STRATEGIC THINKING AND PLANNING

Strategic Thinking and Planning

Strategic Thinking and Planning

Strategic Planning

Strategic planning is a formal long-term planning process focused on defining and implementing the organization's objectives. It is characterized by the following features. It provides a framework for planning and tactical and operational decisions daily basis (Armstrong, 1986, 87). This is the highest level of activity in the organization because it is managed by the top management.

Comparison of strategic planning and Day-To-Day Tactics

Activity

Strategic Planning

Day-To-Day Tactics

Hierarchical level

Senior Management Level

Includes all levels with a focus on middle management

Uncertainty

High

Low

Time horizon

Focus on long-term, as well as medium-and short-term aspects

Emphasis on short-and medium dimensions

Required Analysis

Bothe External and Internal

Internal

Alternative plans

Range of alternatives are included

Spectrum is bounded

Coverage

Concentration on certain important positions

Covers all the functional areas and integrates them

Basic monitoring values

Potentials of success (for example, the growth of market share)

Income, profitability, liquidity

Strategic Planning Process

Strategic planning process allows shareholders and management companies to determine the direction and pace of business development, to outline the global market trends, understand the organizational and structural changes are needed for the company to make it competitive (Olsen, 2012, 99). However, the situation began to change, and, as studies show, more and more companies from medium business begin to engage in strategic planning. Strategic planning process consists of following steps.

Strategic Analysis

It includes development of the mission, vision and goals of the organization.

Analysis of the environment both internal and external is also done, which includes data collection, analysis of the strengths and weaknesses of the company, as well as its potential based on available external and internal information.

Strategic Planning

This step includes decision making and selecting the best available strategy in the specific situation.

Strategic Implementation

The strategy is implemented and continuous evaluation, monitor and control of the performance is done after the implementation.

Strategic Analysis Tools External

External strategic analysis includes PESTLE Analysis, Porter's five forces competitive analysis and Ansoff Growth Matrix. These tools are briefly discussed below.

PESTLE AnalysisPolitical 

It is the political climate in which society lives. It includes the degree of concentration of power, the political and party system. 

Economic 

The general economic context, the relationship between private and public property, the centralization or decentralization of economic planning, financial system, fiscal policy, the level of investment in physical resources and consumption characteristics. 

Sociological 

The structure and mobility of society, their roles, their organization and their institutions. 

Technological 

It is the level of scientific and technological advancement of the company, including its physical basis: plant, equipment, infrastructure, and the basis of conceptual knowledge. 

Legal 

The constitution, the characteristics of the system of laws, the jurisdiction of different government units and training specific laws, taxation and corporate control. 

Environment 

It consists of all organizations and individuals with whom the company interacts directly. 

Porter's Five forces competitive Analysis

The model of Porter's five competitive forces is a tool for strategic analysis of the company's competitive environment. Developed by Michael E. Porter, this model aims to identify the forces in the competitive environment and their intensities, to adapt its strategy to gain a competitive advantage and thus make a profit above the industry average (Kotler, 2003, 187). Michael Porter has identified five types of forces that can ...