Strategic Management: Formulation and Implementation

Strategic Planning Systems

Strategic planning system is conceived as a system whereby managers go about making, implementing, and controlling important decisions across functions and levels in the firm. For example, Lorange (1980) has argued that any strategic planning system must address four fundamental questions: (1) Where are we going? (mission), (2) how do we get there? (strategies), (3) What is our blueprint for actions? (budgets), and (4) How do we know if we are on track? (control). Therefore, the systems include usually three cycles: strategic issue identification, strategy development, and strategy implementation (Eckhert et al. 1986). Strategic planning systems vary along several dimensions: the comprehensiveness of decision areas included, the formal rationality of the decision process, and the tightness of control exercised over implementation of the decisions (Armstrong 1982)

The strength of these systems is their attempt to coordinate the various elements of an organization's strategy across levels and functions.

Their weakness is that excessive comprehensiveness, prescription, and control can drive out attention to mission, strategy, and organizational structure (Frederickson 1984), and can exceed participants' ability to comprehend them (Bryson, Van de Ven, and Roering 1987).