Strategic planning is an organization 's process of defining its strategy or direction, and making decisions on allocating its resources to attain strategic goals.
124-549: Furthermore, it may also extend to control mechanisms for guiding the implementation of the strategy. Strategic planning became prominent in corporations during the 1960s and remains an important aspect of strategic management . It is executed by strategic planners or strategists , who involve many parties and research sources in their analysis of the organization and its relationship to the environment in which it competes. Strategy has many definitions, but it generally involves setting strategic goals , determining actions to achieve
248-568: A 1954 book The Practice of Management writing: "... the first responsibility of top management is to ask the question 'what is our business?' and to make sure it is carefully studied and correctly answered." He wrote that the answer was determined by the customer. He recommended eight areas where objectives should be set, such as market standing, innovation, productivity, physical and financial resources, worker performance and attitude, profitability, manager performance and development, and public responsibility. In 1957, Philip Selznick initially used
372-460: A central platform, this new trend of competitive intelligence tools has effectively reshaped how competitor analysis is performed and intelligence gathered. Competitive intelligence has been influenced by national strategic intelligence . Although national intelligence was researched 50 years ago, competitive intelligence was introduced during the 1990s. Competitive intelligence professionals can learn from national-intelligence experts, especially in
496-461: A company be in X years?' and 'What are the strategic risks and opportunities facing us?' This type of intelligence work involves among others the identification of weak signals and application of methodology and process called Strategic Early Warning (SEW), first introduced by Gilad, followed by Steven Shaker and Victor Richardson, Alessandro Comai and Joaquin Tena, and others. According to Gilad, 20% of
620-416: A company must only choose one of the three or risk that the business would waste precious resources. Porter's generic strategies detail the interaction between cost minimization strategies, product differentiation strategies, and market focus strategies. Porter described an industry as having multiple segments that can be targeted by a firm. The breadth of its targeting refers to the competitive scope of
744-648: A coordinated competitive intelligence program. It is the action of defining, gathering, analyzing, and distributing intelligence about products, customers, competitors , and any aspect of the environment needed to support executives and managers in strategic decision making for an organization. CI means understanding and learning what is happening in the world outside the business to increase one's competitiveness. It means learning as much as possible, as soon as possible, about one's external environment including one's industry in general and relevant competitors. Another definition of competitive intelligence regards it as
868-522: A distinction between strategic management and operational management , where operational management is concerned primarily with improving efficiency and controlling costs within the boundaries set by the organization's strategy . Strategy is defined as "the determination of the basic long-term goals of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals." Strategies are established to set direction, focus effort, define or clarify
992-452: A firm from its rivals. A robust competitive position cumulates from many activities which should fit coherently together. Competitive intelligence Competitive intelligence ( CI ) is the process and forward-looking practices used in producing knowledge about the competitive environment to improve organizational performance. Competitive intelligence involves systematically collecting and analysing information from multiple sources and
1116-538: A formal strategic-planning process, the process was not being used for their "most important decisions". For Michael C. Sekora, Project Socrates founder in the Reagan White House, during the cold war the economically challenged Soviet Union was able to keep on western military capabilities by using technology-based planning while the U.S. was slowed by finance-based planning, until the Reagan administration launched
1240-409: A formalized process. Therefore, he underscored the role of plans as tools to communicate and control. It ensures that there is coordination wherein everyone in the organization is moving in the same direction. The plans are the prime media communicating the management's strategic intentions, thereby promoting a common direction instead of individual discretion. It is also the tool to secure the support of
1364-402: A framework for analyzing the profitability of industries and how those profits are divided among the participants in 1980. In five forces analysis he identified the forces that shape the industry structure or environment. The framework involves the bargaining power of buyers and suppliers, the threat of new entrants, the availability of substitute products, and the competitive rivalry of firms in
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#17328515664321488-406: A framework for strategic planning. Such tools include: Simply extending financial statement projections into the future without consideration of the competitive environment is a form of financial planning or budgeting , not strategic planning. In business, the term "financial plan" is often used to describe the expected financial performance of an organization for future periods. The term "budget"
1612-409: A key question from a portfolio perspective: "What business should we be in?" Business strategy involves answering the question: "How shall we compete in this business?" Alternatively, corporate strategy is strategic management of a corporation (a particular legal structure of a business); business strategy is the strategic management of a business . Management theory and practice often make
1736-436: A long-term coordinated strategy was necessary to give a company structure, direction and focus. He says it concisely, "structure follows strategy." Chandler wrote that: " Strategy is the determination of the basic long-term goals of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals ." Igor Ansoff built on Chandler's work by adding concepts and inventing
1860-428: A method for finding new opportunities and trends. Organizations use competitive intelligence to compare themselves to other organizations ("competitive benchmarking"), to identify risks and opportunities in their markets, and to pressure-test their plans against market response (business wargaming), which enable them to make informed decisions. One of the major activities involved in corporate competitive intelligence
1984-407: A more-sophisticated qualitative analysis. Knowledge management is essential for effective change. A key effective factor is a powerful, dedicated IT system executing the full intelligence cycle. Market intelligence (MI) is industry-targeted intelligence developed in real-time aspects of competitive events taking place among the four Ps of the marketing mix (pricing, place, promotion and product) in
