Strategic management global cultural perspectivesfor profit and non profit

Strategic Management


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Strategic Management
Global Cultural Perspectives
for Profit and
Non-Profit Organizations

Marios I. Katsioloudes, Ph.D.
Professor of Management
School of Business and Management
American University of Sharjah
United Arab Emirates

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Library of Congress Cataloging in Publication Data
Katsioloudes, Marios I.
Strategic management : global cultural perspectives for profit and non profit organizations / by
Marios I. Katsioloudes.
p. cm.
Rev. ed. of: Global strategic planning.
Includes index.
ISBN 0 7506 7966 2 (pbk. : alk. paper) 1. Strategic planning. 2. Nonprofit organizations.
3. Globalization. I. Katsioloudes, Marios I. Global strategic planning. II. Title.
HD30 . 28 . K3755 2006
658 . 4’012 dc22
2005024536
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library.
ISBN 13: 978 0 75 067966 4
ISBN 10: 0 75 067966 2
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This work is dedicated to the memory of my beloved

parents, Ioannis and Vasiliki, and to my hometown of
Famagusta, Cyprus, whose citizens have inspired and
challenged me throughout my life.


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Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x
Acknowledgments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiv
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv

PART ONE: AN OVERVIEW OF THE STRATEGIC
PLANNING PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1
An Introduction to the Strategic Planning Process (SPP) . . . . . . . . . . . . . . . . 3
Introduction 3. The Importance of Strategic Management and Planning 4. Dynamic
Strategic Management Process 7. Important Terms in Strategic Management 8.
Strategic Levels 14. Stakeholders and Stakeholder Management 20. Organizational
Strategists 24. The Case for Planning 31. Cultural Influences on the Strategic
Planning Process 31. The Strategic Importance of Understanding the Global
Environment 32. Summary 33. Discussion Questions 33. Endnotes 34.

2
Contemporary Issues in the Strategic Planning Process . . . . . . . . . . . . . . . . . . 37
Introduction 37. Diversity: The Changing Workplace 38. Corporate Social
Responsibility and Ethics 39. Benchmarking 46. Technology as a Strategic
Weapon 47. Small Business and Entrepreneurship 50. Strategic Management in
Nonprofit and Public Organizations 59. Overview of Global Strategic Planning 61.

Summary 62. Discussion Questions 63. Endnotes 63.

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Contents

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viii

Contents

PART TWO: STRATEGY FORMULATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

3
External Strategic Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Introduction 69. SWOT Analysis 69. Environmental Scanning and the Value
of Information 73. The Role of the Environment 76. The Concept of Strategic
Groups 77. Industry Analysis 82. Forecasting 88. Industry Financial Averages 92.
Summary 94. Discussion Questions 94. Endnotes 95.

4
Internal Strategic Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Introduction 99. SWOT Analysis 100. The Mckinsey 7-S Framework 104. The
Balanced Scorecard 106. Porter’s Value Chain Approach 108. Functional Areas of
the Business and Strategic Management 110. Organizational Structure 114.
Organizational Culture 122. Financial Ratio Analysis 127. Summary 130.

Discussion Questions 131. Endnotes 132.

5
Strategic Options—Corporate Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Introduction 135. Corporate Strategy 135. Growth Strategies 136. Stability Strategy
149. Retrenchment Strategies 150. Portfolio Management Approaches 152. Niche
Strategy 157. Summary 159. Discussion Questions 160. Endnotes 160.

6
Strategic Choice Options—Business and Functional Levels . . . . . . . . . . . . 165
Introduction 165. Business-Level Strategies 165. Porter’s Generic Competitive
Strategies 170. The Importance of Risk Propensity in Strategic Decisions 176. The
Impact of the Quality Movement 179. Functional Level Strategy 182. Summary 191.
Discussion Questions 192. Endnotes 192.

PART THREE: IMPLEMENTATION, EVALUATION AND CONTROL . . . . 197

7
Implementing Strategies in the Business and Functional Levels . . . . . . . . 199
Introduction 199. What Is Implementation? Why Is It So Important? 200. Programs,
Budgets, and Procedures 202. Organization Structure as a Strategic Implementation
Variable 204. Organizational Culture as a Strategic Implementation Variable 209.
Managerial Leadership as a Strategic Implementation Variable 214. Summary 219.
Discussion Questions 219. Endnotes 220.


