Structure and content of strategic management at the enterprise. Strategic management of an organization: essence, structure, problems. Functions of strategic management
Strategic management can be viewed as a dynamic set of five interrelated management processes. These processes logically follow (or follow) one from the other. However, there is a stable feedback and, accordingly, a reverse influence of each process on the others and on their entirety. This is an important feature of the strategic management structure. The structure of strategic management is shown schematically in Fig. 1.
Rice. 1.
Environmental analysis.
Environmental analysis is generally considered the original process of strategic management because it provides both the basis for defining the firm's mission and goals and for developing behavioral strategies that will enable the firm to achieve its mission and achieve its goals.
One of the key roles of any management is to maintain balance in the organization’s interaction with the environment. Every organization is involved in three processes:
- obtaining resources from the external environment (input);
- turning resources into products (transformation);
- transfer of the product to the external environment (output).
Management is designed to provide a balance between input and output. As soon as this balance is disturbed in an organization, it takes the path of death. The modern market has dramatically increased the importance of the exit process in maintaining this balance. This is precisely reflected in the fact that in the structure of strategic management the first block is the environmental analysis block.
Analysis of the environment involves the study of its three components:
- macroenvironment;
- immediate environment;
- internal environment of the organization.
Analysis of the external environment (macro and immediate environment) is aimed at finding out what the company can count on if it successfully conducts its work, and what complications may await it if it fails to avert in time the negative attacks that may present her with an environment.
Analysis of the macroenvironment includes the study of the influence of the economy, legal regulation and management, political processes, natural environment and resources, social and cultural components of society, scientific, technical and technological development of society, infrastructure, etc.
The immediate environment is analyzed according to the following main components: buyers, suppliers, competitors, labor market.
Analysis of the internal environment reveals those opportunities, the potential that a company can count on in competition in the process of achieving its goals. Analysis of the internal environment also allows us to better understand the goals of the organization and more accurately formulate the mission, i.e. determine the meaning and direction of the company’s activities. It is extremely important to always remember that the organization not only produces products for the environment, but also provides an opportunity for existence for its members, giving them work, providing them with the opportunity to participate in profits, providing them with social guarantees, etc.
The internal environment is analyzed in the following areas:
- personnel of the company, their potential, qualifications, interests, etc.;
- management organization;
- production, including organizational, operational and technical-technological characteristics and scientific research and development;
- company finances;
- marketing;
- organizational culture.
Defining mission and goals.
It was said earlier that one of the key tasks of management is to maintain a balance between the input and output of the organization. Another equally important management task is to establish a balance of interests of various social institutions and groups of people interested in the functioning of the organization and influencing the nature, content and direction of its functioning. The balance of interests determines where the organization will move, its target orientation in the form of mission and goals.
Determining the mission and goals of the organization, considered as one of the strategic management processes, consists of three subprocesses, each of which requires a lot of and extremely responsible work. The first sub-process is to formulate the company’s mission, which in a concentrated form expresses the meaning of the company’s existence, its purpose. The mission gives the organization originality and fills the work of people with special meaning. Next comes the sub-process of defining long-term goals. And this part of strategic management ends with the subprocess of setting short-term goals. Formation of the mission and establishment of the company's goals lead to the fact that it becomes clear why the company operates and what it strives for.
Choice of strategy.
Once the mission and goals are determined, the stage of analysis and strategy selection begins. At this stage, a decision is made on how and by what means the company will achieve its goals. The strategy development process is rightfully considered the core of strategic management. Defining a strategy is not about drawing up a plan of action. Defining a strategy is making a decision about what to do with a particular business or product, how and in what direction to develop the organization, what place to occupy in the market, etc.
Execution of strategy.
The peculiarity of the strategy implementation process is that it is not a process of its implementation, but only creates the basis for the implementation of the strategy and the achievement of the company's goals. Very often there are cases when firms are unable to implement the chosen strategy. This happens because the analysis was carried out incorrectly and incorrect conclusions were drawn, or because unforeseen changes occurred in the external environment. However, often the strategy is not implemented because management cannot properly attract the company's existing potential to implement the strategy. This particularly applies to the use of human potential.
The main task of the strategy execution stage is to create the necessary preconditions for the successful implementation of the strategy. Thus, strategy execution is the implementation of strategic changes in the organization, transferring it to a state in which the organization is ready to implement the strategy.
Evaluation and control of strategy implementation.
Assessing and monitoring the implementation of strategy is the logical final process carried out in strategic management.
This process provides stable feedback between the progress of the process of achieving goals and the actual goals facing the organization.
The main tasks of any control are the following:
- determining what and by what indicators to check;
- assessment of the condition of the controlled object in accordance with accepted standards, regulations or other benchmarks;
- identifying the reasons for deviations, if any are revealed as a result of the assessment;
- making adjustments if necessary and possible.
In the case of monitoring the implementation of strategies, these tasks acquire a very specific specificity, due to the fact that strategic control is aimed at finding out to what extent the implementation of the strategy leads to the achievement of the company's goals. This fundamentally distinguishes strategic control from managerial or operational control, since it is not interested in the correct implementation of the strategy or the correct execution of individual jobs, functions and operations.
Strategic control is focused on determining whether it is possible in the future to implement the adopted strategy, and whether its implementation will lead to the achievement of set goals. Adjustments based on the results of strategic control may concern both the strategy being implemented and the goals of the company.
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1.2. Main stages of strategic management...................................................8
2. MAIN COMPONENTS OF STRATEGIC MANAGEMENT................................................................... ........................................................ ...12
3. STRATEGY AND RESOURCES.................................................. ...........................17
CONCLUSION................................................. ........................................................ ..21
BIBLIOGRAPHY............................................... ....23
INTRODUCTION
As an academic discipline, strategic management began to take shape with the publication of Richard Rumelt's book Strategy, Structure and Performance in 1974. The next important contribution was made by Michael Porter and his book Competitive Strategy, which was published in 1980. Since this discipline is young and covers very complex processes of modern business management, there is no clear enough definition of it. Here are the most common definitions.
Strategic management is the process by which managers establish long-term directions for the development of the organization, its specific goals, develop strategies for achieving them in the light of all possible internal and external circumstances, and implement the chosen plan of action.
Strategic management is the process of forming the goals of an organization and managing to achieve them.
Strategic management is the process of assessing the external environment, formulating organizational goals, making decisions, their implementation and control, focused on achieving goals in the present and future external environment of the organization.
1. DEFINITION OF STRATEGY
We can approach the definition of strategic management by first defining the concept of strategy. There is also no single definition of strategy, although the history of this concept is longer than the concept of “strategic management”. It is widely used in game theory and was given in Von Neumann and Morgenstern's book on game theory as follows: Strategy is a complete plan indicating what choices (moves) a player will make in each possible situation.
Later, various attempts were made to define strategy in the context of strategic management issues. Let us formulate some of them.
A strategy is a unified, integrated and understandable plan designed to ensure that the goals of the enterprise are achieved.
Strategy is a model (pattern of behavior) in the flow of future actions or decisions.
In earlier definitions, the emphasis was on articulating the mission and goals of the organization. A mission is a statement of the long-term vision of an organization's meaning and an expression of the essence of its activities. The goals, in turn, give a more specific and detailed idea of the expected development of the organization in a particular area of its activity. Strategy is an expression of the way to achieve goals and, finally, tactics are specific plans of action.
Later, a view of strategic management was formed as a process of assessing the strengths and weaknesses of an organization, external market opportunities and threats, and forming, on their basis, a way to achieve sustainable competitiveness of the company.
One of the latest books on strategic management introduces the following definition:
Strategy is a model for allocating resources that allows an organization to improve its business results. A “good” strategy is one that neutralizes threats, takes advantage of market opportunities, builds on its strengths, and strengthens its weaknesses.
In this definition, the term “results of economic activity” requires special explanation. In English-language literature, the expression “organizational performance” is used, which is very often translated as the term “results of economic activity”. The direct meaning of the word “performance” is execution. In the sense that it is used, for example, in sports, when talking about performing a jump or exercise. In the theater we can talk about performing a ballet, a play or a separate dance. It is in this sense that the word “performance” is used - as the organization’s fulfillment of its mission or role in the market. The English term is much broader than its Russian translation “results of economic activity”. Therefore, the previous definition could be reformulated as follows.
Strategy is a model for the interaction of all resources that allows an organization to best fulfill its mission and achieve sustainable competitive advantage.
1.1. Contents of strategic management
Strategic management extends to the long-term goals and actions of the company. We can say that the formulation of a strategy (course of action) and its clear tools are the core of management and the surest sign of good company management.
Determining the purpose and main goals of the company’s business,
Analysis of the company's external environment,
Analysis of its internal situation,
Selection and development of strategy at the level of agricultural producers, companies,
Portfolio analysis of a diversified firm,
Designing its organizational structure,
Selecting the degree of integration and control systems,
Management of the "strategy - structure - control" complex,
Determination of standards of conduct and policies of the company in certain areas of its activities,
Providing feedback on the company's results and strategy,
Improving strategy, structure, management.
All this is reflected in Fig. 1.
Fig.1. Contents of strategic management
In order to compete in today's complex and rapidly changing environment, a firm must identify those who manage strategy development - strategic managers. Their task is to ensure the activities of the entire organization in a certain direction (they are often called complex managers). They differ from functional managers, who provide specific business functions (HR, procurement, production, sales, customer service, accounting) and occupy a unique position in the company, managing the entire organization in a strategic sense.
According to E. Wrapp (University of Chicago), the most successful strategic managers should have the following qualities:
Be well informed
Be able to manage your time and energy,
Be good politicians (consensus builders),
They should not be, like experts, “obsessed”
Ability to promote the program in private areas.
Good information provides the opportunity to make a wide range of management decisions at different levels of management. Managers must create a network of information sources in different parts of the organization that will enable them to remain within operational realities.
They must be able to distribute their time and energy among various activities, decisions or problems. They must know when to delegate responsibility and when to be involved in a private decision.
A good politician must have the art of achieving consensus based on his ideas, rather than using his authority to promote them. He must act as a member or leader of a coalition, not as a dictator.
The changing world requires a certain amount of flexibility from the strategic manager. He must be ready to maneuver and adapt to the emerging situation. This does not mean that the company should act without specific goals, but it must be prepared to adjust them.
1.2. Main stages of strategic management
The main stages of strategic management are:
1. Determining the scope of business and developing the purpose of the company.
2. Transformation of the purpose of the company into private long-term and short-term goals of activity.
3. Determining a strategy for achieving business goals.
4. Development and implementation of strategy.
5. Assessing activities, monitoring the situation and introducing corrective actions.
The relationship between these stages is shown in Fig. 2.
Fig.2. Strategic Management Process
Strategy cannot be developed only at the top level of management. It is practically advisable to distinguish four levels of its development:
Corporation level
Level of SZH (branches),
Functional level
Low-level managers (field commanders).
The hierarchy of strategy development in the company is illustrated in Table 1.
