The Importance of Strategic Planning in Organisational Success - Essay Example

Strategic planning and implementation The topic deals about the importance of strategic planning and implementation in the organisational success. This study deals about the stake holders’ role in developing strategy, key criteria for the evaluation of strategic options, Role of vision and mission, Influence of cultural, social, and ethical environment in the organisation’s business objective, Encouragement of participation in the strategic dissemination process, and strategic evaluation process. This has done with the illustration of retail giant Wal-Mart. The study is comprised of Introduction, Outline of strategic planning and implementation, Answers to questions, and conclusion. Introduction Changing attitude of the companies to global gives relevance to strategic planning and implementation. An organizations strategic goal helps in directing the resources towards it. But strategic plan alone does not result in a successful implementation of the strategy. It depends upon the overall environment of the business i.e. its size, culture, market pressures etc. Studies show that strategic management led to increased performance of an organization in terms of its profit, market share etc. Strategic management decisions taken at all levels of management helps to evaluate and measure the benefits derived. It also helps in the creation of problem prevention culture in the organization. Strategic management offers a number of benefits to the organization practicing it. Strategic management helps in envisioning the future of an organization. It helps to understand for what the organization stands for, to charter the development path and planned results over a period. People could realize the importance of their working and what are expected from them. Better delegation, coordination, monitoring, performance evaluation and control. Strength and weakness of the firm could be identified. Also helps in meeting competition through adapting suitable strategies for exploiting opportunities and to fight against threats. Outline of Strategic planning and implementation The word strategy has different meaning in different parlance. In business, there is no definite meaning and it is often used to mean a number of things. Alfred D Chandler had defined strategy as “the determination of the basic long term goals and objectives of an enterprise and the adoption of the courses of action and allocation of resources necessary to carry out these goals.”(Page no.26, Second Edition, Business Policy and Strategic Management, Azhar Khazmi). William F Gluek, a well known in the strategic management area has defined strategy as " a unified, comprehensive and integrated plan designed to assure that the basic objectives of the enterprise are achieved" (page no. 27, Business Policy and Strategic Management, Azhar Khazmi, Second Edition).  Unified refers that the strategic plan joins all levels of an organization, comprehensive refers all aspects of an organization and integrated refers that whole parts are compatible. Nature, depth and coverage make difference in strategy definition. A company may have more than one strategy at different levels. A company adopts different strategies according to their changing environment. They may expansion, diversification, and disinvestment strategy. Usually there are four essential phases in strategic management process which are sequential in nature. The four phases are: establishing the hierarchy of strategic intent, formulation of strategy, implementation of strategy and performing strategic evaluation and control. In practice these phases could not be differentiated from each other. Each phase consists of a number of elements. This topic is described with the example of Wal-mart, the giant retailer in the world. Started as a one room apartment, now it is crossing $100 billion every year, which is comes from 3000 stores worldwide and it is also composed of 75000 employees across the glob. It was named as the one of the “10 most admired corporation”. It has done it through the efficient balance between the profit-targeting approach and social responsibility approach. But it always sticks on its traditional philosophy: “Provide everyday low prices and superior customer service” (http://www.peerpapers.com/essays/Walmart-Strategy/172509.html). What consideration should be made to ensure stakeholder participation in developing management strategy? A stakeholder is a person who has interest in the wellbeing of an organization. Stakeholders may include its members, employees, suppliers, customers, community leaders, investors, related organizations, regulatory bodies, government etc. An organization working on a strategic plan or policy development, should consult with its key stakeholders for achieving its goals. Stakeholder participation in developing management strategy offers certain benefits: 1.Group thinking helps in creative ideas and thus helps in quality decision making. 2. Stakeholder participation will lead to greater stakeholder satisfaction in the planning of the product. 3. Strategy implementation will be easy when stakeholders feel committed. 