8
Evaluation and Control in Strategic Planning . . . . . . . . . . . . . . . . . . . . . . . . 223
Introduction 223. The Importance of Strategic Control 224. The Process of
Evaluating Strategies 228. Six Evaluation and Control Process Steps 234. Summary

239. Discussion Questions 240. Endnotes 240.

PART FOUR: THE STRATEGIC PLANNING PROCESS
IN THE NONPROFIT SECTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243

9
A Strategic Planning Process (SPP) Model for the Nonprofit Sector . . 245
Introduction 245. Public-Private Distinctions and Strategic Management 248.
Summary 266. Discussion Questions 267. Endnotes 267.

10
Strategic Market for the Public and the Nonprofit Sectors . . . . . . . . . . . . 269
Introduction 269. The Importance of Strategic Marketing 270. Profit versus
Nonprofit Marketing 271. Marketing Research 274. Identification of Competitors
279. Fund Raising as a Strategic Marketing Technique 281. Are Marketing, Selling,
and Development the Same? 286. Is Marketing Needed in the Nonprofit
Organization? 288. Orientation Toward Marketing 289. Advertising 296.
The Marketing Plan 303. Summary 306. Discussion Questions 306. Endnotes 307.

PART FIVE: THE GLOBAL ENVIRONMENT . . . . . . . . . . . . . . . . . . . . . . . . 309

11
A Framework of Global Strategic Planning . . . . . . . . . . . . . . . . . . . . . . . . . . 311
Introduction 311. Overview of Global Strategic Planning 312. Global
Political Economy: Foreign Direct Investment (FDI), Trade, Financial Flow, and
Technology Transfer 314. FDI Prospects 320. Prospects for Major Host and
Home Countries 322. The Role of the Transnational Corporations (TNCs) 323.
The Strategic Planner in a Global Multicultural Environment 327. Summary 330.
Discussion Questions 330. Endnotes 331.

12
Doing Business with Newly Emerging Market (NEM) Economies . . . . 333
Introduction 333. The Reform Process 335. Market Conditions and Strategic
Management/Planning 356. Poland, Hungary, and the Czech Republic: Reform
Process 368. Summary 372. Discussion Questions 372. Endnotes 373.

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375

ix

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x

Foreword
Hundreds, if not thousands, of books have been published on the subject
of strategic planning and the strategic planning process (SPP). Some of these
books are highly theoretical in nature, while others are ‘‘how-to’’ primers.
Some of these books take a quantitative approach to the subject, while
others take a general, conceptual approach. Still other books, present rigid,
structured, grid-like format.
Among these thousands of books published on strategic planning, Global
Strategic Planning; Cultural Perspectives for Profit and Nonprofit Organizations uniquely achieves a delicate balance between the theoretical and the
practical, the quantitative, and the conceptual approaches. The author of this
well-organized and highly readable book presents all of the classical elements
of strategic planning, including the most important aspect of strategic plan

implementation.
More, I believe what truly distinguishes and differentiates this book from
many of its strategic planning counterparts is the inclusion of (as well as the
emphasis on) the intangible (i.e., or the ‘‘soft’’) aspects of strategic planning,
including the all-important concepts of globalization, leadership, and culture.
If an organization’s board (as well as its senior and middle management)
fail to focus on and achieve a deep understanding of these subjects and
their importance, I believe that the SPP (and, even more importantly, the
implementation of the plan itself), will ultimately fail.
Before I comment further on globalization, leadership, and culture, allow
me to present some of my own views on strategic planning. Never before has
it been more important for organizations (either for-profit or nonprofit) to
engage actively and seriously in the SPP. It is trite (yes, still true) change is
more rapid than ever. A strategic plan can and should be a template (i.e., a
frame of reference) for an organization. In a fast-changing world, opportunities are more numerous than before, challenges arise without notice, and
instant global communications accelerate the decision-making process. Thus,
‘‘in the heat of battle when emotions and enthusiasms are high,’’ such
opportunities and challenges must be overlayed against the ever-present


template of the organization’s strategic plan, to ascertain if there is a ‘‘good
fit,’’ or if there is any incongruity.
The SPP and the implementation of the strategic plan forces each function,
each division, and each and every component of the organization ‘‘to think.’’
Thinking is very hard work that can, unfortunately, always be put off
to tomorrow. Organizations must not-allow this to occur. The SPP puts all
the pieces of the organization through a structured process, facilitated
by a common language that permits the examination (and the reexamination)
of all facets of the organizations. The process serves to challenge
assumptions, common beliefs, and ‘‘givens,’’ as well as all those unwritten

