A critical evaluation of strategic planning as an appropriate way of developing an organization’s strategy (BU3413)


A critical evaluation of strategic planning as an appropriate way of developing an organization’s strategy (BU3413)

It is factual to infer that strategy is everything in an organisation. This can be attributed to the definition of strategy that Weigl (2008) presents which elaborates strategy as a ploy, a position, a perspective and a pattern. Such definition coupled with the intensifying competition in the contemporary business world makes strategy an indispensible element for any firm.  Strategic planning on the other hand is the process through which a firm gets to define its long term strategy. Steiner (2010) defines it as an organisational activity of prioritising actions and allocating resources to them and ensuring the entire organisation is committed to these priorities and goals. Strategic planning thusly stands as one of the roadmaps to strategy attainment. In light of this discussion, this essay intends to critically evaluate strategic planning as an appropriate way of developing an organisation’s strategy.

According to Leonard and Mintzberg (1996) strategic planning is an important concept only that its contextual and innate meaning has been misplaced. In Bower’s (2007) discussion he notes that strategic planning is supposed to be a detailed demystification of the visions of the organisation into small formal procedures that need to be followed. This follows the analysis of the market through strategic planning tools including PESTEL analysis which looks into the external environment, Porter’s generic strategies, SWOT analysis and value chain analysis. In addition it is supposed to offer an insight as to what is expected at the end (Burgelman, 2002). In this aspect, strategic planning thus stands as advantageous because it creates a harmony in the conduct of activities in the organisation. It offers a pathway to success. However, Mintzberg, (1994) critiques modern applications of strategic planning as they blur the line between ‘strategic thinking’ and ‘strategic planning’. Another upper side to strategic planning according to Falshaw, Glaister and Tatoglu (2006) is that it offers a firm the capability to allocate resources rationally to different courses of action. This is a very imperative element is budgeting and consequentially financial performance.

During strategic planning, the involved team analyses the external environment and plans for it in advance (Harrison, 2010). As such, strategic planning offers a bigger picture to the stakeholders as to what to possibly expect and how to avoid it. This is mostly a long-term perspective that may otherwise be easily go unnoticed. According to Fairholm (2009), getting strategic planning to work means that not only will every individual and department know their place and expectation but the entire organisation gets to be coordinated. This is also due to the fact that everybody has knowledge of the ultimate objectives of the firm.Parke (2012) in reference to the long-term orientation of strategic planning argues that it offers all the parties involved fore-sightedness meaning that the whole organisation is set for the future. In addition to this, Kaplan and Beinhocke (2003) believes that strategic planning meetings though they may not often, in modern organisations, offer strategy solutions, allow the involved manager to be prepared for strategic thinking. This is so because at such meeting they often discuss fundamental organisational issues that matter in terms of strategic choices. In the end all the key decision makers stand on the same platform on decision making. Kaplan and Beinhocke (2003) argument is founded on the basis that the best strategic planning occurs at critical times.

Strategic planning as much as it boasts of the aforesaid strengths is bound by different shortcomings. As Kaplan and Beinhocke (2003) note, there entire process of strategic planning can be termed as mediocre because managers ‘pretend to make strategic plans and also pretend to follow them’. This means that there is no genuine concern about strategic planning and it is observed just because it is a formal procedure. Managers get to do what they want alongside it. One of the backdrops of strategic planning that has been majorly discussed is lack of flexibility – also termed as ‘too much focus’ (Wang and Walker, 2007). This is seen by Mintzberg, (1994) as a problem because the modern business world is dynamic and can hardly be transcended using a continuous uninterrupted pathway. This is especially so in the wake of current disruptive technologies in the different industries. What strategic planning suggests is the adherence to the same pathway regardless. In the end, the organisation may stand to lose. As discussed by Kaplan and Beinhocke (2003), the need for strategic planning needs not be in its application but in preparing the manager for critical times of decision making; the best strategic choices are not made in the boardrooms but in “office corridors” and “long flights” at turbulent business times.

Murray (2010) for example discusses the case of leading companies that have been often thrown out of the market by competitors just because they focused too much on “good” management provisions. Evidencing this,Thierer (2012)says that Blackberry was a celebrated phone brand a few years ago having been creative enough to come up with an appealing line of mobile devices. However, changes in the market, as characterised by Apple coming up with even better devices, could not have been predicted beforehand and thus Blackberry was phased out of the lead position. Murray (2010) suggests that a more “non-conventional” approach should be attached to firm in which case strategic decision can be made at the instance they are necessitated and more so by people that can see the need. An example of a company that has embraced such an approach is Google Inc. The firm accords the employee freedom to invest in side projects that have proven to be critical in sustaining a competitive edge for the firm (Murray, 2010). This is as opposed to a scenario where the step by step provisions of the strategic plan are adhered to unwaveringly.

As inferred in the introduction, strategic planning is one of the ways to achieving the perfect strategy for the organisation. However, this is not the only way since there are other roadmaps to developing an organisational strategy such as strategy crafting and the resource based view.

