The Strategic Planning Concept in Strategic Management

Hernan E. Contreras Alday *

Summary
This text aims to highlight the importance of strategic planning in managing org
anizations within the concept of Strategic Management. Presents the main steps f
or deploying the process of strategic management and seeks to clarify key aspect
s of the relationship of the concepts of strategic vision and managing the deplo
yment of strategic planning as well as highlight some current views of how they
should be treated the planning for the present and planning for the future. Keyw
ords: planning, strategic management, business strategy, environment.
Abstract
This article stresses the Importance of Strategic Planning When managing Busines
s Organizations, Within the concept of Strategic Management. It presents the mai
n steps When implanting the process of Strategic Management and the Clarifier As
pects related to the fundamental concepts of Strategic view and management in th
e Implementation of Strategic Management. It Also emphasizing focus on some curr
ent views on the present and is planning for the future.
Key words: planning, Strategic Management, business organization, Strategic view
.
* Mechanical Engineer, Master in Business Administration and Business Management
by ESADE, Barcelona - Spain. Professor of the disciplines of Strategic Planning
and Administration in Marketing in the SAF, a tenured professor of CDE projects
in the SAF. E-mail: alday@cwb.matrix.com.br
9
Rev. FAE, Curitiba, v.3, n.2, p.9-16, May / Aug. 2000
Introduction
Much is made in Strategic Planning (EP), and organizations in general can still
find a range of interpretations regarding this administration tool. The Strategi
c Plan, which became the focus of attention of top management of companies, turn
s to the positive steps that a company can take to address threats and seize the
opportunities found in their environment. Companies of all kinds are coming to
the conclusion that systematic attention to this strategy is a very profitable a
ctivity. Small, medium and large distributors and manufacturers, banks and witho
ut purpose of profit, all types of organizations must decide the directions that
are more tailored to your interests. The reasons for this increasing attention
to business strategy are many, some more obvious than others. Among the most imp
ortant causes of the recent growth of Strategic Planning, we can mention that th
e environments of virtually all businesses change with amazing rapidity. These c
hanges occur in economic environments, social, technological and political. The
company can only grow and progress to achieve ajustarse to the situation, and St
rategic Planning is a proven technique for such adjustments are made with intell
igence. This is a more flexible instrument known as the Long Term Planning. A ke
y element of the strategy is the selection of only a few features to be consider
ed and measures taken. It is a tool that forces, or at least encourages, the adm
inistrators to think in terms of what is important or fairly important, and also
to focus on issues of relevance. The most important use of the Strategic Plan i
s its close link with strategic management in organizations. You can not treat s
eparately the strategic planning process without entering into strategic, thus c
ontributing more effectively to the management of managers in achieving their re
sults.
10
What is Strategic Planning?
With the constant change of economic scenarios in the world, including Brazil, t
here are some negative factors about which should focus the attention of adminis
trators. Issues such as low economic growth, globalization, government regulatio
n, inflation, shortages of certain resources, high cost of oil and protectionism
should alert international organizations to use and further development of such
planning. In Brazil, although many companies are already using the methodology
of Strategic Planning, although there are doubts about what this really comes in
to being and how it should be formulated. The bigger question concerns a marked
tendency to use the term "Strategic Planning" and "Long Term Planning" as if the
y were synonyms. According to Igor Ansoff (1990), only a few companies use the r
eal strategic planning. The vast majority of organizations still using the outda
ted techniques of long-term planning, which are based on extrapolation of past s
ituations.€The methodology of long-term planning was developed in America in the
50s, with profound influence of technology planning in countries with centrally
planned economy in the long term. As a result, according to Marvin BOWER (1966)
, the long-term plans have become profit projections (for ten years or more) wit
hout much utility, represented by a huge amount of paper and a limited amount of
strategic thinking. Such plans do not allow to predict the environmental future
. In the mid-60s, was introduced Strategic Planning propositions by prof. Igor A
nsoff, from researchers at Stanford Research Institute and the consultants from
McKinsey Consulting Co. (Taylor, 1975). Philip Kotler (1975), one of the advocat
es of its use, propose the following concept: "The Strategic Planning is a metho
dology
management that allows for direction to be followed by the Organization, which h
as a greater degree of interaction with the environment. " The board includes th
e following items: scope of action, macro, functional policies, philosophy of ac
tion, macro strategic, functional strategies, macroobjetivos, functional objecti
ves. The degree of interaction between an organization and environment, which ca
n be positive, neutral or negative, varies depending on the assumed strategic be
havior by the organization before the environmental context. The table below ill
ustrates the optional behaviors of an organization and its consequences.
