Importance Of Strategic Planning
Maywood Entertainment is a struggling music publishing company that specializes in ethnic music and ethnomusicology. Maywood Entertainment has been in existence for over 15 years, mainly to protect copyrights owned by the principals. The copyrights, and the finished products as well, have sat stagnant for many years with little flurries of activity when the possibility of exploiting one of the intellectual properties arises. No formal strategy has been initiated, and the tactical approach has been to react to either new ideas or licensing.
Why Strategic Planning is Important
Maywood Entertainment is a prime example of a company, which if not in the intellectual property business, would have been forced to go out of business since no strategy or focus exists. Strategic planning can be simply defined as a set of decisions, leading to actions which further the company’s objectives (Pearce, II & Robinson, Jr., 2004). Jay Abraham states “strategy is the master purpose your business is all about” (Abraham, 2002, p. 3). Tony Robbins, the motivational speaker, also notes that strategy is most likely one of the most overlooked facets of business life (Abraham, p. 3). Most companies, including Maywood Entertainment, are tactical not strategic. Formulating a strategic plan for Maywood Entertainment will increase results and allow more focus when implementing the tactics required in the day to day decision making process.
Maywood Entertainment needs to understand fully its competitors and in what markets it needs to compete in and who it should compete with. Product selection, marketing, sales, and finance are currently all being decided in a tactical fashion, there is no formal roadmap of how the products fit into the “big picture,” or strategic vision of the company.
Many opportunities exist for strategic partnerships, joint-ventures, and outright selling off of certain copyrights. A strategic plan will highlight the highest performing parts of May,wood Entertainment and allow the lesser performing parts to either be repurposed or outsourced. Long-term objectives can be created and old business assumptions will be questioned.
Much of the intellectual property of Maywood Entertainment is sound recordings. The current state of the music business has changed since these recordings were made. Rampant piracy has diminished the value of recordings. Digital delivery methods have caused the sharp decline, 20% in the first three months of 2007, and another 16% in the first half of 2008, of Compact Disc sales (Smith, 2007; Garrity, 2008). A strategic plan must determine what to do with the existing copyrights and what, if any, new products can be created. With the following in mind, the strategic plan must include a vision for these products that takes into account the current realities in the music industry.
Using the strategic management model presented by Pearce and Robinson (2005, p. 13), will formalize the method for creating the strategic plan. Since Maywood Entertainment operates in an entrepreneurial mode, the strategic management model will allow the principals the ability to see the big picture and a view of what the final plan should encompass. Even though the principals of Maywood Entertainment are familiar with concepts like mission statements, analysis, long-term objectives, and action plans, the day to day running of a small business has gotten in the way of implementing these ideas.
Four Functions of Management
The first function of management is planning. Planning takes place at all levels, from the C level to the line managers. A strategic plan allows these management levels to be focused on the same goals and objectives. C level management, by defining the broad corporate strategy, can pass its vision to the middle and lower level managers. The middle and lower level managers can implement tactics to achieve the strategic goals of the company.
With a strategic plan, managers have an easier time organizing. Tactical reactions, which make up the bulk of many businesses “planning,” are less needed. The focus of the company is sharper and managers can spend time organizing what is truly needed to achieve the strategic vision and not waste time on superfluous issues.
Managers, by having a strategic plan to follow, can more easily direct staff. In a tactically run company, it is much harder to direct due to multiple distractions and crises that need to be attended to. Staff also knows what the focus of the company is. Staff is also much more compliant since they understand the reason managers are asking them to do certain tasks.
Having a strategic plan makes controlling much easier. The strategic plan, and by application, the tactics used, provide a very specific set of goals and objectives. These goals and objectives can be monitored and improved on over time. Corrective actions can be taken earlier if managers understand exactly what the objectives of the company are. On the contrary, companies working in a tactical mode only often have conflicting objectives that are hard to measure and control.
Maywood Entertainment, and all companies for that matter, needs a strategic plan. It is very easy, especially in smaller, entrepreneurial companies, to overlook the importance of creating a vision for the company. In the midst of running a business, many crises come up that prevent the creation of a strategic plan. The principals of Maywood Entertainment need to find the time to create a strategic plan to move the business forward effectively. Without a strategic plan, the company will likely never grow and could possibly shut down.
Abraham, J. L. (2002). Nine drivers of upside leverage & exponential business growth. Rolling Hills, CA: Abraham Publishing Group, Inc..
Garrity, B. (2008, July 3). CD sales plummet further. New York Post, p. 29.
Pearce, J. A., II, & Robinson, R. B., Jr. (2004). Strategic management, Formulation, implementation and control (9th ed.). Boston, MA: McGraw-Hill.
Smith, E. (2007, March 21). Sales of music, long in decline, plunge sharply: Rise in downloading fails to boost industry;A retailing shakeout. Wall Street Journal, p. 1.