By Dr. Alfredo Anthony
As a cadet in the Army Reserve Officer Training Corps program, the instructors stressed a time-tested adage of the U.S. Army, “The more sweat in training, the less blood in war.” That maxim is not only applicable to the military; organizations can also apply the same logic to their business operations. With respect to businesses, the strategic planning process would equate to the “sweat in training” metaphor which will increase the probability of realizing a competitive advantage in the market space. Competitive advantage occurs when one company exceeds another’s ability to attract buyers by giving them what they consider to be enhanced value when compared to what is being offered by competitors. Enhanced value can represent a decent product at a reduced price, an expensive product that merits the higher price, or a best-value that embodies an appealing blend of desired characteristics (Thompson, Peteraf, Gamble, and Strickland, 2013). Competitive advantage can also be attained based upon the resources a business possesses because that is where costs and value exist. This method is generally referred to as the resource-based value (Hunt, 2009). Competitive advantage is sustained when rivals cannot duplicate or exceed the value created.
As mentioned above, strategic planning serves as a mechanism to enhance a company’s offering to its clients and improve organizational performance. Strategic planning is a vital factor in conducting business at each level whether a company is a multinational corporation or a family-owned business. The most encouraging fact is that most organizations employ strategic planning in some form or another; however, very few are able to reap the benefits of a rigorous strategic planning program (Parke, 2012). There are several reasons for not attaining the fruits of strategic planning, including time constraint, insufficient support from top management, lack of an executable action plan, too much information, insufficient preparation and buy-in from employees, etc. (Parke, 2012; Bartlett, 2017). The major factor in executing and attaining positive results from strategic planning is the active participation of the leaders in every organization. Absent leader participation, strategic planning becomes another activity that produces limited or negative results. Previous studies have concluded that senior leadership involvement in many aspects of an organization’s operations is positively correlated with the results that an organization will experience when implementing strategic planning, information technology enhancements, business intelligence systems, etc.
So, how does an organization initiate the strategic planning process? First and foremost is an internal look or assessment of the current internal and external conditions. The external conditions refer to the customers, competition, economic, political and social states that can affect the market conditions. The internal assessment requires organizations to be candid about their capabilities, resources, offerings, and the organizational structure. The internal and internal assessments will generate an objective SWOT (strengths, weaknesses, opportunities, threats) analysis, which will support apportionments of excess resources to areas that are lacking or maximize limited resources by developing innovative processes to gain efficiencies. Completing the SWOT analysis provides the foundation for the development of the strategic plan. The strategic plan will encompass each element of the SWOT analysis; when developed and implemented, it becomes imperative to test and update the plan as necessary.
References:
Bartlett, M. (2017). The top 10 strategic planning mistakes and how to avoid, fix them. Credit Union Journal, 21(9), 10-14.
Hunt, S. D. (2009). Competitive advantage strategies in times of adversity. Journal of Customer Behaviour, 8(2), 137-151. doi:10.1362/147539209X459769.
Parke, C. (2012). Preparation meets strategic planning. Industrial Engineer: IE, 44(1), 44-48.
Thompson, A., Peteraf, Gamble, J., and Strickland III, A. (2013). Crafting and Executing Strategy: Concepts and Readings. McGraw-Hill.