Strategic Business Management Planning / Control
BUSINESS MANAGEMENT PLANNING AS CORPORATE
Planning as a management function is the process of selecting objectives and deciding what should be done to attain them. In management parlance, planning is the systematic process of analyzing relevant information both past and present and the development of alternatives so that a course of action be taken to achieve organizational objectives. It is concern with what is to be done. When it is to be done and who is to be it. It also involves looking into the future.
PLANNING AND ORGANIZATION SUCCESS:
Like individuals, small organizations do not can success to some degree without doing much formal planning, nor, does planning in it, guarantee success just as a new car with an excellent engine may file to perform well because of low quality petrol. An organization that plans may fail because of faulty performance of the functions of organization that plans may fail because of faulty performance of the organizing motivating or controlling. However, formal planning makes several important; offer essential contribution to an organization.
1. Planning, in the form of formally expressed objectives, helps create unity of purpose within the organization.
2. Planning provides a framework for decision making. Knowing what the organization wants to accomplish and basically how it is to be accomplished, considerably clarifies what cause of action is most appropriate.
3. Formal planning helps decrease Risk in decision making. By being thorough and systematic when making planning decision due to inadequate or faulty information about the organization’s capabilities of the environment.
4. Planning helps the organization copes with a changing environment. Several research studies indicate a strong positive correlation between planning and organization success.
COMPONENT OF FORMAL PLANNING:
Sound objectives are critical component of effective planning, but they are not wholly adequate guidelines for decision making and behaviour, objective only states what the organization wants to accomplish and when it wants this desired result.
The under lying purpose of these guild lines is to channel future decisions and behaviour to alternatives management, considered conducive to its oval purpose. The idea is to increase cohesiveness of action. The major components formal planning used to accomplish this are: policies, strategies, procedures rules, and Budgets.
These are broad guild to action and decision making that facilitates attainment of objective. It is that statement of intentions gearing an organization towards a certain goal. Policies are generally formalities by top management. For long life. A policy establishes parameters within which future decision and related matter are to be made. According to Steiner and mincer, policies may be thought of as codes that state the direction in which action may take place’’. Policies are designed to secure a constancy of purpose and to avoid decisions that are short sighted and based on expediency.
• MISSION OR OBJECTIVE:
This is the aim of an organization that is what it wants to do. Manufacture or produce goods and services.
These are broad decisions to act and to allocate organizational resources in certain ways in order to attain objectives. Strategic planning is concern with long range planning and related matters such as decision making and formulation of policies. Strategies are formulated by top management and chosen from among alternative ways of achieving the organization’s objectives. Strategies involve deciding what the major goals of the entire organization will be and what policies will guide the organization in the pursuit of these goals. Thus strategies may involve asking question like what business should we go into; should we provide services or produce manufactured goods? What guild lines should we follow? Etc.
• FACTORS IN SELECTING STRATEGIES:
Because of internal complexities and a changing environment, manager of large organization must consider many factors when selecting a strategy;
1. the needs of its” customers” and how they are changing
2. Limits and opportunities of the environment. This would include factors such as competition, legal, Technology and socio-cultural development.
3. The organization’s internal capabilities strengths and weaknesses.
• THE NEED FOR MULTIPLE STRATEGIES:
Strategies specify how resources are to be allocated to attain objectives. Therefore, every objective requires some form of strategy. Each major subdivision should formulate written strategies for attaining its divisional objectives. These strategies may sometimes vary considerable and still contributed effectively to the objectives of the organization as a whole. For example-General motor (USA), Cadillac division’s strategy of production of luxury cars contrast and moderate priced automobiles. Yet both of these strategies have proven successful in attaining the oval general motors corporate objective of changing a profit from products related to the internal combustion engines.
