The business environment within which various organizations operate in, changes from time to time. This is due to changes in the environmental factors, which influence the performance of an organization. Some of these factors, which contribute to the changes in the business environment, include economic factors, technological advancements, political factors, among other factors like social cultural factors and the legal environment factors.
The various environmental factors tend to behave in a manner, which portrays an existence in of a close relationship. This is because the effect of one factor will lead to the other, and the cycle of relationship continues from good to bad. The effects of the influences that are caused by these environmental factors are felt by the general business society due the interconnections that exist in the environmental factors.
These changes in the different environmental factors demand that an organization establishes concrete plans, on how to deal with the various environmental factors. It is also important for any organization to factor in these factors, in establishing its business plans. This will enable it to maintain a high competitive position in the market, which is essential in the survival of an organization in the business environment. This research paper will focus on the strategic management process, as one of the key business plan tools.
The management tool, that any organization will consider as it tries to achieve its main objectives in growth and profitability, in the ever changing business environment. The research paper will look at the strategic planning process, the techniques that can be used and the benefits that the organization will derive from using strategic management. This is as a way of growing a company, which is more responsible to change in the business environment.
As defined by (Bryson 2004), this is the process through which an organization establishes various plans, to carry out at the present time and in the future. The plans are then implemented using various techniques, which the organization will consider to be appropriate. Finally the plans are evaluated so as to determine how well the organization has been able to achieve its goals and objectives. If there are any deviations from the goals and objectives, alternatives are determined, that can be used to correct the deviations. This will be done to enable the organization move towards a positive direction, in achieving its main goals of growth in the marketplace, and a stable profit potential for its operations.
The most important point, which is considered in the strategic management process, is the consideration of the various business environment factors in establishing the business plans of the organization. The reason for considering these factors is that, they have a great influence on the performance of the organization in the business environment. If these factors are not considered, the organization cannot be able to handle the challenging situations, which are presented by these factors which can lead to the total failure of the organization (Bryson 2004).
Strategic management process
Strategy formulation is the first stage in the strategic management process, whereby the management of the organization is involved at establishing the goals and objectives of the organization, either for a long period of time or for a short period. In most cases, the profitability and future growth prospects goals seem to take the top position, in the major points of concern (Bryson 2004). The management has to be keen enough to establish those goals and objectives, which relate to the main mission of the organization.
The mission of the organization thus becomes the major point of reference, in establishing the goals of the organization, as it enables the organization to maintain focus for its operations. Finally the management of the organization will be able to come up with a list of strategies, which will address the situation at the market and the various strategic issues, which need the attention of the government (Olsen 2006).
In strategy formulation stage, the management of an organization should be able to collect, and analyze information on the situation of the organization in the marketplace. In this case external and internal environmental factors are considered, that will help the management of an organization to establish various business plans. The business plans will enable the organization to exploit its strengths, and opportunities in the marketplace, as well as to handle the weaknesses and threats, that emerge from the business operations (Rabin et al 2000).
Implementation of the strategies is the second stage of the strategic management process, which will ensure that the strategies are put into action. Depending on the period of time, within which the strategies are to be carried out, the management of the organization should be able to commit its resources and time.
This is targeted making sure that the implementation phase is successful as it is the phase, which determines the success of the strategies of the organization. It is thus important for the management of an organization, to gather the necessary resources for strategy implementation. This will make the process of allocation of tasks easier, by taking advantage of the organization’s potential in seeking to achieve high performance results for the organization (Olsen 2006).
Strategy evaluation is the final phase of the strategic management processes, which involves three major activities of control. The first activity involves determining the standards, which the organization will use to measure its performance in the business environment. The standards, which can be used, could be the ones that are taken from some of the best organizations in the business environment (Bryson 2004). Once the standards of performance have been established, the organization would use them to compare its actual performance with those of the benchmarks.
In the process of making comparisons, the management should be able come up with the areas, that the organization has shown deviations when it is being compared with the set standards. With the deviations having been established, the management should come up with alternative strategies. The alternative strategies will be used to correct the deviations, so as to achieve the main goals and objectives of the organization (Rabin et al 2000).