‘‘sacred cows.’’
Further, the SPP is an excellent communications vehicle. If managed
sensitively but strongly, the SPP can serve to improve both communication
and understanding between all parts of the organization. Through a skilfullymanaged, well-executed SPP, ‘‘silos’’ become obvious to all and tend to
crumble.
Now on to what I believe are the truly distinguishing aspects of this
book: globalization, leadership, and culture. First, let me highlight this
book’s emphasis on globalization. It is all too easy (if not glib) to say ‘‘we
are global,’’ ‘‘we are going global,’’ or ‘‘we run our businesses globally.’’ That
of the matter is that very, very few organizations truly are global and run
their businesses globally. Many companies may have a significant amount
of business outside their ‘‘home country,’’ but that alone does not make them
global. To be truly global and to truly run an organization globally (i.e.,
to think, act, plan, execute, and allocate resources within a global context) is
not only extremely difficult, but is also one of the biggest challenges facing
organizations today.
Some questions about globalization that must be considered include all of
the following: Does the board and the senior management truly think and
act within the context of a ‘‘borderless world?’’ Does the composition of
the board include a significant number of members of different nationalities?
Do the board members have a good awareness and understanding of the
most important attitudes of the cultures of the major geographical regions
citizens of the countries within those regions? Is the majority of the research
and development (R&D) done in the ‘‘home country?’’ At the organization’s
headquarters, are there a significant number of second country nationals?
Does the allocation of capital reflect a global view and understanding? The
answers to these and many other questions will present a very clear answer
as to whether or not an organization is truly run globally.
In addition to discussing globalization, this book also talks about
leadership, clearly highlighting its importance in the SPP, as well as in the

implementation of the strategic plan. The author is eminently correct in
emphasizing the role of leadership within an organization. If anything,

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Foreword

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xii

Foreword

leadership (or, perhaps, the lack of it), is the decisive factor in the degree of
success or failure of the process, its implementation, and indeed of the
business itself.
Leaders are sine qua non for any successful enterprise. Leaders do not fit
a mold or stereotype; the fact of the matter is, you will ‘‘know them when
you see them.’’ Leaders come in all shapes and sizes—tall/short, thin/fat,
young/old, great orators/not-so-great public speakers, etc. But, the truly
great organizations will also have great, well-admired leaders. Among their
array of attributes, great leaders will have a vision. That vision will be
communicated clearly and continuously, throughout the organization, and,
as a result, the leader will achieve enthusiastic ‘‘buy in’’ from all of the
organization’s constituencies.
Jack Welsh, Harold Geneen, Floris Maljers, Winston Churchill, Harry
Truman, Charles de Gaulle, Conrad Adenauer, Alfred P. Sloan, Henry

Ford, Tom Watson, etc, are all great leaders. Yet, each one is very different
from all of the others. Were any of these leaders specifically trained to be
a leader? One of a board’s most important (if not crucial) responsibilities is
to find the leaders of the future; to create and preserve a culture in which
leaders are attracted, thrive, and rise the top. An old saying applies, ‘‘cream
rises to the top.’’ Management’s responsibility is to recognize it, preserve it,
and promote it.
In addition to the aspects of globalization and leadership, this book further
focuses on culture. Culture is a ‘‘soft’’ (or, intangible) element. To my
knowledge, this book is one of the few on strategic planning that gives
significant attention and focus to culture within the context of strategic
planning as a whole. An awareness and understanding of the various cultures
extant within an organization is crucial to the successful implementation
of the strategic plan.
But, having said that, what exactly is culture? The author of this book
defines very clearly culture; then, he goes on to describe its elements and
attributes as applied to strategic planning. Describing the culture of a company (particularly a globally-oriented organization), is extremely difficult.
There are numerous cultures that exist within an organization (e.g., the
cultures of the parent company, its regional subsidiaries, those within
acquisitions and joint ventures, and also those of each of the countries in
which the firm operates). Thus, in a global enterprise there are organizational
cultures, as well as both country- and regional-specific cultures.
A truly global organization (with a board and management composed of
significant and broad-based diversity) is not merely aware of, but also understands and deals with the cultural issues day-in and day-out, as an integral
part of managing the ongoing business. There are very few organizations that
‘‘get it right.’’ However, those that do, have a tremendous competitive
advantage.


