‘Organisations that fail to plan are in essence planning to fail’. Discuss this statement. In your answer consider types of organisational plans, and the link between planning and the strategic management
process. Support your answer with examples drawn from real organisations, using textbooks, journals, newspapers, business magazines, and periodicals.
Managing companies in the 21st century has changed in many ways compared to the managing system used in the olden days. Starting from the structure of the organization itself, how they plan, how they make decision, up until how they doing things; but one thing that has not changed is that organizations which perform with an outstanding result never neglect their planning. Each organization competes with each other to perform better in accordance to others. These changes are made in order to form a better organization each day as well as better results at the end of all progress. This essay will examine why organizations that fail to plan are in essence planning to fail, as well the types of organizational plans; hence the link between planning and strategic management process.
“Organizations that fail to plan are in essence planning to fail”. From this statement it is clearly understood that organizations which do not plan their future organizational goals are more likely to fail. Not only is this applicable in the context of management. Anything that is done without planning is very unlikely to succeed.
A well defined plan in academic term means “a drawing or diagram showing the arrangement in horizontal section of a structure, piece of ground” (Webster’s New World College Dictionary 2001). In planning, the very first step is to set a goal which is defined as “statements of intended results that are general in nature and are measureable on a naming or ranking scale of measurement” (Kaufman 1988).
It is crucial to plan every single step and thing that is needed to be done to avoid failure. Hence, the importance to understand the purposes to plan; which is providing a direction about what the organization does, and what and why it needs to be achieved so that the organisation, as a whole, knows exactly what they are required to do. Therefore when they know what to do, they can work together with other staff to accomplish the goals that been set. For instance when the plan is set, the staff can easily refer to the master plan and remind themselves what each of them are required to do.
Planning reduces uncertainty and makes sure everybody is committed to the achieving the goal. It also forces the staff to anticipate any changes so they can construct an appropriate response. In simpler terms, planning makes it easier to deal with uncertainty. For example, where there is uncertainty or any problem in an organization, they know what to do and are faster to react.
To minimize waste or redundancy is another one of the vital reasons to plan. This mean that the organisation makes sure that nothing is left out or wasted in order to reach an efficient result at the end of the day. These include time and financial resources. For example when dealing with the food industry where the stocks are bound to the expiry date, companies have to make sure of the amount needed in a certain period of time so it does not result in waste of stock, expired food stock.
The last reason is to set a standard. This keeps things on track, or in the terms of a managerial role it is known as controlling, as well as being a reference in competing with other companies. This ensures us of what we are trying to achieve, and whether or not we achieved it yet. For example, companies keep track of the progress of their plan by determining their position in accordance to the plan daily, weekly, monthly or annually.
Even though many cases show that performance organizations that plan are mostly do well, cannot be said that organizations that did not plan always fail. One of the real life examples for the organization that did well planning where lead to outstanding outcome is Sunrise Confectioners. In 1987 when Ken Klooger took over the confectionary after his father in law retired, the company had annual revenues of approximately $4 million which did not increase or decrease much in the last ten years. He then realized that he needed some planning in order to increase the revenues. After the changes that he made through new products and methods in producing the products themselves as well some ongoing research about the consumers’ preference and awareness, he did some appropriate response to it such as spending $300,000 on television advertising for two months due to consumers’ unawareness that their product contains no artificial colouring and flavouring which one of the way to attract most health conscious consumers. This resulted in the increase of revenues from $1.5 million to $15 million in 2000-2001 periods, as well as the market share that had risen from 2 per cent to 25 per cent. In this context, Sunrise Confectionary uses their organizational planning to give them direction as well as set standards in accordance to its competitors (Robbins et al 2003).
In general terms, planning can be referred to in two ways: formal and informal. Formal planning means concentrating on the achievement of the goals. Simple thing such as setting a period of time to achieve that goal and writing down a list can be shared by throughout the organizational structure so everyone knows what they have to do, where they have to go also have something to refer back to while they are at it.
Informal planning is the reverse of the formal planning which is usually present in a small business or organization. Informal planning is not as well organized because it is not written and there is limited sharing among individuals due to an abstract form of it. This shows that formal planning is addressed for a bigger organizational structure that want to achieve their future organizational purpose positively because it assists them in formalizing and systemizing all the processes being made.
There are various types of organizational plans. However, this essay will only discuss the three major types of planning in an organization: budget planning, project planning, and strategic planning. The best way to categorise each of the organisational plans is via its breadth, time-frame, specificity and frequency of use.
