How to integrate strategic planning into your management process

The primary purpose of strategic planning is to enable management to make decisions today which will affect the firm over the long run where the long run is characterized by risk and uncertainty. If strategic planning is to be useful to management it must be an integral part of the decision making process and not merely an appendage to the management process. In this paper we shall define some of the problems involved in integrating strategic planning and strategic planning tools into the decision process. We shall also suggest some possible solutions to these problems.     

Strategy restoration

Discussions of strategic change generally assume that managers strive to break free from the constraints of their organization's past so that they can forge ahead into the future. However, some organizations instead opt to reinterpret and reenact abandoned strategies drawn from their own history. Such actions are largely unaccounted for in the literature on strategic change. Accordingly, we propose here a conceptualization of a distinct type of strategic change that we call “strategy restoration.” We first outline how strategy restoration fills a gap in current understandings of strategic change. We then elaborate conditions that motivate and enable organizations to pursue strategy restoration rather than other types of strategic change. Two components of the framework—organizational traditionality and memory—characterize the organization itself, and two—nostalgia and perceptions of the organization's authenticity—characterize the market in which the organization operates. The proposed conceptualization of strategy restoration and discussion of its underlying mechanisms carry implications for researchers and managers.     

The dangers of centralized economic planning

There is little evidence that there is much value in riveting attention on the question of strategic planning in an era of low growth or negative growth. Rather, there is value in discussing strategic planning in terms of the efficient realization of society's goals— whether expressed as economic goals or as non-economic aspirations. This article contains some observations on corporate strategic planning, provides perspective on the energy and materials scarcity question, and warns that detailed economic planning by government thwarts the optimal use of resources to improve living conditions for everyone. The author holds that renewed government reliance upon the workings of a competitive market economy is indispensable for achieving this goal.     

Long-range planning in a politicized environment

The environment of the American corporation is becoming politicized by a variety of trends in the specific sense that social, political and legal developments are assuming greater strategic importance relative to market competition. As a result, long-range planning at the level of enterprise strategy is increasingly important. This paper examines two major illustrations of such politicization in the context of commercial law (the Westinghouse uranium crisis) and environmental regulation (Consolidated Edison's Storm King Mountain project). The paper concludes with a brief investigation of the implications of such politicization for long-range planning procedures.     

Strategic planning for multinationals—The views of governments and scientists

The purpose of the project described in this paper was to study the environmental changes that influence the strategic planning of multinational firms. The environment of any business or government consists of all things external to an organization which influence it, such as political climate, social situation, international economics, etc. The changes in the strategic planning procedures of firms have been reported elsewhere. This article concentrates on the role that three governments in north-western Europe play in multinational business planning and the views of a number of scientists concerning the interaction of environmental conditions and the strategic planning of multinational firms.     

How corporate planning responds to uncertainty

This article is based upon an SSRC research project into the influence of computer methods on decision making. During this research, information on the planning systems of a cross-section of British industry was obtained.The paper illustrates how managers in these firms were coping with planning in the present conditions of extreme uncertainty about the future, combined with adverse economic and business conditions. Conventional planning theory, together with some modern observations on it, are briefly described and then the paper shows how, in the firms visited, the structure of planning was more complex than this theory.It goes on to show that today's critical conditions were not leading to management putting aside their plans and computer models and “muddling through’. They were actually leading to an acceleration in the adoption of formal planning and decision making methods but in a somewhat different manner to conventional planning theory.Seven different modes of planning were identified with integrated operational planning being the most common, possibly the most essential to survival and sometimes the only planning possible into today's conditions. A trend to extend the operational plan to 2 to 3 years and to reduce the firm's long range plan from 5 to 3 years was also observed.Long range plans were being considered as planning and decision making tools and not as blue-prints of the firm's future, as accurate long range forecasting was impossible. Three types of strategic planning were identified with that carried out at intervals probably being the most appropriate for medium sized firms in today's conditions.     

Public planning and political strategy

Planning theory and practice derived from corporate experience, management science and rational decision theory have had little influence on decision-making in the public sector. The political environment and organizational complexity of public decision making render conventional approaches to objective, rational, comprehensive planning of limited value in government agencies and in private corporations involved in public policy making. A more effective approach to strategic planning and management must be based on an understanding of the political dynamics through which policies are made. It must adopt a variety of styles directly related to major functions in the policy making process and use a variety of political intervention and influence techniques that facilitate the implementation of plans and policies.     

EDUCATION

The power of an integer programming approach—and more particularly a 0,1 programming approach—to resource allocation problems is not widely appreciated. Recent developments in mathematical programming and in problem formulation enable decision makers to deal explicitly with the special conditions which characterize real world problems in capital budgeting, scheduling, and facilities planning. In this paper, somewhat tutorial in nature, we seek to demonstrate formulation and solution of an equipment selection resource allocation problem with several special conditions. The problem can be solved on any reasonably equipped computer system. Sensitivity studies are also performed and discussed.     

