This paper dealt with analysis from books and journals on the participative strategic planning process and other relevant subjects of strategic management, strategic planning, and participative environment in the strategy formulation of a corporation or organization.
The Literature Review is a study and analysis of the vast knowledge and information from leading experts and authors on the subject. Porter’s concept of strategy formulation is a good case in point. He simply says that strategy formulation is coping with competition. Competition is always present in business and in man’s every endeavor. CEOs and managers should deal with the competition; this is the objective of planning and strategy formulation.
Another fact is the reality of change. Change is always with man and his daily activities, more so with business. Change is a part of business, and along with strategic management, this has to be dealt with too and often should the manager or CEO look into it.
Mintzberg’s (1987) opinions and ideas on strategy are analyzed. The concept of the 5 Ps is interesting and encouraging that any business strategist should emulate. Mintzberg provides ideas on plan, pattern, ploy, position, and perspective and then collaborates with Waters (1985) on strategies that should be based on the aims of the organization and realized or implemented deliberately with effective means.
Additionally, the paper covered analysis and discussion on the surveys conducted on respondents who are the middle- and low-level managers and employees of ACUMENT. The findings of the survey are unexpected; the respondents’ answers, ideas, and opinions on the questions formulated revealed unexpected answers. This could create an unfavorable remark from the management, but since the surveys were conducted with maximum confidentiality, it would not bear any bad effects on the respondents. Nevertheless, the whole outcome of the surveys contains recommendations for the benefit of the whole company, so that instead of the negative side, the study can reconcile both the top management and the middle- and low-level management and employees.
Background to Study
The participative strategic planning process is a relevant topic for this writer/researcher in that the improvement and success of a company like Acument Global Technologies is an important personal objective. Strategic planning is valuable and accessible to the company and its employees; however, it has been found that a participative strategic planning process can help the organization, stakeholders, and the middle- and low-level employees.
The importance of participative strategic planning is stressed can not be measured. In an organization, everyone must be involved and participate in strategy formulation: the employees, the top management, and the middle- and low-level staff must work for a common goal which is the success of the organization. This is how a participative environment evolves. It is in this context and background that this process and activity are recommended for Acument Global Technologies.
This paper will provide an appropriate investigation and study of the importance of strategic planning and participative strategic planning. It is further the aim of this researcher to provide a closer look at the participative strategic planning process in companies, and in an organization like Acument Global Technologies, with its subsidiary Acument China.
Moreover, we will try to answer the question of why the strategic planning process is widely accepted and popularly used in business or in the corporate world.
The main objective of this study is to provide an analysis of a survey conducted on the top management, with the middle- and low-level management and employees of Acument China, regarding the participative strategic planning process. It is also the objective of this paper to make recommendations and formulate some strategies for the company.
Discreet research from the vast literature will be conducted. The research will cover relevant topics on business strategies, strategic formulation and strategic management, and the participative planning process.
The importance of this process will be examined and determine whether its implementation has great effects on the corporate world. Then this will also enumerate the various advantages and disadvantages of the strategic planning process and the problems encountered in its implementation. After a thorough investigation, some methods and ways will be given due preference for best practice recommendations. Finally, concepts and ideas are indorsed to get the message of gaining employee participation in the strategic planning process.
Moreover, an analysis of the survey questionnaires will be given due time, and discussion will also ensue. Some of these answers added with the literature review from books, journals, and periodicals will provide a framework for conclusion and recommendations.
An initial hypothesis can be developed in this study that a participative strategic planning process is ideal for the development of a large company like Acument China, a subsidiary of Acument Global Technologies because the process can empower the employees, or the middle- and low-level management and staff, in framing the strategy of the organization. With a participative strategic planning process, everyone is enjoined to have a voice in the strategy formulation. In other words, the middle- and low-level management and employees are given a chance to participate in decision-making.
The logic behind the participative strategic planning process is that an environment that involves all the actors in business is encouraged or created – this is known as a participative environment. A participative environment can involve middle- and low-level managers, including the frontier staff and employees, to work together and contribute their expertise for the success of the planning process. This is, of course, in addition to the CEOs or the top-level managers who are the top planners of the organization. Obviously, in the ordinary course of events, the middle- and low-level managers and employees cannot just voice their opinions and ideas in traditional strategic planning. They are never a part of the decision-making process of the organization. They are just there making low-level or small decisions in the process of the operation, or they can only act through instructions and other standard operating procedures that they are used to doing and told to do.
Through participative strategic planning, the middle- and low-level employees can voice out their opinions and ideas: their knowledge, information, and experience in the field, the frontier, are heard and become part of the strategic plan to be imposed or carried out as part of the operation.
Acument Global Technologies is a supplier of mechanical fastening technology with annual revenue of US$1.8 billion. Acument Hong Kong and Acument Wuxi have one Managing Director and are referred to in this paper as Acument China. This is a large corporation that has the usual characteristic structure of being multidivisional, multiproduct, and multinational. This global organization is segmented into four business units (BU) which are Electronics, Automotive, Industrial, and Construction. Additionally, its website announced on June 27, 2008, the establishment of Acument Aerospace as a separate business unit to meet the demands of high-performance aerospace fasteners (Acument Global Technology News, 2009).
