Evolution of Strategic Planning
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There are different models of strategic planning. Some of the models are dependent on the situation while others are applicable to any company irrespective of the sector in which the company operates. This discussion is based on three models, namely the Michael Porter's 5 forces model, the Adrian Slywotzky's Value Migration model, and W. Chan Kim and Renee Mauborgne's Blue Ocean Strategy.
The Premises and Advantages of the Models
The Premise of Michael Porter's "Five Forces
Michael Porter's "five forces" model is based on the premise that external and internal sources have a direct influence on markets’ competitiveness and that in order to remain competitive, it is imperative to understand the sources (Flynn, 2005).
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Based on the model, the techniques that are used to understand industries and their competitors posit several variables. The variables have direct impacts on the ability of a company to compete effectively in a given industry. The central concept that is addressed by the model is competitiveness, and the aggregate of all the variables gives rise to the level of intensity. The model is advantageous in the sense that it gives a clear and logical picture regarding the position of a given company within a particular sector. Thus, it is helpful in understanding a particular industry (Flynn, 2005).
Adrian Slywotzky's Value Migration Model
The underlying premise of the model is that as a company continues developing, it undergoes the stage of value inflow. In that stage, companies get value from others who have outmoded designs (Flynn, 2005).
The model is beneficial because it enables companies to obtain a measure of the relative power of business designs that is regarded as an integral requirement in understanding the direction of vale migration (Flynn, 2005). The metrics are also vital in understanding the change in business design’s economic power.
W. Chan Kim and Renee Mauborgne's Blue Ocean Strategy
The underlying premise of the Blue Ocean Strategy is that instead of a company getting involved in a competition with other companies in a given industry, it can develop the strategies to help in the creation of unique products that can enable it get profits from lucrative new products (Flynn, 2005).
The advantage of the model is that it helps companies find ways to avoid operating in the red ocean conditions. By avoiding the environment, companies become safe from a situation where they would need to fight against each other for the market share. It is effective in facilitating a situation where companies limit a focus on competitors as they focus on alternatives and potential customers (Flynn, 2005).
How to Apply or Implement Strategic Planning Using the Methods
Porter's Five Forces
The Porter’s Five Forces model can be applied in the implementation of strategic plan by using it as a tool for understanding the point where power lies in a business situation. The information is vital in strategic planning since it helps the management understand competitors’ strength and the potential position that it seeks to move to (Hill, & Jones, 2012). The model enables a company to clearly comprehend the point where power lies. As such, the application of the model gives a company the opportunity to get an advantage of the prevailing situation and to avoid taking wrong steps.
Adrian Slywotzky's Value Miration
The model is applicable in planning as the means of identifying changes in customer priorities and in initiating new approaches that can help address the changes. In so doing, unsuccessful strategies are detected and avoided (Slywotzky, Morrison & Andelman, 2002). Besides, the model may serve as a way to highlight the essence of understanding customer priorities and create new opportunities as efforts are made to negate strategies that are unsuccessful. The model also helps in planning and conducting competitive analysis. It is also applicable in doing an approximation of possible market change (Slywotzky, Morrison & Andelman, 2005).
Chan Kim and Renee Mauborgne's BBlue Ocean Strategy
The Blue ocean strategy can be applied in the management and planning of companies’ activities to enable an organization to maximize its profit generation by avoiding competitive environments. The model states that competition presents an environment that is not conducive for a company that strives to succeed. As such, the model is used as an indicator of particular initiatives that a company can take to create a new market that makes competition irrelevant. The method is used in making decisions regarding the kind of products that a company can deal with. For example, the model can be utilized in understanding matters to do product differentiation so as to eliminate competition while creating new markets (Hill & Jones, 2012).
The Pros and Cons of the Strategic Planning Methods
Porter's "Five Forces” Model
There are several advantages of Porter's "five forces” model. For instance, it is helpful in understanding the manner in which value is shared among actors besides providing insight into redistribution of profits. The model is also profitable since it takes a wider view on competition. The business unit level also offers a context that is above a single product or a range of products. However, the model has a number of disadvantages. First, it works on an assumption of a particular state of affairs without being applicable to industries that are in turmoil. Secondly, the analysis fails to include other perspectives like the resource based view that gives room for organizations to reshape a given industry in accordance with available core competencies.
Adrian Slywotzky's Value Migration
This model is beneficial as enables companies to capture value through creation of new business designs that it facilitates measurement of relative power of business designs that gives a vital insight to enable companies understand the velocity of migration. The metrics also makes companies distinguish the manner in which economic power can fulfill customer needs. Its drawback is that it does not cater for extraneous factors that can also have unfavorable implications on customer satisfaction.
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