Strategic Planning: Traditional and Contemporary Approaches

Introduction

Traditional and contemporary approaches to strategic planning shares some similarities and differences. According to Ansoff (1990), all these approaches are applied in organizational strategic planning in the efforts of revolutionizing operations, processes and service delivery. However, there are several discontents about traditional approaches. For instance, there have been concerns that traditional approaches disregard dependencies, they are not flexible, they emphasize on plan rather than strategy and that they are difficult to implement.

For that matter, there has been evolution in approaches of strategic planning. As a result, contemporary approaches were conceived to address inefficiencies noted in the traditional approaches (Berman & Evans, 2006). Therefore, this paper compares both traditional and contemporary approaches to strategic management, provides four possible scenarios to the future and thereafter provides a reflective statement on the strategic planning approaches.

Comparison of Traditional and Contemporary Approaches to Strategic Planning

There exist similarities between traditional and contemporary approaches to strategic planning. To begin with, Clegg and Hardy (1999) believed that all these approaches are geared towards business process reengineering. Usually, all these approaches employed achieve this through establishing a set of qualitative apparatus that are used to describe existing processes which facilitate identification of weaknesses. Therefore, ways of improving business processes are then sought through strategic planning. As a result, all these approaches lead to reengineering of business processes which is an element of achieving continuous improvement in organizations (Ehnert, 2009).

In addition, according to Healey (1997), both traditional and contemporary approaches to strategic planning are all intended to achieve total quality management in organizations. This is a mechanism through which organizations elevate quality in their business operations in order to attain competitive advantage in the operating environment. Traditional approaches to strategic planning were intended to continuously improve performance and attain clients’ satisfaction. Also, contemporary approaches to strategic planning are concerned with total quality management (Jenkins & Ambrosini, 2002). Organizations usually use traditional or contemporary approaches to strategic planning whenever there are some gaps between their performances and their customer expectations.

Despite several similarities existing between traditional and contemporary approaches to strategic planning, there are several differences that are noted in these two approaches of planning. To begin with, Johnson and Scholes (2008) opined that traditional approaches to planning were based on the supposition that it is possible to measure all variable that are relevant to business’ future. Therefore, this makes it possible to construct strategies that guarantee future success.

For that matter, it is believed that this fallacy of prediction was the main reason to the downfall of traditional approaches to strategic planning. However, contemporary approaches differ from the traditional approach in the sense that there are no fallacies hence no assumptions made. For instance, there are no assumptions made in contemporary approaches since all variables that are involved in planning are keenly analyzed through quantitative or qualitative research (Johnson & Scholes, 2008). Therefore, plans are made based on concrete knowledge background.

Nonetheless, Lynch (2006) postulated that traditional approaches to strategic planning greatly emphasize on the plan rather than strategy. It therefore means that good plans could be designed for the organization. However, these plans need good implementation strategies to ensure their implementation. As a result, contemporary approaches were therefore adopted in order to breach this gap. Consequently, contemporary approaches emphasize on both proactive and reactive plans and strategies to implementation which was a missing element in traditional approaches.

Notably, traditional approaches involve design that intends to bring forth process of connections both within and without the organization. On the other hand, it is believed by Mintzberg and Quinn (2003) that contemporary approaches are entrepreneurial in nature since they are concerned of creating new business opportunities in the operating environment.

This implies that contemporary approaches are more visionary as they are more concerned with continues improvement of business processes. Moreover, it is also asserted by Mintzberg and others (2005) that traditional approaches to strategic management are concerned with maintenance and management of the status quo. This is contrary to contemporary approaches since they are concerned with changing processes to suite ever changing working environment.

Additionally, traditional approaches to strategic planning were based on the perception that stages of planning are chronological as they consist of four key phases. These phases include supervision, predicting, agenda setting and lastly putting into practice the plans through implementation (Niven, 2008). All these steps are supposed to bring forth revolution in the organization through business reengineering processes which in the long run guarantee management effectiveness and efficiency.