“The flame of competition has changed from smokey yellow to intense white heat. For companies to survive and prosper, they will have to have a vision, a mission, and a strategy. They will pursue the action arising from that strategy with entrepreneurial skill and total dedication and commitment to win.” (Peter B Ellwood, Chief Executive, Lloyds TSB Group, cited in Thompson, 2005, p. 7)
Strategy is likened to a recipe in cooking: good cooking is a product of a good recipe that can have an outcome of delicious food. Strategy for business starts at the beginning, along with the vision, mission statement, and so forth. Strategy is planning the steps to do in conducting the operations of the business. You plan for work and all the other important activities. Unsuccessful operations result from careless planning.
Strategy is concerned with how to do things, a road map, or a game plan of an organization (Middleton, 2003, p. xiii).
Doing things in business is what is referred to here, although the original connotation of strategy from the beginning is military in nature. Strategy in the military is doing things or the techniques of winning over the enemy. In business, this can be referred to as getting an advantage or an edge over rivals or competitors. So the term strategy is almost the same in meaning whether it is for military or civilian use. Simply, the purpose of strategy is to win the competition.
Companies fail when their strategies fail to meet the expectations of the stakeholders or produce outcomes that are undesirable to them (Thompson, 2005, p. 8).
What do the stakeholders want from the products? Well, it is simply products with the quality or those which satisfy their needs and wants.
Porter (1998) says, ‘The essence of strategy formulation is coping with competition’ (p. 21). The essence of Porter’s statement is that competition is natural for business or for any industry. Executives should not be too complaining because competition is always there present –they have to live and cope with it in order for a business to survive and compete in the midst of all those strong forces threatening the industry. The competitors are the customers, suppliers, potential entrants, and substitute products.
Customers are also categorized as competitors; a business organization must meet customer demands, needs, and wants. Customers are demanding; even though they don’t say it loudly, their meticulous wishes are implied. The company should be able to know it instantly and keep on improving the product to satisfy the customer.
Another form of competitor is time. Stalk et al. (1999) argue that time is a new source of competitive advantage or “just one piece of a more far-reaching transformation in the logic of competition” (p. 172).
Companies compete effectively on time. Competing on time can mean “speeding new products to market, manufacturing just in time, or responding promptly to customer complaints” (Stalk et al., 1999, p. 172).
Time plays a role in instituting change or in dealing with change in the organization. Companies have to be flexible in responding to changes, must benchmark continuously to achieve best practices, must outsource to gain efficiencies, and must nurture a few core competencies in the race to be in the lead (Porter, 1998, p. 39).
In business, therefore, it is a matter of always being active, always looking for improvement, and in pursuit of excellence. Planning aims for these goals. Planning is action or activities to get to the customers’ demands quick, answer their needs, improve the business always, etc.
Competition is a “war of movement” in which success depends on anticipation of market trends and quick response to changing customer needs” (Stalk et al., 1999, p. 171).
Porter’s Five Forces
Porter’s famous five basic forces determine the state of competition in an industry, and their collective strength determines its profitability. ‘The weaker the forces collectively, however, the greater the opportunity for superior performance (Porter, 1998, p. 22).
Every actor in the industry would like to bring along techniques in the business to beat or surpass the other, and these are in the form of price competition, product introduction, and other advertising methods – these are all to get the lead in the competition.
Factors that contribute to rivalry, according to Porter (1998, p. 33), can be the following
- There are a lot of competitors who are almost equal in size and power.
- A search on the internet can provide a list of competitors for Acument China in the fastening industry. Though they may not be equal in size and resources (although this is an assumption) as the company Acument China, they still pose a threat to the competition. The list is quite long that it can be said that if the company Acument is caught off guard, there could be bad consequences.
- There is a slow pace in growth; hence competitors fight for market share, which involves expansion-minded members.
- As stated earlier, Acument Global Technologies is a leading company in mechanical fastening technology with annual revenue of US$1.8 billion. It is a global organization with branches worldwide. However, the two branches, Hong Kong and Wuxi have one Managing Director; these two are collectively named Acument China in this paper. The company has four Business Units which are Electronics, Automotive, Industrial, and Construction. Recently, Acument Aerospace has been added to the business units.
- There is lacking in the differentiation or switching costs of products or services, which lock in buyers and prevent a competitor from being raided on its customers by another competitor.
- The prices of the products have to be kept low and competitive so that customers may not shift to other competitors’ products.
- There are higher fixed costs on perishable products, creating a temptation to cut prices.
- As it is said, prices can shift customer loyalty. However, there are products with a high maintenance cost that there is the temptation to cut prices. The company has to maintain the original prices.
- There are diverse strategies, origins, and “personalities” among rivals or competitors.
On the other hand, in describing strategy, Mintzberg (1987) provides his so-called 5 Ps, and these are:
- plan, which is to guide the business;
- pattern, which is to give way to a stream of actions;
- ploy, which is to introduce a set of actions for the conduct of business;
- position, which is to identify the company in its stand as a business in the competitive world; and
- perspective, which is to provide a deep-rooted method or actions in the business world.
