Essence, purpose and advantages of strategic planning. Advantages and disadvantages of planning
Advantages and disadvantages strategic planning
The main advantage of strategic planning lies to a greater extent in the validity of planned indicators, in a greater likelihood of implementing the planned scenarios for the development of events.
The current pace of change in the economy is so great that strategic planning seems the only way formal forecasting of future problems and opportunities. It provides the top management of the firm with the means to create a plan for the long term, provides a basis for decision-making, helps reduce risk in decision-making, ensures the integration of the goals and objectives of all structural divisions and company executives.
In the domestic practice of enterprise management, strategic planning is rarely used. However, in industry developed countries it becomes the rule rather than the exception. Features of strategic planning: should be supplemented by the current one; strategic plans are developed at meetings of the top management of the company annually; the annual detailing of the strategic plan is carried out simultaneously with the development of the annual financial plan (budget); most Western companies believe that strategic planning mechanisms should be improved.
Along with the obvious advantages, strategic planning has a number of disadvantages that limit its scope and deprive it of universality in solving any economic problems.
Disadvantages and limited opportunities strategic planning: strategic planning does not and cannot give due to its essence detailed description pictures of the future. What it can give is a qualitative description of the state to which the company should strive in the future, what position it can and should take in the market and in business in order to respond to main question- will the firm survive or not in the competitive struggle; strategic planning does not have a clear algorithm for drawing up and implementing a plan. His descriptive theory boils down to a particular philosophy or ideology of doing business. Therefore, specific tools largely depend on the personal qualities of a particular manager, and in general, strategic planning is a symbiosis of intuition and art of top management, the manager's ability to lead the company to strategic goals. The goals of strategic planning are ensured by the following factors: high professionalism and creativity of employees; close connection of the organization with the external environment; product updates; improving the organization of production, labor and management; implementation of current plans; inclusion of all employees of the enterprise in the implementation of the goals and objectives of the enterprise; the process of strategic planning for its implementation requires a significant investment of resources and time compared to traditional long-term planning. This is due to more stringent requirements for the strategic plan. It must be flexible, respond to any changes both within the organization and in external environment. The number of employees involved in strategic planning is higher than in long-term planning; the negative consequences of strategic planning errors, as a rule, are much more serious than in the traditional, long-term one. Especially tragic are the consequences of an incorrect forecast for enterprises that carry out a non-alternative economic activity. The high degree of risk in long-term planning can be explained by those areas of production and economic activity in which decisions are made about products; directions of investments; new business opportunities, etc.; strategic planning should be complemented by mechanisms for the implementation of the strategic plan, i.e. the effect can be produced not by planning, but by strategic management, the core of which is strategic planning. And this implies, first of all, the creation of an organizational culture at the enterprise that allows the implementation of a strategy, a system of labor motivation, a flexible organization of management, etc. Therefore, the creation of a strategic planning subsystem at a particular enterprise should begin with putting things in order in the management system, with improving the overall management culture, strengthening performance discipline, improving data processing, etc. In this regard, strategic planning is not a panacea for all managerial ills, but only one of the means.
The main advantage of strategic planning lies in the greater degree of validity of planned indicators, the greater likelihood of the implementation of the planned scenarios for the development of events.
The current pace of change in the economy is so fast that strategic planning seems to be the only way to formally predict future problems and opportunities. It provides the top management of the company with the means to create a plan for the long term, provides a basis for decision-making, helps reduce risk in decision-making, ensures the integration of the goals and objectives of all structural divisions and performers of the company.
In the domestic practice of enterprise management, strategic planning is rarely used. However, in the industry of developed countries, it is becoming the rule rather than the exception.
Features of strategic planning:
- * must be supplemented by the current one;
- * strategic plans are developed at meetings of the top management of the company annually;
- * annual detailing of the strategic plan is carried out simultaneously with the development of the annual financial plan (budget);
- * Most Western companies believe that strategic planning mechanisms should be improved.
Along with the obvious advantages, strategic planning has a number of disadvantages that limit its scope and deprive it of universality in solving any economic problems.
