of the strategic plan are of the most general nature and can be changed depending on the characteristics of a particular enterprise. We only highlight that we are limited to considering the strategic plan for the development of the enterprise as a whole. Three main schemes for long-term planning are often used: 1) bottom-up (decentralized); 2) top-down (centralized); 3) interactive (in interaction). Planning "bottom-up" ” (typical for diversified companies) determines that the goals of the departments, their development strategies, production plans are determined by the operational divisions of the enterprise. The advantage of the planning department of the enterprise is the establishment of forms of planning documents and the distribution of the planned activities of operational units. Nevertheless, the main elements of the strategy (especially financial indicators) are somehow developed by top management. When planning "top down" (typical for enterprises specialized in the production of special products), the basic information, tasks of all departments and key strategies are formed at the enterprise level as a whole and serve as a guiding line for the operational units. The latter create, at best, medium-term plans for their own development. Interactive planning (the most common at present) involves something in between the two schemes described above. In this case, ideas are formed in the process of interaction between top management, the planning department of the enterprise and its operational units. Top management indicates the goals and directions of the enterprise. Strategies are drawn up in the process of vertical interaction according to specially developed procedures. Separate strategies that cannot be assigned to any one unit are produced by the planning department or the development department and are implemented at the level of the enterprise as a whole. Based on his practical experience, D. Hussey identified a number of questions, the answers to which will allow you to check for possible elementary errors in the strategic plan. Thus, it can be concluded that creating an opportunity for an enterprise (firm) to achieve the necessary advantage over other competitors through the use of the most effective means is the most important task of strategic planning in a market environment. In order for a company to be able to establish its own long-term competitive development cycle, it should grow faster than the potential of its main competitors will increase. The potential of an enterprise is defined as a set of indicators or factors that characterize its strength, capabilities, reserves, means, sources, abilities, resources and many other production reserves that can be used in economic activity. The potential of any enterprise has the greatest impact both on the final results of any of its activities, and on the limits of economic growth and structural development of the entire organization. The choice of direction or strategy for developing the potential of an enterprise depends mainly on the composition, structure and quality of available economic resources, the level of competitiveness of the work performed and services, the current market position and future goals, for example: to become a leader, to gain a foothold among competitors, to avoid bankruptcy.
Links to sources 1. Parakhina V. N., Maksimenko L. S., Panasenko S. V. Strategic management: a textbook [for universities] // 4th ed., Ster. M .: KNORUS, 2012. 496 p. 2.BayazitovT. Strategy: certain aspects of formulation and application [Electronic resource]
Access mode: http://www.intalev.ru/index.php?id=727 [Date of access: 02.07.16] 3. Petrova A. N. Strategic management: a textbook for universities // .5th ed. Peter, 2013. 368 p.4. Pipko E.G. The content of planning in the system of strategic management // Modern entrepreneurship: socio-economic dimension / ed. O.I. Kirikov. Book 5. Voronezh: Voronezh State Pedagogical University, 2012. S. 19325. KruglovaN. Yu. Strategic management [Text]: a textbook for universities //–2nd ed., revised. M .: Higher education, 2013. 492 p. 6. Rezvyakov A. V. Strategic indicative planning in the management system of the socio-economic development of the region. dis. for a job. scientist step. cand. economy Sciences /A.V. Rezvyakov. -Kursk, 2014. -22 p.
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Introduction
1. Intra-company planning as the most important function of Management
1.1. The role of planning in an organization. Types of plans
1.2. Features of planning in market conditions
2. Strategic planning
2.1. The concept, purpose and characteristics of the strategic planning process
3. Tactical planning
3.1. Concept, purpose, main stages of tactical planning
Conclusion
Bibliography
Introduction
Experience shows that organizations that plan their activities operate more successfully than organizations that do not plan their activities. In an organization using planning, there is an increase in the ratio of profit to the volume of sales, an expansion of the scope of activities, an increase in the degree of satisfaction with the work of specialists and workers.
Most large Russian enterprises have a long history of socialist planning. The practice of this planning had negative consequences, primarily related to the restriction of freedom of planning and freedom of action. Russian economic reforms paved the way for the economic freedom of enterprises. As a result, having felt the air of freedom, many partially or even completely tried to free themselves from the "fetters" of planning. However, the improvisation of activities did not lead to optimal results. Having formed, many small businesses did not make a single business transaction. Today, approximately one third of registered small and medium-sized enterprises are not economically functioning. If we talk about large enterprises, then a huge number of them are in a state of insolvency. There are many reasons for this state, but among them is the lack of qualified planning.
But still, increasing competition, the emergence of new markets, including financial markets, and financial stabilization measures carried out in our country lead to the fact that enterprises are forced to develop competitive strategies and plans.
What is planning?
Planning is one of the economic methods of management, acting as the main means of using economic laws in the process of managing. Planning serves to prepare decision making.
1. Intra-company planning as the most important management function
The content of intra-company planning as a function of managing a large industrial firm consists in a reasonable determination of the main directions and proportions of the development of production, taking into account the material sources of its support and market demand. The essence of planning is manifested in the specification of the development goals of the entire company and each unit separately for a specified period; determination of economic tasks, means of achieving them, timing and sequence of implementation; identification of material, labor and financial resources necessary to solve the tasks.
Thus, the purpose of planning as a management function is to take into account in advance, if possible, all internal and external factors that provide more favorable conditions for the normal functioning and development of enterprises that are part of the firm. It provides for the development of a set of measures that determine the sequence of achieving specific goals, taking into account the possibilities for the most efficient use of resources by each production unit and the entire company. Therefore, planning is designed to provide interconnection between the individual structural divisions of the company, including the entire technological chain: research and development, production and marketing. This activity is based on the identification and forecasting of consumer demand, analysis and assessment of available resources and prospects for the development of the economic situation. Hence the need to link planning with marketing and control in order to constantly adjust production and sales figures following changes in market demand. The higher the degree of monopolization of the market, the more accurately TNCs can determine its size and influence its development.
The need for planning in modern multinational corporations stems from the enormous size of the socialization of production carried out on an international scale; specialization and co-operation of production within the vast economic complexes of industrial firms; the presence of numerous structural divisions within the company; close intercompany ties with suppliers of raw materials, semi-finished products, components included in a single technological process, as well as from the requirements of scientific and technological progress - to quickly take into account and master the latest achievements of science and technology. In the same direction, there is such a factor as the desire of TNCs to subjugate the market, to increase their influence on the formation of consumer market demand.
The development of planning is directly related to the growing trend towards centralization in the management of TNCs and is designed to link the activities of all departments, subordinating it to a single development strategy. Intra-company planning within the framework of TNCs covers both current and long-term planning, carried out in the form of forecasting and programming.
If long-term planning is designed to determine the general strategic goals and directions for the development of the company, the resources necessary for this and the stages of solving the tasks set, then the current plans developed on its basis are focused on the actual achievement of the intended goals based on the specific conditions and market conditions at each given stage of development. Therefore, the current plans complement, develop and correct the promising directions of development, taking into account the specific situation.
