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UDC 330.115:658.1
THEORETICAL AND METHODIC ASPECTS OF STRATEGIC PLANNING IN THE
ORGANIZATION
L.S. Filatova
M.A. Malyk
Vinnytsia national technical university, Vinnytsia, Ukraine
ФыатоваЛ.С., МаликМ.О. Теоретико-методичт аспекти стратегiчного планування в оргатзацп.
Стаття присвячена розкриттю теоретико-методич-них аспектов стратепчного планування та дослiдження його методик. Завдання полягае в доалдженш основних методик стратегiчного планування в оргатзацп та визначення найоптимальшшог Розроблено оптималь-ний спосiб поеднання методик стратепчного планування, що на вщмшу вiд iснуючих методик забезпечуе вищу ефективнiсть функцiонування пiдприемства.
Ключовi слова: стратепя, планування, методики, ефективтсть, етапи, iнструменти
Филатова Л.С., Малык М.А. Теоретико-методические аспекты стратегического планирования в организации.
Статья посвящена раскрытию теоретико-методических аспектов стратегического планирования и исследования его методик. Задача состоит в исследовании основных методик стратегического планирования в организации и определение оптимальной. Разработан оптимальный способ сочетания методик стратегического планирования, что в отличие от существующих методик обеспечивает высокую эффективность функционирования предприятия.
Ключевые слова: стратегия, планирование, методики, эффективность, этапы, инструменты
Filatova L.S., Malyk M.A. Theoretical and methodic aspects of strategic planning in the organization.
The paper reveals the theoretical aspects of strategic planning and the research of its methods. The task is to study the main methods of strategic planning in the organization and to determine the most optimum one. There had been developed the most efficient way for combining the techniques of strategic planning which, unlike the existing methods, provide for the high efficiency of an enterprise functioning.
Keywords: strategy, planning, methods, effectiveness, stages, tools
Nowadays strategic planning developed by many domestic entrepreneurs. Understanding of its necessity and important in company did not come immediately. In conditions of external environment, we should use a tool that would be able not only to put the company to new more effective management level but also took into account the main objectives facing it. This tool is a strategic planning mechanism. One of the reasons for not enough using of strategic planning is using by foreign colleagues methods that not adapted to the domestic market, and as a consequence, the results are not always satisfactory [1].
Analysis of recent researches and publications
Both domestic and foreign scientists are going for problems' developing of using in companies the strategic planning. The most significant of research papers: O.A. Bogomolov, L.C. Balabanov, V.S. Pono-marenko, O.M. Yastremsky, R. Ackoff, D. Hussey, G. Mcburg, B. Karlof, etc.
The aim of the article is the revelation of the theoretical aspects of using the strategic planning and its basic techniques. The goal is to study methods of strategic planning in the organization.
The main part
Strategic planning is the process of managerial decision-making regarding strategic foresight, adaptation of the company to the external environment and the allocation of resources. Strategic planning is the process of identifying the main goals of the organization, needed resources to achieve them and policies for the acquisition and use of these resources. Strategic planning provides an opportunity to test the values of the organization, its current status and the environment, factors associated with achieving the desired future. Needs in strategic planning are not for those organizations that exist in a static world, which is absurd. Because our environment is constantly changing in all aspects of our lives - demographic, economic, cultural, etc. Thus strategic planning is a reaction and a process of adaptation to changes, as well as a means of creating the organization's future in the context of these changes. This is a major challenge for all organizations of different sizes and types. It is the most effective instrument for development responsibility and competence of the personnel at the same time. In the
end, this is the basic prerequisite for the successful operation of any group of people seeking to achieve common organizational goals [2].
T.M. Sorochan [3] notes that strategic planning is the process of providing direction and content for daily activities. V.V. Glushchenko [4] notes that strategic planning is one of the main functions of strategic management. It is the process of managerial decision-making regarding strategic foresight (strategies), distribution of resources, adaptation of the company to the external environment, internal
organization. Strategic planning provides the basis for all management decisions, functions, organization, motivation and control, focused on the development of strategic plans. The strategic planning process provides the basis for management members of the organization.
Implementation and application of strategic planning includes the following components: tools, stages, techniques, and exactly the strategic planning process. In turn present the instruments of strategic planning on fig. 1.
Management by objectives System approach that allows you to focus activities of companies to achievement goals.
