Best practices in strategic planning and policy require businesses to predict the financial position in different situations. Managers access past results to plan and predict what can happen in the future. They can also determine the resources and capital necessary to move forward with a project. There are many theories associated with strategic planning and policy that aid in making decisions in the future. Strategic planning consists of taking available resources and turning that data into a plan for future operations. It requires non-bias data to base the calculations upon. Organizations need to take best practices in strategic planning and policy seriously; it can ensure they are making sound decisions for the future business operations and costs.
Some companies opt to use the Pro Forma Statement. The process requires an analysis of past financial statements to determine historical sales and performance. Next, a careful projection is made regarding future sales. There is research conducted on independent projections such as equipment and quantities which are not available through historical sales. Finally, it requires a testing of sensitivity for forecast results to make changes in projected sales. It is important to consider that the Pro Forma approach may not be as effective as needed. “Traditional solely financial-based performance measurement systems can no longer meet management expectations” (Glykas, 2013). Theories are pushing more towards organizations using financial and non-financial predictions for strategic planning and policies.
The planning process in large organizations is vital for planning. The process includes three continuous cycles. The operation cycle is when the managers take the qualitative strategic goals and use that to establish a concrete plan. A strategic plan cycle consists of senior executives being the most active participants in the process. Finally, the budgeting cycle is vital to put a numeric value on the plans for the operation. It is important to consider how strategic theories coincide with the process. “First, employing a broader range of theory will lead to more connections between the phenomena of strategic planning and constructs representing its origins and antecedents, its constituent parts, its outcomes, and the contexts in which these occur, leading to a richer and more coherent understanding of strategic planning” (Wolf & Floyd, 2013).
The use of theory will result in research which is more collective. If studies in the future demand a strong commitment to theory, it is more probable that they will base their efforts around mutual, conceptual frameworks that provide a consistent stream of research. Finally, the use of theory will result in strategies that yield a more theory-driven method. Theory-driven research design establishes the likelihood that the gauge the valid and reliable increases drastically. The possibility of needing additional theories would be pointless unless they provide a method to improve the existing situation. The method can promote the study and implementation of strategic planning.
Organizations need to take best practices in strategic planning and policy seriously; it can ensure they are making firm decisions for the future business operations and costs. Theories associated with strategic planning and process allows for managers to use the information they have with greater accuracy. The responsibilities of strategic planning and policies can fall on different departments, requiring them to work together for a common outcome. Regardless of what approach an organization takes, or what theories are implemented, it is vital to acknowledge the importance of accurate planning. Strategic planning and policy provide the organization with a map to make decisions and to project costs associate with a particular operations.
- Glykas, M. (2013). Fuzzy cognitive strategic maps in business process performance measurement. Expert Systems with Applications, 40(1), 1-14.
- Wolf, C., & Floyd, S. W. (2013). Strategic Planning Research toward a Theory-Driven AgendaJournal of Management, 0149206313478185.