Depending on the content, goals and objectives, the following forms of planning and types of plans can be distinguished:
Forms of planning depending on the duration of the planning period:
long-term planning (forecasting);
medium-term planning;
current (budget, operational) planning.
1.1. The role of planning in an organization. Types of plans
From a general economic point of view, planning is a mechanism that, in intra-company activity (within a corporation), is to a large extent capable of replacing prices and the market. Within the framework of a market system, prices are the main coordinator of the actions of its participants. It is prices that determine the volumes and methods of production and consumption of goods that are beneficial for sellers and buyers. The enterprise, as a participant in the market system, is forced to obey the price mechanism, the law of supply and demand, since it cannot eliminate their effect. However, in the internal environment of each economic unit, the price mechanism is replaced by conscious actions and rational decisions of entrepreneurs and managers. Hence the internal nature of the firm is based on a system of planned decisions.
The success of the entrepreneurial activity of an organization (enterprises, firms, companies) is predetermined primarily by how carefully thought out and defined the goals of the business and the means to achieve them. Planning is especially important for optimizing decisions, as it implies a systematic approach to work. Making the right management decisions, ensuring their effectiveness in market conditions is impossible without the use of planning. It is no coincidence that planning is considered one of the key functions of management. Planning acts as a set of actions, such as research, analysis and others carried out in order to determine a set of decisions aimed at achieving the goals set by the organization.
The main task of planning is to, as far as possible under given conditions, find the optimal solution to the problems facing the organization. The manager plans because he must anticipate and act ahead of time. This will avoid many mistakes and make better use of the available opportunities.
With the help of planning, uncertainty is eliminated, the goals facing the organization, measures to achieve them are more clearly defined; conditions are created for the identification and development of a creative element in management; errors can be avoided in future work; make the most of competitive advantages to prevent possible errors. Planning helps to track new trends in the development of the market, its innovative tools and use them in their activities; reduce the impact of weak points, shortcomings in the activities of the enterprise; take timely protective measures against different kinds risks; evaluate the results of the production and commercial activities of the organization more accurately and on a larger scale; anticipate and act in the upcoming market situation.
The value of planning for business is also determined by the fact that it: opens up the possibility of finding management solutions for using favorable conditions in the future; clarifies and clarifies emerging problems, which helps to avoid erroneous decisions; orients managers to the implementation of their own management decisions in their future work; forms the basis for the search and implementation of solutions that ensure the coordination of actions in the organization; creates prerequisites for improving the training and quality of work of managers; expands the possibilities in providing the management of the enterprise with the necessary information; contributes to a more rational distribution of resources; significantly facilitates and improves control over the decisions made in the organization.
In general, the presence of a detailed plan allows you to actively develop entrepreneurship, attract investors, partners and credit resources, and provides an objective basis for choosing the best solutions.
Types of plans:
1) depending on the content of economic activity - R&D plans; production; sales; logistics; financial plan;
2) depending on the organizational structure of the company - plans for the production department; subsidiary plans.
The level and quality of planning are determined by the following most important conditions: the competence of the company's management at all levels of management; qualifications of specialists working in functional units; the presence of an information base and the provision of computer equipment.
There are some characteristic features of planning depending on the goals:
in American companies, the main thing is the unification of the strategies of all departments and the allocation of resources;
in English companies - orientation to the distribution of resources;
in Japanese companies - focus on innovation and improving the quality of solutions.
Planning involves: a reasonable choice of goals; policy definition; development of measures and activities (mode of action); methods for achieving goals; providing a basis for subsequent long-term decisions.
Planning ends before the start of actions to implement the plan. Planning is the initial stage of management, but it is not the only act, but a process that continues until the completion of the planned set of operations.
Planning is aimed at the optimal use of the company's capabilities, including best use all types of resources and the prevention of erroneous actions that could lead to a decrease in the efficiency of the company.
Planning includes determining:
final and intermediate goals;
tasks, the solution of which is necessary to achieve the goals;
means and ways to solve them;
the required resources, their sources and method of distribution.
Depending on the direction and nature of the tasks to be solved, there are three types of planning: strategic, or long-term; mid-term; tactical, or current (budget).
Strategic planning consists mainly in determining the main goals of the company's activities and is focused on determining the intended final results, taking into account the means and methods for achieving the goals and providing the necessary resources. At the same time, new opportunities for the company are also developed, for example, expanding production capacity by building new plants or acquiring equipment, changing the profile of an enterprise or radically changing technology. Strategic planning covers a period of 10-15 years, has long-term consequences, affects the functioning of the entire management system and is based on huge resources.
Current planning is to determine intermediate goals on the way to achieving strategic goals and objectives. At the same time, the means and methods for solving problems, the use of resources, and the introduction of new technology are developed in detail.
TNCs in modern conditions began to pay more and more attention to the development of long-term planning as a tool for centralized management. Such planning, covering a period of 10 to 20 years (usually 10-12 years), provides for the development of general principles for the company's orientation to the future (development concept); determines the strategic direction and development programs, the content and sequence of implementation of the most important measures that ensure the achievement of the goals set. Forward planning helps to make decisions on the complex problems of the company's activities on an international scale:
determination of directions and sizes of investments and sources of their financing;
introduction of technical innovations and progressive technology;
diversification of production and renewal of products;
forms of foreign investment in terms of the acquisition of new enterprises;
improvement of the management organization for individual divisions and personnel policy.
Since the assessment of prospects in the conditions of the spontaneous development of the world market is extremely uncertain, long-term planning cannot orient the company to achieve quantitative indicators and therefore is usually limited to the development of only the most important qualitative characteristics specified in programs or forecasts. Through them, the coordination of promising areas of development of all departments of the company is carried out, taking into account their needs and resources. On the basis of the program, medium-term plans are being developed, which already contain not only qualitative characteristics, but also quantitative indicators, detailed and concretized in terms of the choice of means to achieve the goals outlined in the framework of long-term planning.
In the long-term planning system, depending on the methodology and goals, they usually distinguish between long-term planning and strategic planning.
The long-term planning system uses the extrapolation method, i.e. using the results of indicators of the past period and, on the basis of setting optimistic goals, spreading somewhat inflated indicators for the future period. Here, the expectation is that the future will be better than the past.
In the system of long-term planning, goals are translated into action programs, tactical plans and budgets (annual plan), profit plans developed for each of the main divisions of the company. Then the programs, tactical plans and budgets are carried out by these units and the deviations of the actual indicators from the planned ones are determined.
Long-term planning systems are used in 70-80% of the largest Japanese corporations, where planning is organized as follows:
* 5-10 key strategies are selected and a long-term development policy is formed around them;
* at the same time, medium-term plans are being adopted to combine strategies into a single whole and link with the allocation of resources;
* top management defines goals for each unit, and the latter develops quantitative plans to achieve these goals using the "bottom-up" method.
Long-range planning scheme
The purpose of strategic planning is to give a comprehensive scientific justification for the problems that the company may face in the coming period, and on this basis to develop indicators of the company's development for the planning period.
