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Strategic Planning Methodology

Strategic evaluation is an activity which is dependant on three periods: evaluation, planning and management. We are able to divide it into two types: function sense, and tool sense. In case of the function sense proper analysis is a set of actions which diagnose both. the company and its environment, and so enable build proper plan and its development. When it comes to the tool sense, tactical analysis is a couple of analysis methods which help verify, assess, and anticipate the future states of decided on company's elements and its own environments to make it make it through and develop on the marketplace. Every administrator in the corporation must think strategically. The thought of strategic thinking is to create a long-term plan and eye-sight of the company, by understanding the problem, analyzing the probabilities, preparing the goals and rules to work with resources. Also, it requires the use of different techniques and research and synthesis methods which will help realize these goals and gain all the needed information. Tactical thinking is characterised by the frequent need of changing areas and kinds of the company's activities relative to its vision and its own environments condition.

There are different types of evaluation in the company, however, what is different strategic research from others are two characteristics:

  1. Two ways of perceiving management and information resources: exploring the surroundings and company at the same time, and then confronting all results. This way has its root base in the art work of war, and is opposite to traditional company's analysis
  2. Use of the qualitative and quantitative methods, from the various fields: economy, fund, sociology, psychology, information, and marketing

Strategic management development got a strong impact on the proper examination. Since 50s and 60s there's been a increasing instability and complexity of the world that surrounds the business, and thus triggered scientists to generate methods that could help it adapt to all changes by rational and designed manners. Long-term planning was the first concern that came into existence, but it was changed into the tactical planning term. Since 80s we can talk about the strategic management development. New concepts were made when the old ones did not work, and therefore helped companies succeed on the marketplace.

While expanding the proper management idea, there was a huge pressure placed on the guidelines and techniques of formulating the strategy. After that scientists were concentrating the empirical studies, and basing to them these were classifying. Within the last stage, the final characteristics of the studies and examination are the following: company strategy multi-dimensional treatment, tactical thinking concentration, and trying to produce strategic management strategy.

Strategic management development helps understand the progression of methods and strategic evaluation techniques, changes in the form of its use within the business's management, and dealing with the moment of the tactical analysis creation as a separate analysis category. There may be a big increase in demand for these kinds of practices, that assist assess the current and future situation of the business and then anticipate the near future conditions of its performing. It's connected with the increase of the environmental complexity, and then putting into practice long-term, and then tactical planning. Strategic planning, mainly in the global corporation, required more effort and so analysis of the competitive environment, macro-environment, and dimension of the company's tactical position.

The main factors that obligated people get deeply in to the strategic examination and proper planning were tough times of the abrupt changes in the global overall economy, technology development, and worse economical factors. Companies improve their strategic research, because they face duplicating company crises, worse interior development, lower market shares, or change of the prospective market. What's interesting, these changes are extremely often affected by the management table changes, or new strategy development and its implementation.

According to Richard Koch (1998) there are two talking to companies, which integrated the strategy research to their businesses and so became successful in the first 50s: Boston Consulting Group and McKinsey.

Until the finish of 70s, there were created seven college of the proper thinking, which were connected with the two important management paradigms: proper rationality ( Harvard Institution, Strategic Planning Institution, Matrix Positioning Institution, and Quantitative college ) and strategic behaviours ( Behavioural institution, System School, Incrementalists college ).

First paradigm explains " strategy's technical-economical aspect, normative way, which create rational habits of behaviours, assessments and way of operating" ( Gierszewska et al, 2007). The first band of schools is defined below:

  • Harvard college - is characterised as a will to analyse the company and its own competitive position against the environment, and to search for both positive and negative factors linked with working of the company in different markets and its advantages and weaknesses. You will discover three most widely known strategic evaluation models created by this university:
    • LCAG model ( developed by E. P. Learned, H. K. Christensen, K. R. Andrews, W. D. Guth ). The thought of this model is to describe the search and research of the affect on the strategic choices of the business's talents and weaknesses, and opportunities and hazards that are linked with the environment. It has been used by the specialists in neuro-scientific management, until there were developed a much better ways of the tactical analysis
    • Contingency model ( A. D. Chandler, P. R. Lawrence, J. W. Lorsch )

      This model enables to put into action different answers to the tactical problems. These solutions differ in line with the situation of the business

    • Industry analysis model ( M. Porter )

      Michael Porter advises to assess the company's situation that concentrates on the competitive environment. Additionally, it brings about the examination of the sector appeal extent, in which company wish to operate

    • Strategic Planning Institution - as a term says, it is about the tactical planning, nonetheless it doesn't bring any models nor tactical analysis methods that assist in the proper management. It demonstrates, that the rationality of the activities is a good plan.
    • Matrix positioning institution - used qualitative and quantitative examination tools, and helps gain correct techniques of the business's competitive position measurement. Presents the company's product collection and compares the dynamics of change between former and the future
    • Quantitative College - methods and techniques that are firmly linked with the multi-criteria and statistics analysis. It really is based on the econometric modelling.