4. There will be superior governance and open communication. Who to consult and when to consult are key considerations of participating stakeholders in developing management strategy. Mostly internal stakeholders are consulted more than the external stakeholders. In some cases it is not necessary to consult all the stakeholders. There are three options for stakeholder consultation like: survey, one to one meeting and multi stakeholder consultation. Stakeholders could be participated in policy design, formulation and appraisal, for analyzing the alternations, for analyzing the impact on social and cultural environment, for choosing the policy instruments and for policy implementation, monitoring and evaluation. Stakeholder participation is one way to long term effectiveness. Wal-Mart conducts stakeholder analysis for identifying the stakeholders to consult in determining public affairs strategy. The stakeholders of Wal-Mart are mainly divided into two: market and non market stakeholders. The market stakeholders include stockholders, Wal-Mart executives, employees, communities where Wal-Mart is located, consumers, non-profit organizations, other retailers, online retailers and gasoline retailers who has economic stake in the company operations. Non market stakeholders include labour unions, international retail stores and politicians who has non economic stake in the company operations. http://allman.rhon.itam.mx/~oromero/Wal_Mart_CaseStudy.pdf What are the key criteria that should be considered when reviewing management strategy options? Focusing on alternatives helps in narrowing down the number of alternatives which is feasible. Business definition and thorough gap analysis helps to cut down to few alternatives. These alternatives are further analyzed based on the selection factors. Selection factors helps to focus on few alternatives and to choose the best strategy. It can be broadly classified into two as objective and subjective factors. The objective factors are the analytical techniques such as rational, normative or prescriptive. Subjective factors depend upon the personal judgments. Based on the selection factors the results of the analysis are bought together to identify the best strategy. The factors to be considered while evaluating the strategy options are the mission and vision; value system of the organisation; future of the current business; government policy, competitive environment; company resources; supply and demand conditions of the firm; and business environment. The cost and benefit of the particular strategy is also very much important while choosing different options. Wal-Mart successful strategy formulation includes three elements looking into the following: Wal-Mart’s competitive strategy, the CEO’s leadership and the company strategy strengths and weakness assessment. The data for the analysis is obtained from the company’s annual report, facts sheet, and internet. The SWOT (Strength, Weakness, Opportunity, and Threat) analysis is done to highlight the leadership style of CEO. The culture, values are also taken into consideration. Wal-Mart’s key strategy is to become the leader in the retail market all over the world. This strategy is evaluated by the competitive strategy of every unit. Each store compete each other to become dominant in the retail market. http://allman.rhon.itam.mx/~oromero/Wal_Mart_CaseStudy.pdf Wal-Mart strategy: “Wal-Mart’s corporate strategy involves selling high quality and brand name products at the lowest price (Vans, 119). In order to keep low price, the company reduces costs by the use of advanced electronic technology and warehousing”. (http://www.peerpapers.com/essays/Walmart/88478.html) Strategic Goals of Wal-Mart Become a pioneer in the retail market, Expansion in US as well as international market and thereby ensure growth. Ensure brand recognition and customer satisfaction and helps the retailers by offering standard price, Diversification into other areas such as pharmaceuticals, automotive repair and grocery sale. These are the strategic goals of Wal-Mart. (http://www.peerpapers.com/essays/Walmart-Strategy/81329.html) Global strategy: “Dominate the retail space across the world Cash on the retail space across the world Replicate the success achieved in the US markets and become the world’s largest retailer”. (http://www.peerpapers.com/essays/Walmart-Strategy/83658.html Thus we can say that the company have a clear cut strategy option in each level. In its home country, in industry and global level the strategy will be changing but there is a common theme gives the customers superior preference, by ensuring the participation of stakeholders and achieving the ultimate goal-to dominate in the retail world. Describe situation with an organization for your choice where a potential strategy might be developed to resolve the issue produce appropriate strategy and indicates its resources The unregulated pollution, rapid population, global warming and excessive consumer affluence are major problems faced by the world which results the future in jeopardy. The concept of sustainability is the possible solution and so business should practice sustainability to achieve and major companies plans to implement green strategies. Wal-Mart has successfully implemented the Sustainability 360” program. The company introduced new agenda including changes in the business practices, stressing on environmental responsibility. Wal-Mart approached this strategy through new design technologies, new ideas and overall support from the stakeholders. Wal-Mart’s Sustainability 360” program influenced the suppliers, logistics, manufactures, government officials, communities and consumers. Wal-Mart has done assessment on the following aspects like environmental footprint, impact of product lines, impact on local communities worldwide, affordability and risk, and the interaction among the employees before the implementation of green strategy. After assessing three goals are derived which include? 