Table 1. Main levels of firm strategy development
| Level | Responsible for | Contents of development | development (adoption | solutions) | 1 | 2 | 3 | Corporate | Executive Director, Key Vice Directors (the decision is made is being revised board of directors) | Creation and management SZH portfolio. Ensuring synergy of SZH as a competitive advantage Defining investment priorities and managing resources in the most attractive agricultural sector. Revision, revision, unification the main strategic approaches of SZH chiefs. | strategy |
Strategic management procedures are applicable to a wide range of organizations, from large to many small individual enterprises, from manufacturing to service enterprises and from profit-seeking to non-profitable (for example, budgetary). Organizational strategy is the output of a rational planning process. The main components of the strategic management process include determining the purpose and main goals of the organization, analyzing the external and internal environment of the organization, choosing a strategy at the level of agricultural enterprises and corporations in accordance with its strengths and weaknesses and external threats and favorable opportunities, adapting organizational management systems to the strategy chosen by the organization A strategic manager is a person who leaves an imprint on the entire activity of the organization, on its main independent divisions. His concern is to maintain the “health” of the entire organization while moving in a certain direction. The strategic manager must be well-informed, skilled in managing his own time and energy, and also be a good politician, a flexible expert, able to persistently push the program step by step in the accepted direction. Strategic management permeates the entire company. We can distinguish the following levels: corporation, agricultural sector, functional services and lower level of management. Strategic management involves communication between levels of management to ensure that the strategy is realistic and meaningful. Strategic planning fails if implementers do not plan due to task uncertainty, and senior planners lose a sense of operational reality. A feature of strategic management is its orientation to the future, and, therefore, it is necessary to determine: what to strive for, what goals to set. Depending on the specifics of the industry, the characteristics of the state of the environment, the nature and content of the mission, each organization sets its own goals. Goals can be classified into the following functional areas: Market objectives (or external program objectives): in the areas of marketing and public relations, for example: Sales volume in physical and value terms; Number of clients; Market share. Production goals (internal program goals) are a consequence of market goals. Includes everything needed to achieve market goals (excluding organizational resources), for example: Ensure a certain volume of production (production volume = sales volume - existing inventories + planned inventories); Build a workshop (volume of capital construction); Develop a new technology (carrying out research and development work). Organizational goals are everything that concerns the management, structure and personnel of an organization, for example: Hire three marketers; Bring the average salary level of employees to the level of the salary of the market leader; Implement a project management system. Financial goals - link all goals in value terms: Net sales (from “market goals”); The amount of costs (from “production” and “organizational” goals); Gross and net profit; Return on sales, etc. You can set goals in a different order: from financial to market and production. In our opinion, this classification is distinguished by the simplicity of its conceptual apparatus. In addition, it ensures the coherence of goals, since the latter logically follow from each other (from market - production, then organizational and financial). The goal setting process involves going through four phases: Identification and analysis of those trends that are observed in the external environment of the company. Management must strive to foresee the state of the external environment and set goals in accordance with this foresight. Goals should be formulated in such a way that, without absoluteizing trends, they reflect them. Setting goals for the organization as a whole. It is important to determine which of the wide range of possible characteristics of the organization's activities should be taken as goals. The system of criteria used to determine the goals of the organization is also important. The decision on goals also always depends on the resources that the organization has. Building a hierarchy of goals. Defining such goals for all levels of the organization, the achievement of which will lead to the achievement by individual divisions of overall organizational goals. It involves the construction of a “tree of goals”, in which a clear “goal-means” relationship is recorded. Setting individual goals. In order for the hierarchy of goals within the organization to become a real tool for achieving goals and objectives, it must be brought to the level of the individual employee. In this case, one of the most important conditions for the successful operation of the organization is achieved: each employee is, as it were, included in the process of jointly achieving the ultimate goals of the organization. Established goals must have the status of law for the organization, for all its units and for all members. However, the requirement of obligation does not in any way imply the invariability of goals. There are several possible approaches to the problem of changing goals: Goals are adjusted whenever circumstances require; Proactively changing goals. In this approach, long-term and short-term goals are set, after short-term goals are achieved, new long-term and short-term goals are developed, etc. One of the most important points that determine the process of setting goals in an organization is the degree to which the right to make decisions on goals is delegated to lower levels of the organization. In practice, the process of setting goals occurs differently in different organizations. However, the general thing is that the decisive role in all cases should belong to top management. Along with analyzing the internal environment, the organization also needs to diagnose the external environment in order to know the opportunities and threats for development in the future. The analysis of the external environment is carried out in seven areas (spheres), which are economics, politics, market, technology, competition, international situation and socio-cultural behavior. Thus, strategic analysis is the most important stage of management in developing an effective strategy, which is based, as a rule, on three components: Properly developed long-term goals; Deep understanding of the external competitive environment; A realistic assessment of your own resources and capabilities. Strategic choice includes the formation and assessment of alternative directions for the development of the enterprise. The most preferred option is accepted. There are special methods for forecasting and assessing future situations based on development scenarios and portfolio analysis. It is believed that the formation and assessment of alternative development options is of independent value for management and is implemented during strategic planning. At the same time, the time frame, resources, sources and amounts of financing and those responsible for the implementation of the planned activities are determined. When developing a strategy, it must be taken into account that every company has ethical obligations to owners, employees, customers, suppliers and society. A company's commitment to the customer is based on the expectations that are present when purchasing goods or services. Inadequate appreciation of this obligation has led to the enactment of consumer protection laws and the creation of many regulatory bodies to protect them. In Russia, the “Society for the Protection of Consumer Rights” also has influence and can ruin the reputation of any organization about which consumers complain. The implementation of the chosen strategy involves adjusting the two previous stages. Management's activities are aimed at modernizing (if necessary) the management system, bringing the company's organizational structure into line with the strategic goals, allocating the necessary resources, as well as training personnel. In other words, strategic management is formed in such a way as to help the organization’s management anticipate business development trends and monitor external influences. Strategic decisions at this stage include: reconstruction of the enterprise, introduction of new products and technologies, organizational changes in the legal form of the enterprise, structure of production and management, remuneration, etc., entry into new markets, as well as acquisition (merger) enterprises, etc. Strategic management also has its own algorithm: what needs to be done (conceptual aspect, formation of a general goal); how to do it (technological aspect); using what means (resource aspect); in what terms and in what sequence (temporal aspect); who will do it (personnel aspect); what the organizational management structure should be (organizational and managerial aspect). It seems that economic mass and mobility are determined primarily by the resources of the enterprise. In different spheres of the economy they differ both in volume and content. It is the lack of resources - financial, material and technical, informational, intellectual - that does not allow economic entities to successfully develop and implement a corporate strategy, even sometimes in the most favorable external conditions. The role of resources in strategic management is fundamentally important not only because without them the subject will not achieve the strategic goal. Resources are the potential of an organization. Their strategic significance consists, firstly, in the possibilities they contain to develop an optimal strategy for the subject (source of formation), secondly, in the fundamentally possible impact on the external environment of the enterprise (nature of use), thirdly, in the specifically strategic setting of goals subject (direction of action). Most publications rightly indicate that the development and implementation of an enterprise strategy requires large expenditures of resources. On the one hand, this allows the majority of economic actors to raise the question of strategy only in a scholastic theoretical manner, on the other hand, this is precisely why major strategic mistakes are made. Not all firms are able to equally accurately select a strategically advantageous market for themselves. By mistakenly assessing their potential capabilities to operate stably over a long period of time, they find themselves essentially in a strategic zone of management that is alien to them. Moreover, in this case we are not just talking about the possession of resources or the possibility of acquiring them. Of great importance is the quality of management, its ability to strategically rationally combine these resources and link them with the obvious competence of the organization. Hence, the most important characteristic of a “strategic” entity is to find a market niche that is adequate to the available resources and act in it. The development of an enterprise strategy is not limited to the costs of material and financial resources, as well as time. Information and intellectual resources are of great importance. The development and implementation of strategic decisions require the possession of a wealth of information - collected, systematized and analyzed throughout the entire period of business. Without information there is no strategy, but the information resources of an enterprise are closely related to intellectual ones - the enterprise must have personnel who are able not only to develop another business plan using one of the methods, but to determine trends in the development of the external environment, the prospects of a particular business, and formulate directions for development organization, justify the need to concentrate funds for strategic purposes. Particular attention should be paid to the organizational and structural strategic potential of the enterprise. The elementary and functional organizational structures of most economic entities overload top management with solving current problems, not allowing them to adequately focus on the strategic problems of the organization. If we add to this the reluctance characteristic of Russian management to “share” rights with subordinates, it becomes clear why many managers objectively lack strategic direction of action. The transition to a divisional organizational structure (which is typical, for example, for large commercial banks), while increasing the flexibility and adaptability of the organization and creating opportunities to concentrate the attention of top management on strategic issues, at the same time creates certain difficulties in terms of the strategic compatibility of individual divisions. Although there are difficulties in developing and implementing strategy in more developed organizational structures, the general conclusion is undeniable - their strategic potential differs significantly. Since the organizational structure of an enterprise should not be more complex than necessary based on its size, nature of activity, technology and territorial location, most Russian (and Western) economic entities operate within simple organizational structures. At the same time, the strategic aspects of the functioning of the organizational structure remain in the shadows for them, objectively complicating the development and implementation of an economic strategy. Possession of essentially strategic resources allows an economic entity to fundamentally determine the nature of their use in relations with the external environment of the enterprise. The expression “adaptation to new conditions,” which is often used to characterize the activities of successfully developing companies, does not seem to be entirely successful, since it creates the impression that the economic strategy of the organization is passive and aimed primarily at internal changes. Undoubtedly, adaptability to changing environmental conditions can be the basis for the long and successful existence of an enterprise. However, strategy means not so much following changes in the environment and implementing strategic changes in the organization, but rather active interaction with the external environment. A strategically active enterprise must purposefully influence the environment, changing and adapting it to the implementation of the strategy, creating conditions for achieving strategic goals. In a certain sense, it can be argued that these will be strategic changes, the most important component of the actual implementation of the strategy. There is hardly any need to prove that the impact on the external environment does not mean or imply a change in the macroeconomic situation in the country. It is aimed primarily at creating the environment in the immediate environment of the enterprise - consumers, suppliers, competitors, regional and local authorities. The forms and methods of this influence can be varied - advertising, the choice of business partners and the terms of cooperation with them, pricing policy, methods of competition and ways to protect one’s own economic interests, influence on government authorities, attracting the media (including the creation of one’s own ). It is impossible not to note here some features of modern Russian statehood (corruption, uncontrolled use of budget funds), which create ample opportunities for business circles to create the necessary living environment. Determining the purpose and main goals of the company’s business; Analysis of the company's external environment; Analysis of its internal situation; Selection and development of company strategy; Analysis of the portfolio of a diversified company, design of its organizational structure; Selecting the degree of integration and control systems; Management of the “strategy - structure - control” complex; Determination of standards of behavior and policies of the company in certain areas of its activities; Providing feedback on the company's results and strategy; Improving strategy, structure, management. Strategy is a statement of an organization's mission, its intentions and goals, policies, programs and methods for achieving them. Strategy in one form or another is inherent in any management system, although it will differ in specifics depending on its type - portfolio or corporate; competitive or business strategy; functional. There are three levels of strategic decisions. Corporate (portfolio) decisions concern the activities of the enterprise as a whole. Competitive decisions apply to business units of the enterprise. Functional decisions are made in the interests of departments and services of the enterprise. Currently in Russia the potential of strategic management is not sufficiently used. He gets undeservedly little attention. Most entrepreneurs, when asked about the company’s strategy, just shrug their shoulders and say: “What is the strategy in our conditions? We would like to survive." This approach is initially wrong. It is in conditions of uncertainty that it is best to have different strategies for all occasions. 2. Dufala V. Toolkit for forming an enterprise strategy // Problems of theory and practice of management. - 1998. - 3. Radugin A.A., “Fundamentals of Management”. M. "Center", 1998; 4. Thompson A.A., Strickland A.J. Strategic management. M: “Banks and exchanges”, “UNITY”, 2000 5. Tulenkov N. Key position of strategic management in an organization // Problems of theory and practice of management. - 1997. -
Tulenkov N. Key position of strategic management in an organization // Problems of theory and practice of management. - 1997. – 26 p.