On the other hand, Robert (1998) discoursed that contemporary approaches do not follow the chronological phases since they assume iteration approaches. For instance, a strategic plan that is adopted may be road tested in the organization and after a careful analysis; the plan may be taken back to the drawing board to be refined for full implementation.

In addition, it was noted by Jackall (1988) that traditional approaches are not concerned about external environment of the organization rather than concentrating on the internal environment. According to Parker (2002), it is opined that these approaches do not carry out external environmental analysis since they heavily concentrate on their internal factors. For that matter, it is believed by Roberts (1984) that this was a reason for failure of these approaches in positioning organizations in the operating environments since their strategic plans were not environment conscious to propel them in a competitive world.

This contrasts with the contemporary approaches which are environment conscious. According to Watson (2006), it is postulated that contemporary approaches to planning usually scans for external threats and opportunities in order to actively plan with these external factors in consideration. Therefore, contemporary approaches have been preferred against traditional approaches in the contemporary times due to ever increasing competition in the business environment.

Lastly, Knights and Roberts (1982) alluded that traditional approaches to strategic planning did not involve implementation team in the planning process since it was done only by the top executives of the organization. Therefore, the outcomes of these plans could only be imposed on the tactical and operational managers in the organization for their implementation. This is contrary to contemporary approaches which involve implementation personnel right from initial stages of planning. According to Kapoor and others (2011) contemporary strategic plans are usually owned by all stakeholders. This was not the case in the traditional approaches since strategic plans were seen as a preserve of the top management in the organization.

Four Possible Scenarios for the Future in Approaches to Strategic Planning

Trends in strategic planning that are currently being witnessed can inform several possible scenarios for the future. As earlier discussed, competition in the operating environment demands approaches to planning that will be able to craft and design strategies for organizations that are capable of making them bullet proof in terms of impending competition in the environment. For instance, Polynesian National Airlines since 2004 started facing stiff competition from the low cost airlines especially in their international operations.

Moreover, small scale airlines have also been established in the region which again offers competition to the regional market. Most of these competitors in the environment offer low cost services compared to the cost of services offered by Polynesian National Airlines. Therefore, for Polynesian National Airlines to continuously maintain its operating space and market in the operating environment, it is relatively important to come up with scenarios that can be used in crafting and designing strategic plans for the organizations in order to give them a competitive edge in the environment.

However, these scenarios need to be proactive and reactive in order to make the organization maintain its vivaciousness. For that matter, it is relatively important to carry out trend analysis in order to predict what is likely to happen in the future. Therefore, it is important to have knowledge of what is happening currently in the environment by considering trends in the sector, a country and to the entire globe. As a result, scanning of the environment using several tools becomes compulsory in the effort of getting to understand the trend. For instance, PESTE (Political, Economic, Social, Technological and Environmental) analysis aid in identification of different forces in control in a given environment. This provides a benchmark for strategic planning in the organization.

Moreover, it is emerging that competition is becoming inevitable in any business environment. With the case of Polynesian National Airlines in mind, in order to guarantee competitiveness, it needs to identify threats and opportunities in order to integrate them in planning their strategies. However, in identification of opportunities, the airline should not use one single visionary view but it should use multiple views that provide bridge of opportunities in a watertight competition environment. For that matter, it is evident that there will be different scenarios for the future in the Polynesian National Airlines operating environment which will require strategic responses.

Scenario One for the Future of Polynesian National Airlines and Possible Strategic Responses

The organization is likely to be in a financial quagmire due to impending competition from both international and regional players. The financial problems are likely to emanate from the reduction of service costs which the organization will be forced to undertake due stiff competition in the environment. As a result of lowering costs of services, the airline operations are likely to be affected due to financial constraints. For instance, from the recent past, the airline has been facing stiff competition from both small to big players in the market. For example, a recent survey indicates that the average international fare that the Polynesian National Airline was offering the market was double that of low cost competitors.

