Impact of Strategic Planning on Organizational Productivity

Impact of Strategic Planning on Organizational Productivity

What is Planning?

Akpala, Agwu (1990), states that planning establish the framework or boundaries within which people make decisions and carryout action in the future. It determines what is to be done in the future and to what end. He says that planning therefore, anticipates future events, problems and relationships and in this way it;

  1. develops a series of alternative approaches to guide action to wards desired goals, and then
  2. decides what to do it, and where to do it before action is taken.

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Megginson, Leon etal (1986), define planning as choosing a

course of action and deciding in advance what is to be done, in what sequence, when and how. Good planning, they states, attempts to consider the nature of the future environment in which planning decisions and actions are intend to operate, as well as the current period when plans are being made. According to them, planning provides the basis for effective action resulting from management’s ability to anticipate and prepare for changes that might affect organizational objectives. Thus it is the basis for integrating the management functions and is especially needed for controlling the organisation’s operations.

Trewarthal, et al (1976) states that planning involves setting of goals and objectives. This is to say that planning is the determinations of objectives, strategies, procedures, methods, programmes and rules, required in guiding the combination and utilization of an organisation’s human, material and money resources for future time spans. Planning is a process which takes a rationalistic and decision making approach, and recognizes problems, evaluates relevant information, develops alternative courses of action; assesses the possible consequences of each alternative, and selects the best course of action called plan, they state.

Ewurum and Unamka (1995) states that in business, planning is the managerial function of setting company objectives, determining strategy and selecting alternative course of action. Planning according to them is an umbrella word or idea containing the following elements;

  1. Objectives
  2. Policies
  3. Programmes
  4. Rules
  5. Methods
  6. Standards

Kinard, Jerry (1988), states that planning is an activity we perform before taking action. It is anticipatory decision making – a process of deciding its purpose, he continues, is to facilitate progress and improve performance and that planning allows integrated, consistent, and purposeful action. Although, mistakes can be avoided and problems can be anticipated and overcome before crises arise, but that planning must be based on prudent forecasts and reasonable premise. And that it cannot be done in an atmosphere of blind optimism and disregard for competitive and environment realities.

REASONS FOR PLANNING

There are many reasons for planning; but according to Mosley, C. Donald etal (1986), planning is done because it prepares the organisation for continues change. While planners cannot control the future, they should at least attempt to identify and isolate present actions and changes that can be expected to influence the future, they state. Again, they say that another reason for planning is to see that current programmes and findings can be used to increase the chances of achieving future objectives and goals that is, to increase the chances for making better decisions today that help improve tomorrow’s performance.

They state further that unless planning leads to improve performance, it is done in vain. And so, to help an organization anticipate the future so that it can state alive and prosper in a changing world, there must be active, vigorous, continuous, and creative planning. Otherwise, management will only react to its environments and not be an active participant in the competitive world.

PROCESSES OF PLANNING

Theoretically, there are three levels of planning; strategic, administrative, and operational. But in practice, the distinction become blurred because all types of planning are part of a single, dynamic planning process. Kinard, Jerry (1988), puts it that the sequential steps in the planning process are seven (7), and they are as follows:

  1. Define planning premise: This is determining what will have a major impact on planning through a study of pertinent environmental factors (the economy, society, public policy, the industry and the market), available company resources, past and current company operations, and profitability.
  2. Formulate company objectives and develop strategic plans: In the light of the planning premises, the manager must develop and appraises alternative long term objectives for the company. These objectives are commonly referred to as the company’s mission or purpose. The manager selects the objectives that will most profitability exploit the market opportunities that were identified during the first step. The general philosophy and overall strategy that will guide and control all phases of planning are also formulated now.
  3. Develop policies: After developing and evaluating objectives, the manager selects the overall policies that will fulfill the company objective and still satisfy market, industry, and company criteria. Such policies are general statements that provide a sense of direction for subordinates. While they are flexible enough to permit some discretion in decision making, they serve as guidelines that channel managerial action. For instance, a company may make a concerted effort to employ the physically handicapped whenever possible to meet its objective of staffing with the best people available. Another firm may strive to increase its market share through a policy of selling its products at lowest price in a particular geographic region.
  4. Develop implementation plans: The management select operating plans for all areas of the business. They should be consistent with the overall planning premises, objectives, and policies established in the proceeding steps and within the capabilities of the company. Derivative polices, rules, and procedures in all planning areas also should be specified. The sales forecast is one of the most important aspects of this planning stage because it defines the budgeting limits for all plans.
  5. Develop control: After the operating plans are completed, methods for measuring performance against the plans must be developed. These control usually are in the form of budgets.
  6. organize for implementation: The manager next must establish adequate administrative procedure for implementing the plan.
  7. Review: Reviewing and modifying the plan as needed is the final step in the planning process.

