Basic Text

The top management of a company have certain unique responsibilities. One of their key tasks is to make major decisions affecting the future of the organisation. These strategic decisions determine where the company is going and how it will get there and they shape a company's future.

Before doing any kind of strategic planning, the management must be sure of one thing. They must decide what is the mission and purpose of their business.

To make this point clearer here is an example. Most people have heard of Marks and Spencer, one of the biggest and most successful retailers in the world. Michael Marks opened his first penny bazaar in 1884, in Leeds, England. Ten years later there were nine market stores, and Marks had taken into partnership Tom Spencer, the cashier of one of the suppliers. In 1926 Marks and Spencer became a public company. At that point they could have stopped. Around that time, however, they developed a clear idea of Marks and Spencer's mission and purpose. They decided that the company was in business to provide goods of excellent quality , at reasonable prices, to customers from the working and middle classes. Providing value for money was their mission and purpose. Their later success was founded on this idea. One of the strategies they used was to concentrate on selling clothing and textiles. Later on, food products were added as a major line of business.

After identifying its mission and purpose, it is time for the company to work out certain more specific objectives. For example, an objective of a car firm may be to produce and market its new models in the medium-price range. Another objective may be to increase its market share by 10% in the next five years. Having established its more specific, medium-term objectives, the company can draw up a corporate plan. Its purpose is to indicate the strategies the management will use to achieve its objectives.

However, before deciding the strategies, a SWOT analysis (strengths, weaknesses, opportunities and threats) is carried out. First, the current performance of the organisation is examined, assessing its strengths and weaknesses. Performance indicators like market share, sales revenue, output and productivity are looked at. Its resources - financial, human, products and facilities- are also examined. Next, the company looks at external factors, from the point of view of opportunities and threats. The technological, social, economic and political trends in the markets where it is competing are assessed. The activities of the competitors are also examined.

Having completed the SWOT analysis, the company can now evaluate its objectives and perhaps work out new ones. The remaining task is to develop appropriate strategies to achieve the objectives. The organisation decides what action it will take and how it will provide the resources to support those actions.

Company planning and strategic decision-making are key activities of top management. Once they have been carried out, objectives and targets can be set at lower levels in the organisation.