Thompson A.A., Strickland A.J. Strategic management. M: “Banks and exchanges”, “UNITY”, 1998-15 p.
Akulov V., Rudakov M. On the characteristics of the subject of strategic management // Problems of theory and practice of management. - 1998. – 125 p. |
Introduction……………………………………………………..…….……… 1
1. Strategic management……………………………………………...……. 2
1.1. The essence of strategic management…………………………….……..2
1.2. Functions of strategic management………………………………….……8
1.3. Basic principles of strategic management……………………..…..9
2. Stages of strategic management …………………………………………. 13
3. Strategic management in management zones…………………….… 18
4. Strategic planning………………………………………..……… 21
4.1. The concept of strategic planning…………………………….…. 22
4.2. The essence and function of strategic planning………………….….25
4.3. Strategic planning structure…………………………….….. 29
4.4. Advantages and disadvantages of strategic planning…………….35
5. Organizational strategy……………………………………………..…… 37
5.1. Types of organization strategy………………………………………………………………. 37
5.2. Organization portfolio plan………………………………………..……… 41
Conclusion ………………………………………………………………………. 44
References…………………………………………………………..…………….. 47
Introduction
Nowadays, no one doubts that competent and thoughtful strategic management in a modern economy is the most important and fundamental condition for the success of any enterprise. In a general sense, a management strategy is a plan for managing a company aimed at strengthening its position, satisfying customers and achieving its goals.
The management strategy of a modern company covers a huge number of functions and departments: supply, production, finance, marketing, personnel, research and development. Making strategic choices means tying together business decisions and competitive actions across the company into a single node. This unity of actions and approaches reflects the current strategy of the enterprise.
A well-thought-out strategic vision prepares a company for the future, sets early development directions, and defines the company's intention to take specific business positions.
Strategy development is one of the main functions of management. Of all the things a manager does, there are few that have such a significant impact on the well-being of the company as developing long-term strategy, developing competitive and effective strategic actions and business approaches, and executing the strategy in a way that achieves intended results.
Particular attention in this work is paid to strategic planning - one of the management functions, which is the process of choosing the goals of the organization and ways to achieve them. Strategic planning provides the basis for all management decisions; the functions of organization, motivation and control are focused on the development of strategic plans. The dynamic process of strategic planning is the umbrella under which all management functions are sheltered; without taking advantage of strategic planning, organizations as a whole and individuals will be deprived of a clear way of assessing the purpose and direction of the corporate enterprise. The strategic planning process provides the framework for managing the members of the organization. Strategic planning is becoming increasingly relevant for Russian enterprises that are or are striving to compete fiercely both among themselves and with foreign corporations.
Strategic management has received much attention in Western literature, but, unfortunately, in Russia for a long time due attention has not been paid to this economic discipline. This work is based primarily on the works of Western management specialists, such as A. Thompson, A. Strickland, I. Ansoff and others. However, where possible, theoretical calculations are illustrated with data on Russian enterprises, and various provisions of strategic management theories are analyzed based on information on the activities of various Russian companies.
The purpose of this work is to review and analyze the process of strategic management of a company in its modern understanding.
The first chapter of the work is devoted to the theoretical foundations and general principles of strategic management. The second and third chapters contain a detailed overview and analysis of strategic management as a factor in the existence of an enterprise in a modern market economy. The fourth and fifth chapters are devoted to the problem of strategic planning, as the most important in the development and implementation of an enterprise management strategy.
1. Strategic management
1.1.The essence of strategic management
From a formal point of view, strategic management is the justification and selection of long-term goals for the development of an enterprise and increasing its competitiveness, their consolidation in long-term plans, and the development of targeted programs that ensure the achievement of intended goals.
We can also say that strategic management is the management of an organization that relies on human potential as the basis of the organization, focuses production on consumer needs, carries out flexible regulation and timely changes in the organization, in accordance with environmental changes, and allows one to achieve competitive advantages, which allows the organization to survive and achieve its goal in the long term.
In a highly competitive and rapidly changing environment, firms must not only focus on the internal state of affairs, but also develop a long-term behavioral strategy that would allow them to keep up with changes occurring in their environment. Practice shows that, as a rule, there is no strategy in the actions of organizations, which often leads to defeat in the market struggle. This is due to the fact that, firstly, organizations plan their activities based on the fact that the environment will not change, or there will be no qualitative changes in it. Secondly, planning begins with an analysis of the organization's internal capabilities and resources.
Strategic management can be considered as a set of five interrelated management processes (Fig. 1):
1) environmental analysis
2) definition of mission and goals
3) choice of strategy
4) strategy execution
5) assessment and control of implementation
Environment analysis It is generally considered the initial process of strategic management because it provides the basis for defining the mission and for developing strategies.
Rice. 1. Five tasks of strategic management
Analysis of the environment involves studying its three parts:
1. Macroenvironment analysis. Includes studying the influence of such environmental components as the state of the economy; legal regulation and management; political processes; natural environment and resources; social and cultural components of society; scientific, technical and technological development of society; infrastructure, etc.
2. Competitive environment. It is analyzed according to its five main components: competitors within the industry; buyers; suppliers; potential new competitors; manufacturers of possible replacement products. Each of these five competitive entities is analyzed from the point of view of competitive strength and competitive capabilities.
3. Internal environment analysis. It reveals those internal capabilities and the potential that a company can count on in competition in the process of achieving its goals, and also allows you to better understand the goals of the organization and more accurately formulate the mission. It is important to always remember that the organization not only produces products for the environment, but also ensures the existence of its members, providing them with work, the opportunity to participate in profits, creating social conditions for them, etc.
The internal environment is analyzed in the following areas: the company’s personnel, their potential, qualifications, interests, etc.; research and development; production, including organizational, operational and technical and technological characteristics; company finances; marketing; organizational culture.
Defining mission and goals , considered as one of the processes of strategic management, consists of three subprocesses - determining the mission of the company; defining long-term goals; defining short-term goals.
The main overall purpose of the enterprise - the clearly expressed reason for its existence - is designated as its mission. Goals are developed to achieve this mission.
The mission details the status of the enterprise and provides direction and guidance for defining goals and strategies at various organizational levels. The mission statement of the enterprise should contain the following:
· finding out what kind of business activity the company is engaged in;
· determination of the company's operating principles under pressure from the external environment;
· identifying the company culture.
Some leaders do not care about choosing and articulating the mission of their organization. For them, this mission seems obvious - making a profit. But if we think carefully about this issue, then the inadequacy of choosing profit as the overall mission becomes clear, although it is undoubtedly an essential goal.
Profit is a completely internal problem of the enterprise. Since an organization is an open system, it can ultimately survive only if it satisfies some need outside itself. To earn a profit, a company must monitor the environment in which it operates. Therefore, it is in the environment that management looks for the overall goal of the organization.
A long-term goal has a planning horizon of approximately five years. A short-term goal in most cases represents one of the organization's plans that should be completed within a year.
Goals will be a significant part of the strategic management process only if they are correctly formulated, known to employees and accepted by them for execution. The strategic management process will be successful to the extent that senior management is involved in setting goals and to the extent those goals reflect management's values and the firm's realities.
Defining the mission and goals of the company leads to the fact that it becomes clear why the company operates and what it strives for. Knowing this, you can choose a better strategy of behavior. Analysis and choice of strategy. This process is considered the core of strategic management. With the help of special techniques, the organization determines how it will achieve its goals and realize its mission.
Determining a strategy for a firm fundamentally depends on
the specific situation in which the company finds itself. However, there are
some general approaches to strategy formulation and some
the general framework within which strategies fit.
When determining a company's strategy, management is faced with three main questions related to the company's position in the market: which business to terminate; what business to continue; in which
business go.
The first area is related to cost leadership
production. The second area of strategy development is related to specialization.
in the production of products. The third area of strategy definition relates to fixation
a certain market segment and the concentration of the company’s efforts on a selected market segment.
The variety of strategies that commercial and non-profit organizations demonstrate in real life are
personal modifications of several basic strategies, each of them
effective under certain conditions and state of internal and
external environment, so it is important to consider the reasons why an organization chooses one strategy rather than another.
Limited growth. This strategy is used by most organizations
nizations in established industries with stable technology. At
limited growth strategies, development goals are set “from
achieved" and are adjusted to changing conditions
Height. This strategy is most often used in dynamic industries with rapidly changing technology. Character for her
It is difficult to establish an annual significant excess of the level
development above the level of the previous year.
Reduction. This strategy is chosen least often by organizations. It is characterized by setting goals below the level achieved in the past. A reduction strategy is resorted to when the organization’s performance indicators acquire a steady tendency to deteriorate and no measures are taken
do not change this trend.
Combined strategy. This strategy is
any combination of the considered alternatives - limited growth,
growth and contraction. The combined strategy is usually followed by large organizations that actively operate in
several industries.
Basic strategies serve as options for the overall strategy of the organization
tions, filling with specific content in the process of fine-tuning.
Execution of strategy is a critical process, since it is it that, if successfully implemented, leads the company to achieve its goals. Very often there are cases when firms are unable to implement the chosen strategy. This happens either because the analysis was carried out incorrectly and incorrect conclusions were drawn, or because unforeseen changes occurred in the external environment. However, strategy is often not implemented because management fails to properly engage the firm's existing capacity to implement the strategy. This especially applies to the use of labor potential.
For the successful implementation of a strategy, it is necessary that, firstly, goals, strategies and plans are well communicated to employees in order to achieve on their part both an understanding of what the company is doing and their informal involvement in the process of implementing strategies, in particular to ensure that employees develop commitments to the company to implement the strategy. Secondly, management must not only ensure the timely receipt of all resources necessary for the implementation of the strategy, but also have a plan for implementing the strategy in the form of targets and record the achievement of each goal.
In the process of implementing strategies, each level of management solves its own specific tasks and carries out the functions assigned to it.
Assessment and control execution of strategies is logically the last process carried out in strategic management. This process provides stable feedback between how the process of achieving goals is progressing and the actual goals of the organization. The main objectives of any control are:
· determination of what and by what indicators to check;
· assessment of the condition of the controlled object in accordance with accepted standards, regulations or other standards;
· clarification of the reasons for deviations, if any are revealed as a result of the assessment;
· adjustment, if necessary and possible.
