Review the Issues Involved in Strategic Planning Essay

Custom Student Mr. Teacher ENG 1001-04 29 November 2016

Review the Issues Involved in Strategic Planning

Every year at about this time or a little earlier, we start the process of ‘strategic’ planning. The annual planning process, for all its focus on analysis, or template completion, can easily fall into the apparently comfortable tactic of merely updating the activity from last year’s plans. Often, however, what is really needed is a fresh approach which can pay dividends. Approaches to planning differ, depending upon the attitude and culture of the company involved, which in turn affect the relative importance given to different elements of the process and the output.

Some companies are heavily financially oriented, making the desired output more focused on numbers than the thinking behind those numbers. Other organisations focus heavily on the resource implications of the tactical plan, and particularly sales force allocation and efficiency. Not all companies perform truly strategic (long -term) market-centred planning, but all companies generally aim to produce a set of financial forecasts. The major differences are in the way they get there and as a consequence the basis on which those forecasts are derived.

First and foremost, the organisation needs to be clear about what issues can get in the way of developing a sound strategic plan before deciding on an appropriate approach. Clearly all planning is driven to an extent by profit and financial forecasts but there is a need to be clear what else the plan has to deliver for the organisation, the individual, and the brand – the planning ‘need’ – otherwise the process used may be sub-optimal. Why does the organisation need a plan? What is it meant to deliver over and above the financial projections?

Many companies are often unaware of the issues and constraints that will affect the planning process and output , for example the local operating company situation. Are the right resources, the right experience and the right information available at a local level to develop and complete the plan? Can the local markets get the right quality of information they need to drive good quality thinking? If not, then how can this be provided to ensure the right level of thinking is achieved? It could also be that the chosen approach is too sophisticated or inappropriate to deliver the required answers.

For example, the process may have all the ‘standard’ elements of analysis but there is no thought given to what each element is telling them. All companies do have a structured process but if the process does not drive the necessary thinking then the resulting plans can be limited. If the process does not challenge the planners to consider different ways of doing things but is merely a set of agreed templates and a time line for deliverables, the resultant forecast simply becomes a straight line projection from historical sales data, and activity remains the same as last year no matter whether or not things are changing in the market.

This is the apparently ‘safe’ option but it rarely maximises return on investment and is often not safe at all. Above all the process needs to raise the right questions, stimulate debate both internally and with external stakeholders, and force conclusions to be drawn from the analysis and interpretation of information that can then form the basis for strategy development. And finally, senior management by their actions and questions often demonstrate that all they are really interested in are the numbers, with no challenge or credence given to the thinking behind those numbers.

Even though a thorough process is used to arrive at a market -based forecast, senior management just focus on the revenue with/without profit Sometimes the budget or forecast even comes before the planning/thinking in time, and at other times it is ‘imposed’ so the plan reflects how to achieve it, not whether it is at all achievable. There are three very different approaches to strategic planning in our experience: The data-driven approach is based on hard data collected from a variety of sources, both primary panels and syndicated data, from which a market model is then built by brand from the bottom up.

Issues are then identified but there seems to be no real focus on what drives success in local markets, or on what competitors will do and the impact of their actions. This approach can simply lead to ‘more of the same’, making a projection based on the previous year and no real change in approach, with the whole focus being on next year’s revenue. While many companies may not use such an apparently numbers-focused approach they still act in the same way, with the forecast being the key, rather than the rationale behind it.

To overcome the inevitable local variances in both resource and/or experience and to ensure a consistent base for review, many companies utilise a template-led approach . This consists of a pre-defined plan with key headings that can be amplified or contracted, but with certain key elements which must be completed. This option works well as it provides a structured process for analysis, with check questions at each stage.

However in some cases we have seen that such an approach can still be very financially focused. Sometimes it does not analyse the brand and company strengths and weaknesses in a meaningful market-centred manner, to enable a market -led SWOT analysis and often there is still not enough competitive focus. The next level is often seen in the ‘marketing excellence’ approach, where the organisation provides an integrated planning tool comprising standard marketing planning software.

