The rational planning model is a model commonly uses for the business evaluations and strategic decision making purposes. Specially in CIMA examination focus rational planning model as a critical subjects for management students.
But there are only few points to be remembering for rational planning model. The subject of Enterprise strategy [E3] and enterprise management [E2] are mostly focus on rational planning model.
Its containing of
- Mission and Objectives
- Position Audit
- Environmental Analysis
- Co-operate appraisal
- Strategic option generation
- Strategic option evaluation and choice
- Strategic implementation
- Review and control
From review and control again continues with position audit and the environmental analysis.[its repeat the same process again and again]
Mission and Objectives
The mission and objectives are related to create the mission and objective of the organisations. When making the mission and objective the following should be considers,
- Importance of Stakeholders and stakeholders power and interest
Key players, keep satisfied, keep inform, minimal efforts.
- Cooperate social responsibility[CSR polices ],
- Critical success factors [CSF].
- Setting objectives for profit making organisations and non profit making organisations.
The environmental analysis is analysis of the environmental factors how it’s help or affect the business environment. This is fully depending on the risk profile of the organisation.
- Importance of business environments
PESTEL or PEST approach and Michel porter 5 Force theory,
- Competitor analysis and reactions,
- Environmental uncertainty,
- Domestic and international environmental affects.
- SWOT analysis,
Strengths, weaknesses, opportunities and threats.
- Value chain analysis,
Primary activities and the secondary activities, how its help to identified the position of organisation.
- Benchmarking approach,
- Gap Analysis,
- Scenario planning.
- Resource based positioning.
Most of the positioning approaches are help the organisation to identify the internal capabilities of the organisation to develop their strategies.
The co-operate appraisal is a gathering point of the mission and objectives, position audit and the environmental analysis.
In the co-operate appraisal the organisation considering their internal, external factors are according with their mission and vision statements. After the success of elevations, it will lead to strategic option evolution level.
Strategic option generation
The strategic options are a pool of options. These options are indentifies and suggested by the different levels of management and the individuals. The collections of the strategic options are evaluated by the senior level management before it suggested to the top management to decide. Therefore the strategic options should be very carefully evaluate according to the mission and vision statement.
Strategic option evaluation and choice
It’s the level to evaluate the strategic options collected by the above stage. It’s should consider the following approaches,
- 3 generic strategy of Michel porter.
Cost leadership, differentiation and focus.
- Ansoff’s Matrix,
Market development, product development, penetration and diversification.
- Alternative growth approaches,
Internal approach and external approach.
- Options for non profit organisations.
The strategic option evaluation activities are to select the suited strategy rather than best strategy.
The implementation of the strategy is like the project planning approach. This implementation activity is shown a success of the position of the chosen strategy.
- Performance measures of the strategy,
- Key mile strong and gates,
- Financial evaluation of the businesses.
- Value addition of the strategy,
There are not specific approaches to elevate the strategic implementation; the success in of the implementation will depend on the success of the project completions.
Review and control
The review and control is an activity of the evaluate the strategic decisions are following the basis of mission and objectives or not,
- Comparison between the actual performance and the expected performance.
- Alternative approaches for proper control mechanism,
- Budgets and the performance,
- Stakeholders satisfactions,
- Needs of the amendments or adjustments.
The rational planning approach is continues process. The same steps are moving again and again, which develops to the organisation to be efficient and effectiveness.