Second paradigm is thought as " exposing of the socio-political strategy proportions and strategic examination " ( Gierszewska et al, 2007 ). Basing upon this paradigm, there were created three colleges of the tactical thinking. These are as follows:

    • Behavioural.

It has four fathers: H. A. Simon, J. G. March, R. M. Cyert, and H. Mintzberg. The idea of this school are the real processes of formulating and implementing the business's strategy, without the information background, steps to make strategic decisions

    • System

D. Katz, R. L Kahn and M. Crozier are the founders of this school. This case identifies the role of the person in the formulating strategy process, relationships between members, and " shows the social record of the organisation "

  • Incrementalists school

C. E. Lindblom, T. J. Peters, and R. H. Waterman -

This school represents the pragmatic management approach. The only path to increase the quality of management is to check out already proved habits implemented in the business by the successful companies. Also, determination of the individuals in the management process and example of the other successful corporations plays here a very important role. It's the basis of the further future success ( Giermaszewska, 2007 ).

As we can view, these academic institutions provide us with the different methods to the analysis methods improvement and strategic management. Corresponding to Giermaszewska ( 2007 ), and. . . . . . . , academic institutions predicated on the paradigm of the proper rationality tend to be more valuable than institutions based on paradigm of the proper behaviours. Harvard and setting matrix institutions bring more concretes and details, and thus bring and require more practical methodology. The other academic institutions concentrate the theoretical examination methods and strategy creating.

French researchers divided the strategic evaluation models and put them on the continuum. They start from the sociological models ( which can be general and fabricated ) to the microeconomic models ( more complex, and bring more concrete analysis tools and techniques ).

Sociologic models Macro-economic models

LCAG-ANSOFF-PORTER-McKINSEY-ADL-BCG

These classifications, colleges evaluation, and tactical analysis models indicate the way of the research progression. New classifications disregard the latest universities and technique propositions. M. F. Gouillart has chronologically purchased best known strategic analysis schools, and therefore presented nine of them. He started from the early 60s, and ended on the 90s.

Strategic examination development, matching to M. F. Gouillart:

  1. SWOT Evaluation - 1965
  2. Portfolio examination - 1970
  3. Japanese affect - the role of quality, production and technology - 1975
  4. Shareholders benefits examination - 1980
  5. Porters Model ( Porter's 5 makes ) - 1985
  6. Price of efficiency - 1990
  7. TIme-based competition
  8. Goal and tactical skills
  9. Strategic change

Stage one presents LCAG examination from the harvard school, portfolio analysis corresponds to the matrix setting college, Porter model stands for the industry evaluation model, and "price of efficiency" stage represents the incrementalists institution. However, M. F. Gouillart has enriched this group with two models more. They can be as follows: examination of the shareholders benefits, and Japanese influence. He adds also three conditions that occurred in the early 90s: time-based competition, goal, tactical skills, and tactical changes.

Analysis of the shareholders benefits - kind of the company's position analysis. It all fits in place with the financial analysis signification increase, and capital market forecasts. Moreover, it focuses stocks value increase as a main goal of the company, and implementation of the financial analysis into the strategy formulation

and its development

Japanese effect - this term was created in the 70s, when Japanese current economic climate became very successful and was admired by the western companies. "Just-in-time" inventory strategy describes well the thought of this university, which puts pressure on the detail and punctuality, one of the key key success factors.

Time-based competition - time advanced companies have a serious advantage over the competition. Main tools found in this stage are techniques which help sophisticated the "dynamics of the given sensation, processes, and organisation" ( Gierszewska, 2007 ). Time is one of the main factors which impact the consequence of the rivalry between companies.

Goal and proper skills - the key role of the organisation is to explain the mission and most important goals of the business. Basis of the success lays in the capability to use the business's strategic skills.

Strategic change - it explains the challenge of the company's and executives version to the changes in the surroundings and in the company. When there is too much attention placed on the changes, the goal of the proper management is lost from the horizon. This implies, that "elaboration and implementation of the strategy development" aren't taken into consideration ( Gierszewska, 2007 )

All these procedures do not venture out, while the more attractive ones are being applied. "Useless methods are turned down, useful just better and modified to the needs of the company, and technical and information capabilities " ( Gierszewska, 2007 ). Also, the elderly methods from 50s and 60s are still being used in the consulting companies and business classes. LCAG method, product life-cycle, and BCG matrix are invaluable help for the start analysts.