Disadvantages and limitations of strategic planning:
- 1. Strategic planning does not and cannot, due to its nature, give a detailed description of the picture of the future. What it can give is a qualitative description of the state to which the company should strive in the future, what position it can and should take in the market and in business in order to answer the main question - will the company survive or not in the competition.
- 2. Strategic planning does not have a clear algorithm for drawing up and implementing the plan. His descriptive theory boils down to a particular philosophy or ideology of doing business. Therefore, specific tools largely depend on the personal qualities of a particular manager, and in general, strategic planning is a symbiosis of intuition and art of top management, the manager's ability to lead the company to strategic goals. The goals of strategic planning are ensured by the following factors: high professionalism and creativity of employees; close connection of the organization with the external environment; product updates; improving the organization of production, labor and management; implementation of current plans; inclusion of all employees of the enterprise in the implementation of the goals and objectives of the enterprise.
- 3. The process of strategic planning for its implementation requires a significant investment of resources and time compared to traditional forward planning. This is due to more stringent requirements for the strategic plan. It must be flexible, respond to any changes both within the organization and in the external environment. The number of employees involved in strategic planning is higher than in long-term planning.
- 4. Negative consequences errors in strategic planning, as a rule, are much more serious than in traditional, long-term planning. Especially tragic are the consequences of an incorrect forecast for enterprises engaged in non-alternative economic activities. The high degree of risk in long-term planning can be explained by those areas of production and economic activity in which decisions are made about products; directions of investments; new business opportunities, etc.
- 5. Strategic planning should be complemented by mechanisms for the implementation of the strategic plan, i.e. the effect can be produced not by planning, but by strategic management, the core of which is strategic planning. And this implies, first of all, the creation of an organizational culture at the enterprise that allows the implementation of a strategy, a system of labor motivation, a flexible organization of management, etc. Therefore, the creation of a strategic planning subsystem at a particular enterprise should begin with putting things in order in the management system, with improving the overall management culture, strengthening performance discipline, improving data processing, etc. In this respect, strategic planning is not a panacea for all managerial ills, but only one of the means.
Questions for revision and discussion
1. What is the decision-making process?
2. What are the economic risks?
3. What are the stages of the decision-making process?
4. What models are used in making managerial decisions?
5. What stages of research are used in management science?
6. What theoretical methods are used in decision making?
7. What types of forecasts are used in making management decisions?
8. What is the advantage of economic analysis?
9. What are the goals pursued when developing a business plan?
10. What are the main sections of the business plan?
11. Features of the business plan of an innovative project.
12. What determines the depth of business plan development?
13. Management decisions and business risk.
14. The main types of business risks of a commercial enterprise.
15. Business risk assessments.
16. Prevention of business risks.
17. Business risk insurance.
Literature
1. Blank I.A. Trade management. - Kyiv, UFIMB, 1997.
2. Gerchikova I.N. Management. - M., 1994.
3. Gorokhov M.Yu., Maleev V.V. Business - planning and investment analysis. M. - IID "Filin", 1998.
4. Kozlovsky V. A., Markina T. V., Makarov V. M. Production and operational management. S - P., “Special Literature”, 1992.
5. Makarenko M.V., Makhalina O.M. Production management. - M. PRIOR Publishing House, 1998.
6. Meskon M.Kh., Albert M., Hedouri F. Fundamentals of management. – M. “Delo”, 1992.
7. Rusinov F.M. etc. Management. - M FBK - PRESS, 1998.
8. Cherkasov V.V., Platonov S.V., Tretyak V.I. Management activities management. – WECKLER HOPE, 1998.
Chapter 5
Plan - this is a system of interrelated tasks united by a common goal that determine the procedure, timing and sequence for implementing programs, performing work, various operations, etc. There are current (tactical) and long-term (strategic) plans of enterprises and organizations.