When monitoring the implementation of strategies, these tasks acquire a very specific specificity, due to the fact that strategic control is aimed at finding out to what extent the implementation of the strategy leads to the achievement of the company's goals. This fundamentally distinguishes strategic control from managerial or operational control, since it is not interested in the correct implementation of the strategic plan, the correct implementation of the strategy, or the correct execution of individual works, functions and operations, because it focuses on whether it is possible to implement the adopted strategies in the future and whether their implementation will lead to achieving the set goals. Adjustments based on the results of strategic control can relate to both the strategies and the goals of the company.
1.2. Functions of strategic management
Strategic management involves the implementation of the following functions:
a) determining the company’s goals taking into account the market situation;
b) determining the means to achieve these goals;
c) segmentation, that is, dividing a common goal into subgoals;
d) development of relevant long-term plans and programs .
All types of management are interconnected. Any manager performs administrative functions, manages staff, and participates in choosing the goals of his activities and the means of achieving them. The director of a small enterprise, and especially an individual entrepreneur, performs all or most of the functions himself. Only with an increase in the size of the company does it become possible to assign them to different employees or management departments. However, in all cases it is advisable to distinguish and analyze types of management, since they are characterized by special means and methods of management, skills and techniques.
Strategic management is the basis of enterprise management. Establishing development goals and means of achieving them determines the tasks of all types of management.
1 . 3. Basic principles of strategic management
We can highlight the basic principles and trends of strategic management of enterprises in modern conditions.
1. Separation of property management (function of the owner) and production (competence of the director, board, manager). According to Russian legislation, in a joint stock company only the meeting of shareholders-owners can make decisions on changing the authorized capital, selling, purchasing, leasing expensive (more than 10% of total assets) property, distribution of profits (after taxes), issue of securities, reorganization enterprises, opening and closing branches, etc. At the same time, the owner (including the state property fund) has no right to interfere in production management (selection of suppliers, sales of products, recruitment and dismissal of workers, etc.). The lessor monitors changes in the value of his property, the ratio of assets and liabilities, profits and losses, and payment of rent, but cannot specify to the lessee the conditions for the sale of products and the distribution of income.
2. Planning of income and expenses becomes the basis of the enterprise strategy; the attention of managers moves from the supply and production to the financial and sales sphere.
In conditions of crisis or the constant risk of its development, funds can be invested only in the most reliable and promising projects that will not only provide a given level of profitability, but also strengthen the company’s market position. A high level of risk (dependence of expected revenue on changes in resource prices, loan interest, inflation rates, exchange rates and other factors independent of the enterprise) can be compensated by increased investment efficiency. To estimate it as a first approximation, the return on investment ratio (ROC) is used:
Assessing production efficiency ultimately characterizes the effectiveness of specific projects and enterprise management as a whole. It includes four main stages:
1) calculation of production costs;
2) determination of the required investments (capital investments);
3) forecasting annual income taking into account depreciation of assets;
4) determination of the payback period of capital investments and its compliance with the standard.
3. Separation of the functions of strategic and operational production management. The first is carried out by the head (board of directors) and the headquarters (advisory board, which does not have the right to give direct instructions to the performers), the second by the board, directors of production, marketing and sales, etc., and management departments subordinate to them.
The manager's responsibilities include defining general goals based on analysis and forecasting of the company's market position, approving relevant plans and programs, management structure, marketing concepts, and main areas of R&D. Development of personnel, social, financial, investment, purchasing and production (what and how to produce) policies, coordination of the work of structural units and management services, selection of directly subordinate employees. The intervention of the general director in the operational management of supplies, inventories, and scheduling is unacceptable in a market economy.
Property management includes monitoring property values, assets and profit distribution, determining marketing strategies and updating production. At the same time, the strategic management function is performed at the corporate headquarters, while the operational management function remains at the plant and is transferred to lower cells, workshops, integrated teams and other divisions. There is no difference between American and Japanese firms in this regard. Grassroots cells began to order materials themselves, produce and ship products. As a result, in the United States, for example, corporations cut 25% of their management personnel.
The role of financial departments in developing strategic goals is increasing. In the context of computerization, the financial service is being combined with accounting. In the absence of electronic computer technology, the significantly increased volume of accounting work begins to slow down the entire work of the company. In developed countries, 92% of companies have abandoned manual issuance of documentation, calculations, etc. Essentially, complete computerization of these processes is being introduced. The tasks of long-term (for 5 years or more) and current (for 1-3 years) profit maximization are also divided.
Thanks to a different strategic orientation, Japanese corporations have significantly displaced the United States in the world market. In the 80s they had superiority in such indicators as capital-labor ratio (2-5 times), the average age of metalworking equipment (9.5 years compared to 17.5 years), the share of costs for updating production (research and development, marketing, design and advertising, development market after the start of sales), the share of new products, costs of preventing defects, etc. At the same time, US corporations have a higher turnover rate, current return on total assets, and the share of equity and borrowed capital compared to loans.
Methods for increasing profitability in the long term include developing the infrastructure for sales and technical maintenance of products, reducing the serial production (with high unification of components, parts, and technological processes). Decentralization of management (when creating an automated information system), technical assistance to suppliers (based on long-term relationships), allocation of structural units to subsidiary small enterprises, etc.
4. A variety of management strategies depending on the company’s market position and areas of activity where it can count on success. Thus, the Impulse plant in St. Petersburg based its strategy on the transition from military to high-tech civilian products. In 1993, without waiting for general conversion programs, he mastered the production, and in 1995, mass production of microwave ovens at a price 5-10 times lower than imported ones. The Altai cardboard and roofing felt plant was faced with a different situation - a reduction in demand for building materials and an abundance of intermediaries taking the bulk of the profit. He achieved success by putting forward direct deliveries, including through barter and abroad, as his main goal.
5. Organization of cooperation between large and small businesses. The 80s of the 20th century became a period of revival of small business throughout the world. It became obvious that the theoretical provisions of our political economy about the replacement of small producers by corporations as production was concentrated turned out to be valid only for the end of the 19th and beginning of the 20th centuries.
Since the middle of the 20th century, a scientific and technological revolution began to unfold in the world. The year of the beginning of scientific and technological revolution is considered to be 1955. when the computer was first used for industrial purposes. It was invented in 1942 but was previously used only for scientific and military purposes. Essentially, the “age of machines”, which included only an engine, a transmission device, and a working part, has ended, and a new tool has appeared - a machine with a built-in microprocessor. Sensors collect information, then it is analyzed and compared with the program; if inconsistencies are detected, the command device makes appropriate adjustments.
In fact, it was the scientific and technological revolution that led to the revival of small business, because it significantly increased its capabilities. Note that small business has a number of significant advantages:
a) it opens up large spaces for personal self-expression. A classic example was the creation of a personal computer. As is known, in the West, two young engineers were forced to leave one of the leading companies in this field, which at that time was following the path of increasing the size of computers and did not support the idea of creating a microcomputer. After quitting, they took out a loan and, working 14-15 hours a day, together with three mechanics, created a personal computer in non-industrial conditions. As a result, their own company reached a turnover of 7 billion dollars;
b) helps reduce environmental load;
c) reduces transportation costs, etc.
It was typical for the 90s that the development of small businesses did not lead to a decrease in the role of large businesses: each of them had its own niche. In this regard, in our opinion, one should be critical of the methods of privatization in Russia, which led to the division of large industrial complexes into independent parts and the destruction of knowledge-intensive production.
Strategic management takes into account the currently developing types of cooperation, small and large businesses. Firstly, this is an entrepreneurial network, that is, the unification of a large number of small enterprises for the production of certain final products that cannot be produced by one small enterprise (for example, the unification of a number of St. Petersburg firms for the production of computers). An agreement is concluded, functions are divided between the participants, each specializes in the type of activity that can be performed most effectively.
Secondly, we should highlight franchising - a system of cooperation between large and small businesses, in which a large company has contracts with a large number (up to 3 thousand) of small companies. At the same time, a large corporation provides its trademark (for example, in Russia - to companies operating under the Doka Pizza or Doka Bread brand), provides its technology and equipment, conducts personnel training, and controls product quality.
2. Stages of strategic management
Let us consider in detail what exactly a strategic manager of a company should do, what is the sequence of his work, and what consultants (referents, assistants) help him with.
Stage 1- choosing a goal taking into account the financial situation of the company. Here you can highlight the following options (types of goals):
a) restoration of solvency. This goal is very relevant for our economy, when workers sit without pay, and the main concern of the manager is to avoid bankruptcy;
b) increase in mass and profit margin;
c) diversification, that is, the development of new areas of activity. For example, the Izhora plant is usually associated with the production of equipment for nuclear power plants, nuclear reactors of rolling mills, and rock excavators. However, now he is the founder of about 20 companies involved in financial, foreign trade, and tourism. Essentially, with the sharp decline in demand for the firm's traditional products, its overall goal became diversification;
d) conversion - a complete change of profile for defense plants.
Stage 2- clarification, differentiation of goals. Based on the market situation, it is planned:
a) penetration into a new market - an offensive strategy of a company based on ousting competitors from this market or cooperation with them.
b) maintaining and developing market positions - a defensive strategy. For example, our aluminum industry and some other industries entered the world market in an unorganized manner; domestic enterprises themselves undercut each other’s prices. As a result, over three years, the volume of exports for a number of items increased significantly, but revenue, on the contrary, decreased by 15-20%. Obviously, it is necessary to conclude cartel agreements to regulate export quotas and prices. In our country, such agreements have so far only been concluded by enterprises exporting the forestry complex;
c) retreat, leaving unpromising markets. The company does not need to cling to all types of activities and try to gain a foothold in all possible markets. You can leave the market, but leave with dignity, through the normal curtailment of your activities.
Stage 3- choosing the type of marketing and competitive strategy. There are four options for this strategy:
A. Non-price competition with a wide range. This type of marketing strategy means that the company competes with unique quality, rather than low price, products. This is the most promising type of competition. It means that only this enterprise can produce certain products and, without reducing prices, competes with quality. An example would be global shipbuilding. Thus, Japan is the only country that builds large-capacity tankers with a displacement of more than 100 thousand tons with a unique degree of automation.
Note that this type of strategy is only suitable for large firms with great scientific and technical potential.
B. Non-price competition with a narrow range. For example, shipbuilding in Scandinavia specializes in the production of passenger liners (they can be ordered in Sweden and Norway), and Finland specializes in icebreakers and drilling platforms. There is a narrow specialization when, for example, in Finland only 3-4 types of ships can be ordered.
B. Price competition with a wide range. It can be chosen by large firms that have relatively cheap material resources or labor.
As an example, we can point out that this is a possible strategy for domestic shipbuilding. An example is the Admiralty Shipyards shipyard, which successfully entered into market relations. He found his niche by signing a contract with a Swiss businessman. The plant can produce any vessels, except unique ones. At the same time, mass products are created at a price 20-30% lower than abroad - (for example, tankers with a displacement of 10-15 thousand tons, which are needed, in particular, in Arab countries and Greece for transporting fuel to the islands). As a result of its efforts, the company is currently provided with orders for 3 years in advance. It has now taken first place in terms of wages for workers in the mechanical engineering industry of St. Petersburg.
