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Bus and Motor Coach Library

The Concept of Strategic Planning

Author – Dr. John Cunningham (2001)

William Vandament, in his book, Managing Money in Higher Education (1989), defines strategic planning as "an approach to planning that stresses comprehensive environmental scanning and explicit organizational decisions on major directions, thus creating the basis for tactical planning" (p. 131).  Tactical (operational) planning, is the implementation of the organization's strategic plan, usually by departments or units. 

Vandament (1989) defines the strategic planning process as the "weaving together of a number of departmental financial plans into a consolidated whole" (p. 1). Therefore, representation by each department is incorporated into the overall organizational plan.

Goodstein, Nolan and Pfeiffer (1993) define applied strategic planning as "the process by which the guiding members of an organization envision its future and develop the necessary procedures and operations to achieve that future" (p. 1).  Organizations engaged in applied strategic planning have the opportunity to create their future rather that being controlled by it.

In strategic planning, it is the stakeholders who determine the viability of a plan based upon their understanding of the organization's culture and its capabilities in accomplishing each plan element.  In the case of the bus industry these stakeholders would include association staff and board members, manufacturers, association members and non-members. If these stakeholders and organizational leaders do not support the plan, or, if the organizational culture is not conducive to the plan, the plan will be doomed to fail.

In the case of a fleet operation, the guiding members would include the owner(s) if a private fleet, general manager, and the managers responsible for sales & marketing; maintenance & repairs, office staff, and last but not least the safety director. If any one of these stakeholders and organizational leaders do not support the plan, or, if the organizational culture is not conducive to the plan, the plan will be doomed to fail.

Strategic Planning vs. Traditional Planning

As with traditional planning approaches, strategic planning is one form of organizational planning.  Strategic planning seeks to democratize the planning process as it integrates the views of all organizational stakeholders. 

The elements of strategic planning vary among authors however these elements focus around several major themes.  According to Meredith, Cope and Lenning (Differentiating Bona Fide Strategic Planning From Other Planning) these themes are:

1) the creation of an agenda for ongoing planning;
2) greater integration among operating units;
3) an environmental scanning mental outlook; and
4) a systematic program reviewing activity. 

Whereas traditional planning focuses around the common elements of:

1) structured implementation with little flexibility for change;
2) "top-down" with little regard for integration or synergy between operating units;
3) closed and internally focused; and,
4) an extrapolative and "locked in" structure.

These are the major themes in which the two approaches can be best described.  However, in conducting this research there are several elements which best characterize the differences in the two planning approaches.

Strategic Planning vs. Traditional Planning
The strategic planning process is strongly tied to an organization's mission statement.   During the strategic planning process each element of the organizational plan is assessed on the basis of its relevance to the overall mission.  The mission encourages synergy and is used as the "beacon" to determine if the plan being prepared is reflective of the overall direction where the organization is moving as a whole.  If there are significant discrepancies between the plan and the organization's mission, the organization may choose to reevaluate and make changes to either the plan or the mission. 

Many organizations are breaking from their traditional planning methods and adopting a more visionary, flexible proactive approach to planning in order to survive in an increasingly complex competitive environment.  In order to keep pace with the competition, organizations need a single focus, and a relevant organizational mission statement provides just that.  

Strategic Planning and the Budgeting Process
As with traditional planning, strategic planning impacts all aspects of the budgeting process and the organizations allocation of resources; however, strategic planning is focused on allocating resources based upon the organization's approved strategic direction. 

Traditional planning approaches involve decisions which impact employees who have had little involvement in the planning process.  According to Vandament (1989), in many institutions financial management and organizational planning is regarded as an exclusive domain of the professional and management staff.  And, often, the status quo leadership would fund their own programs of interest at the expense of potentially successful new initiatives.  As a result employees have, traditionally, taken less ownership during the implementation of the organizational plan.  This type of planning has historically resulted in higher costs and a lack of effectiveness due to low employee moral, high staff turnover, and higher costs for training new staff. 

Strategic planning, however, is a "mindset" shared by the majority of the organization's stakeholders, and the organizational mission is the directional "beacon" which guides the implementation process. 
By the time resources are allocated to the various projects designated in the strategic plan each objective has been reviewed and deemed financially viable by the organization's stakeholders.  And, during the implementation stage these objectives are monitored on a regular basis by the financial planning staff of each organization.

Once the plan has reached the implementation stage it is referred to as the "tactical" or "operational plan".  These plans are driven by measurable objectives or milestones, which are evaluated and monitored at various stages of the implementation process to determine the plan's degree of completion.

The budget is monitored by management reviews and organizational variances, which determine the degree to which the strategic plan is being implemented and to prevent unnecessary cost overruns requiring adhoc reallocation of resources.  According to Goodstein, Nolan and Pfeiffer (1993),  the budget "may be considered as the navigator's tactics for arriving at a ships destination; and budgetary variances, especially serious ones, suggest that arriving at the intended port may be delayed or may never even occur" (p. 381). 

Forecasts not being achieved, cost overruns, and/or not reaching budgeted revenues budgets are clear indicators that the strategic plan requires a detailed review to determine the corrective action which is required to ensure that the overall plan is not placed in jeopardy.

Strategic Implications for the Bus Industry
Goodstein, Nolan, and Pfeiffer (1993) identify the key steps involved for successful planning.  These steps can be applied as a model for any individual bus operation in their future planning efforts.

1. Planning to Plan - involving the bus operation’s top management to determine members of the planning team, the timing, the length and depth of the planning process.
2. Values Scan - to examine the personal values of the top managers, the values of the organization as a whole, the organization's operating philosophy, the organization's culture.  
3. Mission Formulation - involving members of top management in preparing a clear statement to guide the bus and act as the "beacon" for all its activities. 
4. Strategic Business Modeling - determine the direction that the organization must go through in identifying the company's line or lines of business, establishing critical success indicators, and identifying its strategic thrusts that compliment its mission.
5. Performance Audit - looking at the current business operations and examining organizational strengths, weaknesses, opportunities and threats (SWOT). As a key element, this performance audit would also involve an analysis of the company’s competitors.
6. Gap Analysis - involving the assessment of the information compiled during the performance audit stage to determine whether the strategic plan created, might be implemented.  This process, which serves as a reality check, will assist the bus industry in determining whether the plan goes too far and extends beyond its current capabilities or whether the plan does not go far enough and does not fully utilize the available resources.
7. Integrating Action Plans - prior to the implementation of each action plan it must be checked for consistency with the organization's mission and values.
8. Contingency Planning - planning for future events which could impact the organization (economic downturn, increased energy costs, loss of key personnel).
9. Implementation - the successful performance of the actions identified in the plan.  Including all key personnel through a consensus building approach during the planning process is vital to the successful implementation of the plan's activities.
The outcome of a company strategic planning framework would produce a common agreement on a company’s vision, mission and priority actions over the next five years, and beyond.  The preparation of a viable strategic plan gives a company a leg-up advantage over its immediate competition, and can significantly increase its chances to realize its short and long term goals, and future growth.   

References:

Goodstein, Leonard, Timothy Nolan and J. William Pfeiffer, Applied Strategic Planning: How to Develop a Plan that Really Works; McGraw Hill, Washington, DC, 1993.
            Meredith, Mark, Robert Cope and Oscar Lenning, Differentiating Bona Fide Strategic Planning From Other Planning; Education resources reference number (ERIC) ED287329.
            Vandament, William Managing Money in Higher Education; Jossey-Bass, San Francisco, 1989.