Strategic planning

1.4 Advantages and disadvantages strategic planning

The main advantage of strategic planning is a greater degree of validity of planned indicators, a greater likelihood of the implementation of planned scenarios for the development of events.

The current rate of change in the economy is so great that strategic planning seems to be the only way to formally forecast future problems and opportunities. It provides the firm's senior management with the means to create a plan for the long term, provides a basis for decision making, helps reduce risk when making decisions, ensures the integration of goals and objectives of all structural divisions and the company's performers.

In domestic enterprise management practice, strategic planning is rarely used. However, in industry developed countries it becomes the rule rather than the exception.

Features of strategic planning:

* must be supplemented by the current one;

* strategic plans are developed at meetings senior management firms annually;

* annual detailing of the strategic plan is carried out simultaneously with the development of the annual financial plan(budget);

* the majority of Western companies believe that strategic planning mechanisms should be improved.

Along with obvious advantages, strategic planning has a number of disadvantages, which limit the scope of its application, deprive it of its versatility in solving any economic problems.

Disadvantages and limited capabilities of strategic planning:

1. Strategic planning does not and cannot provide due to its essence detailed description pictures of the future. What it can give is a qualitative description of the state to which the company should strive in the future, what position it can and should occupy in the market and in business in order to respond to main question- whether the company will survive or not in the competition.

2. Strategic planning does not have a clear algorithm for drawing up and implementing a plan. Its descriptive theory boils down to a specific philosophy or ideology of doing business. Therefore, the specific tools largely depend on the personal qualities of a particular manager, and in general, strategic planning is a symbiosis of intuition and the art of top management, the manager’s ability to lead the company to strategic goals. Strategic planning goals are achieved through the following factors: high professionalism and creativity of employees; close connection of the organization with the external environment; product updates; improving the organization of production, labor and management; implementation of current plans; inclusion of all employees of the enterprise in the implementation of the goals and objectives of the enterprise.

3. The process of strategic planning for its implementation requires a significant investment of resources and time compared to traditional long-term planning. This is due to more stringent requirements for the strategic plan. It must be flexible, respond to any changes both within the organization and in external environment. The number of employees involved in strategic planning is higher than in long-term planning.

4. Negative consequences errors in strategic planning, as a rule, are much more serious than in traditional, long-term planning. The consequences of an incorrect forecast are especially tragic for enterprises engaged in non-alternative economic activities. High degree risk in long-term planning can be explained by those areas of production and economic activity in which decisions are made about manufactured products; directions of investment; new business opportunities, etc.

5. Strategic planning must be supplemented with mechanisms for implementing the strategic plan, i.e. The effect can be achieved not by planning, but by strategic management, the core of which is strategic planning. And this presupposes, first of all, the creation of an organizational culture at the enterprise that allows it to implement the strategy, a system of labor motivation, a flexible management organization, etc. Therefore, the creation of a strategic planning subsystem at a specific enterprise should begin with putting things in order in the management system, improving the overall management culture, strengthening executive discipline, improving data processing, etc. In this regard, strategic planning is not a panacea for all management ills, but just one of the means.

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MINISTRY OF EDUCATION AND SCIENCE OF THE RUSSIAN FEDERATION

KAMA STATE POLYTECHNIC INSTITUTE

College of Economics

ABSTRACT

by discipline: Management

on the topic: “The concept of strategy and strategic planning processes”

Completed by: student

Checked:

Naberezhnye Chelny

INTRODUCTION……………………………………………………………………………….3

Chapter 1. ESSENCE AND NECESSITY OF STRATEGIC PLANNING AT THE ENTERPRISE……………………………………...4

1.1. The concept of strategy………………………………………………………4

1.2. The essence and advantages of strategic planning…………4

Chapter 2. ORGANIZATION OF WORK ON STRATEGIC PLANNING AT THE ENTERPRISE……………………………………………………...9

2.1. The main elements of the strategic plan and the organization of its development………………………………………………………………………………...9

CONCLUSION…………………………………………………………..…......14

LIST OF REFERENCES……………………………15

Strategic planning is one of the management functions, which is the process of choosing the goals of the organization and ways to achieve them. Strategic planning provides the basis for all management decisions; the functions of organization, motivation and control are focused on the development of strategic plans. The dynamic process of strategic planning is the umbrella under which all management functions are sheltered; without taking advantage of strategic planning, organizations as a whole and individuals will be deprived of a clear way of assessing the purpose and direction of the corporate enterprise. The strategic planning process provides the framework for managing organizational members. Projecting everything written above onto the realities of the situation in our country, it can be noted that strategic planning is becoming increasingly relevant for Russian enterprises, which are entering into fierce competition both among themselves and with foreign corporations.