Myths and Misconceptions about Strategic Planning in the business world, most of
the conventional thinking on strategic planning, ie, setting goals and formulat
ing plans to achieve them, is misguided and sometimes obsolete. Many organizatio
ns lose too much time and precious intellectual energy trying to plan and make a
prognosis for its future. Create strategic plans grand, supported by detailed b
udgets, resource estimates, tactical plans and schedules, but most of these effo
rts have little connection to business success.
OPTIONAL BEHAVIORS AND THEIR CONSEQUENCES NEGATIVE DEGREES OF INTERACTION BEHAVI
OR reagent Not Not Not innovative adaptive Reagent CONSEQUENCES Adaptive short-t
erm survival Long-Term Survival Extinction Stagnation Reagent Adaptive Innovativ
e Long-Term Survival Development
(Dinosaur) NEUTRAL
(Chameleon) POSITIVE
(Homo sapiens) SOURCE: VASCONCELLOS (1979)
There are doubts also about the differences between Strategic Plans, Tactical an
d Operational. Russell Ackoff (1966) states that the Strategic Plan is relevant
to the organization as a whole, while the tactical plan are related to various a
reas of the organization. For example, a Financial Plan and Marketing Plan is a
tactical plan. To operationalize the Tactical Plans, Operational Plans are prepa
red, to guide resource allocation for each part of the tactical plan.
Many organizational leaders tend to confuse with budget planning. In state insti
tutions, for example, where budgets are almost entirely directed towards the cos
ts of payroll, the leader goes beyond simply the cost of the current year for th
e next year, with corrections for adjustments in wages and cost factors related
to of life. All of them make up their budgets properly, with minimal change, and
the process goes from one year to another. This type of activity-based budget d
eceives the people, leading them to
11
Rev. FAE, Curitiba, v.3, n.2, p.9-16, May / Aug. 2000
think they are planning, but in fact there is often little or no planning (ALBRE
CHT, 1994).
Planning the Future Projection
Is there a better way of thinking in the future. I need to change the vocabulary
we use to think and talk about how to orient our business. Planning is the appr
opriate word to design a set of actions to achieve a clearly defined result when
you have full assurance of situation in which the action takes place and almost
absolute control of the factors that ensure success in achieving results. We ne
ed a plan to build a bridge, fly a plane, a kidney transplant, open a new office
in another city or to launch a new product. But if anyone wants to venture in a
competitive market, or pass the national market to a global market, or defend t
heir core business (core business) in the face of changing competitive and techn
ological expressive, we need something more than planning. This involves a proce
ss of reasoning that is exploitative, and non-deterministic. ALBRECHT (1994) cal
ls for future projection.€Planning as is done conventionally has little to offer
in any situation is highly ambiguous. Documents drawn up, the forecast, the act
ion plans and schedules often are nothing more than intellectual mirage. In some
cases, the illusion of accuracy that they create can lead to a shift of focus o
n means to achieve success. They may mistakenly directing its attention, making
it follow the plans in place to exploit opportunities, of which most certainly d
oes not contain plans. In one approach, the projection of future outcome measure
s are needed or critical indicators that help measure the effectiveness of strat
egies. But we can not delude ourselves, thinking we have a realistic set of goal
s and we'll be working for atingilas. Rather, we are developing
12
action strategies to explore what is happening in the environment and using the
critical indicators to then decide what to do. The concern at that time, should
not focus on the expectation of success or failure, because we will be continual
ly adapting to the consequences of our action strategies. It seems a subtle dist
inction, but may be profound in its effects on thinking processes present there.