The basis for developing a strategic plan is:
* analysis of the development prospects of the company, whose task is to identify trends and factors influencing the development of relevant trends;
* analysis of positions in the competition, the task of which is to determine how competitive the company's products are in different markets and what the company can do to improve performance in specific areas if it follows optimal strategies in all activities;
* choice of strategy based on an analysis of the prospects for the development of the company in different types activities and prioritization of specific activities in terms of their effectiveness and resource availability;
* analysis of directions for diversification of activities, the search for new more efficient activities and the definition of expected results.
When choosing a strategy, it must be borne in mind that new strategies, both in traditional industries and in new areas of business, must correspond to the accumulated potential of the firm.
As can be seen from the diagram, perspectives and goals are linked to develop a strategy. Current programs guide operational units in their daily work to ensure ongoing profitability; strategic programs and budgets lay the foundation for future profitability, which requires the creation of an execution system built on project management.
The strategic plan is expressed by the strategy of the corporation. It contains decisions regarding areas of activity and the choice of new directions. It can list major projects and set their priorities. It is developed at the level of senior management. Usually the strategic plan does not contain quantitative indicators.
Medium-term plans most often cover a five-year period as the most appropriate period for the renewal of the production apparatus and product range. They formulate the main tasks for a specified period, for example, the production strategy of the company as a whole and each division (reconstruction and expansion of production capacities, development of new products and expansion of the range); sales strategy (the structure of the sales network and its development, the degree of control over the market and the introduction to new markets, the implementation of activities that promote sales expansion); financial strategy (volumes and directions of investments, sources of financing, structure of the securities portfolio); personnel policy (composition and structure of personnel, their training and use); determination of the volume and structure of the necessary resources and forms of material and technical supply, taking into account intra-company specialization and cooperative production. Medium-term plans provide for the development in a certain sequence of measures aimed at achieving the goals outlined by the long-term development program.
The medium-term plan usually contains quantitative indicators, including in relation to the allocation of resources. It provides details by product, investment and funding sources. It is developed in production departments.
Current planning is carried out through detailed development (usually for one year) of operational plans for the company as a whole and its individual divisions on an international scale, in particular, marketing programs, research plans, production plans, logistics. The main links of the current production plan are calendar plans (monthly, quarterly, semi-annual), which are a detailed specification of the goals and objectives set by the long-term and medium-term plans. Production schedules are compiled on the basis of information about the availability of orders, their availability of material resources, the degree of utilization of production capacities and their use, taking into account the stipulated deadlines for the execution of each order. Production schedules include expenditures for the reconstruction of existing facilities, replacement of equipment, construction of new enterprises, and training of the workforce. Sales and service plans include product exports, overseas licensing, technical services and maintenance.
Operational plans are implemented through a system of budgets or financial plans, which are usually drawn up for a year or a shorter period for each individual unit - profit center, and then consolidated into a single budget, or financial plan of the company. The budget is formed on the basis of the sales forecast (mainly the supply of orders and the allocation of resources), which is necessary to achieve the financial indicators planned by the plan (for example, such as sales volume, net income and rate of return on invested capital). When compiling it, first of all, indicators developed in long-term or operational plans are taken into account. Through the budget, the interconnection between long-term, current and other types of planning is carried out.
The firm's budget is an expression of the operating plan in terms of monetary units; it seems to link the operational and financial plans, making it possible to foresee the final result of the activity, i.e. size and rate of return. Budgeting is usually carried out by different services or special sectors. Special committees, consisting of top administrators, consider the already prepared budget. The head of the firm approves the budget and is responsible for the effectiveness of the methods for its development. The basis of the budget is the sales forecast and the calculation of production costs. Based on the sales forecast, plans for production, supply, stocks, research, capital investment, financing, and cash receipts are drawn up. The budget of the company covers all aspects of its activities and is based on the operational plans of the departments and the enterprise of the company, therefore it also serves as a means of coordinating the work of all parts of the company.
1.2. Features of planning in market conditions
The methodological feature of planning within the framework of TNCs is the widespread use of the program-target approach, which provides for the need to accurately formulate the goals of the company and link them with resources. Usually, goals are developed for a long-term perspective and determine the main directions of the company's development program. At the same time, clear tasks are formulated for each division of the company and its place and role in achieving common goals are determined. In particular, not only the total amount of profit and the rate of return are determined, but also various regulatory indicators related to the implementation of the functions of marketing, financing, etc.
Thus, in the plans developed by firms, both strategic and current, the main tasks of economic policy for a certain period and specific ways to solve them are formed: the necessary material and financial resources are determined, as well as methods for their most effective use, taking into account the prevailing conditions on an international scale. . In other words, the planning methodology is focused on ensuring the linkage of goals with resources, determining the sequence of means and methods for the most effective achievement of the set goals and the resulting tasks within each business unit of the entire company.
Organizationally, the process of central planning in most of the largest firms is carried out "top down". This means that planning directives are developed at the highest level of management. Here the goals, main directions and main economic tasks of the development of the company are determined and attempts are made to interconnect all the links of the production mechanism. Then, at lower levels of management, these goals and objectives are specified in relation to the activities of each division, down to a subsidiary and a separate plant. This is purely technological planning, which establishes the proportions and volumes of production for all types of products. After the appropriate coordination of plan targets with specific executors, the plans are finally approved by the top management. Such an organization of the planning process indicates the centralization of the most important decisions in the field of planning in the top management of the parent company and at the same time provides a certain independence for production departments and subsidiaries in the development of calendar plans based on indicators common to the entire company.
In order to be able to correctly determine the goals and objectives for each division, the top management of a TNC must have data on the state and development of each specific market and each individual product on the market.
This data is usually contained in the marketing programs that form the basis for the development of the plan in all departments.
The apparatus that carries out intra-company planning includes functional units at different levels of management. The highest level of the planning system is made up of committees under the board of directors. In some companies these are planning committees, in others they are development committees or central development departments. They, as a rule, include representatives of the top management of the company, who prepare decisions on the most important issues strategies and policies of the company, perform technical, coordinating and analytical functions, participate in the formulation of the main goals and objectives of the company for the long term. The recommendations prepared by them are submitted for consideration by the board of directors and, after approval, are included in the form of specific measures in the company's long-term development plan. It can be said that at this level of management, initial provisions are formed for the optimal distribution of intra-company resources during a certain planning period.
The next link in the planning apparatus is the central planning service, whose functions include developing long-term and current plans, coordinating them with production departments or subsidiaries, adjusting and clarifying planned indicators, and monitoring their implementation. She draws up forms of planning documentation, advises senior management on planning issues. The central planning service carries out its activities in close contact with other departments, as well as with planning services in production departments, receiving from them all the information necessary for the development of plans.