For that reason, the airline is likely to lose more clients to this low cost airline. This will result to adverse effects for the organization’s operations. For instance, it will be forced to lower airline costs to match the market cots in order to maintain their market niche in the operating environment. As a result of cost reduction, several scenarios in the organization will be encountered.

For example, employees’ salaries that are considered to be presently above current industry rates and which have been considered to be one of the important motivating factors of the employees in the organization will be hampered. As a result, reduction of airline costs is likely to cause stagnation in increase of staff salaries in the future which will in turn affect employees’ motivation. This will affect general service operation of Polynesian National Airlines due to financial constraints. Consequently, decrease in financial stability of the airline is likely to have direct effects to other related airline services like catering that were highly regarded in the market.

Therefore, several strategies are required to be undertaken in order to address these future scenarios in the airline’s operations. For Polynesian National Airline to continue having effective services and to achieve their operational capacity, it is imperative that airlines craft sound, proactive and reactive strategies. However, these strategies need to be implemented intelligently by guarding against negative change effects that may result from the change of strategy. For that matter, after a careful analysis of the airlines, the paper proposes following strategies to be implemented in order to address scenario one.

The organization must apply systems thinking approach in designing strategic plans to be able to address problems under scenario one. This type of planning will support entrepreneurial strategic plans which will be key in revolutionizing the organization. To begin with, airlines management should embrace information communication technologies (ICT) in all its operational activities. ICT should be incorporated in all airlines activities to help connect airlines stakeholders.

These include airline operators, customers and other business providers. Excellent adoption of ICT services by stakeholders is likely to promote effectiveness and efficiency in service delivery of these airlines. For instance, use of the organization’s websites for online booking of airlines should just serve as the beginning of ICT integration in the operations of the airline. Other airline operations should be automated to take advantage of the ICT capabilities. This is likely to provide the required competitive advantage in the environment hence maintaining Polynesian National Airlines at the helm of airline services.

In addition, airlines growth are normally determined by airline firms that provides airways services, business entities that regularly use air transport and businesses that provides ancillary services to air passengers. Therefore, it is crucial for the all these stakeholders to have specific strategies that are aimed at achieving efficiency and effectiveness while meeting market demands in all seasons including peak periods. For this reason, it is important for Polynesian National Airlines management to enter into collaborations with other airlines that operate in other destinations in order to open the region to more regions of the world. This will be helpful the organization since it will provide economy of scale. The economy of scale will be important since it will help to curb financial strains that are impending in the environment.

In terms of increasing revenue for these Polynesian National Airlines, its management should craft good marketing strategies that should use modern ICT services to be able to target both corporate and individual clients in order to guarantee its revenue inflow. In respect to businesses that provides ancillary services to customers, plans should be in place to improve and increase their services in order to cater for the increasing number of passengers.

Moreover, it is relatively important for the Polynesian National Airlines management to engage in commercial developments that seek to support airports operations. For instance, ventures into catering and accommodation facilities will likely to make airports management to be self reliant. This will help to reduce dependency on private players since they may hold the organization’s operations hostage at some point due to uncertainties in their management. Moreover, these commercial developments are expected to supplement the current financial turnover and be part of addressing impending financial crunch due to entry of both regional and international players in the environment.

Nevertheless, business process re-engineering of the Polynesian National Airlines needs to be done to overhaul its operations that are currently characterized by external threats (Borkowski, 2009). However, this re-engineering should take place after physical re-designing of the airports that should take place first to meet the current and future operational capacity. The re-engineering process should be geared towards increasing revenue inflow so that the organization can be self reliant in addition of adding value to its business value.

However, it is important to acknowledge that implementation of these strategies to address this scenario will experience several challenges that may be detrimental in their initial phases. For instance, in its initial stages, it will be difficult to meet optimum possible value derived from strategies such as business process re-engineering since their positive effects might take some while before they are reflected. It is therefore relevant that implementation efforts be emphasized throughout this phase to guarantee better results afterwards.