Purpose The work is to determine the essence of strategic planning and the process of developing a strategic plan as a necessary element of the existence of an enterprise.

Task:

1. Identify the advantages of strategic planning and the main factors limiting its application;

2. Study the main elements of management decisions related to the organization of the implementation of the goals and strategy of the enterprise;

3. Explain the content of the mission statement process and enterprise goals.

Chapter 1. ESSENCE AND NECESSITY OF STRATEGIC PLANNING AT THE ENTERPRISE

1.1. Concept of strategy

Word "strategy" comes from Greek strategos,“The art of the general.” The military origins of this term should not come as a surprise. Exactly strategos allowed Alexander the Great to conquer the world.

Strategy is a detailed, comprehensive plan of management action designed to ensure the long-term success of an enterprise. The development and choice of strategy must be supported by extensive research and reliable data.

First of all, strategy is mostly formulated and developed by senior management, but its implementation requires the participation of all levels of management. The strategic plan must be supported by extensive research and evidence. To compete effectively in today's business world, a business must continually collect and analyze vast amounts of information about the industry, competition, and other factors.

1.2. The essence and benefits of strategic planning

Strategic planning is a tool that helps in making management decisions when carrying out the necessary innovations and changes in the enterprise in order to achieve the desired strategic result. Strategic Planning Process includes four main types of management activities: distribution of strategic resources, adaptation of activities and management to changes in the external environment, internal coordination of work and organizational strategic foresight.

Resource allocation involves priority provision of strategic corporate resources (funds, scarce management talent and technological experience) to important areas of the enterprise’s activities that determine its competitive position in the market and success in the long term.

Adaptation to the external environment covers all actions of a strategic nature that improve the relationship of an enterprise with its environment. The activities of the enterprise must be adapted to favorable external opportunities and to dangers (threats). Identifying such opportunities and threats is important element strategic planning process. At the same time, appropriate options for the enterprise strategy must be determined, taking into account their effective adaptation to changing environmental conditions.

Internal coordination involves coordinating strategic activities to reflect (take into account) the strengths and weaknesses of the enterprise in order to achieve effective integration of internal efforts and capabilities.

Organizational strategic foresight provides for the systematic development of managers' thinking to make them aware of past experience in the strategic management of an enterprise. This activity is aimed at developing the strategic thinking of managers and increasing their professionalism. The ability to learn from experience allows an enterprise to timely adjust the strategic direction of its activities. The role of the senior manager is not only to initiate the strategic planning process, but also to decide concrete solutions on implementation, integration and evaluation of results.

The essence of strategic planning is in formulating the main directions of the enterprise’s activities (mission) and indicators of its development for the planned period (goals), which determine the desired result of its activities in general and in a specific business. As part of strategic planning, a comprehensive justification of the problems that the enterprise may encounter is provided, and actions to resolve them are determined, as well as a specific plan of management actions (strategies) is developed to fulfill the mission of the enterprise and achieve the stated goals.

Strategic plans must be designed to be coherent over a long period of time and at the same time be flexible enough to allow for improvement and reorientation if necessary. The general strategic plan should be considered as a program of the enterprise's activities for a long period of time, with the condition that the constantly changing business and social environment makes adjustments to this plan inevitable.

Strategic planning creates important benefits in organizing the future activities of the enterprise, including:

Provides preparation for the use of possible favorable conditions for the successful operation of the enterprise;

Allows you to comprehensively analyze emerging (including expected in the future) problems and threats in the activities of the enterprise;

Improves coordination of actions in the process of economic activity of the enterprise to achieve its goals;

Creates the prerequisites for the development of strategic thinking and foresight among the management corps of the enterprise;

Promotes the formation information base for effective enterprise management in implementing strategy and achieving goals;

Provides a more reasonable and rational distribution of enterprise resources and their concentration on key areas for achieving enterprise success;