Central planning services are available in almost all large companies. However, organizationally and structurally, the central service can be built in different ways and differ in the nature of the functions performed. In some companies, the functions of the central planning service are performed by planning departments that are part of other central services. In production departments, the planning apparatus is represented by the planning department, whose functions include drawing up monthly, quarterly, semi-annual and annual, summary and current production plans for the department as a whole. Usually, these plans summarize the indicators received from each unit. In subsidiaries or individual plants, planning functions are usually performed by operational and current planning and control services, whose task is to draw up plans for each shift, day, week, month, quarter, half year, year, taking into account the restrictions that are determined by corporate goals ( this applies primarily to capital investments, since production departments, for example, in American companies, usually have the right to make independent decisions on capital investments in an amount not exceeding $ 100,000).
Since in the production department the functions of operational planning and operational control over the implementation of the plan are concentrated in one body, this allows you to timely identify deviations from the plan and make adjustments to the planning process.
The organization of the planning process in different TNCs has its own distinctive features, due to differences in the organizational structure of management in general and the nature of the production and technical process. These differences relate both to the timing of planning periods, and the planning procedure itself and the functions of individual units involved in planning issues. When developing forward plans, firms often set different planning periods for the parent company and for its overseas affiliates and subsidiaries, as well as different periods for different types of plans (for example, a 15-year R&D plan and a seven-year strategic plan).
Practice shows that in American companies plans are drawn up, as a rule, in production departments. According to some data, about 2/3 of American companies plan "from the bottom up", 1/3 - based on the interaction of all levels of management, and there is no "top-down" planning at all.
The plans developed by the operational units are reviewed by the central planning service, the labor relations service and then by the board of governors under the chief administrator. Once approved by the board of directors, the plan takes on a directive character.
In English companies, the formation of plans in the production departments also predominates, where the initial plan is prepared. The planning department (service) of the company develops directives that go to the linear planning department (production department) to take into account its performance when drawing up the original plan. Here, just as in American companies, the planning is based on the principle "the contractor plans."
The process of making strategic decisions in Japanese companies is carried out either "from top to bottom" or is interconnected by higher and lower levels of management.
In Japanese companies, innovation is more often introduced from the top down. At the same time, the tactics of operational activities are usually developed by the personnel management department, and decision-making is of a group nature.
The central planning department in Japanese companies plays a much more important role than in American ones. It is usually the planning department that develops the plan, with some input from the line planning departments and the HR department. The plan drawn up by the planning department is reviewed by the management committee, and the final decision is made by the management committee and the president, who is also the general manager. In Japanese companies, this is largely due to the fact that their degree of diversification is less than that of American and British companies.
The management committee in Japanese companies is the most important group decision-making body, it is at the highest level of the organizational structure. Characteristically, in Japanese companies, strategic plans are rarely submitted to the Board of Directors for consideration.
Since most of the board members are permanent employees of Japanese companies, duplication of decisions made by the management committee does not seem necessary.
Unlike Japanese companies in American and British companies, the final decisions are made by the board of directors or the managing director (chief administrator). The role of committees in making final decisions on planning and strategy development is insignificant. However, they usually have 1/3 of the boards of directors made up of people who do not work in the corporation, so their involvement in solving strategic issues is necessary, since capital investments, especially significant ones, directly affect the interests of shareholders, and risky investment proposals at this stage can be rejected.
Summing up what has been said, we can conclude that intra-company planning in TNCs is turning into a special sphere of economic activity, objectively necessary at the current level of socialization of production.
2. Strategic planning
The market, influencing the activities of the company, requires not just planning, but strategic planning, which involves the development and implementation of a strategy in relation to the market, to competitors, to buyers.
The theory of strategic planning was developed in the 60s. This was the beginning of a new stage in the development of the theory of management and planning.
Strategic planning, which has come to replace long-term planning, is different from it. The main difference is in the interpretation of the future. The long-range planning system assumes that the future can be predicted based on existing growth trends. Leaders of organizations usually proceed from the fact that in the future the results of activities will improve. Therefore, when planning, optimistic goals are set.
The strategic planning system does not assume that the future will be better than the past and that it can be studied by projecting established trends into subsequent periods. Therefore, in strategic planning, an important place is given to the analysis of the prospects of the organization, trends, dangers, opportunities that can change the current and current trends are clarified.
Another difference is that the strategy is not an indicator of time, but the direction of development. The strategy includes the entire set of global ideas for the development of the company, and not only focuses on a specific period.
Strategy planning establishes the general direction that will ensure the growth and direction of the organization.
The main principle of strategic planning is adaptability, which implies the existence of an alternative plan and strategy to which the organization is moving. It is the organization's response to changes in its external environment.
2.1. The concept, purpose and characteristics of the strategic planning process
The term "strategy" came to business from the military field. According to the military, strategy is a part of military art that determines the general nature of armed struggle with the aim of achieving victory. The great strategist of antiquity was Alexander the Great.
A strategy is a set of rules that guide an organization when making management decisions. At the same time, the strategy is seen as an overall comprehensive plan designed to ensure the implementation of the mission and achievement of the goals of the organization.
We give the following definition of a strategy.
Strategy is the optimal set of rules and techniques that allow you to realize the mission, achieve the global and local goals of the company.
What is the organization's mission?
The mission of the company determines its status, declares the principles of its functioning, statements, the actual intentions of its leaders. This is the most general purpose of the enterprise, expressing the reason for its existence. It expresses the organization's aspirations for the future, showing where efforts will be directed and what values will be prioritized.
* description of products (services) offered by the organization;
* definition of the main consumers, clients, users;
* goals of the organization - survival, growth, profitability, etc.;
* technology: characteristics of equipment, technological processes, innovations in technology;
* philosophy: basic views and values of the organization are expressed;
* an internal concept, which describes the company's own opinion about itself, the sources of its strength, survival factors;
* the external image of the company, its image, emphasizing the economic and social responsibility of the company to partners, consumers, society as a whole.
The mission should not include profit as a goal, since profit is an internal issue (albeit a very important one). At one time, G. Ford defined the mission of the Ford company as providing people with cheap transport. He noted that in this case, the profit is unlikely to pass by. Here are some examples of mission statements:
1) Investment company,
We are ready to invest capital in any area that works profitably and has the potential for further growth.
2) Mini milk processing plant,
Our goal is to provide a solution to the problems of selling milk to farmers, private traders, to stimulate the creation and development of farms and private households.
Our goal is to provide the population with high-quality, diverse, affordable products.
The significance of the mission for the activities of the enterprise is special. It lies in the fact that the mission:
* is the basis for all planned decisions of the company, for further definition of its goals and objectives;
* helps to focus the efforts of employees in the chosen direction, unites their actions;
* provides understanding and support among external participants of the organization (social environment). When defining the mission, the period within which it must be implemented must be determined. The deadline for completing the mission must be visible so that the current generation of workers can see the results of their work.
The further process of strategic planning is shown in the diagram.
Scheme. Stages of the strategic planning process
This diagram shows that the planning process consists of successive stages.
If the beginning of strategic planning is the choice of the mission, then the second place is given to setting goals. They are established within the mission and in its development. They express individual specific activities of the organization; underpin any business decision; serve as a guide for the formation of specific planned indicators.