Applying these to the company Acument, the 5Ps can provide a pattern or a plan for success. A strategic plan is always a must for any company, more so with a global company like Acument. Participative planning is ideal because this can empower middle- and low-level managers and employees, who are the most experienced and talented individuals. A pattern for actions is almost the same as a plan for actions, but the pattern can include experience and innate desires on the part of the employees to do what is right and beneficial for the company. A ploy can be equal to outsmarting the competitor, although it does not mean playing tricks. Employing strategies to attract customers can be considered a ploy.
Acument China has some strategies in place which can counterchange. Its website is an application and display of the best of the Acument products – these are mechanical fastening technologies, ranging from aerospace to automotive to construction and electronics. They are also diverse and can be considered state-of-the-art. The company is also in a good position and can be considered a leader in the industry because of its quality products, a good organization of experienced managers and employees, and being globally oriented. However, the question of a participative environment and strategy is still a case in point.
Moreover, Mintzberg and Waters (1985) argued that strategies should be derived from the aims of the organization and realized or implemented deliberately, affected by the following conditions:
- The particular aim of the organization for implementing the strategy should be articulated precisely and in detail;
- The intentions or aims must actually or virtually involve everyone, and
- The intentions must be realized with no external force interfering.
Strategy, says Mintzberg, provides a means by which organizations and individuals can examine their internal and external worlds (Middleton, 2003, p. 99).
Middleton (2003) made his analysis of Mintzberg and his various studies on strategic planning. He states that:
Mintzberg traces the origins and history of strategic planning through its prominence and subsequent fall and sets out what he sees as some of the fundamental fallacies of strategic planning, for example, that discontinuities can be predicted, that strategists can be detached from the operations of the organization, and that the process of strategy-making itself can be formalized (Middleton, 2003, pp. 99-100).
Strategy Formation Process
Strategy can be in different forms due to environmental interferences; these are external environmental forces that are difficult to control. Mintzberg and Waters (1985) provide us with the different forms of strategy formation processes:
Obviously, this is the formal plan borne out of careful planning by the leadership of the organization. This is aimed to counter any surprises along the way or in the process of the operation.
This kind of strategy is formed from a personal or leadership style, usually coming from the entrepreneur or main leader of the organization.
The people running or doing the strategy have a common belief or ideology for which the organization aims to work on common ground. The kind of strategy imposed is deliberate as the people are indoctrinated for the particular ideology.
The strategy imposed is for the people to work on that level of constraints, meaning the strategy is the framework for the managers and employees to work on. The leadership of the organization formulates the strategy, and the middle level and frontier staff follow.
The leadership works on the process or methods which the staff follows. However, the leadership has control, and the rest can be formulated by the other managers. The strategy here is deliberate.
The strategies implemented in this kind are loosely connected, meaning the managers and the employees do their own way and are not directly in line with the organization’s objectives.
It is said that the strategies here are emergent because the actors or employees work or implement some actions after a consensus is brought among them. There is no common objective on the part of the organization, a situation that gives the actors leeway to work on a certain framework or strategy.
Here the environment plays an important part in the formulation of the strategies. Through an evolved situation, strategies and plans of action are formulated.
Collis and Montgomery (1998) cite the elements of a corporate strategy in the form of a triangle.
Collis and Montgomery (1998) say that ‘Great corporate strategies come in the first instance from strength in each side of the triangle: high-quality rather than pedestrian resources, strong market positions in attractive industries and an efficient administrative organization’ (p. 4).
There should be a tight fit at each angle of the triangle. The resources, businesses, and organizations are each on equal sides.
Companies succeed if their strategies are appropriate for the circumstances they face, feasible in respect of their resources, skills, and capabilities, and desirable to their important stakeholders, those individuals and groups, both internal and external, who have a stake in and an influence over the business’ (Thompson, 2005 p. 8).
The strategist has to assess every situational aspect affecting his business; then, he can proceed to analyze the strengths and weaknesses of the company. The
a strategist can get to the causes, create the strengths and weaknesses and identify the company’s posture as to where it stands against the barriers.
Porter (1998, pp. 34-35) says that ‘the strategist can devise a plan of action that may include:
- positioning the company so that its capabilities provide the best defense against the competitive force; and/or
- influencing the balance of the forces through strategic moves, thereby improving the company’s position; and/or
- anticipating shifts in the factors underlying the forces and responding to them with the hope of exploiting change by choosing a strategy appropriate for the new competitive balance before opponents recognize it.’
Formulating a strategy is similar to a field battle where one builds defenses and fights against the enemy, this time against competitors in business. Competitors can be regarded as the enemy. This can be effective when you identify your strengths and weaknesses and then prepare for the competition. Like in any other competition, a team has to find its strengths and weaknesses.
Knowledge of the company’s capabilities and of the causes of the competitive forces will highlight the areas where the company should confront competition and where to avoid it (Porter, 1998, p. 35).
