Strategic planning is a management activity in an organisation used in coming up with priorities, strengthening operations, focusing energy and resources, and ensuring that all stakeholders and employees are working towards a common goal. On the other hand, strategic management is wide-range of processes and activities used by an organisation to effectively align and coordinate its actions and resources with its mission, and vision throughout the organisation. This paper discusses three theories of strategic planning management, and how these theories can be used by an organisation to evaluate its strength and weakness, set its goals and how to achieve these goals.
Theories of Strategic Planning Management
There are several techniques and theories for strategic planning and management. There are, however, no absolute rules about the bets techniques and theories. The most common theories, however, include the following, core competence theory, BCG matrix theory and Competitive position analysis theory. Core competence theory prescribes critical actions that should be used by an organisation to achieve a competitive advantage over its competitors in the same industry. In this case, the theory state that an organisation should maximise its strengths or areas where they have competencies. An organisation should develop its competencies in areas where other competing firms will find it difficult to imitate. The main principles in this theory are that the organisation must align their strategies with their core competency for them to be ahead of its customers (Ansoff, Declerck, & Hayes, 2016).
The second theory is Porter's Five Forces of Competitive Position Analysis theory. According to this theory, the company's competitive intensity and attractiveness are based on five different forces. These forces are the power of the supplier, the power of the buyers, the threat of substitution, the level of competitive rivalry and the threat of new entry. This theory helps the decision makers to pinpoint where the power of a business lies in the market. This theory is important because it helps the business to identify its current strength and the strength of the position that the business intent to move into. These forces are key factors that business organisation must take into consideration in making an important decision such as developing their mission and vision.
The third theory is the BCG matrix is derived from the life cycle of a product, which is used in evaluating the priorities of the products to be offered by a business. In this theory, for an organisation to create value in the long-term, an organisation should offer a product and services with both low-growth products to generate more revenues and high-growth products that require cash inputs. This theory has two dimensions: market growth and market share. In this case, the bigger the product market shares, or the faster the market of a product grows, the better the position of the business.
Organizations Evaluation of Its Strengths and Weaknesses
Organisations can use the above three theories in evaluating their strengths and weaknesses, as well as set their goals and how to attain those goals. The main reason why most organisations are in business is to make a profit. For this to be possible, the business goals should be to provide a product that will enjoy large market shares. In this case, therefore, BCG matrix theory plays a major role in goals setting. To attain the set goals, the business organisation use its core competencies to beat its competitors in the ever competitive business environment. In determining its strengths and weaknesses, the business uses Porter's Five Forces of Competitive Position Analysis theory.
System Thinking and Its Importance to Business Firms
System thinking is a way of looking at an organisation in a broad perspective, including the entire structures, cycles and patterns in the organisation instead of looking at the specific aspect of an organisation. This wide view is essential in speeding up the identification of causes of problems in an organisation, and, therefore, know the exact place to address the problem. This system thinking uses several effective tools and principles in analysing the issues and proposing solutions in an organisation. By focusing on an entire organisation, decision-makers to come up with solutions addressing as many problems as possible in the organisation. This will increase the organisation's productivity because the solutions given promote improvement across the organization (Haines, 2016).
Samsung Electronics Co., Ltd Strong Strategic Plan
Samsung Electronics Co., Ltd is one of the companies with the strongest strategic plan. The company specialises in the production of electronic products, for both domestic and industrial use. However, one of its main revenue generators is the production of mobile phones and smartphones. The smartphone is industry is highly competitive with new products launched into the market within a short period. For a business to continue operating in this competitive industry, they must have a strong strategic plan. Samsung mobile phones and smartphones are enjoying a large market share in the world, because of the excellent strategic plan used by the company. In the mobile industry, Samsung smartphones are known for their excellent quality. The company has focused on the quality and durability of its products as its core competence. To ensure that they remain ever competitive, relevant and profitable, the company aims at producing cheaper and quality product compared to its closest competitor Apple. As a result, many people, primarily among middle and lower consumers, opt to buy Samsung products (White, 2004).
In conclusion, it is clear that strategic planning management is one of the key tools used by business in the decision-making process. The use of a combination of different strategic planning management theories helps the business organisation to continue operating in the ever competitive business environment. Without sound strategic planning and strategic management, organisations are likely to collapse due to the ever-changing business environment.
Ansoff, H. I., Declerck, R. P., & Hayes, R. L. (2016). From strategic planning to strategic management. Hoboken, NJ: John Wiley & Sons.
Haines, S. (2016). The Systems Thinking Approach to Strategic Planning and Management. Boca Raton, FL: CRC Press.
White, C. (2004). Samsung Electronics: a dramatic turnaround. Strategic Management, 1(3), 754-759. doi:10.1007/978-0-230-55477-1_27
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