As can be summarized from the strategic management process, it seems to be a continuous process, which is undertaken by the organization so as to ensure that it achieves its goals and objectives. It is considered to be a continuous process because the evaluation bit, involves going back to the early stages of the process. This is done so as to determine the areas, which have a problem and then making the necessary changes to the deviations, so as to improve on the activities of the organization (Rabin et al 2000).
Significance of strategic planning
The modern business environment (Olsen 2006), has posed several challenges to the organizations. Some of the challenges could include the changes in the economic cycles, which could lead to recessions in the economic environment. In that case, the organizations will have to cut on the expenses, that it uses to acquire the various resources like human resources and raw materials that it needs for its business operations. The organizations can be able to face the challenges in a more successive way, especially if they consider the benefits, which result from the strategic planning process.
Some of the benefits an organization expects to have, include being able to widen its focus for the business operations in the market. The reason for these is that, strategic management in itself encompasses the focus on the different factors, which are outside the organization. On the other hand, when the management of the organization uses strategic management as part of its operational plans for its business operations, it will be able to focus on the future operations of the business. This will enable it to accomplish most, if not of its goals and objectives as to why it is in business operations (Rabin et al 2000).
In addition to that (Goldstein 1993), the process of strategic planning involves the activities, which are carried by an organization so as to improve the performance of its various business activities. Most of these activities are those that create value for the employees, and the customers of the organization. The process of strategic management enables the management of the organization, to identify various benchmarks, and then structure its performance activities. This will be done in a manner, which will enable it to meet the benchmarks.
In trying to meet the benchmarks the organization is able to improve the quality of its goods and services as well as the links that exist between the organization and its employees and the customers. This is an important benefit for the organization as it will be able to improve on the supply chain activities of the organization that can ensure the organization continues to derive profitable growth in the business environment (Bryson 2004).
As competition becomes a major challenge for the organizations in the business environment (Olsen 2006), there is need for the organizations to change towards the direction of strategic management. This is because change is the only thing, which expected to last in the business environment as the organizations strive to focus their business activities. The focus is made to what is happening in the business environment, while at the same time making forward thinking business decisions, which are targeted at improving the general performance standards of the organization in the marketplace (Bryson 2004).
Strategic planning tools
As discussed in (Olsen 2006), the strategic planning tools are techniques, which organizations often use to make informed decisions regarding their operations in the business environment. The strategic planning tools enable the organization to focus on the various external factors, which influence the achievement of the goals and objectives of the organization. The tools also enable the organization to establish its current performance standards, so as to be in a position to establish future plans for its various management functions.
The overall advantage of the strategic planning tools is that, they enable the organization to improve on its performance standards. This is because they enable the management to analyze the various components of an organization, and then assist them to identify the various strategies that can be used to make corrections. Corrections will be targeted to the areas, which do not meet the requirements. In that manner, the quality of the organization’s activities is improved (Goldstein 1993).
In carrying out various strategic plans for an organization, the management should be able to assess the different tools. These tools will then be used to assess the different important factors, which need to be considered in strategic management. Some of the strategic planning tools include the SWOT analysis, and environmental analysis among many other strategic planning tools (Rabin et al 2000).
In carrying out a SWOT analysis the organization will be in a good position to establish its strong points while it carries various business operations in the marketplace. The organization will also be at an advantage to deal with the opportunities that are emerging at the market place.
The strong points of an organization should be analyzed in reference to the competitive advantage of an organization, when the organization is compared with others that carry out similar operations ion the market. The capabilities of the organization are analyzed as to how; it is able to create value for its customers and employees (Wootton and Horne 2000). The resources, that an organization owns can also be used to assess its strength. In the case where the organization owns a large resource base, it can consider that as a strong point as well as its physical location, which can enable it to establish better marketing strategies for its goods and services.
In addition to that, the organization can consider the level experience as one of its strong points that it has in the market place. This can be displayed in the way in which it carries out unique production processes, and various innovation plans. Once the organization has managed to discover its strong points, it should be able to maintain that position and make more improvements (Napier et al 1998).
