Business Strategy - Process of Strategic Planning - Essay Example

Topic: Contents 1 3 2Process of strategic planning 3 2 Strategic Purpose (Contexts) and terminology 3 2.2 Issues involved in the strategic planning of TNT 4 2.3 Different planning techniques 5 3Formulating a new strategy 6 3.1 The organizational audit for TNT 7 3.2Environmental audit for TNT 8 3.3 Significance of stakeholder analysis 9 4 Conclusion 10 5 REFERENCES 11 1Abstract Strategic planning is regarded to as an organizational management activity which is used to create priorities, focus resources and energy, ensure that stakeholders and employees are geared towards achieving the organization’s goals, strengthen operations and assess the organization’s direction based on a changing environment (Olsen, 2013). It is through the use of strategic planning that most organizations are able to prosper. TNT is a global company that has been able to expand its market all over the world based on its strategic planning technique that has satisfied their customers and increased its market base. This paper is going to look at the strategic planning process of TNT as well as the formulation of a new strategy. 2Process of strategic planning Strategic planning is a significant aspect when it comes to the operations of any organization. It is important for an organization to have a clear understanding on the process of strategic planning in order for it to implement it successfully (Johnson, 2004). This section is going to focus on the mission, objectives, vision as well as the core competencies of TNT, the issues that are involved in the process of strategic planning and lastly, the different planning techniques. 2.1 Strategic Purpose (Contexts) and terminology A strategy can simply be defined as a long-term direction for any organization. According to Johnson et al, a strategy has the long-term direction that is required in achieving the set organizational goals (Johnson, 2004). In the case of TNT, the organization has established its own practical measures based on three aims. These aims are customer relationship, innovation and operational excellence. These measures in this context can be classified as the long term direction goals for TNT. A mission statement in an organization is used to provide the stakeholders and employees with clarity of the set purpose. For example the TNT mission statement is explained below (TNT, 2010): Deliver our services to our clients through providing the best and reliable solutions via our delivery networks. Exceed the customers’ expectations during the process of transferring their goods to their destination around the world. Strive to be the leading organization in the industry by imparting pride in our customers, sharing responsibility and creating substantial value for the stakeholders around the world. The vision statement of an organization is simply focussed with the state of an organization that is desired based on future forecasting (Simerson, 2011). A vision statement for any organization should look at what the organization wants to achieve at present and in the future. Objectives are regarded as the organization’s desired outcomes. In the case of TNT the top level objective of the organization is to achieve profitable growth. The core competencies simply differentiate an organization from the competitors in the same industry. The resources, activities and skills which cannot be copied by the competitors may be regarded as the core competencies of that organization. TNT is known to have many core competencies in the industry and thus it has been able to gain a competitive advantage over its competitors through the available resources. 2.2 Issues involved in the strategic planning of TNT According to Sadler et al, strategic planning is a form of systemized procedure that is used to develop a strategy for an organization. This concept of strategic planning encompasses a lot of issues. There are five major issues based on analysis conducted by Sadler, these are confusing the strategy with strategic plan, paralysis by analysis, dampening of innovation, detachment from reality and lack of ownership (Sadler, 2003). Some confusion may exist as a result of the strategies already in existence during the process of strategic planning. Majority of the managers may tend to think that the process of strategic planning is based on strategies that they already have and hence there all the same. Paralysis by analysis is another issue. It simply argues that the process of strategic planning can be too detailed due to extensive analysis. The next issue is dampening of innovation. Strategic planning may tend to set up a lot of strict controls in the organization and thus this may hinder the organization’s flexibility. Therefore, the argument is that strategic planning may cause dampening of innovation. Another issue is detachment from reality. Strategic planning is regarded to as an intellectual process and thus it often causes damages to the reality that is focussed on operations. The final issue is that of lack of ownership. Most of the strategies in an organization are planned by the senior management or corporate planning department (Sadler, 2003). Therefore, it is true to say that there is no widespread form of ownership within an organization with regards to strategic planning. 2.3 Different planning techniques Strategic planning approach is different based on the context referred to. Based on this an organization embraces different planning techniques based on the circumstances involved. Focussing on the aspect of different circumstances there are five types of strategic planning techniques that can be introduced: direct planning, command planning, emergent strategy planning, devolved emergence planning and coordination planning (Wittmann & Reuter, 2008). Directive planning is a technique that is applicable in large and stable organizations but should not be very complex. In the organizations using this approach the top management level is in charge of the strategic planning. Using this method forces the environment of the organization to be extensively analysed. In the case of having a more complex and turbulent organization, coordination planning is then applied. For this type of organization it is important to implement strategic planning effectively. The next technique is command planning. This technique is only applicable whereby the organization is operating in a stable environment. This type of model best suits a small organization setting. In this case it is the owner of the organization who makes the strategic plan. Finally the last technique is emergent planning. This technique is best applicable in a large organization that is based on a complex environment. These strategic planning techniques are mostly conducted by a team of experts or corporate strategic department (Altson & Bryson, 2013). With regards to TNT the best planning technique that can be used is emergent strategy planning techniques. This is because the technique is more close to TNT’s strategic planning technique. TNT’s organizational environment is quite complex and therefore it requires more attention so that the strategic planning technique adopted can be able to gain a competitive advantage. Having a close look at TNT’s strategic direction, it can be noted that the organization is indeed trying to expand its business more into the global market. Therefore, the emergent strategy planning technique is the most suitable technique to be applied to TNT. 3Formulating a new strategy Formulation of a new strategy for any organization requires a comprehensive understanding of both the micro and the macro environment. To create a clear picture of these environment PESTEL and SWOT techniques can be used. Additionally, Porter’s five force technique can also be used to carry out an analysis of an organization’s macro environment. 