Evaluation Of Formal Strategic Planning Business Essay Example

substitutes, which collectively impact competitive rivalry in the market. On the other hand, PESTEL is an analytical tool that examines external factors including Political, Environmental, Social, Technological, Economic, and Legal aspects. This tool helps businesses assess potential impacts from these external influences.

PESTEL analysis focuses on broader aspects and external factors such as economic recessions, seasonal trends, inclement weather, and global market considerations unlike SWOT analysis. Both SWOT and PESTEL analyses are crucial for companies considering significant changes since they require evaluating current work ethics identifying areas for improvement addressing weaknesses exploring opportunities for future growth.

Source: Porter's Five Forces TemplateCompanies should consider outsourcing certain aspects of their business to reduce costs, but they should also evaluate the potential threats that it may pose. Strategic planning involves considering PESTEL and SWOT factors to design a program that takes advantage of the current market conditions. The strategy must be regularly reviewed in light of the external and internal environments. An Intended Strategy outlines a company's plan for employees and management to follow, but it may need revision in order to progress to the next level. If plans are not met or if there are significant changes in the market or other factors, an Emergent Strategy should be discussed with the board of managers. However, companies still need to find a way to navigate their Unrealized Strategy and transition to another Intended Strategy.

Evaluations of Formal Strategic Planning

When evaluating strategic planning, it is crucial for business intelligence to continuously monitor the implementation of the strategy and objectives. It is important to determine whether the company has successfully addressed issues using their plan or not. If a company lacks strengths,

then restructuring and redesigning the strategic program becomes necessary in order to tackle challenges and gain a competitive advantage. Drago and Clements (1999) suggest that leadership qualities of management and staff should be taken into account during the implementation of a strategic plan.This article emphasizes the importance of utilizing employees' strengths and attributes in order to integrate them into the overall strategic plan, which will contribute to achieving desired outcomes. Formal strategic planning offers several advantages, including ensuring that everyone within the company is working towards a common mission statement or goal. It outlines the future direction of the company and provides a framework that highlights strengths and focuses on envisioning where the company wants to be in the future. This helps create stability among employees by showing that there are plans for growth ahead. Failing to have adequate plans in place can result in a company becoming stagnant if they have not differentiated themselves enough to gain market share. Planning enables companies to better understand their market, analyze competitors' positions, and determine if adjustments to products or targeting different market segments are necessary. Through planning, companies can identify opportunities for growth and expansion by diversifying within related markets or exploring new dimensions for their products. An example of a company that recognized the importance of adapting market strategies for growth is Virgin, which initially started with Virgin music in the 1980s and later expanded into Virgin Atlantic as well as incorporating Virgin media and phones throughout its history.The early funds generated from Virgin music were utilized to venture into the Virgin Atlantic sector and reduce risks within the company. However, formal strategic planning also

has its drawbacks and weaknesses. In today's dynamic economic environment, planning may not always be effective due to constant market changes. It becomes challenging to plan with certainty when external factors beyond our control can hinder successful plan execution. Failure can occur if there are flaws in the initial business model or insufficient consideration during the planning process.

Furthermore, personnel changes may require the company to restructure its plans. Both internal and external factors or changes can make goals unachievable. When program changes arise and an urgent response is necessary to address failures in formal planning, it indicates that the focus is not solely on the original objective. While a willingness to compromise may emerge, this flexibility can be time-consuming and inefficient.

According to Mintzberg (1994), strategic planning often obstructs strategic thinking as managers may confuse actual vision with numerical data. This suggests that directors can lose sight of reality and become excessively fixated on the strategic plan rather than their vision for change.

In a journal article by Pateli, A.G., and Giaglis, G.M. (2005), they propose connecting business models and strategic planning to consider strategy, industry, and resource-based effects.The text highlights the importance of companies integrating external influences with their internal factors. It emphasizes that assessing a company's market position, potential expansion opportunities, outsourcing possibilities, employee readiness for change, training needs, and profit realization emphasis are crucial components of strategy. The text also discusses the challenges businesses may face during a global recession and underscores the need to adapt to stay ahead. It suggests that industries may have to temporarily shift focus towards competition and future planning in the domestic market for survival. Additionally, it acknowledges the

complexity of strategic planning for larger companies during a recession and stresses the constant assessment of the environment by managers to determine future directions. In this unpredictable environment, it recommends utilizing emergent strategies and finding ways to overcome uncontrollable external forces of change. Furthermore, it raises concerns about political issues like the potential emergence of an Independent Scotland which could introduce economic risks, reduced security, increased differences with England, and uncertainties with the Euro. Ultimately, individual companies must be prepared to confront various outcomes and significant changes in an uncertain and dynamic environment.In uncertain and dynamic environments, businesses must carefully consider scenarios and develop responsive strategies to address emerging challenges. The contribution and role of formal strategic planning are examined in such situations. However, in a highly volatile global economy, where quick action is needed in response to change and uncertainty, formal strategic planning approaches may have limited benefits for organizations. Scenarios provide insight into potential future events, while strategic thinking involves intuitive and entrepreneurial ideas for desired outcomes. Conversely, bureaucratic planning can involve complex procedures that may result in flawed decisions. Bureaucratic plans can become burdened with unnecessary steps and obstacles that hinder timely task completion. The perception of bureaucracy often implies inefficiency and a lack of practicality as it entails issuing orders that individuals may not fully comprehend or care about fulfilling. Despite the challenges it presents, strategic planning is essential for both business and personal decision-making as it allows individuals and organizations to remain adaptable and make necessary changes to progress further.