From this viewpoint, the typical annual planning cycle that many organizations
follow religiously can actually catch them the agility to react to changes, thre
ats and opportunities. Drafting the strategic plan and annual budget is a proces
s so thorough that no one wants to change it, even major environmental changes t
hat occur during the year. It takes as much planning as designing the future to
make a company successful. Skilled individuals are needed in both tasks. It requ
ires leaders who can master both practices. While designing the future is a proc
ess that involves deciding how to act based on what is happening in the immediat
e environment and in the near future plan is to translate that decision into man
ageable actions. The impossibility of making a plan for a future which appears c
onfused and ambiguous should not generate feelings of frustration and impotence.
It should, rather, develop skills and discipline to continually interpret this
in terms of future actions and strategic initiatives, and so use the skills of p
lanning to achieve coherent plans. One can summarize the guidelines followed in
planning and projection of the future as follows:
NO PROJECTION IN PLANNING THE FUTURE
-
Set results or goals. Determine actions. Reserve resources. Targeting the target
s set.
- Mastering the "shock waves" (ALBRECHET, 1994). - Explore trends. - Manage even
ts. - Monitor the critical indicators.
The future projection and planning should meet at the point where it is possible
to devise an action strategy and translate it into a goal or target. In this se
nse, planning becomes the result of tactical projection of the future, but do no
t expect him to solve the puzzle for the business, this is a dynamic puzzle wher
e the pieces are fitted to each day, each months and years, not assembled all at
once, in drafting the so-called plan. The guiding premise for this maneuver is
the creative Strategic Management. With a clear understanding of who the company
really is, its capacity, what is your business that creates value for customers
and how it differs to win customers and Mantel, has the means to make the most
of the work no matter what the present business environment.
The Concept of Strategic Management
The study of Strategic Management had its definite form for the first time after
the Ford Foundation and Carnegie Corporation sponsor in 50 years, research in t
he curriculum of business schools. A summary of this research, called GordonHowe
ll report, recommended that the teaching of business had a broader nature and in
clude a training course in an area called business policy (Gordon, and HOWELL, 1
959). Such a course should have very different characteristics. Instead of prese
nting students to analyze business problems in specific areas such as marketing
or finance, emphasize the development of knowledge in identifying, analyzing and
solving real world problems in extensive and important business areas. So, woul
d give students the opportunity to exercise qualities of trial that are not expl
icitly required in any other way. The report also recommended that the new cours
e of policy should concentrate on integrating the knowledge already acquired in
other courses and promote the development of skills of students using that knowl
edge.
The Gordon-Howell report got wide acceptance. By the age of 70 years, the course
was part of the curriculum of many business schools. However, over time, the in
itial focus of the course was expanded, including consideration of the overall o
rganization and its environment. For example, social responsibility and ethics a
s well as the potential impact of political, legislative and economic on the suc
cessful operation of an organization have become topics of interest. This emphas
is on more recent and wide area and caused the leaders to change the name of the
Business Policy Course for Strategic Management (LEONTIADES, 1982). The concept
of strategic management has evolved and will continue to evolve (GINTIS and WHI
TE, 1982). As a result, is perceived to lack of consensus on the precise meaning
of the term (ANSOFF, 1993). Despite the stalemate, strategic management is perf
ormed in many organizations today, and many of them benefit significantly. The S
trategic Management is defined as a continuous and iterative process that seeks
to maintain an organization as a whole properly integrated into your environment
. In the past, the process of strategic management was influenced largely by the
planning department of the organizations. The members of these departments were
involved in the design and implementation of strategic management systems withi
n their organizations. However, more recently, planning departments have lost so
me of its influence (SURE, 1993). The current process of strategic management tr
ends, especially in smaller organizations, to be dominated by the chief executiv
e officer (CEO) of the company. The president is also regarded primarily as the
main responsible for the success of the process. That does not mean, however, th
at the president follow the process of strategic management independently. Inste
ad, the CEO to successfully in this area generally outlines a process of strateg
ic management that involves members from different areas and different levels of
the organization.