2108-447: A pattern of activity (emergent) as the organization adapts to its environment or competes in the market. Strategy includes processes of formulation and implementation; strategic planning helps coordinate both. However, strategic planning is analytical in nature (i.e., it involves "finding the dots"); strategy formation itself involves synthesis (i.e., "connecting the dots") via strategic thinking . As such, strategic planning occurs around
2232-601: A search for sources of competitive advantage. By the 1960s, the capstone business policy course at the Harvard Business School included the concept of matching the distinctive competence of a company (its internal strengths and weaknesses) with its environment (external opportunities and threats) in the context of its objectives. This framework came to be known by the acronym SWOT and was "a major step forward in bringing explicitly competitive thinking to bear on questions of strategy". Kenneth R. Andrews helped popularize
2356-557: A series of questions they want to be answered in formulating the strategy and gathering inputs. The output of strategic planning includes documentation and communication describing the organization's strategy and how it should be implemented, sometimes referred to as the strategic plan. The strategy may include a diagnosis of the competitive situation, a guiding policy for achieving the organization's goals, and specific action plans to be implemented. A strategic plan may cover multiple years and be updated periodically. The organization may use
2480-422: A set of prerequisites defining competitive intelligence, distinguishing it from other information-rich disciplines such as market research or business development. They show that a common body of knowledge and a unique set of tools (key intelligence topics, business war games and blindspots analysis ) distinguish competitive intelligence; while other sensory activities in a commercial firm focus on one segment of
2604-486: A shift from the production focus to market focus. The prevailing concept in strategy up to the 1950s was to create a product of high technical quality. If you created a product that worked well and was durable, it was assumed you would have no difficulty profiting. This was called the production orientation . Henry Ford famously said of the Model T car: "Any customer can have a car painted any color that he wants, so long as it
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#17328515664322728-472: A strategy for horizontal and vertical market expansion and product positioning. This occurs in an automated fashion on massive marketplaces such as Amazon.com and their classification and prediction of product associations and purchase probability. A new industry emerged of tech companies with tools that simplify and automate the way companies conduct competitive intelligence. With technology responsible for scraping billions of pieces of data and pulling it into
2852-472: A valuable product or service for the market. These include functions such as inbound logistics, operations, outbound logistics, marketing and sales, and service, supported by systems and technology infrastructure. By aligning the various activities in its value chain with the organization's strategy in a coherent way, a firm can achieve a competitive advantage. Porter also wrote that strategy is an internally consistent configuration of activities that differentiates
2976-445: A variety of factors, such as the learning curve , substitution of labor for capital (automation), and technological sophistication. Author Walter Kiechel wrote that it reflected several insights, including: Kiechel wrote in 2010: "The experience curve was, simply, the most important concept in launching the strategy revolution...with the experience curve, the strategy revolution began to insinuate an acute awareness of competition into
3100-405: A variety of methods of measuring and monitoring progress towards the strategic objectives and measures established, such as a balanced scorecard or strategy map . Organizations may also plan their financial statements (i.e., balance sheets, income statements, and cash flows) for several years when developing their strategic plan, as part of the goal-setting activity. The term operational budget
3224-536: A vocabulary. He developed a grid that compared strategies for market penetration, product development, market development and horizontal and vertical integration and diversification. He felt that management could use the grid to systematically prepare for the future. In his 1965 classic Corporate Strategy , he developed gap analysis to clarify the gap between the current reality and the goals and to develop what he called "gap reducing actions". Ansoff wrote that strategic management had three parts: strategic planning ;
3348-473: Is a perspective on developments and events aimed at yielding a competitive edge. The term competitive intelligence is often viewed as synonymous with competitor analysis , but competitive intelligence is more than analyzing competitors; it embraces the entire environment and stakeholders: customers, competitors, distributors, technologies, and macroeconomic data. It is also a tool for decision-making. Competitive intelligence literature can be exemplified by
3472-746: Is a generic quality that draws on shared institutional understanding on the substance, form and communicative purposes of the strategic plan. Hence, they posit that strategic plan is a genre of organizational communication (Bhatia, 2004; Yates and Orlikowski, 1992 as cited in Cornut et al., 2012). In this sense, genre is defined as the "conventionalized discursive actions in which participating individuals or institutions have shared perceptions of communicative purposes as well as those of constraints operating their construction, interpretation and conditions of use" (Bhatia, 2004: 87; see also Frow, 2005; Swales, 1990 as cited in Cornut et al., 2012). The authors compared
3596-417: Is a perspective on facts rather than the facts themselves. Unique among corporate functions, competitive intelligence has a perspective of risks and opportunities for a firm's performance; as such, it (not information activities) is part of an organization's risk-management activity. Ethics has been a long-held issue of discussion among competitive intelligence practitioners. The questions revolve around what
3720-525: Is also used in relation to marketing , where the variable "importance" is related to buyers' perception of important attributes of a product: for attributes which might be considered important to buyers, both their perceived importance and their performance are assessed. The concept of the corporation as a portfolio of business units, with each plotted graphically based on its market share (a measure of its competitive position relative to its peers) and industry growth rate (a measure of industry attractiveness),
3844-531: Is and is not allowable in terms of competitive intelligence activity. Several scholarly treatments have been generated on this topic, most prominently addressed through Strategic Consortium of Intelligence Professionals publications. The book Competitive Intelligence Ethics: Navigating the Gray Zone provides nearly twenty separate views about ethics in competitive intelligence, as well as another 10 codes used by various individuals or organizations. Combining that with