The requirements for goals are:
* concreteness and measurability; goals should reflect specific key aspects of production and have a specific numerical expression;
* orientation in time; all goals must be painted along the lines;
* achievable: goals should be realistic;
* Compatibility of the goals of the company as a whole and the goals of its divisions. Otherwise, you get the effect of a swan, cancer and pike.
Having defined strategic goals, it is important to prioritize them, to rank them, because there is no way to solve all problems at the same time.
One of the most common reasons for planning failure is the lack of clear and thoughtful goal setting.
The main task in strategic planning is the organization's adaptation to the external environment. A necessary condition for successful actions to adapt the organization to the external environment is a clear knowledge of the situation, its opportunities and the dangers that lie in it. Realization of the organization's goals is also impossible without the concentration of resources and efforts in the most important areas, without effective internal coordination of activities. To do this, you need to clearly understand the situation within the organization, its strengths and weaknesses and active forces.
When analyzing the external environment, first of all, attention is paid to changes that may affect the strategy of the organization, as well as factors that, on the one hand, can create a serious danger to the organization's activities, and on the other hand, open up additional opportunities for it. Usually economic, technological, competitive, market, social, political, international factors are considered.
At the same time, with the help of special coefficients, the comparative significance of the factors is determined.
After conducting an analysis of the external environment and having received data on factors that pose a danger or open up new opportunities, management moves on to an analysis of the internal environment. This analysis assesses whether the firm has the internal strength to take advantage of opportunities and what internal weaknesses may complicate future challenges from external threats. The analysis is based on a management survey of the following functional areas;
* marketing;
* Finance (accounting);
* production;
* personnel;
* organizational culture and image of the organization, As a result, management identifies those areas that require immediate intervention; those that can be relied upon in the development and implementation of the organization's strategy.
After assessing the dangers and opportunities, the company, using the methods of strategic analysis, formulates various options for the strategy, reveals the relative position of each alternative direction of activity. Then the best strategy is selected depending on the mission and goals of the company, development prospects, internal culture, environmental factors, acceptable level of risk, and develops the final version of the company's strategic plan.
The following strategies are possible;
* limited growth;
* reduction;
* various combinations of these three alternatives.
A limited growth strategy is a strategic alternative that is characterized by goals set at the level of past performance, adjusted for inflation. Most often used in well-developed industries with a static external environment.
Growth strategy - a strategy in which the level of short-term and long-term goals of each year is significantly increased in relation to the previous year.
The reduction strategy is a strategic alternative, which is characterized by the establishment of the achieved level or the exclusion of certain activities.
A combination of different strategies is usually used by firms active in different industries.
At subsequent stages, medium-term plans and programs are prepared.
Based on the strategic plan and the results of medium-term planning, annual operational plans and projects are developed.
In conclusion, the prerequisites for the formation of new planned programs are determined, based on what the organization has managed to achieve in the implementation of plans and what has not.
In general, planning is a closed loop with a direct link (strategy development - implementation and control) and feedback (accounting for the results of implementation - plan refinement).
Strategic planning makes sense only when it is implemented in the management of the organization, when the organization links its actions with its plans and allocates the resources necessary for their implementation. In other words, the organization must develop a clear program of action and establish a process for implementing the actual plan.
What is a program of action?
This is a program that includes the purpose, timing and procedure for implementing activities, guidance for their implementation, total need for funds, personnel and resources, additional need for resources and equipment, expected profit from the implementation of the program, financial results. The calculations are based on the goals of the strategy, and they are corrected in accordance with the factors identified in the course of long-term planning that can have a positive or negative impact.
The company's strategy is implemented in operational plans. The short-term plans of the organization, developed on the basis of strategic plans, are the tactics of the organization, reflecting the short-term goals, consistent with its long-term goals. Tactics usually cover the short and medium term.
As a rule, tactics are developed by the middle management of the organization.
The operational plan characterizes the company's activities in a competitive environment, reflects its behavior in the market, provides for measures to produce products and profitability of business operations, establishes a framework for developing a labor incentive system. In the operational plan, not only goals and objectives are specified, but it is also clearly fixed how the tasks will be solved and who is specifically responsible for this. The operational plan is a detailed and comprehensive document. Its content includes:
* corporate strategy;
* setting financial goals reflected in the structure of the balance sheet and financial statements;
* strategic goals;
* detailed action plan;
* human resource development plan.
An integral part of operational planning is a business plan, a financial plan, a marketing plan, a production plan, and a procurement plan.
The operational plans of the divisions include an assessment of the state of the business, key financial objectives, the strategy of the division, requirements for support from other divisions, and an action plan.
The operational plan of the unit consists of sections.
The first section sets out the main economic and financial forecasts based on the study of the external environment, markets and competition. The economic, legal, political and social factors that can have a positive and negative impact on the company's actions in the planning period are clarified. Each unit is obliged to find opportunities for normal activity even in the face of restrictions and barriers. These opportunities should be reflected in the operational plan.
The second section of the operational plan sets out the status of the unit, identifies their strengths and weaknesses, and vulnerability. Labor productivity, staffing are determined; personnel and management personnel are evaluated.
In the operational plan of the unit, the requirements for its support from other services and divisions of the company are also formulated.
The planning department coordinates the work on organizing support. It sends the necessary information to the relevant interdependent departments.
The final section of the operational plan contains a program for the implementation of the plan: specific tasks, dates for their implementation, those responsible for the implementation of tasks, forms for reporting on the progress of work, conditions for the implementation of the plan and possible obstacles.
The results of the implementation of tactical plans can appear quite quickly. Evaluation of the progress of the plan is carried out monthly or quarterly.
Thus, tactical plans can be quickly evaluated and, based on the results of the evaluation, appropriate adjustments can be made to the actions and future plans of the organization.
A widely used technology for both strategic and tactical planning is program-target planning. It lies in the fact that when developing a target program, its composition, main activities and subprograms are determined. After that, the goals and objectives of the main and supporting subprograms are formulated. Then, sequentially by hierarchical levels, a tree of goals is formed.
For example, building a program according to a four-level principle provides for: the program as a whole (general goals), subprograms, blocks of activities, individual activities (lower level of the goal tree).
Each event must meet the goals of a higher hierarchical level and be financially supported. For each event, the costs and expected effect must be determined.
The main feature of targeted programs is that each specific event plays a certain role in achieving a specific goal that ensures the achievement of the general goals of the program.
In addition to strategic and tactical plans, when managing an organization, its policy should be defined - a general guide for actions and decisions aimed at achieving goals,
The policy of the organization is determined by top management for a long period. It contains the main methods and mechanisms for achieving goals, establishes a policy in the field of technological development and marketing, and requirements for personnel. At the same time, politics is not a rigid recommendation of decisions to be made, leaving freedom of choice of actions, protecting against making short-sighted decisions,
So, we have considered the model of strategic planning. In practice, various strategic planning schemes are used (Western, Eastern, American, Japanese).
In Japan, for example, the four-stage strategic planning model has become widespread.
Stage 1. Formation of prerequisites. Collection of information about the environment, activities of industry enterprises, competitors. Making forecasts for the future. Threat assessment from outside. Comparison of past performance and the current state of the firm.
