General - Strategic Management

It is worth remembering that operating plans are a form of communication between managers and the chief executive. The planner must not become a blockage. The help and advice given to managers as they complete their plans, the way the planner tried to ensure that they have evaluated the logical implications of each course of action; have studied alternatives; and have taken account of the company assumptions – all these must be carried out in a way which does not destroy the plans as a communication channel.Good planners will enjoy the confidence of line managers – although this is something which may take time to win – and will be able to help and guide them informally during the planning preparation.

The borderline between help and interference is a very fine one which the planner must be careful not to cross.Plans should be routed to the chief executive through the planner. The planner’s task at this stage is to relate the plans to the outline strategy and corporate policies, to check them for completeness, and to coordinate them with the plans of other operating divisions. At this stage the planner may informally or formally go back to the manager on aspects of the plan. Eventually they should be passed through to the chief executive with a note (copied to the line managers concerned) of the main issues for decision – results, areas of risk, main problems, strategic issues, and the like.

There should always be a review of plans by the chief executive and, possibly, other members of the top management team. Reviews may be held of all plans in one major meeting attended by all concerned. Alternatively, and I prefer this, they may be small meetings consisting of the chief executive, planner, the operating manager, and whatever team he or she wishes to bring with him.Sometimes a private meeting between chief executive and manager may be better, in which case the planner should not expect to attend as a right. In large companies the strategic planner may have a number of divisional operating plans, all broadly accepted, to integrate into total company strategy.

Some companies simply add up the profits and capital needs of all divisions and call that the plan. In my view consolidation is not as simple as that, and may require adjustment to the figures carried through for strategic planning. An example of this is with estimates of capital requirements: in operating plans these are frequently high for two years (where managers have firm projects in mind) and tail off to nothing for the rest of the plan. The planner may need to adjust these estimates.

Review may lead to modification. Once a plan has been agreed and accepted it becomes an instruction from top management to the operating manager to begin to implement, which should lead to the preparation of the tactical plans It is not a blanket authorisation to commit vast sums of capital expenditure, although it is an agreement that, provided the detailed appraisal of the expenditure indicates acceptable results, the capital will be made available.

Chaos is often caused in companies where plans are accepted but no thought is given by top management to capital needs. If there is no intent to provide the necessary capital, the lubricant which makes the plan work, the plan itself must be changed.Techniques may be used to aid the task of operational planning. Some have already been described in earlier chapters, and a number will be discussed later. Success in this type of planning is not a matter of techniques, but of the method of approach and motivation. If this goes wrong, much of the company’s planning effort will be wasted. If it succeeds the company will reap many rewards.

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Strategic Management Topics