Friday, September 7, 2012

Historical Background of Strategic Planning

Strategic planning has a very colorful history that dates back to ancient Greek civilization. The term "STRATEGY" is derived from the Greek word "STRATEGOS" which means "General" or army leader. Annually each of the ten ancient Greek tribes elected a "STRATEGOS" to be its leader. Most of the elected leader ended up to be both politicians as well as generals of the tribes.
In modern times strategic planning has its roots from the Harvard Business School. The Harvard Policy Model was developed and taught in the early 1920s to students of the Harvard Business School. The systematic assessment of Strengths, Weaknesses, Opportunities, and Threats or SWOT Analysis came from the Harvard Policy Model.
In the late 1950s, Igor Ansoff, known as the father of strategic management came up with the Product-Market Growth Matrix which focuses on two dimensions, the products and the markets.
In the early 1970s, the Product Portfolio Model is attributed to the Boston Consulting Group founded by Bruce Henderson. It is also known as the BCG Matrix. It revolves around the interrelationship of between market share and market growth.
In 1979, Michael Porter of Harvard Business School formed the business strategy model known as Porter's Five Forces Analysis. The five forces are: Bargaining Power of Suppliers, Bargaining Power of Customers, Threat of New Entrants, Threat of Substitute Products, and Competitive Rivalry within an Industry.
Strategic planning became a standard management tool in almost every Fortune 500 company. It continued to be a private sector undertaking. However, in the late 1980s, the public sector steadily emerged and embraced strategic planning as reformers expressed their desire to run government more like a business. Among the pioneering States that took a strategic approach to public sector planning were the State of Oregon and Texas. With the passage of the Government Performance & Results Act of 1993 all federal agencies are now required to write a strategic plan that includes first and foremost the mission statement, followed by outcome based goals and objectives, description of how goals will be achieved, what are the resources needed and finally how objectives will link to performance plans. It also includes a list of external influences on goals and a program evaluation schedule. Every year, all federal agencies are required by the GPRA bill to write an annual performance plan and to submit an annual performance report. The performance report will compare actual to planned performance levels.


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