The ability to anticipate future changes in time, especially when things are going well in the company, and there is the possession of strategic planning skills.
If you recognize the weaknesses and strengths of the organization, choosing the right path to achieve the goal, this can do a good job: save the company from ruin or bankruptcy, help get ahead of competitors, reduce production costs, increase its competitiveness, and master new technologies.
In many ways, the success of a company in the market is determined by strategic planning in the organization. As a method, this is a phased study of various aspects of activity with the further development of a technique for executing a procedure aimed at theoretical and practical construction of a model of the future. A clear program for the transition of an organization or enterprise to an optimal model of management or production in the conditions of the market.
Strategy or closed loop
The sages say that it is better to fulfill a good plan today than an ideal one, but tomorrow. The fact is that, without even owning special economic knowledge, any company must go through the strategic planning process. It includes eight main stages, united in a closed cycle. It:
- mission of the enterprise (organization), or the reason why the organization arose;
- goals set for the company, opportunities for their achievement;
- assessment of the influence of external factors on the existence of the organization;
- determination of competitiveness, strengths and weaknesses of the enterprise;
- a strategy for comparing possible external threats and contrasting the organization's strengths with them;
- the choice of strategic alternatives is one of the central points of the strategic planning process;
- implementation and selection of methods, development of marketing strategies to achieve the goal;
- assessment of the chosen strategy and transition to a new stage of development.
mission Possible
The purpose of creating an organization or company determines its mission. This is the first stage of the strategic planning process, which details the reasons for the emergence of any enterprise and determines its guidelines at various levels of management.
In formulating the content of the mission, it is necessary to disclose the following sequence of actions:
- activities or tasks facing the organization, taking into account consumer requirements and the possibility of using existing technologies;
- objective influence of external factors in relation to the company;
- principles of corporate culture formation, involvement of employees of the appropriate level of professionalism;
- determination of the value and goals of labor of the whole team, which are not limited to one profit.
The formulated mission or vision of the organization of its activities in the market should first of all answer the basic questions indicated in the figure below.
Concrete goals are the foundation of a company’s strategy
Any organization, whether it is a commercial enterprise or an educational center, must formulate specific goals on the basis of a mission.
The more specific the goal, the sooner it will be achieved. Therefore, any task facing the organization must meet the following requirements:
- Measurability in absolute numbers. For example, for a university this is the number of trained specialists; for social services - support for a certain number of poor citizens.
- The goal should be oriented in time when the final limit for its achievement is established. At the same time, the implementation of short-term tasks is formed within one year, and long-term - up to five years.
- The goals facing organizations must be achievable. You can’t set a task for a point of sale to fly to Mars. But there can be any goal that raises the level of credibility of the company in the market, while not interfering with the achievement of other organizational goals. For example, for a social assistance center, the strategic planning process includes the following goals that do not contradict one another:
- protecting the rights of families and children;
- child crime prevention;
- improving the standard of living and well-being of the family;
- restoration of lost intra-family relations, improving the psychological climate of the family, etc.
In order not to miss
Archer athletes have their own secrets and techniques for hitting the target. Such as taking into account the strength of the wind, the opposition of the sun, the length of the arrow, the bow curvature. Similar secrets, taking into account the influence of external factors on the effectiveness of hitting the target, are in the economy of enterprises.
So, the strategic planning process includes at the third stage the study of the external environment and those external and independent factors that affect the organization.
The following indicators must be considered at this stage:
- the influence of external changes, such as, for example, possible changes in the political and economic legislative and other regulatory functions of the state;
- assessment and analysis of the external environment that affects the functioning of the company;
- the most accurate determination of factors that pose a threat to the organization; pinpointing those that might pose a threat to the strategy;
- mandatory accounting of all positively affecting conditions to achieve the goal;
- constant adjustment of strategic plans.
In a professional language, such a technique for identifying and learning is called pest analysis. During its implementation, special attention is paid to social, political, investment and other factors affecting the organization.
Thus, the possibility of the influence of external factors, their control in relation to the enterprise, timely neutralization of unwanted obstacles and the detection of threats is revealed.
The table below defines the main indicators of the pest analysis, which are considered during its implementation.
What is the strength in, brother...
Management research plays a significant role in successful planning.
The basics of strategic planning inevitably lead to a study of the strengths and weaknesses of the organization. Internal studies relate to the analysis of the effectiveness of marketing activities, finance, production capacity. Up to the culture and education of company personnel.
Briefly, this study is called the study of strengths and weaknesses under the influence of external and internal. Based on the data obtained, a SWOT analysis matrix is compiled. This data processing method is based on the study of the strengths (S - strenght) and weaknesses (W - weakness) of the object of study, with the identification of opportunities (O - opportunities) and the identification of potential threats (T - troubles) of the external environment.
Popular all over the world
A thorough study of the company's strengths and weaknesses is a popular business analysis of activities around the world. It is quite objective and complete.
What gives a similar analysis:
- Studying the features of marketing allows you to accurately determine the competitiveness of a company and its place in the market; timely increase or decrease the share of new goods and services; make good use of advertising opportunities to increase the level of customer service.
- The study of the financial condition of the organization allows us to predict the organization’s ability to increase production, strengthen its market position, and create the necessary financial reserves in case of force majeure. Equally important is the study of finances in the public sector to optimize existing financial resources, identifying additional sources of financing.
- Studying the possibilities of production allows us to determine the possibilities of reducing the cost of production, increasing production volumes, lowering prices for products and increasing their competitiveness. In the same aspect, the possibilities of access to advanced technologies are studied, the introduction of which ensures the demand for the organization in the market.
