Strategic Planning in the Small Business

8

Unit 1

HO

1-5 (continued)

Part I The Concepts and Techniques of

Strategic Management

Citicorp's Objectives

(as stated In 1988)

To build shareholder value through:

Sustained growth (12--18%)

in earnings per share.

A continued commitment

to building customer-oriented

businesses

worldwide.

Superior

rates of return on equity (18%).

A strung balance sheet.

A business balanced

by customer, product, and geography.

Source-Company

annual reports

Crafting a

Strategy

Strategy-making brings

into play the critical managerial

issue of how to achieve

the targeted

results in light of the organization's

situation and

prospects. Objec­

tives

are the "ends," and

strategy is the "means" of

achieving them. The task

of

forming

a strategy starts with

hard analysis of the organization's

internal and

external situation. A,-med

with an understanding

of the "big picture." managers

can better devise a strategy

of how to generate the

targeted results.

Definitionally.

strategy is the

pattern of organizational

noves and uinage­

ria/

approaches used to achieve

organizational objectives

and to pur.ste the

organization's mission.

The pattern of moves

and approaches already

taken

indicates

what the prevailing strategy

is,the planned moves

and approaches signal

how, the prevailing

strategy is to be embellished

or changed. Thus.

while strategy

represents

the managerial game plan

for running an organization.

this plan does

not consist of just

good intentions and actions

vet to be taken. An organization's

strategy is nearly always

ablend of prior moves,

approaches already in

place, and

new

actions being mapped

out. Indeed, the btggest

part of an organization's

strategy usually consists

of prior approaches

and practices that are working

well

enough

to continue. An organization's

strategy that is mostly

new most of the time

signals erratic

decision-making and weak

"strategizing" on the part

of managers.

Major changes

in strategy can

be expected on occasion,

especially in crisis

situations, but they cannot

be made often without

creating internal chaos

and

confusion among

customers.

Crafting a strategy has

a strongly entrepreneurial

character in the sense

that

managers have to

chouse among alternative

business directions and

pursue moves

that entail at least some venturesomeness

and nr.1-t.aking.

How boldly/cautiously

managers

push out in new directions

and whether they press

for improved organi­

zational

performance are often

good indicators of their

entz!rprising spirit. The

entrepreneurial

risks inherent in

managerial ctrategy-making

are becoming com­

placent

when the present strategy

is working well and

being overly analytical

and

hesitant

wher; a strategy starts to

grow stale. The entrepreneurial

challenge is to

keep the organization's

strategy fresh,

to maintain the organization's

capacity for

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