Antecedents and Outcomes of Political Tie Intensity: Institutional and Strategic Fit Perspectives

Although international nonmarket strategy research has highlighted the importance of political ties, it is still unclear why some foreign subsidiaries are more politically active than others and what conditions may render political practices beneficial in a host country. We argue that foreign subsidiary political tie intensity—the extent to which senior managers provide time and resources in informally dealing with government officials for nonmarket purposes—will be influenced by political institutions in their parent's home country, especially when the MNE parent attempts to protect foreign subsidiary resources. Additionally, we assert that fit between a parent's home country political institutions and foreign subsidiary political tie intensity will positively affect subsidiary performance. We employ primary data collected from 181 foreign subsidiaries in the Philippines and find support for our hypotheses. This study advances international nonmarket strategy research by highlighting how an MNE's home country political institutions shape subsidiary political networking and strategic performance outcomes in host country environments.     

Regression models of behavior for managerial decision making

A principal problem in systems studies concerns the development of models that will be accepted and used by decision makers in organizations. Regression models derived from managers' past behavior offer promise in overcoming this problem for many repetitive types of decisions. Employing a simulated production planning environment, this paper discusses both the potential usefulness and limitations of such models for understanding and improving decision making in practical applications.     

Participation in Strategic Decision Making: The Role of Organizational Predisposition and Issue Interpretation*

Each time managers are faced with a strategic decision they decide how to decide. Specifically, they make choices about who has necessary information and, therefore, who needs to participate in the decision. Such responses to strategic issues are believed to be affected by the way in which decision makers interpret issues. However, organizations develop habitual responses to issues and may be predisposed because of their attention to rules and routines, or because of past performance, to respond to strategic issues in certain ways regardless of how issues are interpreted. We examined the direct and indirect effects of predisposition (rule orientation and past financial performance) and interpretation of strategic issues on the participation of internal stakeholder groups in strategic decision making. Executives in 52 organizations indicated that rule orientation and performance are directly linked to participation in strategic decision making, and that interpretation and rule orientation are directly linked to each other. Implications for managers include the notion that any effort to improve decision-making effectiveness by shaping how organizational members frame and interpret issues will be constrained by the organization's existing routines as well as its past performance.     

Scenario planning,cognition, and strategic investment decisions in a turbulent environment

We explore how scenario planning contributes to cognitive dynamics and strategic investment decisions in a changing environment. Our research is based on an in-depth, longitudinal case study of Shell's ventures in Russia between 1994 and 2016. We show that Shell's scenarios did not foresee some major events that occurred in the turbulent Russian energy market. However, the scenarios envisaged the rising role of gas, the strategic relevance of the gas transportation infrastructure, and the growing interventionism of the Russian government. The scenarios thus helped Shell's managers to adapt their strategic beliefs and ultimately enabled them to notice, assess, and respond successfully to external changes—even though these changes had not been foreseen in the scenarios. Shell has been the first (and, for almost a decade, the only) foreign company to produce and export gas from Russia.     

Analysis of justification problems in CIMS review and projection

Attempts to study justification problems related to advanced manufacturing systems such as CIMS are made. Such systems conceptually promise industries many significant advantages, but many justification procedures that are used in appraising such system proposals remain ill-suited because of their failure to incorporate multifaceted strategic and tactical issues. The aim in this paper is to review some of these procedures and finally propose a total systems approach. The objective is to make a prognosis of the issues to prepare a projective base for organizational decision support. Two case studies from Indian industries where CIMS have been tried out are also described.     

Should the Model for Risk‐Informed Regulation be Game Theory Rather than Decision Theory?

Risk analysts frequently view the regulation of risks as being largely a matter of decision theory. According to this view, risk analysis methods provide information on the likelihood and severity of various possible outcomes; this information should then be assessed using a decision‐theoretic approach (such as cost/benefit analysis) to determine whether the risks are acceptable, and whether additional regulation is warranted. However, this view ignores the fact that in many industries (particularly industries that are technologically sophisticated and employ specialized risk and safety experts), risk analyses may be done by regulated firms, not by the regulator. Moreover, those firms may have more knowledge about the levels of safety at their own facilities than the regulator does. This creates a situation in which the regulated firm has both the opportunity—and often also the motive—to provide inaccurate (in particular, favorably biased) risk information to the regulator, and hence the regulator has reason to doubt the accuracy of the risk information provided by regulated parties. Researchers have argued that decision theory is capable of dealing with many such strategic interactions as well as game theory can. This is especially true in two‐player, two‐stage games in which the follower has a unique best strategy in response to the leader's strategy, as appears to be the case in the situation analyzed in this article. However, even in such cases, we agree with Cox that game‐theoretic methods and concepts can still be useful. In particular, the tools of mechanism design, and especially the revelation principle, can simplify the analysis of such games because the revelation principle provides rigorous assurance that it is sufficient to analyze only games in which licensees truthfully report their risk levels, making the problem more manageable. Without that, it would generally be necessary to consider much more complicated forms of strategic behavior (including deception), to identify optimal regulatory strategies. Therefore, we believe that the types of regulatory interactions analyzed in this article are better modeled using game theory rather than decision theory. In particular, the goals of this article are to review the relevant literature in game theory and regulatory economics (to stimulate interest in this area among risk analysts), and to present illustrative results showing how the application of game theory can provide useful insights into the theory and practice of risk‐informed regulation.     

