ProActiveLeadership

2017-05-30 02:33:21 Why Some Firms Do No Strategic Planning

• Content with success—Particularly if a firm is successful, individuals may feel there is no need to plan because things are fine as they stand. But success today does not guarantee success tomorrow.

• Fear of failure—By not taking action, there is little risk of failure unless a problem is urgent and pressing. Whenever something worthwhile is attempted, there is some risk of failure.

• Overconfidence—As managers amass experience, they may rely less on formalized planning. Rarely, however, is this appropriate. Being overconfident or overestimating experience can bring demise. Forethought is rarely wasted and is often the mark of professionalism.

• Prior bad experience—People may have had a previous bad experience with planning, that is, cases in which plans have been long, cumbersome, impractical, or inflexible. Planning, like anything else, can be done badly.

• Self-interest—When someone has achieved status, privilege, or self-esteem through effectively using an old system, he or she often sees a new plan as a threat.

• Fear of the unknown—People may be uncertain of their abilities to learn new skills, of their aptitude with new systems, or of their ability to take on new roles.

• Honest difference of opinion—People may sincerely believe the plan is wrong. They may view the situation from a different viewpoint, or they may have aspirations for themselves or the organization that are different from the plan. Different people in different jobs have different perceptions of a situation.

• Suspicion—Employees may not trust management. Open / Comment

2017-05-30 02:33:08 Why Some Firms Do No Strategic Planning

• Lack of knowledge or experience in strategic planning—No training in strategic planning.

• Poor reward structures—When an organization assumes success, it often fails to reward success. When failure occurs, then the firm may punish.

• Firefighting—An organization can be so deeply embroiled in resolving crises and firefighting that it reserves no time for planning.

• Waste of time—Some firms see planning as a waste of time because no marketable product is produced. Time spent on planning is an investment.

• Too expensive—Some organizations see planning as too expensive in time and money.

• Laziness—People may not want to put forth the effort needed to formulate a plan. Open / Comment

2017-05-30 02:31:28 Greenley stated that strategic management offers the following benefits:
1. It allows for identification, prioritization, and exploitation of opportunities.
2. It provides an objective view of management problems.
3. It represents a framework for improved coordination and control of activities.
4. It minimizes the effects of adverse conditions and changes.
5. It allows major decisions to better support established objectives.
6. It allows more effective allocation of time and resources to identified opportunities.
7. It allows fewer resources and less time to be devoted to correcting erroneous or ad hoc decisions.
8. It creates a framework for internal communication among personnel.
9. It helps integrate the behavior of individuals into a total effort.
10. It provides a basis for clarifying individual responsibilities.
11. It encourages forward thinking.
12. It provides a cooperative, integrated, and enthusiastic approach to tackling problems and opportunities.
13. It encourages a favorable attitude toward change.
14. It gives a degree of discipline and formality to the management of a business Open / Comment

2017-05-30 02:31:06 Nonfinancial Benefits

Besides helping firms avoid financial demise, strategic management offers other tangible benefits, such as an enhanced awareness of external threats, an improved understanding of competitors’ strategies, increased employee productivity, reduced resistance to change, and a clearer understanding of performance–reward relationships.

Strategic management enhances the problem-prevention capabilities of organizations because it promotes interaction among managers at all divisional and functional levels.

Firms that have nurtured their managers and employees, shared organizational objectives with them, empowered them to help improve the product or service, and recognized their contributions can turn to them for help in a pinch because of this interaction. Open / Comment

2017-05-30 02:30:48 Financial Benefits

Businesses using strategic-management concepts show significant improvement in sales, profitability, and productivity compared to firms without systematic planning activities.

High-performing firms tend to do systematic planning to prepare for future fluctuations in their external and internal environments.

Firms with planning systems more closely resembling strategic-management theory generally exhibit superior long-term financial performance relative to their industry.

High-performing firms seem to make more informed decisions with good anticipation of both short- and long-term consequences. Open / Comment

2017-05-30 02:30:17 A great benefit of strategic management, then, is the opportunity that the process provides to empower individuals.

Empowerment is the act of strengthening employees’ sense of effectiveness by encouraging them to participate in decision making and to exercise initiative and imagination, and rewarding them for doing so.

Although making good strategic decisions is the major responsibility of an organization’s owner or chief executive officer, both managers and employees must also be involved in strategy formulation, implementation, and evaluation activities.

Participation is a key to gaining commitment for needed changes. Open / Comment

2017-05-30 02:29:41 Open / Comment

2017-05-30 02:29:34 Benefits of Strategic Management

Strategic management allows an organization to be more proactive than reactive in shaping its own future; it allows an organization to initiate and influence (rather than just respond to) activities—and thus to exert control over its own destiny.

Small business owners, chief executive officers, presidents, and managers of many for-profit and nonprofit organizations have recognized and realized the benefits of strategic management. Open / Comment

2017-05-30 02:28:36 Policies

Policies are the means by which annual objectives will be achieved. Policies include guidelines, rules, and procedures established to support efforts to achieve stated objectives. Policies are guides to decision making and address repetitive or recurring situations.

Policies are most often stated in terms of management, marketing, finance/accounting, production/operations, research and development, and computer information systems activities.

Policies can be established at the corporate level and apply to an entire organization at the divisional level and apply to a single division, or at the functional level and apply to particular operational activities or departments.

Policies, like annual objectives, are especially important in strategy implementation because they outline an organization’s expectations of its employees and managers.

Policies allow consistency and coordination within and between organizational departments. Open / Comment

2017-05-30 02:28:24 Annual Objectives

Annual objectives are short-term milestones that organizations must achieve to reach longterm objectives. Like long-term objectives, annual objectives should be measurable, quantitative, challenging, realistic, consistent, and prioritized.

They should be established at the corporate, divisional, and functional levels in a large organization. Annual objectives should be stated in terms of management, marketing, finance/accounting, production/operations, research and development, and management information systems (MIS) accomplishments.

A set of annual objectives is needed for each long-term objective. Annual objectives are especially important in strategy implementation, whereas long-term objectives are particularly important in strategy formulation.

Annual objectives represent the basis for allocating resources. Open / Comment