In specific terms, a budget is a plan of action matched by resources required to implement the plan (Hussey 1998). In other words, a budget is a plan. Budgets generally divide between two broad categories: the operating budget, sometimes known as the “expense” budget and the capital budget. Budget in simpler terms mean a sum of money allocated for a particular purpose (Webster’s New World College Dictionary 2001). Budget is in everyone’s life, be it a small or a big one. Budget is a tool which helps in controlling and planning the functions of an organization. It is a formalized statement of the goals of an organization stated in financial terms and accomplishes several important functions for managers. It states future projections of revenues, expenses and expected profits. Planning, evaluating performance, co-ordinating activities, implementing plans, communicating, motivating and authorising actions are the main functions of a budget. The budget period depends upon the action plan; it might be for a short or long duration. A budget compels the managers to think ahead by formalizing their responsibilities for planning, and is best framework for judging subsequent performance and aids managers in coordinating their efforts, so that the plans of an organization meets the objectives of the organization as a whole (Hussey 1998).
To plan a project a team should have a goal and should work as one unit to achieve certain objectives. In project planning, team members should implement inventive ideas that would serve their goal in a resourceful way. Each individual on a team should take part in the planning process, because the diversity of team members and their different perspectives can create more than one approach to initiate a project. Project planning can be explained as determining the goals and objectives of a project through a coordination of procedures and determination of courses of action before initiating a project. Project planning is a rational determination of how to initiate, sustain, and finalize a project. There are many steps to be taken when planning a project within a team. To have a successful plan when working with a team, set a role of conduct for the team members (Free Management Library 2007). Define what each individual’s responsibility is and what to be expected from them. Each project should be broken down into specific tasks; it is important to find ways to divide the work into manageable parts. All projects encounter problems and conflicts. In order to have an early resolution to those problems, team members should discuss each potential problem that they might face (Free Management Library 2007). Team members should have a logical approach to problem solving. All problems must be predefined. Also, a deadline for the project is essential. If time to get done with the project is not controlled then the project itself can not be controlled (Free Management Library). Team members have to prioritize and work on a certain pace. They might also have a set schedule on when each task within the project should be done. Another important point in project planning is communication. Team members should always give each other a feedback on the progress of their tasks or roles and what have they accomplished. The process of communication and its result helps diminish the conflict of change (Free Management Library 2007). Discussing ideas within team members is a process where each individual should contribute in. Having different ideas will make the project unique and will create more than one method to reach the project’s goal.
Strategic plans are plans that apply to the entire organisation, establish the organisation’s overall goals, and seek to position the organisation in terms of its environment. Strategic plans tend to cover a longer time frame. Long-term plans can be defined as those with a time frame of more than three years (Robbins et al 2003). They also cover a broader view of the organisation. Strategic plans also include the formulation of goals (McNamara 2007). There are a variety of perspectives, models and approaches used in strategic planning. The way that a strategic plan is developed depends on the nature of the organization’s leadership, culture of the organization, complexity of the organization’s environment, size of the organization, expertise of planners and et cetera. For example, there are a variety of strategic planning models, including goals-based, issues-based, organic, scenario and so on. Goals-based planning is probably the most common and starts with focus on the organization’s mission, goals to work toward the mission, strategies to achieve the goals, and action planning. Issues-based strategic planning often starts by examining issues facing the organization, strategies to address those issues, and action plans. Organic strategic planning might start by articulating the organization’s vision and values and then action plans to achieve the vision while adhering to those values. Some planners prefer a particular approach to planning (McNamara 2007).
There is a link between planning and strategic management process. Planning is one part, though small, of the strategic management process. This can be shown using the roles of corporate managers. One of the four major roles of a manager is to plan. This planning plays a crucial part in determining the success of an organisation as mentioned earlier. But first, we have to ask: What is “strategic management process?” and “What are the steps in the process”.
There is not just one definition of the phrase “strategic management process”. The definition, though similar, differs in accordance with people’s personal opinions. For example, Johnson views it as a six-step process. On the other hand, Viljoen & Dann see it as a five-step process. However, in my opinion, I agree most with Robbins’s view on the process. Robbins et al analyses strategic management process as an eight-step process that consists of strategic planning, implementation and evaluation. Although the first six steps describe the planning that must take place, implementation and evaluation are just as important. Even the finest strategies can fall short if management does not put into practice or assess them properly.