D. Price competition with a narrow range (for example, in the production of coasters).
Stage 4 - differentiation of goals depending on the stages of the product life cycle.
Stage 5 - market segmentation and target selection for each segment. The company's goals are differentiated according to various areas of management activity. Controlled indicators include: sales (sales volume); income; level of competition; price dynamics. The specifics of the product being manufactured and the strategic goal that is ultimately set determine the object of special attention for strategic management.
Stage 6 - development of targeted programs to achieve goals.
The basic goal of the enterprise is differentiated for individual areas (segments) of its activity - strategic economic zones. They can be distinguished by the following characteristics:
The nature of sales markets (products intended for mass consumers, for export to developed countries and elite groups in Russia, produced for individual orders);
Commonality of raw materials used;
Unity of technology and phases of the scientific and production cycle (raw raw materials, semi-finished products, finished products, scientific and technical products, services);
Patent protection (release under foreign licenses, based on own inventions and know-how without patents), etc.
For each of these zones, it is advisable to conduct an analysis in several directions:
1. The share of this zone (segment) in the total income (sales volume) of the company and its dynamics. This indicator reflects the importance of this area of activity of the enterprise. At the same time, (in American terminology) “stars” (groups of goods with the maximum sales growth rates), “cash cows” (products that bring the main income with a stable sales volume), “mysteries” (the share in revenue is low, but demand remains constant) are distinguished ) and “dead dogs” (sales are declining, there are no prospects).
2. The share of this group of goods in the total volume of sales on the market and its dynamics. This takes into account the share of buyers who purchased the company's product (market penetration coefficient) and the ratio of the average company selling price to the level of market prices for a similar product (price coefficient). Thanks to the latter, automobile companies from Russia and Ukraine are penetrating the markets of Latin America, Eastern Europe and other countries.
3. The stage of the life cycle at which the product is located. The market introduction stage begins in the Innovation Process and ends with the release of the first production batches or samples. At the growth stage, sales volume and profit per each unit of production quickly increase (costs decrease when moving to mass production). The maturity phase means stabilization of revenue with some increase in total profit due to further reduction in costs. Finally, a decline begins with a steady decline in sales due to a shift in demand to other goods.
Life cycle phases may vary across markets. With a decline in revenue in Moscow and St. Petersburg, the product often just becomes fashionable in other regions and CIS countries.
Table 1 gives an idea of the differences in strategy at different stages of the cycle.
At the first stage, the time factor is of particular importance, reducing (without compromising quality) the time frame for developing and mastering an innovation, intensive advertising of a new product, strengthening relationships with suppliers and potential buyers. After the start of serial production, the main thing is the full use of production capacity, maintaining the design, guaranteed quality, achieving the planned level of costs, forming a product family based on the main model, taking into account the requests of various customers. The cessation of income growth requires a change in pricing strategy (focusing not on high prices and profits from each unit of goods, but on the total amount of profit due to an increase in the number of buyers). To stimulate sales, it is necessary to reduce prices, sell in installments and on credit, provide additional preferential services for delivery, repair, registration (purchase and related goods), modernize the basic model, and at the first signs of a recession, carry out markdowns and sell off balances, accelerate introduction of new products to the market.
Table 1. Strategy at various stages of the product life cycle
|
STRATEGIC CONDITIONS |
IMPLEMENTATION |
MATURITY |
|||
| growing |
declining |
||||
| minimal (before loss) |
maximum |
(before loss) |
|||
| COMPETITION |
maximum |
||||
| low |
declining |
||||
| basic model |
modification of the base model |
modernization |
individual |
||
| STRATEGIC GOAL |
reduction of time to market |
increasing production volume |
sales promotion |
change of assortment |
|
| OBJECTS OF SPECIAL MANAGEMENT |
market for research and development |
production |
marketing |
Research and development work |
PHASES OF THE CYCLE4. General competitiveness and strategic vulnerability of a given economic zone (degree of commercial risk).
3 . Strategic management in management areas
The strategy in management zones is of particular importance. In strategic management, the choice of a long-term goal for the development of an enterprise is especially important. For each market segment, such goals, as already noted, can be:
1. Market penetration by developing a new branded product or displacing competitors offering similar products. This attack strategy (market capture) is used mainly when organizing exports, since competition in the domestic Russian market is still low. Non-price competition is intensifying around the world; success is determined (especially in Europe, North America, and Southeast Asia) by the technical level, quality and reliability of the product, confirmed by certification in generally recognized centers, by the level of service and after-sales service, and not by low prices.
Various forms of implementing offensive strategy in specific market segments are used:
a) merger with other enterprises entering the same market on the basis of a consortium (temporary association of firms and financial funds for joint struggle for obtaining a large order and its joint implementation with joint liability), cartel (agreement on export quotas, prices, terms of sale, joint use of patents);
b) the creation by firms already operating in the same market of common branches (subsidiaries) for the production or sale of jointly developed or produced goods; many rocket and space enterprises in Russia have followed this path;
c) concluding agreements on the use of components, technical systems and service services of foreign companies. Thus, the export of IL-86 aircraft is ensured by an agreement with the Rolls-Royce concern on the purchase of its aircraft engines using 120 repair plants in various countries;
d) inclusion of related companies into a single concern with a complete production cycle through mutual acquisition (this makes it possible to block decisions by another company about worsening supply conditions), exchange of assets (transfer of unprofitable production to another company in exchange for those needed to enter a new market), creation of holdings, providing financial control over subsidiaries and grandson companies, etc.
2. Maintaining and developing market positions by updating the product range, production technology and diversification (transition to diversified production with a wide range of products and services). At the same time, as a result of the privatization of unfinished construction projects, the purchase of unprofitable enterprises at competitions and auctions, and the organization of new production facilities, conglomerates are often formed - joint-stock companies in which enterprises belong to different industries, perform diverse functions and do not have technological connections.
Thus, the Hermes association, starting with financial and export operations with petroleum products, in 1994-1996. engaged in the processing of agricultural products and their delivery to regions of Siberia, petrochemicals, construction, etc. This defensive strategy must take into account forecasts for the development of general economic conditions, changes in market structure, quality, prices and demand for various goods, and the competitor’s marketing behavior model.
3. Withdrawal from unpromising markets based on specialization in the production of profitable products that are in steady demand. Such an orderly retreat is forced by the competition of producers (in connection with the penetration of foreign companies into the Russian market), consumers (they prefer the goods of other companies or generally reduce demand), suppliers (they reorient themselves to other markets) and technologies (fundamental innovations depreciate the value of already invested capital) , as well as difficulties in developing new markets (high prices and shortage of raw materials, patent and customs barriers).
Reducing the range of products and closing unprofitable areas requires the dismissal of some staff. Many large research institutes in St. Petersburg retained only 30-40% of their employees on permanent staff (computing and information center, experimental base, accounting, project management, buildings and structures maintenance service). by separating specialized departments into independent small enterprises that use the base of the parent institute on a contractual or rental basis.
Strategic management of enterprises in a transition period can only be multi-purpose. Thus, the Lyubertsy Carpet Factory chose four main goals: renewal of production, diversification of the product range, organization of direct relations with suppliers and consumers, and preservation of social infrastructure.
The course for renewal characterizes the ratio of the share of gross income allocated to improving production and wages. At the plant it was 6:1 (the average for Russian industry is 1:1). Funds were allocated for contracts with research institutes for the development of new technologies, materials and dyes. Together with machine-building plants named after. On May 1, a machine for twisting weaving and knitting yarn was created in Moscow and Tekhmash in Orel, and then a joint-stock company for its production was created (the plant’s share is 15%). The supply of carpets to oil and gas production teams allowed, according to the agreement, to use their currency for the purchase of foreign equipment.
The financial stability of the plant after the introduction of excise tax (20-45%) and customs duty (15%) on carpets is ensured by the production of yarn for hand knitting, knitwear, batting, and in the future - clothing, fur products, and processing of agricultural raw materials. The experience of leading foreign companies confirms that during periods of crisis one cannot limit oneself to a narrow subject specialization.
The plant refused the services of many intermediaries, organizing 40 company stores in the CIS countries, direct supply of products to 1,400 customers, direct purchases of raw materials through its trading house, marketing center and permanent exhibition of products. The international quality certificate allowed us to obtain a permanent place at the world's largest fair in Hannover.
The plant, a closed joint-stock company, gave its 3,500 employees the right to purchase shares for half their par value. Only 10% of gross income is spent on labor costs (3-5 times less than abroad). However, even more than 30% is sent to the social development fund, through which children’s institutions, a sports complex, a dispensary are maintained, housing is built, pension supplements are paid, etc. Therefore, staff turnover is minimal.
The management strategy in different business areas of the same company may differ significantly. If there is a shortage of capital, you should move away from areas that are unacceptable in terms of the level of risk, required investments or payback periods, using the freed-up funds in other segments. However, one should take into account the depreciation of capital investments already made in a given zone, as well as fixed costs (for the maintenance of buildings and structures, execution of long-term contracts, etc.), which will have to be financed even if production ceases.
Business risk can be reduced by using:
a) insurance against the risk of non-payment, expropriation, unfavorable changes in prices, exchange rates, etc.; b) flexible organizational structures that allow you to quickly respond to changing situations and quickly transfer resources within the company from one zone to another; c) liquid (quickly converted into money) reserves to compensate for temporary losses (their maximum allowable amount is calculated in advance); d) flexible technical systems that allow quick changeover and simultaneous release of several product modifications; e) diversification of economic activities - dispersal of funds between segments that differ in the stage of the life cycle of profile products and the degree of commercial risk.
The specifics of the management zone determine the general management concept. If the situation is stable, the goal is defined, and success depends on one main factor, it is advisable to transfer powers, resources and responsibility to the localities. In complex multi-purpose areas, strategic management should be kept central. When developing technology within one generation (basic technology), the range of products can be limited; when moving to a new structure, a centralized change in the entire management structure, forms and methods of management is required. The management of the company coordinates the strategy in various areas of management, supporting the offensive impulse of some at the expense of reserves created by others in the common interests.
4. Strategic planning
Let us now consider and analyze in detail what is perhaps the most important aspect of strategic management – strategic planning.
Strategic planning is the most important component of enterprise management, and without it, successful operation of an enterprise in a market economy is hardly possible. In today's rapidly changing economic situation, it is impossible to achieve positive results without planning your actions and predicting the consequences.
Strategic planning is one of the management functions, which is the process of choosing the goals of the organization and ways to achieve them. Strategic planning provides the basis for all management decisions; the functions of organization, motivation and control are focused on the development of strategic plans. The dynamic process of strategic planning is the umbrella under which all management functions are sheltered; without taking advantage of strategic planning, organizations as a whole and individuals will be deprived of a clear way of assessing the purpose and direction of the corporate enterprise. The strategic planning process provides the framework for managing the members of the organization. Projecting everything written above onto the realities of the situation in our country, it can be noted that strategic planning is becoming increasingly relevant for Russian enterprises, which are entering into fierce competition both among themselves and with foreign corporations.