- Analysis of the level of selected personnel, competence and professionalism of employees help to identify areas where advanced training of employees of all levels is required.
- Developing your own image of the company, which will positively affect relations with suppliers and customers. In addition, the formation of a positive psychological climate in the company contributes to the constant influx of good labor resources.
The SWOT analysis matrix is shown in the diagram below.
Alternative delights, or On all four sides
The study of strategic alternatives is referred to the fifth level or stage of analysis. You can start it after evaluating all the external and internal factors that determine the activities of the organization.
In fact, four promising development paths are possible for any company to choose from.
Analysis of strategic alternatives offers the following options:
1. Application of limited growth strategy - a similar option is used in industrial sectors in enterprises with stable and static technology. This is the most reliable way to maintain previously achieved results, taking into account inflationary processes, it saves the organization from unjustified risks.
2. Annual growth strategy - implies an increase in indicators in the short and long term compared to previous ones. A similar strategy is possible for companies operating in developing industries that apply new technologies. The dynamic growth strategy is internal - with the expansion of production of goods or services; external - with expansion in the market and takeover of other firms.
3. The reduction strategy. A similar method is used if necessary to reduce the results achieved. The choice of this strategy is usually caused by objective factors. It:
- liquidation of an enterprise, organization with a full sale of property values;
- reduction of certain units or lines of business, as superfluous and non-profitable;
- new benchmarks - the reduction of the old and the development of new activities.
4. The combination and combination of any of the above three strategies, which is usually suitable for large firms.
Focus on efficiency
Choosing a strategy is a vital moment in the life of any organization. An analysis of the alternatives will tell you which is most suitable for the enterprise and will ensure the effective work of the company at all levels for a long time.
What can affect the result of the enterprise, what factors have a special influence on the choice of alternatives?
- First of all, determining the level of risk. If the level is too high, self-destruction of the organization is possible. Acceptability of risk largely determines the choice of a strategic alternative.
- The knowledge and experience of past working methods often influences the choice of strategy in the present; this may not always lead to success.
- Restrictions imposed by company owners, holders of its shares, for example, may affect the choice of a strategic alternative.
- When choosing a strategic alternative, it is always necessary to take into account the time factor, which can both ensure success and, if the time to market is unsuccessful, lead to the collapse of the organization.
Objective reality: a plan for a shaft or a shaft for a plan
Any adopted strategic plan must be realistic above all.
Its implementation is the seventh stage of the strategic planning process and includes tactics, policies, procedures, rules.
- Tactics involves the development of short-term strategies that meet the goals of long-term planning. Tactical plans are developed at the average management level and serve the overall development of the adopted strategy. As a rule, the result of tactical plans are specific actions in the short term. While the results of the main strategy can appear only after a few years.
- The organization’s policy is determined by top-level managers and is essentially a general guide to action or decision-making, as a rule, is formed for a long period of time. For example, a policy of non-disclosure of production or scientific secrets of an organization or a policy of targeted social assistance to employees.
- Planning procedures for making planned decisions. Usually these are specific actions taken by employees in specific situations. For example, in case of emergencies, registration of pension or maternity leave and other procedures.
- The rules restrict some actions of employees of the organization. The developed instructions ensure that specific actions are performed in ways specified by management. For example, the rule to follow the dress code, the rule to smoke in designated places or otherwise.
Often, employees try to break the rules and procedures. To avoid this, management is obliged to inform subordinates in a timely manner of their importance and necessity, explaining why they should be observed.
Management resources
Consistency in management in the implementation of tasks is the key to success. Effective use of managerial resources is the basis of strategic planning.
What opportunities are hidden under the concept of distribution of management and can they be quantified?
The budget of the organization is a method of using available resources, expressed in quantitative terms. The management process consists of four interrelated steps:
- The first stage of management consists of formulating goals from the top level to downstream employees in the field of information, updating plans, supporting horizontal and vertical planning, coordinating management resources.
- The second stage is to determine the necessary measures in solving the tasks. It consists in the delegation of authority, the assessment of the necessary time spent on the execution of tasks, verification of deadlines and the necessary adjustment of the planned actions.
- At the third stage, determine the degree of implementation of plans, identifying the reasons that affect their change. Identification of the personal contribution of employees to the degree of solving problems, followed by remuneration for effective activities, targeted encouragement. In case of deviation from the intended goals, the reasons are clarified and measures are taken to eliminate interference.
- The fourth stage is a debriefing. With the normal development of the management process, goals have been achieved, new tasks are set for the future period of activity.
Comparison is only for the benefit
Assessing and comparing performance with goals is the final step in the strategic planning process. Evaluation of the organization should be carried out continuously and systematically. The evaluation results answer the following questions:
- Compliance of the strategy with the capabilities of the organization.
- Is there a degree of risk for the company when using the chosen strategy.
- Availability of resources necessary for the implementation of strategic plans.
- Emergence of new opportunities or risks not considered by the strategic development plan.
- Is the chosen strategy the best way to use all the capabilities and resources of the organization.
Goal determines how to achieve it
The effectiveness of the applied strategy is evaluated by quantitative indicators: growth in the volume of production or services, level of costs per unit of output. Qualitative indicators of assessment - the ability to attract highly qualified personnel, the expansion and improvement of the quality of services provided.
In general, the chosen strategy should contribute to the achievement of goals, determine the structure of the organization, comply with the concept of developed plans.