MICHAEL M.

MAUNDU D61/60723/13 DSM601: STRATEGIC MANAGEMENT

Assignment 2 It has been observed that there is growing popularity of strategic planning in Kenya today than ever before. What are the possible explanations for this popularity?

1. INTRODUCTION Widely acclaimed research has shown that organisations that plan strategically obtain superior profitability than those that dont.This implies that expenditures related to strategic planning activities would be compensated financially.Similarly, firms must adapt to environmental forces when the costs of influencing the environment exceed the benefits.Since, organisations are open systems, enterprises that ignore environmental turbulence do so at their own peril. Contemporary management is not possible without strategic thinking. The stategist must know the company's strategicposition, understand the influence of changing conditions,monitor internal and external environment of the company and choose the right time to change strategy.Effective strategic planning can transform an organization, bring wealth to shareholders, or change thestructure of an industry. Strategic planning is focused on changes and amendments to be made in the organization and within its interactions with the environment in which it operates, in order to avoid situations in which goods and services provided by the organization, their production and sale, entire activity become outdated, inconsistent in relation Swith produced changes.Thus, strategic planning has become a premise for the realization of the sustainable competitive advantage of an organization.Thus, it attempts to bridge the gap between the firms current state & its desired future state. Strategic planning is increasingly used by small businesses, large corporations, non profit institutions, government organizations as well as multinational corporations. . It is well known that people and organizations which plan in time are more likely to become what they want than those which do not plan. The core role of strategic planning is efficiency & effectiveness organisational long term objectives. in the realisation of

2. DEFINITION

According to Cole G.A(1997)Strategic planning is the process of preparing for future whilst taking into account for environmental dynamics and complexity. This entails the need to build alternative future scenarios and configurations. Hence, strategic planning provides guidelines and programs for the achievement of specific goals and visions. It specifies the basic conditions as well as the scope for future business activities. Without a strategy, a manager has no thought-out course to follow, no roadmap to manage by, no unified action program to produce the intended results.Powerful execution of a powerful strategy is not only a proven recipe for business success but also the best test of excellent management(Thomson and Strickland). The sole purpose of strategic planning is to enable a company to gain, as efficiently as possible, a sustainable edge over its competitors. Corporate strategy thus implies an attempt to alter a companys strength relative to that of its competitors in the most efficient way(Kenichi Ohmae ) . The goal of developing a strategic plan is to create a competitive advantage, i.e. the aggregation of factors that sets an entity apart from its competitors and gives it a unique position in the market that is superior to its competition. From a strategic perspective, the key to business success is to develop a unique competitive advantage,one that creates value for customers and is difficult for competitors to duplicate. A company that gains a competitive advantage becomes a leader in its market and can achieve above-average profits. Building a competitive advantage alone is not enough; the key to success over time is building a sustainable competitive advantage. In the long run, a company gains a sustainable

competitive advantage through its ability to develop a set of core competencies that enable it to serve its selected target customers better than its rivals. Core competencies are a unique set of capabilities that a company develops in key areas, such as superior quality,customer service, innovation, team-building, flexibility, responsiveness, and others, that allow it to vault past competitors. .

3.Purpose and Benefits of Strategic Planning Strategic planning helps craft a sustainable competitive edge for an organisation in the future which is characterised by deep uncertainities, complexities and intensified competition(Thompson et al)

According to Cole G.A(1997) organisations adopt strategic planning due to a variety of purposes including to:
a. Clearly define the purpose of the organization and to establish realistic goals and objectives consistent with that mission in a defined time frame within the organizations capacity for implementation. b. Communicate those goals and objectives to the organizations constituents. c. Develop a sense of ownership of the plan. d. Ensure the most effective use is made of the organizations resources by focusing the resources on the key priorities. e. Provide a base from which progress can be measured and establish a mechanism for informed change when needed. f. Bring together of everyones best and most reasoned efforts have important value in building a consensus about where an organization is going. g. Provides clearer focus of organization, producing more efficiency and effectiveness. h. Builds strong teams and synergy in the organisation. i.Produces great satisfaction among planners around a common vision. j. Increases productivity from increased efficiency and effectiveness.

Organizations go through a new cycle of the strategic planning processevery year. This does not necessarily mean that top management choose a new strategy eachyear. In many instances, the result is simply to modify and reaffirm a strategy and structure already in place. The strategic plans generated by the planning process generally look out over a period of one to five years, with the plan being updated, or rolled forward, every year. In most organizations, the results of the annual strategic planning process are used as input into the budgetary process for the coming year so that strategic planning is used to shape resource allocation within the organization.

3. CONCLUSIONS strategic planning promotes long-term thinking, reduces the focus on operational details and provides a structure for the identification and evaluation of strategic alternatives. In summary, strategists advocate for adaptation of organizations to environmental forces when the costs of influencing the environment exceed the benefits. However, they should be proactive in creating their own opportunities. In addition, organizations should engage in deliberate strategic planning processes, but they should also be willing to make mistakes and learn from them as they chart a strategic course. In other words, strategy should be both deliberate and emergent, and firms should both adapt to and enact their environments, with the situation determining which option to choose. The most important reason for adoption of strategic planning by organisations in Kenya is that it significantly improves economic and financial results of the company, quick development and strengthening its market position, appreciably increases its competitiveness as well as motivates it employees through participative engagement & empowerment in decisionmaking.

REFERENCES
1. Fred R. David, Strategic management concepts and cases, Ed. Prentice Hall, New Jersey, (2011). 2. Hill C.W., Jones G. R., Strategic management, 4th Edition, Boston: Houghton Mifflin Company, (1998). 3. Istocescu A., Strategies and strategic management of the organization. Basic concepts. Managerial applications (Strategia si managementul strategic al organizatiei. Concepte fundamentale. Aplicatii manageriale), Ed. ASE, Bucuresti, (2005). 4. Nicolescu O., Managers and human resources management (Managerii si managementul resurselor umane), Ed. Economica, Bucuresti, (2004). 5. Pearce J., Robinson R., Strategic management, 8th Edition, Ed. McGraw Hill Companies, Columbus, (2003). 6. Popa I., Strategic management (Management strategic), Ed. Economic, Bucuresti, (2004). 7. Radulescu C., Sustainable development and economicfinancial implications of the farm organizations (Dezvoltarea durabil si implicaiile economico-financiare ale organizrii exploataiilor agricole), Ed. ASE, Bucharest, (2003). 8. Vihanskii O., Strategic management, Ed. Gardarica, Moscova, (1998)