The problem of strategic planning has received much attention in Western literature, but unfortunately in our country for a long time, due attention was not paid to this problem. The need for the appearance of training manuals on planning was caused by the transformation of centralized planning into a system of state regulation, which required a radical revision of all elements of the intra-company planning system. The purpose of these manuals is to study the means, methods and technologies for justifying planning decisions at an enterprise, acquiring skills in developing strategic, tactical and operational calendar plans.
4.1. Concept of strategic planning
The concept of “strategy” became a management terminology in the 50s, when the problem of responding to unexpected changes in the external environment became of great importance. At first the meaning of this concept was unclear. Dictionaries were no help since, following military usage, they still defined strategy as “the science and art of deploying troops for battle.”
At the time, many managers, as well as some scientists, doubted the usefulness of the new concept. For half a century before their eyes, American industry had managed admirably without any strategy, and they asked why it was suddenly needed and what use it would do to the firm.
At its core, strategy is a set of rules for decision-making that guide an organization in its activities. There are four different groups.
1. Rules used in assessing the performance of a company in the present and in the future. The qualitative side of the evaluation criteria is usually called a guideline, and the quantitative content is called a task.
2. The rules by which the company’s relations with its external environment develop, determining: what types of products and technologies it will develop, where and to whom it will sell its products, how to achieve superiority over competitors. This set of rules is called product-market strategy or business strategy.
3. The rules by which relationships and procedures within the organization are established. They are often called the organizational concept .
4. The rules by which a firm conducts its daily activities, called basic operating procedures.
Strategies have several distinctive features:
1. The strategy process does not end with any immediate action. Usually it ends with the establishment of general directions, progress along which will ensure the growth and strengthening of the company's position.
2. The formulated strategy should be used to develop strategic projects using the search method. The role of strategy in search is, first, to help focus attention on specific areas and opportunities; second, discard all other possibilities as incompatible with the strategy.
3. The need for strategy disappears as soon as the real course of development leads the organization to the desired events.
4. When formulating a strategy, it is impossible to foresee all the opportunities that will open up when drafting specific activities. Therefore, one has to use highly generalized, incomplete and inaccurate information about various alternatives.
5. As soon as specific alternatives are discovered during the search process, more accurate information appears. However, it may question the validity of the initial strategic choice. Therefore, successful use of the strategy is impossible without feedback.
6. Since both strategies and benchmarks are used to select projects, they may appear to be the same thing. But these are different things. The benchmark represents the goal that the firm seeks to achieve, and the strategy is the means to achieve the goal. Guidelines are a higher level of decision making. A strategy that is justified under one set of guidelines will not be so if the organization's guidelines change.
7. Finally, strategy and guidelines are interchangeable both at individual moments and at different levels of the organization. Some performance parameters (for example, market share) will serve as a firm's guidelines at one moment and become its strategy at another. Further, since guidelines and strategies are developed within the organization, a typical hierarchy arises: what is elements of strategy at the upper levels of management turns into guidelines at the lower levels.
In short, strategy is an elusive and somewhat abstract concept. Its development usually does not bring any direct benefit to the company. In addition, it is expensive both in terms of money and management time.
The term “strategic planning” itself was introduced into use at the turn of the 60s and 70s. in order to indicate the difference between current management at the production level and management carried out at the highest level. The need to fix such a difference was caused primarily by changes in business conditions. The development of strategic management ideas is reflected in the works of such authors as Frankenhofs and Granger (1971), Ansoff (1972), Schendel and Hatten (1972), Irwin (1974), etc. The leading idea, reflecting the essence of the transition from operational to strategic management, the idea emerged of the need to shift the focus of top management's attention to the environment in order to respond appropriately and timely to changes occurring in it.
We can point to several constructive definitions that were proposed by authoritative developers of the theory of strategic management. Schendel and Hatten saw it as "the process of defining and (establishing) connection , organization with its environment, consisting in the implementation of selected goals and in attempts to achieve the desired state of relationship with the environment through the allocation of resources, allowing the organization and its divisions to operate effectively and efficiently.” According to Higgens, “strategic planning is the process of managing to achieve an organization's mission by managing the organization's interaction with its environment.” Pearce and Robinson define strategic management “as the set of decisions and actions to formulate and execute strategies designed to achieve the organization's purpose.” " There are also a number of definitions that focus on certain aspects and features of strategic management or on its differences from “ordinary” management.
4.2. The essence and function of strategic planning
Being a management function, strategic planning is the foundation on which the entire system of management functions is built, or the basis of the functional structure of the management system. Strategic planning is a tool with the help of which a system of goals for the functioning of an enterprise is formed and the efforts of the entire enterprise team are combined to achieve it.
Strategic planning is a set of procedures and decisions with the help of which an enterprise strategy is developed to ensure the achievement of the goals of the enterprise. The logic of this definition is as follows: the activities of the management apparatus and the decisions made on its basis form the strategy for the operation of the enterprise, which allows the company to achieve its goals (Fig. 2):
| Actions |
Strategy |
Rice. 2. Logic of strategic planning
The strategic planning process is a tool with the help of which management decisions in the field of economic activity are justified. Its most important task is to provide innovations and organizational changes necessary for the life of the enterprise. As a process, strategic planning includes four types of activities (strategic planning functions) (Fig. 3). These include: resource allocation, adaptation to the external environment, internal coordination and regulation, organizational changes
1. Resource Allocation. This process includes planning the allocation of resources, such as material, financial, labor, information resources, etc. The enterprise's operating strategy is based not only on business expansion and meeting market demand, but also on the efficient consumption of resources and the constant reduction of production costs. Therefore, the effective distribution of resources between various areas of business and the search for combinations of their rational consumption is the most important function of strategic planning.
| Organizational changes |
Rice. 3. Functional structure of strategic planning
2. Adaptation to the external environment. Adaptation should be interpreted in the broad sense of the word as the adaptation of an enterprise to changing market business conditions. The market environment in relation to business entities always contains favorable and unfavorable conditions (advantages and threats). The task of this function is to adapt the economic mechanism of the enterprise to these conditions, i.e., to take advantage of competitive advantages and prevent various threats. Of course, these functions are also performed in the day-to-day management of the enterprise. However, the effectiveness of operational management will be achieved only if competitive advantages and barriers are foreseen in advance, i.e. planned. In this regard, the task of strategic planning is to provide new favorable opportunities for the enterprise by creating an appropriate mechanism for adapting the enterprise to the external environment.
3. Coordination and regulation. This function involves coordinating the efforts of the structural divisions of the company (enterprises, production facilities, workshops) to achieve the goal provided for by the strategic plan. Enterprise strategy includes a complex system of interrelated goals and objectives. The decomposition of these goals and objectives involves dividing them into smaller components and assigning them to the relevant structural units and performers. This process does not occur spontaneously, but on a planned basis in a strategic plan. Therefore, all components of the strategic plan must be linked by resources, structural divisions and performers, and functional processes. This linkage is ensured by the system for generating planning indicators, as well as the presence in the enterprise management apparatus of the corresponding unit or executor responsible for coordination. The objects of coordination and regulation are internal production operations.
4. Organizational changes. This activity involves the formation of an organization that ensures the coordinated work of management personnel, the development of the thinking of managers, and the consideration of past experience in strategic planning. Ultimately, this function is manifested in various organizational changes at the enterprise: redistribution of management functions, powers and responsibilities of management staff; creating an incentive system that contributes to achieving the goals of the strategic plan, etc. It is important that these
organizational changes were carried out not as a reaction of the enterprise to the current situation, which is typical for situational management, but were the result of organizational strategic foresight.
Strategic planning as a separate type of management activity imposes a number of requirements on employees of the management apparatus and presupposes the presence of five elements:
The first element is the ability to simulate a situation. This process is based on a holistic view of the situation, which includes the ability to understand the patterns of interaction between the needs and consumer demand of buyers, competitors with the quality of their products and the needs of one’s own company, i.e. its ability to meet customer needs. Thus, the most important part of strategic planning is analysis. However, the complexity and inconsistency of the source data give rise to the complexity and variability of the analytical work performed within the framework of strategic planning, making it difficult to model the situation. In this regard, the role of the analyst can hardly be overestimated: the greater his ability to abstract, the more clearly the connections between the components that gave rise to the situation are revealed. The ability to move from the concrete to the abstract and back again is an important condition for competence in matters of strategy. Using this ability when developing a strategic plan, you can identify the need and possibility of changes in the company.
The second element is the ability to identify the need for change in the company. The intensity of changes in enterprises and organizations in a market economy is much higher than in a planned economy, which is explained by the greater dynamism of the external market environment. In conditions of monopoly, any changes are aimed at maintaining the expansion of the company. Now they are represented by a variety of variables characterizing the company: from the efficiency of production costs to the company's attitude to risk, including product range, product quality and after-sales service. Determining the need for change requires two types of abilities:
The readiness of management staff to respond to trends arising from the action of known factors and the given industry;
Scientific and technical potential, intelligence, intuition, and creative abilities of managers, which, based on taking into account a combination of known and unknown factors, make it possible to prepare the company for action in unforeseen circumstances and find opportunities to increase its competitiveness.
The third element is the ability to develop a change strategy. The search for a rational strategy is an intellectual, creative process of searching for an acceptable option for the functioning of an enterprise. It is based on the ability of managers and specialists to foresee various situations and to recreate a “mosaic canvas” of future events from individual disparate factors. Strategic plan developers must be able to write various scenarios and master forecasting tools.
The fourth is the ability to use sound methods during change. The arsenal of means and methods of strategic planning is quite large. It includes: strategic models based on operations research methods; Boston Advisory Group (BCG) matrix.
The fifth element is the ability to implement strategy. There is a two-way connection between strategy as a scientifically based plan and the practical activities of enterprise employees. On the one hand, any actions not supported by a plan usually turn out to be useless. On the other hand, a thinking process that is not accompanied by practical activity is also fruitless. Therefore, enterprise employees involved in implementing the strategy must know the technology.
4.3. Strategic Planning Framework
In Fig. 4. A schematic diagram of the strategic planning process is presented.
Strategic planning can be viewed as a dynamic set of six interrelated management processes that logically follow from one another. At the same time, there is a stable feedback and influence of each process on the others.
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Rice. 4. Strategic planning structure
The strategic planning process includes:
Defining the mission of an enterprise or organization;
Formulating the goals and objectives of the functioning of an enterprise or organization;
Assessment and analysis of the external environment;
Assessment and analysis of internal structure;
Development and analysis of strategic alternatives;
Choice of strategy.
The strategic management process (except for strategic planning) also includes:
Implementation of the strategy;
Assessing and monitoring the implementation of the strategy.
As can be seen from Fig. 4, strategic planning is one of the components of strategic management. Strategic management is sometimes considered synonymous with the term strategic planning. However, it is not. Strategic management, in addition to strategic planning, contains a mechanism for implementing decisions. Main components of strategic planning:
1. Defining the organization's mission. This process consists of establishing the meaning of the company’s existence, its purpose, role and place in a market economy. In foreign literature, this term is usually called a corporate mission or business concept. It characterizes the direction in business that firms focus on based on market needs, the nature of consumers, product features and the presence of competitive advantages.