Just as management. formulate short-range objectives consistent with and facilitating the attainment of long-range objectives, it often must develop short-range strategies consistent with its broad, long-range strategies. These short range strategies are referred to as Tactics, tactics are formulate in pursuit of strategy. Whereas strategy is almost always formulated at the top/ highest levels of management. tactics often are developed and implemented at middle management.levels. Tactics have a shorter live range than strategy. Whereas the result of strategies may not be fully seen for several years, tactical result tends to be quickly evident and easily related to specific actions. Tactics are detailed consideration of short-term plans and their qualification and evaluation by means of for cast and budgets. Such matters and the cash required manpower needed, stock to be help, fixed assets to be employed and the breakdown of costs should all be covered.
A procedure prescribes what action is to be taken in specific situation”. These are detailed set of instructions for performing; sequence or action that occurs often or regularly. Organizations, like people, can benefits by applying their post experiences to future decisions. Resulting what happened in the past can help prevent repeating a mistake. Equally important not repeating the analysis that led to a satisfactory decision saves time and prevents introduction of error. Thus, when a decision making situation tend to recur frequently, management often finds it desirable to reuse its time – proven way of doing things and evolve a standardized guide to action. When expressed formally this guideline is called procedure.
Essentially, procedures usually outline a chronological sequence of activities to be performed in a specific situation.
• RULES: When the successful execution of plans depend on the task being performed precisely, it may be desirable for management to eliminate all distractions. To meet these objectives of internal security, the SSS restrict employment to people who are extremely loyal and trustworthy. It therefore cannot allow managers to hire anyone without conducting an investigation of the person’s background. Management also feels the need to relatively eliminate choices when there is high probability that some peoples might behave in a way that will have negative effects. Organizations, for example required people to be at work for a specific time period, such as 7.30 am to 3.30 pm or 8 am to 4 pm. To cope with this minor but important situation, where a high degree of conformity is needs to attain objectives, manager develop rules. A rule specifies exactly what is to be done in a specific, single situation”. Rules are statement that a specific action must or must not be taken in a given situation. Rules differ from procedures in that the, deal with a vary specific and limited issue. Procedures, on the other hand, cope with situation that involved a sequence of several related actions.
To cope with resources are available, managers use budgets, a planning tool that is wholly district from, but closely related to, the objectives strategies rules sequence. A budget is a technique for allocating resources, expressed quantitatively, to attain objective expressed in the same terms”. They are statement of the financial resources set aside for carrying out specific activities. Budget is by far the most widely used component of formal planning.
STEPS IN THE PLANNING PROCESS:
These are procedures of selecting objectives expressed and deciding what must be done to attain them. They are seven interrelated steps in all: they are selecting a mission or purpose, analysis of internal capabilities, analysis of the environments, setting objectives, developing supporting plans, implementing plans and controlling plans.
1. SELECTION OF A MISSION:
The selection of a mission or the definition of organization’s purpose is the logical starting point of planning. It is the organization’s over-ridding reason for existence and the foundation for all subsequent planning and other decision.
2. ANALYSIS OF THE ORGANIZATION INTER-CAPABILITY:
To determine what the organization can reasonable be expected to accomplish successfully, mgt. must analyse its strength and weakness. The purpose of doing so is to answer the fundamental question where is we now”? This analysis involves honestly answering many difficult questions about the organization’s capabilities in key areas like marketing, finance, production and human relation/resources.
3. ANALYSIS OF THE ENVIRONMENT; EXTERNAL THREATS AND OPPORTUNITIES.
Since, organization interacts actively with their environment in a variety of ways. During planning organizations always analyse the threats and opportunities in the environment. This includes competitors, economic conditions, government regulations laws, customers, technology, and social values. The rate of change of various factors must also be taken into account. Therefore this step requires forecasts of the environment.
4. SETTING OF OBJECTIVES:
The setting of objectives phase begins with the establishment of long-rage goals for the organization as a whole. Management then formulates medium and sort-range objectives for both the oval organization and each of its sub units that are consistent with and contribute to its long-range desired result.
