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100 PART 2 • STRATEGY FORMULATION

Planning
The only thing certain about the future of any organization is change, and planning is the
essential bridge between the present and the future that increases the likelihood of
achieving desired results. Planning is the process by which one determines whether to
attempt a task, works out the most effective way of reaching desired objectives, and
prepares to overcome unexpected difficulties with adequate resources. Planning is the
start of the process by which an individual or business may turn empty dreams into
achievements. Planning enables one to avoid the trap of working extremely hard but
achieving little.
Planning is an up-front investment in success. Planning helps a firm achieve maxi-
mum effect from a given effort. Planning enables a firm to take into account relevant
factors and focus on the critical ones. Planning helps ensure that the firm can be prepared
for all reasonable eventualities and for all changes that will be needed. Planning enables a
firm to gather the resources needed and carry out tasks in the most efficient way possible.
Planning enables a firm to conserve its own resources, avoid wasting ecological
resources, make a fair profit, and be seen as an effective, useful firm. Planning enables a
firm to identify precisely what is to be achieved and to detail precisely the who, what,
when, where, why, and how needed to achieve desired objectives. Planning enables a firm
to assess whether the effort, costs, and implications associated with achieving desired
objectives are warranted. 10 Planning is the cornerstone of effective strategy formulation.
But even though it is considered the foundation of management, it is commonly the task
that managers neglect most. Planning is essential for successful strategy implementation
and strategy evaluation, largely because organizing, motivating, staffing, and controlling
activities depend upon good planning.
The process of planning must involve managers and employees throughout an organi-
zation. The time horizon for planning decreases from two to five years for top-level to less
than six months for lower-level managers. The important point is that all managers do plan-
ning and should involve subordinates in the process to facilitate employee understanding
and commitment.
Planning can have a positive impact on organizational and individual performance.
Planning allows an organization to identify and take advantage of external opportunities as
well as minimize the impact of external threats. Planning is more than extrapolating from
the past and present into the future. It also includes developing a mission, forecasting
future events and trends, establishing objectives, and choosing strategies to pursue.
An organization can develop synergy through planning. Synergy exists when everyone
pulls together as a team that knows what it wants to achieve; synergy is the 2 + 2 = 5 effect.
By establishing and communicating clear objectives, employees and managers can work
together toward desired results. Synergy can result in powerful competitive advantages.
The strategic-management process itself is aimed at creating synergy in an organization.
Planning allows a firm to adapt to changing markets and thus to shape its own destiny.
Strategic management can be viewed as a formal planning process that allows an organiza-
tion to pursue proactive rather than reactive strategies. Successful organizations strive to
control their own futures rather than merely react to external forces and events as they
occur. Historically, organisms and organizations that have not adapted to changing condi-
tions have become extinct. Swift adaptation is needed today more than ever because
changes in markets, economies, and competitors worldwide are accelerating. Many firms
did not adapt to the global recession of late and went out of business.

Organizing
The purpose of organizing is to achieve coordinated effort by defining task and authority
relationships. Organizing means determining who does what and who reports to whom.
There are countless examples in history of well-organized enterprises successfully
competing against—and in some cases defeating—much stronger but less-organized firms.
A well-organized firm generally has motivated managers and employees who are commit-
ted to seeing the organization succeed. Resources are allocated more effectively and used
more efficiently in a well-organized firm than in a disorganized firm.