2. Formulation of goals and objectives. To describe the nature and level of business aspirations inherent in a particular type of business, the terms “goals” and “objectives” are used. Goals and objectives should reflect the level of customer service. They must create motivation for people working in the company. The target picture must have at least four types of targets:
Quantitative goals;
Qualitative goals;
Strategic goals;
Tactical goals, etc.
Goals for lower levels of the firm are considered as objectives.
3. Analysis and assessment of the external and internal environment. Environmental analysis is generally considered the original process of strategic management because it provides both the basis for defining the firm's mission and goals and for developing behavioral strategies that will enable the firm to achieve its mission and achieve its goals.
One of the key roles of any management is to maintain balance in the organization’s interaction with the environment. Every organization is involved in three processes:
Receiving resources from the external environment (input);
Transformation of resources into products (transformation);
Transfer of the product to the external environment (output). Management is designed to provide a balance between input and output. As soon as this balance is disturbed in an organization, it takes the path of death. The modern market has dramatically increased the importance of the exit process in maintaining this balance. This is precisely reflected in the fact that in the structure of strategic management the first block is the environmental analysis block.
Analysis of the environment involves the study of its three components:
Macroenvironment;
Immediate surroundings;
Internal environment of the organization.
Analysis of the external environment (macro and immediate environment) is aimed at finding out what the company can count on if it successfully conducts its work, and what complications may await it if it fails to avert in time the negative attacks that may present her with an environment.
Analysis of the macroenvironment includes the study of the influence of the economy, legal regulation and management, political processes, natural environment and resources, social and cultural components of society, scientific, technical and technological development of society, infrastructure, etc.
The immediate environment is analyzed according to the following main components: buyers, suppliers, competitors, labor market.
Analysis of the internal environment reveals those opportunities, the potential that a company can count on in competition in the process of achieving its goals. Analysis of the internal environment also allows us to better understand the goals of the organization and more accurately formulate the mission, i.e. determine the meaning and direction of the company’s activities. It is extremely important to always remember that the organization not only produces products for the environment, but also provides an opportunity for existence for its members, giving them work, providing them with the opportunity to participate in profits, providing them with social guarantees, etc.
The internal environment is analyzed in the following areas:
Personnel potential;
Organization of management;
Finance;
Marketing;
Organizational structure, etc.
4. Development and analysis of strategic alternatives, choice of strategy . Strategy development is carried out at the highest level of management and is based on solving the tasks described above. At this stage of decision-making, the manager needs to evaluate alternative ways of operating the company and select the best options to achieve its goals. Based on the analysis, in the process of developing a strategy, strategic thinking is formed through discussion and agreement with the management line apparatus of the concept of the development of the company as a whole, the recommendation of new development strategies, the formulation of draft goals, the preparation of directives for long-term planning, the development of strategic plans and their control. Strategic management assumes that a company determines its key positions for the future depending on the priority of its goals. A firm faces four major strategic alternatives: limited growth, growth, contraction, and a combination of these strategies. Limited growth is followed by most organizations in developed countries. It is characterized by the establishment of goals based on what has been achieved, adjusted mergers of firms in unrelated industries. Managers rarely choose a reduction strategy. In it, the level of goals pursued is set lower than what was achieved in the past. For many firms, downsizing may mean a path to streamlining and refocusing operations. In this case, several options are possible:
liquidation (complete sale of inventories and assets of the organization);
deduction of excess (separation by firms of some of their divisions or activities);
downsizing and refocusing (cutting down part of one's activities in an attempt to increase profits).
Downsizing strategies are most often used when a company's performance continues to deteriorate, during an economic downturn, or simply to save the organization. The strategy of combining all alternatives will be followed by large firms that are active in several industries.
Having chosen a specific strategic alternative, management must turn to a specific strategy. The main goal is to select a strategic alternative that will maximize the long-term effectiveness of the organization. To do this, managers must have a clear, shared vision of the company and its future. Commitment to a particular choice often limits future strategy, so the decision must be subject to careful examination and evaluation. Strategic choice is influenced by various factors: risk (a factor in the life of the company); knowledge of past strategies; the reaction of shareholders, who often limit management's flexibility in choosing strategy; time factor depending on the choice of the right moment. Decision-making on strategic issues can be carried out in different directions: “bottom-up”, “top-down”, in the interaction of the two above-mentioned directions (strategy is developed in the process of interaction between top management, planning service and operational units).
The formation of the company's strategy as a whole is becoming increasingly important. This concerns the priority of problems to be solved, the determination of the structure of the company, the justification of investments, the coordination and integration of strategies.
5. Implementation of the strategy. Execution of the strategic plan is a critical process because, if the plan is actually implemented, it leads the firm to success. It often happens the other way around: a well-developed strategic plan can “fail” if measures are not taken to implement it. Very often there are cases when firms are unable to implement the chosen strategy. This happens because either the analysis was carried out incorrectly and incorrect conclusions were drawn, or because unforeseen changes occurred in the external environment. However, often the strategy is not implemented because management cannot properly attract the company's existing potential to implement the strategy. This particularly applies to the use of human potential.
Successful implementation of the strategy is facilitated by compliance with the following requirements:
The goals and activities of the strategy must be well structured, communicated to employees and perceived by them;
It is necessary to have a clear action plan for implementing the strategy, providing for the provision of the plan with all the necessary resources.
6. Strategy assessment and control . Assessment and control of strategy implementation is the logical final process carried out in strategic management. This process provides stable feedback between the progress of the process of achieving goals and the actual goals facing the organization.
The main tasks of any control are the following:
Determining what and by what indicators to check;
Assessment of the condition of the controlled object in accordance with accepted standards, regulations or other benchmarks;
Finding out the reasons for deviations, if any are revealed as a result of the assessment;
making adjustments if necessary and possible .
In the case of monitoring the implementation of strategies, these tasks acquire a very specific specificity, due to the fact that strategic control is aimed at finding out to what extent the implementation of the strategy leads to the achievement of the company's goals. This fundamentally distinguishes strategic control from managerial or operational control, since it is not interested in the correct implementation of the strategy or the correct execution of individual jobs, functions and operations. Strategic control is focused on determining whether it is possible in the future to implement the adopted strategy, and whether its implementation will lead to the achievement of set goals. Adjustments based on the results of strategic control may concern both the strategy being implemented and the goals of the company.
4.4. Advantages and Disadvantages of Strategic Planning
The main advantage of strategic planning is a greater degree of validity of planned indicators, a greater likelihood of the implementation of planned scenarios for the development of events.
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 company's top management with the means to create a long-term plan, provides a basis for decision-making, helps reduce risk in decision-making, and ensures the integration of the goals and objectives of all structural divisions and executives of the company.
In domestic enterprise management practice, strategic planning is rarely used. However, in the industry of developed countries it is becoming the rule rather than the exception.
Features of strategic planning :
must be supplemented by the current one;
strategic plans are developed at meetings of the company's senior management annually;
annual detailing of the strategic plan is carried out simultaneously with the development of the annual financial plan (budget);
Most Western companies believe that strategic planning mechanisms should be improved.
Along with obvious advantages, strategic planning has a number of disadvantages that limit the scope of its application and deprive it of its universality in solving any economic problems.
Disadvantages and limited capabilities of strategic planning:
1. Strategic planning does not and cannot, due to its nature, provide a detailed description of the picture of the future. What it can give is a qualitative description of the state to which the company should strive in the future, what position it can and should occupy in the market and in business in order to answer the main question - whether the company will survive or not in the competition.
2. Strategic planning does not have a clear algorithm for drawing up and implementing a plan. Its descriptive theory boils down to a specific philosophy or ideology of doing business. Therefore, the specific tools largely depend on the personal qualities of a particular manager, and in general, strategic planning is a symbiosis of intuition and the art of top management, the manager’s ability to lead the company to strategic goals. Strategic planning goals are achieved through the following factors: high professionalism and creativity of employees; close connection of the organization with the external environment; product updates; improving the organization of production, labor and management; implementation of current plans; inclusion of all employees of the enterprise in the implementation of the goals and objectives of the enterprise.
3. The process of strategic planning for its implementation requires a significant investment of resources and time compared to traditional long-term planning. This is due to more stringent requirements for the strategic plan. It must be flexible and respond to any changes both within the organization and in the external environment. The number of employees involved in strategic planning is higher than in long-term planning.
4. The negative consequences of errors in strategic planning are, as a rule, much more serious than in traditional, long-term planning. The consequences of an incorrect forecast are especially tragic for enterprises engaged in non-alternative economic activities. The high degree of risk in long-term planning can be explained by those areas of production and economic activity in which decisions about manufactured products are made; directions of investment of funds; new business opportunities, etc.
5. Strategic planning must be supplemented with mechanisms for implementing the strategic plan, i.e. The effect can be achieved not by planning, but by strategic management, the core of which is strategic planning. And this presupposes, first of all, the creation of an organizational culture at the enterprise that allows it to implement the strategy, a system of labor motivation, a flexible management organization, etc. Therefore, the creation of a strategic planning subsystem at a specific enterprise should begin with putting things in order in the management system, improving the overall management culture, strengthening performance discipline, improving data processing, etc. In this regard, strategic planning is not a panacea for all management ills, but just one of the means.
Organization strategy
5.1. Types of organization strategy
A strategy is a detailed, comprehensive, comprehensive plan designed to ensure that an organization's mission is achieved and its goals are achieved.
Strategy is largely formulated and developed by senior management, but its implementation requires the participation of all levels of management.
Strategic plan should be developed from the perspective of the entire corporation rather than the individual. The strategic plan must be supported by extensive research and evidence. To compete effectively in today's business world, a firm must continually collect and analyze vast amounts of information about the industry, market, competition, and other factors.
Strategic plan gives the company certainty and individuality, which allows it to attract certain types of workers, and, at the same time, not attract other types of workers. This plan provides a perspective for the organization to guide its employees, attract new employees, and help sell products or services.
Strategic plans must be designed to not only remain intact over long periods of time, but also to be flexible enough to allow modification and reorientation if necessary. The overall strategic plan should be viewed as a program that guides the firm's activities over an extended period of time, recognizing that the conflictual and constantly changing business and social environment makes constant adjustments inevitable.
The role of strategy in strategic planning is to provide a clearly defined, clear, desired, realistic and desirable competitive position.
The strategy should be as clear as possible . For example, planning for new products should include setting priorities, assigning responsibilities, time and production schedules. Here's an example of a bad, unclear strategy: In order to increase market share for product (X), additional funds will be allocated to design and advertising. A good strategy for the same organization should show clearer directions for action. Market share of product (X) should be increased from 6 to 8% within 12 months by developing attractive and functional packaging; enhanced advertising to attract 200 core consumers, changes in product redesign to improve its appearance without increasing costs.
Marketing strategy defines how the marketing structure should be applied to attract and satisfy target markets and achieve organizational goals. Marketing structure decisions focus on product planning, sales, promotion and price.
Often a company chooses a strategy from two or more possible options. . For example, a company that wants to increase its market share to 40% can do this in several ways: create a more favorable image of the product through intensive advertising; increase the number of sales personnel; introduce a new model; lower prices and sell through a large number of retail stores; Effectively integrate and coordinate all these marketing elements.