5. DEVELOPMENT OF SUPPORTING PLANS:
Supporting plans are the form of guild to action and decision making. These include policies, strategies, tactics, procedures, rules and a variety of budgets. These supportive plans facilitate attainment of objectives by increasing unity of purpose.
6. IMPLEMENTATION OF THE PLAN:
The summation of the preceding steps in the organization’s plan for success and survival, planning process does not stop here. It must be implemented; plans are converting into action thought the managerial functions of organizing and motivation.
7. CONTROL OF THE PLAN:
Planning does not end by implementation, controlling serves as the concluding step of planning. Controlling, therefore, determines to what degree the plans have actually been implemented and how much progress the organization has made toward attaining each of its objectives. By gathering information on process and evaluating results, management is able to determine whether its plans are resulting in the future management predicted for the organization. If negative result (objectives) is envisaged, controlling helps management determine why and enable it to take corrective action before serious problem arises.
• QUALITY OF GOOD PLAN:
When an organization is said to be effective, certain qualities must reflect in the plan. These include:
1. Plans must costly relate to well defined organizational objectives.
2. A good plan must take cognizance of environmental factors that may provide opportunities or pose threats in attaining organizational goals.
3. They must take account of the existing organization and provide for control so that performance can be evaluated against established standards.
4. Plans must be concise, practicable and simple to be understood by organizational members and must offer easy operation.
5. Plans must have a flex able elastic band so that it could be stretched to take account of unforeseen future circumstances and changes.
• BARRIERS TO EFFECTIVE PLANNING:
Effective organizational planning is borne with a lot of frustrating elements generally; two major stumbling blocks impede effective planning in a modern concern. Firstly, obstacle from the incumbent planners internal resistances to establishing goals and making plans to achieve them. And secondly is the barrier which is beyond the scope of the planners, this is the general reluctance on the part of the member of the organization to accept planning and plans because of the kinds of changes they bring. The barriers are:
1. RELUCTANCE TO GIVE UP ALREADY ESTABLISHED ALTERNATIVE GOALS:
Some manager finds it painful to forget about an old established organizational goal and consider new ones in new plans. Coming out with a new plan in expensive both in manpower and money wise.
2. FEAR OF FAILURE:
Whenever someone sets a definite, clear-cut goal, that person takes the risk that he will fail to achieve it. Managers, no less than other people confidence in the organization, he will hesitate to establish difficult goals,
3. LACK OF ORGANIZATIONAL KNOWLEDGE:
In order to set effective goals, a manager needs a good working knowledge of three areas of the organization:
i. The organization as whole.
ii. Other sub-unit of the organization and
iii. His own sub-unit. Many managers, however, may only be equip with under development and faulty information system and may therefore call goal setting a quit and fall back on old established goals.
4. LACK OF KNOWLEDGE OF ENVIRONMENT CONDITION:
In addition to understanding the organization’s internal environment, the manager needs to understand the external environment- the competition, customer’s shares holders, suppliers, government agencies and the threats in the manager are hopeless and become confused about which direction to take. Sometimes, they become manager must feel that they and the sub- unit or organization have the ability to achieve those goals. Honestly, if the manager lacks self- confidence or confidence in the organization, he will hesitate to established difficult goals,
5. RESISTANCE TO CHANGE:
6. Establishing new goals means changing old ways of doing things. This change is most often met with resistance by organizational members because of the fear of the unknown and the throwing away of the “freezen” attitude, belief and way of going about things. This in no small way blocks the initiative to plan effectively.
