QUESTION ONE

Read the case study below and answer the questions that follow:

Strategic Planning in Diversified Companies The widely accepted theory of corporate strategic planning is simple: using a time horizon of several years, top management reassesses its current strategy by looking for opportunities and threats in the environment and by analysing the companys resources to identify its strengths and weaknesses. Management may draw up several alternative strategic scenarios and appraise them against the long-term objectives of the organization. To begin implementing the selected strategy (or continue a revalidated one), management fleshes it out in terms of the actions to be taken in the near future. In smaller companies, strategic planning is a less formal, almost continuous process. The president and his handful of managers get together frequently to resolve strategic issues and outline their next steps. They need no elaborate, formalized planning system. Even in relatively large but undiversified corporations, the functional structure permits executives to evaluate strategic alternatives and their action implications on an ad hoc basis. The number of key executives involved in such decisions is usually small, and they are located close enough for frequent, casual get-togethers. Large, diversified corporations, however, offer a different setting for planning. Most of them use the product/market division form of organizational structure to permit decentralized decision making involving many responsibility-centre managers. Because many managers must be involved in decisions requiring coordinated action, informal planning is almost impossible. However, the thought processes in undertaking planning (as described in the opening paragraph) are essentially the same whether the organization is large or small. Therefore, even executives whose corporate situation permits informal planning may find that our delineation of the process helps them clarify their thinking. To this end, formalizing the steps in the process requires an explanation of the purpose of each step. Every corporate executive uses the words strategy and planning when he talks about the most important parts of his job. The president, obviously, is concerned about strategy; strategic planning is the essence of his job. A division general manager typically thinks of himself as the president of his own enterprise, responsible for its strategy and for the strategic planning needed to keep it vibrant and growing. Even an executive in charge of a functional activity, such as a division marketing manager, recognizes that his strategic planning is crucial; after all, the companys marketing strategy (or manufacturing strategy, or research strategy) is a key to its success. These quite appropriate uses of strategy and planning have caused considerable confusion about long-range planning. The process of strategy formulation can be thought of as taking place at the three organizational levels: headquarters (corporate strategy), division (business strategy), and department (functional strategy). The planning processes leading to the formulation of these strategies can be labelled in parallel fashion as corporate planning, business planning, and functional planning. Harvard Business Review- Richard F. Vancil and Peter Lorange

Questions

1.1 As planning is a critical part of any organization, clearly explain each of the steps in the planning process.

1.2 Leadership is very important when it comes to strategic planning. Discuss the elements of leadership. (10)

1.3 As strategic planning is required to set an organization up for long term growth, critically discuss strategic planning and the steps in the strategic planning process. (10)