Alfa Resonance Capital Ltd sets long-term goals and develops means to achieve them, determines the main directions of development of the enterprise (organization) and, most importantly, forms the mission of the enterprise aimed at realizing its common goal. The mission details the status of the company and provides directions and guidelines for setting goals and strategies at various levels of development.
Strategic planning is a special kind of planning, oriented, as a rule, to a long-term perspective and defining strategic goals of the social, economic, financial and trade-industrial development of the company and the direction of their achievement. Strategy formation is the formation and allocation of goals, the identification and allocation of the necessary funds to achieve the goals in the long term.
The most important problem of strategic planning is the definition of goals and the correct balance between goals and means. Strategic goals are related to meeting the needs of the market. But their formation is influenced by both internal and external factors. In conditions of limited resources (and this is especially characteristic in conditions of economic turmoil), the choice of main goals is accompanied by ranking of priorities. Distinctive features of strategic planning will always be:
• identification of strategic goals that are crucial for the development of the company;
• resource support of the intended goals (in terms of volume and structure of resources);
• taking into account the impact on the development of the corporate economy of external and internal factors.
The purpose of strategic planning is the formation on the basis of the selected priorities of sufficient economic potential for the future successful development of the corporate economy. Strategic planning is being implemented in long-term planning documents reflecting the development of the company in the future for 5-10-15 years.
According to the period of action, long-term (10 or more years), medium-term (usually 5 years) and current (annual) plans are distinguished. In the practice of planning, all three types of plans are used, which ensures the continuity of planning and the achievement of goals that are different in time.
Strategic planning is the process of creating and implementing action algorithms related in space (by executor) and in time (by time), aimed at fulfilling strategic tasks.
Strategic planning is a tool that helps in making managerial decisions when making the necessary innovations and changes at the enterprise in order to achieve the desired strategic result. The strategic planning process includes four main types of management activities: the allocation of strategic resources, the adaptation of activities and management to changes in the external environment, internal coordination of work and organizational strategic foresight.
The distribution of resources provides for the priority provision of strategic corporate resources (funds, scarce managerial talents and technological experience) with important areas of the company’s activity that determine its competitive position in the market and long-term success.
Adaptation to the external environment covers all strategic actions that improve the relationship of the business with its environment. The company’s activities must be adapted to favorable external opportunities and to dangers (threats). Identifying such opportunities and threats is an important element of the strategic planning process. In this case, appropriate options for the strategy of the enterprise should be determined taking into account their effective adaptation to changing environmental conditions.
Internal coordination includes the coordination of strategic activities to reflect (account) the strengths and weaknesses of the enterprise in order to achieve effective integration of internal efforts and capabilities.
Organizational strategic foresight provides for the systematic development of managers’ thinking on their awareness of past experience in strategic management of a company. This activity is aimed at implementing the development of strategic thinking of managers and increasing their professionalism. The ability to learn from experience enables the company to timely adjust the strategic orientation of its activities. The role of the senior manager is not only to initiate the strategic planning process, but also is related to the adoption of specific decisions on the implementation, integration and evaluation of results.
The essence of strategic planning is to formulate the main activities of the enterprise (mission) and indicators of its development for the planning period (goals), which determine the desired result of its activities in general and in a particular business. Within the framework of strategic planning, a comprehensive justification of the problems that a company may encounter is provided, and actions to resolve them are determined, and a specific management action plan (strategy) is developed to fulfill the mission of the enterprise and achieve the stated goals.
Strategic plans should be designed in such a way as to be integral over a long period and at the same time be sufficiently flexible, allowing, if necessary, to carry out their improvement and reorientation. The overall strategic plan should be considered as a program of the enterprise for a long period of time with the condition that a constantly changing business and social environment makes adjustments to this plan inevitable.
Recently, in business, more and more often, some use the phrase “strategic planning”, which means a certain desired state of development of the economy of the company for 5 or even 20 years. Strategic planning is the result of calculating the plan (trajectory) of the best use of corporate resources now to maximize the acceleration of movement in the desired direction.
The essence of strategic planning is the systematic coordination of the income and expenditure balances of producers and final consumers – players in a market economy, households, exporters and importers (foreign economic balance), and the interests of producers and consumers.
The essence of strategic planning of economic processes of a company is determined by its strategy, which is understood as the direction of changing the balance of power of the vectors of business development at a certain stage of business.
Strategic planning represents the process of modeling the future, including setting goals and formulating the concept of long-term development. It can also be considered as an element of the management process aimed at creating and maintaining a strategic balance between the goals of the company, its potential capabilities and probable development prospects. The strategic plan is flexible and allows:
a) regular adjustments to planned targets;
b) review of the system of measures to implement these plans on the basis of continuous monitoring and evaluation of ongoing changes in the activities of the company.
