Many of today’s most successful business organizations continue to survive because many years ago they offered the right product at the right time; the same can be said for nonprofits and government organizations. Many critical decisions of the past were made without the benefit of strategic thinking or planning. Whether these decisions were based on wisdom or luck is not important. They resulted in momentum that has carried these organizations to where they are today. However, present day managers increasingly recognize that wisdom and intuition alone are not sufficient to guide the destinies of large organizations in today’s ever changing environment. These managers are turning to strategic planning.
In earlier, less dynamic periods in our society, the planning system utilized by most organizations extrapolated current year sales and environmental trends for 5 and 10 years. Based on these, they made plant, product, and investment decisions. In most instances, the decisions were fairly accurate because the factors influencing sales were more predictable and the environment was more stable.
In the year after World War II, many of the factors on which earlier planners counted could no longer be taken for granted. Uncertainty, instability, and changing environments because the rule rather than the exception. Managers faced increased foreign competition, technological obsolescence, and changing market and population characteristics because, changes are occurring so rapidly, there is increased pressure on top management to respond. In order to respond more accurately, on a more timely schedule, and with a direction or course of action in mind, managers are increasingly turning to the use of strategic planning.
Strategic planning is a process that involves the review of market condition; customer’s needs; competitive strengths and weaknesses and the availability of resources that lead to the specific opportunities or threats facing the organization. In practice, the development of strategic plans involves taking information from the environment and deciding upon an organizational mission and upon objectives, strategies, and a portfolio plan. Among the most important questions strategic managers ask are: what products should we produce? What services should we offer these products or services? And what is our purpose for existing? For example, managers have introduced new products that have positioned their companies in new industries.
In 1930, DuPont was known for industrial explosives and construction materials, but then it introduced cellophane and moved into plastics. Other synthetic materials soon followed, including nylon and more than 200 different polyesters, and DuPont was transformed into a plastics fabricating company. Soon after cellophane became popular, 3M Corporation, then a firm known for sanding abrasives, coated cellophane with an adhesive to create Scotch Tape, and the company repositioned itself as an innovator in films, adhesives, coating, and sealers, including the recent Post-it notepads. Scotch Tape was initially designed in one-foot-wide rolls to seal cardboard shipping boxes. Then a marketing manager at 3M envisioned Scotch Tape as a revolutionary product for home and office use, and 3M shifted its marketing efforts toward consumer goods.
Credit: Advanced Strategic Management-MGU