Organizations may not have world class abilities and performance in each

and every one of the functions and in each segment of their business; yet, they
can be world leaders in their industry. How? It results from a leader with a
vision who communicates that vision clearly to each and every part of the
global organization and the management is representative of the various
nationalities and cultures encompassed within the business. ‘‘Winning’’ (i.e.,
increased profits year after year) develops both pride and a ‘‘can-do’’ attitude
throughout the organization. As a result, success is perpetuated, and a
company culture grows and thrives.
In sum, this book presents a clear, comprehensive, very readable exposition of the SPP, as well as of the implementation of the strategic plan. The
inclusion of globalization, leadership, and culture as integral components of
the process is what sets this book apart from many others. The author
emphasizes that the culmination of the strategic planning exercise must be a
living, breathing, vibrant, useful, and relevant document—the strategic plan
itself. The document should be used and referred to on an ongoing basis,
rather than just presented to the board once every five years for approval and
stashed away in a file cabinet to gather dust. If the latter occurs, then
management (and the board) has failed in its leadership role, and, in fact, the
entire exercise may prove to be counterproductive to the organization as
a whole.
I hope that you will take this opportunity to explore the SPP within the
context of globalization, leadership, and culture as presented in this book.
You will not be disappointed!
James A. Kennedy
Formerly Chairman and Chief Executive Officer
National Starch & Chemical Company

xiii

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Foreword


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xiv

Acknowledgments
This second edition, under its new title Strategic Management: Global
Cultural Perspectives for Profit and Nonprofit Organizations, would have
been impossible to research, update, and bring to its present form if it weren’t
for the contributions of a number of individuals. First, I would like to express
my sincere gratitude to Maggie Smith, Senior Editor of the Elsevier Group,
for her guidance, patience, understanding, and encouragement throughout
this process. Furthermore, Maggie is to be credited with the new title of this
text. I would also like to thank Dennis McGonagle of the Elsevier Group for
his overall assistance and direction during this revision.
My gratitude also goes to Dr. Robert Nale of Coastal Carolina University,
South Carolina, for his contribution to the first, and in extent to the second,
edition of the text. Both editions are based on a 1997 text, Strategic Planning:
Theory and Cases, which we coauthored.
My appreciation also goes to Elena Gregoriou, my research assistant, at
Intercollege, Nicosia-Cyprus, for her hard work, dedication, professionalism,
and attention to detail. I would also like to thank Devon Gabourel, a
graduate student at Galen University, San Ignacio, Cayo District, in Belize
for his assistance in finalizing the exhibits in this second edition.
Finally, I would like to express my appreciation to all the individuals who
have read and commented on both editions of this text: Dr. Constantinos
Markides of the London Business School, the U.K.; Mr. Robert Hennessy of
the National Starch & Chemical Company (retired); Dr. Tunde Durosomo
of Wilmington, Delaware; Dr. Susanne Weber of the Phillips University of

Marburg, Germany; Mr. Michael Sarris of the World Bank, Washington,
D.C.; Dr. Paul Kleindorfer of the Wharton School, University of Pennsylvania, Philadelphia, PA; Dr. Tom Burns of the Organization and Management
Group, Philadelphia, PA; and Dr. George Baourakis of the Mediterranean
Agronomic Institute of Chania, Crete-Greece.
Last but not least, I would like to thank all my students who have studied
strategy under my instruction throughout my academic career. Their
objectivity and criticism have been an inspiration and encouragement to
continue to teach, research, and write on this topic. Thank you all.


