what is meant by strategic planning and operational planning

 The Strategic Planning Process

Strategic Planning

Strategic planning is the process undertaken to determine an organization's strategy or direction, and make decisions to allocate resources (including capital and human resources) to achieve this strategy. Various business analysis techniques can be used in this process, including SWOT analysis (Strengths, Weaknesses, Opportunities, Threats), PEST (Political, Economic, Social, Technological), or Steer (Socio-cultural, Technological, Economic, Ecological, Regulatory).This is the highest level and usually done by senior management. The decisions on the objectives, committing resources such as money, time, and people in general is done here.

Examples: In business, it means how much money is going to be dedicated to a project, and by when you expect the project complete. In personal life, suppose you plan a wedding, it means deciding on the budget and the date.

In the 1970's, many large firms adopted a formalized top-down strategic planning model. Under this model, strategic planning became a deliberate process in which top executives periodically would formulate the firm's strategy, then communicate it down the organization for implementation. The following is a flowchart model of this process:

The Strategic Planning Process

Mission

| V

Objectives

| V

Situation Analysis

| V

Strategy Formulation

| V

Implementation

| V

Control

This process is most applicable to strategic management at the business unit level of the organization. For large corporations, strategy at the corporate level is more concerned with managing a portfolio of businesses. For example, corporate level strategy involves decisions about which business units to grow, resource allocation among the business units, taking advantage of synergies among the business units, and mergers and acquisitions. In the process outlined here, "company" or "firm" will be used to denote a single-business firm or a single business unit of a diversified firm.

Mission

A company's mission is its reason for being. The mission often is expressed in the form of a mission statement, which conveys a sense of purpose to employees and projects a company image to customers. In the strategy formulation process, the mission statement sets the mood of where the company should go.

Objectives

Objectives are concrete goals that the organization seeks to reach, for example, an earnings growth target. The objectives should be challenging but achievable. They also should be measurable so that the company can monitor its progress and make corrections as needed.

Situation Analysis

Once the firm has specified its objectives, it begins with its current situation to devise a strategic plan to reach those objectives. Changes in the external environment often present new opportunities and new ways to reach the objectives. An environmental scan is performed to identify the available opportunities. The firm also must know its own capabilities and limitations in order to select the opportunities that it can pursue with a higher probability of success. The situation analysis therefore involves an analysis of both the external and internal environment.

The external environment has two aspects: the macro-environment that affects all firms and a micro-environment that affects only the firms in a particular industry. The macro-environmental analysis includes political, economic, social, and technological factors and sometimes is referred to as a PEST analysis.

An important aspect of the micro-environmental analysis is the industry in which the firm operates or is considering operating. Michael Porter devised a five forces framework that is useful for industry analysis. Porter's 5 forces include barriers to entry, customers, suppliers, substitute products, and rivalry among competing firms.

The internal analysis considers the situation within the firm itself, such as:

• Company culture
• Company image
• Organizational structure
• Key staff
• Access to natural resources
• Position on the experience curve
• Operational efficiency
• Operational capacity
• Brand awareness
• Market share
• Financial resources
• Exclusive contracts
• Patents and trade secrets

A situation analysis can generate a large amount of information, much of which is not particularly relevant to strategy formulation. To make the information more manageable, it sometimes is useful to categorize the internal factors of the firm as strengths and weaknesses, and the external environmental factors as opportunities and threats. Such an analysis often is referred to as a SWOT analysis.

Strategy Formulation

Once a clear picture of the firm and its environment is in hand, specific strategic alternatives can be developed. While different firms have different alternatives depending on their situation, there also exist generic strategies that can be applied across a wide range of firms. Michael Porter identified cost leadership, differentiation, and focus as three generic strategies that may be considered when defining strategic alternatives. Porter advised against implementing a combination of these strategies for a given product; rather, he argued that only one of the generic strategy alternatives should be pursued.

Implementation

The strategy likely will be expressed in high-level conceptual terms and priorities. For effective implementation, it needs to be translated into more detailed policies that can be understood at the functional level of the organization. The expression of the strategy in terms of functional policies also serves to highlight any practical issues that might not have been visible at a higher level. The strategy should be translated into specific policies for functional areas such as:

• Marketing
• Research and development
• Procurement
• Production
• Human resources
• Information systems

In addition to developing functional policies, the implementation phase involves identifying the required resources and putting into place the necessary organizational changes.

Control

Once implemented, the results of the strategy need to be measured and evaluated, with changes made as required to keep the plan on track. Control systems should be developed and implemented to facilitate this monitoring. Standards of performance are set, the actual performance measured, and appropriate action taken to ensure success.

Dynamic and Continuous Process

The strategic management process is dynamic and continuous. A change in one component can necessitate a change in the entire strategy. As such, the process must be repeated frequently in order to adapt the strategy to environmental changes. Throughout the process the firm may need to cycle back to a previous stage and make adjustments.

Drawbacks of this Process

The strategic planning process outlined above is only one approach to strategic management. It is best suited for stable environments. A drawback of this top-down approach is that it may not be responsive enough for rapidly changing competitive environments. In times of change, some of the more successful strategies emerge informally from lower levels of the organization, where managers are closer to customers on a day-to-day basis.

