Assignment

On

STRATEGIC MANAGEMENT PLANNING OVERVIEW

BY

VIPUL ARUNBHAI BHATT

Roll no 2 Class SFI SEM-3 Batch 2010 2012

Department of business administration, Bhavnagar

-:Guided by:Dr.Jay Badiyani

What is Strategic Planning?

Simply put, strategic planning determines where an organization is going over the next year or more and how it's going to get there. Typically, the process is organization-wide, or focused on a major function such as a division, department or other major function. The descriptions on this page assume that strategic planning is focused on the organization.

How to Get a Feel for Strategic Planning There's No Perfect Way to Do It

Planning typically includes several major activities or steps in the process. Different people often have different names for these major activities. They might even conduct them in a different order. Strategic planning often includes use of several key terms. Different people might use apply different definitions for these terms, as well. Don't be concerned about finding the perfect way to conduct strategic planning. You'll soon notice that each writer seems to have their own particularly interpretation of the activities in strategic planning. However, as you read the materials linked from the topic Strategic Planning in this library, you'll begin to notice some information that is common to most writers. Read the basic description described below on this page. Then review the various materials linked from the library in the topicStrategic Planning. Once you start strategic planning, you'll soon find your own particular approach to carrying out the process.

One Way to Look at Strategic Planning

One interpretation of the major activities in strategic planning activities is that it includes,

1. Strategic Analysis
This activity can include conducting some sort of scan, or review, of the organization's environment for example, of the political, social, economic and technical environment . Planners carefully consider various driving forces in the environment, for example, increasing competition, changing demographics, etc. Planners also look at the various strengths, weaknesses, opportunities and threats an acronym for this activity is SWOT regarding the organization. Some people take this wide look around after they've identified or updated their mission statement, vision statement, values statement, etc. These statements are briefly described below. Other people conduct the analysis before reviewing the statements. Note that in the past, organizations usually referred to the phrase long-range planning. More recently, planners use the phrase strategic planning. This new phrase is meant to capture the strategic comprehensive, thoughtful, well-placed nature of this type of planning.

2. Setting Strategic Direction

Planners carefully come to conclusions about what the organization must do as a result of the major issues and opportunities facing the organization. These conclusions include what overall accomplishments or strategic goals the organization should achieve, and the overall methods or strategies to achieve the accomplishments. Goals should be designed and worded as much as possible to be specific, measurable, acceptable to those working to achieve the goals, realistic, timely, extending the capabilities of those working to achieve the goals, and rewarding to them, as well. An acronym for these criteria is SMARTER. At some point in the strategic planning process sometimes in the activity of setting the strategic direction , planners usually identify or update what might be called the strategic philosophy. This includes identifying or updating the organization's mission, vision and/or values statements. Mission statements are brief written descriptions of the purpose of the organization. Mission statements vary in nature from very brief to quite comprehensive, and including having a specific purpose statement that is part of the overall mission statement. Many people consider the values statement and vision statement to be part of the mission statement. New businesses for-profit or nonprofit often work with a state agency to formally register their new business, for example, as a corporation, association, etc. This registration usually includes declaring a mission statement in their charter or constitution, articles of incorporation, etc. . It seems that vision and values statements are increasingly used. Vision statements are usually a compelling description of how the organization will or should operate at some point in the future and of how customers or clients are benefiting from the organization's products and services. Values statements list the overall priorities in how the organization will operate. Some people focus the values statement on moral values. Moral values are values that suggest overall priorities in how people ought to act in the world, for example, integrity, honesty, respect, etc. Other people include operational values which suggest overall priorities for the organization, for example, to expand marketshare, increase efficiency, etc. Some people would claim that these operational values are really strategic goals. Don't get hung up on wording for now.

3. Action Planning
Action planning is carefully laying out how the strategic goals will be accomplished. Action planning often includes specifyingobjectives, or specific results, with each strategic goal. Therefore, reaching a strategic goal typically involves accomplishing a set of objectives along the way -- in that sense, an objective is still a goal, but on a smaller scale. Often, each objective is associated with a tactic, which is one of the methods needed to reach an objective. Therefore, implementing a strategy typically involves implementing a set of tactics along the way -- in that sense, a tactic is still a strategy, but on a smaller scale. Action planning also includes specifying responsibilities and timelines with each objective, or who needs to do what and by when. It should also include methods to monitor and evaluate the plan, which includes knowing how the organization will know who has done what and by when. It's common to develop an annual plan sometimes called the operational plan or management plan , which includes the strategic goals, strategies, objectives, responsibilities and timelines that should be done in the coming year. Often, organizations will develop plans for each major function, division department, etc., and call these work plans. Usually, budgets are included in the strategic and annual plan, and with work plans. Budgets specify the money needed for the resources that are necessary to implement the annual plan. Budgets also depict how the money will be spent, for example, for human resources, equipment, materials, etc.