• CORPORATE PLANNING:
The process of policy formulation establishment of goals and objectives and the development of strategies are all subsumed under planning. Planning therefore covers the whole process of determining what purpose to pursue and the means of attaining them as well as the mechanism for monitoring result. Planning as explain above could then mean these activities which lead to the definition of ends and the determination of appropriate means to achieve defined ends. Similarly, Taylor and Sparks (1970) help the opinion that planning is the systematic exercise in determining the total resources of the organization for the achievement of the quantified objectives within a specific time frame. Kempner (1978). Sees corporate planning as the systematic study of long term company objectives and the strategy required to achieve them. Again, according to Garba(1982)” Long range planning also looks at the alternative causes of action in the future to provide the basic for making current decisions” corporate planning in essence in designed to effectively relate the organization to its environment . Thus, efficient knowledge of all aspect of the environment is required before meaningful and effectively strategy can be developed and implemented. Herein, lies the importance of environmental scanning. This involves making thorough study of the environment in terms of its present and future pictures and, relating policy and strategy to the demand of the environment. The environment here could be internal or external business environment for an organization to decided to consider two important issues: what is the organization’s current performance? And what factors in the external environment might affect the organization’s future? Any answer to these questions is fundamental to the progress of a corporate plan. Organization current performances (internal environment) is usually appraised under two output, resources (financial, personnel etc.) are considered in terms of their relative strengths and weaknesses. Examples: sales volume may be increasing year by year a strength- most sales are in overseas markets with risky political situation- a possible weakness. Also recruiting well qualified staff for key functions a strength but the absence of sati factory career path for young employees – a weakness. External- environment features. Opportunity and threat. Here, the organization’s planners assess the likely impact on organization objectives of technological, economics, political and social trends together with the activities of competitors. Adjusting and adopting strategy to environmental conditions is the key to corporate planning and management. Thus, there are four essential aspects of corporate planning in the preceding definitions.
1. There must be clear quantifiable objectives and priorities to be pursued.
2. There must be a planning horizon over which the plan is expected to last
3. Information required for taking decisions regarding the plan must be available promptly and accurately, and
4. There should be a methodology for implementing the plan. This would include who would be responsible for various aspects of the plans, what resources will be needed, how would result be measured and what kinds of corrective action will be taken when deviation from the plan are observed. In the process of effective strategic planning, and organization should be able to provide adequate answer to the following questions.
i. What is our business?
ii. What should our business be:
iii. What will out business have to be in future
iv. What kind of business should we seek to enter
v. What are our goals and objectives
vi. Should we seek diversification? If so, in what area? How vigorously?
vii. Should we develop and exploit our present product- market position.
viii. How should we go about achieving them?
ix. What feedback mechanism should be developed for ascertaining how well we are performing?
x. What corrective action/ adjustment, if any should be taken?
Most frequent, the major problem of corporate strategic planning arises from improper definition of business of the organization. Such definition need be clear, and broad to enable the development of effective implementation of strategies. The source of income of an organization should define its business. A radio or Television network for example, is not in the business to providing education, information and entertainment. This is a wrong definition of its business and would lead to the development of inappropriate strategies. Its obvious business should be selling advertising space/airtime/ commercials. The business of lever Brother Nig. Plc. A manufacturer of programmed aimed at exploiting the consumer market at large in lieu of its many product lines. Furthermore, the organization should give more thought to what its business will have to be in future in response to changes taking placing in the competitive environment. It may have to change its structure, diversify or concentrate more on what it knows best.
APPROACHES TO CORPORATE PLANNING:
Steiner and Mincer (1977) have identified five major approaches to corporate planning and decision – making.
A. Intuitive Anticipatory:
This approach do not favour long- range planning in many sense. Chief executive applies contingency theory that a particular alternative strategy is the right one in particular circumstance and makes a decision accordingly. This approach, however, lacks objectivity; it telescopes and draw on years of experience and observation of the chief executives. For to work, the decision maker must be highly experienced and smart.
B. Opportunistic: This approach is high entrepreneurial in nature. It involves a contract search for new business ventures, new markets and new products to exploit. It also involves deferring commitment of resources until the opportunity arises. Its danger lies in the tendency to turn the company into a passive waiter for opportunities rather than an active search.
C. Formal structure: is a system and laid sown explicit procedures. It would be highly bureaucratic and time wasting especially in a dynamic business environment in the sense that it depends on set patterns and suggestion have to be refined and vetted at each level before a final decision is taken.
Strategic Business Management Planning / Control