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Strategic Plan Literature Review
A fundamental technique applied by management accountants in managing an organization is strategic planning. Strategic planning a comprehensive method that consists the determination of what an organization should become and how it can achieve its goals and objectives Griffin (2013). In strategic planning mission and vision for the business are laid out. It does not necessarily involve describing how to achieve the goals of the business but to describe where the business is going.
Though strategic planning is a paramount need for an organization’s growth through recharging, an organization is mostly tired of coming up with new ways due to the scarcity of resources (Byron 2011). This paper is intended to analyze strategic planning as a management accounting function by going through literature reviews to ascertain the applicability, characteristics, and assumptions underlying the technique.
Literature review
Bain (2015) researched on strategic planning and its applicability in organizations. According to the author, strategic planning exploits the full potential of a business and acts as a link between the objectives of the business and the resources required to achieve the objectives. According to Bain (2015), a clear strategic plan should address the following issues.
1. A full insight into an organization’s mission, goals, and objectives.
2. Explore all the potential business gaps and markets for emerging opportunities and threats.
3. Provide an understanding of the future market segments and priorities.
4. An analysis of the company’s weaknesses and strengths and its competitors together with processes in the value chain that need to be changed or adopted.
5. Identification, assessment, and evaluation of strategies and creation of a business model that can differentiate the business with competitors.
6. Preparation of programs and policies for proper implementation of the strategies.
7. Allocation of resources, responds to environmental changes and monitoring of performance.
Strategic Plan Literature Review
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Strategic planning is used by management accountants to change the performance of a business, promote discussions that provide facts that are politically sensitive, the creation of a model that integrates all the functions of the organization, and have proper context for making budgeting decisions (Amy 2012). Through strategic plans, managers get more insightful information for decision making and business appraisal.
The assumption made in developing strategic plans is that resources are readily available, and the organization is underperforming. Also, it is assumed that the external factors and internal factors provide all the required information for making strategic plans. However, it’s hard to get complete strategies since competitors do not give information that is relevant for benchmarking and the process is also implicated b social and political factors (Byron 2013).
Another scholar, Paul (2013) made a comprehensive research on the essential requirements for strategic planning. The author also assumes that the organization making strategic plans is financially struggling. According to the author, strategic planning is a functional process that provides the difference between a struggling organization and an innovative-driven organization.
The reason behind strategic planning is to create a cultural environment that believes in planning not just for the company to strive out of its low performance but long after regaining form (John 2012). Successful strategic planning incorporates ideas, inspiration, hard work, and determination. Most strategic plans are currently static and should evolve to being more adaptive and directive.
Strategic Plan Literature Review
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Paul (2013) noted that the essential elements of a successful strategic plan involve:
1. Beginning at the top.
For a unified mission and vision, top management should take priority in implementing the strategic plans. The plan does not only involve management accounting but all other senior departmental managers including the CEOs. The senior managers should drive the strategies and give reasons behind each plan for effective accomplishment of organization goals. A strategic plan involves all the processes of an organization, and it is through coordination of the different functions and processes that a cohesive strategic plan is formulated. Management should be leaders in their job to ensure the strategies fall in place.
2. Inclusion of strategic plan at all levels
Management accountants should involve all the levels of employees while designing a strategic plan. As proven by the lean approach, each has different ideas, and if given the right conditions, the ideas can be put to work (Khan and Join 2010). The sales team, financial accountants, casual workers, and even customers should be involved in strategic planning. Involving all levels of the organization in strategic planning ensures that passion for the internal community is strong for all the people working at the organization. Employees get motivated to work even extra hard when they feel they are considered a part of the organization.
3. Concentrate more on skill than vision
Though a strategic plan is guided by the vision of the organization, skills and expertise required is key to the achievement of the firm’s goals. Different skill sets should be applied while crafting the strategic plan (Bain 2014).
4. Have a guidebook for making decisions
The strategic plan should be used by all the functions of the organization to make decisions. Mission, vision, and decisions should be the core of the strategic plan and should provide advance decisions for the firm. The strategic plan should be the first thing to be viewed and applied daily as it is a representative of the organization.
5. Flexibility
Though the strategic plan is used as a guidebook, the market keeps on changing, and it should be designed in a way that it can be changed. Priorities and economic conditions shift making the tasks laid out for accomplishment to change and evolve.
A well-documented strategic plan uses the past to forecast the future and creates a specialized culture for the organization. Strategic plans impact the organization socially by integrating the different functions and departments (Erica 2012). It is ethical in its form since all the stakeholders are involved hence ensuring that the needs of each are looked into before it is implemented.