Basic Overview of Variety of Planning Models

Here's a quick overview of a variety of strategic planning. This overview will help you get a feel for the variety of perspectives on strategic planning. Now that you have some basic sense about what strategic planning is, you can go on to polish your understanding by returning to the topic Strategic Planning, starting with in the section Basic Overviews of Strategic Planning Process

Key success factors

Characterises effective strategic management, a clear business strategy and vision for the future a strategic direction endorsed by senior managers, taking account of partners and other stakeholders a mechanism for accountability to the citizen in meeting their expectations, as well as to the centre in meeting policy targets a framework for governance at several levels government-wide down to internal reporting arrangements that ensures you can coordinate everything multiple goals even when there are competing priorities and different goals see Governance . the ability to exploit opportunities and respond to external change turbulence by taking ongoing strategic decisions a coherent framework for managing risk - whether it is balancing the risks and rewards of a business direction, coping with the uncertainties of project risk or ensuring business continuity.

Principles
The strategic issues facing the organisation and its response to them will call on the organisation's skills in strategic management - its ability to recognise and deal successfully with strategic issues. In the public sector, these will include, addressing the needs of the citizen, not the convenience of the organisation greater efficiency and value for money improved and innovative service delivery to the public joined-up policy making increased communication with customers and partners greater local-central government coordination improved performance and the implementation of Public Service Agreements realisation of the government's e-government strategy

Review
You must keep the strategy under constant review, as part of the continuous task of monitoring organisational performance. You should consider, is our 'vision' for the organisation still valid? Does our view of the desired future for the organisation match the pressures on us, the way our business is developing, and the changes that have taken place - and are likely to take place - in our business environment? are the themes of our strategy still appropriate? Do we need to consider additional themes which should be added to the agenda for change, because of changed business circumstances, new technologies, pressures from the environment or changes in corporate capabilities? Are any of our strategic themes no longer relevant to the organisational agenda for change? what progress are we making in our strategic themes, and do we need to re-prioritise or replan to ensure that the rate of change meets our business requirements?

You must keep all these levels of strategy and planning under constant review,
the strategic 'vision' the detailed plans for implementation.

the route chosen towards the vision.

What is a Strategic Plan?

Entrepreneurs and business managers are often so preoccupied with immediate issues that they lose sight of their ultimate objectives. That's why a business review or preparation of a strategic plan is a virtual necessity. This may not be a recipe for success, but without it a business is much more likely to fail. A sound plan should, Serve as a framework for decisions or for securing support/approval. Provide a basis for more detailed planning. Explain the business to others in order to inform, motivate & involve. Assist benchmarking & performance monitoring. Stimulate change and become building block for next plan.

For inspiration and a few smiles , have a look at some of the quotations and examples of bad advice included in other pages. A strategic plan should not be confused with a business plan. The former is likely to be a very short document whereas a business plan is usually a much more substantial and detailed document. A strategic plan can provide the foundation and frame work for a business plan. For more information about business plans, refer to How to Write a Business Plan, Insights into Business Planning and FreePlan, Business Plan Guide & Template. A strategic plan is not the same thing as an operational plan. The former should be visionary, conceptual and directional in contrast to an operational plan which is likely to be shorter term, tactical, focused, implementable and measurable. As an example, compare the process of planning a vacation where, when, duration, budget, who goes, how travel are all strategic issues with the final preparations tasks, deadlines, funding, weather, packing, transport and so on are all operational matters . A satisfactory strategic plan must be realistic and attainable so as to allow managers and entrepreneurs to think strategically and act operationally - seeDevising Business Strategies for further insights.