Strategic planning - Misplaced Pages Continue
3968-454: Is black." Management theorist Peter F Drucker wrote in 1954 that it was the customer who defined what business the organization was in. In 1960 Theodore Levitt argued that instead of producing products then trying to sell them to the customer, businesses should start with the customer, find out what they wanted, and then produce it for them. The fallacy of the production orientation was also referred to as marketing myopia in an article of
4092-451: Is both the impetus for and result of critical thinking, optimization, and motivation for the growth and development of organizations. The core disciplines, which are inherent in systems thinking , personal and organizational mastery, mental models, building a shared vision, and team learning. In a time of machine learning and data analytics, these core disciplines remain to be relevant in so far as having human resource and human interest become
4216-545: Is found to have a positive impact on organizational performance. Strategic planning is particularly potent in enhancing an organization's capacity to achieve its goals (i.e., effectiveness). However, the study argues that just having a plan is not enough. For strategic planning to work, it needs to include some formality (i.e., including an analysis of the internal and external environment and the stipulation of strategies, goals and plans based on these analyses), comprehensiveness (i.e., producing many strategic options before selecting
4340-444: Is frustrating in the educational sector. To meet the changing needs of this new society, educational institutions must reorganize. Finding ways to maintain achievements while improving effectiveness can be difficult for educational institutions. Keeping up with society's rapid changes. Some strategic planners are hesitant to address societal outcomes, so they often ignore them and assume they will happen on their own. Instead of defining
4464-580: Is measured in days, weeks, or (in slower-moving industries) months. Market research is a tactical, method-driven field consisting of neutral, primary research of customer data (beliefs and perceptions) gathered in surveys or focus groups, and is analyzed with statistical-research techniques. Competitive intelligence draws on a wider variety (primary and secondary) of sources from a wider range of stakeholders (suppliers, competitors, distributors, substitutes and media) to answer existing questions, raise new ones and guide action. Ben Gilad and Jan Herring lay down
4588-572: Is more focused on information technology and internal focus than competitive intelligence, while its broader (historical) definition is more inclusive than competitive intelligence. Knowledge management (KM), when improperly achieved, is seen as an information-technology driven organizational practice relying on data mining, corporate intranets and mapping organizational assets to make it accessible to organization members for decision-making. Competitive intelligence shares some aspects of knowledge management; they are human-intelligence- and experience-based for
4712-428: Is often used to describe the expected financial performance of an organization for the upcoming year. Capital budgets very often form the backbone of a strategic plan, especially as it increasingly relates to Information and Communications Technology (ICT). While the planning process produces outputs, strategy implementation or execution of the strategic plan produces outcomes. These outcomes will invariably differ from
4836-459: Is relating a company to its environment. Michael Porter Strategic planning activities include meetings and other communication among the organization's leaders and personnel to develop a common understanding regarding the competitive environment and what the organization's response to that environment should be. A variety of strategic planning tools may be completed as part of strategic planning activities. The organization's leaders may have
4960-430: Is striving and the means (policies) by which it is seeking to get there." He continued that: "The essence of formulating competitive strategy is relating a company to its environment." Some complexity theorists define strategy as the unfolding of the internal and external aspects of the organization that results in actions in a socio-economic context. Michael D. Watkins claimed in 2007 that if mission/goals answer
5084-471: Is typically iterative, with feedback loops throughout the process. Some elements of the process may be continuous and others may be executed as discrete projects with a definitive start and end during a period. Strategic planning provides inputs for strategic thinking , which guides the actual strategy formation. Typical strategic planning efforts include the evaluation of the organization's mission and strategic issues to strengthen current practices and determine
Strategic planning - Misplaced Pages Continue
5208-461: Is use of ratio analysis , using key performance indicators (KPI). Organizations compare annual reports of their competitors on certain KPI and ratios, which are intrinsic to their industry. This helps them track their performance, vis-à-vis their competitors. The actual importance of these categories of information to an organization depends on the contestability of its markets, the organizational culture,
5332-429: Is used for a financial plan for the upcoming year. A "forecast" is typically a combination of actual performance year-to-date plus expected performance for the remainder of the year, so is generally compared against plan or budget and prior performance. The financial plans accompanying a strategic plan may include three–five years of projected performance. McKinsey & Company developed a capability maturity model in
5456-623: The Hadoop " big data " architecture has allowed the creation of multiple platforms for named-entity recognition such as the Apache Projects OpenNLP and Apache Stanbol . The former includes pre-trained statistical parsers that can discern elements key to establishing trends and evaluating competitive positions and responding appropriately. Public information mining from SEC.gov , Federal Contract Awards, social media, vendors, and competitor websites now permits real-time counterintelligence as
5580-519: The Journal of Competitive Intelligence and Management in its third volume, provided coverage of the field's global development. For example, in 1997 the École de guerre économique [ fr ] ( School of economic warfare ) was founded in Paris, France . It is the first European institution which teaches the tactics of economic warfare within a globalizing world. In Germany , competitive intelligence
5704-427: The experience curve . Companies that pursued the highest market share position to achieve cost advantages fit under Porter's cost leadership generic strategy, but the concept of choice regarding differentiation and focus represented a new perspective. Porter's 1985 description of the value chain refers to the chain of activities (processes or collections of processes) that an organization performs in order to deliver
