Strategic Planning, Definitions Used at the Empirical research

In continuance with the first article that presented a theoretical overview of strategic planning, the second article in the series has focused on the different definitions used by scholars while implementing the empirical research of strategic planning.

Researches at the early seventies classified firms according to dichotomous criterion – whether the firm implementing strategic planning. Thune and House (1970); Herold (1972) defined strategic planning as the definition of goals and strategies for a period of at least three years and the preparation of operation plan and procedures for achieving the goals. Rue and Fulmer (1973) argue that firm can be regard as strategic planner if it possess written plans that includes goals and long term strategies for a period of at least three years. Karger and Malik (1975) determine that firm can be regards as conducting strategic planning if it implementing a general five years plan and a detailed two years plan for the organization and its subsidiaries.

With the development of the research in that field, the classification of firms changed from dichotomous criterion to layers, when a layer of strategic planning was defined through the time length and sophistication in which the planning is conducted. Kallman and Shapiro (1978) ranked firms according to five categories based on the firm’s level of commitment to long term planning (more then one year), starting with firms that didn’t implemented any form of strategic planning to firms that implemented a detailed and written plans. Wood and LaForge (1979) ranked firms according to three categories based on the scope of long-term planning. Sapp and Seiler (1981) classify firms according to the wholeness of their planning posture. Four levels have been examined: 1. Not planning. 2. Beginner planners. 3. Moderate planners. 4. Sophisticated planners. Robinson and Pearce (1983) classify firms according to three levels: 1. No written plans. 2. Moderate sophisticated written plans for a period of at least three years, includes; goals and objectives, strategies, future resources analysis. 3. Highly sophisticated written plans, includes in addition to “moderate sophisticated”; procedures for reviewing planning versus execution, business environment analysis. Rhyne (1986) characterized five levels of strategic planning: 1. Short term forecast – definition of the short run operation outcomes (less then one year). 2. Budget – financial check-up on the planning outcomes (one year). 3. Yearly planning – identification of threats and opportunities in order to maximize the current year’s outcome (one year). 4. Long range planning - identification of threats and opportunities in order to maximize outcomes from operation for a longer period of time (five to fifteen years). 5. Strategic planning – identify Opportunities within the firm’s existing market or within new markets as well as identify potential threats to the current operation of the firm (five to fifteen years).

Another issue that rises from the literature and needs clarification is why scholars uses the concept “formal strategic planning” and when strategic planning becomes formal? Perry (2001) identified strategic planning using five levels ordinal scale, and an evaluation at each level whether the planning process end with a written outcome. This sort of evaluation is based on the assumption that planning becomes formal when it’s written.