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Файл:Strategic analysis and planning. Textbook
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7. STRATEGIC PLANNING
7.1. THE CONCEPT AND IMPORTANCE OF STRATEGIC PLANNING
Strategic planning is the process of creating and implementing programs, action
plans and activities related in space (by performers) and in time (by deadlines), aimed
at achieving strategic objectives.
The benefits of strategic planning are as follows:
• provides preparation for the use of possible favorable conditions for the
successful operation of the enterprise;
• allows you to comprehensively analyze emerging (including expected in the
future) problems and threats in the activities of the enterprise;
• improves coordination of actions in the process of economic activity of the
enterprise to achieve its goals;
• creates the prerequisites for the development of strategic thinking and foresight
among the management staff of the enterprise;
• contributes to the formation of an information base for effective enterprise
management in implementing the strategy and achieving goals;
• ensures a more justified and rational distribution of the enterprise's resources
and their concentration on key areas for achieving the success of the enterprise.
7.2. TYPOLOGY OF STRATEGIC PLANNING
The typology of enterprise strategic planning is presented in fig. 22.
Fig. 22. Typology of strategic planning
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All types of planning must be interconnected and not contradict each other.
According to the point of view given in the textbook by E. A. Utkin, strategic
planning is characterized by:
1) degree of uncertainty;
2) time orientation of the planning process;
3) a certain planning horizon.
Characteristics of forms of strategic planning
by degree of uncertainty
Depending on the degree of uncertainty of planned activities, planning systems
in an organization can be divided into two types.
The first type of planning involves action in a completely predictable environment
and no lack of information. Therefore, co-events in such systems have complete
certainty: you can give a 100 % guarantee that if event A occurs, then event B will
follow. These planning systems are called deterministic systems. Is it possible for
deterministic systems to exist in practice? If we talk about planning at the level of the
organization as a whole, then, of course, no, since every organization in a market
economy operates in an uncertain, changing environment and cannot be sure of any
definite outcome of ongoing events. But current planning and planning at the
departmental level, for example, production planning, as a rule, have high certainty and
power in anticipating results.
The second type of planning systems involves a lack of certainty in the
external environment and a lack of information. Thus, it is impossible to foresee a
certain value of the result of decision X made by the manager if this result can be
realized with 80 % probability.
Planning systems that do not provide complete predictability of the result are
called probabilistic (stochastic). Almost every organization, when carrying out general
planning of its activities, is faced with uncertain results. However, the degree of
uncertainty may vary depending on the level of economic development, historical
period and other factors. Thus, in developed countries, the transition from an industrial
economy to the next, higher type of development — a post-industrial economy — has
led to increased uncertainty due to the increasing complexity of the economy and the
acceleration of changes in it. In the Russian economy, the decline in certainty in the
business sphere is determined by the current historical moment, which is characterized
by global shifts in various areas of life.
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The options for probabilistic planning systems are the following:
1. Planning based on a system of strict obligations. Such planning is suitable for
situations in which there is a high degree of certainty in the outcome of events. An
example of this type could be planning a contract with a well-known, trusted partner,
when only sudden, force majeure circumstances can change plans.
2. Planning under personal responsibility. This planning is acceptable for the
opposite of the first type of situation — a situation of complete uncertainty. In this case,
the manager cannot be sure of anything at all and acts at his own peril and risk, taking
all responsibility upon himself. This type of planning is less typical for sustainable,
stable enterprises with experience in economic activity and a complex internal
structure, and to a greater extent for small, newly created business organizations that
do not have the necessary knowledge of the environment and established relationships
with their counterparties.
3. Planning adapted to random circumstances. This type of planning is
intermediate between the first two: on the one hand, it faces constant uncertainty in the
organization’s activities, on the other hand, it takes into account possible options for
action in an uncertain environment and thereby increases their predictability. In
practice, there are no more than three or four main options for the possible development
of events. Thus, planning can consist, for example, in determining actions in the event
that the prices of the most important types of raw materials increase by 15, 20, 25 %
instead of the expected 10 %.
