Benefits of Formal Strategic Planning Will Be Very Limited Due to the Uncertain and Dynamic Environment

Topics: Strategic planning, Strategic management, Management Pages: 7 (2105 words) Published: December 8, 2012
Benefits of formal strategic planning will be very limited due to the uncertain and dynamic environment

Will the benefits of strategic planning overcome the uncertain environment has been argued for a long time. Strategy decides the long-term direction of an organization and scopes its activities. The benefits of strategic planning have helped many companies succeeded in today’s competitive environment. But more companies failed due to the uncertainty of the environment. This essay will present a clear thought about the benefits of strategic planning will be very limited due to the uncertain and dynamic environment.

Nature of traditional strategic planning tools
Strategy is the direction and scope of an organization over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations ( Johnson and Scholes, 1999). Strategy decides the long-term direction of an organization and scopes its activities. Take Yahoo in 2006 as an example. Yahoo was losing its advantage to the fast-growing companies such as Google. Strategy helps to take advantages for Yahoo to overcome this competition. It fits organization to position itself in the competitive environment and exploits the strategic capability of an organization, in terms of its resources and competences, to provide competitive advantage and yield new opportunities as well. Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. In order to determine the direction of the organization, it is necessary to understand its current position and the possible avenues through which it can pursue a particular course of action. We will explain strategic planning better by looking at GE. In exploring the evolution of strategic planning we first define the term, as its meaning and usage varies widely in both the academic literature and in strategy practice. Developing a consistent definition of strategic planning is important for our efforts to study its history and evolution because organizations may engage in strategy development and planning without labeling these activities as such. While language and labels are important in organizing, we believe it is critical to distinguish the evolution of labels and vocabularies from the evolution of practices ( Mintzberg, 1994). We define strategy as a framework, either implicit or explicit, that guides an organization’s choices of action. We interpret this definition broadly and view strategies as planned and emergent, resulting from strategic design, the evolution of a pattern of decisions, or a combination of the above. Consistent with a strategy as practice perspective, we define strategic planning as a form of planning practice intended to formulate strategy. Strategic planning is therefore a particular form of strategizing, one that involves the application of planning practice ( Saloner, 2001). Therefore, in considering the history and evolution of strategic planning at GE, we also consider the extent to which strategic planning was an integrated activity, and how formal corporate-level planning processes have shaped resource allocation and strategic decision-making ( William, 2006).

Benefits associated with formalized strategic decision-making Strategic planning can help an organization representing a useful measurement yardstick. For an organization, positioning itself is very important in a highly competitive environment, such as Yahoo in 2006. Google was developing very fast in that period, and it was overtaking Yahoo in many businesses. Strategic planning helped Yahoo to realize what the real advantages are and what advantages can be transformed into other businesses. This helped Yahoo to consolidate its position. A fully formulated, communicated plan is an important motivational device. Every decision...
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