Advantages of Strategic Planning - 2089 Words

Strategic Management Assignment 1 Table of contents Page 1. Introduction 2 2. Advantages of Strategic Planning 2.1. Financial Advantage 2 3. Disadvantage of Strategic Planning 3.1 Distortions and Deceptions 3 4. Friedman view of business social responsibility 3 5. Having a look at Sasol’s Social contribution 5 6. References 6 1. Introduction There are a number of advantages and disadvantages of strategic management. To me the advantage that stood out was the financial advantage organisation can achieve by implementing a strategic planning process. There are evidence of this as a study was done on banks in the United States - they do†¦show more content†¦Loss aversion - Scarcity of investment proposals 3. Overconfidence – Understating risks of large acquisition Deception 1. Misaligned time horizons – Managers focus on incremental innovations with short-term impact 2. Misaligned risk aversion profiles – Managers avoid ‘risky’ projects that company might have deemed attractive 3. Champion bias – CEO relies on judgment of most trusted associates though advice is biased 4. â€Å"Sunflower management† – Absence of dissent or debate in important decisions. (Lovallo Olivier, 2006) 4. Friedman view of business social responsibility There is one and only one social responsibility of business-to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud. ~Milton Friedman~ US economist (1912-2006) Milton Friedmans statement that a businesss social responsibility lies in making profit has shown a controversial point of view in modern business. Some people believe in Friedmans ideas while others do not. Is it possible that Friedman can be both right and wrong? In business, there are different situations that require different perspectives and methods of approach. On one hand, it is correct to say that the main focus of a business should be to make profit. Without profit, a business can not survive. In a way, Friedmans theory doesShow MoreRelatedStrategic Planning for Competitive Advantage14834 Words   |  60 Pagesï » ¿Chapter 2—Strategic Planning for Competitive Advantage TRUE/FALSE 1. The manufacturer of Macho brand martial arts products was implementing a strategic plan when it sponsored a local karate tournament for teenagers. ANS: F Such a short-range decision is typically a tactical plan or operating decision, not a strategic plan. PTS: 1 OBJ: 02-1 TOP: AACSB Reflective Thinking KEY: CBE Model Strategy MSC: BLOOMS Level III Application 2. 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