Strategic planning is an organized management activity that is used to prioritize, focus energy and resources and ensures that employees and stakeholders work towards common goals to achieve a common outcome, the operational plan is an outline that defined objectives of each stage of the strategic plan (Faccio & Cohen, 2015). Whereas internal factors are those issues that affect the business and the business tends to have control over them for instance management, external factors are those issues that affect a business from without and the business has no control over them, for instance, political forces. Internal and external analysis evaluation is influenced by the strategic and operational planning of an organization.
Strategic planning outlines what an organization hopes to achieve in the long run (Abraham, 2012). Organizations tend to plan for the future so that they can manage the outcomes thereof. It is important for organizations to anticipate changes that might occur in future and duly prepare for them. It is for this reason that organizations tend to have strategic plans. Because the strategic plan does not specify what is to be done when and how, the operational plan helps to outline the objectives to be achieved in a specified period (Jakhotiya, 2013). An operational plan gives details what is to be done in each department and what resources to be used in achieving the set targets for the specified period.
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Uncertainties, external or internal factors, tend to affect the operations of businesses. When such a scenario occurs, the operational plan should be adjusted to solve the problem at hand (Ben-Akiva, Meersman & Van, 2013). External factors tend to affect businesses to a great extent. Advancement in technology, political factors, and market prices all tend to leave a business with tough decisions to make. The decision determines if the business will continue remaining relevant and competing competitively.
Comet Group an electrical chain started in 1933 as Comet battery Stores, recharging batteries for customers wireless radios (Chancellor, 2015). Comet failed to forecast the future and did little in making sure that its competitors were always kept in check as is one of the strategies for a successful strategy in logistics. In 2007, it finally fell because it was not cognizant of the cost leadership and differentiation (Chancellor, 2015). The fall of Comet could have been revived had a tactical approach been employed in counteracting the external forces that existed at the time of the fall. The Comet Group did little in consolidating its prices with those that were already in the market.
Another case scenario is that of Compaq. Compaq was founded in 1982 and became the world’s largest supplier of PCs during the 1990 (Chancellor, 2015). The impact on technology stocks caused by the influence of other companies in the market that the leadership did not think of the shifting environments. Excess inventory and unexpected price competition in PC’s saw Compaq’s profits depleted (Chancellor, 2015). Technology is always advancing. Business must be cognizant of this fact and employ the latest technology in their business. Firms that are in the technical production should be on the lookout not to be left behind by their competitors as they could look irrelevant in the market. Compaq’s internal factors are to blame for the fall of the company. The tech development department failed to produce products that were to beat the technological development of the time.
The tactical approach should help address uncertainties that Strategic approach fails to address (Wilkin, & Sutton, 2012). Businesses have the strategic approach in countering logistical challenges in organizations. Sometimes, however, the strategic approaches would tend not to work because of the unforeseeable situations. A tactical approach is employed to this effect to address the challenge experienced as a result of these unforeseeable situations.
In conclusion, businesses should have both strategic and operational plans in the execution of activities. The long-term plans, outlined by strategic plans are important as well as having operational plans. Operational plans should allow for adjustment of execution of plans, as businesses cannot control external factors.
- Abraham, S. C. (Ed.). (2012). Strategic planning: A practical guide for competitive success. Emerald Group Publishing.
- Ben-Akiva, M. E., Meersman, H., & Van, D. V. E. (Eds.). (2013). Freight transport modelling.
- Chancellor, D. (2015, September 17). Four companies that failed spectacularly, and the lessons of their premature demise.
- Faccio, M., & Cohen, Y. (Eds.). (2015). Parts-feeding systems for assembly : organisation, logistics and automation.
- Jakhotiya, G. P. (2013). Strategic Planning, Execution, and Measurement (SPEM): A Powerful Tool for CEOs. CRC Press.
- Wilkin, L., & Sutton, A. (Eds.). (2012). The management of uncertainty: Approaches, methods and applications (Vol. 32). Springer Science & Business Media.