Why do some firms not use strategic planning?
No formal training in strategic management
No understanding of or appreciation for the benefits of planning
No monetary rewards for doing planning
No punishment for not planning
Too busy “firefighting” (resolving internal crises) to plan ahead
View planning as a waste of time, since no product/service is made
Laziness; effective planning takes time and effort; time is money
Content with current success; failure to realize that success today is no guarantee for
success tomorrow
Overconfident
Prior bad experience with strategic planning done sometime/somewhere
Pitfalls in strategic planning
Using strategic planning to gain control over decisions and resources
Doing strategic planning only to satisfy accreditation or regulatory requirements
Too hastily moving from mission development to strategy formulation
Failing to communicate the plan to employees, who continue working in the dark
Top managers making many intuitive decisions that conflict with the formal plan
Top managers not actively supporting the strategic-planning process
Failing to use plans as a standard for measuring performance
Delegating planning to a “planner” rather than involving all managers
Failing to involve key employees in all phases of planning
Failing to create a collaborative climate supportive of change
Viewing planning as unnecessary or unimportant
Becoming so engrossed in current problems that insufficient or no planning is done
Being so formal in planning that flexibility and creativity are stifled
The Strategic Management Model - 3 important questions
Where are we now?
Where do we want to go?
How are we going to get there?
Competitive Advantage
Any activity a firm does especially well compared to activities done by rival firms or any
resource a firm possesses that rival firms desire
Strategists
Individuals most responsible for the success or failure of an organization
Help an organization gather, analyze, and organize information
Vision and Mission Statements
A vision statement answers the question “What do we want to become?”
A mission statement answers the question “What is our business?”
External Opportunities and Threats
economic, social, cultural, demographic, environmental, political, legal, governmental,
technological, and competitive trends and events that could significantly benefit or harm
an organization
Internal Strengths and Internal Weaknesses
an organization’s controllable activities that are performed especially well or poorly
determined relative to competitors
Long-Term Objectives
specific results that an organization seeks to achieve in pursuing its basic mission -
more than one year
should be challenging, measurable, consistent, reasonable, and clear
Strategies
the means by which long-term objectives will be achieved
Annual objectives
short-term milestones that organizations must achieve to reach long-term objectives
Policies
the means by which annual objectives will be achieved