Stage 2. Statement of problems. Determination of the company's growth rate (at least 10% per year). Forecast of results subject to maintaining the current policy. Determining the level of claims. Comparison, detection of gaps. Development of a strategy to close the gaps.
Stage 3. Development of a long-term strategy. The procedure includes three aspects: a) development of long-term goals; b) drawing up long-term projects; c) the adoption of a course of long-term policy.
Stage 4. Formulation of medium-term plans. Promotion of medium-term projects, linking them to resources. Preparation of product assortment plans. Preparation of development plans (production capacity, personnel, profit).
In Japan, of course, other models are also used. So, the Hitachi company adopted a five-stage model. At the first stage, information about the environment is collected and an analysis of the current state of the company is carried out. In the second, strategic problems are identified. In a certain sense, the model "company growth - market share" is used here. At the third stage, the goals of the company and its production policy are formed. The fourth stage is devoted to the development of branch plans: a plan for the sale of each product; production plan; a plan for expanding production capacity; personnel plan; profit plan. The fifth stage is the preparation of a document that embodies the future production strategy of the company.
However, all variations do not affect strategic ideas and views on the future. In the main, all the current schemes are similar: goal setting, assessment of the current state, choice of strategy, preparation and implementation of the plan.
As for the types of strategies, the following stand out:
* price leadership, in which the company tries to put itself at the head of the market by setting prices for products below those of competitors;
* differentiation, when a company achieves competitiveness by releasing a higher quality product;
* focus - concentration on a specific market segment.
Depending on its position in the market, a company may adopt one of several competitive strategies. The market leader strategy is used to maintain a leading position by expanding demand, protecting current market share, and expanding the market. The market challenge strategy is used by the company in second place to achieve leadership through price discounts, product upgrades, and selective promotion. The niche market strategy is used by a company that is interested in a small niche market that is more large companies cannot be seen or replaced.
Other strategies are also used.
In conclusion, it should be noted that the main condition for the effective functioning of strategic planning is the constant attention to it from top managers and the involvement of a wide range of employees in the development and implementation of strategies.
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Strategic planning is one of the functions of strategic management, which is the process of choosing the organization's goals and ways to achieve them. .
Strategic planning provides the basis 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 to assess the purpose and direction of the corporate enterprise. The strategic planning process provides a framework for managing the members of an organization.
The 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 should occur in the company in order for it to become competitive, what are its advantages, what tools does it need to be successful development. Until recently, strategic planning was the prerogative of large international concerns. However, the situation began to change, and, as surveys show, more and more companies representing medium-sized businesses are beginning to engage in strategic planning.
The process of strategic planning in a company consists of several stages:
- 1. Definition of the mission and goals of the organization.
- 2. Analysis of the environment, which includes the collection of information, analysis of the strengths and weaknesses of the company, as well as its potential opportunities based on the available external and internal information.
- 3. Choice of strategy.
- 4. Implementation of the strategy.
- 5. Evaluation and control of implementation.
Definition of the mission and goals of the organization. The objective function begins with the establishment of the mission of the enterprise, expressing the philosophy and meaning of its existence.
A mission is a conceptual intention to move in a certain direction. It usually details the status of the enterprise, describes the basic principles of its operation, the actual intentions of the management, and also defines the most important economic characteristics of the enterprise. The mission expresses the aspiration to the future, shows what the efforts of the organization will be directed to, what values will be priority in this case. Therefore, the mission should not depend on the current state of the enterprise, it should not reflect financial problems, etc. It is not customary in the mission to indicate profit as the main goal of creating an organization, although profit is the most important factor the functioning of the enterprise. The goal is to specify the mission in the organization in a form accessible to manage the process of their implementation. The main characteristics of the purpose of strategic planning is as follows:
- 1) a clear orientation to a certain time interval;
- 2) specificity and measurability;
- 3) consistency and consistency with other missions and resources;
- 4) targeting and controllability.
Based on the mission and goals of the existence of the organization, development strategies are built, and the policy of the organization is determined.
Strategic analysis or as it is also called "portfolio analysis" (in the case of a diversified company analysis) is the main element of strategic planning. It is noted in the literature that portfolio analysis acts as a strategic management tool, 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. The main method of portfolio analysis is the construction of two-dimensional matrices. With the help of such matrices, productions, departments, processes, products are compared according to the relevant criteria.
There are three approaches to the formation of matrices:
- 1. A tabular approach, in which the values of varying parameters increase as they move away from the column of the name of these parameters. In this case, the portfolio analysis is carried out from the upper left corner to the lower right.
- 2. The coordinate approach, in which the values of the variable parameters increase with distance from the point of intersection of the coordinates. Portfolio analysis here is conducted from the lower left corner to the upper right.
- 3. A logical approach, in which the portfolio is analyzed from the lower right corner to the upper left. Such a campaign is most widely used in foreign practice.
Environmental analysis is essential in the implementation of strategic analysis, because. its result is the receipt of information on the basis of which estimates are made regarding the current position of the enterprise in the market.
Strategic analysis of the environment involves the study of its three components:
- 1. Analysis of the external environment.
- 2. Analysis of the internal environment of the organization.
The external environment of an organization is understood as all the conditions and factors that arise in the environment, regardless of the activities of a particular company, but which have or may have an impact on its functioning and therefore require management decisions.
External environment of direct influence. The direct impact environment is also called the direct business environment of the organization. This environment forms such subjects of the environment that directly affect the activities of a particular organization. These include:
1. Suppliers. From the point of view of the systems approach, the organization is a mechanism for transforming inputs into outputs. The main types of inputs are materials, equipment, energy, capital and labor. Suppliers provide the input of these resources. Receiving resources from other countries can be more profitable in terms of prices, quality or quantity, but at the same time dangerously increase environmental factors such as exchange rate fluctuations or political instability. All suppliers can be divided into several groups - suppliers of materials, capital, labor resources.
Materials. Some organizations depend on a continuous flow of materials, that is, there is a dependence on prices, deadlines, rhythm, quality, etc. Moreover, this dependence has recently been increasing with the deepening of the division of labor and the development of cooperation. Firms are more and more focused on the primary purchase of components from partners, and only certain operations are performed on the firms themselves, and this is typical for both manufacturing and service firms. Therefore, we can talk about an increase in the strengthening of their dependence on suppliers in the future. At the same time, there are changes taking place in the relations between firms-buyers and firms-suppliers, based on the Japanese system of subcontracting, organization effective system supplies. At the same time, additional powers and responsibilities are transferred to suppliers, both in the field of design and production, which makes it possible to speak of supplier management.
Capital. To grow and prosper, a company needs not only suppliers of materials, but also capital. There are several potential investors: banks, federal loan programs, stockholders, and individuals who accept company bills or buy company bonds. As a rule, the better the company is doing, the higher its ability to negotiate with suppliers on favorable terms and receive the required amount of funds. Small businesses, especially venture capitals, are now experiencing great difficulty in obtaining the necessary funds.
