Strategic Planning Theories

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DBA 822 Seminars in Strategy and International Business
Strategic Planning Theories
A Literature Review
By; Benjamin J. Shuford III

Strategic planning is a broad concept that has been introduced into the main stream practices of today’s corporations. Strategic planning can be defined as an organization’s process of defining goals, direction, and decision making processes that effect the allocation of resources that include capital and people. The term “strategy” is derived from the Greek word of “strategos,” which means literally, “general of the army.” (Hart, 1965). The Greek tribes of ancient civilizations would elect a strategos to head their regiments during battles. These political rulers would follow the strategic advice from the council members about managing troops to win battles. From its early military roots on winning battles to becoming a pattern of purposes and policies that define a company and its business, strategic planning has become the primary focus of today’s diverse organizations. There are many theories that are used to describe how organizations view the strategic planning process. These processes are framed as models that are consistently being revised to fit the needs of an organization. This literature review will focus on some of these models and the theorists who developed them. This literature review will review theories from Igor Ansoff, Henry Mintzberg, Michael Porter, and Kenichi Ohmae. The purpose will be to gain a better understanding of how these theories shape organizational performance. An analysis will be conducted to evaluate the practice of and the future direction of these theories. The choice to review these four theorists over all of the others is because of their legacy and robust contributions to the field of strategic management. Ansoff was one of the earliest writers on strategy as a management discipline, and laid strong foundations for several later writers to build upon, including Michael Porter, Gary Hamel and C K Prahalad. He invented the modern approach to strategy and his work pulled together various ideas and disparate strands of thought, giving a new coherence and discipline to the concept he described as strategic planning. A debate between Ansoff and Henry Mintzberg over their differing views of strategy was reflected in print over many years, particularly in the Harvard Business Review. Ansoff has often been criticized by Mintzberg, who disliked the idea of strategy being built from planning which is supported by analytical techniques. This criticism was based on the belief that Ansoff's reliance on planning suffered from three fallacies: that events can be predicted, that strategic thinking can be separated from operational management, and that hard data, analysis and techniques can produce novel strategies. The strategic planning/management theories of Porter and Ohmae were derived from both Ansoff and Mentzberg. Ansoff was the originator of the strategic management concept, and was responsible for establishing strategic planning as a management activity. The Strategic Planning Process:

Because of high competitive business environments, organizations must engage in strategic planning processes that clearly define and state the objectives of the organization. They must assess both external and internal factors to develop and implement a strategy to stay competitive. They need to evaluate the process and make needed adjustments to stay on track. In their search for sources of sustainable competitive advantage, researchers have come to realize that business performance depends not only on the formulation and successful implementation of a given strategy but also on the process by which competitive positions are created or maintained. Mintzberg was one of the first to point out that the realized strategy of an organization can strongly differ from the intended strategy and that the extent to which an intended strategy...
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