Determinants of Global Strategic Planning Formuluarity
INTRODUCTION The topic I want to write about is based on an article which is titled the determinants and benefits of global strategic marketing planning formality. Global strategic marketing planning formality is a process by which businesses and their subsidiaries derive the best decisions and methods so as to compete in the market it serves in. According to Herter (1995) he proclaimed that in the global world regardless of the size, every business needs a comprehensive plan which is the first step in order to achieve success therefore a business without proper management style and planning processes will result to out dated management.
In the global world planning and strategic marketing has become very important which has initiated competition and environmental changes in international marketing. This research article is important due to the fusion and clarification of strategic management and planning processes which has helped in aiding global strategic marketing and planning formality. With the response gotten from 90 multinational corporations it has been stated that the determinants which affect planning formality are categorized into two which are the internal and external factors.
The internal factors are comprised of organizational climate, CEO’s involvement and the firm size while the external factors are comprised of environmental uncertainty and environmental complexity. Companies which have indulged in global activities face a lot of global obstacles, companies faced obstacles during the 1960s to 1980s (McDonald, 1990, 1992; and Jessup and Kukalis, 1990).
Organizations which were interested in international planning were faced with the problem of formulating not only clear planning procedures but also have to carefully examine and take records of foreign or distant market environments so as to acquire the commitment and involvement of the major stakeholders which will be affected by the planning process (Pearce et al. , 1987, p. 658). Although there is an increase in global competition, the formulation of the planning processes has been seen to be under attack due to managers which are confused by the planning procedures there by generating aimless strategies (Campbell & Alexander, 1997).
Managers sometimes tend to make mistakes in estimating environmental uncertainty and have been criticized that their planning methods are not strategic enough and do not convey any information of being democratic in their usefulness and creativeness to the organization (Hamel, 1996; Mintzberg, 1994; Wall and Wall, 1995). The model of how strategic marketing planning formality can be seen below CONTENT SUMMARY The determinants and benefits of global strategic marketing planning formality were written by Myung-Su Chae and John S.
Hill in the year 2000. This article explains the internal and external factors which influence the global strategic marketing planning formality and also the benefits of global planning formality (organizational and competition benefit). The internal factors are made up of CEO’s involvement, organizational climate and lastly firm size while the external factors are made up of environmental complexities and environmental uncertainty. This article talks about how it has inspired top managers to be more advanced in global planning systems.
This study talks about the factors which can boost the reinforcement of global strategic marketing planning systems, such as cooperation and positive administration which is one of the major factors in supporting a global strategic marketing planning process. This study also confirms the importance of industry competition, suppliers and also the government in terms of regulating corporate planning schemes (environmental complexity).
The other factors talk about the association between planning formality and organizational climate and competition which is a crucial element in order to derive positive benefits for the organization be it internally or externally which confirms that most international organizations now depend strongly on corporate cultures so as to aid their organizational and planning processes. The perception of planning formality has progressed as time goes by which is comprised of two but separate dimensions.
These are fundamentals which were concluded in the plan and how the plan or guidelines were being followed in order words it’s called the degree of completeness (Sapp & Seiler, 1981). The effectiveness of planning formality is a fusion of both content and obligation which make an attempt to comprise of the two dimensions (Grinyer & Norburn, 1975). In this article planning formality have been seen to be associated with organizational goals and benefits and also competitiveness which has broaden practitioners and academicians views on the benefits associated in global strategic marketing lanning. This study specifies that committed firms which have gone global who fuse planning formality into their business activities have achieved worldwide competitive stance and organizational efficiency. Planning formality is seen to be a disadvantage to companies which are located in inconsistent industries within nation-wide markets but seems acceptable when coping with the difficulties of the world market.
Below is the summary of the determinants and benefits of global strategic marketing planning formality. CEO’S INVOLVEMENT The planning process starts with the top management and their involvement which is important in promoting and advancing the planning formality. Business decisions have effects due to the duty of either the managing director or CEO’s position of giving tasks because the others working have no idea of how the business started, where it’s going to and how it would get there.
For example in a research done by Burt’s (1978) in a retailing industry he found out that the more the CEO’s (chief executive officer) involvement the more the company had positive results therefore the success of any strategic planning lies in the commitment and ability of the top management to strategize and make the right decisions. According to Forman (1988) he stated that the CEO’s are the ones who can set organizational goals and values with well-developed management styles in order to increase planning formality and service improvement. ORGANIZATIONAL CLIMATE
This is another factor which is seen to be essential to produce effective organizational results. For example lack of data, skills, resources and hostility are unsuitable and are associated with adverse organizational climates. According to Marx (1991) he postulated that businesses should develop their corporate culture and interest groups so as to engage in long term planning, risk taking activities, interaction between headquarters and their subsidiaries and reward systems which will therefore lead to a positive strategic planning formality. FIRM SIZE
This is one of the factors which determine the style of marketing planning system that will be used. According to Vancil and Lorange (1975) it has been noticed that has a company gets larger so will it be more difficult to control and be accurate in decision making processes by the top management therefore an organized decision making scheme has to be established as the firm increases in corporate size. For example in a research done by McKee et al. ’s (1990) they studied health industries and found out that 211 firms in the health industry increased their marketing planning due to the complexities when the sizes of the firms increased.
