Essay On Strategic Business Planning

Importance of Strategic Planning and Management in the Business Environment

The business that the author wants to start is a green eco-friendly organization that designs and builds water turbine induction systems for power creation and water desalination for the costal United States. However, starting a business is a challenge. Without proper procedures and guidelines, a new business owner cannot identify and maintain a game plan to success. Creating a rough outline or game plan by the issuing of a mission statement is part of the strategic management process. To coincide with a mission statement, a vision statement is created that describes what the organization wants to become. This paper will review how important these factors are as well as the four concepts of business: planning, leading, controlling, and organization are to the creating and implementation of a strategic business plan.

Define Strategic Management and Planning

Hermann (2005) states “ Strategic management has developed theories and concepts that mainly examine the environment and look inside the firm, developing ideas and methodical advances that follow and try to predict management practice transformation as seen from an evolutionary perspective on variation, selection, and retention” (p. 111, ¶2). Business strategic management and planning are the processes used to orient an organization over the long-term; which achieves an advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets, and to fulfill stakeholder expectations.

Strategic management is the process to build a game plan using short-term and long-term goals and objectives with an outline from a mission and vision statement. By examining results of the short-term or tactical management revisions can be made to achieve the long-term strategic plan. As with a physical highway roadmap that has mile markers and exits along with alternative road ways, well planned strategic management offers a path to success with check points and offers the ability to make choices on how to proceed based on the issue at hand.

Importance of a Strategic Plan to the Success of this Business

A business cannot achieve maximum success without a strategic plan. By designing and planning a sound strategic plan allows the author and business owner the ability to provide a service that satisfies a need while generating a financial gain. According to Segal-Horn (2004) “Strategy has therefore become understood more a process,” than as a plan (p. 12, ¶3). Several steps are part of building a strategy: Formulate or develop a strategy, strategy implementation or putting the strategy into action, and strategic control or modifying the strategy or its deployment to ensure desired outcomes are attained. The business developed a mission statement: To develop environmentally friendly sources of power and water for coastal regions along the United States while providing for economic profits to allow further growth and future technological advances. In addition to a mission statement, the business developed a vision statement: To eliminate the United States dependency on all foreign energy sources.

By developing a sound strategic plan, the business of developing and building water turbines can achieve sustainable competitive advantage by creating “a unique and valuable position involving a different set of activities….”(Lowson, 2002, p. 52, ¶3). By first formulating or developing an action plan with a rough outline, the author can begin the process of building ones business. In this particular business of developing and selling water turbines, strategic planning is important in assisting in design cost, quality, flexibility, and responsiveness of the organization (Lowson, 2002, p. 51, ¶2). A business owner can manage the business by using the various techniques of planning, leading, controlling, and organizing to ensure that these factors and others that may arise are quickly addressed to move successfully toward the vision statement.

Four Functions of Management

The four functions of management as they relate to creating and implementing a strategic plan are important components. Without these components, planning, leading, controlling, and organizing, a strategic plan would not be a total comprehensive plan encompassing all aspects of what an organization faces internally or externally. From the planning stage in which the infrastructure of the business is created with employees, equipment, and capital are attained to how these resources will be used, the strategic plan is the roadmap used for guidance. In addition, during the planning stage, goal setting, establishing standards, and obtaining necessary resources is performed. Planning takes three forms: Short-term planning or strategy in the form of tactical strategy, long-term planning or strategy or strategic planning, and contingency strategy utilized when an alternative plan is necessary.

Leading is motivating individuals or employees to reach an objective or goal by setting short and long-term goals and the ability to deliver these goals to the employees. Leading also involves being a role model, setting an example, and resolving conflicts. The ability to lead also assists employees learn the ability of empowerment by taking on additional responsibilities, making correct decisions, and completing tasks assigned to them.

Coordinating procedures and resources internally and externally is part of the controlling function of management. By measuring against set guidelines and goals set earlier, a manager can monitor and control outcomes of employees by correcting issues as they arise. By maintaining control of an organization, a manager can maintain an awareness of how productivity is progressing toward the goal or objective.

By taking the rough outline from the planning stage, the organizing step involves prioritizing the steps into a framework that all employees understand. Processes are established in a specific order. For example, employees are assigned jobs and tasks to perform in a particular order for their specific job title. Identifying capable employees and placing them in the best position possible provides managers the flexibility to develop teams that can complete several tasks and assignments at the same time. Thus production and productivity increases. From personnel resources to other resources, organizing involves bring processes and planning together to form a prioritized checklist in how the resources are utilized.


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Importance of Strategic Planning

Strategic planning is a process in an organizational culture in which a strategy is defined or a direction is set and then business decisions are taken for allocation of the business resources and assets in order to pursue the defined strategy. Strategic Planning comprises of two words, i.e. strategy and planning. Strategy means a game plan or a blueprint of set of actions in order to achieve a long term goal or an overall aim of a business or an individual. Planning, on the other hand, means a thinking process in order to organize the actions required to achieve the ultimate aim or goal by maintaining a balance between the needs and demands.