The organization should be able to analyze its weaknesses in the business environment, so that it is in a good position to improve on its performance activities. Some of the areas that need to be focused on as the management seeks to identify its weak points, includes the its reputation in the market place, inadequacies in experience, financial problems and other issues to do with money required to finance the operations of the organization. The various production process of the organization needs to be looked at, as the weaknesses are analyzed as part of the whole range of activities in the supply chain of the organization (Bryson 2004).
In considering the opportunities, which are available for the organization at the market place, the management of the organization will need to assess the current market situation. The technology is assessed and the various activities, that are being carried out by human resource management development department in the organizations. In addition to that, the management will need to consider the advantages of working with other organizations, while considering the competitor’s positions in the market (Goldstein 1993). The opportunities are analyzed, so that the organization structures its various resources and functions to exploit them.
The threats of an organization can be analyzed in terms of the different negative effects, which result from the environmental factors. The intentions of various competitors can be analyzed as to the obstacles that they are likely to put for the operations of the organization in meeting demand and supply components of the market (Wootton and Horne 2000).
The management of an organization should be able to analyze its operating environment, so as to determine its strengths and weaknesses, when it compares its operations with those of its competitors in the market place. By being able to establish its strengths and weaknesses the management of the organization will be at a better position of exploiting the new business opportunities as it deals with the various threats, that are likely to emerge in the business environment(Olsen 2006). In order for the organization to carry out a successful environmental analysis, it has to be able to establish clear organizational goals and objectives. This will enable it to determine its position, in the business environment.
Political environment can be analyzed by, assessing factors like the stability of the government in carrying out its different goals and objectives of serving its citizens. When the management of an organization plans its various goals and objectives for the future, it has to be in a position to evaluate the stability of the government where it is carrying out its operations. Some of the points, which the organization can use to assess the government stability, are the probability of having any kind of political conflict in the future or at the present time (Rabin et al 2000).
The various values and beliefs, which the government of the country upholds in carrying its operations, affect how various businesses will structure their business decisions, which will enable them to derive growth and profitability. In that respect the management of the organization that wants to structure their operations, so that they are able to achieve growth will consider the levels of corruption in the government. This will cover the government structures like the judiciary, the executive and parliament which are the key areas, which give a picture of the values and beliefs that the government upholds (Wootton and Horne 2000).
The management of an organization can look at the different policies, which the government has in place that govern the business transactions within the country and with other countries. In that way, the organization will be at a good position to comply with the legal requirements to avoid incurring costs, which could result from legal expenses for non compliance to the laws (Goldstein 1993).
The staffing organization should be able to consider the various economical factors, which affect the business operations of the organization either within the given country, or in the global environment. Most of these factors affect the costs at which, the organization will incur to acquire its various resources needed to carry out its business operations in the market. The Gross domestic product of the country should be analyzed so as to enable the organization to determine the amount of money that customer have within the country to spend on various products and services (Napier et al 1998).
The amount of money, that is made available for use by the central bank affects the rates, that will be charged by the financial institutions in offering financial assistance to the business organizations. The management of the organization should be able to determine, and understand the amount of money in supply as it affects their liquidity in their operations. In this way, the organization will be able to avoid instances, which are likely to pose financial problems to the operations of the organization (Bryson 2004).
Inflation rates in the economic markets affect the costs, which the organization will incur in meeting its various financial obligations, which relate to the business operations. If the inflation rates are high the organization will incur more costs to acquire its various resources. When the organization is aware about the prevailing inflation rates, it will be at a good position to check on the expenses, that it incurs.
This is important for the organization to cut on the extra costs, especially for goods and services, which are not part of the major goals and objectives of the organization. This can be done appropriately without doing away with the human resources, as it will only reduce the amount of money paid in salaries and wages to a given value. In this case the individuals do not end up losing their jobs as a result of uniformed decisions, that the management of an organization is likely to make (Napier et al 1998).
The rates of unemployment in the economic market can also be assessed, as the organization establishes the human resource management decisions. In doing so, the organization can be at a good position of acquiring skilled human resources, that will enable the organization focuses on its main goals and objectives in the business environment (Bryson 2004).
The amount of money, which individuals have to spend on the consumption of goods and services, determines the various consumption decisions they will make. The organization should be able to understand, when its customers have money to spend, and so make goods and services that could encourage them to spend their money on the company’s products.