5828-485: The 'what' question, or if vision answers the 'why' questions, then strategy provides answers to the 'how' question of business management. The strategic management discipline originated in the 1950s and 1960s. Among the numerous early contributors, the most influential were Peter Drucker , Philip Selznick , Alfred Chandler, Igor Ansoff , and Bruce Henderson. The discipline draws from earlier thinking and texts on ' strategy ' dating back thousands of years. Prior to 1960,
5952-481: The 1970s to describe the sophistication of planning processes, with strategic management ranked the highest. The four stages include: Categories 3 and 4 are strategic planning, while the first two categories are non-strategic or essentially financial planning. Each stage builds on the previous stages; that is, a stage 4 organization completes activities in all four categories. Later McKinsey research undertaken and published in 2006 found that, although many companies had
6076-673: The Competitive Intelligence Magazine that was dedicated to this topic. In France, a Specialized Master in Economic Intelligence and Knowledge Management was created in 1995 within the CERAM Business School, now SKEMA Business School, in Paris, with the objective of delivering a full and professional training in Economic Intelligence. A Centre for Global Intelligence and Influence was created in September 2011 in
6200-518: The Corporate Level 2014 In 1980, Porter defined the two types of competitive advantage an organization can achieve relative to its rivals: lower cost or differentiation . This advantage derives from attribute(s) that allow an organization to outperform its competition, such as superior market position, skills, or resources. In Porter's view, strategic management should be concerned with building and sustaining competitive advantage. Porter developed
6324-564: The Internet is used, it is to gather sources for primary research as well as information on what the company says about itself and its online presence (in the form of links to other companies, its strategy regarding search engines and online advertising, mentions in discussion forums and on blogs, etc.). Online subscription databases and news aggregation sources, which have simplified the secondary source collection process, are also used. The technical advances in massively parallel processing offered by
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#17328515664326448-452: The Internet will be misinformation and mislead users, so competitive intelligence researchers are often wary of using such information. As a result, although the Internet is viewed as a key source, most competitive intelligence professionals should spend their time and budget gathering intelligence using primary research—networking with industry experts, from trade shows and conferences, from their own customers and suppliers, and so on. Where
6572-435: The Internet, have made gathering information on competitors easy. Analysts can discover future trends and market requirements. However, competitive intelligence is much more than this, as the ultimate aim is to lead to competitive advantage . As the Internet is mostly public domain material, information gathered is less likely to result in insights that will be unique to the company. There is a risk that information gathered from
6696-559: The Socrates Project, which should be revived to keep up with China as an emerging superpower . Strategic planning has been criticized for attempting to systematize strategic thinking and strategy formation, which Henry Mintzberg argues are inherently creative activities involving synthesis or "connecting the dots" which cannot be systematized. Mintzberg argues that strategic planning can help coordinate planning efforts and measure progress on strategic goals, but that it occurs "around"
6820-415: The advent of the internet and social media has become one of the most important vehicle to which corporate strategic plan can be distributed to an organizations internal and external stakeholders. This distribution of knowledge allows for staff of organization to access and share the institutional thinking this able to reformulate it in their own words. Strategic planning through control mechanisms (mostly by
6944-492: The analysis of complex situations. Competitive intelligence may be confused with (or seen to overlap) environmental scanning , business intelligence , and market research . Craig Fleisher questions the appropriateness of the term, comparing it to business intelligence, competitor intelligence, knowledge management, market intelligence , marketing research, and strategic intelligence. Fleisher suggests that business intelligence has two forms. Its narrow (contemporary) form
7068-455: The argument for achieving higher market share and economies of scale . Porter wrote in 1980 that companies have to make choices about their scope and the type of competitive advantage they seek to achieve, whether lower cost or differentiation. The idea of strategy targeting particular industries and customers (i.e., competitive positions) with a differentiated offering was a departure from the experience-curve influenced strategy paradigm, which
7192-449: The authors argued, a true strategist is one who is able to instantiate the genre strategic plan through appropriate application of language. Spee, et. al. (2011) explored the strategic planning as communicative process based on Ricoeur's concepts of decontextualization and recontextualization, they conceptualize strategic planning activities as being constituted through the iterative and recursive relationship of talk and text, this elaborate
7316-550: The bibliographies that were published in the Strategic Consortium of Intelligence Professionals' academic journal The Journal of Competitive Intelligence and Management . Although elements of organizational intelligence collection have been a part of business for many years, the history of competitive intelligence arguably began in the U.S. in the 1970s, although the literature on the field pre-dates this time by at least several decades. In 1980, Michael Porter published
7440-536: The business. Porter defined two types of competitive advantage : lower cost or differentiation relative to its rivals. Achieving competitive advantage results from a firm's ability to cope with the five forces better than its rivals. Porter wrote: "[A]chieving competitive advantage requires a firm to make a choice...about the type of competitive advantage it seeks to attain and the scope within which it will attain it." He also wrote: "The two basic types of competitive advantage [differentiation and lower cost] combined with
7564-492: The company (i.e., the internal environment), while the latter two relate to factors external to the company (i.e., the external environment). These elements are considered throughout the strategic planning process. Data is gathered from various sources, such as interviews with key executives, review of publicly available documents on the competition or market, primary research (e.g., visiting or observing competitor places of business or comparing prices), industry studies, reports of