Under strategic planning you should understand the rationale for the long-term goals of the enterprise and the choice of the most effective ways their achievements . The formation of a management strategy refers to complex creative processes based on forecasting the activities of an enterprise, conjuncture consumer market in general and its selected segment in particular. When developing a management strategy, an extensive search is carried out and an assessment is made alternatives strategic management decisions that most fully correspond to the mission of the enterprise and the tasks of its long-term development. The complexity of developing a management strategy lies in the fact that it requires periodic adjustments taking into account environmental conditions that change over time and emerging new business development opportunities.
The strategy planning process refers to the tasks of making managerial decisions, such as: resource allocation, adaptation to the external environment, internal coordination and organizational strategic foresight.
Strategy is a comprehensive plan designed to ensure the implementation of the organization's mission and achieve its goals. The strategy, as a rule, is developed by the top management of the enterprise, and usually all levels of management take part in its implementation. To work effectively in modern business, an enterprise must constantly collect, process and analyze information about the industry, market, competition and other factors. For this reason strategic plan should be viewed as a program that regulates the activities of the enterprise for an extended period of time. The current pace of change in the conditions of the enterprise is so great that strategic planning seems to be the only way to predict the future problems of the enterprise.
The development of an organization's strategic plan is usually carried out in the following main stages (Fig. 5.1.1). Main common goal organization or a clearly defined reason for its existence - referred to as its mission. Other The goals of the organization are usually developed to fulfill this mission.
The goals adopted thus serve as criteria for the entire subsequent process of making managerial decisions. The mission statement of the organization should include:
The objectives of the enterprise in terms of its underlying services or products, its underlying markets and underlying technologies;
Assessment of the external environment in relation to the enterprise;
Organization culture. What type of working climate exists within the firm?
Rice. 5.1.1 Strategy planning process.
Characteristics of goals. Company-wide goals are formulated and developed in accordance with the mission of the organization and the goals that top management is guided by. Remember, goals must be specific and measurable. By defining goals, management creates a baseline for subsequent decisions and evaluation of progress. Middle managers in this case have a reference point for making their decisions.
The goal must be achievable- To serve to improve the efficiency of the organization. Choosing a goal that exceeds the organization's capabilities, either because of insufficient resources or because of external factors, can lead to disastrous consequences. The multiple goals of the organization should be mutually supportive - ᴛ.ᴇ. actions and decisions necessary to achieve one goal should not interfere with the achievement of other goals. Neglecting the condition that the goals are mutually supportive leads to conflicts between the departments of the organization that are responsible for achieving the adopted goals.
Definition general period strategy formation - is a characteristic of the effectiveness of goals. Not only should it be specified exactly what the organization wants to do, but also what when the result is to be achieved. The main condition for determining the period of formation of a management strategy is the accuracy of the forecast for the development of the economy in general and the conjuncture of the consumer market in particular.
Long term goal has a planning horizon of approximately five years in the US, and often up to ten years in Japan. Under the conditions of the current unstable (and in some areas unpredictable) development of the economy of the CIS countries, this period cannot be too long and is determined by no more than three years.
Short term goal in most cases it is represented by an enterprise plan, which is limited within a year. Medium term goals have an intermediate planning horizon, i.e. from one to five years. Long-term goals are usually very broad. The organization formulates them first. Then medium and short-term goals are developed that clarify and concretize the fulfillment of long-term goals over time. Usually, the closer the target planning horizon, the higher the quality of the forecast.
Analysis of the external environment - provides a process by which the developers of the strategic plan control factors external to the organization in order to determine opportunities and threats for the enterprise. Analysis of the external environment provides important results. Deep analysis gives an 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 previous threats into profitable opportunities. The role of environmental analysis in the planning process is essentially to answer three specific questions:
1. Where is the organization now?
2. Where does top management expect the organization to be in the future?
3. What should management do to move the organization from where it is now to where management wants it to be?
Scroll external dangers and opportunities. Through the analysis of the external environment, the organization can determine the list of dangers and opportunities that it faces in this environment. After reviewing this list, management should assess the strengths and weaknesses of the organization. Moreover, for successful planning, management must have a fairly complete picture of the internal potentialities and shortcomings of the organization, as well as significant external problems.