ENVIRONMENTAL COMPLEXITIES According to Lindsay and Rue research in 1980 they found out that organizations which are situated in complex environments make use of formal planning so therefore there exist a relationship between planning formality and environmental complexity. Environmental complexity is related to relationships with customers, distributors and suppliers, demand changes, diversity of market served and also technological advancement. For example Bantel (1993) found out that in the US banking industry environmental complexity was related to strategic planning formality.
ENVIRONMENTAL UNCERTAINTY It has been found that the environment is subject to change for instance according to Lindsay and Rue (1980) they found out that large businesses in rapid and advanced environments were subject to make use of formal planning than small businesses, large firms in fast-changing environments were more likely than small firms to use formal planning. It was noticed that large firms in different industries made long term plans so as to counter any environmental condition faced.
They suggested that large firms, regardless of industry-type, made efforts to tailor their long-range planning processes to their perceived environmental conditions. According to Lorange (1980) he observed that changes in technology, entrance of new competitors and changes in market structure increases, arguing that new competitors, technological innovation, and market structure changes would all increase the necessity to indulge in comprehensive planning. The benefits of global strategic marketing planning formality have been broken down into two which are organizational and competition benefits.
ORGANIZATIONAL BENEFITS AND COMPETITION BENEFITS It has been written by a lot of writers that with the adoption of systematic planning brings about an effective financial performance for instance company specific strategies and global competitiveness aids financial increase. Due to planning formality benefits such as increases in market share, reduced manufacturing cost, product quality and new product development can be achieved through direct competition (Yip, 1989). CRITICAL REVIEW The main theme of this article is based on the determinants and benefits of global strategic marketing planning formality which I’m going to criticize.
CEO’S INVOLVEMENT Researchers suggested that CEO’s involvement was related to planning formality but other researchers such as (Calingo, 1989; Ringbakk, 1971) had different point of views, they suggested that the whole management not necessary the CEO have to be involved and support the organization so as to create a whole corporate commitment to the planning procedures therefore when there is support from the bottom management or lower staffs it aids positive competition and organizational goals which helps to enhance the planning processes. According to Wee et al. 1991) he stated that many businesses have failed due to indecisive CEO’s and poor planning, which have resulted in the loss of capital and employment. ORGANIZATIONAL CLIMATE Corporate culture were determined by the researches as a breeze through sequence not taking into consideration the cultural differences of each individual in which sometimes people don’t want to let go of their former work culture and bring it into the new organization thereby causing delay of information and the planning process which may hinder the growth of the organization.
If the organization keeps on developing new schemes and different planning formality processes without being precise it can lead to communication breakdown due to misunderstandings and differences in the demands of the individuals which can lead to loss of clients and break the planning process thereby leading to a low revenue and breaking the planning chain (Stephen, 2001). FIRM SIZE
Firm size was seen as not a relevant factor of global strategic marketing planning formality for example it has been noticed that companies which have been in international business for a very long spam of time had an average of $3. 2 billion in sales which suggests some development in the global market. Secondly size is a factor which changes such that as firms begin to expand and go global, there is a change in their corporate mass which goes beyond the need for a planning process to be maintained on a casual basis. ENVIRONMENTAL CONDITIONS
According to this article environmental conditions (environmental complexity and environmental uncertainty) were the factors which aids the increase of a proper planning process but it was noticed that just two out of the five elements(government regulations, suppliers or equipment’s) were associated with the factors which were actually related to global strategic marketing planning formality however factors which were not associated to upgrading the planning formality are the customers, competition between industries, advancement in technology and distributors etc. ll these factors are readily added to constitute the planning process which reduces resourcefulness and ambiguity on the parts of the suppliers and manufacturers (Dwyer et al. , 1987). According to Courtney et al. (1997) he indicated that people engaged in the planning process have the problem of either over estimating or under estimating environmental uncertainty. ORGANIZATIONAL AND COMPETITION BENEFITS
There is evidence from several researches which contradict the saying that planning formality has an effect on the financial status of an organization (Grinyer and Norburn, 1975; Robinson and Pearce, 1983). It is stated that financial results can be affected by several factors specifically the factors related to the increase in company strategies and global competitiveness not planning formality specifically. Another factor which was assumed to increase strategic marketing planning formality was seen to be competition.
