Academic journal article Journal of Small Business Management

Internal Politics and the Strategic Business Plan

Academic journal article Journal of Small Business Management

Internal Politics and the Strategic Business Plan

Article excerpt

Strategic planning has often been thought of as a management function most appropriate to large organizations, but many small business managers now realize that a well-developed strategic business plan can significantly enhance their organizations' performance. This realization has arisen in part from the reported results of empirical studies of planning in small businesses. For example, in a study of over one hundred small service, retail, and manufacturing firms, Robinson found that firms that engaged in strategic planning with expert outside advice tended to perform significantly better than those which did not. In a study of forty-two small manufacturing firms, Potts reached a similar conclusion.

Other published works on strategic planning in small businesses point out that while sophisticated and elaborate planning concepts may be of great benefit to giant corporations, their costs may far outweigh their benefits to smaller firms. As a result, small business managers have learned that there is no "ideal" strategic planning process, and that the scope of strategic planning in small business cannot parallel that of big business.

Finally, more small business managers now realize that flexibility and high reactive capabilities are not adequate substitutes for strategic planning. The benefits of developing contingency plans and the advantages of implementing proactive strategies are now recognized. As managers begin to realize that business survival depends not only on the ability to react to changes in the external environment, but also on strategies that anticipate and plan for those changes, the need for strategic planning becomes clear.

As more small business managers develop skills in strategic planning and put these skills to work, many may realize that special interests within the organization can hamper the development of an effective overall strategy. For the small business owner/manager, internal politics do not usually come into play, because almost all management functions are performed by one individual. However, as the business grows, roles become functionally specialized and management becomes partically decentralized. (This usually occurs when the firm's employees number twenty-five to fifty.) At this point, special interests can develop. In such cases a strictly rational approach to strategic planning may not work, because it does not account for the impact that internal politics can have on the business plan.

The purpose of ths article is to use traditional strategy models as a point of departure for addressing the effects that internal politics can have on the development of the strategic business plan, and to develop management practices which help to control internal politics. This aspect of management should be of particular interest to managers of small but growing businesses who are concerned with preventing internal politics from affecting operations, as well as to managers of businesses which have already been adversely affected by the politics of special interests within the organization.

THE TRADITIONAL APPROACH TO STRATEGY DEVELOPMENT

Broadly speaking, strategic management consists of developing an overall business plan which most approximately matches the firm's resources and capabilities with the external environment in which it expects to operate. Thus, two processes are antecedent to the implementation of a strategic business plan: (1) assessing the firm's capabilities through a comprehensive inventory of its resources (financial, human, physical, and strategic), and (2) determining the opportunities and threats presented by the external environment through an analysis of the competitive stresses in the industry and the effects of economic, legal, cultural, political, and technological developments.

The appropriate "grand strategy"--the extent to which the firm should pursue a strategy of growth, stability, or retrenchment--depends both on projected external developments and on the capabilities of the firm. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.