Uncertain market environment is the main objective reason influencing the possibility of generating sufficient information (data) about the present and future state of the enterprise and its environment. The uncertainty of the behavior of the environment and the corresponding results of the enterprise's activities, taking into account its changes, is determined by the very nature of the market. Regulation of the enterprise's relations with some market participants to increase planning limits can be carried out within the framework of certain strategic actions. These actions include: vertical integration strategies, expanding demand control, creating business networks, establishing contractual relationships and other actions. The essence of the actions within the framework of vertical integration lies in the fact that external (market) relations are replaced by intra-company ones. It should be taken into account that the possibilities of vertical integration, in turn, are limited. The most effective demand control can be achieved effective marketing activities at the enterprise. Its development allows the enterprise to adapt to consumer demand, needs and requirements of customers. However, the current competitive forces in the industry do not allow for fully controlled and sustainable relationships with consumers. Contractual relationship between producer and consumer are a more reliable way to eliminate uncertainty and be able to plan your activities. The meaning of concluding a contractual relationship is that a potential manufacturer first finds a buyer for a specific product, enters into a contract for its supply, and then (after certain preparation) produces and supplies these products. Enterprises can reduce environmental uncertainty by using entrepreneurial networks . These networks bring together businesses that have an economic interest in each other through flexible relationships and cooperation based on mutual trust. Relationships within a network differ from ordinary market transactions in that they are secured not by the force of law, but by moral and ethical standards, relationships of trust and interest.

Planning is carried out in order to achieve:

1. “protective advantages” arising from the reduction of opportunities for error in decision making;

2. “Positive benefits” associated with an increased likelihood of success in achieving organizational goals.

Planning application:

Makes it possible to prepare for the use of favorable conditions for the planning object;

Clarifies problems encountered during planning;

Encourages managers to implement their decisions in further work; "-i: and improves coordination of activities in the organization;

Creates the prerequisites for improving the educational training of managers;

Increases the ability to provide a business entity with the necessary information;

Promotes a more rational distribution of resources;

Improves control in the organization.

Developed in country at all levels national economy forecasts, programs and plans are the most important tools for implementing the policies of the relevant management entities; they allow organizing clear, well-founded work to achieve the objectives set for society. To successfully manage the development of the national economy, regulate various processes It is necessary for all management subjects to accurately and correctly set goals, prepare scientifically based measures that contribute to the achievement of goals. In a market that focuses every manufacturer and entrepreneur on obtaining high final results, planning acquires new functions. It should ensure the process of production of competitive products, promote full employment resources, fair distribution of income and increased quality of life.

Benefits of planning:

* At the macro level, it is based on the conscious use of a system of objective economic laws; main provisions and conclusions economic theory, accumulated experience and economic practice to provide scientifically based management of the development of territories through the use of a system of planning documents;

at the micro level is to the best way justify such types, volumes, terms and other indicators of production and sale of goods, performance of work and provision of services, which, with skillful use of available resources, can bring high income to an economic entity.

Advantages of planned farming:

* Interrelation in the plans of social and economic aspects of the development of society;

* Concentration of forces on the implementation of priority areas of activity;

* An integrated approach to problem solving;

* Taking into account the possibilities of continuous forward-looking and current planning;

* Reports from sectoral and territorial approaches;

* An attempt to balance the use of labor, material and financial resources;

* Characteristic feature the planned system is coordination, therefore the planned system uses progressive adaptive mechanisms;

* To manage the development of an exogenous type, a mechanism for the functioning of the organization is created - a set of adaptive forecasting structures; planning; stimulation.

Disadvantages of centralized planning and forecasting:

* Weak consideration of natural laws and trends in the development of commodity-money relations;

* The growing role of the plan as an end in itself of activity according to the principle of “plan at any cost”; a kind of fetish of the plan over economic relations;

Lack of room for maneuvering the actions of enterprises in different regions and inflexibility of the situation planning system;

Methodological weakness of planning, does not take into account reserves, initiative, micro-level diversity;

Significant expenditures of effort, time and money for the development, coordination, approval, clarification, and maintenance of stability of planned indicators;

insufficient coordination of efforts to develop forecasting;

Significant implementation costs individual species forecasts;

* Fuzzy detection of forecast development targets;

Violation of prospects in the use of retrospective and forecast information;

* The methodology for developing and implementing forecasts is insufficiently developed.