Each alternative presents different opportunities for marketers. For example, a pricing strategy can be very flexible because it is easier to change prices than to create different variations of a product. However, a strategy based on low prices is the easiest to copy. In addition, a successful pricing strategy can lead to a price war, which will have a very bad impact on the bottom line. In contrast, a location-based strategy is difficult to replicate due to long lease periods and the unavailability of suitable locations to competitors. But it can be inflexible and difficult to adapt to environmental changes.
At the company level, the following main strategies can be distinguished:
1. Takeovers.
2. Mergers.
3. Opening a branch in the country or abroad.
4. Acquisition of shares of other companies.
5. Establishing business contacts in various fields of activity with
other companies.
6. Vertical integration - acquisition of related companies (for example, suppliers, dealers). From these suppliers, dealers). From these general strategies flow strategies in relation to specific sales markets and the choice of alternative strategies in this case is carried out in accordance with the matrix of product markets.
The Product/Market Opportunity Matrix uses four alternative marketing strategies to maintain and/or increase sales: market penetration, market development, product development, and diversification (Figure 5).
Rice. 5. Opportunity matrix by product/market
The choice of strategy depends on the degree of market saturation and the company’s ability to constantly update production. Two or more strategies can be combined.
Market penetration strategy effective when the market is growing or not yet saturated. The company expands sales of existing products in existing markets through intensified product distribution, aggressive promotion and the most competitive prices. This increases sales: it attracts those who have not previously used the products of this company, as well as customers of competitors and increases the demand of already attracted consumers.
Market development strategy effective if: the local firm seeks to expand its market; as a result of changing lifestyles and demographic factors, new market segments are emerging; New areas of application are identified for well-known products. The firm seeks to increase sales of existing products in markets or to encourage consumers to use existing products in new ways. It can penetrate new geographic markets; enter new market segments whose demand has not yet been satisfied; offer existing products in new ways; use new distribution and sales methods; enhance promotion efforts.
Product development strategy effective when a firm has a number of successful brands and enjoys consumer loyalty. The firm develops new or modified products for existing markets. It focuses on new models, quality improvements and other minor innovations that are closely related to already introduced products, and sells them to consumers who are loyal to the company and its brands. Traditional marketing methods are used; promotion emphasizes that new products are produced by a well-known company.
Diversification strategy used to ensure that the company does not become overly dependent on one product group. The company begins producing new products aimed at new markets. The goals of distribution, sales and promotion differ from the traditional ones for the company. The basis for an organization's choice of one of the strategies listed above is: the strategy's alignment with our mission, the organization's internal capabilities, and the natural environment.
5.2. Organization portfolio plan
A business portfolio is a set of individual areas of activity and products of an organization. Business portfolio analysis is a tool with which the management of an organization identifies and evaluates various areas of its business activities in order to invest resources in the most profitable ones and narrow or terminate the weakest areas of activity. Here, first of all, it is necessary to identify the strategic business units (SBUs) of the organization, which is sometimes a difficult task, especially for large organizations. What should CHE be: a separate company, a division of a company, a product line or a separate product? The CHE must satisfy the following three criteria:
1) serve the external market, and not satisfy the needs of other divisions of the organization;
2) have their own, different from others, consumers and competitors;
3) SHE management must control all the key factors that determine success in the market.
Next, in order to develop strategies for the development of the organization, the degree of attractiveness of various SHEs is assessed. Typically, such an assessment is carried out according to two parameters: the attractiveness of the market or industry to which the CXE belongs, and the strength of the position of this CXE in this market or in this industry. The first, most widespread, method of CXE analysis is based on the use of the “market growth rate - market share” matrix (the so-called Boston Consultative Group matrix - BCG); the second is the CXE planning grid (the matrix of the General Electric Corporation or McKinsey). The matrix “market growth rate - market share” is intended to classify the organization’s CXE using two parameters: relative market share, characterizing the strength of the CXE’s position in the market (X-axis), and market growth rate, characterizing its attractiveness (Y-axis) (Fig. 6 ). The intersection of these two coordinates forms four quadrants. If SCEs are characterized by high values of both parameters, then they are called “stars” and should be supported and strengthened. If SHEs are characterized by a high value of the X parameter and a low value of the Y parameter, then they are called “cash cows” and are generators of the organization’s funds, since there is no need to invest in market development, but there is no future for them. With a low value of the parameter X and a high value of Y, SCEs are called “difficult children”; they must be specially studied to determine whether, with certain investments, they cannot turn into “stars”. When both the X parameter and the Y parameter have low values, then the CHEs are called “losers” and should be gotten rid of if possible unless there are compelling reasons to keep them.
Rice. 6. Boston Consulting Group Matrix
With the help of this matrix, managers resolve issues of determining areas of preferred investment in order to gain a larger market share, and perhaps discontinue production of a product. The CXE planning grid (Fig. 7) is used to assess the attractiveness of individual CXEs based on two coordinates: the X axis characterizes the strength of the CXE position in the industry, the Y axis is the attractiveness of the industry. Each of these coordinates is determined taking into account several parameters.
Rice. 7. CHE planning grid
The position strength index is determined taking into account the indicator of relative market share, the dynamics of its change, the amount of profit received, image, degree of price competitiveness, product quality, sales efficiency, geographical advantages of the market, and employee performance. Three levels of gradation of this index are accepted: strong, medium, weak. The industry attractiveness index is determined taking into account the size and diversity of markets, market growth rate, number of competitors, industry average profit, cyclicality of demand, industry cost structure, pricing policy, legislation, and labor resources. Three levels of gradation of this index are used: high, medium and low. The intersection of the lines characterizing the different levels of values of these two levels forms a grid that is divided into three zones: the zone in which the organization must invest; a zone in which the organization must maintain investments at the same level, and a zone in which it must obtain the maximum possible profit, after which it must leave.
Despite the attractiveness of such approaches, they also have a number of disadvantages. They are quite labor-intensive and expensive, a number of indicators are difficult to measure with their help, they focus attention on current CXEs and provide little information about the planning of new CXUs, and are based primarily on expert assessments, primarily of employees of a given organization.
Conclusion
So, the information presented and its analysis make it possible to fully imagine that a correctly chosen and successfully implemented enterprise management strategy is the key to its fruitful functioning in a market economy.
Naturally, a good strategy coupled with successful execution does not guarantee that a company will be able to completely avoid periods of recession and instability. Sometimes it takes time for managers' efforts to produce positive results. However, it must be remembered that it is the responsibility of the manager to prepare the company's strategy for unexpectedly demanding conditions through proactive strategic planning - perhaps the most important part of strategic management.
It should be remembered that planning is organically included in the management process and does not represent a separate event for two significant reasons. First, although some organizations cease to exist after achieving the purpose for which they were originally created, many strive to continue to exist as long as possible. So they redefine or change their goals.
The second reason why planning must be carried out continuously is the constant uncertainty of the future. Due to changes in the environment or errors in judgment, events may not unfold as management anticipated when plans were made. Therefore, plans need to be revised to ensure they are consistent with reality.
Strategic decision making is the choice of how and what to plan, organize, motivate and control. In the most general terms, this is precisely what constitutes the main content of a leader’s activity. But since there is no single strategy for all enterprises, and therefore each enterprise that wants to survive in harsh market conditions develops its own strategy based on an analysis of the external environment, its own potential, based on the goals and mission of the organization. Developing an organization's strategy is not an end in itself for strategic management. This complex and time-consuming work becomes meaningful only if the strategy is subsequently successfully implemented. In order to control the process of strategy implementation and be confident in achieving the set goals, organizational leaders are forced to develop plans, programs, projects and budgets, motivate the process, i.e. manage it.
Strategic management involves not only a thorough study of all its areas, which naturally becomes obvious, but the mandatory participation of managers at all levels of management in its development.
Strategy planning is a type of management activity that requires significant effort and time. The main condition for the effective functioning of the strategic planning system is constant attention to it from senior managers, the ability to prove to them the need for planning to involve a wide range of employees in the development and implementation of the strategy. This attention is especially important at the first stage of implementing a planning system in an organization.
The choice of a company's strategy is made by management based on an analysis of key factors characterizing the state of the company. Also, the choice of strategy largely depends on the style of organizational behavior. There are two main styles - incremental (based on what has been achieved) and entrepreneurial. Strategic planning is a systematic approach to entrepreneurial behavior.
An organization's potential and strategic opportunities are determined by its structure and the quality of its personnel. Without sufficiently complete information about the quality of personnel, management cannot make the right choice of company strategy.
In conclusion, it should be noted that the organizational development of enterprises in Russia, apparently, occurs in accordance with the objective laws and patterns of development of organizations - the patterns of delay and inadequacy. A necessary condition for reducing the impact of negative factors caused by these patterns on enterprises is the development and implementation of the mandatory practice of a strategic approach to enterprise management and planning their activities.
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Strategic management can be viewed as a dynamic set of five interrelated management processes. These processes logically follow (or follow) one from the other. However, there is a stable feedback and, accordingly, a reverse influence of each process on the others and on their entirety. This is an important feature of the strategic management structure. The structure of strategic management is shown schematically in Fig. 1.
Rice. 1. Strategic management structure
Environment analysis
Environmental analysis is generally considered the original process of strategic management because it provides both the basis for defining the firm's mission and goals and for developing behavioral strategies that will enable the firm to achieve its mission and achieve its goals.
One of the key roles of any management is to maintain balance in the organization’s interaction with the environment. Every organization is involved in three processes:
- obtaining resources from the external environment (input);
- turning resources into products (transformation);
- transfer of the product to the external environment (output).
Management is designed to provide a balance between input and output. As soon as this balance is disturbed in an organization, it takes the path of death. The modern market has sharply increased the importance of the exit process in maintaining this balance. This is precisely reflected in the fact that in the structure of strategic management the first block is the environmental analysis block.
Analysis of the environment involves the study of its three components:
- macroenvironment;
- immediate environment;
- internal environment of the organization.
Analysis of the external environment (macro and immediate environment) is aimed at finding out what the company can count on if it successfully conducts its work, and what complications may await it if it fails to avert in time the negative attacks that may present her with an environment.
Analysis of the macroenvironment includes the study of the influence of the economy, legal regulation and management, political processes, natural environment and resources, social and cultural components of society, scientific, technical and technological development of society, infrastructure, etc. .P.
The immediate environment is analyzed according to the following main components: buyers, suppliers, competitors, labor market.
Analysis of the internal environment reveals those opportunities, the potential that a company can count on in competition in the process of achieving its goals. Analysis of the internal environment also allows us to better understand the goals of the organization and more correctly formulate m and s s and y, i.e. determine the meaning and direction of the company’s activities. It is extremely important to always remember that the organization not only produces products for the environment, but also provides an opportunity for existence for its members, giving them work, providing them with the opportunity to participate in profits, providing them with social guarantees, etc.
The internal environment is analyzed in the following areas:
- personnel of the company, their potential, qualifications, interests, etc.;
- management organization;
- production, including organizational, operational and technical-technological characteristics and scientific research and development
- company finances;
- marketing;
- organizational culture.
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