The Importance of Strategic Planning and Management
Strategic planning and strategic management are critical areas for any organization seeking to improve its performance or success. The two components considerably influence the business model in terms of practicality and performance. Planning or strategic management failures can lead to substantial business blunders, as observed in the holiday blunders committed by UPS and FedEx a while back.
It is always essential to understand the best strategic approach to support the growth and sustainability of an ever-expanding or changing demand. Companies need to appreciate the importance of strategic planning and management and choose the best possible approaches for performance, growth, and increased profitability.
Defining Strategic Management and Strategic Planning
Abraham (2012) defines strategic management as the ability to steer and manage a company to become successful in the long term. It is a process that involves the decisions which steer a company, the products to develop, and keeping tabs on changing industry trends. Strategic management, therefore, requires identifying and understanding the main competitors and how to beat them, understanding the customer needs and demographics, and developing the right products or services for the right markets for enhanced profitability.
The Process of Strategic Planning
Strategic planning or strategic formulation, on the other hand, is a complex process involving strategic thinking, internal analysis, developing critical strategic issues, developing strategic alternatives, and choosing the optimal strategy designed to be the company’s criteria for success (Abraham, 2012). Planning helps develop applicable practices that will push the company towards developing the required services and products to compete effectively.
Role in Business Model Development
Strategic planning is essential in determining the business model by outlining the different systems of various company activities and, as a result, selecting an appropriate model for improving the business (Abraham, 2012). Furthermore, the strategy, which represents the wider view of the businesshelps to determine which model a business will choose, since the two are interdependent.
Case Study: Strategic Failures by FedEx and UPS
FedEx and UPS both made some terrible mistakes which led to the holiday fiasco experienced in 2013. The companies made several errors, including under forecasting the delivery demands of the 2013 season, failing to have a backup plan, and failing to set up a functional automation center prior to the holiday (Banker, 2014).
Strategic Oversights During Peak Season
The above failures highlight key strategic considerations that any delivery company must always take into account, especially during peak season. However, fear of losing their markets prevented both companies from charging their clients additional fees to ensure continuous operations and mitigate losses. Consequently, this fear also meant that the companies could not pursue prior planning and strategic management initiatives to support growth.
Implementing Strategic Changes
The two companies have since made major strategic changes to their peak season operations to avoid hitches. Some of the changes include UPS adding more delivery days starting on November 28th and more package delivery cars. Further changes include developing the mobile distribution centers and villages, building more warehouses, and investing more in anticipation for the peak seasons.
Strategic Recommendations Based on Abraham’s Models
Based on the models discussed by Abraham, it would be necessary for the company to have a combination of different models in one market to enable the business to grow and operate sustainably. Primarily, the company needs to work on product development and market strategies to ensure a solid entry to the market and maintenance of performance (Abraham, 2012).
Emphasis on Generic Strategies
It should also consider generic strategies involving differentiation, low-cost leadership, and focus, which ensure the development of high-quality products and management of clients. At the extreme level, a company can consider acquisitions and mergers, which might not be necessary. In conclusion, the best recommendation would be to focus on generic strategies.
Conclusion: Prioritizing Strategic Planning for Long-Term Success
Strategic management and planning are the most critical factors to ensure optimal business operations. FedEx and UPS are examples of companies that failed to work on their strategic planning and management, leading to the holiday fiasco incident. The most recommended strategic approach for success in business growth and sustainability is the application of generic strategies. Therefore, it is crucial for a company to always have a team that works on strategic development to ensure the business runs competitively.
Reference List
Abraham, S. C. (2012). Strategic management for organizations. San Diego, CA: Bridgepoint Education.
Banker, S. (2014). UPS Holiday Season Fiasco: A Failure of Strategic Planning. Forbes. Retrieved 10 February 2022, from https://www.forbes.com/sites/stevebanker/2013/12/30/ups-holiday-season-fiasco-a-failure-of-strategic-planning/?sh=269f2c60fcfe.
Reuters. (2014). FedEx, UPS Prepare for a Better Holiday Season – Supply Chain 24/7. Supplychain247.com. Retrieved 10 February 2022, from https://www.supplychain247.com/article/fedex_ups_prepare_for_a_better_holiday_season.