Stated simply, the strategic planning process (SPP) helps organizations
identify what they intend to achieve and how they will go about achieving it.
The magnitude of this challenge is greater today than ever before, and one is
reminded of the ancient curse: ‘‘May you live in interesting times!’’ Firms face
continuous pressures to become more competitive on many critical fronts.
For one, the global economy represents a competitive arena, which
appears to increase both in size and complexity each day. Also, our own
domestic economy is one, which is increasingly characterized by rapid
change. During the past few years, such terms as restructuring, downsizing,
and rightsizing have become commonplace. Another critical front organizations face—whether they are for-profit or nonprofit—is that of culture.
Culture can be the national culture of the country in which the organization
operates in; culture can also be the organization’s own culture. Organizational culture can either facilitate or hinder the SPP, as well as the
implementation of the strategic plan.
All of this would seem to render strategic planning (at least, in some
people’s minds) rather unnecessary, since changes come much too quickly. Of
course, I would argue that these situations make planning even more
important, albeit more difficult, to virtually all organizations. In the final
analysis, a key to organizational success revolves around the ability of an
organization to offer products to customers, which they perceive as having
greater value. This increases competitiveness and often enables the firm to

earn above-average profits.
Of course, not all the answers are in this book. Because the focus is
consistently on the SPP, though, I am hopeful that you (the educator, the
student, the executive, the planner) will be better able to develop a framework within which you can identify and deal with as many situations as
possible.
The uniqueness of this book is evidenced by the fact that, in addition to
the more types of traditional types of information on the SPP for the forprofit sector, there is also a plethora of information regarding the process for
the nonprofit sector. Most importantly, what distinguishes this book from

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Introduction

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xvi

Introduction

other books on the market today, is the impact of culture (both national and
organizational) from a global perspective and of organizational leadership on
the SPP, whether in the for-profit or the nonprofit sector.
My hope is that the pedagogical features presented are helpful to you. As
you will see, the approach is relatively simple throughout. An introductory
paragraph is presented and the text of the chapter then follows, with several
discussion questions at the end, to help you recall the important points.
Within each chapter, I have tried to be straight-forward in my presentation,

presenting examples, which are often drawn from current business publications. In addition, an Instructor’s Manual with a test bank is available to
those educators intending to adopt the book for instruction. Instructors can
also use cases for analysis and discussion from the publisher’s website.
The chapter material in this textbook is divided into five parts, with a total
of 12 chapters. Below is a brief summary of what I have covered in each part.
All chapters have a segment on the impact of culture on the SPP.
Part One: An Overview of the Strategic Planning Process (SPP) includes
two chapters. In Chapter 1, I present the SPP, including the importance of
vision, mission, the board of directors, objectives, strategies, the various
stakeholders, and the strategic levels all within the SPP model. In Chapter 2, I
present information on social responsibility, business ethics, benchmarking,
global strategies, the nonprofit sector, small business and entrepreneurship,
and technology.
Part Two: Strategy Formulation includes four chapters. In Chapter 3, I
address the external environment of the organization, introducing concepts
such as opportunities and threats, environmental scanning, industry analysis,
Porter’s five forces model, strategic groups, forecasting techniques, the
general environment, industry financial averages, and the External Factor
Evaluation and Competitive Profile matrices. In Chapter 4, I discuss the
internal environment of the organization as it pertains to the strengths and
weaknesses, value chain, functional areas, organizational structure, organizational culture, financial ratio analysis, and financial ratio analysis. In
Chapter 5,1 introduce corporate-wide strategic options available to the
organization, such as portfolio analysis, growth strategies, diversification
strategies, joint ventures, mergers, acquisitions, and niche strategies. In
Chapter 6, I offer strategic choices at the business and functional levels of the
organization. The concepts addressed here are business level strategies,
competitive advantage, Porter’s generic strategies, Strategic Business Units
(SBUs), market life cycle, Total Quality Management (TQM), reengineering,
and risk propensity.
Part Three: Implementation, Evaluation, and Control in the Strategic