THE STRATEGIC PLANNING INPUTS The strategic planning aspect of Strategy Reengineering draws heavily on management theory particularly Peter Drucker and Michael Porter. It uses an expression of an organisation's directions as a starting point, in terms of the strategic statements, The statements are used by Strategy Reengineering for modelling of strategy and the formulation of the strategic blueprint. All of the strategic statements are linked in a cascading manner. For example, the Mission statement will define goals and objectives which in turn will define strategies and tactics. Statements, cascading from the inner portions of the onion to the outer portions. Each organisation can be divided into three levels of operation - Strategic, Tactical and Operational. The Strategic level is typically made up of the chief executive and his or her executive management. This group has the prime responsibility for all aspects of the organisation. They define the overall Mission statement for the organisation, setting its focus and direction. They set strategic level Goals and Objectives, which will be fleshed out at the Tactical and Operational levels. And they set strategic level strategies which will set the organisation on its chosen course. At the next level, Tactical, are the major divisions and/or departments of the organisation. These may include personnel, sales, marketing, engineering, etc. At the third level, Operational, are the workgroups of the organisation which either deal directly with the customers or clients of the organisation, or provide support to those workgroups. These may include customer service, shipping, order entry, etc.

At each level strategic statements should be formulated. The Strategic level statements should be formulated first to avoid possible conflicts and/or gaps caused by unconnected or disintegrated planning at lower levels of the organisation. From these Strategic statements will come the Mission statements for each of the Tactical level areas in the organisation. And because they have been formulated top-down, each division/department will not only be in harmony with the overall objectives of the Strategic level. Also, most importantly, they can test the strategic statements of the Strategic Level for feasibility and provide essential feedback to top management while they are still in the formulation phase of their strategic planning. Similarly at the Operational level, the workgroups can formulate their strategic statements, providing further essential feedback to upper management on the feasibility of the strategic plan during its initial stages, rather than discovering that the plan is unworkable during the latter implementation stage.

Basic Approach to Strategic Planning A critical review of past performance by the owners and management of a business and the preparation of a plan beyond normal budgetary horizons require a certain attitude of mind and predisposition. Some essential points which should to be observed during the review and planning process include the following, Relate to the medium term i.e. 2/4 years Be undertaken by owners/directors Focus on matters of strategic importance Be separated from day-to-day work Be realistic, detached and critical Distinguish between cause and effect Be reviewed periodically Be written down.

As the precursor to developing a strategic plan, it is desirable to clearly identify the current status, objectives and strategies of an existing business or the latest thinking in respect of a new venture. Correctly defined, these can be used as the basis for a critical examination to probe existing or perceived Strengths, Weaknesses, Threats andOpportunities. This then leads to strategy development covering the following issues discussed in more detail below, Vision Mission Values Objectives Strategies Goals Programs

Key Steps towards a Strategic Plan

The preparation of a strategic plan is a multi-step process covering vision, mission, objectives, values, strategies, goals and programs. These are discussed below. The Vision The first step is to develop a realistic Vision for the business. This should be presented as a pen picture of the business in three or more years time in terms of its likely physical appearance, size, activities etc. Answer the question, if someone from Mars visited the business, what would they see Consider its future products, markets, customers, processes, location, staffing etc.

The Mission The nature of a business is often expressed in terms of its Mission which indicates the purpose and activities of the business, for example, to design, develop, manufacture and market specific product lines for sale on the basis of certain features to meet the identified needs of specified customer groups via certain distribution channels in particular geographic areas. A statement along these lines indicates what the business is about and is infinitely clearer than saying, for instance, we're in electronics or worse still, we are in business to make money The Values The next element is to address the Values governing the operation of the business and its conduct or relationships with society at large, customers, suppliers, employees, local community and other stakeholders. The Objectives The third key element is to explicitly state the business's Objectives in terms of the results it needs/wants to achieve in the medium/long term. Aside from presumably indicating a necessity to achieve regular profits expressed as return on shareholders' funds , objectives should relate to the expectations and requirements of all the major stakeholders, including employees, and should reflect the underlying reasons for running the business. These objectives could cover growth, profitability, technology, offerings and markets. The Strategies Next are the Strategies - the rules and guidelines by which the mission, objectives etc. may be achieved. They can cover the business as a whole including such matters as diversification, organic growth, or acquisition plans, or they can relate to primary matters in key functional areas, for example, o o o The company's internal cash flow will fund all future growth. New products will progressively replace existing ones over the next 3 years. All assembly work will be contracted out to lower the company's break-even point.