Characteristics of forms of strategic planning
depending on time orientation
Depending on the time orientation of planning, R. L. Ackoff distinguishes four
types of planning:
1) reactive (return to the past) — based on the analysis of previous experience
and relies on old organizational forms and established traditions;
2) inactive (inertia) — considers both the use of past experience and the desire
to move forward unnecessary. Its main goals are survival and production stability.
Inactive planning, focused on the present, does not contribute to economic growth and
development of the organization;
3) proactive (anticipation) — focused on future changes;
In its quest for the best, it relies on all the achievements of science and
technology, widely uses experiment and forecasting, but makes little use of
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accumulated experience. Proactive planning based on forecasts can only be effective
for a relatively short period;
4) interactive — consists of designing the desired future and finding ways to
build it. This type of planning focuses on improving performance over time and aims
to maximize one's ability to learn and adapt or develop. It seems advisable to use only
the essence of interactive planning, and not its ideal form, and model the future
activities of the enterprise, adapting its relationship to the realities of a changing market
environment, which is what strategic planning takes into account.
Reactive planning (return to the past). The main method is the genetic
approach, i.e. every problem is studied from the point of view of its origin and past
development. It is necessary to find the cause of the problem in the past, suppress it or
contain it, and the problem will disappear.
The organization is perceived by supporters of reactive planning as a firm, stable,
well-established mechanism. Everything that happens in the organization is known in
advance. It must be managed from top to bottom with the help of the personal authority
of the top leader and his paternalistic attitude towards his subordinates.
Reactive planning is based on previous experience and is carried out from the
bottom up. Initially, the needs of the lower divisions are clarified, which are formalized
in the plans of these divisions. The collected materials are transferred to the next level
of management, which corrects and edits them and transfers them to the next level, etc.
until the final selection and preparation of the consolidated project. The general plan is
not adjusted again by lower divisions.
The disadvantages of reactive planning are:
1) it is considered not as a system, but as a simple unit of a set of elements, as a
result of which the positive effect of the interaction of individual parts of the whole
(for example, the marketing department and the production department), called
synergy, is lost;
2) planning is carried out without sufficient consideration of the objective
circumstances of today and future changes; the principle of flexibility is not observed;
3) reactive planning is a function mainly of top management only (the principle
of participation is not observed). As a rule, people with experience, i.e., the older
generation, are invited to participate in planning; the capabilities of younger employees
are to a certain extent ignored;
4) since the requests of the lower levels of the organization are taken into account
only once and then adjusted downward, the heads of lower divisions tend to inflate the
level of their requests and thereby increase the unproductive costs of scarce economic
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resources and contribute to their ineffective accumulation. Reactive planning reduces
the overall operational efficiency of an economic organization.
It should be noted that reactive planning also has positive features:
1) constant reference to history, to past experience, from which much can be
learned;
2) a strong sense of continuity, protecting against sudden and thoughtless
changes;
3) preservation of traditions, creating a sense of security among the employees
of the enterprise.
Inactive planning (inertia). This type of planning perceives existing conditions as
good enough, or at least acceptable. Contentment with the present is a hallmark of
enactivism. Also characteristic of it is the idea that balance in the position of the
organization is achieved naturally, automatically, which means that the main principle of
planning should be the rule: plan the minimum necessary so as not to change the natural
course of things. Inactivist managers, therefore, do not strive for any serious changes in
the activities of their organization and work without “putting their hands on it.”
Preventing change and maintaining one's style becomes the main goal of
organizations using inactive planning. When making decisions, bureaucracy and red
tape dominate. Decision-making is carried out within the framework of various
endlessly meeting commissions. Considered a fundamental evil and severely punished,
disloyalty to the organization and its goals. Planners are not interested in the
background history of the problem.