The business cycles can be a good measure, which the organization can use to determine the spending patterns of the customers. During recessions, customers tend to cut the amount of money, which they spend on various commodities. This should be the period, that the organization is supposed to cut on the production level and should instead embark on the efforts to market the commodities, which the customers consider as important (Rabin et al 2000).
The cost of obtaining funds for business operations, as determined by the Interest rates in the financial market, should be considered by the organization as it conducts the environmental analysis. The reason being the interest rates affects the prices, which will be charged for the various commodities in the market as the interest rates affect the cost of production among other activities, which are used to avail commodities to the market place (Napier et al 1998).
The legal environment can be assessed by looking at the various laws, which are established to govern the competition in the market place and the rights of workers. In addition to that, the management of the organization should be aware of the laws, which govern the environment and the other business activities. This will enable the organization to structure its various decisions in a manner, which will ensure compliance to the laws so as to avoid unnecessary conflicts, which are likely to result from the government and other lobby groups (Goldstein 1993).
In considering the social cultural factors in the environment, the organization will need to assess the demographic trends of the population. This is as far s age composition is concerned, that will help the organization to come up with goods and services, which most of the people in the population will find useful. The population trends change as people grow and also migrate to different locations. These factors when considered will enable the organization, to understand the general behaviors of their customers (Goldstein 1993).
Different people have different lifestyles, to which they have accustomed themselves to. The lifestyles seem to be guided, by the beliefs and values they attach to different things in the society. For an organization to be able to carry out its operations in a more convenient way, it has to consider the different kinds of people, which it is hiring to its organization. This is important as it will enable the organization to employ individuals, who can be able to adapt easily to the organization’s culture so as to enable the organization achieve its goals and objectives (Napier et al 1998).
The management of an organization should be able to embrace, the strategic approach of carrying out the activities of an organization as it is the only way in which the organization will be able to stay current in its operations as the environmental factors continue to change in the market (Napier et al 1998). As the strategic management process enables the organization to focus its activities for the future, the management of an organization should be able to come up with ways that it will deal with anticipated situations in the future of its operations.
One of the ways, which an organization will deal with these, can be through making human resource plans and expenditure during the times of economic instabilities. This will ensure that the organization cuts the expenditures on compensating its employees. This will be part of what the organization will want to do, as it targets to be at a given position in the market (Bryson 2004).
The management of an organization should always consider various external environment factors, besides the internal factors to establish the goals and objectives of the organization. This is because these factors influence the performance results of an organization, by influencing the various decisions, which an organization will make as regards to resource allocation and other policy measures. To act in a responsible way it’s a requirement that an organization considers this aspect, as it establishes its business plans (Olsen 2006).
The other recommendation that can be made in this business plan is that, strategic management process is effective, when an organization is able to carry out the various activities of the process on a continuous basis. The reason for this is that, the various stages of the process display interrelationships of activities, whereby one activity leads to the other, and it never ends at any point in time. The cycle that is created by the process needs to be monitored by the organization, so as to ensure continuous improvement of the activities. Continuous improvements are important, as they will enable the organization to create value for its operations, which will increase the chances of growth of the organization (Goldstein 1993).
This business plan has discussed some of the ways, which the management of an organization should use to reorganize the activities of an organization as the environmental factors keep changing in the business environment. This is to enable the management to have an oversight of the future of the organization’s operations, which can enable it to act in a more fiscally responsible manner.
This research paper made an analysis of the strategic planning process as a technique, which organizations use to carry out their activities in the dynamic business environment. An analysis was made on the components of the strategic planning process and the significance of the strategic management process, to an organization that is in business. The various factors, that influences an organization to carry out strategic planning have been analyzed, that could enable the organization take serious steps to sustain a profitable and valuable position in the market place.
The various strategic planning tools have been analyzed, that includes the environmental analysis and SWOT analysis. These tools among others enable an organization to have a view of the operations of the organization at the present time, which could enable the management of an organization to devise strategies, which can be used in future to meet the goals and objectives of the organization. In conclusion the business plan makes recommendations, which an organization can take into consideration while undertaking strategic management process. This is targeted at ensuring that the organization is able to achieve its goals and objectives, in a more efficient and effective manner.
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