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#17328515664327688-597: The concept of "parenting advantage" to be applied at the corporate level, as a parallel to the concept of "competitive advantage" applied at the business level. Parent companies, they argued, should aim to "add more value" to their portfolio of businesses than rivals. If they succeed, they have a parenting advantage. The right level of diversification depends, therefore, on the ability of the parent company to add value in comparison to others. Different parent companies with different skills should expect to have different portfolios. See Corporate Level Strategy 1995 and Strategy for
7812-399: The configuration or transformation school, a hybrid of the other schools organized into stages, organizational life cycles, or "episodes". Michael Porter defined strategy in 1980 as the "...broad formula for how a business is going to compete, what its goals should be, and what policies will be needed to carry out those goals" and the "...combination of the ends (goals) for which the firm
7936-463: The construction of a strategic plan as a communicative process. This study looks at the way that texts within the planning process, such as PowerPoint presentations, planning documents and targets that are part of a strategic plan, are constructed in preparation, through a series of communicative interface. Throughout the process, strategy documents were essential in detaining the developing strategy as they were constantly revised up until an ultimate plan
8060-452: The corporate consciousness." Prior to the 1960s, the word competition rarely appeared in the most prominent management literature; U.S. companies then faced considerably less competition and did not focus on performance relative to peers. Further, the experience curve provided a basis for the retail sale of business ideas, helping drive the management consulting industry. Completion of an importance-performance matrix forms "a crucial stage in
8184-608: The corpus of strategic plans with nine other corpora. This included annual reports from the public sector and nongovernment organizations, research articles, project plans, executive speeches, State of the Union addresses, horoscopes, religious sermons, business magazine articles and annual reports for-profit corporations included in the Standard & Poor's 500 largest companies (S&P 500). The authors used textual analysis, including content analysis and corpus linguistics . Content analysis
8308-399: The course to follow) and careful stakeholder management (i.e., thinking carefully about whom to involve during the different steps of the strategic planning process, how, when and why). Henry Mintzberg in the article "The Fall and Rise of Strategic Planning" (1994), argued that the lesson that should be accepted is that managers will never be able to take charge of strategic planning through
8432-488: The driving force behind organizations. Moreover, it cannot be denied that communication plays a role in the realization of learning organizations and strategic planning. In a study by Barker and Camarata (1998), the authors noted that there are theories that could explain the invaluable role of communication, and these are from Rational Choice Theory to Social Exchange Theory where costs, rewards, and outcomes are valued in maintaining communication and thus relationships to serve
8556-421: The ends of an organization and its members. Thus, while many organizations and companies try their best to become learning organizations and exercise strategic planning, without communication, relationships fail and the core disciplines are never truly met (Barker & Camarata, 1998). Strategic management In the field of management , strategic management involves the formulation and implementation of
8680-404: The environment in which the organization operates, then making a series of strategic decisions about how the organization will compete. Formulation ends with a series of goals or objectives and measures for the organization to pursue. Environmental analysis includes the: Strategic decisions are based on insight from the environmental assessment and are responses to strategic questions about how
8804-510: The formulation of operations strategy", and may be considered a "simple, yet useful, method for simultaneously considering both the importance and performance dimensions when evaluating or defining strategy". Notes on this subject from the Department of Engineering at the University of Cambridge suggest that a binary matrix may be used "but may be found too crude", and nine point scales on both
8928-489: The framework via a 1963 conference and it remains commonly used in practice. The experience curve was developed by the Boston Consulting Group in 1966. It reflects a hypothesis that total per unit costs decline systematically by as much as 15–25% every time cumulative production (i.e., "experience") doubles. It has been empirically confirmed by some firms at various points in their history. Costs decline due to
9052-415: The general view would be that competitive intelligence concepts can be readily found and taught in many business schools around the globe, there are still relatively few dedicated academic programs, majors, or degrees in the field, a concern to academics in the field who would like to see it further researched. These issues were widely discussed by over a dozen knowledgeable individuals in a special edition of
9176-459: The goals, setting a timeline, and mobilizing resources to execute the actions. A strategy describes how the ends (goals) will be achieved by the means (resources) in a given span of time. Often, Strategic Planning is long term and organizational action steps are established from two to five years in the future. The senior leadership of an organization is generally tasked with determining strategy. Strategy can be planned (intended) or can be observed as
9300-440: The importance and performance axes are recommended. An importance scale could be labelled from "the main thrust of competitiveness" to "never considered by customers and never likely to do so", and performance can be segmented into "better than", "the same as", and "worse than" the company's competitors. The highest urgency would than be directed to the most important areas where performance is poorer than competitors. The technique
9424-448: The industry. These forces affect the organization's ability to raise its prices as well as the costs of inputs (such as raw materials) for its processes. The five forces framework helps describe how a firm can use these forces to obtain a sustainable competitive advantage , either lower cost or differentiation. Companies can maximize their profitability by competing in industries with favorable structure. Competitors can take steps to grow
9548-512: The issue of the appropriate level of diversification . In 1987, he argued that corporate strategy involves two questions: 1) What business should the corporation be in? and 2) How should the corporate office manage its business units? He mentioned four concepts of corporate strategy each of which suggest a certain type of portfolio and a certain role for the corporate office; the latter three can be used together: Building on Porter's ideas, Michael Goold, Andrew Campbell and Marcus Alexander developed
9672-437: The key dimensions considered (industry attractiveness and competitive position) remain central to strategy. In response to the evident problems of "over diversification", C. K. Prahalad and Gary Hamel suggested that companies should build portfolios of businesses around shared technical or operating competencies, and should develop structures and processes to enhance their core competencies . Michael Porter also addressed
