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Must Be Inclusive
For many strategic plans to work, all areas of a business must understand the strategic goals and operate together to achieve them. This means different functions or departments, such as marketing, production, information technology and human resources, must be educated about the company’s overall strategies and develop their own departmental strategies and tactics to contribute to the objectives. Each area must also take steps to make sure its actions don’t interfere with any other area’s.
Slows Reaction Time
Because of the integration of different departments into a strategic plan, different functions might need to get approval or confirmation from other functions before they can act. For example, a production manager might want to change a product feature that is causing slowdowns in production and increased production costs. However, no matter how beneficial the change might seem, the production manager must check with the marketing department to make sure the feature isn’t something customers need or want. If marketing wants to make a change to a product, it might have to get approval from finance if the company has a strategic plan regarding profit margins and return on investment for its products. This need for ongoing strategic management can sap time from key managers and slow their ability to react to opportunities. This can be doubly dangerous if it slows the company's ability to react to a threat, such as a new competitor.
Small-business owners often have short-term opportunities to make money
that might not fit into a big-picture strategic plan. For example, a local restaurant might be able to take advantage of a technology convention that’s in town by putting out a welcome sign for the attendees or running ads in local papers offering a discount. This might invite a relatively young target audience to come to the eatery. If the restaurant has a long-term strategy of trying to brand itself as a restaurant for seniors and middle-age empty-nesters, this marketing tactic could confuse its brand. The restaurant would have to forgo this chance to make easy money to manage its strategic brand strategy. If a business has a strategy of making a specific return on investment or percentage profit margin on products, it might have to forgo sales opportunities that don’t meet the strategic financial goals the company has set.
Strategic planning includes goals such as expansion, diversification, rebranding, mergers and acquisitions and improved employee recruitment and retention. This requires knowledge of these areas and the ability to manage these strategies and the tactics needed to achieve them. Just because a company puts together a sound strategic plan, such as expansion, doesn’t mean the staff can manage the strategy. For example, a small-business owner and her key managers might decide to increase sales by adding new products to the company’s line. The team must be able to choose the right products, taking into consideration the company’s capabilities in the area of production, marketing, distribution, cash flow, profit management and labor management.