Understanding Strategic Management and Types of Planning in Organization

In Business Skills, Management Skills
Strategic Management and Types of Planning

Every organization needs a strategic management to execute and evaluate the selected strategies and its performance as effective and as efficient as possible. So, the management in an organization can adjust and make some corrections if there’s any deviation in the execution of the strategy.

The strategic management is also very useful to update the defined strategy to suit the development of the external environment. It means to always review the strengths, weaknesses, opportunities, and threats of the business. If you have learned 14 principles of management, you probably already know the objective of strategic management.

Furthermore, the main objective of strategic management in an organization or company is to be always innovating the product or service that suit the needs and wants of customers. Whilst, management is a set of processes that consist of planning, organizing, actuating, controlling, and budgeting. Therefore, if you are in a top management, you have to understand and capable of planning in an order you know how to organize, actuating, controlling, and budgeting the whole operations of the organization.

Here we are going to discover about the understanding of strategic management, strategic planning and other types of planning.

The Definition of Strategic Management

According to Harold Koontz & Cyril O’Donnell, Management is an effort to achieve certain goals through the activities of others, so it needs the coordination towards the planning activities, staffing, directing, and controlling. Then, according to Wheelen dan Hunger (2004:2); Strategic Management is a set of managerial decisions and actions that will determine the long-term performance of the company or organization.

The Emersion of Strategic Management

In 1962 Alfred D. Chandler, a business historian, proposed that “strategy” was defined as determining the long-term goals and objectives of a company, and the process of adopting the sequence of actions and allocating the required resources to achieve the goals and objectives. Chandler emphasizes on three key elements of strategy:

  • a set of actions to achieve goals,
  • the process of finding the main idea, and
  • how to define the strategy (not only the outcome of the strategy).

The Process of Strategic Management

Broadly speaking, there are two phases that occur in a strategic management, they are;

Strategic Planning

A strategic planning Includes the process of setting goals and formulating the strategy.

Strategic Implementation

The strategic implementation includes the stages of and strategic administrative and control.

Whereas, Hofer and Schendel focus on four key aspects of strategic management such as goal setting, strategy formulation, administration, and the last is strategy control that gives feedback to the manager about the progress accomplishment.

The Levels of Strategy

There are three levels of strategy consists of three levels of strategy based on some key differences. They are;

1. Corporate Level Strategy

The corporate level of strategy is formulated by the top management in an organization or company to cover the interests and operations of the organization that has more than one type of business.

2. Unit Business Strategy

It’s also called as a business line strategy that concerns on how to manage the interest and operation of certain business lines.

3. Functional Level Strategy

To create a framework for managers in every function, such as marketing or production to run a business unit strategy and corporate strategy.

Understanding Planning and Types of Planning

Planning is one of the four basic functions of management. Among the four basic functions of management, Planning is the most crucial function that must be undertaken first before proceeding to other basic management functions. In other words, planning is the foundation of other basic management functions to achieve the organizational goals.

According to R. Schermerhorn (1996: 138), Planning is the process of setting goals and determining what must be done to realize it. While according to Samuel Certo (1997: 134); the definition of Planning is the process of determining how the management system (organization) will achieve or realize the goal.

Basically, the meaning of Planning in Management is determining the organizational goals and deciding the best way to achieve them. So, the planning in management concerns on creating procedures, rules, and guidelines for achieving organizational goals.

The purpose of Planning is to help the organization to achieve its objectives by minimizing the risk of uncertainty that will occur in the organization. While the benefits of Planning in an organization is to provide systematic guidance and help managers to orient forward and emphasis on organizational goals that have been established. Good and systematic planning will increase the level of success of the organization in achieving its organizational goals.

Types of Planning in Organization

Based on the level of the hierarchy, there are three types of. They are Strategic Planning, Tactical Planning, and Operational Planning. The following is a brief explanation of each of the types of planning in the organization.

Strategic Planning

Strategic Planning determines the organizational vision framework of the organization and the ways in which the organization should realize its vision. Generally, the duration of Strategic Planning is about 3 to 5 years. It means a strategic planning is a long-term planning.

Basically, Strategic Planning determines the long-term goals of an organization or company and defining the strategies and actions to be taken to achieve the organization’s goals.

The objectives of an organization or company are to determine the overall direction of the company with the result that the strategic planning is undertaken by the top management of the company.

Strategic planning should be flexible and be able to accommodate the future organizational developments.

A Strategic Planning should contain a framework and provide clear direction for planning at a lower level.

Tactical Planning

Tactical Planning is a type of planning with the tactics managers to achieve goals or targets that have been planned by top management in the strategic planning.

Tactical Planning is medium-term planning which is usually less than 3 years and developed by every middle-level manager or division head.

This type of planning details every action that each division or department has to perform in order to achieve the targets that have been set by the top management on its Strategic Planning.

Commonly, tactical planning also plans the allocation of resources and tasks for each sub-unit of every division or department.

Operational Planning

Operational Planning is a type of short-term planning which takes less than a year. In which, the actions of Operational Planning are designed and developed specifically to support the Strategic and Tactical Plans.

Besides that, the operational planning is usually undertaken by managers or supervisors and team leaders to fulfill their responsibilities in achieving the planned targets on the tactical planning. This of planning also regulates the daily operations of an organization.

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