Edinburgh Napier University |
Strategic Management in a Global Context |
Assessment A |
Module Leader: Karl Warner |
Matriculation Number: 09005374 |
The purpose of this essay is to evaluate a proposition which claims that the weaknesses of formal strategic planning confirm that alternative forms of strategic decision making are more appropriate for organisations that operate in highly uncertain and dynamic environment.
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Contrast between the nature of formal planning ...view middle of the document...
Contrast between the nature of formal planning and strategic decision making
The strategy formulation is subjected to environment in which the organisation operates and therefore it is possible to give two extreme approaches: traditional and modern planning approach (Johnson, Whittington & Scholes, 2011). The traditional approach is based on the intended strategy, thus rational considerations and strategically planned conceptions. Modern approach emphasizes the need to adapt to the dynamic nature of the environment in which opportunities but also threats emerge, both from the internal and external environment (Sirmon, Hitt & Ireland, 2007). The traditional concept of strategic management is a rational and formalised planning, which is a straightforward procedure, top to bottom management approach (Courtney, Kirkland & Viguerie, 1997). In other words, from top executives to employees, from goals to strategies and from plans to its implementation. This procedure used to be popular in practice; it is systematically compiled and uses a number of proven techniques and guidelines to lead the user to concrete results. Traditional planning primarily prevails in medium-sized and large enterprises; some companies see it as a matter of course and is often implemented routinely (Grant, 2007). Planning regulations that underpin the development of plans are not always updated to the necessary extent and usually fail to adapt an enterprise to the business environment. This failure rate is largely attributed to the lack of integration between quality management practices, business strategy, and environmental uncertainty (Jabnoun, Khalifah & Yusuf, 2006). Criticism of the formalised planning system notes that traditional approaches do not respond to changes in the complex business environment and lack the necessary mechanisms for updating planning systems (Grant, 2007). Few highlight the fact that system of planning differs between sectors and companies, but arguably, traditional planning systems were designed for a stable business environment that no longer exists (Grant, 2007; Eoyang, 2003).
The opposite is strategic planning which has features of bottom-up management, concept is spontaneous, unplanned, strategies emerge suddenly and without pre-prepared and precisely thought-out processes. It does not provide sound recommendations and algorithms; it flows from the initiative, which comes suddenly and is not formalised (Eoyang, 2003).
Benefits and problems of formalised strategic decision making
Formalised strategic planning is disproportionately focusing on the observation of horizon through routine programs, what leads to making excuses for continuation in plans that are overly sophisticated, placed on a shelf and practically can never be implemented (Mintzberg and Quinn, 1998). For example, strategic plans on research and development, which in its core should be progressive and dynamic, are leaving people to work on projects that do...