            This is a fundamental step in achieving a long term set business goal or in other words, the conversion of a business vision in clearly defined objectives and goals and a sequential set of step-by-step plan to achieve that long term vision. It is a very flexible way of attempting for a business growth and takes into account a wider picture a dream. There are various benefits and importance of undergoing a strategic planning process, major ones are enlisted below:

  1.    Systematic Proven Business Tool

            Strategic Planning is a traditional means used over a long span of time by the business leaders and managers to create milestones and give business new heights. This is a very systematic organizational blueprint consisting of step-by-step activities to be undertaken by the team to achieve their long term business goals. Being systematic is its major benefit that helps the managers to clearly define the directions of their business decisions one after the other without any chaos, ambiguity and stress. This has been proven overages that, for achieving a long term vision, there is a need to define sequential missions broken in a set of easily achievable goals over a period of time.

  1.     Missing Opportunities

            With the help of a finely created business strategy plan, one can take an advantage of one of the premium opportunities arising all of a sudden or in the near future out of external environmental factors. With a plan the business is able to extract benefits out of the competitive and tough situation and treating it as a challenge rather than taking it as a threat to the organization. Such windfall opportunities can prove to be a boon for the business if attempted for in time like buying a competitor's stock and assets in a liquidation sale or hiring employees of a closed down plant of rivals.

  1.    Focus on problem solving

            With strategic planning process one takes into account a long term view of the business operations and its model. There can be some consistent minor problems that prevent the business from achieving its highest efficiency and thereby stopping from maximizing the organizational success which can be solved by strategic planning process focussing on the root cause of the problem from choosing short term measures to solve the issue. When the things are organized the issues can be sorted out on a permanent basis, which not only cut down the present cost, but enables to have a different outlook for future organizational growth.

  1.     Enables creating a fine and clear strategy

            Clear strategic plans not only benefit the business or its shareholders, but the stakeholders at large. With a clear business strategy the employees and managers get a clear idea about their roles, targets and performances. Like the short term plans detail about the achievement of a business goal over a span of a few months like business targets, deadlines, etc. Whereas, the other may comprise of the longer span of time over next 5-10 years, which may comprise of expansion strategies, new product development, market development, business acquisitions and mergers, marking national or a global presence, etc.

  1.    Proactive business tool

            With a systematic and clear strategic plan the managers are not only able to attend to the current business conditions and situations, but also address future activities based on the upcoming industry scenarios and factors. This helps the business leaders to attempt for a quick and appropriate move at the very initial stage of business downtime or tough industry recession. These finely planned moves not just save the business through a tough time, but also enable it to maintain a strong and stabilized position over its competitors and rivals. This helps capitalize the brand development of a business.

  1.     Appropriate allocation of resources

            Systematic planning, directed activities and properly thought upon business decisions, not only help the business to allocate its resources in an efficient way but also enable it to judiciously make use of its assets with the motive to maximize its output and minimize its wastage. With this the capital and interest cost goes down rising the short term profits and long term stakeholders’ returns. When the current resources are rightly and properly allocated it opens up the ways for new sources of resources available to the business which enhances its capital base, opens up new avenues of opportunities and assure of more stakeholder’s value generation.

  1.    Measurable means of business performance

            Strategic planning as read above is a step-by-step plan of the long term vision of the business which means it is broken down into smaller and more easily achievable missions or business goals over a short span of time. This enables to measure the performance of the business over the series of these short term business targets. This will enable a manager to sketch the picture of the business growth in terms of profits, shareholder value or turnover, etc. achieved in these fragmented time frames. This will therefore form base of the business statistics and will help to frame the future moves and suggest for better or changed business activities for achievement of that long term objective.

  1.     Flexible yet disciplined means

            Though this is a measurable tool in case of any variation in the targeted business goal a strategic plan will enable to take a changed business move in order to achieve same long term business goal may be with a different set of actions. Thus it facilitates any changes to be made to the current set of actions or plans for a more flexible approach for reaching a same destined goal with more disciplined efforts and spirits. This way of moulding in order to remain on the same path to attain the thought of aim keeps the discipline in the hierarchy and the structure of working.

  1.     Simplified yet motivating

            The strategic plan is based on the concept of simplifying the complex goal into fragments of simple and understandable sections of smaller targets. This helps to understand the complex whole picture in an easier way by breaking down into sections. This one-by-one fragmentation is called mission creation which is taken one after the other not only simplifying the process of achievement, but also keeps the spirits of the business leaders and stakeholders high on analysing the business performance. On being able to measure the acts and then compiling a set of scorecard, the team gets motivated on achieving more and higher targets for growth and development of all at the same plane.

  1.     A competitive edge over rivals

            When a business leader has a plan which is systematically made to cover his long term vision and is finely crafted in sections to elaborate its small, thoughtful goals, he has better and higher chances of extracting from the upcoming opportunities and fighting back the threats or converting them to their advantage. This strengthens the business position over its competitors and rivals and reduces the changes of failures and weak decisions resulting in loss. A more stable and strong position is a threat to the competitors as that helps to sustain a longer market presence, stronger brand image and higher stakeholder loyalty.

  1.     Enables Follow-up and change implementation

            The strategic planning process is based on goals which are nothing but just the small pie’s in a big cake which are achieved over a span of time to form that Big chocolate cake. For example the wider vision is to capture the national market over the span of the next 20 year. Now to achieve that vision missions are created for yearly basis, which starts from getting a specific number of clients every month to achieve a budgeted turnover every year. These smaller goals help to evaluate the route covered over the map to achieve that desired destination. Following up with these statistics and measuring these smaller missions’ enables business leaders to make appropriate changes to their current plans to facilitate better and efficient steps to be taken in the targeted growth. Following up is an essential activity to keep up with the right track and reach the decided destination or goal by making necessary changes to the current plan and set of activities.


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