Term Paper: Strategic and Tactical Planning- Definition

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[. . .] Literature in the field of planning and management cite three most potential benefits of strategic. The first benefit cited is the enhancement that strategic change brings about in the positive and progressing relationship of the organization with the environment. Calingo (1989) observes that in a price sensitive market an organization that adopts 'low cost strategy' would be most successful and in a quality market place where customers are confused with vast differences in product offering an organization that adopts a strategy to differentiate the product would be more advantageously placed. The second benefit often associated to strategic planning is that a strategic change brings to an organization new vistas of competitive advantage that is never perceived or pursued by competitors.

The readiness of an organization to experiment and innovate and develop a new product or service or to test the waters of a new market etc. would definitely offer the organization an advantageous position of a pioneer in the field. (Gannon, Smith & Grimm, 1992). Thirdly a strategic change implemented by planning strategically would improve the organization's adaptability with the implementation of healthy changes in the business and industry. Strategic planning enables a renewed focus to the vision and goals of the organization and brings about an added zeal within members of the organization thereby would act as a catalyst for increased efficiency and productivity. Organizations that are closed to strategic changes often become more 'stagnant', as they limit the creativity and beneficial involvement of its members (Grimm & Smith, 1991).

However, associated with the benefits of strategic planning are the potential costs that organization would need to incur with the implementation of the strategic plan. Organization often tend to keep off from planning strategically due to the cost and risks involved. In implementing a strategic plan, managers are often challenged by the apparent risks as they are solely responsible for the development of a 'new formula for success' that is suitable to address the key change in organizational and environmental, factors. (Yoshihara, 1990). The next factor is that the strategy change has a direct bearing on the culture of the organization and although management experts and gurus suggest practical and pragmatic means to change organizational culture, it would practically take several years for the culture of the organization to support and adopt the change in strategy. This would mean the business would run out of profitability, at least in the initial years. The process of implementation of a strategy also would demand huge capital outlays (Miles & (Snow, 1978).

Lastly a strategic change at times would lead to market confusion and a consumer would not rightly perceive the organization's products and services, there by resulting in loss of market share and profitability. Introducing a new product or service to the consumer does not always ensure success and the risks associated with the strategy would prove costly to the organization. In fact in the modern market conditions it is often seen that competitors tend to warp the awareness of consumer aiming to garner the benefits of the confusion in the market, brought about by the strategic change. The consumer a goods market is flogged by such "imitation strategies" by competitors. This would further confuse the customer and many consumers buy the duplicate product in the belief that it is the original product. Such situations add complexity to strategic implementation and often prove costly to the organization.

The Need for Strategic Planning

The special edition of Business Week (1992:60), reports, "change can [no longer] be an occasional episode in the life of a corporation. Companies with rigid structures will be swept away. Corporate cultures that can adapt will survive and thrive..." If modern managers need to be successful in their profession they need to flexibility and adaptive enough to the speedy change that is sweep the corporate world today. Effective strategic planning is often identified as a prior necessity to ensure positive results in the ever-changing business scenario described herein. Primarily the advancements in technology and the lightning speed with it technology is advancing is causing business management to be more and more complex day by day. Strategic planning would assist the managers in foreseeing the changes, both within the industry and outside and would prepare the managers to meet the challenge effectively. As markets get competitive, a strategically planned marketing function would be able to respond positively to the market changes with advantageous propositions. Strategic planning provides a definite perspective to the company's direction and acts as a guideline to the company's managers to reach the desired position in the stipulated or planned time. Strategic planning can be used to ensure total participation of the employees in all areas of business, thereby ensuring bottom-line success.

Successful Implementation of Strategies

Over the years the implementation of the strategic plan is becoming more and more important than the content of the plan as strategic planning is primarily a top management faction in organization and fails to trickle down the layers of managements. As Landerk has quote in 1969, " strategic planning is carried out by the Chief Executive and his first executives. It is concerned with the broad concept of the company in the future and the provision and allocation of total resources to product market opportunities to realise the company's profit potential through selected strategies, tactical planning which embraces all the detailed plans and actions involved in implementing it can be undertaken by the first executives and those who report to them." The adopted strategies are required to be communicated to all concerned managers so as to prepare the necessary programs. In articulating and formalizing the programme the managers would need to seek recommendations of staff advisors and line subordinates and review them to ensure consistency to the plan.

The key tasks and the objectives would need to be clearly identified and assigned to a single person, who is as far down the organization structure as viable and the responsible manager would need to review the implementation of the programme on a regular basis. Thompson and Strickland (2003) also identifies that post-modern managers would be able to execute strategy competently only if they posses a more apparent and obstinate commitment to adopt best practices and methods and strive for continuous improvement of the process, adopt benchmarking standards, facilitate innovations in management practices, reengineer and if needed restructure the core business processes, and initiate total quality management programs, as these processes would enhance efficiency and product quality, more often helps to lower costs and offer improved customer satisfaction.

The Effects of Strategic Planning - Literature Review

Ever since its introduction, strategic planning has been a hot topic and management experts and researches had been keen in investigating the effects of strategic planning on the financial performance of companies. Most of the studies over the 1980's and the early 1990s suggest that there was no significant and steady correlation between the strategic planning and implementation by companies and its financial and the financial performance. However the literature on strategic planning and management is covered with the perceptible benefits of planning, most importantly the socio-political aspect of planning which helps the organization to adapt effectively to the external environment. A host of authors assign such benefits to strategic planning as that it would tender a positive attitude to change, assist in determining the future threats and opportunities, with specific reference to marketing, promotes internal communication.

Langley suggests the advantages of planning, with reference to the four roles where formal strategic planning would normally be applied. The first role of the strategic planning is suggested to be the information role, where strategic planning would assist management decision making with the necessary inputs and information. The next is the group therapy role, in which strategic planning would ensure total involvement of all people across the organization thereby enhancing organizational commitment. The next role of strategic planning is the direction and control role where the plans provide a guidance to make future decisions and programmes aimed at certain similar objectives. And finally in the role of the public relations, strategic planning which is formal would help the organization to impress or influence outsiders. (Langley, 1988) Roach and Allen recognizes that the process of strategic planning elicits the most knowledgeable and influential minds both inside and outside the corporation and hence would offer considerable benefits to the organisation.

The process would play a crucial role in the performance of the organization as it deliberates on the future consequence of the decisions currently implemented, amends the plans to the changing business conditions, adopt to rational means of managing the business and coordinates with and controls multiple and complex enterprises by way of a more practical, and pragmatic management system. (Roach & Allen, 1983). However in 1987 Cartwright suggested that strategic planning is 'not as rational and analytical' as… [END OF PREVIEW]

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