STRATEGIC PLANNING LECTURE No. 1.

THE STRATEGIC PLANNING AS A NEW PARADIGM OF

ECONOMIC GOVERNANCE: SCIENTIFIC CONCEPT vs
MANAGEMENT PRACTISES

 Some major issues of Strategic Planning today:

1. Almost every day an idea of a new strategy in some specific field of socio-economic
life appears in public area.
1.1. Especially, this is the in Bulgaria in public affairs, as well as in business practice.

2. Phenomenon mentioned above, in turn, has generated other phenomena:

2.1. At a community level: increasing number of consulting groups in mapping out
priorities for the development of different aspects of socio-economic life,
respectively, to set out priorities of a community at a national, regional or local level.
2.2. At an organizational level: enormous increase in number and types of methods,
analytical techniques, and staffs in mapping our priorities for different aspects of
organizational activity, formulating and undertaking more and more actions to
enhance the firm’s performance.
 The concept of strategic planning and management is now
widespread in economic management:
 GLOBAL GOALS 2030 (UN) – Sustainable Development Goals;
 Europe 2020: A strategy for smart, sustainable and inclusive growth of EU;
 National strategic plans and programs, in particular, of EU member states;
 Corporate strategies, business strategies, functional strategies, etc.

Essence and functions of SP.

Strategic planning – the process executives undertake in order to make thoughtful
decisions about their organization’s mission, values and goals, and properly allocate resources
to fulfill those directives.
 Main attributes of SP:
o Subject – projection of the functioning and development of an economic unit
in the coming periods (mostly for long-term);
o Aim – to trace out the way, in which the economic unit (as an object of
governance) could reach a higher, substantially new stage of functioning.

 Mapping out the prospects: should guarantee an economic entity will reach a higher,
substantially new stages of functioning at a particular moment in the future, requires
the projection to meet the objective law and regularities of the economic unit
functioning and development.
o Therefore – a strategy is a plan for the functioning of a particular economic
system in a long-time.
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o This plan should contain the functioning of the system in a way, in which the
economic entity will come to another, definitely higher stage of performance.

 Objective laws and regularities concern relationships and interdependencies within

the economic entity, but also the links and relationships of the unit at issue with other
entities from the external environment.
o Therefore: to work out a strategy for a particular economic unit, we need to
know:
 How does the economic entity function and develops?
 What are the major parameters of its functions and performance?

 From conceptual perspectives SP can be defined as:

o Outlining the trajectory (a major course) of long-term functioning and
development of an economic system (a micro, territorial, macro).
 should provide normal functioning and sustainable development to the
system at issue, so that the object could accomplish its mission and
functions in society.

 Components of the strategy architecture:

1. Identifying the existing potential of the economic system at the beginning of
the strategy period;
2. Identifying a suitable “framework” of the economic system’s potential that
should be reached at the end of the strategic period;
3. Identifying the steps of transformation of the existing potential into the
purposeful framework of the economic system’s potential.

 Prerequisites to fulfill the components of an economic strategy architecture:

1. Distinguishing the economy from all different systems of society – that’s the
same, identifying economic activities among all human activities – especially
from the political system.
2. Identifying the links and interdependencies between all different system of
society and paying attention to their specific roles and missions.
3. Studying the objective laws and regularities in the links and interdependencies
mentioned above.
 The prerequisite for the development of economic strategies can only be met by
using a specific approach:
o System approach – it stems from general systems theory. (That’s not
systematic). Components of the SYSTEM APPROACH:
 Thinking in systems: an analytical technique with a strict algorithm of
the research process, which is definitely different from that of the
orthodox analytical approach;
 Examination of the object of interest from various perspectives, at
least, from the main viewpoints;
 Interpreting adequately the functional dependency, which results in
a cybernetic system, specially, the dependency that leads to an
economic system.
In conclusions
 The essential characteristics of the SP concept:
o It studies the economy in the cybernetic sense;
 STRATEGIC PLANNING LECTURE No. 1.

o It pays attention to the homogeneity of the economic system, to the specificity

of internal relationships within the system, and to external ones as well;
o It pays attention to the dialectical relationship between the evolution of the
economic system and changes in the economic management system.

 Main features of an economic strategy:

o It integrates all the facets and functions of an economic system:
 In particular, a firm strategy integrates into a coherent whole array of
forces to face challenges of economic, competitive, social, political,
and technological nature, which form the arena where the economic
unit operates.
o In this sense, it is holistic:
 It considers the economic system as a whole, not only a particular
aspect, a function or department.
 The characteristic mentioned above appears even in functional
strategies.

Genesis and purpose of SP

 SP concept applied to the economy originates from:
o The evolution of economy and changes in the system of economic governance.
o Specific conditions: at a particular stage of growing economic system
complexity, when a specific level of external environment turbulence has been
reached.
o The US economy in the late 60’s in the 20th century, when business
organizations, even though growing larger and larger, began to experience
growing influences of the environment.
o Under specific circumstances in the national economies after WWII, the limits
of market mechanism became the factor that gave birth to the national
planning.
o In subsequent periods, national planning has become a common practice and
another mechanism to coordinate economic operations by complementing the
market mechanism and helping it to work properly.
o However, SP emerged at the macroeconomic arena even in the later stages of
economic evolution; for example, in Japan and France in the late 1970s.
o In the late 20th century SP was recognized as indispensable at a regional
community level too.
 In particular, this is the case of EU integration.
o In the 90s of the 20th century, the SP concept was recognized as an appropriate
paradigm to cope with global challenges and started to be implemented into
UN initiatives.

 Such a direction of sp expansion by interfering from one level to another higher

level is a manifestation of the objectively determined necessity for extending the
advisability and scope of business activities.!!!!!
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 Driving forces for the emergence of SP in economic management systems:

o Growing complexity of the organizations;
 Decentralization within large organizations had appeared and resulted
in establishing many departments.
o Growing internal competitions for resources;
 Biggest companies invested for growth faster than they generated
internal funds.
 Some of those companies undertaken investments in emerging
business.
o Intensifying and changing external competition;
 Companies faced competition that was growing rapidly.
o Rapidly changing business environment.
 New subject emerged on the socio-political scene.
 Different types of social movements.
 Collectively, the movements radically changed the
sociopolitical environment.

 Strategic Planning concept appeared in response to the need for radical changes in
organizational planning systems:
o To take a much broader look at their markets and (particulary the sources of)
competition;
o To be far more sensitive to new developments in the sociopolitical as well as
the economic and technological fields;
o To be more open to possibility of radical changes in their environment and
correspondingly radical changes in their manner to act.

 Some conclusions about SP destiny:

o Strategy cannot be relegated to a backseat or become a sometime practice.
 This relevant at an organizational level,
o Strategy, considered at a higher than organizational level, must be turned into a
mechanism for facilitating economic entities to define their perspectives
strategically.