In addition, due to business process re-engineering and the desired increase in operational capacity, activities in Polynesian National Airlines will tremendously increase and so variety of skills will be required. This implies that there will be a challenge in skills development hence human resource development needs to be proactive in providing necessary skills needed in the expansion and advancement process.

Scenario Two for the Future of Polynesian National Airlines and Possible Strategic Responses

Polynesian National Airlines has been on record for being one of the best employers in the region and globally as a whole. This can be proved from ever increasing number of employees from the year 2004 which was increasing steadily all through 2006. However, with hard economic times setting in, it is obvious that the organization will have to restructure itself in terms of its human resource.

The scenario in human resource restructuring is likely to lead to phasing out of some of the manual departments due to application of information communication technologies. In addition, some staff might be retrenched due to the organization’s efforts of cutting on costs. Therefore, there is high likelihood that employees’ motivation in the organization will be highly affected hence affecting the overall performance of the Polynesian National Airlines.

For that matter, there is need to have effective strategic responses that are geared towards addressing human resources and related scenarios to avoid their negative impacts on the organization’s business performance. Therefore, the airlines need to have strategies in place that manage talents in order to guarantee continuous improvement. As a result talent management strategies will be the best responses to this scenario.

Talent management according to Boudreau and Ravin (2011) falls under one of three broad categories. For that matter, the responses should use all these categories. The first category should define talent management plans to be undertaken in the organization. These should include combination of standards and procedures of human resource management.

For example, recruitment, selection and their development career wise. On the other hand, the second category according to the strategies postulated by the same Boudreau and Ravin holds that this talent management strategy should entail creation of a huge talent pool which ensures that there is both quantitative and qualitative flow of employees in the organization. Moreover, the third strategy for the talent management should relate to an unqualified resource that needs to be administered basically to performance levels.

Nonetheless, it is acknowledged by Kerr (1986) that talent management needs to be based on identification, selection and thereafter nurturing these key performers, sourcing, development and allocation of replacements of the key personnel. In addition, allocation of required resources to key talents based on their potential value to the organization also forms part of talent management strategies. This is designed to strategically position Polynesian National Airlines in the business environment.

Benshoff and Sean (2004) opined that organizations should adopt talent on demand approach in order to ensure that talents are only recruited when there is demand. However, management of talents in Polynesian National Airlines should consider factors that arbitrate their management and how computer systems add value to this process.

Talent on demand framework should be applied in order to ensure that demand and supply of talent is covered to cater for the talent demand of the organization in all times. However, it should be noted that talent management does not bring any difference if it adapts to organization’s local practices. The current practices that relates to talent management in the organization should therefore be aligned with the emerging trends in the market in order to proactively and reactively provide mechanisms to human resource management of the organization. In addition, it should also consider both internal and external factors such as culture that is prevalent in the environment in which Polynesian National Airlines operate.

Nelmes (2001) explored the impact of the top executive support of the organization systems performance. For that matter, he provided the role of the organization’s top executive in supporting the implementation of talent development and retention in organizations. However, this support should be applicable to several perspectives which include deterministic, contingent and dynamic perspectives in enriching understanding of top management support in the context of implementation of the enterprise systems. As opined by Nelmes, contingent and deterministic perspectives should be simplified in order to guarantee implementation of these approaches that ensures positive outcomes in terms of management of human resource in the organization.

Scenario Three for the Future of Polynesian National Airlines and Possible Strategic Responses

Management team at Polynesian National Airlines was keen to design and develop a viable strategy that was in a good position to address the airlines management problems. These included financial problems that started setting in with the increase in competition level both in the regional environment and on the global platform. Moreover, this scenario indicates that there was divergent of opinions amongst top management of the airline.

For instance, with the need to match competition in the operating environment, it became imperative that it was inevitable for the organization to adopt a low cost budget airline. However, the chief executive officer of the airline was against the issue of increasing these costs. Following this scenario in the organization, it is only imperative to acknowledge the fact that the future management of the organization will be characterized with parallel management decisions amongst the top management. Therefore, this is likely to lead to management wrangles in the organization which is likely to lead to the demise of the airlines.