Management survey of the internal strengths and weaknesses of the organization is an assessment of the functional areas of the organization, designed to identify its strategic strengths and weaknesses. For the purpose of concretization, five functions are recommended to be included in the survey – marketing, finance (accounting), operations (manufacturing), human resources, and corporate culture and image.
Exploring strategic alternatives. Once management has weighed external threats and opportunities against internal strengths and weaknesses, it can determine a strategy to guide its future.
Organizations typically face four main strategic options: limited growth, growth, downsizing, or a combination of these three strategies.
Limited growth. The strategic alternative favored by most organizations is limited growth. It is important to note that the strategy of limited growth is characterized by setting goals from what has been achieved, adjusted for inflation. Organizations choose this alternative because it is the easiest, most convenient, and least risky course of action.
Growth. The growth strategy is implemented through a significant annual increase in the level of short-term and long-term goals above the level of the previous year. The growth strategy is the second most frequently chosen alternative. It is used in dynamically developing industries with rapidly changing technologies.
Reduction. The least frequently chosen alternative by managers, and often referred to as the strategy of last resort, is the reduction strategy. The level of goals is set in this case lower than that achieved in the past. Within the framework of the reduction alternative, there may be several options: liquidation, cutting off the excess, reduction and reorientation. Downsizing strategies are most often resorted to when the performance of the enterprise continues to deteriorate, during an economic downturn, or simply to save the enterprise.
Combination. The strategy of all alternatives will most likely be followed by large and active companies in several industries. A combination strategy is a combination of any of the three strategies mentioned - limit growth, growth and contraction.
Choice of strategy. On the strategic choice carried out by the leaders of the enterprise, affect various factors, including:
1. Risk. What level of risk does management consider acceptable? Risk is a fact of the life of an enterprise, but a high degree of risk can destroy an enterprise.
2. Knowledge of past strategies. Often, consciously or unconsciously, the management of the enterprise is influenced by past strategic alternatives chosen by the enterprise.
3. Reaction to owners. Quite often, equity holders limit management's flexibility in choosing a particular strategic alternative.
4. Time factor can contribute to the success or failure of the organization in decision making.
Formation of a portfolio of orders of the enterprise. The main tool in the sphere of strategic planning is the analysis and formation of the economic order portfolio of the enterprise. We are talking about the assessment by the management of the enterprise of the position of the state of this portfolio, i.e., the assessment of the position of all the enterprises that are part of the enterprise. “Production” can be understood as a department of an enterprise, a product range, or even a simple or branded product. Such an analysis should identify more or less profitable production or hot goods and decide what to do with each of them separately. An enterprise naturally wants to invest its main resources in the most profitable productions and reduce or even stop investing resources in less profitable ones.
Diagnostics of the financial and economic situation within the framework of strategic planning, it includes, first of all, an analysis of the strategic position of the enterprise in the market. For this, various special methods, one of which is SWOT-analysis The obvious advantages of SWOT-analysis are its simplicity, logic, ease of perception, and therefore it is widely used in practice. SWOT analysis is presented in the form of table 5.1.1.
The general algorithm of actions is shown in fig. 5.1.2
Figure 5.1.2 General SWOT analysis algorithm.
Table 5.1.1. Risk matrix (SWOT - analysis).
| Strengths | Weak sides |
| 1. There are production areas. 2. There is engineering support. 3. There is a supply of energy resources, fuel. 4. Availability of a piece of equipment. 5. Creation of new jobs. 6. Expansion of the range. 7.Experience in the conditions of technical re-equipment. 8. Qualified personnel. 9. Environmental measures. 10.Production certain types products. | 1.Market 2.Suppliers of raw materials. 3. Insolvency of consumers. 4.Source of funding. 5. Time is running out. 6.Quality. |
| Opportunities | Threat (danger) |
| 1. Diversification. 2. Initiative of the 1st person. 3. New technology. 4. Equipment upgrade. 5. Increase in volumes. 6. Flexibility of assortment. | 1. Economic instability. 2. Weak legislative base. 3. Sales. |
1) Strategic planning enhances the competitiveness of the firm
The starting point of marketing activities is the analysis of the various possibilities of the company. Management needs to know how to identify and evaluate these opportunities. The analysis should uncover attractive market opportunities from the company's point of view.