In a complex organization, in conditions of interdependence of its elements, any deviation from a coordinated plan leads to large costs, so the incentive system must strictly punish non-fulfillment of the plan. A planned evolutionary system must be a system of development, order and stability if it is based on progressive, correct mechanisms. The larger and more complex the organization, the more difficult it is to implement an endogenous development system. A planned system of endogenous development is a development system based on the planning and use of endogenous resources and creating opportunities for the use of endogenous resources - unlocking the employee’s potential. The planned system of endogenous development is a triad, including:

* Progressive climate;

* Progressive environment;

* The mechanism of their functioning.

The liberal evolutionary system solves the problem associated with the “denial of coordination” through self-organization and decentralization of endogenous type development control. It leads to the creation of property. In this case, coordination characteristic of a planned evolutionary system is lost. When designing evolutionary systems, both a centralized planned system is used, with its adaptation and coordination, and a liberal system with its inherent self-organization and instability. The planned system uses adaptive mechanisms and archetypes. To manage the development of an exogenous type, a progressive mechanism is created that encourages the system to unlocking potential, but with enough high speed the mechanism of innovation cannot ensure progress through systemic limitations.

The planned evolutionary system is based on the coordination of the organization's exogenous resources. It is more difficult to transform a planned evolutionary system into endogenous development, the higher the complexity of the organization and the more often changes occur. Planned

the evolutionary system is ineffective in conditions of rapid change. The liberal evolutionary system solves the problem associated with the “denial of coordination” through self-organization and decentralization of endogenous type development control. It leads to the creation of property. In this case, coordination characteristic of a planned evolutionary system is lost. When designing evolutionary systems, both a centralized planned system, with its adaptation and coordination, and a liberal system with its inherent self-organization are used.

The main advantage of strategic planning is a greater degree of validity of planned indicators, a greater likelihood of the implementation of planned scenarios for the development of events.

The current rate of change in the economy is so great that strategic planning seems to be the only way to formally forecast future problems and opportunities. It provides the company's top management with the means to create a long-term plan, provides a basis for decision-making, helps reduce risk in decision-making, and ensures the integration of the goals and objectives of all structural divisions and executives of the company. 26

In domestic enterprise management practice, strategic planning is rarely used. However, in the industry of developed countries it is becoming the rule rather than the exception.

Features of strategic planning:

Should be supplemented by the current one;

Strategic plans are developed at meetings of the firm's senior management annually;

The annual detailing of the strategic plan is carried out simultaneously with the development of the annual financial plan (budget);

Most Western companies believe that strategic planning mechanisms need to be improved.

Along with obvious advantages, strategic planning has a number of disadvantages that limit the scope of its application and deprive it of its universality in solving any economic problems.

Disadvantages and limited capabilities of strategic planning:

1. Strategic planning does not and cannot, due to its nature, provide a detailed description of the picture of the future.

What it can give is a qualitative description of the state to which the company should strive in the future, what position it can and should occupy in the market and in business in order to answer the main question - whether the company will survive or not in the competition.

2. Strategic planning does not have a clear algorithm for drawing up and implementing a plan. Its descriptive theory boils down to a specific philosophy or ideology of doing business. Therefore, the specific tools largely depend on the personal qualities of a particular manager, and in general, strategic planning is a symbiosis of intuition and the art of top management, the manager’s ability to lead the company to strategic goals. Strategic planning goals are achieved through the following factors: high professionalism and creativity of employees;

4. The negative consequences of errors in strategic planning are, as a rule, much more serious than in traditional, long-term planning. The consequences of an incorrect forecast are especially tragic for enterprises engaged in non-alternative economic activities. The high degree of risk in long-term planning can be explained by those areas of production and economic activity in which decisions about manufactured products are made;

directions of investment; new business opportunities, etc.

5. Strategic planning must be supplemented with mechanisms for implementing the strategic plan, i.e. The effect can be achieved not by planning, but by strategic management, the core of which is strategic planning. And this presupposes, first of all, the creation of an organizational culture at the enterprise that allows it to implement the strategy, a system of labor motivation, a flexible management organization, etc. Therefore, the creation of a strategic planning subsystem at a specific enterprise should begin with putting things in order in the management system, improving the overall management culture, strengthening executive discipline, improving data processing, etc. In this regard, strategic planning is not a panacea for all management ills, but just one of the means. 27

Methods of strategic planning.

