Strategic planning may be defined as a process of developing a direction that an organization or a business should take to allocate resources and ensure that the strategy is successful. There are several models that companies can pursue in developing a strategic plan in order to achieve its goals. The major ones are the balance scorecard, Kotler’s and Pfeiffer’s strategic planning models (Friend & Zehle 2009).
Balance Scorecard Strategic Planning Process Model
The balance scorecard strategic planning model or strategic maps are diagrams used to document the principal strategic goals that an organization intends to follow in order to fulfill its mission. These have several characteristics. They have few objectives, which are in most cases less than twenty. They appear within shapes or diagrams, and are arranged in the form of two or more bands, each showing a perspective on the strategy map. Arrows that link the objectives represent the causal association between them (Pochampally, Nukala & Gupta 2009).
A strategy map describes an organizational strategy and gives its pictorial description, representing visually how a business can create value and the factors that will cause a change. It represents the objectives, which are interconnected in a cause-and-effect relationship, which is described as a scorecard perspective. The latter represents the four main objectives of the balance scorecard model that are essential in describing the relationship indicated above. The components of the scorecard, which include measures, objectives, initiatives, targets, responsibilities, and assessments, are located behind the strategy map’s objectives (Friend & Zehle 2009).
A strategy map is created from a single management team’s perspective. Each team will hold the former that defines their strategy. Since the strategy map tells the strategic planning story of the respective management department, it represents the overall organization’s strategy from the management perspective. For instance, if it is created by a business executive team, it will represent company’s strategy from the executive’s perspective. Since each management department has its own strategy map, the individual one represents the contribution of each team to the organization’s overall strategy (Slywotzky, Morrison & Andelman 1997).
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A strategy map is unique in a specified organization and differs from the ones in others. It represents the strategy of that particular business, but not the one of another firm. As such, it should not be copied, unless the organization wants to use the strategy of another company.
The operation of the strategy map is based on emphasizing choice and focus. Developed by a specified management team, it contains important issues, on which the department must focus to create a difference. Therefore, it may be concluded that strategy maps are not operational, due to they do contain all information, but carry few objectives that are vital and define the cause-and-effect relationship in the organization. In this case, it is necessary to ask appropriate questions on issues that drive business performance in the right manner when coming up with a strategy map (Pochampally, Nukala & Gupta 2009).
A strategy map is aimed at causing changes in the organization. If the latter manages to achieve the objectives, then it will propel improvements, which will then prove that the cause-and-effect relationship functions well in the company. The reason for the use of the balance scorecard strategic planning model is that a strategy map is usually used by an organization to measure progress resulting from its strategy. It offers vital support to the process of strategic management. The scorecard aspect of the approach is utilized to assess the progress of the operational management process (Slywotzky, Morrison & Andelman 1997).
Due to the strategy map assessment mainly dwells on questions about planning a strategy, for instance, the management team may ask whether the developed one by them is working and if not, what drawbacks of it are, strategy maps should be utilized as management tools that are developed and refined (Kaufman & Herman 1991). The management team learns from the strategies they develop, and it in turn enables the latter to evolve. The combination of strategic thinking and operations should be given much consideration in this model (Friend & Zehle 2009). A strategy map is important in the formulation of customers’ needs. It enables a business to come up with new products or services that will boost the morale of consumers. It is the major idea that will help see the future progress of the business. It is useful in competing strategies, as the organization can come up with possible requirements that will result into it becoming more competitive as compared to competitors. It is the most important idea in analyzing the competitive basis for every business.
Pfeiffer’s Strategic Planning Model
An organization requires strategic planning, because the business environment in the world is in the process of constant changes. It would be unrealistic to assume that consumer expectations and needs, economic conditions and competition in the market will remain constant in the future. The Pfeiffer’s strategic planning model is the process, when the leading and management teams of an organization envision the organizational future and develop appropriate operations and procedures to achieve it. As such, this model assists a business in determining its own future. The Pfeiffer’s strategic planning model includes nine steps that are developed to be adhered to in sequence. In addition, these are set between two processes, namely application consideration and environmental monitoring (Pochampally, Nukala & Gupta 2009).
Planning to Plan
In this step, the top management team of the organization determines who will compose the planning group, the duration of the planning process, and who will conduct research and provide the needed data (Slywotzky, Morrison & Andelman 1997).
Formal planning sessions should be conducted in a confidential manner in secret places to avoid interruptions. During the former, the selected members of the organization will conduct research, compile and catalogue data to be considered at the next session by the planning team. The time spent on formal sessions will depend on the desires and needs of a specific organization. These end before the budget is adopted for the plan to be incorporated in it. Decisions of a business are based on the organizational values. A strategic plan that does not prioritize the latter may fail to accomplish its mission. At the value scan stage, planning teams analyze a number of elements. These are the value of the organization, personal values of the planning team, the operating philosophy of the firm, its stakeholders and culture (Friend & Zehle 2009).
The mission statement of the organization is a precise one about the business that a company intends to undertake. It should be brief and easy to understand. When creating a mission statement, the planning team must consider a number of questions that include the essence of the existence of firm, its intended functions, the people for whom it will perform its functions, and the reason why the organization exists. The planning team must also take into consideration forces that drive it and determine attributes that make the business different from others (Dyson & O'Brien 1998).
