Strategic planning in the multinational company.

61. Why strategic planning is important?

Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. Various business analysis techniques can be used in strategic planning, including SWOT analysis

Strategic planning is the formal consideration of an organization's future course. All strategic planning deals with at least one of three key questions:

" What do we do? "

" For whom do we do it? "

" How do we excel? "

Without the benefit of strategic planning, organizations in general and people in particular have no clear way to evaluate the purpose or direction of group enterprise. The strategic planning process provides a framework to guide the members of the organization.

The strategic planning process is a tool to aid managerial decision making. Its purpose is to ensure sufficient levels of innovation and change in an organization.

62. What are the limitations for strategic planning?

- Strategic Planning is not a way of making future decisions. There is no way anyone can predict the future. Strategic Planning provides overall guidance and direction based on what we think will happen;

- Strategic Planning is not a blueprint for the future. There are too many changes taking place - marketplace is changing, customer preferences are changing, new competition, new technologies, new opportunities, declining financial condition, etc. Strategic Planning is a dynamic process, which is receptive to change;

- Strategic Planning cannot resolve critical situations threatening the organization. Strategic Planning will not get you out of a crisis. The organization should be stable before engaging in strategic planning;

- Strategic Planning should not replace good intuitive judgements. If an organization is lucky enough to have good intuitive thinkers, then exercise extreme care before embarking on formal strategic planning. You do not want to destroy intuitive thinking within the organization.

63. How to organize the strategic planning process?

1) Environmental analysis is the process by which strategic planners monitor factors external to the organization to determine opportunities and threats to the firm.

Environmental analysis has several important benefits. It gives the organization time to anticipate opportunities, time to plan for contingencies, time to develop an early-warning system for possible threats, and time to develop strategies that can turn threats into opportunities.

the role of environmental analysis in the strategic planning process basically responds to three specific questions:

1. Where is the organization now?

2. Where does top management want the firm to be in the future?

3. What must management do to get the firm from where it is now to where it wants to be?

2) Gather preliminary information for the plan, such as the current mission of the organization, major goals in progress, and other plans already implemented. Survey key managers and determine critical issues of the future. In the strategy formulation process, the mission statement sets the mood of where the company should go. Objectives are concrete goals that the organization seeks to reach, for example, an earnings growth target.

3) Formulation of strategy. Once a clear picture of the firm and its environment is in hand, specific strategic alternatives can be developed. Strategy is a detailed, comprehensive, and integrated plan designed to assure that the mission and objectives of the organization are met. The strategic plan gives an identity, a personality, to the firm that allows it to attract certain types of employees, as well as not to attract other types. The plan becomes the vision for the organization that guides its employees, attracts new employees, and sells products or services.

4) Implementation of strategy. The strategy likely will be expressed in high-level conceptual terms and priorities. For effective implementation, it needs to be translated into more detailed policies that can be understood at the functional level of the organization. The expression of the strategy in terms of functional policies also serves to highlight any practical issues that might not have been visible at a higher level. The strategy should be translated into specific policies for functional areas such as:

Marketing

Research and development

Procurement

Production

Human resources

Information systems