In the system of managing socio-economic processes occurring in society, as well as in ensuring the normal functioning of commercial organizations, planning occupies a special place - a way to ensure the unity of direction of efforts to achieve common goals. Without planning, the system is unchanged over time and does not adapt to changes in the external environment. Therefore, no management is possible without planning the activities of the enterprise, since effective functioning largely depends on it. 28 Depending on the size of the enterprise, the nature of the tasks and the possible time frame for their solution, the plan may have various shapes

. In accordance with this, planning is divided into: long-term, designed for a period of 5 to 15 years and providing for the formation of long-term goals of the enterprise aimed at best use

medium-term, for a period of one to five years. Compared to long-term plans, medium-term plans are more detailed, contain a large number of quantitative indicators, and they emphasize the allocation of resources. The objects of such planning are the production capacity of the enterprise, capital investments, needs for financial resources, Scientific research

and development, etc.;

short-term, or current, - designed for a period of up to one year. 29 IN last years The role of strategic planning has especially increased, the purpose of which is to develop strategic decisions and formulate plans aimed at developing the enterprise in the long term and achieving competitive advantages, taking into account possible changes

in the external environment.

Thanks to strategic planning, an enterprise can assess its potential capabilities with the necessary accuracy, develop appropriate production programs, coordinate the efforts of all services, set specific goals for each department, and determine alternative actions for the long term.

Strategic planning is fundamentally different from other types of planning, since it does not use the traditional approach “from the past to the future”, but involves the direction of analysis and management decisions “from the future to the present”. This is what causes the main difficulties: everyone knows how to plan “from the base,” but few know how to build a plan for their current actions based on ideas about the future of the business. thirty

Strategic planning has replaced long-term planning and taken a leading place in the planning activities of the company. In strategic planning, compared to long-term planning, the space of a company’s activities has become more voluminous, including, along with the main elements of the organization’s internal environment, external aspects: social factors, tastes and needs of customers, actions of competitors, etc. The main difference between strategic planning and long-term planning is its variability, the development of alternative versions of the development of the future enterprise.

Currently, strategic planning has taken its place among the functions of management. Today, along with formal, quantitative methods, strategic planning uses a creative, intuitive approach.

Strategic planning methodology, a set of the most important theoretical principles and methods used in the process of drawing up plans, provides answers to the following questions.

What are the development goals of the corresponding strategic planning object?

What approaches to solving strategic planning problems should you use?

What system of indicators can be used to ensure optimization of strategic plans?

The method of strategic planning is understood as a specific method, technique by which any planning problem is solved. The following methods for developing plans are used in strategic planning:

expert method, based on the use of indirect and incomplete information, the experience of expert specialists, and intuition;

method of socio-economic analysis, which consists in a comprehensive study of socio-economic reality, knowledge of internal connections and dependencies of phenomena in order to determine progressive development trends;

a method of direct engineering and economic calculations designed to determine market needs for a given type of product and the possibilities of its production;

the balance sheet method used to ensure consistency among interrelated indicators;

economic and mathematical methods and models that solve, for example, issues such as drawing up an optimal production program for given labor and material resources;

Methodological approaches to strategic planning can only be implemented with the help of special indicators. The development of strategic programs and plans is impossible without the use of a system of indicators, which must be flexible, adaptive, and capable of reflecting all changes in the state of the planning object.

Since strategic planning is a central element of a company’s management system, management principles are generally significant for it, which include:

the principle of unity of centralism and independence.

It is associated with providing branches with the maximum possible freedom in business activities, including planning, but within the framework of the overall strategy of the company;

the principle of unity and complexity of forecasts, programs and plans. It is aimed at coordinating and integrating into a single whole the plans of structural divisions and branches developed on the basis of the overall strategy of the organization; the principle of checking the implementation of programs and plans. Verification of the fulfillment of the intended goals is carried out to

identifying errors

admitted during the strategic planning process; to take into account opportunities that were not previously taken into account or that have arisen again; to identify new needs that arise during the implementation of plans and attract the necessary resources. 32 Nature, Functions and Benefits of Strategic Planning

Strategic planning The dynamic strategic planning process is an umbrella that covers all management functions. If an organization does not engage in strategic planning, it and its individual members will not be able to evaluate how well they are moving towards their goals.

main goal

. This process is the fundamental structure that guides all members of the organization.

