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Corporate Strategy and Long-Range Planning

Reporter: GIAN CARLO M. DELA CRUZ

Introduction

Planning presupposes willingness by management to spend a lot of time, energy and


money in the present for results that will not be seen until some time in the future. Since
results cannot be assured, risk is involved. The planning process is utilized to reach
distant goals which will assure both survival and optimizations of long-term profits.

PLANNING

Planning is a process for accomplishing purposes. It is a blue print of business growth


and a road map of development. It helps in deciding objectives both in quantitative and
qualitative terms. It is setting of goals on the basis of objectives and keeping in the
resources.

FIVE MAJOR PHASES OF PLANNING

1. DATA COLLECTION AND ASSESSMENT OF CURRENT POSITION

• Data must be gathered in order that a reassessment of the company’s major


policies and a restatement of its specific objectives can be made. The data are
also necessary for strategic planning.

• Knowing the current business environment in one’s country is not enough. We


must be able to anticipate the changes which will take place. More , importantly,
we must be able to assess what business opportunities will be created or
destroyed by such changes, and to foresee what the effects will be on the firm’s
performance capability.

• Such assessments provide us with the basis for proceeding to the critical aspect
of setting objectives.

2. SETTING SPECIFIC OBJECTIVES

• The purpose of policies is to provide guidance for decision making.

• Most companies will include, among their goals, a certain return on invested
capital. This must be done with he realization that, if a high rate is set,
management will have to make greater risks.
3. STRATEGIC PLANNING

• Strategy is simply the process of devising alternative choices of achieving


company objectives, of relating choices to company resources and to the
environment, and then selecting the best- method for achieving those objectives.

• The concept of strategy is closely linked with probable changes in the


environment. One of the key factors in the environment, as we very well know by
now, is competition.

• The use of strategic approach is basic to the process of planning, and strategic
planning is a key part of the planning process.

STEPS IN STRATEGIC PLANNING

• What would happen over the ext five years if the company were to
continue its present course-selling the same products in the same
markets in the same quantities and at the same prices and
following the same internal operating policies.

• Determining whether, from the evidence presented by the analysis


of data collected, the preliminary objectives which the company
have set I five years still appear to be realistic.

• Identify the finite, operational gaps between where the company is


now and where the plan’s objectives direct it to be at some specific
time in the future.

• Determining the set of available alternatives, that might be used to


close each gaps.

• Evaluate the risks, costs and returns associated with each


alternative, for each gap, ad to make the strategic choices
necessary to reach each goal.
• Review personnel requirements and prepare proforma financial
statements for each year of the planning period.

• Prepare the written strategic plan.

4. OPERATIONAL PLAN

• Once the strategic plan is approved, it must be broken down into


operational categories while responsibility for every category is
assigned to a specific individual in the company.

• The manager must set the goals to be attained each year, indicate
the steps to be taken to achieve those goals, and detail the
resource requirements in terms of manpower and cash over time.

OPERATIONAL CATEGORIES

• Product Planning and development

• Market Planning

• Production Planning

• Manpower Planning

• Organizational Planning

• Financial Planning

5. The Short term plan

• This is usually associated with the annual budget.

• The short-term plan and annual budget should coincide in every


way with the goals set for attainment at the end of the first year of
the long-term plan.

• The short-term plan will be divided into twelve monthly periods and
can, therefore, be based on sale and cost forecast which are more
detailed and accurate than those used for the log-term plan.
CONCLUSION

The success of long-range planning is not determined by the production of an


impressive document entitled “Company Goals and Plans, 1980-1985,
CONFIDENTIAL- especially if it is then kept locked in the president’s desk.

Planning is a process. A beginning which gives purpose and direction to management.


Long-range corporate planning is a complicated process. There are few established
procedures and techniques. The subject of corporate planning alone cannot be reduced
to simple, objective facts. It is a process that is basic as it is subtle. This, however, does
not imply that planning is an unreal or impractical exercise. O the contrary, strategic
corporate planning, within any environment, is both feasible and necessary. It is one of
the key responsibilities of he firm’s chief executive officer. Planning will never be utilized
if it appears too complex, theoretical, and impractical to the manager. The planning
process should be kept very simple he first time it is tried. Compromises should be
made on the amount of data to be gathered, on the quality and quantity of the
objectives, and on the level of risk assumed in the strategies. As experience is gained in
the process, each of the compromises can then be corrected.

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