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Long Range Planning

33/2 April 2000

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Charles Baden-Fuller Editorial

CEO Interview

J. Kelly Energising the Network: An Interview with Tom Watson, Chief Growth Officer, Omnicom Group. james.n.kelly@cgey.com

Planning Processes

T. J. Andersen Strategic Planning Autonomous Actions and Corporate Performance tanderse@som.gmu.edu

    There has been a tendency to de-emphasise the role of strategic planning in recent years and instead focus on management autonomy and organisational learning. Yet most firms continue to plan for the future. This reveals a need to review the effects of strategic planning in conjunction with managers' autonomous actions. Past research on the performance effects of strategic planning has been inconclusive, and evidence of the strategic importance of adaptive actions taken by lower level managers remains somewhat anecdotal. What is more, contemporary scholars hold opposing views. Some argue that autonomous actions are imperative to strategic adaptation, while planning inhibits change. Conversely, others argue that centralised planning is needed to coordinate responsive actions and spur adaptive strategic thinking. To clarify this apparent dilemma, this article presents a recent research programme investigating the dual performance effects of strategic planning and autonomous actions in the strategy formation process. The results indicate that strategic planning has positive performance effects across industries, and exists in tandem with autonomous actions, where managers make responsive decisions that enhance performance under changing environmental conditions.

D. Jennings PowerGen: The Development of Corporate Planning in a Privatized Utility david.jennings@ntu.ac.uk

    Following privatisation in 1991, PowerGen has developed from being a UK electricity generator to become a diversified international energy company. This article looks at the development of PowerGen's corporate planning process to meet the extensive and continuing changes that have taken place in the company's environment, strategy and organisation. The development of the company's planning process indicates that planning systems can be reconfigured, perhaps frequently, to maintain consistency with the organisation's changing strategy and structure. The current planning process is discussed, and its ability to balance autonomy and adaptation by the business units with coordination and the realisation of financial expectations. In conclusion, effective planning activity requires appropriate reconfiguration of the planning process to meet contextual change; clear expression of central management intent concerning business unit performance; an organisational structure that facilitates the communication and negotiation of business unit planning guidelines; and organisation-wide commitment to the planning process and its agreed outputs.

Other Topics

E. Delany Strategic Development of the Multinational Subsidiary through Subsidiary Initiative-taking eddelany@iol.ie

    The view that subsidiary managers should be active in taking strategic initiatives beyond their mandate is challenging the traditional hierarchical view that MNC subsidiaries' roles should be tightly controlled. MNC subsidiaries operate in three markets local, global and internal and take initiatives in these markets which may develop, consolidate or defend their existing position. Their development initiatives need to add value to the parent organisation and can lead over time to a strengthening of the subsidiary's contribution to and strategic significance within the corporation, although any such gains can also be lost. This article presents an 8 stage development model for MNC subsidiaries; each stage builds on the credibility gained by the subsidiary management team in carrying out its current mandate in a superior way. The model allows the subsidiary management to identify its position in terms of the development of its mandate. Corporations will gain from encouraging initiative-taking in subsidiaries as this will allow full exploitation of the company's capabilities in increasingly decentralised multinationals. Subsidiary managers need to change their mindset from one of compliance to head office to proactive initiative-taking if they are to maximise their subsidiary's value to the parent corporation.

R. Nellore and K. Soderquist Portfolio Approaches to Procurement nellorerajesh@hotmail.com

    Portfolio models have been used in strategic planning and marketing, but their application to the field of purchasing has been limited. This seems, however, to be changing, as procurement management has become more strategic. Applying portfolio models to purchasing can introduce a major risk in that the implications for suppliers and/or operational staff are scarcely considered. This article explores existing portfolio models in purchasing, which classify purchases into different product categories. Based on case studies of two automotive OEMs and two vehicle industry suppliers (all European), together with benchmarking interviews at Toyota, Japan, we attempt, firstly, to link these product categories to different types of suppliers and, secondly, to link the product categories and the supplier types to the specification process in other words, to link the specification types and the specification generators. We argue that product categories must be matched by distinctive suppliers that have the required capabilities and capacities to satisfy specific product demands. The connection between the portfolio models and the specification process will help original equipment manufacturers (OEMs) and suppliers to improve relations with each other. Also, the understanding of who generates the specifications for different product categories can help both the OEM and the suppliers to better understand each other's involvement in terms of capabilities and timeliness in the development process. Based on these arguments, we further analyse and extend the supplier relationships and the action plans for managing different procurement situations proposed in the portfolio models.

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Long Range Planning - International Journal of Strategic Management
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