Strategic Planning and Resource Allocation in Business
1. The Strategic Planning Process
Strategy involves implementation and execution. Planning involves analyzing relevant information from the past and present, along with estimating future developments. This analysis leads to a plan that guides the company towards achieving its objectives.
Planning in the Company
This is a formalized decision-making process that produces a representation (plan) of the desired future state of the company and outlines the practical steps for implementation.
Strategic Planning
This process formalizes the company’s strategic direction, shaping decisions and integrating the decision-making process. Strategic planning aims to improve or adapt the company’s competitive position.
2. The Process of Integration of Formal Planning
Planning should be understood as a thought process, a clear expression of the company’s desired future state. These plans must be specific and actionable.
Strategic and Tactical Planning
Strategic planning defines the company’s direction, while tactical planning focuses on the methods and actions required to achieve the strategic goals.
Three Strategic Levels
- Corporate Level: Defines the mission, identifies opportunities and threats, and assesses the company’s strengths and weaknesses.
- Business Level: Defines the competitive positioning of the company and how it can gain a competitive advantage.
- Functional Strategy: Outlines specific actions within different departments of the company, specifying their roles and importance.
These three levels must be integrated into a cohesive whole.
Advantages and Disadvantages of Formal Planning
Advantages:
- Unified direction and clear goals.
- Defined scope of activity, either broadly or within a specific market segment.
- Promotes discipline in thought, reflection, and understanding.
- Encourages negotiation and collaboration within the organization.
Disadvantages:
- Potential for bureaucracy.
- Difficulty in predicting the future accurately.
- Risk of disconnect between planning and execution.
3. Resources Planning in the Corporate Level
This refers to planning resources across the entire enterprise, considering the strategies that will support this global planning. Two factors to consider during implementation are:
- Degree of Perception of Change: In mature and stable companies, change can be implemented more easily than in less adaptable organizations.
- Degree of Central Management: The concentration of power and decision-making authority.
4. Human Resources Planning in the Business Level (Competitive Level)
This can be complex but is best achieved through a process that utilizes the value chain method. This method segregates the company’s activities into core activities. Three criteria for consideration are:
- Identification of resources.
- Fit with existing resources.
- Fit between the total resources.
5. Resources Planning
First, determine the critical success factors – the key elements that will determine the company’s success or failure. Three key issues to consider during the planning and budgeting process are:
- Critical Factors or Keys: Those that contribute to the development of the strategy.
- Fingerprinting of the Tasks: Identifying and defining specific tasks.
- Priorities: Establishing clear priorities for tasks and resource allocation.