Importance Of Planning And Strategic Management

      Comments Off on Importance Of Planning And Strategic Management

There is a common saying popular among many that “failing to plan is planning to fail”. Of course, planning is a crucial process when it comes to management of organizations. One integral part of corporate planning is defining and formulating an overall strategy for the business organization. A good corporate strategy has to include everything in a business organization from employees, resources and how they could be used to optimize profits as well as guidelines to carry out day-to-day business operations. There are separate functional level, business unit level and corporate level strategies that are implemented in different levels of the business. The article emphasizes on two popular strategies that are adopted by organizations in the corporate level.
Quality has become important in strategy formulating as customers have become the most important element of any business. Therefore, formulating strategies to establish quality within the organization as well as to maintain quality throughout is important. Most organizations are keen on obtaining quality standards issued by both local and international institutes such as ISO 9001 Dubai, ISO 14001, and ISO 22301 etc.
The corporate portfolio approach
Today’s business organizations have not restricted themselves to producing one single product. For those organizations that offer a range of products it is important to evaluate the growth and the performance of each product and invest only on those that are profitable. The BCG matrix which is used for this purpose focuses basically on two aspects: relative market share and market growth rate. The four quadrants of the matrix which are star, problem child, cash cow and dog depict the different categories various products can fall into. The matrix gives an idea as to which products should be dropped and what products to further invest on. Various organizations may use different strategies to analyze their product portfolios. But maintaining consistency throughout the years will be a better practice.
Industry analysis
This strategy introduced by Michael Porter is to be carried out before entering a certain industry or a line of business. Porter defines five environmental forces influence the competitiveness of the firm within a particular industry. The five forces are bargaining power of customers bargaining power of suppliers, rivalry among existing firms, threat of new entrants and the threat of substitutes. It is important to analyze each of these forces in detail to decide whether entering the industry would be a profitable or not.
Apart from these adoptive strategies business organizations must have a management system of their own and an overall business strategy on maintaining their competitive edge. ISO 22301 specifies requirements to implement and maintain a management system as such that will aid in business continuity planning.
However, leading an organization with no clear set plan will be like driving towards your own destruction. Having a set plan and a clearly defined strategy provide a sense of direction, focus all efforts and help in evaluating the progress. If we think of an organization as a giant tree, planning and strategic intent are its roots.