Response to Discussion Question- Benefits of Strategic Planning:
Ethical Benefits:
Ethics is considered as the moral principles that governs a person's or groups' behavior, separating what is good from what is considered bad, or right from wrong. It is essentially a system of moral principles or philosophy concerned with "what is good for individuals and society" (BBC, nd). The following are some of the ethical benefits that an organization may derive from strategic planning:
1. An organization can derive ethical benefits by ensuring that the goals and visions are developed in consideration not only of its own corporate interest but also of the interests of the public it serves or the stakeholders. In other words, the goals the organizations have set for itself must be good for both the individuals and for the society. Given that the satisfaction of the stakeholders is essential to the success of the organization, it means that ethical dimension of strategic planning results in a convergence of both corporate and stakeholder interests. In other words it is a win-win situation. According to Hosmer (1994), ethics builds trust commitment between the organization and stakeholders, and it is "essential for organizational success" (p. 17). It is this trust and commitment that are the most important elements of collaboration between the organization and the stakeholders in achieving its strategic goals.
2. Another ethical benefit of strategic planning is the promotion of ethical organizational culture: According to Business Dictionary.com, an organizations culture may be defined as "the values and behaviours that contribute to the unique social and psychological environment of an organization". The incorporation of ethical reflections into strategic planning can cultivate and strengthen the positive values and behaviors or conduct of the organization. In essence, strategic planning, by promoting ethical organizational culture encourages ethical conduct, ensuring that the ‘right', ‘good', and ‘proper' values, belief systems, concepts etc., are practiced in the organization, even in the absence of rules and monitoring.
Financial Benefits:
1. Through strategic planning and management, managers are able to review operating processes and make necessary and desired changes that will improve revenue- generating ideas.
2. Strategic planning may involve various work streams, including marketing, research and development, human resources management, sales and financial management (Codjia, nd), which enables a firm to develop the best strategies and tactics to beat the competition. This will ensure improved productivity and revenues.
3. It can be used to gauge and manage profitability using corporate income statements.
4. Strategic planning enables an organization monitor its liquidity by tracking its cash flow and ensuring that it meets its financial obligations.
5. It provides the opportunity for the organization to maintain solvency by reviewing the components of its balance sheets- assets, liability, and net worth.
Cultural Benefits:
1. Strategic planning can promote a desired culture, or set of collective attitudes, perspectives and social norms of a society or an organization by driving policy and regulations in a positively pre-determined way that creates equitable benefits.
2. Strategic Planning promotes cross-cultural-competencies, the ability to effectively work in cross-cultural situations, which is a critical aspect of organizational behavior. This skill is an essential ingredient in the success of any organization through the process of developing collaborative support as well as in stakeholder engagement. This is more so given the increasingly cultural-diversity prevalent in the work place today. Organizations must therefore develop sensitivity to cultural diversity in order to thrive and succeed in a very competitive global business environment. Strategic planning is the vehicle through which organizations can derive such cultural benefits.
3. The incorporation of culture into strategic planning can result in the creation of positive social change desired in the organization to its benefit.
Limitations of Strategic Planning (SP)
1. Suppresses creativity and flexibility: While strict adherence to a strategic plan is important in providing a sense of direction for the organization, it tends to limit flexibility and creativity. According to Kahn (January 17, 2010), in an uncertain and ambiguous world, flexibility and creativity are more important than the rigidity of a strategic compass like a strategic plan.
2. Leads to Group think: The internalization of strategic planning, essential for its success, could result into a corporate culture and lead to group think. This can cause an organization to define itself narrowly (Kahn, January 17, 2010).
3. Lack of Knowledge: SP requires considerable knowledge, skills and training. Specifically, managers should have conceptual skills. If these are lacking, the desired results will not be achieved.
4. Financial/Resource Considerations: SP requires huge amount of resources of time, energy and money. Managers may be constrained by these considerations in developing effective strategic plans.
5. Cooperation and Coordination: To be effective, SP requires the interdependence, integration and coordination of units as well as the cooperation amongst staff. If these are lacking, effective implementation of the plan can be stymied.
6. Leadership Values and Attitudes: The support and commitment of senior leaders in an organization is important for the success of a strategic plan. The attitudes and values of these leaders to risk are crucial in developing and implementing strategic plan. According to UKEssays (nd), leaders would choose strategic programs with high-yield if they are willing to risk, on the contrary, they would chose lower yield with low risk.
7. The Future is Unknown: Planners create goals and plans based on what has happened in the past, and on a vision of the immediate future based also on current trends. However, neither the vision nor the trends can adequately predict the socio-economic and political context within which an organization will operate. In effect, future changes in the social and political environment are relatively unknown and unpredictable. According to Powell (1992), "the more unpredictable the operating environment is for an organization, the less benefit the organization will achieve through strategic planning" (p.551).
Potential Pitfalls
As the name "planning" indicates, one major pitfall is that strategic planning is not designed to get the company out of a crisis if it finds itself in one. The plan itself may be weakened by a number of internal factors such as a failure of middle managers to implement the plan effectively, or if their values are at variance with the organization's goals, objects or cultural change in the plan.
Impact of Changing Stakeholders on Strategic Planning
Finally, as stakeholders change, so also does the stakeholder interests, views and perspectives that must be incorporated into the strategic plan also change. As previously noted, the satisfaction of key stakeholders is essential for the success of the organization, hence the requirement for continual assessment and revision of the strategic plan in order to continually create value for the stakeholders as observed by Bryson, (2011).
REFERENCES
BBC (nd): Ethics Guide. Retrieved on January 26, 2016 from: https://www.bbc.co.uk/ethics/introduction/intro_1.shtml
Bryson, J. M. (2011). Strategic planning for public and non-profit organizations: A guide to strengthening and sustaining organizational achievement (4th ed.). San Francisco, CA: Jossey-Bass
Codjia, M. (nd): Financial Benefits of Strategic Management. In Workplace Health and Wellness Study. Retrieved on January 26, 2016 from:https://www.ehow.com/info_7983789_financial-benefits-strategic-management.html
Hosmer, L. T. (1994). Strategic planning as if ethics mattered. Strategic Management Journal (1986-1998), 15(SPECIAL ISSUE), 17.
Kahn, J. (January 17, 2010): Reasons why Strategic Planning Fail and Limitations of Strategic Management: Business Articles. Retrieved on January 26, 2016 from: https://www.articlesfactory.com/articles/business/reasons-why-strategic-plans-fail-and-limitations-of-strategic-management.html
Powell, T. C. (1992): Strategic Planning as Competitive Advantage. Strategic Management Journal, 13(7), 551.
UKEssays (nd): Benefits and Limitations of Strategic Management. Retrieved on January 26, 2016 from:https://www.ukessays.com/essays/management/benefits-and-limitations-of-strategic-management-management-essay.php