Strategic Planning in Diversified Companies

Abstract

Page 81 There are two maindimensions to consider for the long-range strategic planning effort in diversified corporations. One is vertical and operates through three organisational levels: headquarters, the divisions, and their functional departments. The other is chronological, as the process moves from level to level it also moves through three cycles: setting corporate objectives at the top, setting consonant business objectives and goals in the divisions, and establishing the required action programs at the functional level. Page 82 Corporate planning and strategyCorporate objectives are established at the top levels. Corporate planning, leading to the formulation of corporate strategy, is the process of (a) deciding on the companys objectives and goals, including the determination of which and how many lines of business to engage in, (b) acquiring the resources needed to attain those objectives, and (c) allocating resources among the different businesses so that the objectives are achieved. Business planning and strategythe process of determining the scope of a divisions activities that will satisfy a broad consumer need , of deciding on the divisions objectives in its defined area of operations, and of establishing the policies adopted to attain those objectives. Strategy formulation involves selecting division objectives and goals and establishing the charter of the business, after delineating the scope of its operations vis-à-vis markets, geographical areas, and/or technology. Functional planning and strategyIn functional planning, the departments develop a set of feasible action programs to implement division strategy, while the division selectsin the lights of its objectivesthe subset of programs to be executed and co-ordinates the action programs of the functional departments. Strategy formulation involves selecting objectives and goals for each functional area (marketing, production, finance, research, and so on) and determining the nature and sequence of actions to be taken by each area to achieve its objectives and goals. Programs are the building blocks of the strategic functional plans. these levels of strategy impinge on each other to some extentfor example, the corporations choice of business areas overlaps the scope of division charters, and the delineation of the markets by the division can dictate, at the department level, the choices of strategy in the marketing function