In planning, most of the time is spent collecting facts and their primary
processing. Analytical departments can be extremely bloated. The most valuable
employees are not those who have the most experience and knowledge, but those who
know how to grasp the essence of what is happening and have numerous connections.
The disadvantages of interactive planning are the following:
1. Inability to adapt to change. Work goes well only in stable, favorable
conditions. At the same time, only enterprises with income, that does not depend on
the market, but is formed from budgetary funds, survive; but budgetary organizations
survive only if the material condition of society is great and it can provide the budget
with the necessary financial resources. In the Russian economy, budget organizations
that use inactive planning are doomed to extinction.
2. Poor use of the creative potential of the organization’s employees, limitation
of their official independence.
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The positive side of inactive planning is caution in planning business activities.
Gradual and prudent actions usually do not lead to catastrophic consequences, and at
least the “death” of organizations in this case is never sudden.
Modern Russian reality provides a lot of examples of organizations that, to one
degree or another, combine planning with considering the past and planning according
to the principle of “minimum changes.” This applies to a greater extent to state-owned
or privatized enterprises that were recently state-owned. Newly created private
businesses in Russia are usually less inclined towards reactivism and inactivism and
prefer other types of planning.
Proactive planning (anticipation). In contrast to inactivists, proactivists strive
to accelerate changes and bring the future closer quickly. Particularly important for
proactivists is the ability to guess the likely directions of changes and ride their “first
wave” in order to achieve their goals; moreover, these goals are usually associated not
only and not so much with increasing profitability, but with the survival and growth of
the organization.
Proactive planning does not focus on minimizing efforts, but on finding optimal
solutions. From several development options, pre-activists choose the one that seems
optimal from an economic point of view.
Proactivists have a positive attitude towards technology and scientific, including
economic and mathematical, planning methods.
Planning is carried out from top to bottom: at the highest levels, external
conditions are predicted, goals and strategies are formulated, then the goals of the lower
levels and their action programs are determined.
Disadvantages of proactive planning:
• poor use of accumulated experience;
• insufficient attention to the daily needs of the organization;
• excessive passion for futurology and new research methods, when each method
is treated as a panacea.
The main advantage of the proactive method is an adequate assessment by
proactivists of the external environment and the desire to take into account
environmental factors in the planning process.
Interactive planning has two main features:
1) based on the principle of participation and maximally mobilizes the creative
abilities of the organization’s participants;
2) assumes that the future is subject to control and is largely a product of the
creative actions of the organization's participants. The goal of interactive planning is
to design the future.
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There are two main problems with interactive planning.
1) interactive planning is more of an ideal construct than a practical management
model. Even in countries with a long history of market economy, the most common
form of planning until the last two decades was inactivism, which in the current
conditions is slowly giving way to planning focused on future changes and taking them
into account;
2) the second problem is related to the fact that even from a theoretical point of
view, an organization taken separately cannot fully control its future. The most she can
do is adapt effectively to it. Consequently, the way an organization relates to its future
is not its design, but adaptation, accommodation. But even this type, as noted, is slowly
finding its recognition in the business environment, although the use of this method is
spurred by numerous external factors.
Characteristics of forms of strategic planning
along the planning horizon
In terms of planning horizon, strategic planning can be short term, medium term
and long term.
Long-term strategic planning usually covers long periods of time from 5 to
15 years. At one time, traditional long-term planning was identified with strategic
planning, since both types of planning are focused on the future, but now these concepts
exist independently. Strategic long-term planning in its content is much more complex
than traditional long-term planning, based on extrapolation of trends. Strategic
planning is not just a quantitative function of time, it focuses on qualitative changes in
the organization’s activities.
Medium-term strategic planning specifies the guidelines defined by the long-term
plan. Sometimes it is designed for a shorter period. Until recently, the medium-term
planning horizon was five years. However, the unforeseen nature and speed of changes
in the external environment have forced many organizations to reduce the length of their
plans from five to three years, respectively, five-year plans became long-term.
