Advantages Nd Disadvantages of Strategic Planning

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By far the most common model of how strategies are developed in organisations is based on the notion that strategies are systematically and formally planned following a set of relatively rigid steps and procedures. Some refer to this notion of strategy development as a 'design' view of strategy. Most text books and courses on strategic management and planning have adopted and promoted the design view of strategy. There are a number of claimed advantages of developing strategies through highly structured and formal planning systems and steps in an organisation. The main advantages are as follows:

· First, formalised planning provides what many would term a logical and certainly a structured means of analysis and thinking about complex strategic problems. There is no doubt that strategy development is complex and formal planning systems attempt to help resolve and deal with this complexity by following a series of distinct steps and stages which the manager can follow in this complex area.

· Secondly, it is argued that formal planning systems force managers to take a longer term view of strategic options and directions than would otherwise have been the case. In particular, the stages of environmental and competitor analysis which form a key part of most formalised corporate planning systems encompass planning horizons of three years at the minimum, and in some cases up to 20 years.

· Formal planning systems also tend to facilitate the process of control and evaluation. So, for example, because objectives in formal planning systems are required to be specified and because strategic direction is determined in advance, the measurement of performance against these is facilitated. · Another claimed advantage is that co-ordination between different functions and managers throughout the organisation can be increased with formal planning systems. This is because very often a formal planning system will require the different functions/managers to work together towards...
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