- a set of management actions and decisions leading to the development of specific strategies that are designed to help the organization achieve its goals. According to P. Lorange, the strategic planning process is an auxiliary tool for making management decisions, the purpose of which is to ensure the proper level of innovation and change in the organization. In particular, Lorange points out the presence in this process of all four main types of management activities: resource allocation, adaptation to the external environment, internal coordination and organizational strategic awareness., talented managers and experienced technical specialists. For example, in the fall of 1987 Phillip Morris decided to restructure its division General Foods, which was seen by many as an attempt to make more profit from the food industry giant acquired Phillip Morris in 1985. According to the new plan, Phillip Morris divided General Foods into three autonomous companies, thereby hoping to reduce the number of managers and other corporate-level personnel. It was decided to reinvest the saved funds in development General Foods.

Adaptation to the external environment

Adaptation in this case should be understood in the broad sense of the word. This concept covers all strategic actions that contribute to improving the company's relationship with the environment. Companies must adapt to opportunities and threats in the external environment, identify possible courses of action, and develop strategies for effective adaptation. The strategic planning of all successful firms involves creating new opportunities by developing effective product systems, interacting with government and society at large, and so on.

A striking example of successful adaptation to the environment is the exit Coca-Cola to the decaffeinated soft drink market. Before introducing new products, the company spent a lot of time researching threats and opportunities in the external environment. RC 100 was the first decaffeinated cola to be brought to market Royal Crown. The response from consumers interested in “healthier” drinks has been encouraging. Then Pepsi offered her brand Pepsi-Free. A Coca-Cola it bided its time, taking cautious competitive measures, and eventually, recognizing the changing consumer environment, introduced a range of decaffeinated products to the market.

Internal coordination

Internal coordination involves coordinating strategic activities based on the firm's strengths and weaknesses in order to achieve effective integration of its internal operations. For example, being the executive director ITT, G. Ginin was responsible for the integration of the activities of more than two hundred and fifty different enterprises, but ensuring effective internal operations is an integral part of the manager's work in organizations of any size.

Organizational Strategic Awareness

This line of work involves firmly establishing a systematic approach to management development by creating an organization that can learn from the company's past strategic decisions. This allows the organization to better define its strategic direction and increase professionalism in the field of strategic management. Sustained success of companies such as IBM, Delta Air Lines And Eastman Kodak, confirms their managers' constant desire to learn from past experiences and anticipate the future.

The role of the senior manager is not only to initiate the strategic planning process, but also to implement, integrate and evaluate it.

Before examining the various elements of this process, it is useful to discuss its model. It is clear that due to the dynamic nature of organizations it is impossible to create one specific model for the planning process, but in Fig. 9.1 presents in a general, simplified form the most essential management functions, thanks to which plans are converted into actions.

Rice. 9.1. Strategic planning process.

The Nature of Strategy

Word strategy comes from Greek strategos- “the art of a commander.” The military origin of this term is not surprising. It was thanks to the “art of the commander” that Alexander the Great conquered the world.

Strategy– a detailed, comprehensive, integrated plan developed to ensure the accomplishment of the mission and goals of the organization.

Senior management simply needs to understand and, more importantly, accept a set of initial requirements regarding strategy. First of all, the strategy is formulated and developed mainly by senior management, but its implementation requires the participation of all levels of management. Yes, a new direction Chrysler was initiated and carried out by its head, Lee Iacocca. The popularity of new models, increased marketing activities and ultimately increased profitability of this company can be considered the result of both the correct formulation and successful implementation of the strategy.

A strategic plan must be written from the perspective of the corporation as a whole, not the individual. The founders of private enterprises can still afford to a certain extent combine your personal strategies with organizational ones, but in joint stock companies open type such luxury is unacceptable. Executive Director a company may well want to have a personal jet, mansions, luxurious offices, etc., but all this is not always combined with the interests of his organization.

The strategic plan must be based on comprehensive research and evidence. To compete effectively in the modern business environment, a company must constantly collect and analyze a huge amount of information about its industry, market, competitive conditions, etc.

A strategic plan gives a firm an identity that allows it to attract certain types of workers and not others. This plan becomes the organization's vision, which serves general management for staff and helps the company sell its products.

