Strategic Planning in the Small Business

Unit

1

HO 1-5

(continued)

20
Part I The
Concepts
and Techniques

of Strategic

Management

tions.7

The chief

executive

officer

of one

successful

company

put

it well

when he

said:

In the main,

our

competitors

are acquainted

with thi.

same fundamental

concepts

and technique%

and

approaches

that

we follow,

and they

are a%

free to pursue

them

as

we are.

More often

than

not. the difference

between

the-r level

of success

and

ours hes

in the

relative thoroughness

and

self-discipline

with

which

we and theN

develop

and execute

our

strategies

for the

future

The advantages

of first-rate

strategic

thinking

and

conscious

strategy

manage­

ment

(as opposed

to freewheeling

improvisation,

gut feel,

and drifting

along)

include

(I) providing

better guidance

to the entire

organization

on the

crucial

point

of "what

it

is we are

trying

to do and

to achieve."

(2) making

management

more

alert

to change,

ne,

opportunities,

and threatening

developments,

(3) providing

managers

with

a much-needed

rationale

to evaluate

competing

budget requests

for

investment

capital

ind new

staff-a

rationale

that

argues

strongly

for

steering

resources

into strategy-supportive,

results-producing

areas.

(4)

helping

to unify

the numerous

s:rateg

related

decisions

by managers

across

the

organization,

and

(5)

creating

a more

proactive

managemer

I

posture

and counteracting

tendencies

for decisions

to

be reactive

and

defenstxe.8

The fifth

advantage

of

being

proactive

rather

than merely

reactive

frequentlh

enhances

long-term

performance.

Business

history

shows

that high-performing

enterprises

often inmate

and

lead,

not .just

eac tand

defend.

They

see strateg.

as

a tool

for securing

a

sustainable

competitive

advaniage

and

for pushing

perfor­

mance

to

superior

leels.

Ideally,

devising

arid

executing

a powerful,

oppor­

tunistic

strategy

",ill propel

a firm

to a leadership

position

above

and apart

from

industry

rivals,

so its earnings

will prosper

and

its products/services

will

become

the standard

for

industry

comparison.

A Recap

of

Important

Terms

Let's

conclude

this

in!roductory

overview

of the managerial

tasks

of formulating

and implementing

strategy

by

reiterating

the

meaning

of key

terms

that will

be

used

again

in the chapters

to come:

Organization

in

,mo-management's

customized

answer

to the

question

"What

is our

business

and what

will it be

"

• A mission
  statement
  broadly
  outlines
  the

organization's

future

direction

and serves

as a

guiding

concept

for what

organization

is to do

and to

become.

the

7 For a lucid

discussion

of the

importance

of the

strategic

management

function,

see

V. Ramanujam

and N Venkatraman.

"Planning

and Pe-rformance'

A New

Look at

lion," an Old Ques­

Bumne..%

Iorzons

30. na.
    3 (May-June
    1987).
    pp 19-25;
    and Henry
    Mintzberg,
    Strategy "The
    Concept.
    Another
    Look
    at Why
    Organizations
    Need
    Strategies,"
    California
    Management

Review

30,

no. I (Fall

1987) pp.

25-32.

HKenneth

R. Andrews,

The

Concept

of Corporate

Strategv,

rev .d.

(Homewood,

Richard

D. Irwin,

1980). pp.

15-16.

46, 123-29.

and Seymour

Tilles,

"How

Ill.:

to Evaluate

Corporate

Strategy,"

Harvard

Biu.ue..

Review 41,

no. 4 (July-August

1963), p.

116.

95