There is one more classification of the strategic management classes that must be mentioned. One of the best known polish economists, Krzysztof Oblj, has named and referred to them as follows:

  1. Traditional ( planning ) - first thing to be considered is a detailed environment, and second creation of the formalized strategy
  2. Evolutionary - more behavioural and politics-focused. Strategy "can be an evolutionary searching for the common design". It really is in the " midsection of the circumstance and many organisational processes: tender for ability, customer needs fulfilment, fixation of the activities routine "
  3. Positional - notion of this school is reaching the competitive gain. It assumes that the strategies are characterised by the product-market concept, and put the pressure on the situation of the business in environmentally friendly sector
  4. Resources and features - company's key capabilities and resources are the basis because of its development strategies

Modern strategic analysis is partially predicated on the methodology of technology, such as sociology, psychology, overall economy, and management. This interconnection helps in list the next characteristics of the strategy examination methodology:

    • Use of the financial analysis

Technology development has simplified complex methods of the financial research, and therefore it is more understandable for the specialists and the managers. Strategic financial research can be used both, in the examination of the business's financial condition and the composition of the capital, and in the examination of the competitive position of the organisation. Additionally, it helps estimate sector entrance and exit barriers, and became a basis for the development portfolio estimation. What's more, strategic costs, price strategy, and strategic alliances planning are also very important issues to consider.

    • Quality factors

The notion of quality factors is to make company be familiar with its tender elements, such as "culture, skills, and individuals motivations, strategic objective, ecological management aspect, and moral aspect of the tactical analyses" ( Gierszewska, 2007 ). These elements relate especially to the info about the competition, which is utilized to make decision process.

    • Situational approach

Company focuses the correct approaching procedure, and capacity to interpret the analysis results without already picked tools and imposing assessments. Research is a tool, utilized by the professionals in their every day job. Thus, strategic planning departments are liquidated, information has been decentralized, and additionally company creates special group which gets control this task.

    • ˜ Complex character

Company considers both internal and external factors from all of it subsystems and environment. In cases like this it explores relationship between these two factors ( Gierszewska, 2007 ).

1. 7. 1 Strategic Planning Methodology

The purpose of this factor is to create information needs and methods of hauling on the strategic analysis in the business. First issue that must be considered is the examination of the environment, where company operates, and its own internal track record, such as advantages and weaknesses, personnel development, and its own potential to build up the process of the new strategy. Understanding of the past, occurrence, and capability to predict the business's future and its own environment, assists with building the strategy that will adapt to the reality. A good strategic plan helps the company use its potential and talents to fight the threat rather than to loose any opportunity made available from the market. Professionals can just established "the strategic goal and during utilizing the chosen scenario change the ideas in to the concrete ideas" ( Gierszewska, 2007 ), nonetheless they may face some problems in the meantime, for example lack of accuracy in formulating the goals of the activities.

Strategic planning is dependant on determining the series of decisions which have been made earlier, but need to be put into practice.

Strategic management means, that the tactical decisions need to be devote the right order, "findings in the several areas must be coordinated, and on different levels of the management" ( Gierszewska, 2007 ). The next methods, provided by Grazyna Gierszewska and Maria Romanowska ( Gierszewska et al, 2007 ), are very helpful in putting the business's strategy on the right track, plan different kinds of operations, and management functions.

Levels of the proper management ( Maria Romanowska, 2007 ) ( STR 32, Gierszewska )

Levels of the management Types of the strategy

Management Board Company development strategy

Section management

The most significant decisions for the company come from the management table. Portfolio procedures " rely upon the quantity and kind of sectors of the future activity, kind of technology, and physical opportunity of sales " ( Gierszewska et al, 2007 ). So, relating to what is said the corporate strategy is highly recommended as an initial step to the further inner solutions.

Strategy of the business is also accountable for the amount of the " different industries, technologies, and marketplaces, and investment priorities as well " ( Gierszewska, 2007 ).

Sector strategy is split into two sub-groups: suppliers strategy, and competition strategy. Strategy making process in all these cases is limited by the goals and hierarchy that was executed in the business development process. If firms that operate only in one sector, there are no two strategic planning levels. They are just treated by the management mother board as a one strategic plan. However, they show up only when company would like to enter a whole new sector

Last type of the strategy will be the functional strategies. Their subject is to " evaluate the goals and ways of reaching them in the region of the financial management, marketing, personal plan, structure shaping, centering the management techniques, and technology development" ( Gierszewska, 2007).

To conclude, the purpose of the efficient strategies is to oversee all strategic plans in the whole organisation.

1. 7. 2 Scope of the proper analysis

Strategic management requires capacity to differentiate internal and external situations/phenomenons. Managers can mainly to analyze internal problems of the company rather than exterior ( Gierszewska, 2007 ). Exterior problems estimation needs help of the consultants, and thus managers fail to analyse the surroundings. Organization which constantly observes the surroundings is prepared for the danger that might occur. Situation on the marketplace helps the company prepare the good strategy and plan the future. tells what steps should be studied to be able to therefore

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