Short-term strategic planning is the development of plans for the
implementation of short-term strategies, the implementation of which is designed for
one to two years (usually short-term plans are annual plans). The content of short-term
plans is detailed by quarter and month.
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Features of strategic planning
Strategic planning, being an important element of strategic management, acts as
a separate integral system and represents:
1) the process of modeling the future in accordance with certain goals and the
concept of long-term development;
2) the management process of creating and implementing a strategy in
accordance with the potential capabilities of the organization and environmental
conditions;
3) an adaptive process, as a result of which there are regular adjustments to
decisions, formalized in the form of plans and systems of measures for program
implementation, taking into account emerging changes.
Strategic planning has the following typical features:
• commitment to the long term;
• contains a set of global ideas for the development of the organization;
• provides for a promising direction for the development of the organization;
• defines the main activities;
• sets goals for each division of the organization that are consistent with the
overall strategy;
• defines the objectives and policies of the organization;
• provides for alternative actions of the organization for a long-term period;
• serves as the basis for any other type of planning;
• provides for a variety of types of planning activities, generalizes long-term,
medium-term, short-term planning;
• provides a unified system of marketing, production, financial, innovation,
investment, social activities of the organization;
• is a multi-stage, sequential and parallel process, covering many solutions;
• creates the basis for the distribution of the organization's actual economic
resources;
• determines the study of the external and internal business environment;
• contains a systematic approach to assessing the strengths and weaknesses of
the organization;
• sets performance indicators for subsequent monitoring;
• clearly coordinates the efforts undertaken by the organization;
• provides for the development of procedures and operations necessary to
achieve the future;
• is a function of direction rather than time because it focuses on the goals of the
organization rather than on a given period of time.
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In most studies devoted to this problem, there is no clarity in identifying the main
elements of the strategic planning process, its stages; there is also an identification of
the concepts “strategic planning” and “business planning”.
In comparison with tactical and operational plans, the strategic plan is different:
1) in structure, it has its own sections and indicators;
2) by validity period;
3) it covers not only the internal goals of the organization, but also external ones;
4) according to the degree of accuracy.
There are also differences between a business plan and a strategic plan:
1) the strategic plan includes the entire set of general goals of the organization,
and the business plan includes only one, which is related to the creation of a new type
of activity or the development of an existing one;
2) the strategic plan includes various types of strategy, and the business plan is
focused only on development;
3) a strategic plan is a plan with a growing time horizon and constant adjustment.
The business plan has a clearly defined time frame, after which work on the business
project is completed;
4) a strategic plan is created for one’s own use, and a business plan is most often
created to find sources of financing, that is, for external investors and creditors;
5) in a business plan, the functional components (production plan, marketing,
etc.) are much more important than in the strategic plan.
Strategic planning has disadvantages that limit the extent of its use:
1) strategic planning, due to its essence, does not provide a detailed description
of the future;
2) the strategic planning process requires more resources and time for its
implementation compared to traditional long-term planning;
3) the negative consequences are much more serious than the traditional
promising ones;
4) the result of strategic planning can only be obtained if there is a mechanism
for implementing the strategic plan.
The indicated features and disadvantages of strategic planning limit the scope of
its use. Full strategic planning can only be carried out in large organizations with
sufficient labor and financial potential.
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7.3. STRATEGIC PLANNING PROCESS AND ITS STAGES
The strategic planning process is a continuous, adaptive and creative process
that takes into account changes in the external and internal environment of the
organization.
An analysis of the relevant literature showed that the strategic planning model
could be as follows (fig. 23).
Fig. 23. Place of strategic planning in the strategic management system
Thus, the strategic planning process includes the following stages:
1) defining the mission of the organization;
2) formation of goals and objectives for the functioning of the organization;
3) analysis and assessment of the external environment;
4) analysis and assessment of the organization’s internal resources;
5) analysis of types of strategy;
6) formation of the organization’s strategy;
7) strategy assessment;
8) choice of strategy;
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