13
Rev. FAE, Curitiba, v.3, n.2, p.9-16, May / Aug. 2000
An organization can obtain many benefits from properly practicing strategic mana
gement. Perhaps most important is the tendency of such organizations to increase
their profit levels. Although previous studies have concluded that the increase
in profitability does not normally monitor the implementation of strategic mana
gement, 1 a number of significant recent research suggests that an efficient and
effective system of strategic management can increase profitability.
organizational or determining the organization's goal. There are two main indica
tors of the direction to which an organization is taken: the mission and organiz
ational objectives. The organizational mission is the purpose of an organization
or the reason for their existence. The goals are the goals of organizations. Th
ere are two other indicators of the direction that companies are now in place: t
he vision, which is what companies aspire to be or become, and the values that e
xpress the philosophy that guides the company and that differentiates it from ot
hers. Step 3 - Formulation of an organizational strategy The third step of the p
rocess is the formulation of strategy. This is defined as a course of action wit
h a view to ensuring that the organization achieves its goals. Formulate strateg
ies is to design and select strategies that lead to the achievement of organizat
ional objectives. The central focus is on how to deal satisfactorily with the co
mpetition. Once the environment has been reviewed and the guidelines stipulated
organizational, management is able to outline alternative courses of action in a
n effort known to ensure the success of the organization. Step 4 - Implementatio
n of organizational strategy in this fourth stage put into action the strategies
developed logically emerged from previous stages in the process of strategic ma
nagement. Without effective implementation of the strategy, organizations are un
able to obtain the benefits of conducting an organizational analysis, the establ
ishment of an organizational guidelines and formulation of organizational strate
gy.
The Strategic Management Process
The Strategic Management involves a process or series of steps. The basic steps
include: Step 1 - Implementation of an environmental analysis of the strategic m
anagement process starts with the analysis of the environment, ie the process of
monitoring the organizational environment to identify risks and opportunities p
resent and future. In this context, the organizational environment contains all
the factors, both internal and external to the organization€that can influence t
he progress achieved through the realization of organizational goals. Administra
tors must understand the purpose of the analysis of the environment, recognize t
he various organizational levels in the environment and understand the recommend
ations of standards to perform an analysis of the environment. Step 2-Establishi
ng an organizational guideline The second stage of strategic management is the e
stablishment of the guideline
As a first example of such studies see: Fulmer, R.; RUE, L. The practice and pro
fitability of long-range planning. Managerial Planning, v.22 p.1, 1974 and ROBIS
ON JR., Richard. The important of outsiders in small firm Strategic Planning. Ac
ademy of Management Journal, v.25, n.1, p.80, Mar. 1982.
14
Step 5 -
Strategic control
Strategic control is a special kind of organizational control that focuses on mo
nitoring and evaluating the process of strategic management in order to improve
it and ensure proper operation.
Special Issues in Strategic Management
Two other issues have received particular attention in recent years and administ
rators should consider them carefully to determine how strategic management shou
ld be practiced within a particular organization. It's international operations
and social responsibility. During recent years, businesses have tended to become
involved with international activities. As expected this trend to continue, mor
e and more organizations will need to consider international issues in the futur
e as part of its strategic management process. Social responsibility, in turn, i
s an administrative obligation to take actions that protect and promote the orga
nization's interests and welfare of society as a whole. Recognizing that such ob
ligations exist necessarily have an impact on the process of strategic managemen
t.