9796-697: The main elements of strategic management theory where consensus generally existed as of the 1970s, writing that strategic management: Chaffee further wrote that research up to that point covered three models of strategy, which were not mutually exclusive: The progress of strategy since 1960 can be charted by a variety of frameworks and concepts introduced by management consultants and academics. These reflect an increased focus on cost, competition and customers. These "3 Cs" were illuminated by much more robust empirical analysis at ever-more granular levels of detail, as industries and organizations were disaggregated into business units, activities, processes, and individuals in
9920-465: The major goals and initiatives taken by an organization 's managers on behalf of stakeholders, based on consideration of resources and an assessment of the internal and external environments in which the organization operates. Strategic management provides overall direction to an enterprise and involves specifying the organization's objectives , developing policies and plans to achieve those objectives, and then allocating resources to implement
10044-467: The market (customers, suppliers or acquisition targets), CI synthesizes data from all high-impact players (HIP). Gilad later focused his delineation of CI on the difference between information and intelligence. According to him, the common denominator among organizational sensory functions (whether they are called market research, business intelligence or market intelligence) is that they deliver information rather than intelligence. Intelligence, says Gilad,
10168-453: The need for new programming. The end result is the organization's strategy, including a diagnosis of the environment and competitive situation, a guiding policy on what the organization intends to accomplish, and key initiatives or action plans for achieving the guiding policy. Michael Porter wrote in 1980 that formulation of competitive strategy includes consideration of four key elements: The first two elements relate to factors internal to
10292-601: The objectives. Implementation results in how the organization's resources are structured (such as by product or service or geography), leadership arrangements, communication, incentives, and monitoring mechanisms to track progress towards objectives, among others. Running the day-to-day operations of the business is often referred to as "operations management" or specific terms for key departments or functions, such as "logistics management" or " marketing management ," which take over once strategic management decisions are implemented. Strategy has been practiced whenever an advantage
10416-478: The opportunities and threats in the business environment. Alfred Chandler recognized the importance of coordinating management activity under an all-encompassing strategy. Interactions between functions were typically handled by managers who relayed information back and forth between departments. Chandler stressed the importance of taking a long-term perspective when looking to the future. In his 1962 ground breaking work Strategy and Structure , Chandler showed that
10540-611: The organization merged with Frost & Sullivan under the Frost & Sullivan Institute. SCIP has since been renamed "Strategic & Competitive Intelligence Professionals" to emphasize the strategic nature of the subject, and also to refocus the organization's general approach, while keeping the existing SCIP brand name and logo. A number of efforts have been made to discuss the field's advances in post-secondary (university) education, covered by several authors including Blenkhorn & Fleisher, Fleisher, Fuld, Prescott, and McGonagle. Although
10664-445: The organization will compete, such as: The answers to these and many other strategic questions result in the organization's strategy and a series of specific short-term and long-term goals or objectives and related measures. The second major process of strategic management is implementation , which involves decisions regarding how the organization's resources (i.e., people, process and IT systems) will be aligned and mobilized towards
10788-511: The organization's external sphere, such as financiers, suppliers or government agencies, who are helping achieve the organization's plans and goals. Cornut, et al (2012) studied the particular features of the strategic plan genre of communication by examining a corpus of strategic plans from public and non-profit organizations. They defined strategic plans as the "key material manifestation" of organizations' strategies and argued that, even though strategic plans are specific to an organization, there
10912-497: The organization's performance, etc. This may be part of a competitive intelligence program. Inputs are gathered to help establish a baseline, support an understanding of the competitive environment and its opportunities and risks. Other inputs include an understanding of the values of key stakeholders, such as the board, shareholders, and senior management. These values may be captured in an organization's vision and mission statements. The essence of formulating competitive strategy
11036-468: The organization, and provide consistency or guidance in response to the environment. Strategic management involves the related concepts of strategic planning and strategic thinking . Strategic planning is analytical in nature and refers to formalized procedures to produce the data and analyses used as inputs for strategic thinking, which synthesizes the data resulting in the strategy. Strategic planning may also refer to control mechanisms used to implement
11160-462: The organizational function responsible for the early identification of risks and opportunities in the market before they become obvious ("early signal analysis"). This definition focuses attention on the difference between the dissemination of widely available factual information (such as market statistics , financial reports , newspaper clippings) performed by functions such as libraries and information centers, and competitive intelligence which
11284-474: The over two dozen scholarly articles or studies found within the various competitive intelligence bibliographic entries, it is clear that no shortage of study has gone into better classifying, understanding, and addressing CI ethics. Competitive information may be obtained from public or subscription sources, from networking with competitor staff or customers, disassembly of competitor products or from field research interviews. Competitive intelligence research
11408-538: The overall profitability of the industry, or to take profit away from other parts of the industry structure. Porter modified Chandler's dictum about structure following strategy by introducing a second level of structure: while organizational structure follows strategy, it in turn follows industry structure. Porter wrote in 1980 that strategy target either cost leadership , differentiation , or focus. These are known as Porter's three generic strategies and can be applied to any size or form of business. Porter claimed that