Knowledge management The systematic process of identifying, using information that people can create, improve.
Quality management Coordinated activity of topmanagement which directed to release quality products.
Benchmarking The comparison analyze mechanism of effectiveness one company with indicators of more successful firms
Reengineering of business processes It is creating and supporting the continuous improvement system of business results.
The tools of strategic planning
Fig. 1. The tools of strategic planning [5]
In turn the strategic planning process as a specific type of activity consists of several iterative stages:
— the initiation and coordination of the strategic planning process;
— the definition of official powers and duties of the organization;
— the mission statement and values of the organization;
— the analysis of the external and internal environment of the organization;
— the definition of effective strategic vision for the organization;
— the developing an effective implementation plan, evaluation the strategy;
— the strategic planning process [6].
M.D. Vinogradsky [7] notes that strategic planning is defined as the managerial process of creating and maintaining the strategic fit between the goals of the company, its potential and opportunities in marketing. It is based on a clearly formulated program statement of the company, definition the co-goals and tasks, healthy business portfolio and growth strategy.
Features of strategic planning on companies are choosing the actual methods of planning. The methodology of strategic planning is the particular way, technique of solve any problem of planning. In scientific literature there are 2 groups of techniques of strategic planning, which differ from each other. Suppose in fig. 2 the first group of strategic planning methods [8].
In contrast to the presented in fig. 2 methodologies in international practice there is a second group of
matrix and portfolio techniques of strategic planning: Boston consulting group matrix (matrix BCG), the "attractiveness-competitive", the Arthur D. Little matrix (ADL/LC). Also in strategic planning we use a variety of techniques for strategic analysis, the main of which is the SWOT analysis.
Matrix portfolio analysis BCG, one of the most famous and simple, designed in the 60-ies of XX century, the Boston consulting group. It considers only two factors: relative market share and market growth rate. The BCG matrix defines four basic positions in which there may be businesses that have been recognized marketing names: "question marks", "stars", "cash cow", "dog" (fig. 3) [10, 11]. Matrix MC Kinsey is a multi-factorial matrix. It was proposed by advisory campaign "McKin-sey" and the General Electric Company in the United States (fig. 4).
Basically these matrixes are based on a pair of strategically important variables such as market size, the growth rate of the industry, competitive status. In contrast to the two-factor BCG matrix, the matrix "MC-Kinsey/DE" is more detailed version and already multi-factorial model. Matrix "MC-Kinsey/DE" reflects a more flexible approach to strategy formation. For example, if the competitive status of the company is weak and the market forecasts do not include rapid growth, it will not mean that this activity is necessary to leave: it may be happen that risk will decrease but company activity's efficiency will increase to another, more promising sphere, then there will appear the so-called synergistic effect [14].
EKOHOMIKA: peoniï nacy
№5(15), 2014
ECONOMICS: time realities
Methods of strategic planning
Expert Based on indirect and incomplete information, experience experts Balance Used to ensure consistency of interrelated indicators System analyze and synthesis Decomposition of phenomena into constituent parts and determining the key issues of future development
1
Socio-economic analysis Comprehensive study of the socio-economic reality, knowledge of the internal connections of phenomena with the aim of determining the progressive development trends Economic-mathematical methods Solve issues such as identifying optimal output given the labor and material resources Test the programs' execution Detect errors made in the process of strategic planning, given the opportunities that were not previously considered or newly emerging
1
The method of direct engineering and economic calculations Determine the this type of production needs of the market and its production Unity, centralism and autonomy method Provide affiliates the greatest possible freedom in economic activity, but within the overall strategy of the company Unity and complex forecasts, programs and plans Coordination and integration departments' and branches' plans to one plan based on an overall strategy for company
Fig. 2. Methods of strategic planning
Low
High
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Competitiveness (profitability)
20
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Low
High
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Relative market sector
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Fig. 3. Methods of strategic planning
Matrix ADL as Mac Kinsey is also essentially the improved variant of the BCG matrix while in contrast it is a multi-factorial. The approach Arthur DLL's firm to portfolio analysis is based on the concept of industry life cycle which represents the model
changes over time a number of market variables: sales, profit, competition, etc. In accordance with it every industry goes through the life cycle development of four phases: the birth (adoption), growth and development, saturation, decline. These phases of the
0
industry life cycle make up the Y-axis of the matrix ADL. The X-axis reflects the competitive position of company which can be: weak, strong, tolerant, powerful and leading. The combination of data about
the four phases of industry life cycle and the five competitive position results in a matrix ADL (fig. 5) [15].
