The Decision Making Process and Corporate Planning
Corporate planning is strategic in nature as compared to the functional or tactical plans that each department in the organization follows on a daily basis. Strategic planning usually provides the organization with a strategic direction for the next five to ten years (though this doesn't mean that the plan is locked in stone - it may be adjusted based on changes in the business environment). It is a bottom-up, top down, bottom-up planning process. We start with an analysis of the business environment that is provided by each of the functional departments. This includes an analysis of the external environment often provided by the Marketing, Legal, Research and Development, and Environmental Departments. The external environment is described as the economic factors of all markets that the firm serves, changes in demographics of all markets that the firm serves, social and cultural buying behaviors of customers in all potential markets that they firm may serve, changes in technology that impacts the way that products are made or sold, changes in government regulations, and changes in the natural resources available to the firm. In addition each functional department including manufacturing and finance provide information about the firm's resources, it customers, its channels, its suppliers, its competitors, and the products that the firm makes. We refer this analysis as scanning the Business Environment. Dr. Belasen provides you with further details on this process in the next Mini-lecture.
From this information corporate management (usually a team of managers will assist in this process. However some larger organizations have a strategic planning function within the organization), will assess the strengths and weakness of the organization. They can use several tools that primarily have been described by Michael Porter. These tools include Porter's five forces model that looks at the Risk of New Competitors Entering the Market; the Power of Suppliers; the Power of the Buyers; the Threat of Substitute Products; and Rivalry Among Firms. Firms also will perform a product portfolio analysis that lets them assess the opportunities and threats that they expect to see over the next five to ten years, and a competitive analysis so that the firm can determine their own positioning. (Many of these tools are described in your readings with overviews in the mini-lectures found in this module.) This data in addition to the firm's mission statement will help the management team develop a corporate strategy and long-term goals. These strategies are describe further in the next mini-lecture titled Corporate Strategies. Once the strategic direction of the firm has been determined, the functional departments can develop their tactical plans. Tactical plans usually cover one to two years of the planning process, this allows for greater flexibility in achieving the corporate goals. You will learn more about the functional departments and tactical planning in several of the eight core courses (MIS, Operations Management, Marketing, HPM, HSB, and Accounting and Finance). Each tactical plan starts with a functional strategy that is synergistic with the corporate strategy. The tactical plan describes specific milestones that will enable the firm to support this strategy, the resources needed to achieve these objectives, and the expected outcomes from the resources dedicated to the action plan. Based on the tactical plans the firm can estimate the resources needed to implement its strategic plan and the expected performance of the firm based on the proposed strategic direction of the firm. Keep in mind as with all planning, it is important to have an on-going audit of the planning process that will enable the firm to adapt to changes in the business environment.
Please feel free to contact me to discuss this further.
For professional application with a more detailed scope than this course (for your resource in the future after the MBA program beyond the requirements of the capstone project - not now) there is a good reference for strategic planning: Palo Alto's Business Plan Pro
SUNY ESC MBA PROGRAM Last modified: Thursday, July 20, 2017, 6:23 PM