Bartlett and Ghoshal (1987, cited in Cray & Mallory, 1998, p. 5) have added some learning to the usual considerations of global efficiency and local responsiveness. In a global business organization like Acument China, managers must:
- Acquire a new set of skills to process information from a global network on an ongoing basis;
- Encourage subordinates to generate and transmit that information not only to their superiors but also to other relevant nodes in the organization.
- One of the consequences of organizational learning is that the context of management is evolving over time.
Global companies should be able to apply Information Technology tools and the internet. Acument is on track from this perspective.
The ordinary employees and those working in the fields, in the frontier, are the ones who know best the strengths and weaknesses of the company. They know what is best in the competition. They should be consulted and have a part in the strategic planning. They are also the ones who can make or break the competition. These low-level employees can act as ambassadors or liaison officers of the organization. Whatever they do or act can affect the organization. Therefore they have to be empowered and consulted in any decision-making process of the organization. Ignoring their capabilities is something like ignoring members of a family. The organization should let them feel that they are a part of a team and that they own the business. By letting them feel they are a part of the organization, they will do everything for the success of the business.
Middleton comments that Mintzberg has concluded in his studies that managers should rely on intuition.
“…All those analytical techniques of planning felt so wrong … Ultimately, the term ‘strategic planning’ has proved to be an oxymoron” (Middleton, 2003, p. 100).
The aim of the detailed analysis in the strategic process and the objective evaluation process “should be to probe and challenge assumptions, surface mental models or mindsets that are shared by those in the decision-making process, and to ask the ‘what if’ and ‘why not’ questions that extend the boundaries of organizational awareness” (Middleton, 2003, p. 100).
Further, Middleton (2003) cites Mintzberg as saying that “the most compelling and convincing strategic processes are those that are capable of synthesizing a vision” (p. 100).
Planning is the process of establishing objectives and choosing the most suitable means for achieving these objectives prior to taking action.
As Russell Ackoff (cited in Goodstein et al., 1993, p. 3) states: Planning is anticipatory decision-making. It is a process of deciding before action is required.”
Strategic Planning is defined as “the process by which the guiding members of an organization envision its future and develop the necessary procedures and operations to achieve that future” (Goodstein et al., 1993, p. 3).
This should be stressed: Planning involves the future of the organization.
Strategic Planning is as vital for any organization. A company without strategic planning that includes formal, integrated, and long-range planning will surely have a rough-and-tumble way of operation, from its start to future operations, especially when it becomes global or when the situation forces it to become global. Strategic Planning has become so important and widely accepted in business that we have to give it a careful analysis and study.
Middle-level managers must participate in Strategic Planning (Mintzberg, 1994). They have to be involved, and the reason for this is that middle-level managers should participate in decision-making; however, they cannot do so with the kind of structure and distribution of power in a corporation that is said to be vertical. Corporate decision-making allows management to pass on decisions from top to bottom, i.e., a vertical distribution. Nevertheless, the middle- and low-level managers have the authority to make commitments which planners lack. They are there in the field, often having contact with ordinary employees and with customers, or the outside world, so to speak. They also have access to what is called soft information about the organization.
In strategic planning, these things are taken into consideration. A device used to empower middle-level managers to air their sides, their valuable information from the field which cannot be heard if the ordinary distribution of power takes its course. In this method, they are a part of the decision-making process. Strategic Planning is the answer to this predicament.
A participative environment answers the demands of the low-level staff. All important players in the organization should participate in the implementation of strategic planning. Middle and lower-level managers should participate in strategy formulation because of the kind of relevant information that they can input into the planning process. Their function in the organization allows them to have access to maximum knowledge and information about the organization and the kind of business it is in.
Strategic Planning requires the organization’s intimate and enthusiastic involvement, often using formal and informal teams, in providing information, making decisions, and successfully implementing them (Fogg, 1994, p. 3).
What are the contents of a Strategic Plan?
First, plans typically follow the sequence: situation analysis (external assessment, internal assessment), priority issues, mission, objectives, strategies, program development, delegation, and accountability and review (Fogg, 1994, pp. 3-5).
The various steps in the plan are carefully viewed and pieced together like it is in a jigsaw puzzle, putting together the paintings and the drawings, the various steps, and then forming a complete picture that addresses the organization’s specific situation.
Planners are maybe able to accomplish some steps in parallel, shorten or expand steps, and even omit some, depending on the organization’s business situation, priorities, and capabilities (Fogg, 1994, p. 5).
The very size and complexity of today’s large corporations have necessitated breaking up the job of planning and of choosing. (Bower, 1986, p. 15)
There has to be a so-called division of labor in disposing of the resources of the organization. This is achieved in the planning and implementing of the strategic plans of the organization.
While the board of directors of a corporation or a corporate appropriations committee typically reserves to itself the right to make large capital expenditure decisions, a host of critical decisions are made long before a request for funds reaches the board. Among the most important of these decisions are the choice of sales forecasts, the definition of a facility scope and design, and the decision to submit a request. (Bower, 1986, p. 15)
Formulation of the Strategic Planning Process
Early treatises on management, such as that of Fayol (1949), viewed planning and control as the beginning and end of the management process (Camillus, 1986, p. 3).