High
Middle
4 -i
h
SS
Low
1
Selective Raise
4
Reinvesting
Agressive Raise
Low activity
Low Middle High
Competitiveness of company
Fig. 4. Methods of strategic planning
2
3
5
6
7
8
9
Matrix ADL opens a wider range of strategies. It is useful for the product life cycle which is very short and if time does not apply appropriate strategies it can achieve its goals.
"Possibilities of goods-markets" matrix often used in the definition of portfolio strategy to specify in which specific business sectors of the company it will be in the future (fig. 6).
J , i
л л
ад ад
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гл
ТЗ
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£ ■ S3 'ч
и tí
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Y
Low
Profitability
Low <—
Competition risk
High
High -►
Phases of industry life cycle weak strong tolerant powerful leading
Decline l 2 3 4 5
saturation б У S 9 10
Growth and development ll l2 13 14 15
Birth (adoption) l6 l7 is 19 20
X
Fig. 5. Arthur D. Little matrix (ADL/LC) [11]
Each square of the matrix identifies some general strategy:
— strategy "improve what you are already doing" -focus on markets and products that exist;
— market development strategy - find new markets for manufactured goods;
— strategy new product development - involves the company's growth on due to new good production, which will be implemented on the existing market;
— diversification strategy - applied in cases when the company cannot continue to develop in this market with this product within the industry [18].
Exist Market New -►
Strategy "improve what you are already doing" Market development strategy
Strategy new product development Diversification strategy
Fig. 6. "Possibilities of goods-markets" matrix [17]
Adopting such a strategy the company direct own forces to developing new products and finding new markets so it is very risky. To reduce the risk the company can by expanding spheres of activity in the area associated with the main activity of the company, and in a completely separate business areas.
After analyzing 2 groups of strategic planning techniques we can conclude the need of strategic planning in company following next conditions:
— encourage company management to think long-term;
— better coordination of the organization;
— establishment of indexes for follow-up;
— establishing an effective system of potential personnel management in company;
— focus on finding alternative ways to achieve goals, that is permissible purposes under certain goals and existing constraints;
— allocation of responsibility not only between areas activity but also between current and future activities.
Conclusions
Strategic planning in company is one of the most important conditions for its successful functioning. Without such a plan the company will go into the unknown direction by not systematic influences and internal decisions of managers. Strategic planning includes these plans. It is necessary to coordinate all the processes in company. It is making for each decision in company were taken with a clear reference
to a particular purpose, developed based on the results of strategic planning.
So after reviewing the literature we can note nobody in the scientific literature defined best practices of strategic planning. All the above methods are quite effective but to ensure that the company operated and profitable, one must use the methods in the following way. In beginning of the company development it is necessity of combination two methods of the first group, except socio-economic and systems analysis and synthesis, as they are based in the comprehensive study of the socio-economic reality, knowledge of the internal phenomena connections, its decomposition into constituent parts and determine based on this, the key issues of future development. During company growing it is effective to use portfolio methods of the second group like the matrix "product-market" because it will indicate in which specific business sectors the company should operate in the future. To ensure the company status we recommend to use MC Kinsey matrix next that determines the capacity of the market and its growth, intensity of competition, the input and output barriers, seasonality and cyclical fluctuations, capital needs, the impact of social, ecological factors, as well as state regulation.
Therefore the strategic planning process takes the main place in strategic management system. Most of the west and east companies use strategic planning to change itself to get out of hopeless situations formed in company.
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HaAaro до редaкцiï 21.07.14
Фiлaтовa Любов Сергпвга / Lubov S. Filatova
filatovalyba@gmail. com
Maлик Maринa Олексaндрiвнa / Maryna O. Malyk
mary. malyk@yandex. ru
Посилання на статтю /Reference a Journal Article:
Theoretical and methodic aspects of strategic planning in the organization [Електронний ресурс] / L.S. Filatova, M.A. Malyk //Економжа: реалП часу. Науковий журнал. — 2014. — № 5 (15). — С. 59-64. — Режим доступу до журн.: http://economics. opu. uafiles/archive/2014/n5. html
