The strategic planning process Essay
In the summer of 2006, Shipyard LTD, located in on the Danish island of , initiated a strategic planning process. The shipyard, which is the largest employer on with a workforce of 100-150 (depending on the season), carries out a variety of repairs, reconstruction and maintenance work on ships up to 100 meters in length. A few new ships are being constructed in batches as well. The process was necessitated by the shipyard’s investment in a third dry dock with double the vessel capacity of the company’s existing two dry docks. The investment was deemed necessary due to the increased tonnage on the maritime freight market. The obvious advantages of a new dry dock are that current customers can receive better service, and new customers will be attracted by the superior capacity. Innovative initiatives were needed for the strategic planning process.
After a discussion about processes and tools the management group decided to use strategic processes and tools illustrated in figure 3. The strategic process is conventional, but the tools are not, comprising both Blue Ocean’s value innovation concept and the CompetenceWeb(r) process4, which present novel approaches in this context. In the following section, the significance of the two concepts for the
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Shipyard’s strategic planning process Since new concepts and processes were being introduced, it was important for the management group – assembled across different functions – to start identifying relevant topics for the process. After choosing the tools, the group concentrated on defining the content of the Blue Ocean strategy. Six disparate factors normally taken for granted in an organisation became the focus of attention (six paths framework). They are highlighted in figure 4.
Shipyard’s Blue Ocean Approach First Sï¿½by Shipyard identified five approaches based on the Blue Ocean Strategy. Due to the close similarity to the shipyard’s actual business model, these cannot be described in detail, since the company does not wish to disclose these details for competitive reasons.
The next step was a series of customer interviews, followed by implementation of the CompetenceWeb (r) process. The reason for this approach was to test the results from the Blue Ocean Strategy and also get new ideas. The outcome was a modification of the original Blue Ocean Strategy, which naturally falls under the products and services initiatives; new ideas for both product and process innovation were derived as well through the CompetenceWeb(r) activities.
This phase is generally more hands-on than the first step of the process, asking questions such as “what do we do next?” and “why should we do that?” The reason is that customers themselves can explain their views, and the management group can ask questions in order to clarify certain points in the statements. It is worth noting that the process includes both external and internal strategic factors thus reflecting all relevant initiatives the organisation has to take.
The CompetenceWeb(r) process was implemented through all seven stages and hence incorporated increasingly tangible goals. Of particular interest was step four, the result of which came as a surprise to management, and it was revisited several times. Figure 5 graphically depicts the outcome of the CompetenceWeb(r) evaluation, with anonymous competences and activities, again for competitive reasons.
A review of core competences indicates that Shipyard already possesses competence 2, whereas competence 4 and 5 display noticeable weaknesses. Management found it hard to accept these weak points, so the evaluation was repeated several times – with approximately the same result. Interestingly enough, the evaluation was repeated once again in connection with the launch of the strategy – again with almost identical result. This time middle management, foremen and the works council, a 15-person group, performed the evaluation.
Even though it was hard to accept initially, all leaders across all management levels generally agreed on the need for development. It became a positive focal point and frame of reference in the ensuing strategic and organisational development. In the strategic process, this competence recognition was valued as a strength for competence 2 and a weakness in competence 4 and 5. The overview of activities within the strategic value chain shows potential for development within all activities. However, one activity – number 5 in the table – shows a higher potential than the rest. It is an activity that currently has a low priority in the organisation but was brought to the forefront in connection with customer needs.