This can be tailored to the specifications of Acument Global Technologies Inc. The subunits of the organization can be explicitly recognized, the relevant future foreseen and specified, the stakeholders and their priorities identified, and the concerned managers’ preferences also specified.
A flow chart that includes various levels of analysis, formulation, and implementation of the Strategic Plan must be provided. This is one of the first steps. Participation is always stressed with the managers and the frontier staff taking lead roles in the process. With this, effective implementation is ensured.
Porter (1998) says that ‘operational effectiveness is not a strategy (p. 39). But the strategist must be able to distinguish between operational effectiveness and strategy.
The quest for productivity, quality, and speed has spawned a remarkable number of management tools and techniques: total quality management, benchmarking, time-based competition, outsourcing, partnering, reengineering, and change management (Porter, 1998, pp. 39-40).
Differences between companies with respect to their products’ cost and price are derived from the hundreds of activities required to create, produce, sell and deliver; this means the cost depends on how these products are made and sourced and reach their potential buyers and consumers. It really takes a lot of money and resources to be able to produce products; before the products reach the consumers, they have to be handled by people, from manufacturing to processing to selling.
Participation in Strategic Planning
Participation allows middle- and low-level managers to have their sides felt and become a part of the decision-making process.
Eden and Ackerman (1998) state that ‘Increased participation allows better decision and increased collaboration.’ Participative management increases employee participation; they are persuaded into active involvement in the decision-making process of the organization.
Increased participation can lead to better decisions and increased collaboration among middle- and low-level managers (Eden and Ackerman 1998).
To be successful, a strategic planning process should provide the criteria for making day-to-day organizational decisions and should provide a template against which all such decisions can be evaluated (Goodstein et al., 1993, p. 1).
This virtual template can act as something like the standard operating procedure for future activities and problems. When situations arise, employees can look into them or consult the strategic plan.
There are two kinds of important decisions that organizations make: strategic decisions and strategically driven decisions. The organization’s senior management needs to be intimately involved with the first of these because that is clearly an executive function, perhaps the most important executive function. The senior management needs to make certain that the second (strategically driven decisions) are properly made and implemented. Strategic management is the execution of a strategic plan. (Goodstein et al., 1993, p. 1)
Planning has to examine all the important factors in the environment of business. The outside world can be hostile, difficult to understand, and sometimes impossible to influence. There is an ever-changing economic, regulatory, political, and social environment. How do you have to deal with this? How does business cope?
This ever-changing environment contains the customers that we have to win and the competitors that we have to beat.
Fogg (1994, p. 5) says, ‘To plan successfully, you must learn as much as you can about the outside factors and trends that will affect your future.’
Moreover, the customers’ preferences and attitudes have to be examined and studied. They may buy the products or services in a multinational, national, or city market. They may be a specific population for which we provide entitlements. The outside world of Acument China is global, and an external assessment is just as necessary.
The key elements of the strategic planning process (Fogg, 1994, p. 6):
Included here are the areas for opportunities and threats: markets/customers,
sociodemographics, competition, technology, economy, government/political, factors of production, internal assessment. This may also include areas for strengths, weaknesses, and barriers to success, and such other factors as organizational dimensions like culture, structure, systems, people, and management practices. Other key dimensions include cost-efficiency, financial structure performance, quality, service, technology, market segments/performance, innovation/new products, and asset condition/productivity.
Source of Priority Strategic Issues
In this portion, SWOT (strengths, weaknesses, opportunities, and threats) has to be analyzed and addressed.
This may include the vision, business definition, and values.
Source of Strategic Objectives and Programs
This will include the organization’s mission and other priority issues, objectives, and strategic programs.
Moreover, Camillus (1986) recommends the implementation of a Strategic Planning System (SPS), which he says is “most wide, visibly, and explicitly employed as a means of determining the enduring long-term objectives of organizations and as a means of devising strategies for accomplishing these objectives” (p. 39).
SWOT Analysis for Acument China
Acument Global Technologies is one of the largest and leading fastening companies in the world. It has branches in more than 150 countries worldwide, from North America to the Asia-Pacific region. Its range of products includes fastening systems, threading systems, bolt & sleeve assembly, and for a wide range of industries like electronics, automotive, construction, aerospace, and so forth.
The employee population has reached 9,000. The organization is now being led by Richard F. (Rick) Dauch as President and Chief Executive Officer (Acument Global Technologies, Biography). Dauch’s credentials can speak for themselves. He has a wide range of experience in management and leadership in operations, sales, and marketing from other big companies like American Axle & Manufacturing, Inc. before joining Acument.
The company is a recipient of various awards like the 2008 Boeing Performance.
Excellence Award for its quality products with a superior level of performance (Acument Global Technologies, 2009). The wide range of Acument products is quality-oriented.
Sales reached $.18 billion.
Acument is a global corporation serving its customers personally.
It is a very competitive organization.
There is a total lack of strategic planning process, and if there is participative planning is totally lacking.
Because of this lack of participative planning process, there is a possibility the company will lose some of its valued employees.
There is a list of competitors, so the company has to continue its innovations and more changes in strategies to combat competition.