3.1 The organizational audit for TNT SWOT analysis is a technique that can be used to carry out an analysis of an organization’s micro environment. Moreover, it may also be used to explain about the macro environment (Rea & Kerzner, 1998). Strengths Strengths for TNT Below are some strengths that are exhibited by TNT. As an organization that is well established in the delivery service industry, TNT possesses a lot of strengths that cannot be seen by other competitors in the industry. TNT was first founded in Australia in the year 1946 and at present it is recognized as a global organization that serves clients in around 200 countries all over the world. TNT embraces the use of sophisticated technology. TNT is recognized as a reliable and fastest provider of delivery services. It is also considered to be a leader in the European Market. TNT has clearly stated procedures, visions, missions, policies, objectives and strategies. TNT has well trained staffs that are committed. Weaknesses TNT is recognized as a well-established organization and thus being an organization which has been able to maintain a healthy organizational environment with regards to its mission, vision, strategies and objective, TNT is known to possess very few weaknesses. The weaknesses involved in the organization concern issues such as transportation, security and punctuality which are inherent in the industry. These factors may hence be taken as weakness in the case of an environmental change. Opportunities. Being an organization that has expanded its operations in the global market, TNT therefore has many opportunities of expanding its operations. The development of communication as well as transport technology permits a much better and faster delivery service. Threats The threats that are in the industry are also experienced by TNT. However, TNT’s strengths have enabled it to be immune to a lot of threats in the industry such as: Persistent threats in the delivery service industry such as transportation, competition, security. The fierce competition that exists in the market. 3.2Environmental audit for TNT Carrying out an environmental audit simply gives a perceptive about the environment in which an organization operates in. TNT operates on a global platform thus its environment is a global environment. The best technique to be applied here is PESTEL. PESTEL stands for factors such as political, economic, social, technological, environmental and legal (Alston & Bryson, 2013). With regards to political factors TNT usually operates in the midst of various political parties thus some political boundaries may often facilitate such organizations like TNT but at times they opt not to. Economic factors are quite crucial for organizations especially for those that are like TNT. Economic situations that are globally related such as recessions and also specific economic situation in different countries are very important when an organization is operating globally. Social factors in the context whereby an organization is operating globally are the most important in the PESTEL analysis. Societies are quite different based on their rules and thus TNT should take in to consideration the societal factors when it comes to promoting their services. The staff should be trained in a manner that will enable them to adhere to the social factors. Therefore, the social factors are very important in any organization. Technological factors are quite important in the organizations that mainly depend on transportation and communications like in the case of TNT. New inventions made in the transportation and communication sector should be embraced by TNT for better delivery of their services to their customers. Environmental factors are quite significant in the business world at present due to the fact that they are geared towards sustainable development. Thus, TNT should aim at addressing the environmental factors that may affect the survival of the organization. Legal factors simply vary depending on the country. This shows that every organization will encounter various legal systems that may affect their organization in many ways. Therefore, it is quite clear that there is need to understand all the aspects of a macro environment for a better organizational performance. 3.3 Significance of stakeholder analysis Stakeholders are very important when it comes to the establishment of an organization. Therefore, stakeholders can simply be defined as parties that either affect or can be affected with the actions made in the business (Rea & Kerzner, 1998). The stakeholders can be employees, government, creditors, communities, suppliers, customers or even unions. The stakeholders participation is very crucial in any organization therefore when new strategies are applied the stakeholders should be aware. A stakeholder analysis can be done in order to have an understanding of the organization stakeholders. A stakeholder analysis is thus a technique which can be used in order to identify the important groups, people and institutions that influence an organization’s success. The reasons for conducting a stake holder analysis are (Simerson, 2011): To identify groups, people as well as institutions that may tend to influence the operations of an organization. To wait for the influence that the groups will impose on the organization. To formulate strategies that will support the development of the organization and reduce any form of obstacles. According to some scholars some of the advantages of conducting a stakeholder analysis are (Olsen, 2013): The organization can be able to use opinions of stakeholders in shaping up the organization at its inception. This will ensure quality and success of the organization. This enables the organization to anticipate the reactions that may be exhibited by the people towards its operations. Gaining substantial from the top stakeholders may help the organization in accessing more resources. Therefore, it is clear that stakeholder analysis is important for every organization. 4 Conclusion In conclusion it is quite clear that strategic planning is vital for the operation of a successful organization. Every organization should adopt a strategy that best suits with the organizational environment under which they are operating. In the case of TNT its strategic planning techniques has enabled it to achieve a lot of success in the delivery industry. TNT mission and vision have enabled it to satisfy their customers to the best of their ability. With a vision of expanding their global reach further, only time will tell how big TNT will become in the industry. Therefore, for organizations to aim in being the best in the industry there is need to focus on effective strategic planning. 5 REFERENCES Alston, F., & Bryson, J. (2013). Creating and implementing your strategic plan. San. Johnson, P. (2004). Fundamentals of collection development and management. Chicago: America Library Association. Olsen, E. (2013). Strategic planning for dummies. Hobokken, N, J: John Wiley & Sons. Rea, P., & Kerzner, H. (1998). Strategic Planning: A practical guide. New York. Sadler, P. (2003).Strategic Management. London: Kogan page. Simerson, B.K. (2011). Strategic planning: A practical guide to strategy formulation and execution. Santa Barbara, Calif: Praeger. TNT. (2010). Business profile and organization. Wittmann, R.G., & Reuter, M. P. (2008). Strategic planning: How to deliver maximum value through effective business strategy. Philadelphia: Kogan. Read More