1. “To be supplied by 100% renewable energy 2. To create zero waste in all operations 3. To sell products that sustain resources and the overall environment” (http://www.frost.com/prod/servlet/market-insight-top.pag?docid=105661785) The key areas r resources for practising the goal are land; supply chain; packaging; logistics; energy; facilities; and climate. The goals are monitored and measured continuously to achieve it in the long run. For an organization of your choice list the ethical cultural environmental social and business objectives. How are these influenced by the current business and economic climate? Cultural, Social, and ethical environment of Wal-Mart As per the policies of Wal-Mart, it follows a unique culture and it is based on three basic beliefs; Respect each individual with all the dignity, servicing the customer and exceed the customer satisfaction, and finally continuous improvement through innovation and creativity. The controversies and legal battles always followed Wal-Mart. It has accused of destruction of small scale industries, low wage rate, compelling suppliers to supply goods at a lower price, outsourcing jobs to other counties at a lower labour cost etc. Company is also known for its ununionizing strategies. Instead they conduct labour relation classes, and give them badge which says, “We can speak for ourselves”. When competitors understood that the cheap price is the reason of Wal-Mart’s success, they started to imitate that policy. But they failed in that effort. Wal –Mart employees are motivated and passionate about their work that they have a belief that the customers are getting the advantage of their effort. And company also encouraged to brainstorming new ideas and innovation for cost cutting. This kind of employee involvement was missing in competitor’s labour force. Thus we can say that the management is intended to make unity among the employees that they believe that they are all come under one roof and come together to achieve the goal of the organization. The management of Wal-Mart is also accused of its unfair labour management that aroused some ethical issues. The critics argued that the overseas labour hubs of Wal-Mart are known for the low wage rate and labours are considered to be slave. Critics also said in order to achieve their goal-to minimize the cost the company will do anything. To overcome all these criticism Wal-Mart started a new team called Wal-Mart Watch in order to monitor the each movement of the company and to advice them in the critical decision. The main aim of this group is to make the “Wal-Mart, to become a better employer, neighbour, and corporate citizen”. (http://walmartwatch.com/about) http://larouchepub.com/other/2003/3044wal-mart.html. http://www.alagse.com/hr/hr6.php Describe the role of organization vision and mission statement As per the definition of Burt Nanus, vision should be realistic, credible, and should give attractive future for an organization Role of vision: Motivate people to work for the organization: It motivates, energizing the stakeholders of an organization. When a firm achieves its goals, it will boost the morale of the stakeholders. And thus they are also ready to participate in the progress of the organization. Vision gives a feel that they are also part of a great organization: “The right vision will mean something to everyone in the organization if they can see how what they do contributes to that vision.”(http://www.au.af.mil/au/awc/awcgate/ndu/strat-ldr-dm/pt4ch18.html) We can see the difference when a worker says that I am working in the organization as an executive and he says that he is part of a team who are working together to realize the goal of the company. In second sentence he means that he is also a part of a great work. Vision becomes the standard or benchmarking in the organization. It helps the employees to understand the quality of work that an organization expects from them. It helps the employees for the continuous improvement. Vision helps to concentrate on future. A vision should be forward looking. It should tell what the organization targets. Thus the vision is a dream position of an organization in the future. Vision helps for strategic planning: A vision statement identifies where should the firm go and it become the foundation for strategic plan. I.e., a vision statement tells the goal of the firm and strategic plan tells how a firm can achieve its goal. Role of Mission “Mission is "a clear and compelling goal that serves to unify an organizations effort. An effective mission must stretch and challenge the organization, yet be achievable" (Collins and Porras).”(http://www.au.af.mil/au/awc/awcgate/ndu/strat-ldr-dm/pt4ch18.html) http://www.au.af.mil/au/awc/awcgate/ndu/strat-ldr-dm/pt4ch18.html There are four ways to represent a mission statement: Targeting approach (Company’s goal in near future); Common enemy approach (Over taking dominant player in the market); Role model approach (Taking key players in other field as the role model- To become the Microsoft of retail sales companies); Transformational approach (Mention about the transformation takes place in the organization, for e.g., restructuring, revival etc.) http://www.au.af.mil/au/awc/awcgate/ndu/strat-ldr-dm/pt4ch18.html Vision and Mission of Wal-Mart Vision: To become the worldwide leader in retailing, Mission: "help people save money so they can live better" How a timetable of strategy can be determine. Include a sample timetable to include key Milestone Each and every task requires a certain time period. Successful of a strategy depends upon its formulation and successful implementation. A strategy requires a well defined timetable for the following: For appraising the environment and organization; strategic analysis; strategic choice; formulating strategies; preparation of strategic plan; activation of strategies; design of the system and structure; behavioural implementation and for operational strategies. Wal-Mart