The company has to improve it’s Research and Development.
Gauging employee perceptions of the top management should be added among its long-term strategies as the middle- and low-level management and staff are not listened to.
It can retain its valued employees by improving strategic management.
The middle- and low-level management and employees should be given a chance in strategic management planning.
The company can have expansion in the Asia-Pacific region because of the growing market.
Competitors are closing in and are expanding in areas where the company is also growing.
Some employees could be pirated by competitors if they are not given a voice in strategic planning.
There are also external factors in the countries where the company is still gaining influence in the market.
It is often said that change occurs in business or in an organization most of the time. The Manager or the CEO always has to cope with change and has to deal with it in order to survive. By being successful in coping with change, the CEO is successful in business, or perhaps near success.
Strategic Management is the CEO’s chief concern, but the middle or the low-level managers have to participate in the strategic planning. Strategic Management involves cross-functional decisions for the organization to achieve long-term objectives. David (1989) states that ‘Strategic management is a combination of art, science, and craft all for formulating, implementing, and evaluating those functions.’
The activities involved in strategic management are:
- Formulation of the organization’s mission
- Providing emphasis and explanation on external factors like competition, customers, technology, and regulation;
- Formulation and development of competitive strategies to achieve the organization’s mission;
- Creation of a structure employing all possible resources for the success of the formulated strategies;
- Activities for improvement
Managers need to know where their roles fit in relation to the whole and how they can contribute to strategic developments and changes (Thompson, 2005, p. 1).
Strategic Management for Acument China
Formulating strategic management is devising strategies to deal with change. Change is inevitable in man and his activities. There is no time in a human endeavor that change is absent. Society as a whole encounters change, and history is replete with changes. Change is constant and continuous, and this is more prevalent in business. The traditional view of management looks at people to be managed from the center of the organization. This approach to management does no anymore work in the frame of a globalizing economy. Management is not anymore an SOP-type of management where the employees work according to the traditions and culture of the organization. The management style of organizations follows the changing pattern.
In strategic management, change is a common factor; strategic management is dealing with change. Strategic management addresses change in business, issues on strategic developments, and changes in organizations. This also involves cross-functional decisions for the organization to achieve long-term objectives.
Success in business depends on many factors but most especially on strategies being implemented. These strategies are enforced or to be followed up in the field by ordinary employees or the middle- and low-level managers. They have to be carefully studied and given a step-by-step procedure in its implementation so that it becomes almost automatic on the part of the employees to follow.
Change management depends on some factors: on the magnitude of the challenge that requires change; in order to do this, it is necessary to determine what type of change is required, the scope and the context necessary, the problems and hindrances that may occur along the way, and the forces that exist to carry on the change process (Johnson et al., 2008, p. 519).
According to Johnson et al. (2008, p. 519), there are four types of strategic change, and they are:
This is the most common form of change because it occurs within the present setup or culture, and it does not require much effort to deal with. This type of change is incremental.
This is a rapid change that does not affect the culture but involves upheaval within the organization. It could be affected by market conditions and can involve structural changes due to major cost-cutting programs.
This involves a cultural change in the organization. This requires a major change because the existing culture places a hindrance to the strategy; environmental or competitive pressures might have to change along with it.
This can occur when the organization has to adjust to environmental changes wherein some strategy has to change or adjust because of some environmental changes.
In designing programs for strategic change, some contextual features are needed to be taken into account, and these are according to Johnson et al. (2008):
The time available for change differs in different situations. Johnson et al. (2008) provide an example wherein a business is facing an immediate decline in sales and, therefore, profits – the business needs change to counter the possible bankruptcy. In another situation, a business has to effect change in the future or long-term process to provide a program in case a change is to occur in the years ahead.
The scope of change might differ considering the breadth of change across an organization and the depth required.
Whilst changes have to occur. There are some aspects that need to be preserved in the organization; what is possible may just be to base the changes on some competencies in the organization but not totally change them.
It is important that there is a diversity of experience, opinions, and views within the organization, but there are organizations with many years of experience resulting in a homogenous strategy being implemented by the employees. Change in this context may be hampered. Therefore the diversity of experience and opinions should be carefully measured first.
The people to do and effect the change should have the capability or experience.
Available resources for change should be taken into consideration. Change has to be allocated with a certain amount of money and also time.
Are the organization and the people in the organization ready for a change? Does the organization as a whole feel a need for change, and if there should be such changes, will there be acceptance or resistance?
Who is going to affect change should be taken into consideration? It is not in all circumstances that the CEO has the power to effect change. Some others within the organization can have the power to effect change.
Part of the aims and objectives of this paper is to analyze the survey answers of 42 respondents who were comprised of director and senior managers, middle- and low-level managers, and employees.
The director was the leader of the planning process, with the senior managers and other leaders as members of the planning team. The majority of the members of the planning team belonged to the marketing and sales department, which is said to be the middle and low-level department. Moreover, all senior managers were involved, and it can be said that the participation involvement covered a big percentage from the higher echelon of the organization.
From the answers of the respondents, it was found that all managers belonging to the top and middle levels did not feel the environment was stable and predictable; their answers were a combination of diverse, dynamic competitive, and challenging.
