The Impact of Strategic Planning in International Business 1

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The Impact of Strategic Planning in International Business

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Abstract

Strategic planning is a significant tool in the strategic management of organizations

and companies. This planning can be conducted annually by a company, and it is considered

to be an important process where companies can organize their activities. Companies across

the globe implementing this planning find themselves at a better position, in dealing with the

dynamic market environment and having a competitive edge over their competitors.
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Introduction

The concept of strategy has had numerous underpinnings in different fields and

industries across the world, but over decades it became essential when it is integrated into the

major process of organizational activities, in both profit and not-for-profit oriented

enterprises. Strategic planning can be depicted to be a longitudinal study, where institutions

identify changes that affect their performance over time, and consequently incorporate

strategic tools in their competitive and dynamic market environment. It is crucial for

organizations undertaking international business to understand, the practice and nature of

employing strategic planning and its effect in the global market arena, and the possible

correlations between their performance and efforts in business output. More so, organizations

need to understand issues in international business, which they cannot control and

simultaneously have a potential impact, on their business transactions, success and survival.

Formal planning exerted by a company in the international scene can, have some

positive aspects such as creating competitive advantages, positive control in regard to market

forces, improve organizational performance and its overall effectiveness. Consequently, with

the importance strategic planning generates, various international businesses and

organizations have directed their attention towards the process of strategic planning, and the

relationship in the firm’s efforts and the performance achieved, translating to a developed

market economy for different countries across the globe.

The aim of this study is to analyze the impact of strategic planning in international

business relations, and what it entails for organizations to remain competitive in the global

environment characterized by globalization and constant changes.

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The Impact of Strategic Planning in International Business

The strategic planning process incorporates strategic management that seeks to align

an organization’s activities with the immediate external environment. Strategic planning is

central to the management techniques employed by an organization in dealing, with increased

and constant changes in the market environment in aspects such as globalization, and hence

firms stand to benefit through implementing strategic planning tools. Various studies

conducted by different researchers have sought to examine, the correlation between planning

and performance by a firm in business environment. The planning process refers to the

inclusion of an organization’s mission statements, goals, internal resources and

environmental information programs (Leung, 2005, p.358).

In addition, characteristics in the planning process such as system maturity,

commitment, importance, time horizon and comprehensiveness are crucial in the overall

planning framework by the organization. Culture also plays a significant role in an

organization’s strategic planning process, because cultural values or organizational culture

shapes the acceptable company processes like decision making and planning. Constantly,

planning processes have been observed to reflect upon the dominant aspects of a culture.

Strategic planning is part of an organizations business strategy, which will often involve other

factors such as evaluation, analysis, corporate culture, future thinking and strategic intents.

As illustrated, corporate culture influences a company’s planning processes, as it

influences decisions made by management and consequently determine, the ultimate

performance of the firm in the international business environment. Corporate culture entails

company ideals or beliefs, team work strategies, adaptability and flexibility, mission

statements, change management, leadership and vision. Organizations must re-assess their

corporate culture because it influences the, entire firm’s efforts towards the perceived
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performance in the competitive market environment. Culture influences individuals working

in an organization through people interactions and relationships, like staff relations with

clients or customers, stakeholder relationship, individual responses and attitudes towards

work ethics, energy use, community involvement, absenteeism and consequently how the

organization relates to its employees in regard to factors like professional development and

training.

All these factors influence an organization’s performance in the international

environment, because when a company does not implement proper strategic plans it stands to

lose, attributed to the risks encountered in the dynamic competitiveness in the international

market, posed by different market players and aspects of globalization. It is essential for

businesses or organizations’ to step back every so often, from daily running of business or

marketing programs to look at the bigger picture of the organization’s mission and overall

accomplishment of defined goals, through effective strategic planning (Leung, 2005 p.362).

Strategizing will encompass a broad spectrum of issues such as the services or

products a company offers, the markets served, internal and environmental variables,

research, production, finance coupled with myriad other organizational elements, which are

essential in establishing a competitive footprint in the international business environment.

Strategic planning oversees a company’s immediate circumstances, and looks into the future

processes of clarifying the missions and goals of the business in a strategic perspective,

compared to tactical position which looks at the short term prospects, or operational planning

that focuses on the detailing of the work done. Basically for the organization to be

competitive, a thorough analysis will be essential in understanding the objectives and

strategies to be employed by the company, through marketing expertise in implementing

abstract corporate strategy, making key marketing decisions towards addressing market

niches and direct marketing tactics, with the mindset of a sound strategic marketing plan.
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As indicated, strategic planning involves analyzing future business performance, and

simultaneously encompassing immediate external environment in the international, regional

or local environment, in changes which affect the performance of the firm. A company will

need to communicate its vision to all its staff members, to the goals and objectives set by the

firm and the direction the company is taking. This will incorporate factors like market

research in identifying consumer needs, developing relationships with customers, suppliers

and stakeholders in the international environment (Leung, 2005 p.370).

Hence, when the direction is identified marked with strategic planning, the next steps

would be to analyze the market position of the business or organization, and further introduce

and develop strategic goals set coupled with evaluation of the strategies laid down, through

constant analysis and evaluation of results and feedback of the performance, of the strategies

implemented. Analysis of an organization’s strategic plans in the international market

environment would incorporate, analyzing the business strategy through crucial factors which

include core competencies, required inputs, identifying core business processes, coupled with

SWOT, PEST and Five-Force analysis.

In this respect, the SWOT analysis will identify and evaluate existing organizational

strengths, existing business weaknesses, the opportunities in which a business might expect

with redefined objectives in the changing market environment, and further the threats which

might impede the successful implementation of strategic plans, and future success of the

organization. In addition, PEST analysis will evaluate the political factors such as

international and national politics that affect development, and hence the overall performance

of the business. Economic factors will identify main economic issues in the international or

national scene affecting the organization, social factors evaluating developing social trends

especially in consumer consumption and how it affects future planning processes, and
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technological changes brought about by globalization, where a business can use this tool in

form a competitive advantage over competitors.

Required inputs in the strategic plan will encompass the resources which will be

essential, in carrying out the company strategy and this will impact on land opportunities

which are important for development, obtaining both skilled and unskilled labor, and capital

which will drive the necessary strategic processes. Five-Forces on other hand influences and

shapes the market and industry, the company operates in and this entails barriers to entry of

competitors, rivalry between firms, buyer power, threat of substitutes, and supplier power.

These factors and models ultimately influence business operations of an organization in the

international environment, and should be given priority and the necessary attention coupled

with evaluation, that is significant in monitoring the progress of the various strategic plans

implemented by the organization.

Conclusion

Strategic planning ultimately affects how an organization conducts its business in

local, national or international environment. Coupled with organizational culture or corporate

values, strategic planning processes need to involve all the stakeholders who include

suppliers, customers, shareholders and employees for the plans to take positive effect. The

company’s vision and strategic plans must be communicated to all stakeholders, in order to

adopt appropriate attitude, work ethics, business practices and functions compounded by

encompassing analysis factors such as core competencies, SWOT or required inputs in

implementing the company strategic plans.

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Reference

1. Leung, K. & Gibson, C. B. (2005). Culture and international business: Recent

advances and their implications for future research. Journal of International Business

Studies. Volume 36, Issue, 4 pp.357-378.