A firm's marketing opportunity is an attractive area of marketing efforts in which a particular firm can gain a competitive advantage.
An organization may seek new opportunities either occasionally or systematically. Many people find new ideas by simply keeping a close eye on changes in the market. Company executives read newspapers, attend trade shows, study competitors' products, gather market information in other ways. Many ideas can be obtained using informal methods of information gathering. Others identify new markets using formal techniques. One of useful tricks of this kind is the use of a product and market development grid. (Fig. 1.5).
Existing Products New Products
Rice. 1.5. Discover new products with the product development grid
Competitive advantages allow the company to steadily occupy its place in the market. Competitive advantage includes a whole host of concepts, but the main problem is that many competing firms already have them: good quality product, flexible pricing policy, active advertising, etc. - Without this, a company simply cannot exist in a civilized market. Advantage is a relative concept, if all market participants have approximately the same indicators, no one has an advantage in them. Moreover, any firm in such conditions is simply obliged to comply general level, - the circle of possible advantages narrows. In Russia, a company that consciously and purposefully engages in strategic planning gains a competitive advantage in the Russian market, since so far not many companies do the same.
- 2) Strategic planning allows you to optimally allocate resources. The concentration of resources in a certain area of the business makes it possible to overcome the resistance of the competitive environment (a direct analogy from military practice suggests itself). "Smearing" resources in many areas is likely to lead to failure in each of them. For example, insufficient financial and marketing support for even a potentially profitable project can significantly worsen its results. If a company conducts strategic planning, which highlights the main areas of work, then in some cases it refuses even profitable projects that do not fit into the overall strategy.
- 3) Strategic planning links decision-making processes in the top and middle management. At most Russian enterprises, there is a significant information gap between the two levels of decision-making: top and middle management. Strategic management makes strategic decisions, middle managers make operational decisions. Often these processes run in parallel and do not always correspond to each other. The functions of departments do not always correspond to the strategic setting adopted by the enterprise. Therefore, if the company conducts competent strategic planning, then the planning process is carried out from the main goal, there is a clear methodology, the planning process goes down to specific departments. As a result, decision-making is linked to highest level before making decisions on the operational - the firm works in one direction.
- 4) Strategic planning improves the firm's adaptation to changes in the external environment. Strategic planning has a pronounced scenario character, that is, it is necessary to provide for various options for the development of the situation over time. In the simplest case, three options can be distinguished: optimistic, pessimistic and average. Optimistic: all factors of external and internal environment enterprises develop in the best possible way, contributing to the achievement of goals. Pessimistic forecast: factors mainly impede the achievement of goals, work is drastically difficult. Average or probable forecast: some of the factors contribute to the company's activities, some hinder, while, if possible, the real probabilities of one or another state of each factor are taken into account.
The firm is preparing for any scenario, as a result of which its adaptation to the external environment increases. The time to respond to a particular event is reduced, since its possible occurrence and the corresponding measures taken are taken into account in the plan - only some adjustment is required.
- 5) Strategic planning improves the orientation of the firm in the external environment. The market orientation of the firm becomes blurred, even if each of the managers has a good idea of the situation, but each in his own way. As a result, the decision-making process is based on the subjective assessments of those who have more access to administrative resources - the orientation of the firm is subjective. Strategic planning allows you to create an objective, impartial picture of what is really happening and make it the basis for consistent decision-making at all levels of management.
- 6) Strategic planning allows you to focus the efforts of employees in achieving a single goal. The functional interests of departments and employees should be subordinated to the strategic interests of the company as a whole. Any division in the company, regardless of its specifics, profile has its own functional interests. For example, the functional interest of the purchasing department is to fully ensure production or sales, and, therefore, there is a desire to concentrate purchases in one place as large as possible, which also reduces the cost of the process. This is not always in the interests of the firm, which incurs additional storage costs and loses the opportunity to vary the product on the market.