Labor resources. Adequate provision of the workforce with the necessary specialties and qualifications is necessary for the implementation of tasks related to the achievement of the goals set, that is, for the effectiveness of the organization as such. Without people able to effectively use complex technology, capital and materials, all of the above is of little use. The development of a number of industries is currently constrained by the lack of the necessary specialists. Virtually every sector of the computer industry serves as an example, and this is especially true for firms that need highly skilled technicians, experienced programmers and systems designers.
- 2. Laws and government bodies. They form the legal restrictions and conditions for the functioning of the organization.
- 3. Consumers. Well-known specialist on management, Peter F. Drucker, speaking about the purpose of the organization, singled out, in his opinion, the only true purpose of the business - the creation of a consumer. This means the following: the very survival and justification of the existence of the organization depends on its ability to find a consumer of the results of its activities and satisfy its needs.
- 4. Competitors. The impact on the organization of such a factor as competition cannot be disputed. The management of each enterprise clearly understands that if the needs of consumers are not met as effectively as competitors do, the enterprise will not stay afloat for a long time. In many cases, competitors rather than consumers determine what kind of performance can be sold and what price can be asked.
- 5. Shareholders. Often they influence the policy of the organization, and in some cases, the current functioning.
Internal environment. The internal environment of an organization is that part of the overall environment that is within the organization. It has a permanent and most direct impact on the functioning of the organization.
The internal environment is analyzed in the following areas:
- 1. The goals of the organization are specific end states or the desired result that the organization seeks to achieve by carrying out its activities.
- 2. The structure of the organization is a logical relationship of management levels and functional areas, built in such a form that allows you to most effectively achieve the goals of the organization.
- 3. Tasks are prescribed work, a series of works or a piece of work that must be completed in a predetermined manner within a predetermined timeframe.
- 4. Technology is a means of converting raw materials into desired products or services. Technology, as a factor that strongly affects organizational effectiveness, requires careful study and classification. There are several ways to classify, I will describe the classification according to Thompson and according to Woodward.
The classification of technology by Joan Woodward is the most famous. It distinguishes three categories of technologies:
Single, small-scale or individual production, where only one product is manufactured at a time.
Mass or large-scale production is used in the manufacture of a large number of products that are identical to each other or very similar.
Continuous production uses automated equipment that runs around the clock to continuously produce the same product in large volumes. Examples are oil refining, the operation of power plants.
The sociologist and organizational theorist James Thompson proposes three other categories of technology that do not contradict the previous three:
- 1) multi-link technologies, characterized by a series of independent tasks that must be performed sequentially. A typical pattern is mass production assembly lines;
- 2) intermediary technologies are characterized by the meetings of groups of people, such as clients or buyers, who are or want to be interdependent;
- 3) intensive technology is characterized by the use of special techniques, skills or services in order to make certain changes in a particular material entering production.
- 5. People are the backbone of any organization. There is no organization without people. People in an organization create its product, they shape the culture of the organization, its internal climate, they determine what the organization is.
Choice of strategy. Strategic choice involves the formation of alternative directions for the development of the organization, their evaluation and selection of the best strategic alternative for implementation. In this case, special tools are used, including quantitative forecasting methods, development of future development scenarios, portfolio analysis (BCG matrix, McKinsey matrix, SWOT analysis, etc.). A strategy is a long-term, qualitatively defined direction in the development of an organization, relating to the scope, means and form of its activities, the system of relationships within the organization, as well as the position of the organization in the environment, leading the organization to its goals.
The strategy is chosen taking into account:
- 1) the competitive position of the company in this strategic business area;
- 2) prospects for the development of the most strategic economic zone;
- 3) in some cases, taking into account the technology that the company has.
The implementation of the strategy 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, which can be considered as medium-term and short-term plans for the implementation of the strategy. The main components of the successful implementation of the strategy:
- - the goals 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 involve them in the process of implementing the strategy;
- - the management ensures in a timely manner the receipt of all the resources necessary for the implementation of the strategy, forms a plan for the implementation 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 consists in answering the question: will the chosen strategy lead to the company achieving its goals? If the strategy meets the goals 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 embodied in the strategy.
The results of the implementation of the strategy are evaluated, and with the help of the feedback system, the organization's activities are monitored, during which the previous stages can be adjusted. I. Ansoff in his book "Strategic Management" formulates the following principles of strategic control:
- 1. Due to the uncertainty and inaccuracy of calculations, a strategic project can easily turn into an empty undertaking. This should not be allowed, the costs should lead to the planned results. But in contrast to the usual practice of production control, the focus should be on cost recovery, and not on budget control.
- 2. At each milestone, it is necessary to make an assessment of cost recovery during the life cycle of a new product. As long as the payback exceeds control level the project should continue. When it falls below this level, other possibilities should be considered, including terminating the project.
Top management functions in the strategic planning process:
- 1. In-depth study of the state of the environment, goals and development of strategies: the final understanding of the essence of certain goals and a wider communication of the ideas of strategies and the meaning of goals to the employees of the company.
- 2. Making decisions on the efficiency of using the resources available to the company.
- 3. Decisions about the organizational structure.
- 4. Carrying out the necessary changes in the company.
- 5. Revision of the strategy implementation plan in case of unforeseen circumstances.
Changes that are made in the process of executing strategies are called strategic changes. The restructuring of the organization can be in such forms as radical transformation, moderate transformation, ordinary changes and minor changes. quo of the new state. Change styles: competitive, self-eliminating, compromise, accommodation, cooperation. The task of control is to find out whether the implementation of the strategy will lead to the achievement of goals.
Strategic planning sets promising directions for the development of the enterprise, determines the main types of its activities, allows you to link marketing, design, production and financial activities into a single system. The strategic plan ensures the adaptation of the enterprise to the external environment, to the allocation of resources and internal coordination of activities in order to identify strengths and weaknesses. The strategic plan for large enterprises is usually long-term. But the time period of the strategic plan for different enterprises may be different, and what is long-term for one enterprise may be short-term for another. Strategic planning at enterprises should be aimed at their long-term development, achieving high rates of economic growth. Development is a process in which the ability and desire of an enterprise to satisfy its desires and needs of consumers increase. Thus, strategic planning is designed to ensure the necessary economic growth and the desired level of enterprise development for the coming long-term period.
The first and most important decision in strategic planning is the choice of the mission and goals of the enterprise. The mission reveals the meaning of the existence of the enterprise, in which the differences between this enterprise and similar ones are manifested. In other words, the mission is the main goal of the enterprise. Mission and goals - serve as a guideline for all subsequent planning stages and at the same time impose certain restrictions on the direction of the enterprise's activities when analyzing development alternatives. The mission of an enterprise may be to conquer the market for products, to expand the geographical or product market, to improve the quality of products while reducing prices for them. Goals are long-term, medium-term and short-term. They are formed and established within the framework of the mission and in its development. At the same time, goals are a key part of strategic planning.
Strategic plans are drawn up mainly for the medium term, usually for three years. Long-term strategic plans have low accuracy or reliability, as they reflect an aggregated assessment of the goals and possibilities for achieving them due to the lack of sufficiently objective information.