Strategic Plan Literature Review
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Dennis (2013) talked about an organization looking beyond strategic plan. There are so many challenges faced by organizations that they wonder whether they will survive, let alone succeed. One of the main ways of re-starting an organization is through strategic planning. At the beginning of strategic planning, organizations are always excited yet mostly they end up failing in their mission. Failure by organizations results from strategic plans lacking some primary components such as:
1. A detailed assessment of the organizational structure.
2. A vision that is clear with uptight measures.
3. A clear and comprehensive funding structure to acquire all the necessary resources.
4. A plan that is detailed for implementation by both the staff and the management.
After the process of making the strategic plan, management accountants involved in the process always say that the process gave them insights into fulfilling the goals of the organization, that the functions were fully engaged and so on. The managers involved in the process should have greater confidence in the improvement of the organization and also the know how to accomplish the goals (James 2012). All the staff and board of directors should also be excited because they know where they are as an organization and where they are going.
According to Dennis (2013), effective process of strategic planning begins by first establishing the current position of the organization and the internal obstacles that it’s facing and all the hindrances to its achievement. Establishing obstacles is done by having a comprehensive face to face interviews with all the involved stakeholders both internal and external.
Before the interviews are done, it is crucial to collect and review information about the organization. Information management needs to have include budgets and financial statements, table of organization used by management, board minutes, marketing and public relations schedules and a better understanding of all the components. It’s only after there is a detailed list of information that a strategic plan can be prepared.
Strategic Plan Literature Review
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The vision presented by the strategic plan should create enthusiasm, commitment and should be well understood. After a clear identification of where the organization intends to go, review of all services and programs is done to determine processes that need to be changed or improved. Few goals should be set to enhance attainability. Also, during strategic planning, it is an appropriate time to outsource activities or involve other organizations so as to achieve the goals of the organization (Graham 2014).
After a comprehensive assessment of the organization is done, inspirational mission and vision for the organization is established as the foundation for the strategic planning. It is only by going beyond the traditional methods of strategic planning that the employees can be re-energized to impart new life to the whole organization.
According to Bill (2014), Strategic planning is no longer creating vibrancy and energy in organizations. The inability of the managers to forecast the future was the major contributing factor to the decline in the use of strategic planning. Instead of directing resources to opportunities that were productive, strategic managers accepted any project that was brought forward.
Also, strategic plans were not interrelated to the main action plans, and if action plans were described, they were so vague such that managers continued to do their operations in the usual way. A lot of time would be spent in drafting an attractive mission statement that wasn’t practiced.
Strategic Plan Literature Review
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All the above scholars identify strategic planning as a core function of management. It is through having a strategic plan that the direction of an organization is established. However, a plan is incomplete without the involvement of both the internal and external stakeholders. According to Ronald (2013) the plan should be at par with the regulations of the market as well as company’s policies. It should create a correlation between the social aspects of the organization as well as the political aspects.
Leaders should be incorporated and should be first in coming up with effective strategies. It is through proper leadership that common goals and team work is established (James 2011). An organization that does not incorporate teamwork as a core social aspect does not succeed. It is, therefore, necessary to involve all the stakeholders in the designing of the strategic plan.
Before commencing to write a strategic plan, the management should have clear information on all the organization functions. The sales people, accountants, human resources, budgetary committee, financial managers and all internal, as well as external stakeholders, should be involved. When all stakeholders are involved, it’s easy to get a clear picture as to what is ailing the organization.
The obstacles undermining the performance of the organization should be established (Steven 2013). Involvement of all the functions and stakeholders ensures that all ideas are incorporated and weighed against each other to get a common goal. A strategic plan is not necessarily designed to show how goals are to be achieved but where the future of the organization lies.
The reason so many strategic plans are set but do not work is because resources are not directed where they can be mostly profitable. Managers become so blinded with setting up mission and vision for the organization that they do not plan for specific issues that will lead to profitability in an organization.
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Historical data on cost allocation strategies, budgeting, financial statements, and performance is used to generate a strategic plan. The strategic plan also incorporates forecasting and cost analysis since the plan should lie within the available resources (Mark 2013). The more information and stakeholders are involved, the best the outcome. A strategic plan should not be just a documented plan, but it should provide a clear mission and vision for the organization and should be a guide to employees and all staff. The plan should create a culture of team work and leadership. When all the stakeholders are involved, the employees feel part and parcel of the organization and get motivate to put their best feet forward.
References
Amy Beinstein, 2012. How the next big management ideas will arise. Available from http://www.strategy-business.com/strategy_and_leadership
Bain, 2015. Strategic planning: Available from http://www.bain.com/publications/articles/management-tools-strategic-planning.aspx
Bill Conerly, 2014. The death of strategic planning: Available from http://www.forbes.com/sites/billconerly/2014/03/24/the-death-of-strategic-planning-why/
Byron Simerson, 2011. Strategic planning. A practical guide to strategy: Available from https://books.google.com/books?isbn=0313384800
Dennis Miller, 2013. Beyond strategic planning: Available from http://www.thenonprofittimes.com/news-articles/beyond-strategic-planning/
Erica Olsen, 2011. Strategic planning: Available from https://books.google.com/books?isbn=1118050568
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William Pirraglia, 2010. Why is strategic planning important to business? Available from http://smallbusiness.chron.com/strategic-planning-important-business-2671.html
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