Information for more effective strategic planning

This paper illustrates how an entity—called a ‘strategic data base’ (SDB)—can be developed to provide important information in a form which makes it directly useful in various phases of a strategic planning process. The strategic data bases are concise statements of the organizational and environmental situations which define the organization's most salient problems, opportunities, and constraints. These SDBs may be developed through a participative process involving tasks forces which are made up of managers representing the diverse interests of the organization. The strategic data bases thereby become important informational inputs to planning which can directly serve to enhance the quality of planning decisions. Moreover, the process of developing SDBs can be an important learning device for those middle managers who can become involved in such a process at a much earlier point in their career than that at which they might normally engage substantively in the organization's overall strategic choice process.     

How managers decide to use planning models

Recent published reports and surveys have shown that a growing number of corporations and government agencies are using decision models not only for lower level scheduling and resource allocation but also for short-range and long-range planning. Although the literature has described in some detail the types of models used and the ways in which they are used, limited attention has been paid to the ways in which managers decide whether or not to use these models. This paper, which is based on a series of case studies, suggests that the decision to use planning models is made not by performing a comprehensive cost benefit analysis, but by the use of a reference model—that is, an existing model, sometimes in a competitive organization, similar to the one being considered.     

Strategic Assessment Model (SAM): A Multiple Criteria Decision Support System for Evaluation of Strategic Alternatives*

The evaluation of strategic alternatives is a particularly difficult task. This difficulty is due to the complexities inherent in the evaluation process and the lack of structured information. The evaluation process must consider a multitude of relevant information from both the internal and external environments of the organization. Various analytical and normative models have helped decision makers utilize large volumes of information in strategic evaluation; however, most of these models have some limitations. We present a multiple criteria decision support system, called strategic assessment model (SAM), that addresses some of the limitations inherent in the existing models. SAM captures the decision maker's beliefs through a series of sequential, rational, and analytical processes. The environmental forces—decomposed into internal, task, general opportunities, and threats—are used along with the analytic hierarchy process (AHP), subjective probabilities, the entropy concept, and utility theory to enhance the decision maker's intuition in evaluating a set of strategic alternatives.     

Decision Style in British and Swedish Organizations: A Comparative Examination of Strategic Decision Making

In this paper results from parallel large scale studies of strategic decision making in Sweden and the United Kingdom are reported. Swedish decision makers are found to employ a decision making style which emphasizes negotiation within a restricted group. This style, which involves considerable information search, leads to very long decision times. Strategic decisions in Britain are made among groups which include fewer strongly committed participants. Delays are common and often serious, but do not lengthen the process unduly. Decision styles in both countries include contrasting tendencies which produce a dynamic tension in the decision arena.     

Planning in a state of turbulence

This paper is concerned with an exploration of the role of the long range planner, whether in the private or public sector of the economy, and the impact made upon the processes of his work by government's increasing propensity to manipulate the economy. The authors' researches over the last 2 years into the comparative nature of planning processes in the U.K. economy have made it abundantly clear to them that planners are increasingly concerned at the dangerous potential of such impact upon their forecasting procedures. The emphasis here will rest upon the planner in private enterprises, although the authors' work in both local government and the nationalized enterprises suggest that the problem is of equal importance in these sectors.The authors consider first the past nature of the search processes in long range planning and the context of such attempts to narrow down the range of variables that form the enterprise's perception of its future. Secondly, they examine the emerging discontinuity and the changing role of government, with particular reference to indicative planning concepts. Then they introduce some of the findings of a recent survey of attitudes towards long range planning in the construction industry of the U.K., a sector vitally influenced by turbulence in the economy and with particular interest in government's ideas of macro-planning. Finally Edwards and Harris examine the implications to government and to planners of their findings.     

Production planning in practice

The changes and pressures facing the manufacturing and engineering industries today are increasing the importance of effective aggregate manpower and production planning. Several different theoretical optimisation models to tackle this problem have been described in detail in the literature but there have been few applications of them in practice.The reasons for this are many but include: the difficulty in expressing managements' conflicting and mixed objectives in an objective function; the necessity to oversimplify real life systems to enable these methods to be used; the simplistic approach to manpower planning used in these models; the difficulty in gaining managements' acceptance and finally the fact that what management actually wants is a tool to assist them in planning and decision making.What is being used by many managements is a case-study deterministic simulation model. Many companies are adopting this type of model for all types of planning and twelve out of twenty-seven companies visited in a research project described in this paper were using this type of model for aggregate manpower and production planning. It is proving to be an effective management tool and is being readily accepted principally because modern specialised financial modelling languages are enabling these models to be built, understood and used by non-specialist managers.