The Goals Next come the Goals. These are specific interim or ultimate time-based measurements to be achieved by implementing strategies in pursuit of the company's objectives. The Programs The final elements are the Programs which set out the implementation plans for the key strategies. These should cover resources, objectives, time-scales, deadlines, budgets and performance targets. It goes without saying that the mission, objectives, values, strategies and goals must be interlinked and consistent with each other. This is much easier said than done because many businesses which are set up with the clear objective of making their owners wealthy often lack strategies, realistic goals or concise missions.

Effect not Equal to Cause when Planning Strategy

When reviewing a business it is essential to cut through the symptoms of problems and reach the underlying causes. By way of an example consider why this company may be unable to increase its market share, Because it cannot penetrate major customers because its product range is too narrow because the company doesn't have the capability to produce additional products because of shortcomings in R & D because of a lack of expertise and resource because R & D is not an immediate priority because of a lack of profits because of a high interest burden because the company is over-reliant on borrowings because the shareholders can't raise additional permanent capital. The moral in this case is that there are no major customers due to under-capitalization. Also have a look at the discussion on causes of business failure in Devising Business Strategies.

SWOTs - Keys to Business Strategies

Having built up a picture of the company's past aims and achievements, the all-important SWOT strengths, weaknesses, opportunities and threats analysis can commence. Strengths & Weaknesses Strengths and weaknesses are essentially internal to the organization and relate to matters concerning resources, programs and organization in key areas. These include, Sales - marketing - distribution - promotion - support, Management - systems - expertise - resources, Operations - efficiency - capacity - processes, Products - services - quality - pricing - features - range - competitiveness, Finances - resources - performance, R&D - effort - direction - resources, Costs - productivity - purchasing, Systems - organization - structures.

If a startup is being planned, the strengths and weaknesses are related mainly to the promoter s their experience, expertise and management abilities - rather than to the project.

The objective is to build up a picture of the outstanding good and bad points, achievements and failures and other critical features within the company. Threats & Opportunities The external threats and opportunities confronting a company, can exist or develop in the following areas, The company's own industry where structural changes may be occurring

The marketplace which may be altering due to economic or social factors Competition which may be creating new threats or

opportunities

 New technologies which may be causing fundamental changes in products, processes, etc. Against an uncertain and shifting background, the objective must be to identify and prioritize the key SWOTs in a one-handed manner

Develop Business Strategies Once the SWOT review is complete, the future strategy may be readily apparent or, as is more likely the case, a series of strategies or combinations of tactics will suggest themselves. Use the SWOTs to help identify possible strategies as follows, Build on strengths Resolve weaknesses Exploit opportunities Avoid threats

The resulting strategies can then be filtered and moulded to form the basis of a realistic strategic plan - see also Devising Business Strategies for further insights into the development of strategies.

Simple & Short Strategic Plans

Notwithstanding that battles are often lost for want of nails, a company rarely succeeds or fails for minor or trivial reasons. The causes are usually substantial and are often self-evident, at least to an outsider. For example, the business was completely over-borrowed, management was weak, a major new product opportunity was identified, legislation changed, a major competitor went bust or expanded, the company never reinvested. It should be possible in the course of a few pages to set down the main elements of a business's vision, mission, values, objectives, goals, strategies, SWOTs etc. The compilation of a short report along these lines is likely to prove much more difficult than a lengthy dissertation which mixes up details and principles, and confuses the broad picture.

Summary
Strategic planning is not difficult when organisations approach it in a disciplined and orderly manner. It is simply a matter of following the steps establishing the Mission, identifying the Goals and Objectives, etc. through to the building, analysis and implementation of strategy An essential part of strategic planning is to firstly and firmly establish the foundation What is the organisation's business, and then build on that foundation.

BIBLIOGRAPHY

NAME OF JOURNAL

STRATEGIC MANAGEMENT JOURNAL CHARTERED ACCOUNTANTS JOURNAL BUSINESS ECONOMICS INDIAN JOURNAL OF MANAGEMENT TECHNOLOGY ANALYSIS & STRATEGIC MANAGEMENT STRATEGY BUSINESS STRATEGIC MANAGEMENT NEWS & ARTICLES BUSINESS WEEK

NAME OF BOOK
STRATEGIC BRAND MANAGEMENT

STRATEGIC MANAGEMENT BY ICAI (STUDY MATERIAL)

STRATEGIC MANAGEMENT : AN INTEGRETED APPROACH

WEBSITE
www.google.com