The first step in strategic management process is identifying the organisation’s current mission, objective and strategies (Robbins et al 2003). Every organisation requires a statement of the purpose of the organisation, also called a mission. The mission verifies the reason for which the company is in the business. To do this, managers must vigilantly recognize the range of its products and services. It is also vital for managers to identify the goals and strategies currently being pursued in the company. Goals are a foundation of planning which provide the measurable performance targets that the organisation as a whole strives to reach. By being aware of current goals allows managers to decide whether or not these current goals need to be changed. This can also be applied to strategies currently in place.
The second step is analysing the environment (Robbins et al 2003). Analysing the environment is a critical step in the strategy process. Robbins describes the external environment as a significant basis on a manager’s actions. To outline a successful strategy, it must be supported well by the environment. In this step, managers need to know what is going on outside the organisation. Information such as what the competitors are doing, what on-going laws might affect the organisation and what degree of labour supply is available around the area where the company is located. Aside from analysing the external environment, managers must also examine specific and general environments to observe and be conscious of the trends and changes which are occurring. This step of the process can be considered complete when the manager has an accurate understanding of what is occurring in the external environment and the developments which could possibly affect the organisation.
Following this, managers need to evaluate the results they have achieved in step 2 and determine the opportunities which the company can utilize and threats it encounters. This is all part of the SWOT analysis. Robbins defines opportunities as a positive development in the external environment and threats as negative trends.
After identifying threats and opportunities, managers must now look inside the organisation by analysing the organisation’s resources and capabilities (Robbins et al 2003). This includes employees’ skills, the organisation’s resources, success at innovating products, quality of products, the organisation’s financial status, and the way customers distinguish the organisation. All of these show that no matter how large or how small an organisation is, the organisation is bound to the availability of resources and capabilities. This analysis of the internal environment allows managers to recognize specific capabilities and resources. When these capabilities and resources are outstandingly unique, they can be used as competitive weapons. This key value-generating skill is referred to as core competencies (Robbins et al 2003).
From the previous step, the organisation should now have a comprehensible appraisal of its internal resources as well as its capabilities in executing various practical activities. Strengths are any strong capabilities the organisation possesses or unique resource materials (Robbins et al 2003). Weaknesses are the activities which the organisation does not perform well or the lack of resources which they need. Robbins states that different strengths and drawbacks have different outcomes on the strategy being pursued. An organisation’s culture is its personality or characteristics. It is a sign of the organisation’s mutual beliefs and values. When an organisation has a strong culture, it becomes more straight-forward for managers to convey the organisation’s core competencies and strengths to new employees. However, strong cultures are difficult to change. It then becomes a barrier to acknowledging any alterations in the organisation’s strategies. “Successful organisations with strong cultures may become prisoners of their own success” (Robbins et al 2003).
Strategies need to be formulated in all levels of an organisation, be it a corporate, business or functional level. This follows a decision-making process. Strategic alternatives must first be assessed. Managers must select strategies which harmonize with each other and bring out the best of the organisation in terms of its strengths and environmental opportunities. A successful strategy would be one that puts the organisation at a relative advantage over its competitors and the most favourable aggressive edge (Robbins et al 2003). The organisation must try and maintain this advantage to call the strategy a victory.
As mentioned earlier, the first six steps are the planning of strategies. After an organisation comes up with strategies, they must apply it. The same efforts put into planning the strategies must be put into implementing it. No matter how effective the strategies are, if the organisation fails to apply it properly, these strategies will be deemed useless (Robbins et al 2003). Implementing strategies efficiently often means that the organisation has to hire new people with different skills, relocating a portion of current employees to new positions, or in the worst case, make redundant some employees. Most organisations nowadays run their management using teams. Therefore, building and managing effective teams is ability in implementing strategies efficiently. Top-management leadership is equally as important. So is a motivated group of middle and lower-managers who perform the organisation’s specific strategy needs.
The final step in the strategic management process is evaluating the results of the strategies in terms of effectiveness, and adjustments that need to be made to improve the success of strategies. As a real-life example, Anne Mulcahy who is the president of Xerox Corporation made strategic modifications to develop her company’s competitiveness in the information services industry. These strategic actions were made after assessing the results of previous strategies and coming to a conclusion that changed were needed (Robbins et al 2003).
In conclusion, the four key factors for success when implementing change within an organisation are: pressure for change; a clear, shared vision; capacity for change; and action. The various types of organisational plans as well as the implementation of strategic management process play a significant role in planning and managing change. Change management entails thoughtful planning and sensitive implementation, and above all, consultation with, and involvement of, the people affected by the changes. The four key factors for success when implementing change within an organisation are: pressure for change; a clear, shared vision; capacity for change; and action.
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