Another drawback is that this strategic planning model assumes fairly accurate forecasting and does not take into account unexpected events. In an uncertain world, long-term forecasts cannot be relied upon with a high level of confidence. In this respect, many firms have turned to scenario planning as a tool for dealing with multiple contingencies.

OPERATIONAL PLANNING

Operational Planning 

This is a much more detailed level of strategic and tactical plan. Here, managers chosen to work the plan develop a specific plan to execute the strategic plan.

An operational planning is a subset of strategic work plan. It describes short-term ways of achieving milestones and explains how, or what portion of, a strategic plan will be put into operation during a given operational period, in the case of commercial application, a fiscal year or another given budgetary term. An operational plan is the basis for, and justification of an annual operating budget request. Therefore, a five-year strategic plan would need five(5) operational plans funded by five operating budgets.

Operational plans should establish the activities and budgets for each part of the organisation for the next 1 – 3 years. They link the strategic plan with the activities the organization will deliver and the resources required to deliver them.

An operational plan draws directly from agency and program strategic plans to describe agency and program missions and goals, program objectives, and program activities. Like a strategic plan, an operational plan addresses four questions:

• Where are we now?
• Where do we want to be?
• How do we get there?
• How do we measure our progress?

The OP is both the first and the last step in preparing an operating budget request. As the first step, the OP provides a plan for resource allocation; as the last step, the OP may be modified to reflect policy decisions or financial changes made during the budget development process.

Operational plans should be prepared by the people who will be involved in implementation. There is often a need for significant cross-departmental dialogue as plans created by one part of the organisation inevitably have implications for other parts.

Operational plans should contain:

• clear objectives
• activities to be delivered
• quality standards
• desired outcomes
• staffing and resource requirements
• implementation timetables
• a process for monitoring progress.

Examples:
In business, it means engaging the team, develop and answer the who, what, when, where, how management questions.
In personal life, for the wedding, it means, choosing the band, finding the caterer, decide on flowers, etc.

HOW TO MOTIVATE YOUR STAFF

How to motivate your EMPLOYEES

The success of the company (management) to maintain the best employees who have not achieved the easy way. It could only happen thanks to the expertise of management in understanding the needs of employees and their ability to create a conducive working environment that can make their employees feel motivated internally.

Employee needs

One theory of motivation that many received very positively in the field of management of the organization's Hierarchy of Needs is a theory propounded by Abraham Maslow. According to Maslow every individual has needs that are arranged in a hierarchy from the most basic level to the highest level. Every time needs at the lowest levels have been met, other needs will appear higher. At the lowest level, included a variety of basic needs that are biologically, then at higher levels included a variety of needs that are social. At the highest level included the need to actualize themselves.

 ABRAHAM MASLOW HIRARKI OF NEEDS

The need for self-actualization
Needs to be appreciated
Needs to be loved and cherished
The need for security and peaceful
Basic physiological needs

The company needs the above translates as follows:

• basic physiological needs: salary, food, clothing, housing and other basic facilities that are useful for the survival of worker.

• The need for security: a work environment free from all forms of threats, the security office/ position, clear job status, security tools used.
• Needs to be loved and cherished: the interaction with co-workers, freedom of social activities, given the opportunity to establish rapport with others.
• The need for respect: the award or reward, recognize the work of individual.
• The need for self-actualization: the opportunity and freedom to realize the ideals or  expectations of individuals, freedom to develop a talent or talents you have.

Given that every individual in the company comes from many different backgrounds, it will be very important for companies to see what the needs and expectations of employees, what talents and skills they have and how the employee plans in the future. If the company can know these things, it will be easier to place the employee at the most appropriate position, so he will be more motivated. Of course, efforts to understand the needs of the employee should be accompanied with the preparation of company policies and procedures are effective. To do this is certainly not an easy matter, but it requires hard work and genuine commitment from management

Conducive Working Environment

All personnel possess the need to express themselves, want to be accepted as part of a "family member / company", want to believe and heard his words, appreciated by management and are proud of what he did. Through two-way communication (including meetings / meeting) the management can identify these things as well informed about company goals, target markets and future plans and encourage employees to give feedback.

The management must also learn how to form a "corporate culture" and a conducive working environment. This can only be achieved through the practice of leadership and good corporate management, humanitarian approach, justice for all, a clear career structure, training and development programs are integrated, the support of adequate working equipment, an objective performance assessment, the program "rewards" the right , adequate salaries and allowances and other activities held by the company.

Another factor is no less important is that employees need to know that management recognizes their presence, aware of the importance of employees for the company, managers are able to remember the names of his subordinates and did not hesitate to greet them.

Managers who fail to remember the names of subordinates or does not respond when addressed by subordinates will make employees lose motivation to work, less loyal and less confidence in the manager. The manager can gain loyalty and trust of his subordinates if he treats his subordinates as "partners", showed a high caring, willing to listen to suggestions and complaints and willing to share their experiences.

Finally only one question to be answered the manager: is it possible to do these things in your company. With careful planning and good intentions are based on concern for the lives pentingnya.kualitas everyone in the company, I am sure the manager will be able to do so.