Lecture 3: Planning school Flashcards
What is planning? (and in strategy)
Plannings is the establishment of goals, policies and procedures for a social or economic unit
In strategy, planning is a formalized procedure to produce articulated results by using an integrated system if decisions
What are the origins of the planning school?
Military = Organizations and military organizations must adapt to change and constantly improve to gain/maintain an advantage.
Strategy as a result of; o Formal procedure o Formal training o Formal analysis o Lots of numbers
What is the difference between military and organizations using the planning school?
Organizations assumes competition
,military assumes conflict
What are the characteristics of the planning school?
- Strategy is driven by insights into regularities
- Strategy formation is a conscious, formal and controlled process
- Strategy is decomposed into disntinct steps
- strategy formation is supported by checklistst and analytical techniques
- Rational and systematic approach to strategy making - affected by sientific management
- Planning and implementation are seperate, consecutive steps
- Stable and predictable environment
What is scientific management?
Management theory that focuses on increasing economic efficiency based on a logic of science (Taylorism).
- Managerial control to secure labor productivity (control post)
What are the different stages of the planning school?
- Objective setting
- External audit
- Internal audit
- strategy evolution
- Operationalization
- Whole process (scheduling the steps in the process)
What is the planning school process?
- Objective setting
- Analysis (external forecasts and inernal strengths and weaknesses)
- Evaluation
- Operationalization & sceduling
What is operational planning?
Stratigic goals are linked to tje tactical goals and objectives.
It specifies the activities of the organization and resoruces required.
Operational planning establishes budgets and activities for each part of the organization
What are the 3 applications of the planning school?
- Scenario planning
- Real options
- Strategic control
What is scenario planning?
Scenario planning is used when the future cannot be predicted; organizations speculate on varieties of the future of the organization to prepare itself. These scenarios can be set on probability, profitablity, hedge, flexibility.
How does scenario planning adds value?
- Capacity to perceive change
- Interpret and respond to change
- Influence on third parties
- Enhanced capacity for organizational learning
What are real options within the planning school?
Real options are proactive actions to prepare for possible futures.
An option is a contract that specify a price at which the holder of the option can buy/sell an asset such as shares at a particular time in the future.
What is strategic control?
Strategic control is a hybrid style of business unit autonomy and promotion of corporate interests. Divisions are responsible for strategy, but the headquarters must approve the strategies.
What are the limitations of the planning school?
Fallacies of;
- Predetermination -> It is nearly impossible to predict the future
- Detachment -> Manage by remote control (managers are not on workfloor to manage implementation of strategy)
- Formalization -> strategic planning replacing making strategy based on intuition. Overanalysing paralyzing creativity
- The grand fallacy -> Strategic planning us more a tool to implement strategies rather than creating a strategy; analyzing is not synthesizing and planning cannot precede strategizing
What are the levels of control according to Simons?
- Belief systems (values, purpose, directions)
- Boundary systems (limits to action)
- Diagnostic control systems (conventional to ensure predictable goal achievement)
- Interactive control systems