11532-484: The personality and biases of its top decision makers, and the reporting structure of competitive intelligence within the company. Strategic intelligence (SI) focuses on the longer term, looking at issues affecting a company's competitiveness over the course of a couple of years. The actual time horizon for strategic intelligence ultimately depends on the industry and how quickly it's changing. The general questions that strategic intelligence answers are, ‘Where should we as
11656-460: The plans. Academics and practicing managers have developed numerous models and frameworks to assist in strategic decision-making in the context of complex environments and competitive dynamics. Strategic management is not static in nature; the models can include a feedback loop to monitor execution and to inform the next round of planning. Michael Porter identifies three principles underlying strategy: Corporate strategy involves answering
11780-489: The practitioner's tool box. In 1985, Leonard Fuld published in one of his best selling book dedicated to competitor intelligence. However, the institutionalization of competitive intelligence as a formal activity among American corporations can be traced to 1988, when Ben and Tamar Gilad published the first organizational model of a formal corporate competitive intelligence function, which was then adopted widely by US companies. The first professional certification program (CIP)
11904-410: The process to reduce resistance to change, ensure acceptance, and avoid common pitfalls. Strategic Planning does not guarantee success but will help improve likelihood of success of an organization. In educational institutions, strategic planning is also a need. We are already in a transitional period in which old practices are no longer permanent but require revision to meet the needs of academia, which
12028-453: The product (or service) marketplace to better understand the market's attractiveness. A time-based competitive tactic, market intelligence is used by marketing and sales managers to respond to consumers more quickly in the marketplace. Fleisher suggests it is not distributed as widely as some forms of CI, which are also distributed to non-marketing decision-makers. Market intelligence has a shorter time horizon than other intelligence areas, and
12152-597: The sales process in an organization. It investigates various aspects of a product/product line marketing. With the right amount of information, organizations can avoid unpleasant surprises by anticipating competitors' moves and decreasing response time. Examples of competitive intelligence research is evident in daily newspapers, such as The Wall Street Journal , Business Week , and Fortune . Major airlines change hundreds of fares daily in response to competitors' tactics. They use information to plan their own marketing, pricing, and production strategies. Resources, such as
12276-473: The same School. Practitioners and companies regard professional accreditation as important in this field. In 2011, SCIP recognized the Fuld-Gilad-Herring Academy of Competitive Intelligence 's CIP certification process as its global, dual-level (CIP-I and CIP-II) certification program. Global developments have also been uneven in competitive intelligence. Several academic journals, particularly
12400-416: The same name by Levitt. Over time, the customer became the driving force behind all strategic business decisions. This marketing concept, in the decades since its introduction, has been reformulated and repackaged under names including market orientation, customer orientation, customer intimacy, customer focus, customer-driven and market focus. In 1985, Ellen Earle Chaffee summarized what she thought were
12524-452: The schools of informal design and conception, the formal planning, and analytical positioning. The second group, consisting of six schools, is more concerned with how strategic management is actually done, rather than prescribing optimal plans or positions. The six schools are entrepreneurial, visionary, cognitive, learning/adaptive/emergent, negotiation, corporate culture and business environment. The third and final group consists of one school,
12648-426: The scope of activities for which a firm seeks to achieve them lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation and focus. The focus strategy has two variants, cost focus and differentiation focus." The concept of choice was a different perspective on strategy, as the 1970s paradigm was the pursuit of market share (size and scale) influenced by
12772-439: The skill of a firm in converting its plans into reality; and the skill of a firm in managing its own internal resistance to change. Bruce Henderson , founder of the Boston Consulting Group , wrote about the concept of the experience curve in 1968, following initial work begun in 1965. The experience curve refers to a hypothesis that unit production costs decline by 20–30% every time cumulative production doubles. This supported
12896-452: The strategic goals. How close they are to the strategic goals and vision will determine the success or failure of the strategic plan. Unintended outcomes might also be an issue. They need to be attended to and understood for strategy development and execution to be a true learning process. A variety of analytical tools and techniques are used in strategic planning. These were developed by companies and management consulting firms to help provide
13020-650: The strategy formation activity. Strategic planning can be used in Project Management that focuses on the development of standard methodology that is repeatable and will result to high chances of achieving project objectives. This requires a lot of thinking process and interaction among stakeholders. Strategic planning in Project Management provides an organization the framework and consistency of action. In addition, it ensures communication of overall goals and understanding roles of teams or individual to achieve them. The commitment of top management must be evident throughout
13144-490: The strategy formation process rather than within it. It functions remote from the "front lines" or contact with the competitive environment (i.e., in business, facing the customer where the effect of competition is most clearly evident) may not be effective at supporting strategy efforts. While much criticism surrounds strategic planning, evidence suggests that it does work. In a 2019 meta-analysis including data from almost 9,000 public and private organizations, strategic planning
13268-433: The strategy once it is determined. In other words, strategic planning happens around the strategic thinking or strategy making activity. Strategic management is often described as involving two major processes: formulation and implementation of strategy. While described sequentially below, in practice the two processes are iterative and each provides input for the other. Formulation of strategy involves analyzing
13392-399: The study Competitive-Strategy: Techniques for Analyzing Industries and Competitors which is widely viewed as the foundation of modern competitive intelligence. This has since been extended most notably by the pair of Craig Fleisher and Babette Bensoussan , who through several popular books on competitive analysis have added 48 commonly applied competitive intelligence analysis techniques to