The strategic plan sets a promising direction for the development of the enterprise, defines the main activities, allows you to link all the main areas of activity into a single system, and also allows you to better understand the structure of needs, the processes of planning, promotion and marketing of products, mechanisms for the formation of market prices. It establishes specific and clear goals for each division of the enterprise, which are consistent with the overall development strategy of the enterprise. It provides coordination of efforts of all functional services of the enterprise. The strategic approach encourages enterprise managers to better assess their strengths and weaknesses in terms of competitors, opportunities, constraints, and environmental changes. The plan defines alternative actions of the enterprise for the long term and creates a basis for the allocation of limited economic resources. Demonstrates the possibility of actually applying the basic functions of planning, organizing, managing, monitoring and evaluating the activities of an enterprise as a single system of modern management.
The process of strategic planning at the enterprise includes the implementation of the following interrelated functions:
- 1) determination of a long-term strategy, the main goals and objectives of the development of the enterprise;
- 2) creation of strategic business units at the enterprise;
- 3) substantiation and clarification of the main objectives of conducting market research;
- 4) implementation of situational analysis and choice of the direction of economic development of the enterprise;
- 5) development of the main marketing strategy and integrated production planning;
- 6) choice of tactics and refined planning of ways and means to achieve the goals;
- 7) control and evaluation of the main results, adjustment of the chosen strategy and methods of its implementation.
In the process of strategic planning, the main goals of the enterprise are set by top management and agreed with all departments. After their consideration, the units put forward their proposals and, thereby, the necessary prerequisites are created for the development of common goals of strategic planning. The approved plans provide for the general goals of the enterprise, its place in the market, the organizational structure of management, financial results, etc.
Thus, the main task of strategic planning in enterprises is to substantiate the most important goals and develop the right strategy for long-term development. In modern planning theory, it is customary to distinguish eight main areas of activity, within which each enterprise defines its main goals. These areas are the position of the enterprise in the market, innovation, productivity level, availability of production resources, degree of stability, management system, staff professionalism and social responsibility. Strategic planning is a dynamic process of defining the mission and goals of the organization, finding specific strategies for selecting and acquiring the necessary economic resources, allocating and using them in order to ensure the effective operation of the organization in the foreseeable future.
The main tasks of planning the work of the organization are:
the choice of the optimal strategy of the organization for the future, taking into account the forecasts of alternative options for strategic marketing. Ensuring the stability of the functioning and development of the organization.
Formation of an optimal portfolio of innovations in terms of nomenclature and assortment based on scientific approaches. Structuring the goals of the organization. Comprehensive support for the implementation of plans. Development of organizational, technical and socio-economic measures to ensure the effective implementation of plans.
Coordination of the implementation of plans in terms of deadlines, quality of work, resources, performers. Moral and material incentives for the implementation of plans. The strategic planning process includes the following steps:
1) Formation of the mission.
The main overall goal of the organization - a clearly expressed reason for its existence - is referred to as its mission. Objectives are developed to fulfill this mission. The value of an appropriate mission that is formally expressed and effectively presented to the employees of the organization cannot be overstated. The goals developed on its basis serve as criteria for the entire subsequent process of making managerial decisions. If leaders do not know what the main purpose of their organization is, then they will not have a logical starting point for choosing the best alternative. Without defining the mission as a guideline, leaders would have only their individual values as the basis for making decisions. The result might be a huge spread of effort rather than a unity of purpose essential to the success of the organization.
The mission details the status of the firm and provides direction and benchmarks for setting goals and strategies at various organizational levels. The organization's mission statement should include the following:
- 1. The mission of the firm in terms of its main services or products, its main markets, and its main technologies. In other words, what kind of business activities does the firm engage in?
- 2. External environment in relation to the firm, which determines the working principles of the firm.
- 3. The culture of the organization. What type of working climate exists within the firm? What type of people are attracted to this climate?
- 2) Goal setting
Company-wide goals are formulated and established based on the organization’s overall mission and specific values and goals for which top management is guided. To truly contribute to the success of an organization, goals must have a number of characteristics:
First, goals must be specific and measurable. By expressing their goals in concrete, measurable forms, management creates a clear reference point for subsequent decisions and assessments of progress. Middle managers will have a guideline for deciding whether more effort should be put into training and educating employees. It will also be easier to determine how well the organization is working towards achieving its goals.
Second, goals must be time-oriented. The specific forecast horizon is another characteristic of effective goals. It should specify not only what the organization wants to accomplish, but also, in general, when the result is to be achieved. Goals are usually set for long or short periods of time.
Third, the goal must be achievable in order to serve to increase the effectiveness of the organization. Setting a goal that exceeds the capacity of the organization, either due to insufficient resources or due to external factors, can lead to disastrous consequences.
Finally, to be effective, the goals of an organization must be mutually supportive: the actions and decisions necessary to achieve one goal must not interfere with the achievement of other goals.
3) Assessment and analysis of the external environment
After establishing its mission and goals, management should begin the diagnostic phase of the strategic planning process. The first step is to study the external environment. Leaders assess the external environment on three dimensions:
- 1. Evaluate the changes that affect different aspects of the current strategy. For example, rising rocket fuel prices have created a variety of problems for airlines. The latter must constantly assess the dynamics of fuel prices as part of the strategic planning process.
- 2. Determine what factors pose a threat to the current strategy of the firm. Controlling the activities of competitors allows management to be prepared for potential threats.
- 3. Determine which factors represent more opportunities for achieving general corporate goals by adjusting the plan.
Environmental analysis is the process by which strategic planners control factors external to the organization to identify opportunities and threats for the firm.
Analysis of the external environment helps to obtain important results. It gives the organization time to anticipate opportunities, time to plan for contingencies, time to develop an early warning system for possible threats, and time to develop strategies that can turn past threats into any profitable opportunity.
Threats and opportunities faced by an organization can generally be classified into seven areas. These areas are economics, politics, market, technology, competition, international position and social behavior.
4) Management survey of internal strengths and weaknesses of the organization.
The next challenge facing management will be to determine whether the firm has the internal strength to take advantage of external opportunities, and to identify internal weaknesses that can complicate problems associated with external hazards. The process by which a diagnosis of internal problems is made is called a management survey.
A management survey is a methodical assessment of an organization's functional areas designed to identify its strategic strengths and weaknesses.
5) Exploring strategic alternatives
Once leadership has weighed external threats and opportunities against internal strengths and weaknesses, it can determine the strategy it will pursue. An organization faces four main strategic options: limited growth, growth, downsizing, or a combination of these three strategies.
6) Choosing a strategy
After management has considered the available strategic alternatives, it then turns to a specific strategy. The goal is to select the strategic alternative that will maximize the organization's long-term performance. While the choice of overall strategy is both a right and a responsibility of top management, the final choice has a profound effect on the entire organization. To make effective strategic choices, senior leaders must have a clear, shared vision of the firm and its future. The strategic choice must be definite and unambiguous. Commitment to a particular choice often limits future strategy, so the decision must be carefully researched and evaluated.
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