Focus of Strategic Planning
Strategic planning is an organization’s way of maintaining a positive relationship with its
Specifically, it focuses on an organization’s long-term relationship
to its environment.
Strategic planning, according to Richard Daft, is probably the single
most important responsibility of top managers.
Top management is primarily responsible for developing a strategic plan, or grand
strategy that serves to define the organization’s character, mission, and direction.
other words, it defines the major objectives of the organization and defines the ways or
means that an organization will use to achieve those objectives.
The Components of Strategy
A well—thought out strategy deals with four basic areas of concern: scope, resource
deployment, distinctive competence, and synergy.
Scope of the strategy specifies the range of markets in which the organization will
It deals with the organization’s domain.
For example, Hershey has limited
scope because it has restricted itself to the confectionery business whereas Mars has a
much broader scope.
Mars competes in the pet-food industry, the electronics industry,
A strategy should also outline the organization’s Resource Deployment-how it will
distribute its resources among various areas of the business.
For example, a company
may decide to use the profits from its bread and butter areas to finance new ventures.
A strategy should specify the Distinctive Competence the organization has relative to its
A distinctive competence is something an organization does well that sets
them apart from other organizations.
For example, The Limited stresses its distinctive
competence of speed.
It tracks consumer preferences daily with point-of-sale computers,
uses faxes to transmit orders to its suppliers in Hong Kong, charters 747s to fly products
to the USA and has products in the store some 48 hours later.
A strategy should specify the synergy to be achieved between the various decisions about
scope, resource deployment, and distinctive competence.
Synergy refers to how the
different areas of the business enhance or compliment one another.
For example, Disney
achieves synergy among its various operations.
Disney makes movies, which make
money at the box office, and these movies then spur the sales of videotapes.
television program results in vacations to Disneyland and Disney World and these
vacations lead to the purchases of licensed souvenirs and greater interest in movies.
Finally, the Disney cable channel helps promote the entire empire.