For that matter, it is imperative that possible strategic approaches should be designed to address this scenario three which is likely to be a threat to the survival of the airline operations. Therefore, for the airline to conduct its core business and to forge forward strategically in future, there is need to have a more vibrant corporate portfolio that is designated to propel it in the operating environment. Usually, the environment is characterized with stiff competition. Nonetheless, a concern for most organizations especially those that are in global business like Polynesian National Airlines, is how to strategically align plans of its different units so that its conglomeration can work harmoniously as one whole unit.

For this reason, the airline portfolio should follow specific guidelines in respect to strategic management. These principles include; Ansoff Matrix which according to Nagar (2009) involves a classic analysis of the market based on a matrix comprising of four major variables of existing markets, new markets, existing products and new products. In addition, Ansoff Matrix also considers consolidation, penetration, market development, product development and diversification. Moreover, Polynesian National Airlines corporate portfolio should also be tailored based on corporate portfolio matrix and diversification.

Nonetheless, from the case study analysis of the Polynesian National Airlines, it is evident that the airline should follow portfolio matrix in its corporate portfolio in future to avoid decisions conflicts in the top management. According to Williams and Adrian (1997), portfolio matrix will help to ensures that there is linkage between business growth rate and the competitive position of the organization which is usually determined by its market share. For instance, its investment strategies should be determined by the ‘Net Profit Value’ which is usually based on the discounted cash flow.

In addition, another portfolio matrix that Polynesian National Airlines should follow is the familiarity of the industry in terms of its risk level, geographical location and the business that the industry is operating. For this reason, according to Wright (2009), the basic objective of using portfolio matrix in shaping corporate portfolio is to ensure that the organization is only investing in markets which are highly promising and attractive both in the current times and in the future. Additionally, portfolio matrix will also ensure that investments which are done on mature markets becomes self reliant by being self financing in addition of producing cash flow which can also be invested in other productive business areas.

Nevertheless, from the case study, it is relative to acknowledge that the airlines should also employ corporate parenting strategies in its corporate portfolio. For that matter, according to Pounder (2009), corporate parenting should view an organization in terms of its capabilities and available resources that can help it build a vibrant business division value that can be able to generate synergies from other business divisions.

Nonetheless, this can be accomplished through focusing on competencies of the parent organization and the core values that are usually derived from the interrelationship between business divisions and the parent organization. According to the Polynesian National Airlines business operation, it is possible that it can be diversified into several business entities that draw their guidelines from the parent’s origination. For instance, the executive bodies at divisional levels can be mandated to come up with their annual strategic plans but with the approval of the parent organization.

Furthermore, Polynesian National Airlines should also appreciates and use diversification strategies in its corporate portfolio. Corporate units should therefore be at liberty to venture into new business entities provided that their new ventures comply with the stipulated threshold given by the parent organization (Watson, 2001). Nonetheless, this should be taken to ensure that shareholders interests are taken into account by ensuring that the value of corporate share on the stock market is competitively maintained in order to guarantee shareholders value in terms of dividends.

Scenario Four for the Future of Polynesian National Airlines and Possible Strategic Responses

The scenario four that is likely to face Polynesian National Airlines in future is communication breakdown. Breakdown in communication is likely to be a major problem to the airlines operations. The current status of the organization indicates occurrence of this scenario. For instance, due to the increased competition in the market, the airline wanted to lower cost of its services. However, this was not possible due to disagreement of the Chief Executive Officer with other top management. For that reason, this scenario will be a major hindrance to the effective and efficient operation of the airline. Therefore, possible strategic response for this scenario requires a well communication plan.

Communication is thus the most crucial function in management of any organization. Accordingly, improved communication results to improved performance of the organization both internally and externally. However, for this to be accomplished there is need to develop better communication structures that are able to address both internal and external needs of the company. For instance, good internal communication structure will help to prevent issues that could lead to conflict in the organization.