In the chart produced for this paper, it was found that the external environment of ACUMENT CHINA is challenging, dynamic, diverse, and competitive.
These findings somewhat support the answers of the respondents.
The respondents who provided their answers to the questionnaires are represented in the chart below.
The respondents were asked about their opinion regarding strategic planning. Answers varied from long-term goals and objectives to allocation of resources and plans, position, perspective, competitive advantage, and so forth. The opinion of the respondents can be summarised, therefore, as follows: Strategic planning can be used to attain long-term goals, for gaining competitive advantage, and for allocation of resources.
The question on the importance of the strategic planning process gained a consensus from the respondents as their answers were somewhat identical in saying that the strategic planning process is important or quite important to the organization. It is important to the strategy formation process.
Figure 2 shows the respondents’ answers when asked about the business environment characteristics. They provided various answers, which are: competitive, diverse, challenging, dynamic, stable, predictable, and unknown. The figure shows the distribution of respondents in regard to their answers to the questions.
Question 2 dealt with the respondents’ general knowledge of strategic planning and what they thought should be included in strategic planning, and the options were provided, such as long-term goal and objectives, allocation of resources, plan, position, pattern, perspective, product-market considerations, and competitive advantage.
Question 4 deals with the employees’ knowledge and expertise in the strategic planning process. Do they know anything about the strategic planning process? What do they know about it, and how high was their knowledge of the strategic planning process?
The respondents’ answers are shown in the graph in Figure 3 above. The analysis used is arriving at the number of occurrences of the options provided for the respondents. One of the responses goes this way: “We made decisions and adapted as we progressed based on how situations in the market emerged.” This is good as saying: “It depends on the situation. If the situation demands this kind of decision, then we have to do it and adapt our own strategy.” This is some kind of independence, but is it good for business? The question is hypothetic and can be left hanging.
It can be summarized and concluded here, prematurely though, that the strategic planning process was not so very clear to the employees, the middle- and the low-level managers. What they understood and carried out in their operations in the field was that as situations or circumstances arose, they had to implement the strategies. What they had was a vague and naïve notion or concept of the company’s strategy. They had the belief that the company ACUMENT created those strategies to counter situations. In other words, the strategic plan had no meaning, no definite structure, and objective. The company’s mission and vision were stated and virtually implied to them, the employees, but they couldn’t transform that particular knowledge into a strategy for the business. What they had on hand were functional strategies that their departments were to impose. As a whole, the strategic plan was not working. Or, there was no strategic plan at all for the managers and employees to be guided upon.
Question 5 deals with the question of ascertaining the level of participation of middle and lower-level employees in the strategic planning process.
As per our analysis of the survey, 12 percent believed that the employees were very participative; 50 percent believed that the process was participative; 21 percent believed that it was slightly participative; while 18 percent thought it was quite participative.
Moreover, Question 6 dealt on descriptive statistics, while Question 7 asked the respondents to rank the level of participation of middle and lower staff in the planning process.
It was found from the median score (3) and the mean score (2.5 or 2.6) that the middle and lower-level staff were slightly involved in the strategic analysis and strategic alternatives. They were also involved in the strategy implementation & change management and strategic performance management & control because the median score was two and the mean score was 2.3. The middle and lower-level staff were slightly involved in strategy adaptation due to emergent issues as the mean score resulted in 2.4 and the median score was 2.5.
Question 7 dealt with the employees’ perception as to who was making the strategic decision. A tally of the frequency of occurrence was done in this portion, and it showed the maximum times that the respondents believed that the China Managing Director and Asia Pacific Manager were responsible for the strategic decisions for the company ACUMENT. The conclusion here is that the top management and the Director were responsible for the strategic decisions.
Six respondents, or 17.6 percent, were unanimous in saying that the China Managing Director was responsible for the strategy formation. However, 38 percent revealed that the China Managing Director, together with the Asia Pacific Management, was responsible for strategic decisions. Thirty-five percent believed it was the responsibility of the China Managing Director and China Business Unit/Segment Leader. Another unanimous answer stated that top-level management had the option in the strategic decision. As a whole, middle- and low-level managers of ACUMENT did not have an important role in the strategic planning process. The strategic planning process is being done by the top-level echelon, including senior managers and segment leaders.
Question 8 dealt with what the employees felt about strategic planning, and the choices were:
- key formulators of strategy did not play an active role in implementation;
- insufficient employee empowerment;
- instructions and training given to lower-level employees are not sufficient;
- selected strategy and related tactics are not well understood by the employee; and
- failure to get required involvement from the leaders/managers.
The respondents’ answers showed that there were gaps in the strategy formation and implementation process, which meant that the planners or formulators of strategic planning did not have a part in the implementation process. The middle- and low-level staff do not have power in decision-making and are not sufficiently trained or are incapable of implementing the strategies.
Question 9 dealt with a very important aspect of the participative strategic planning process. Who should be involved in the strategic planning process and its implementation?