decided to invest in RFID and EPC to improve the efficiency of supply chain. The time table of Wal-Mart in RIFD (Radio Frequency Identification) and EPC (Electronic Product Code) implementation schedule: “* Second quarter 2003: Announce and define the scope of the pallet-case level implementation. * Third quarter 2003: Test interoperability of EPC-compliant readers and tags. * Third to fourth quarter 2003: Officially brief suppliers on EPC. * 2004: Test implementation strategy. * Jan. 2005: Go live with targeted vendors. * 2005/2006: Roll out case/pallet level RFID strategy with all vendors.” ( http://findarticles.com/p/articles/mi_m0UQX/is_8_67/ai_108000100) How the dissemination process is be used to help an organization encourage participation? The strategy plan should be carefully implemented in order to achieve the objective and disseminate the problem. The success of the strategy depends upon the level of participation and involvement of the stakeholders of the organisation. The stakeholders should actively work in a team and stakeholder participation has the following implications. All the resources like men, money, material and management should be allocated in the right quantity and right quality in the right time to achieve the result. Managers are encouraged to be proactive and they are helped by the supervisors and employees. Working level will also be improved it offers great support to the management which leads to more participation and sharing of concerns. Group dynamics and team work is possible through group based strategic decisions. The strategic alternatives are developed through group interaction where company issues are discussed by the group members. The short listing of the alternatives is done by the experts. Strategic plans also help to motivate the employees to be responsible. Employee development and understanding of various steps are directed. Thus helps in motivating the employees and participating in the dissemination process with greater responsibility. Describe the importance of monitoring and evaluation of new strategy outline how it Might be achieved Strategic evaluation helps in evaluating the effectiveness of a strategy to achieve the organizations objectives. Strategic evaluation and control is the last phase of strategic management process which gives feedback of the strategy implemented. The strategic evaluation and control is done in three steps: performing strategic evaluation; exercising control and reformulating strategy. The evaluation should be based on the minimum amount of information. It should be timely evaluation to take corrective actions. The strategy is evaluated by measuring the actual performance and comparing it with the desired performance. If there is any discrepancy in the actual performance or the strategy is not able to meet the objective it should be reformulated by taking discrepancies into consideration. Importance of strategic evaluation is for coordinating the activities performed by the managers and groups and small business units through the control of performance. Moreover the need for feedback, appraisal and reward, check on the validity of strategic choice etc. makes the strategic evaluation important. Strategic evaluation helps to assess whether the decision match the intended strategy. The encouragement of participation through dissemination process and evaluation, and monitoring of a new strategy can be explained with the help of the following illustration. In 2007, Wal mart have introduced a new strategy by giving out more designed, stylish product. They have developed strategy named as” Look beyond Basics” The strategy implemented after one year’s intensive research. But when it came into effect, the strategy becomes a failure. Then it changed its strategy by giving more advertisement. But it again failed. Then they carry out a survey to find out the reason of these setbacks. The survey found that people come to Wal-Mart for its low price and not for stylish product. The customers just want low price. The survey also revealed that customers want branded and standardised goods. After the evaluation of the failed strategy they find out the mistake and formulated new strategies in order to rectify the mistakes. For the purpose, Wal-Mart created teams which comprises of marketing executive and merchandise executive, to handle five distinct product-food, entertainment, apparel, home appliances and pharmacy. And they also offered different branded products under one roof. Thus instead of recalling the brand ‘Sony’, they started to remember Wal-Mart where they got the desired branded product. The strategy implementation is done through by encouraging group participation from all level. http://www.iht.com/articles/2007/03/01/business/walmart.php Conclusion: Business policy and strategic management is very much important in the competitive world. Integration of knowledge gained from the various functional areas of management to adopt a generalist approach to problem solving is the key area of strategic management. Competitive and changing technology business environment requires thorough understanding of the business environment and organisation which is possible through strategic management. Stakeholder consultation in the development of management strategy policy formulation becomes easier for the management and greater participation is obtained while implementation. Improved job performance with career planning and development to the employees is also one result among the strategic management. A strategy helps in the determination of a basic long term objectives; steps to achieve these objectives and the allocation of resources to take over the courses of action. Read More