13516-477: The term "distinctive competence" in referring to how the Navy was attempting to differentiate itself from the other services. He also formalized the idea of matching the organization's internal factors with external environmental circumstances. This core idea was developed further by Kenneth R. Andrews in 1963 into what we now call SWOT analysis , in which the strengths and weaknesses of the firm are assessed in light of
13640-400: The term "strategy" was primarily used regarding war and politics, not business. Many companies built strategic planning functions to develop and execute the formulation and implementation processes during the 1960s. Peter Drucker was a prolific management theorist and author of dozens of management books, with a career spanning five decades. He addressed fundamental strategic questions in
13764-431: The vision for how we want our children to live, they direct their attention to courses, content, and resources with the mistaken belief that societally useful outcomes will follow. When this occurs, the true strategic plan is never developed or implemented. Strategic planning is a process and thus has inputs, activities, outputs and outcomes. This process, like all processes, has constraints. It may be formal or informal and
13888-749: The way of a communication program) is set in the hopes of coming to desired outcomes that reflect company or organizational goals. As further supplement to this idea, controls can also be realized in both measurable and intangible controls, specifically output controls, behavioural controls, and clan controls. By way of simple definition, output controls work toward to tangible and quantifiable results; behavioural controls are geared toward behaviours of people in an organization; and clan controls are dependent and are executed while keeping in mind norms, traditions, and organizational culture. All these three are implemented in order to keep systems and strategies running and focused toward desired results (n.d.). Strategic planning
14012-402: The work of competitive intelligence practitioners should be dedicated to strategic early identification of weak signals within a SEW framework. Tactical Intelligence : the focus is on providing information designed to improve shorter-term decisions, most often related with the intent of growing market share or revenues. Generally, it is the type of information that a person would need to support
14136-426: Was accepted. The book edited by Mandeville-Gamble (2015) sees the roles of managers as important in terms of communicating the strategic vision of the organization. Many of the authors in the book by Mandeville-Gamble agree that a strategic plan is merely an unrealized vision unless it is widely shared and sparks the willingness to change within individuals in the organization. Similarly, Goodman in 2017 emphasized that
14260-659: Was created in 1996 with the establishment of The Fuld-Gilad-Herring Academy of Competitive Intelligence in Cambridge , Massachusetts. In 1986, the Strategic Consortium of Intelligence Professionals (SCIP) was founded in the United States and grew in the late 1990s to around 6,000 members worldwide, mainly in the United States and Canada, but with large numbers especially in the UK and Australia. Due to financial difficulties in 2009,
14384-428: Was focused on larger scale and lower cost. Porter revised the strategy paradigm again in 1985, writing that superior performance of the processes and activities performed by organizations as part of their value chain is the foundation of competitive advantage, thereby outlining a process view of strategy. The direction of strategic research also paralleled a major paradigm shift in how companies competed, specifically
14508-451: Was followed by G.E. multi factoral model , developed by General Electric . Companies continued to diversify as conglomerates until the 1980s, when deregulation and a less restrictive antitrust environment led to the view that a portfolio of operating divisions in different industries was worth more as many independent companies, leading to the breakup of many conglomerates. While the popularity of portfolio theory has waxed and waned,
14632-481: Was founded by the Ministry of International Trade and Industry in 1958. Accepting the importance of competitive intelligence, major multinational corporations, such as ExxonMobil , Procter & Gamble , and Johnson and Johnson , have created formal competitive intelligence units. Organizations execute competitive intelligence activities not only as a safeguard to protect against market threats and changes, but also as
14756-403: Was gained by planning the sequence and timing of the deployment of resources while simultaneously taking into account the probable capabilities and behavior of competition. Bruce Henderson In 1988, Henry Mintzberg described the many different definitions and perspectives on strategy reflected in both academic research and in practice. He examined the strategic process and concluded it
14880-405: Was interpreted as an indication that "commands and commitments are not overtly hedged, but neither are they particularly strong". Guidance on the sections of a strategic plan abound but there are few studies about the nature of language used for these documents. Cornut, et al's (2012) study showed that writers of strategic plans have a shared understanding of what is the appropriate language. Thus,
15004-410: Was much more fluid and unpredictable than people had thought. Because of this, he could not point to one process that could be called strategic planning . Instead Mintzberg concludes that there are five types of strategies: In 1998, Mintzberg developed these five types of management strategy into 10 "schools of thought" and grouped them into three categories. The first group is normative. It consists of
15128-585: Was summarized in the growth–share matrix developed by the Boston Consulting Group around 1970. By 1979, one study estimated that 45% of the Fortune 500 companies were using some variation of the matrix in their strategic planning. This framework helped companies decide where to invest their resources (i.e., in their high market share, high growth businesses) and which businesses to divest (i.e., low market share, low growth businesses.) The growth-share matrix
15252-637: Was unattended until the early 1990s. The term "competitive intelligence" first appeared in German literature in 1997. In 1995, a German SCIP chapter was founded, which is now second in terms of membership in Europe. In 2004, the Institute for Competitive Intelligence was founded, which provides a postgraduate certification program for Competitive Intelligence Professionals. Japan is currently the only country that officially maintains an economic intelligence agency ( JETRO ). It
15376-458: Was used to identify themes and concepts, such as values and cognition; while corpus linguistics was used to identify naturally occurring texts and patterns (Biber, et al, 1998 as cited in Cornut et al., 2012). The strategic plans showed significantly less self-reference than all other corpora, with the exemption of project plans and S&P 500 annual reports. The results indicated that strategic plans have more moderate verbs of deontic value. This
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