A strategic plan embodies and revolves around the statement of a strategy for an organization. Strategic planning is a process for producing this strategy and updating it as necessary.
Strategy as the Grand Plan:
The concept of strategy is ancient. The word itself comes from the Greek strategeia, which means the art or science of being a General. Effective Greek generals needed to lead an army, win and hold territory, protect cities from invasion wipe out the enemy and so forth. Each kind of objective required a different deployment of resources. Likewise, an army’s strategy could be defined as the pattern of actual actions that it took in response to the enemy.
The Greeks knew that strategy was more than fighting battles. Effective Generals had to determine the right liens of supply decade when to fight and when not to fight, and manage the army’s relationship with citizens, politicians and diplomats. Effective Generals not only had to plan but had to act as well. As far back as the ancient Greeks, then, the concept of strategy had both a planning component and a decision making or action component. Taken together these two concepts form the basis of the ‘grand’ strategy plan.
In the 1920s Sears Roebuck and Co was a giant mail-order house whose president, General Robert E Wood recognized the importance if strategy. Wood realized that the growing popularity of the automobile would give increasing numbers of people access to urban areas. A population no longer confined to the countryside, he reasoned would abandon the mail order catalog in favor of the retail store. So Sears embarked on the long range strategy of converting to a retail chain. According to Wood, the company made every mistake in the book at first but its carefully laid plans eventually brought huge success. Business is like war in one respect the general wrote If its grand strategy is correct any number of tactical errors can be made an yet the enterprises proves successful.
The rise of strategic Management:
The connection that mangers today make between business and strategy is a relatively recent one. Only since World War II has the idea emerged that strategic planning and acting on those plans constitute a separate management process, the process we call strategic management. This comprehensive approach to developing strategy did not appear overnight. It evolved over time. In 1962, business historian Alfred D Chandler proposed that ‘strategy’ be defined as:
the determination of the basic long term goals and objective of and enterprise, and the adoption of courses of action and the allocation of resources necessary or carrying out these goals.
Chandler stressed there key elements: (1) courses of action for attaining objectives; (2) the process of seeking key ideas (rather than routinely implementing existing policy); and (3) how strategy is formulated not just what that strategy turns out to be. Chandler abandoned the conventional notion that the relationship between a business and its environment was more or less stable and predictable. He developed his ideas using historical methods and by analyzing the growth and development of such companies as DuPont, General Motors, Standard Oil, and Sears Roebuck.
As Chandler’s concept evolved two factors soon became evident: (1) strategic planning paid off in the world of real business activity, but (2) the role of the manager in the implementation of strategic planning had not yet been clarified. Still to be determined was how top management could deal with the two major problems faced by modern organizations: rapid changes in the interrelationship between the organization and its environment and the rapid growth in size and complexity of modern business organizations. In an effort to address this problem, the strategic management approach began to take shape.