10.4a The Value of Strategic Planning Flashcards
Strategic plan definition
Program that sets out how a business will achieve its aims and objectives
Why do strategic decisions have the greatest effect on a business?
They are a higher risk
Reasons strategies might fail:
- Wrong strategy chosen for current circumstances
- Don’t have required resources
- Actions of competitors
- External factors
Two key approaches to controlling strategy:
- Planned strategy
- Emergent strategy
What is a planned strategy?
What a business hopes or intends to do
Advantages of a planned strategy:
- Structured
- Encourages longer-term approach
- Fixed and planned so easily communicated around business
Disadvantages of a planned strategy:
- Everything has to go as expected
- Lots of factors can force a business to deviate from original plan
- Likely to fail if not responding to changing factors
- Costs time and money to plan
- Plan eventually goes out of date
What is an emergent strategy?
A pattern of action that develops over time
Advantages of an emergent strategy:
- Continually learns what works in practice
- Firms are adapting to current situations
- Responsive
- Save time and money that would be spent on planning
- Strategy stays relevant to environment
Disadvantages of an emergent strategy:
- No focus and control
- No clear end goal
- May not work for large companies because different parts need to coordinate
What happens in a realised strategy?
A business will plan what it intends to pursue and then will adapt this to the situations that emerge when they plan is in progress
What are unrealised strategies?
Things a business planned to do but had to give up on because of changes in circumstance
Value of strategic planning:
- Decisions are not made without being thought through
- Provides direction for the business
- Provides a structure, management style and culture