Planning Process (SPP) consists of two chapters. In Chapter 7, I address the
implementation aspect of the SPP and discuss such topics as organizational
culture and structure, leadership, budgets, programs, policies, and potential


implementation barriers that organizations might encounter. In Chapter 8, I
deal with the evaluation and control aspect and address such topics as
performance measures, types of control, a strategy evaluation framework,
and common performance measurement problems.
Part Four: The Strategic Planning Process (SPP) for the Nonprofit Sector
also consists of two chapters. In Chapter 9,1 discuss the overall importance
of the SPP to nonprofits. In that context, I differentiate between profit and
nonprofit organizations in terms of the SPP, discuss reasons for nonprofit
organizations engaging in strategic planning, and the importance of such
roles as volunteers and boards of directors. In Chapter 10,1 extend my
coverage to the unique role that marketing plays in the nonprofit sector. I
address the ways that nonprofit organizations attempt to market themselves,
various appropriate marketing strategies and how they differ between profit
and nonprofit organizations, and the strategic execution of fund-raising.
Part Five: The Strategic Planning Process (SPP) in the Global Environment
consists of two chapters in which the nature of global competition and its
implications to the SPP is presented. In Chapter 11, I provide a framework
for global strategic planning. In Chapter 12, I address the strategic and
cultural implications of doing business in newly emerging market (NEM)
economies. In that context, the importance of globalization is discussed, as
are some examples of how domestic companies face increasing global
competition. The regionalization of international markets is also discussed.
Finally, the importance of culture and cultural values is presented within the
context of global strategic planning. In addition, contribution of the global
strategic planner to a successful strategic planning process is discussed within

the framework of the multicultural environment.
This book’s approach to the strategic planning process is unique in that it
goes beyond the traditional application for the for-profit sector by addressing
issues for the nonprofit sector and global aspects of strategic planning. Most
importantly, this book measures the impact of cultural, organizational,
national, and global issues, whether in the for-profit or the nonprofit sector,
and provides examples, exercises, and solutions to make this key part of
international management and strategic planning easier and more successful.
Marios Katsioloudes, Ph.D.
Professor of Management
School of Business and Management
American University of Sharjah
United Arab Emirates

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A

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P

An Overview

of the Strategic

Planning Process


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An Introduction to
the Strategic Planning
Process (SPP)

If it ain’t broke, you just haven’t looked hard enough.
Tom Peters

Introduction
Tom Peters’s words illustrate a strategic management approach to what may
be a generally held fallacy on the part of many students who are taking

a course in strategic management. There is a tendency to look at a successful
organization and conclude that since everything seems to be working well, no
changes are necessary—in other words, ‘‘If it ain’t broke, don’t fix it!’’ All
options cannot be chosen simultaneously, but sound reasons should underlie
why they are not being chosen. The study of strategic management/planning
is largely about that kind of investigation.
Further, it is about choosing courses of action in an integrated fashion and
continually ensuring that the course of action selected continues to be the
most appropriate one. In other words, doing what you are (or have been)
doing may really be the best option, but you can only be sure of that
as a result of continuous investigation.

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1

3


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4

An Overview of the Strategic Planning Process (SPP)

The Importance of Strategic Management
and Planning
Before even attempting to offer a definition of what strategic planning is, it is
important to state that when some organizations want to change, they plan
for it, and this planned change is part of the overall management approach.

Traditionally, management activities have been planning, organizing,
recruiting, selecting, leading, communicating, relating, problem solving,
decision making, negotiating, conflict utilizing, training, controlling, rewarding, evaluating, and innovating. But management is more than this, and it
is subject to continuous change. R. Alec Mackenzie takes a three-dimensional
view of the management process as it is presented in Exhibit 1.1. This model
focuses on the basic elements of management activities: people, who create
the need for leadership to influence people to achieve desired objectives;
things that create the need for administration; and ideas, which create the
need for conceptual thinking. Three functions permeate the work process:
problem analysis, decision making, and communication. Then, we see that
the other aspects of management flow from these components. Successful
Exhibit 1.1
The Management Process


management is the integration of all the parts without neglecting the rest of
the functions. Mackenzie envisions a sequential connection among many of
these elements: The objectives of an undertaking have been clearly stated, and
then planning and organizing follow, which lead to the need for staffing,
directing, and controlling in terms of the dynamic plan. The cyclical
approach to management provides a unified concept for fitting together the
management activities, as well as for distinguishing leadership, administrative, and strategic planning functions. Through this dynamic process, it
is likely that circles of activities could be added within this basic paradigm
as changes require them.
Another point that needs to be made here is that each element in the
management process is culturally conditioned. Thus, managerial activities
or interpretations of basic functions may differ from culture to culture. This
is why business schools offer courses in international business, comparative
management, and so on and why several companies offer training sessions
that address cultural sensitivity issues and cross-cultural management