Conclusion
In this paper, we tried to highlight the importance of strategic planning within
the process of strategic management, placing it as a useful tool for the manage
ment of organizations. Were described some important concepts on strategic manag
ement, vision and strategic management that can greatly contribute to the reflec
tion of directors, and that are directly related to the Strategic Planning proce
ss. The Strategic Planning, rather than a static document, should be viewed as a
dynamic instrument of management which contains decisions on the anticipated li
ne of action to be followed by the organization in accomplishing its mission.
It should bring the thought of Professor. Derek F. Abell, the International Inst
itute for Management Development (IMD) in Lausanne, Switzerland. In one of his a
rticles, entitled "Double-Planning" (1990), he recalls that until recently most
organizations could manage and change their business using a single strategy. Si
nce the competition was stable and moderate change, this approach was appropriat
e. And, in fact, was used by most companies during the long period of expansion
that lasted from the end of World War II until the early '70s. But, as the inten
sified competition for markets and the change spread, a single strategy, encompa
ssing the present and future, offered no basis for a more effective corporate go
vernance in the present, much less to manage change. Many companies have continu
ed to develop systems of strategic planning without making any distinction betwe
en present and future. In fact, they often adopt ineffective approaches that ser
ve as "transitional shelter" between the two and fail to meet the needs of excel
lence in short-term and long-term change. The ubiquitous three-year plan general
ly fall into that trap. The ability of companies today have an effective perform
ance depends on decisions made in the past, the decisions they make today to fol
low this direction or that shape their choices in the future. It is worth mentio
ning an old saying: "The past is the present, and this contains the future." The
proposal of Professor. Derek F. Abell is the adoption of dual planning. The fun
damental difference between planning for the present ("today for today") and pla
nning for the future ("overnight") does not match the common difference between
short and long term, in which the short-term plan is merely a mere exercise deta
iled budget and operations done in the context of a market position expected for
the long term. The planning for this requires its own strategy - a vision of ho
w the company needs to work today (given their skills and their target markets)
and the role of each function key.€And planning for the future is based on a vis
ion of the future - and, more importantly, in a strategy to get there.
15
Rev. FAE, Curitiba, v.3, n.2, p.9-16, May / Aug. 2000
References
Ackoff, R. L. The meaning of Strategic Planning. MicKinsey Quaterly, p.48-61, Su
mmer 1966. Albrecht, Karl. Programming the future. São Paulo: Makron Books, 1994
. ANSOFF, H. Igor. Strategic planning to strategic management. São Paulo: Atlas,
1990. ANSOFF, H. Igor. Deploying strategic management. São Paulo: Atlas, 1993.
BOWER, Marvin. The Will to manage. New York: MacGraw-Hill, 1966. SURE, Samuel, P
eter, J. Paul. Strategic management. São Paulo: Makron Books, 1993. DEREK, F. Ab
ell Double planning. HSM Management, São Paulo, n.16, p.106-114, Sep. / Oct. 199
9. GINTIS, Peter M.; WHITE, Donald D. The Social Learning Approach to Strategic
Management: Toward the Theoritical Foundation. Academy of Management Review, Apr
. 1982. GORDON, R. A., HOWELL, J. E. Higher education for business. New York: Co
lumbia University Press, 1959. Kotler, Philip. Marketing management. São Paulo:
Atlas, 1975. LEONTIADES, M. The confusing words of business policy. Academy of M
anagement Review, p.46, jan. 1982. TACHIZAWA, Takeshy RESENDE, Wilson. Business
strategy: trends and challenges. São Paulo: Makron Books, 2000. TAYLOR, B. Strat
egies for planning. Long Range Planning, Elmsford, p.27-40, Aug. 1975. VASCONCEL
LOS, Paul. Strategic planning. Belo Horizonte: Fundação João Pinheiro, 1979. 16