Polynesian National Airlines as a company should prioritize communication system in its operational structures. It should value communication among its structure of management and to enable workforce to freely communicate to each other irrespective of their level in the organization. For this reason, the airline should assume flat structure of management since traditional tall bureaucratic system of management is a recipe of communication breakdown (Vaiman, 2008). According to Nagar (2009), flat system of management have few levels which implies that both upward and downward communication are simplified and as a result, there is always less distortion and inaccuracy in the message relayed.

Moreover, the airline should build connections through communications to encourage its workforce to build strong rapport among them and good public relation with the external environment. As a result, internal information is able to be relayed effectively due to good cordial relationship built. Furthermore, this strategy is able to promote organizational culture of team work since connections built become pillars on which teamwork and communication is orchestrated. Moreover, according to Wright (2009), connection building helps to cultivate some sense of belonging which facilitate human contact, friendships, acceptance, love, teams and social life that are the biggest panacea to effectiveness in internal communication.

Nonetheless, since stiff competition is threatening the airline it is supposed to create a communication strategy that concerns customers’ education. In this strategy, the airline should educate its customers on several matters that relate to their services. This should forms part of its external communication system since it will help it to build its social relationship (Pendakur, 1990). This communication strategy is designed to give the airline a competitive edge against other players in the industry.

A Reflective Statement

Strategic planning process either employs traditional or contemporary approaches. However, there exist several similarities and differences between these two approaches. Therefore, for one to draft an effective and efficient strategic plan, there is need to consider these similarities and also give emphasis to the differences in order to choose approaches that will suite a particular business environment. Moreover, it is also important to consider changing environment in terms of economical, social and political in choosing the best approach to strategic management (Boudreau & Ravin, 2011). Therefore, in respect to this paper, the following reflection statements can be provided that relates to strategic planning approaches basing on Polynesian National Airlines which is an airline operating organization that operates both regionally and internationally.

It is a learnt idea that major strategic plans are usually created when there is need of business process reengineering. The strategic plans are therefore the wheels that bring forth revolution in organizations. For that matter, approaches that are applied in drawing the plans should then be appropriate. This is so since wrong approaches leads to formulation of poor strategic plans which in most cases becomes the onset of organization’s downfall (Williams & Adrian, 1997). However, proper approaches to strategic planning results to proactive and reactive plans that are viable in organization’s operating environment hence becoming a panacea for sound management of the organization.

Furthermore, it can be learnt that one of the core reasons for developing strategic plans is to achieve total quality management in organization. Usually, total quality management is one of the ways that organizations achieve their management effectiveness. Moreover, this is also one of the mechanisms that organizations use to achieve continuous improvement. Therefore, approaches to strategic planning should be selected properly in order to ensure that an organization achieves these expectations.

Nonetheless, there are differences that exist between different approaches to strategic planning. In most cases, these differences relates to ever changing environment. For instance, traditional approaches to strategic planning are considered to be obsolete in most environments. However, there are some business environments that these approaches can provide the desired solutions to impeding strategic planning predicaments.

Nevertheless, it is believed that contemporary approaches to strategic planning are concerned with entrepreneurial concerns than compared to traditional approaches. In the modern times, most organization appreciates cotemporary approaches to strategic planning due to the stiff competition present in the current business environment. For that matter, contemporary approaches are the best strategic planning mechanisms that can be employed by organizations in order to promote their entrepreneurial aspirations (Watson, 1996).

In addition, in a business environment, there are usually scenarios that an organization can anticipate. These scenarios may at times be beneficial to the organization or harmful to their business survival. For that reason, these scenarios need to be predicted early enough in order to craft necessary measure that can counteract the negative effects. Both traditional and contemporary approaches of strategic management that should be used by an organization should cater for these foreseen situations (Nelmes, 2001). Moreover, approaches that are taken to address these scenarios should therefore be in line with the overall objectives, mission and vision of the organization.

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