It is based on a number of basic conceptual provisions:
• the initial guideline for the development of a strategic plan is the mission (mission) of the enterprise, ie a summary of the main mission of the enterprise for a sufficiently long period of its development;
• the strategic plan contributes to the fulfillment of the mission of the enterprise in the most efficient way;
• in the most general form, one can imagine that the content of the strategic plan, its key components are the following components – a set of defined strategic goals, projects and action programs for the long term;
• strategic planning is based on the preliminary construction of the goal tree, the definition of general lines of action that ensure the development and strengthening of the firm’s position in the long term;
• a strategic plan is developed in the context of incomplete information on development alternatives when it is impossible to foresee all the possibilities of specific conditions; concretization is achieved in the development of medium and short-term plans;
• the strategic plan contains general guidelines in the form of targets, which should be mutually agreed;
• The most promising is the principle of work on the preparation of corporate strategic plans according to the “from the future to the present” scheme, that is, against the passage of time. This is due to the fact that strategic planning is a tool that provides the opportunity to bring the company to a qualitatively new state, taking into account new business conditions and new areas of capital investment during the period of the strategic plan;
• Maintaining the traditional principle of strategic planning according to the “from the past to the future” scheme, based on the extrapolation method, is possible for firms with a stable range of products and technologies. These firms should be at such stages of the life cycle as the stage of growth or saturation, and be well known in the market;
• The most effective is a strategic plan aimed at identifying undeveloped zones (niches) in the domestic and foreign markets, which is a reliable basis for the potential growth of the company. Thus, the formation of new values and a more efficient use and redistribution of capital and other resources of the enterprise are achieved.
Despite the undoubted relevance of strategic planning, the experience of international business has shown that often its implementation in management practice was accompanied not only by successes, but also by failures. The main reasons for this outcome were usually the following:
• violation of the balance of power and responsibility for developing a strategic plan between line managers and planning units of the enterprise;
• the strategic plan is not provided with mechanisms for its practical implementation, that is, there is no full-fledged organizational support for the implementation of strategic programs;
• coordination of the adopted management decisions with the content of the strategic plan is not ensured;
• insufficient level of professionalism among heads of various management levels, their inability to be guided in their activities by items of the strategic plan;
• the disordered rhythm of current activities makes it difficult to consistently focus on long-term goals that are enshrined in the strategic plan, that is, less attention is paid to the implementation of strategic plans;
• shortcomings of the strategic plan itself, in which specific, clear, practically achievable, manageable goals are not defined.
Strategies have several distinguishing features:
The process of developing a strategy does not end with any immediate action. Usually it ends with the establishment of general directions, the promotion of which will ensure the growth and strengthening of the position of the company.
The formulated strategy should be used to develop strategic projects using the search method. The role of the strategy in the search is, firstly, to help focus on specific sites and opportunities; secondly, discard all other opportunities as incompatible with the strategy.
The need for a strategy disappears as soon as the real course of development brings the organization to the desired events.
In the course of formulating a strategy, it is impossible to foresee all the possibilities that will open up when drafting specific activities. Therefore, one has to use highly generalized, incomplete, and inaccurate information about various alternatives.
As soon as specific alternatives are discovered during the search process, more accurate information appears. However, it may cast doubt on the validity of the initial strategic choice. Therefore, the successful use of the strategy is impossible without feedback.
Since both strategies and guidelines are used to select projects, it may seem that this is one and the same. But these are two different things. A landmark is the goal that a firm seeks to achieve, and strategy is a means to an end. Landmarks are a higher level of decision making. A strategy that is justified with one set of benchmarks will not be such if the guidelines of the organization change.
Finally, the strategy and benchmarks are interchangeable both at individual points and at various levels of the organization. Some performance parameters (for example, market share) at one point will serve as a guideline for the company, and at another point it will become its strategy. Further, since the guidelines and strategies are developed within the organization, a typical hierarchy arises: what is at the top levels of management elements of the strategy, at the lower levels it turns into guidelines.
The main advantage of strategic planning is the greater degree of validity of planned indicators, the greater the likelihood of the implementation of planned scenarios.
The current rate of change in the economy is so great that strategic planning seems to be the only way to formally forecast future problems and opportunities. It provides the top management of the company with a means of creating a plan for the long term, provides a basis for decision-making, helps to reduce risk in decision-making, ensures the integration of goals and objectives of all structural divisions and executives of the company.
Features of strategic planning:
should be supplemented by current;
strategic plans are developed annually;
annual refinement of the strategic plan is carried out simultaneously with the development of the annual financial plan (budget).