The Components of Strategic Planning

Several components compiling strategic thinking are helpful in the successful implementation of strategic planning (Bryson et al., 2018). These components include vision, organizational mission, and values. Firstly, an organization’s vision is presented by a visionary statement that consists of the list of goals set by an organization to be achieved in the future. According to Thompson and Strickland (1999), as a vision provides a clear direction where the organization will move, workers should easily understand it. Secondly, the organizational mission comprises 1-2 sentences, highlighting the essential purpose of a corporation itself, which is an important component of strategic planning because it permanently reminds workers what the company stands for. Moreover, a well-defined mission lets individuals obtain a clear vision of the path the company is going. As it is emphasized by Ambarwati et al. (2019, p. 4), “The organization’s mission will fundamentally provide a different color from other organizations even in achieving the same vision.” Finally, values are a set of organizational principles that direct how the business is running, providing the framework for all decisions. Values are important for the implementation of strategic planning because they reflect the identity of an organization.

All the discussed above components allow the implementation of the strategic plan more quickly and efficiently. According to Doh et al. (2012), managers should share the organization’s vision with employees to successfully implement the strategic plan. This is true because it will help them achieve set aims more quickly: both the board and employees will share the same principles and easily understand each other. Concerning creating an organizational mission, managers who fail to establish it may impose obstacles to smooth operations. This will happen because the absence of the mission leads to the existence of unclear views among individuals. Moreover, it is essential to set a list of beliefs and principles, meaning, and values of the company to implement the strategic planning successfully. The management should create a draft of definitions of each of the values to make employees understand each of them.

Strategic planning, including the described components, is highly important for public organizations as well. As it was claimed by Ambarwati et al. (2019), “The leaders of public organizations should have a vision for the direction of their organizations, they have to hire and promote the best employees. This will encourage the creation of a culture of high performance” (p. 3). In other words, creating a clear vision of the company’s future, formulating its mission in a couple of sentences, and accompanying its values with descriptions will improve organizational performance. Summing up, both private and public organizations should create their strategic plan and implement them, paying attention to the important components discussed above.

The utility of the decision made about planning might be increased by the choice of the most appropriate for the case model. In other words, according to Doh et al. (2012), while implementing the strategic plan, it is important to make the right decision regarding models and frameworks for decision-making processes. Therefore, it is essential to know what models exist and what their advantages and disadvantages are. There can be pointed out four decision-making models, which are: Rational, Administrative, Implicit Favorite, and Political.

Firstly, the Rational–Economic (or Classical) model focuses on how a decision has to be made and is based on the rational theory. As it is claimed by Koechlin (2020), “The Rational Decision Theory makes the core prediction that choices should maximize the Subjective Expected Utility (SEU) based on multiplying the subjective probability and value of choice outcomes” (p. 4). According to Lee and Cummins (2004), this model is viewed as a part of normative theory because it focuses on the way how a decision should be made rather than how it is made. This means that the board of managers should be rational, and unbiased, and have to weigh the potential outcomes of their decisions (Bradley et al., 2011). After defining the best choice, a decision is planned and structured, providing actors with a step-by-step list containing additional information and possible alternatives of action. Thus, the effect of this model on strategic planning is the following: Rational model provides a clear set of necessary actions a guidelines, making it difficult to make mistakes and helping to achieve the goals in a minimal amount of time.

Secondly, the Administrative (or Behavioral) model is a descriptive one and focuses on the information about how the decision is made in reality. By applying this decision-making model, managers are reducing the complexity of problems by controlling them. Concerning the Administrative model’s effect on strategic planning, Doh et al. (2012) claim that it provides an approach to decision-making that meets the criteria for a desirable solution to the existing problem.

Thirdly, the Implicit Favorite decision-making model is also descriptive, but it has another focus, which is on the confirmation of the decision already made by managers. The board of managers uses this model to identify the most “implicit favorite” choice before evaluating alternative options. In other words, according to his model, a decision-maker identifies “primary and secondary attributes (based on attribute importance), and considers these attributes to make implicit choices between known alternatives already during the search for more alternatives” (Sauermann, 2005, p. 287). Therefore, this model affects the implementation of strategic planning in the following way: after managers make their favorite choice, they start to justify it by drawing rationality and possible objectives. This means that they will compare their choice with others and criticize it, making it the best of all potential alternatives because of deep research and analysis.

Finally, the Political decision-making model also has a descriptive nature and describes the way how a decision is made. This approach to strategic planning provides conditions for managers to bargain over their suggestions. In other words, to define the most appropriate solution to a problem, managers construct a personal agenda, making others adopt their point of view. Regarding the effect this model has, it imposes a lot of risks on the successful implementation of a plan because bargaining requires complex information and is a highly time-consuming process.

Summing up all the information discussed above, it is necessary to highlight that managers may apply different models to implement their strategic plan successfully and make the right decision. The choice of the model depends on various issues, such as the timeline, the problem needed to be solved, the corporate culture, and others. Moreover, all four models have their advantages and affect the process in various ways, providing the opportunity to choose a model based on the existing priorities.

Reference List

Bradley S. W., Aldrich H., Shepherd D. A., & Wiklund J. (2011). Resources, environmental change, and survival: Asymmetric paths of young independent and subsidiary organizations. Strategic Management Journal. 32(5), 486-509.

Doh J. P., Lawton T. C., & Rajwani T., (2012). Advancing nonmarket strategy research: Institutional perspectives in a changing world. Academy of Management Perspectives. 26(3), 22-39.

Koechlin, E. (2020). Human Decision-Making beyond the rational decision theory. Trends in cognitive sciences, 24(1), 4-6.

Lee M. D., & Cummins T. D. R. (2004). Evidence accumulation in decision making: Unifying the “take the best” and the “rational” models. Psychonomic Bulletin & Review (pre-2011). 11(2), 343-52.

Sauermann, H. (2005). Vocational choice: A decision making perspective. Journal of Vocational Behavior, 66(2), 273-303.

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