When discussing planning in a company, it is necessary to pay attention to the links and differences between planning and forecasting. A plan is a way of action, a program, and a forecast is a prediction of processes that do not depend on us. Therefore, the plan is applied to those processes and elements from which we can make a choice - to make a decision, and the forecast only determines the future state of economic processes or phenomena without any intervention in this state through decisions and planned actions.
The plan is evaluated in terms of the effectiveness and impact of these activities. The forecast is evaluated only in terms of its validity. Forecasting and planning are interrelated in the management process, but they should not be identified with each other.
Concept
Strategic planning as a function of strategic management provides the basis for making major decisions in the management of the firm. The dynamic process itself is built on managerial functions andcreates the basis for the management of the company.
As a function of management, strategy planning focuses on the selection of enterprise goals and how to achieve them. In such a situation, the concept is to anticipate changes in the external and internal environment and adapt the company to them.
The functions of strategic and operational planning are different from each other. In strategy planning, a significant role is assigned to the analysis of promising directions for the development of the company, the current trends, dangers, risks are identified, and opportunities are formulated. It is not an indicator of time that is taken into account, but the direction of the development of the company. The strategy itself can be implemented through a system of operational plans that relate to the organization's current tactics.
Definition of concept
Strategic planning is a formalized process of creating long-term tactics aimed at defining and achieving the organization's ultimate goals. They are usually developed for a period of more than 5 years. The function of strategic planning in the enterprise is characterized by the following features:
- strategic planning provides answers to questions such as: “what are we doing and what should we do”, “who are they and who should our customers be?”;
- creates the basis for tactical and operational planning and for day-to-day decisions. Given the need for such a decision, the manager may ask, "Which of the possible directions and actions would best suit our strategy?"
- associated with a longer period than other types of planning;
- makes it easier to focus the energy and resources of the organization on the most important activities;
- represents the highest level of activity in the sense that executive management should be actively involved in it, since they alone have sufficient resources of knowledge and experience to take into account all aspects of the functioning of the organization. His participation is also necessary to initiate and maintain interaction at lower levels.
Role and Meaning
Strategic planning should be an integral part of business management and, therefore, must take into account such constraints as the conflict of interests of groups affecting the functioning of the enterprise, financial barriers, resource constraints, lack of information, strategic potential, lack of competence, expected changes in environment, competitive activities.
Process essence
The strategic planning process consists of three main steps:
- Strategic analysis is based on diagnostic activities, the purpose of which is to be able to show the current and future strengths and areas of development of the organization, its potential and threats. It also defines the environment in which the organization is located. This step must be carried out reliably, because a good analysis that gives an accurate picture of the situation is the basis for creating a good plan.
- Strategicplanning considers the various options an organization can take and how they can be implemented. The planning phase should culminate in the development of a strategic plan, usually containing several future scenarios with varying degrees of optimism and deciding on a specific strategy to implement.
- Strategic Implementation: This phase follows the selection of a specific plan and includes a series of activities related to its implementation. These activities are combined with operational planning, which is more specific than strategic forecasting and is characterized by a shorter period. At this stage, the organization often faces many implementation challenges, such as reduced employee engagement and lack of identification with the company's goals, lack of financial resources, and a changing environment that forces the plan to be dynamic.
Process Features
This type of strategic planning is expressed in the following special features:
- represents an integrated approach, consisting of combining the decision-making process related to key tasks and critical issues of the company, with the analytical and projective aspect of functions;
- a wide range of process consists of elements: programming (basic strategies at the corporate level, management strategies, functional strategies), development of business plans;
- concretizes and completes the goals of the company,mainly due to the specification of products (services), pricing, marketing functions, costs, quality, production process standards, process parameters, etc.;
- incorporates creativity, innovation and adaptability to environmental changes;
- represents an "outward" orientation, defined both by meeting the needs and expectations of customers (society) and by the company's position in the competitive environment;
- is a factor of integration (coordination) of functional programs and plans.
Functions
Among the main functions, the list below can be distinguished.
- Strategic planning function: allocation of resources. All resources existing in the company: material, financial, labor must be effectively used by the company's management on the basis of their rational distribution in the process of functioning. It is necessary to build such combinations of resources in which the return on production will be maximum.
- Adaptation to the external environment is the main function of strategic planning. It is understood as the company's ability to adapt to the external environment and its dynamics, which will allow creating competitive advantages for the company.
- Strategic planning function: coordination and regulation. It is understood as the creation of coordinated actions of the company's divisions to achieve the set goals.
- Organizational changes. Within the framework of this function,organizational structure of the company to ensure the stable work of the staff. Within its framework, organizational changes are also taking place to achieve maximum efficiency of the company in the future.
- Mobilization function. It means that all the resources of the company in the process of planning a strategy must be mobilized within it in order to achieve the planned plans.
Vision of the enterprise as the initial element of the essence of strategic planning
The vision of an enterprise is often identified with the formulated mission of its activity. A mission is an excellent concept in relation to a company's philosophy or strategy. It determines the direction of the main activity of the organization and the integration around it of solutions to emerging problems. A correctly formulated mission meets the following requirements:
- should be easily identifiable;
- must be created for the benefit that the customer satisfies with the products and services provided in the market;
- written in precise and unmistakable form in response to questions.
Decision making
The essence and functions of strategic planning are closely related to decision-making in the management process. These relationships already exist at the stage of formulating the company's goals (and in the case of strategic management: its mission and vision), as well as at the stage of adopting options for various strategies (programs) and plans, and, finally, in monitoring their implementation.
The interaction between these functions is very strong, however, whenplanning, understood in the sense of accounting, is dominated by pre-processing activities, as well as identifying decision-making problems. For example, distribution of financial resources between specific areas of management, determination of the assortment structure and scale of production, determination of the scale of diversification, formation of a pricing strategy, etc.
Analytical documentation consists of initial and comparative data, as well as expert opinions, which are used in the preparation of the plan. Planning documentation includes long-term programs and plans, as well as budgets (short-term projects). At the level of strategic management, this documentation is a list of typical tasks of key importance, along with their characteristics, as well as a description of the strategic potential that determines the implementation of proposed projects.
Strategic planning function as a system
Strategic planning is a vast system, the structure of which is created by various types of strategies (programs) and plans. They are developed at the level of corporations as well as institutions or departments. The level of detail and accuracy of their preparation increases as they move to lower levels of management, and the programs are mostly long-term in nature.
Functional strategies and plans that deal with specific issues such as improving the company's organizational structure, research and development of production technologies, volumeand type of investment, staff development, productivity improvement, integrated quality management, are essential. In this type of research, the diagnostic part is combined with forecasts that determine the future of the company. If they are optimistic, in economic practice they are called development strategies or plans.
Problems of strategy planning functions
Among the main problems that are associated with the planning function of the strategic planning process are:
- The procedures for linking quality strategies to grassroots projects are very complex;
- there is no flexibility and adaptability in strategy planning models;
- The main focus of the strategy is to capitalize the business. Especially typical for the conditions of Russia.
Conclusion
Thus, strategic planning should be understood as a management function, which is the process of choosing the organization's goals and opportunities to achieve them. It ensures the implementation of most management decisions regarding the future of the company. The process itself is relevant in modern Russian conditions of fierce competition in the market. It is a set of management functions that distributes company resources, adapts it to the external environment, and forms internal coordination. The process of strategic planning itself performs the function of understanding the current activities of the company and planning future forecasts based on the available information.
To the mainstrategic planning functions include resource allocation, adaptation to the external environment, internal coordination and regulation, organizational changes.