The respondents pointed to the senior management team, the Managing Director, and the middle-level managers like the ones who should be involved in the strategic planning process. However, 37 percent of the respondents answered that the middle-level management and frontier employees should also have participation.
What should be the changes in the strategic planning process for the company?
Question 10 dealt with this subject. The answer was on external environment: improvement of market and competitor information collection. Middle-level management and frontier employees should be involved in information collection about competitors. The alignment of strategy, from formulation to implementation, should be improved.
The next questions dealt with strategic planning goals, processes, and roles. The respondents’ responses were quite the same as their understanding of the goals of the strategic process. The Director had more knowledge about the process and had a clear understanding of his role in the planning process. However, the senior managers have lesser knowledge or understanding of their role in the planning process than the lower-level personnel.
A correlation between the respondents’ answers of their understanding of the strategic planning goals was conceived. The negative correlation showed that the middle- and lower-level staff had little understanding of their roles in the strategic planning process.
Acument can be considered a leader in the industry because of its quality products and is globally oriented, but it is a hierarchical organization of experienced managers and employees. A participative environment and strategy are not present in the organization. This can be taken from the survey questions and answers where the respondents revealed that they knew little of participative strategic management.
It was found that there was a decrease in the hierarchy, meaning the vertical structure of the organization was somewhat reduced, which led to a decline in participation in the planning process. The participants in the planning process were members of the Sales & Marketing department, but the other departments, such as the QA, IT, and Finance, were not represented. This revealed a lack of participation from the many departments that should have a say in the strategic planning. Such participation is an important factor in the process. Middle- and low-level managers and employees were not involved in the initial stages of the planning process; they were somehow involved in the later stages of the process, which meant their role was not too clear. Top-level management with segment managers and leaders were involved in the process.
Answers from respondents also revealed that the strategies the employees were implementing in the field were personal perceptions or what they felt and thought should be implemented as the situation arose. There are strategies that can be said to procedures provided by the company, and these were to counter or solve problems in the field.
The areas of discussion and communication among top management, middle- and low-level management are weak and need much improvement and alignment. The strategic management process should be done in such a way that consultations connect the lines from top to bottom or vice versa.
Beer and Eisenstat (2000) refer to limited discussions as laissez-faire. Participation from the lower rank is not much appreciated.
The people involved in the planning process had little understanding of the external environment. The external environment is very important in this process, for how can you formulate strategies, activities, and plans if you have less knowledge of the environment. Factors like social, political, environmental, and so forth are supposed to influence the strategic plan.
Analysis of the entire situation should be included too. The strength and weaknesses of the organization should be given attention and careful study, and an analysis of the SWOT factors should also be done.
The long-term strategy provides dynamic and permanent goals, but little changes can occur for as long as the planners can provide space as the situation arises. The planning process should be determined by the market and financial forecasting forces.
Conclusions and Recommendations
The strategic planning process of ACUMENT CHINA must be provided with an appropriate supply of information from the outside world, the so-called external environment. Without this knowledge, the strategic planning process can be said to not have a good mechanism to handle the future, along with its goals and objectives. It is repeatedly said that the organization ACUMENT CHINA is a dynamic, diverse, and competitive organization. It deserves the best in the planning process.
We can conclude that the present strategic planning process of the company is weak and without appropriate support and structure. This has to be improved. The middle- and low-level managers and employees are not represented, hence the utter failure to provide a smooth running of the operations.
Top management should take the initiative of reaching out to the lower staff and bridge the communication gap between them. Planners and implementers must be a team, not a master-and-servant arrangement. Dialogue is in order to allow the team members to act at the same pace.
The survey indicated that the employees’ stand in the strategic planning process was not clear. Communication between them is loose. This is what is called blocked vertical communication (Beer and Eisenstat, 2000).
Employees should be empowered and allowed to give suggestions and decisions in the strategic planning process. This should be a part of the entire process and become a part of the culture of the organization. There should be more room for improvement. Coping with change must be endemic in the organization.
The strategic planning process for ACUMENT CHINA should be a collective process to allow long-term goals to be fulfilled by a team that must be composed of the top management and the middle- and low-level management and staff. This can gain a competitive advantage for the organization and position the company properly. A strategic plan for the company must position the company to gain maximum profitability and market share.
The answer to the question on employee participation in the strategic planning process is quite clear from the survey answers of the respondents, which is that ACUMENT CHINA does not have a participative strategic planning process. The process is conducted by the top-level echelon: the Director, top management, and some senior managers. A modified version of the strategic planning process is suggested here.
The senior management team, the Managing Director, and the middle- and low-level managers should participate and have an important role in the strategic planning process. The company should improve performance in the areas of market and competitor information collection and alignment of strategy.
The middle- and low-level managers and staff do not have a clear understanding of their roles in the strategic planning process.
Finally, we should also take the advice of Mintzberg, who says that businessmen should rely on intuition. Is strategic planning an oxymoron, as Mintzberg said? If so, then what’s the use of strategic planning?
Strategic planning is very relevant in an organization like ACUMENT CHINA. But this should be coupled with experience in the field and implemented with an added touch of expertise, skill, and creativity. These things can only be done with the right people in the organization and in the field.
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