DURATION OF PLANS, LEVELS OF PLAN

Some plans are in effect for short periods, whereas other stretch decades into the future. Some plans are hardly completed before they expire. Temporary, or single – use, plans governing a course of action are common in all organisation. Short – range plans cover a period of one year or less, medium – range plans last from one to five years, and long-range plans are in effect for five years or more.

SPECIFICITY OF PLANS

This classifies plans according to how general or specific they are. Kindard, Jerry (1988) states that single-use plans are predetermined courses of action developed for unique, non recurring situations. By contrast, standing plans are predetermined course of action developed for repetitive situation. He says that a budget, for instance, is a single-use plan. It becomes obsolete whenever the time period for which it was prepared expires. Rules, policies, and procedures, on the other hand, are standing plans. They continuously govern the operations of a company until they are modified or eliminated. He gave the various types of single use and standing plans as follows:

Budget: This is a single use plan that commits resources to an activity over a given period. It may be expressed in monetary terms, worker-hours, units of product, machine-hours, or any other numerically measurable term.

Objective: It is the end toward which business activity is directed. It is a statement of what the organization seeks to accomplish and as such is a single use plan.

Policy: This is a general guideline that channels the decision making of subordinates. A policy is narrow enough to provide managers with a sense of direction but flexible enough to permit considerable discretion in day-to-day decision making. It is a standing plan.

Rule: A rule is the simplest type of standing plan. It dictates action that must or must not be taken in a given situation.

Procedure: It is a standing plan that establishes a specific method for handling activities. It details the exact manner or chronological sequence in which action must be taken.

Program: This is a composite of policies and procedures, rules and tasks assignments necessary to carryout capital and operating budgets. In general, it is a standing plan.

Schedule: It is a single use plan that commits resources (worker-hours and machine hours) competitors may undertake.

LEVELS OF PLANS

Kinard, Jery (1988) states that the most useful method of classifying plans is based on where they are formulated in an organization. And in this system of classification, plans are strategic, administrative, and tactical.

  1. Strategic planning: According to him, unlike short and medium range plans, strategic planning, or top management planning, includes the development of over all company objectives and is primarily concerned with solving long-term problems associated with external, environmental influences, it addresses these questions.

What business are we in? What business should we be in? where will we be in ten years if we continue doing what we are now doing? Firms have four alternative to help them answer these question:

  1. Expansion within the existing industry.
  2. Diversification into another industry.
  3. Divestment of existing assets.
  4. A strategy of wait and see.

Selecting any of these requires that a company engage in strategic planning. How far into the future a firm projects depends on the industry and the anticipated business environment. After a firm has developed a vision for its future it compares what it would like to be and it will be if it does nothing is called the planning gap. Strategic planning is primarily concerned with closing that gap so state Leon, Reinharth et al (1981).

  1. Administrative planning: In contrast to strategic planning, which establishes the mission of the organization, administrative planning, according to Kinard, Jerry (1988), is the process that structure a firms resources to achieve maximum performance. Administrative plans do not involve such matters as plan layout, merchandise, display, and servicing customers, he says. They concentrate rather on product aims, selection of geographical areas and policies dealing with the major functions of the organization (production, marketing, finance, research, personnel etc)
  • Tactical planning: This again, he states is concerned with the efficient, day – to – day use of resources allocated to a department manager’s area of responsibility. These managers typically work with a one-year operating budget. For example, he says that a sales manager may be required to develop an operational plan to sell a certain number of items within a specific period.

 BENEFIT OF PLANNING

There is hardly a manager alive who would deny the value of planning. Still, many managers give too much lip service and devote too little effort to planning. Many managers would avoid planning altogether if they could find a substitute for achieving the same end writes Kinard, Jerry (1988). He continues states that some of the spoken and unspoken planning related fears that managers often express include the following:

  • Planning is difficult (and might not do a good job).
  • It limits my actions (if it is not in the plan, I can’t do it).
  • It forces me to make decisions (and that makes me vulnerable)
  • Making a plan provides a yardstick for evolution (and I might not measure up).
  • Planning brings direction and organization out of chaos (and removes a very good excuse).

Planning brings its own chaos disruption (when managers resist or choose not to follow the plan.

—-This article is not complete———–This article is not complete————

This article was extracted from a Project Research Work Topic

IMPACT OF STRATEGIC PLANNING ON ORGANIZATIONAL PRODUCTIVITY; EASTERN REGION

(A CASE STUDY OF THE NIGERIAN BOTTLING COMPANY PLC.)

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