Strategic Business Modeling
In this step, the planning team should decide on the direction, which they want the organization to follow. They should visualize the future and present a descriptive picture on how it looks like. The ideal future should be in line with the mission of the organization. The four principle elements that will be highlighted in strategic business modeling are identifying the major lines of the business, establishing critical success indicators, identifying strategic thrust and determining business culture that supports the company’s mission. Although the planning team must not let the past or present situations obstruct their plans and dreams for the future, they should base their creativity and endeavors on realistic ideals that are in line with the organization’s mission (Pochampally, Nukala & Gupta 2009).
Once an ideal future has been pictured, the planning team should assess the present performance of the business. For this assessment, it needs a myriad of information from different departments within the organization. This step involves employees from all levels and is the most detailed and time-consuming (Afuah 2004).
Gap analysis may be referred to as a reality check. It is the comparison between the information developed during performance audit and the one that may be required to attain the strategic plan. If gap analysis shows that there is no difference between the present situation and the future, then the planning team have not put enough efforts to determine an ideal future. The latter may compel the organization to stretch and create ways, in which it may be attained. In most cases, a compromise may be reached when finding means of bridging the gap (Dyson & O'Brien 1998).
Integrating Action Plans
Once the gap between the organization’s capacity and an ideal future has been eliminated, an operation plan needs to be written for each business, and an action plan should be developed for each functional unit. The latter should be accepted and understood by each department functioning within the organization.
The Pfeiffer’s strategic planning model is based on issues or events that have a high likelihood of occurring in the future and that will have a direct influence on the organization. However, there are numerous events that can affect the company, but the chances of them happening are minimal. Thus, they should not be given much attention. Nevertheless, few things can affect the organization. Their probability of happening is minimal, but needs to be given attention in the planning process. Due to this, a contingency plan should assist an organization in developing tactics of detecting warning signs of changes in essential issues that can affect the business (Friend & Zehle 2009.
The reason for the use of the Pfeiffer’s strategic planning model is the reward for its implementation. It should include undertaking actions planned by each functional unit.
When taking into account the future of an organization, the Pfeiffer’s strategic planning model should consider its vision when trying to envision an ideal future. Any drift from the one may render the planning process irrelevant. In order to make an optimal plan, any organization must have a clear vision (Afuah 2004). The performance audit should be focused a lot. This will enable the firm identify any area prone to corruption and thus formulate possible techniques to curb the corruption. It should be carried out often to ensure that the performance of the business is all right. The contingency planning helps to identify things that may affect the business, and plan on what is likely to affect its operation negatively. Therefore, the business can be prevented from collapsing. Gap planning is thus useful in planning of the future. It can be used by the management in preventing the probability of the business being affected indirectly. Once a gap has been identified, the operation plan is required, a suitable action plan is undertaken, and each department should comply with it after fully understanding the requirements. Integrating ideas is useful in coming up with an action plan. The respective actions will enable a business be on a par with competitors.
Kotler’s Strategic Planning Model
This model states that markets are diverse, and strategies should be developed basing on each individual market. In this case, an organization is usually divided into functional units depending on its product in order to create and follow a specified strategy. These are referred to as strategic business units (SBU) and are based on three features. The latter include the market, managers or leaders responsible for strategic planning and profit performance, and a product or a collection of products. Once the organization has established its SBU, the management should decide on the budgetary needs of each unit. As such, the latter must be assessed basing on its value. This model is based on Ansoff's product-market expansion grid (Dyson & O'Brien 1998).
Based on the current market and products, an organization must assess if it can gain a higher market share or should search for a new market for its products. The second analysis should focus on new products and whether they can be offered in the current market or should be taken to new ones (Dyson & O'Brien 1998).
A successful business should consider the organization’s core competencies. SWOT analysis should be conducted to analyze the internal environment, which includes weaknesses and strengths, and the external environment that involves threats and opportunities (Gru%u0308Nig & Ku%u0308Hn 2005).
Formulation of Goals and Strategies
Strategy and goal formulation defines what the organization aims to achieve. Policies should be developed to steer the company in capturing a large market base.
Program Formulation and Implementation
Strategies only function if they are fully implemented. Therefore, practical programs should be developed and applied.
Feedback and Control
The reason for the use of the Kotler’s strategic planning model is that strategic planning puts emphasis on the constant evaluation and control of an organization’s strategic plan with environmental dynamics and market factors.
Although this model is mainly based on marketing products and the environmental dynamics of the market, it should also incorporate other departments in making plans for marketing products. The Kotler’s strategic planning model should also emphasize using the organization’s vision to predict future marketing strategies of the business.
The method is used to analyze organization performance in relation to the way, in which the business interacts with the external world. The use of SWOT analysis enables it to identify weak points and come up with a clear way that will guide it in competing with other firms in the same industry. Thus, weak areas of the business are analyzed, and it can deal with the future outcomes that may make it less competitive as compared to others. The analysis also focuses on the opportunities that can emerge and benefit the firm. It will increase the competitive nature of the business by facilitating a better competitive ground. It will enable the formulation of goals and strategies that are necessary for better performance. There are policies that will see the performance of the company improve and capture a large market share. Thus, the whole idea requires formulation and clear implementation to ensure a better competitive base for the organization.