The interests of the firm as a whole are the interests of making money, and money in a competitive market comes from buyers whose needs are satisfied. The standard ideal consumer interest in a product consists of three desires: “as cheap as possible”, “as high quality as possible”, “as diverse as possible”. In practice, it turns out that no one in the company, with the exception of the owner, is interested in simultaneously satisfying all three desires of the buyer. Strategic planning significantly improves the coordination of activities in the firm.
- 7) Strategic planning contributes to the formation of a single team of managers in the company. Both the adopted strategy and the process of its preparation form a single team. A prerequisite for the implementation of strategic planning is the training of managers. They actively participate in the assessment of the situation, in the examination, in the discussion of the proposed options, that is, in the collective formation of the strategy itself. At the same time, there is a combination of opinions and points of view. It is extremely important that managers begin to think in one direction, to think in the same categories, the corporate language becomes clear to everyone.
- 8) Strategic planning raises the level of corporate culture in the enterprise. Under the corporate culture is understood, first of all, the degree of loyalty of the staff to the top management and the enterprise as a whole. When strategic planning is carried out, the company's goals and the procedure for achieving it are explained to employees, the attitude towards management and the company itself becomes more conscious and positive, there are fewer rumors - people are most afraid of the unknown.
Essence and advantages of strategic planning. General competitive strategies. Formation and types of strategies. Policy for evaluation of the strategic plan and its implementation.
Strategic planning
The abstract was completed by students of group 7212 Krutkin D.P. and Bega O.S.
Moscow State Industrial University
Moscow 2001
Introduction.
Strategic planning is one of the functions of management, which is the process of choosing the goals of the organization and ways to achieve them. Strategic planning provides the basis for all management decisions, functions of organization, motivation and control, is focused on the development of strategic plans. The strategic planning process provides the framework for managing the organization.
About three decades ago, strategic planning took the main place in the planning activities of the company, replacing long term planning. In strategic planning, in comparison with the long-term, the space of the company's activity becomes more voluminous, it includes both the main elements of the internal environment of the economic organization and external aspects: social and political factors, the tastes and needs of customers, the actions of competitors, etc. In addition, the long-term goals of the company in strategic planning are no longer a simple reflection of the conditions of current activity, but are the result of an analysis of changes in the external and internal environment of the company. The main difference between strategic planning and long-term planning is its variability, the development of alternative versions of the future development of the company.
In the process of developing strategic planning, big number methods and models strategic analysis, formal ways of solving problems. So the popularity of formal strategic planning came in the late 70s and early 80s, when it was perceived as a panacea, a means of solving any problems of the company.
However, in the 1980s, formal methods of strategic planning showed their limitations in the new conditions. The main reasons for this were:
Increasing uncertainty in the business environment. This was expressed both in an increased number of changes in economic life, and in a decrease in the predictability of these changes. Strategic schemes in many cases no longer fit the new state of the business;
In the 1980s, the importance of the humanitarian, human factor increased in the theory and practice of business life - the concept of corporate culture was developed. Later, an approach called "intra-company democracy", etc. Impersonal methods of strategic planning have come into conflict with new trends in management.
Currently, strategic planning has taken its place among the functions of enterprise management. In many ways, it acquired a new content, enriched through synthesis with a humanized approach. Today, along with formal, quantitative methods, strategic planning uses a creative intuitive approach. Not being a universal way to achieve success in business, it at the same time creates the basis for the successful operation of the company.
Strategic planning consists of a number of interrelated stages. First, a study of the external and internal environment of the organization is carried out, then the main guidelines of the company are determined, at the next stage, as part of a strategic analysis, the company compares the results of the first and second stages, determines possible options for strategies, then chooses one of the options and formulates own strategy, on the last step the firm prepares the final strategic plan, based on previous developments, proposals from lower levels.
Essence and advantages of strategic planning.
The strategy is a detailed comprehensive plan designed to ensure the implementation of the organization's mission and achievement of its goals.
Strategic planning is a set of actions and decisions taken by management that lead to the development of specific strategies designed to help the organization achieve its goals.
Below is a brief and detailed diagrams strategic planning process.