approaches.
Like most people, you have probably worked somewhere during your life
as a student or as a practitioner, even if only part-time. You might have held
jobs in retail sales, fast-food chains, restaurants, or the construction industry.
As an employee, did you feel as if the organization had some sort of
a strategic plan for success? If so, did you understand how your specific job
was integrated into the organization’s grand scheme? While it may not have
been immediately obvious, such things as your job training and subsequent
performance analyses should have represented the organization’s strategic
direction, although unfortunately, that is not always the case.1
For example, if you worked as a waitperson in a restaurant, was your
objective to get the customers in and out quickly, or was it to encourage
a long eating cycle with appetizers and before- and after-dinner drinks?
Did the restaurant provide a relatively limited menu of certain kinds of foods,
or was it a buffet, intended to satisfy a wide range of customer tastes? Each
of these approaches implies a specific strategy followed by that organization.
In considering these simple questions, you can begin to understand the
importance of strategic planning. The organization has defined itself in terms
of what it wants to be and how it will compete within its industry. As that
industry becomes increasingly complex, you can begin to appreciate just how
challenging this concept can be to even the most experienced managers.
Ask yourself another question. Are the organizations you worked for
still viable, ongoing businesses? If so, do they still operate in essentially
the same way they did when you worked there? If not, you can begin to see
just how much change has become a part of our everyday organizational
lives. This decade has been characterized as one of ‘‘chaos’’ and ‘‘turbulence’’
for corporations.2 Furthermore, such terms as reengineering, mergers,

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An Introduction to the Strategic Planning Process (SPP)


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An Overview of the Strategic Planning Process (SPP)

acquisitions, downsizing, rightsizing, revitalization, Total Quality Management (TQM), and paradigm shifts have become commonplace. Strategic
management and planning provide a framework for seeking profitable
ways for the organization to adapt to change and, in many cases, anticipate
the change and make it work for them.
Even in the relatively rare cases where significant change is not
experienced, strategic management and planning give the organization
a framework in which to operate most efficiently and effectively in their
environment. Although more terms will be defined more precisely later in
this chapter, for now the definition of strategic planning is the process
by which a system maintains its competitiveness within its work environment
by determining where the organization is, where it wants to go, and how
it wishes to get there.3 In other words, strategic planning involves examining
what strategies will enable the corporation or association to prosper in
the future. This definition applies equally to the largest profit-oriented
organization as it does to the smallest, nonprofit organization.

Why Plan?
Is planning important? In some ways, it’s difficult to imagine anyone saying
that it isn’t. However, planning is an emotional experience for many people,

and not always a particularly pleasant one. Martin Gimpel and Stephen
Dakin suggest that there is a fundamental paradox in human behavior that
relates to planning: As the world becomes increasingly unpredictable, we tend
to seek out and rely upon forecasts and predictions to tell us what to do.4
If one thought about it a great deal, the sheer unpredictability of the
world might well render us virtually helpless and unable to deal with our
everyday existence. In that context, planning may, at the very least, provide
us with the means of possibly uncovering elements of control, which we
overlooked previously. In other words, trying to predict our future is superior
to giving up and allowing our future to simply happen to us.
In an old television sports drink commercial, basketball star Shaquille
O’Neill discusses with his grandchildren the changes that have taken place in
the NBA. He mentions a few things, which were challenging, but he says that
nothing was as difficult as the moving basket. The commercial ends with him
attempting a slam dunk shot in a basket, which moves suddenly at the last
second. To some extent, businesses in many industries face a similar situation
in terms of rapidly shifting consumer demands, product innovation, and
competition that is truly global, just to name a few. Perhaps at no other time
has strategic planning been more relevant and critical to an organization’s
success. Having the aforementioned in mind is important, but it is equally
significant to state that while planning for change is advisable, we live in
a work culture marked by unpredictability, innovation, and very rapid