Strategic planning is a special kind of planning work, which consists in developing strategic plans, providing the nomination of such goals and strategies for the organization, implementation of which will ensure its effective functioning in the long term, and its rapid adaptation to changing environmental conditions. Strategic planning is the process of determining the organization’s goals, as well as ways to achieve them. Thus, we are going to discuss strategic planning, giving at least seven reasons why some even rather good developed firms do no strategic planning.
At the beginning of this project it is important to mention that the process of strategic planning is inherently dominant, which identifies all management functions. Experience shows that organization as a whole and individuals, taking advantage of strategic planning, get in their hands an effective way to assess the purpose and direction of the company. In this context, the main function of strategic planning is to provide a framework for management of the organization. At the same time we can say that effective managers develop and evaluate alternatives and set priorities exactly in the frames of strategic planning. Model of strategic planning can be summarized as follows.
The system of strategic planning can be divided into four main stages: assessment – managers check the competitiveness of the organization, identifying its strengths and weaknesses; choice – managers develop strategic alternatives in order to choose the most appropriate strategy basing on the results of the previously made assessment; execution – after the adoption of strategies various specific plans are developed, methods and procedures for planning are improved, human resources are mobilized, financial and material resources of the organization are mobilized too; analysis – the plan powered into action should be periodically analyzed in order to be able to include all the necessary adjustments.
Observing the necessity of strategic planning, it is possible to say that according to David some reasons for poor or even no strategic planning are the following: “fear of the unknown, fear of failure, poor reward structures, self-interest, too expensive, content with success, overconfidence, fire-fighting, laziness, waste of time, prior bad experience, honest difference of opinion or suspicion” (David, 2008). There were given even more that seven reasons required by the task of this assignment, but it is impossible to say that one or another reason is more important because each firm has its specific character of work and any of the above numerated reasons may be more influential in discussion of the question of the strategic planning.
Explaining the main reasons why some even rather developed firms do no strategic planning, we can mention that each reason may be connected with others and their complex influence on the company’s activity. For instance, strategy of the company in the process of strategic planning is formulated and developed by top management, but its implementation will involve all levels of management, and in this case laziness of top managers, their fear of unknown or fear of failure may lead to the fact that they will be trying to avoid strategic planning in their firm, implementing into practice old and traditional practices of their work, forgetting about possible changes. The next fact that strategic plan should be developed in the interests of the entire corporation, but not a particular individual, may lead to the result that the reason of self-interest be in the way of strategic planning. Strategic plan based on the research and evidence (information about the industry, market, competition and other factors) needs a thorough research of the industry, while the firm may have no costs to provide all the necessary researches and strategic planning may seem to them too expensive or even waste of time. One of the main aspects of the development of the strategic plan includes its particular attitude to one concrete firm, because it is generally known that each strategic plan is developed for a particular company and it must reflect only special individual traits of concrete firm, while managers may have honest differences of opinions and not be ready to reach compromise in their discussions of future strategies of development. In addition, also prior bad experience may avoid the development of the strategic plan, because the strategic plan should be consistent over a long period of time, being at the same time flexible enough, but prior bad experience shows to some firms that their actions to follow ineffective strategic plan were considered wrong and this situation has influence on their reputation in the bad way.
It is possible to say in conclusion that we have gave many reasons why some even rather well developed firms do no strategic planning, and we have explained the necessity of the process of strategic planning, defining the notion of the strategic planning and discussing its main components. There is no doubt that strategic planning is not a guarantee of success in itself, however, formal planning can create a number of important and often essential enabling factors, or more precisely, the competitive advantage for organizations. In such a way, modern business conditions reflect the fact that strategic planning is the most adequate way of a formal prediction of future challenges and opportunities, thus providing a development plan for the long term.
David, F. R. Strategic Management: Concepts and Cases. 12th ed. Prentice Hall, 2008.