Mintzberg(1987) came up with the idea behind strategic crafting. Essentially, the difference between strategic planning and strategic crafting comes up from the distinguishable definition of planning and that of crafting. Alluding to the act of a potter crafting different models, Mintzberg elaborates that the process of crafting should be of traditional skill, dedication, perfection through mastery of detail et cetera. In his view, strategic planning is to be attained nor by too much thinking but through genuine involvement, commitment and experience.Mintzberg (1987) suggests that just as a potter sits with her hands on the clay but her mind dangling between past experiences – what has worked for her and what has not – her future prospect, her capabilities and the market demand so should managers. Knowledge should be implicit in this case. Manager thus should similarly focus on the past, the future, what they have et cetera. They basically need to depict knowledge of the materials at hand. In doing so, Mintzberg believes that a better strategy can be developed (Mintzberg, 1987).

In critiquing strategic planning as the approach towards delivering the best strategy, Mintzberg uses the ‘hand and mind’ explanation. In his view, there are no days that a potter thinks and others that she works, she does them both simultaneously. Therefore, the prevalent concepts where strategy is first thought of (formulated) then implemented is wrong. A firm needs to be constantly implementing and planning strategy. A critical point that Mintzberg (1987) puts through is that some strategies as deliberate while other form themselves after a firm’s response to a scenario. An example of a company that adopts deliberate and emergent strategies is the giant furniture manufacturer IKEA. For example (Mellahi and Frynas, 2015) notes that the firm has managed to learn from its past mistakes on the manufacture of furniture in Japan and the United States and adopted new strategies along the way while retaining its basic model as a furniture manufacturer but allows for edges such as customisation of tastes according to the local demands – a previously ignored facet (Mellahi and Frynas, 2015). The firm did not plan then act but rather developed the strategies relative to changing needs.

The genesis of the resource based approach to firms’ strategic decision making is the dissatisfaction associated with static, equilibrium framework nature of the industrial economist’s approaches to strategy such as strategic planning. The recourse based view, leans on older theories of profit and competition (Grant, 1991). The underlying principle in the resource based approach is the role of the organisation in creating congruence between the resource capacity and the strategy chosen (Andersen, 2010). Analysis of the resource advantage of the firm is done and such an analysis, Valentin (2001) says, should incorporate tools such as SWOT. A SWOT analysis unearths the strengths and weaknesses of a firm as well as opportunities and threats presented by the same. In light of this, Becerra (2009) internal capabilities and external opportunities can be matched.

Grant (1991) summarises the application of the resource based theory as; analysing the resource base of the firm, improving on the firm’s capacities, identifying a strategy and extending the pool of resources and capabilities. An example of RBV is Apple’s position in the Smartphone market. Firstly, the firm has brand reputation as a strong resource and second it has the technology to create premium products and thus bases its strategy on this.  However, this approach also has limitation because as Kraaijenbrink, Spender and Groen (2009) posits, the theory of RBV lacks a singular integrating framework for the different contributions made to it.

The above discussion has highlighted issues associated with strategic planning and even so the invaluable nature of strategic planning cannot be underplayed. Such important aspects of strategic planning, as identified by Harrison (2010) also, include the ability to coordinate the various organs of a firm for a common goal, rational resource allocation, long-term orientation and clear guidelines. As such, it would be inapt for an organisation to do away with strategic planning; however in this wake of dynamic business environment it needs to be approached as a contingent measure and a platform to strategic thinking. According to Moore (2011), deliberate strategies, as suggested from strategic planning use to work in the 80s and 90s but current world conditions call for more than that. In exemplification of this, Rao (2012) notes that having stuck with its initial vision and strategies, Nokia failed to prove competitive enough in the phone market. Strategic planning centres power on top management an element that partially inhibits innovativeness in the junior staff; an aspect that could lead to better strategies. As such, Rao (2012) continues to note that Nokia after a long struggle and ignorance of emergent trends in the Smartphone industry had to adapt or be phased out and ended up creating a partnership with Microsoft Inc. The example of Google Inc elaborates this better because as earlier noted Google allows usage of twenty percent of its resources toprojects outside the stipulated realms. In doing so, Murray (2010) points out that Google manages to capture innovation that can be relevant in case the formal strategies fail.

Evidently, strategic planning is as essential as the rest of the approaches to strategy. However, it should be dictated by the context of the organisation. Strategic planning for example can be invaluable in static industries especially the manufacturing industries where the markets and market forces remain fairly constant. On the contrary in contexts where the threat of disruptive technologies is imminent, there needs to be consideration of other approaches such as the crafting approach. Similar cases apply to the resource based approach and the scenario based approach.

Strategy is inevitable in organisation as every firm plans a path to attaining overall objectives. Being that important, it is critical that the beast strategy be applied in view of divergent issues surrounding the firm. The role of strategic planning, as discussed above, is important in several ways including offering foresight and coordination to the firm. However, there are situations that necessitate more than strategic planning. For example cases of rapidly changing external environments. As such the application of alternates to strategic planning is paramount for the survival of the firm. It is from such a perspective that this essay suggests a consideration of the immediate and extended organisational context before deliberation on the ultimate approach to strategy.


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