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July 10, 2014
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Levels of Planning
Organizations live in a constant state of change. Whether external forces or internal forces
affect the change, a plan must be considered to turn opportunities into competitive
advantages and to combat predicted threats. Organizations plan for four reasons;
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There are three levels of planning and strategy in an organization that has a waterfall affect
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Strategy
When adopting strategies, plans must account for many different changes, threats, and
opportunities in a business. Failure to thoroughly research and consider all options will result
in a failed strategy as no organization is psychic.
Economic impacts, customer preference and trends, and competition in the companys
industry can impact a companys goals, strategies, and ability to maintain a competitive
advantage. Scenario planning is a useful tool to forecast various changes and market
conditions and the strategy the company will employ in each scenario why (Jones & George,
2011).
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Once multiple futures are selected, strategies must be chosen to handle each potential future.
During strategy formulation, managers work to develop a set of strategies that will allow the
organization to accomplish its mission and goals why. During this process the group must
analyze internal and external forces that affect the ability of the organization to meet its goals
through performing a S.W.O.T analysis. A SWOT analysis is a review of the companys
internal strengths and weaknesses and external threats and opportunities why (Jones &
George, 2011).
Example of SWOT:
The five basic forces of threat organizations face:
1. level of rivalry in the industry which could impact pricing or product types
2. the potential for new competitors entering the market causing competition in products
or services offered
3. the power of large suppliers which drives up cost for an organization when few
suppliers offer a needed component of a companys product
4. the power of large customers which can impact pricing due to controlled demand,
5. the threat of substitute products that can affect pricing of products and services (Jones
& George, 2011).
Strategies for Competitive Advantage
Once threats and opportunities are identified, strategies are developed to either differentiate
an organizations products to distinguish it from competitors in quality, style, uniqueness and
after sales support, or through a low-cost strategy to seek a competitive advantage over rival
pricing through low cost production resulting in lower prices (Jones & George, 2011).
Organizations can also choose gain a competitive advantage through strategies in
diversification. Related diversification entails a company devising a strategy to enter into a
new industry that its current business is already linked to. Unrelated diversification is when a
company develops a strategy to enter in an industry that is not related to their current
business (Jones & George, 2011).
Once a strategy is chosen based on the companys plan, goals, strengths, weaknesses,
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threats and opportunities, management must allocate responsibilities to carry out strategies to
selected groups, draft detail action plans on how to implement the strategy, establish time
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tables for completion of implementation, allocate necessary resources to the groups, and hold
all members accountable for implementation and goal attainment (Jones & George, 2011).
Finally, strategies should be reviewed, threats should be monitored and plans and strategies
should be flexible enough to adapt to the
constant change in a business.
Conclusion
A companys dream cannot remain only
a thought, or it will disappear like the
companys profits. Maintaining a
competitive advantage requires
planning, forecasting threats and
opportunities, and developing and
implementing strategies. Strategy
cannot exist without a plan; and a plan is
just a dream if it is never acted upon
through strategy.
References
Picture 1 www.socialribbit.com
Picture 2 www.leadershipalive.com
Picture 3 www.smartdraw.com
Picture 4 www.golime.co
Jones, G., & George, J. (2011). Contemporary Management. New York City: McGraw-Hill
Irwin.
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