Finally, the strategic plan should be designed in such a way that it does not require changes over time, but at the same time is flexible enough to be adjusted if necessary. The overall strategic plan should be viewed as the underlying program that guides the firm's activities over an extended period, but it should be understood that due to competition and frequent changes in business and social environment Constant adjustments to this plan are inevitable.

Organizational Planning and Success

Some organizations, like people, are able to achieve some degree of success with little or no formal planning. Moreover, strategic planning in itself does not guarantee success. A well-designed car will not run if you fill it with gasoline. Low quality; An organization that has developed a good strategic plan may fail due to ineffective performance of organizational functions, motivation and control (Table 9.1). However, formal planning can bring significant benefits to an organization.

Table 9.1. The influence of strategy ("what is done") and actions ("how it is done") on the success of the company.

Source. Benjamin W. Tregoe and John W. Zimmerman, "The New Strategic Manager", Business(May–June 1981), p. 17.

The current pace of change and expansion of knowledge is so rapid that strategic planning is the only way to formally anticipate future problems and opportunities. It is a tool that allows top management to plan the organization's activities for the long term, as well as a basis for decision making. Only by knowing what the organization wants to achieve can you draw up clear plan actions. Formal planning helps reduce risk in the decision-making process. By making informed and systematic decisions during planning, the manager reduces the risk of making wrong decisions due to erroneous or unreliable information about the organization's capabilities or the external situation. Planning, in which the organization's stated goals are formulated, helps achieve unity of overall organizational purpose. In modern industrial society, strategic planning is the rule rather than the exception.

A recent study of Fortune 500 companies by R. Paul and J. Taylor found a number of interesting facts regarding strategic planning, in particular the following characteristics this function.

1. The corporation's small (less than six employees) planning department is supplemented by planning at lower levels.

2. Even in the largest corporations, the planning function has existed for no more than ten years.

3. Strategic plans are developed at meetings of the corporation's senior management annually.

4. The annual strategic plan is combined with the annual financial plan.

5. Most organizations believe that the planning function can be improved.

The benefits of planning are confirmed by many studies indicating a direct relationship between it and the success of the organization. One such study carefully analyzed questionnaires filled out by 217 vice presidents of one hundred and nine largest American corporations. It was found that managers who made plans had the greatest success in such important indicators, as profit as a percentage of sales volume and return on investment.

A more complex study was conducted on thirty-six firms from the pharmaceutical, food, chemical, steel, oil and engineering industries. To minimize the effect of other factors, firms were paired by size, industry, and other factors. At the beginning of the research, none of the firms united in eighteen pairs practiced formal planning. Then one of the firms in each pair began to engage in this activity. Monitoring of the objects' activities was carried out for seven years. In terms of returns on invested capital, stock returns, and earnings per share growth, all companies that used planning outperformed those that did not.

One of the most famous long-term studies examining the benefits of strategic planning is the PIMS (Profit Impact of Marketing Strategies) program. It was started on the basis General Electric, and subsequently covered more than two hundred companies producing over one and a half thousand product assortments. As a result, more than thirty factors affecting the profitability of organizations were identified. This information has become invaluable to firms using strategic planning.

All of these studies were primarily based on top management, but a number of other studies have confirmed the direct relationship between planning and the effectiveness of other levels of the organization. For example, a study of railroad crews found that foremen with excellent performance scores devoted more time to planning than foremen with lower performance scores. Other studies, the results of which were later summarized by A. Fill, R. House and S. Kerr, confirmed the relationship between planning and increasing productivity and people's satisfaction with their work.

Drawing up a strategic plan is the conscious and systematic preparation of an organization for the future (Figure 9.2). All managers should engage in formal planning to some extent, but the development of strategic plans for the entire organization is primarily the responsibility of senior management. Other managers help them by providing relevant information and feedback.

In large organizations, complex formal strategic plans are almost always written, often with thousands of different documents attached, so a detailed discussion of specific planning issues is beyond the scope of this book. We will focus on the main components of organizational planning, which we will discuss in detail in the following sections of this chapter. And we will start with the goals and mission of the organization.

3.2. From strategic planning to strategic management In the above discussion of the evolution of management systems, a logical transition from one system to another is given. In practice, such progressive development was slow, unstable and accompanied by many