In a sophisticated example this allows local working but is linked into a central supporting database, with aspects that can be adapted and others that are fixed. The beauty of such a process is that it is transparent, allowing a clear overview of who is performing well, and enabling experience and successes to be shared. However when this is a relatively new process people tend to take time to get to grips with the process resulting in ‘doing the process’ rather than really thinking about what each step is telling them.

Moreover for this approach to be used effectively, senior management must understand the process very well so that they can interrogate the people who are developing the plan. Efforts to plan correctly often fail due to poor alignment between personal and corporate goals – people are often rewarded for achieving short-term deliverables with secure outcomes rather than longer term brand building and innovation or driving change. In summary the key issues in strategic planning are: Not being clear about the planning ‘need’

Not being aware of the issues and constraints that will affect the planning process and output Approach too sophisticated or not appropriate to deliver the required answers The financial forecast is all that matters, with the thinking behind those forecasts being ignored or not challenged/considered Process not challenging people to think or act differently Insufficient external focus: environment and/or competitors Lack of real focus on (new) opportunities for growth Poor expertise at local level More tactical/operational than strategic focus So what works well in overcoming some of these inherent problems?

Ensure a complete and effective structured process to develop the analysis base. Output should focus on alternative scenarios and ‘what ifs’ working from a base plan. Thereby, focusing on incremental growth and type of incremental drivers that need to be addressed. Build market -based forecasts by brand at country level. This requires country plans and budgets built from bottom up by brand and forecasts linked to hard data and clear market maps. Allow enough time for countries to make amendments based on sound strategic thinking and then finalise forecasts ? do not just use Excel formulas.

Balance the need for a ‘quick’ solution with a complete process (analysis and review). Value the process, including through management attitude, and align management with the strategy. Key imperatives are to ensure a complete and effective structured process to develop the analysis base, with structured external and internal analysis, and check questions at each stage. The process should be transparent, reviewed by management so that the output is seen by senior management during budget process. Multi-functional teams should build plans with all key stakeholders involved, but led by marketing.

Recent surveys show that where companies use a good formal process, satisfaction with strategic planning is higher. Companies are looking more and more at processes that drive to different strategies and/or activities. However, there is a demand for a stronger link in pharma between action and reaction, i. e. if we do X then €Y will result. Strategic planning should prepare executives to face the strategic uncertainties ahead, and serve as the focal point for creative thinking about the company or the brand’s vision and direction.

It should also be about making choices between competing priorities, focusing on strategic as well as operational issues. This will ensure that progress against the strategic plan is monitored. There are a number of ‘tricks of the trade’ that help in strategic planning. Among the best practice companies, executives who carry out strategy also make it, and plans reflect goals and challenges. It is important to use any plan to identify growth opportunities, both within and outside the core business.

Monitoring progress against the strategic plan is critical and a key area for improvement. It is important also that planning meetings are true ‘conversations’. Simple ‘tricks’, such as having only a small number of the right people in the meeting, can pay dividends. The process also takes time, so more than one meeting is required. It is also important to avoid combining strategy reviews with discussions of budgets and financial targets because when the two are considered together, short-term financial issues tend to dominate at the expense of long-term strategic ones.

The ideal process leads to strategic decisions that allow the company to meet goals and challenges. It assesses risks as well as benefits, but is based on fact, focusing on strategic issues, and is therefore not merely tactical. The ideal process ensures that those who will carry out strategy are involved in developing it, builds shared understanding of market dynamics, and emphasises discussion of issues not process.

Planning should build ‘prepared minds’ through dialogue to make sure that all decision makers involved have a solid understanding of the business, its strategy, and the assumptions behind that strategy. Then it will be possible for them to respond swiftly to challenges and opportunities as they occur during the year. No strategy process can guarantee great flashes of creative insight, but much can be done to increase the odds that they will occur. The process can be used to challenge assumptions and open people up to new thinking.

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