In the 1980’s competition was seen to impact the global markets due to creating a shift in the environment (Porter, 1980) such as Western Europe and Asia etc. although competition and organizational benefits have been measured and it has been noted that efforts to upgrade the planning formality process such as to compete in several markets will not systematically raise the efficiency of new products and create large market shares at a go, it takes time, enthusiasm, and a lot of budgeting to arrive at the designated point in the organization.
For example in order to determine the strength of strategic planning processes a study was conducted in 94 small firms in Perth metropolitan region. The firms strategy were mostly linked with financial analysis rather than the planning process however the firms were driven as commercial and advertising firms concerned only with its financial benefits rather than the strength of planning formality in which at that point in time it raised issues on whether firms performed strategic activities or merely thought they performed those duties. PERSONAL EVALUATION
The determinants and benefits of global strategic marketing planning formality is a very interesting article although it has been considered as confusing by others who have no idea of the business world. This article has helped managers, directors, and scholars etc. to fully grasp the concept of what strategic management, planning and marketing is all about. The understand ability and application of this planning process into any business model will help in overcoming loss of revenue, better communication between the CEO’s and his staff and a better and profitable management style.
However if this article is carefully studied it can be used as a means of overcoming the internal and external forces associated with the planning process so as for every party in the business to know what is required of him/her and how to carry out the business activities in unison. According to Tung (1994) the marketplace is a battle field and it’s only the strong that survives so with this type of planning process it can help any business management adopt a style which is sequential and productive. In ummary this article was presented in the most chronically and logical order in which it talks about the benefits a business can gain by using a more systematic planning approach to arrive at a successful start. REFERENCES Bantel, K. A. (1993), “Top team, environment, and performance effects on strategic planning formality”, Group & Organizational Management, Vol. 18 No. 4, pp. 436-58. Burt, D. N. (1978), “Planning and performance in Australian retailing”, Long Range Planning, Vol. 11 No. 3, pp. 62-6. Calingo, L. M. R. 1989), “Achieving excellence in strategic planning systems”, Advanced Management Journal, Vol. 54 No. 2, pp. 21-3. Campbell, A. , Alexander, M. (1997), “What’s wrong with strategy? “, Harvard Business Review, Vol. 75 No. 6, pp. 42-51. Courtney, H. , Kirkland, J. , Viguerie, P. (1997), “Strategy under uncertainty”, Harvard Business Review, Vol. 75 No. 6, pp. 66-79. Dwyer, F. R. , Schurr, P. H. , Oh, S. (1987), “Developing buyer-seller relationships”, Journal of Marketing, Vol. 51 pp. 11-27. Forman, R. (1988), “Strategic planning and the chief executive”, Long Range Planning, Vol. 1 No. 4, pp. 57-64. Grinyer, P. H. , Norburn, D. (1975), “Planning for existing markets: perceptions of executives and financial performance”, Journal of the Royal Statistical Society, Vol. 138 No. 1, pp. 70-97. Hamel, G. (1996), “Strategy as revolution”, Harvard Business Review, Vol. 74 No. 4, pp. 69- 71. Herter, G. (1995), “Business planning boosts your chances”, Accounting Technology, Vol. 11 No. 4, pp. 20-30. Jessup, L. M. , Kukalis, S. (1990), “Better planning using group support systems”, Long Range Planning, Vol. 23 No. , pp. 100-05. Lindsay, W. M. , Rue, L. W. (1980), “Impact of the business environment on the long range planning process: a contingency view”, Academy of Management Journal, Vol. 23 pp. 385-404. Lorange, P. (1980), Corporate Planning: An Executive Viewpoint, Prentice-Hall, Englewood Marx, T. G. (1991), “Removing the obstacles to effective strategic planning”, Long Range Planning, Vol. 24 No. 4, pp. 21-8. McDonald, M. H. B. (1990), “Ten barriers to marketing planning”, Journal of Services Marketing, Vol. 4 No. 2, pp. 281-91. McKee, D. Rajan Varadarajan, P. , Vassar, J. (1990), “A taxonomy of marketing planning styles”, Journal of the Academy of Marketing Science, Vol. 18 No. 2, pp. 131-41. Mintzberg, H. (1994), “The fall and rise of strategic planning”, Harvard Business Review, Vol. 72 No. 1, pp. 107-14. Pearce, J. A. , Freeman, E. B. , Robinson, R. B. Jr (1987), “The tenuous link between formal strategic planning and financial performance”, Academy of Management Review, Vol. 12 pp. 658-8. Porter, M. E. (1980), Competitive Strategy, The Free Press, New York, NY.
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