The formal strategic planning departments prove to be inefficient in making decisions in dynamic and unstable environments. The researchers claim that the formal strategic planning departments are inefficient in making decisions as they have no relation to the company’s profitability. The formal strategic planning does not affect the profit growth but at the same time it influences the loss of the company’s profit as the work of the formal strategic planning department requires huge sums of investment. However, the major cause of their inefficiency in decision-making is their inability to forecast and analyze the possible turbulent environments such as the economic crisis, currency changes, sudden armed conflicts, the natural disasters or some other economic troubles. In this case, the on-spot decisions are necessary instead of previously established plans with the old decisions that are not adapted to the new environments. In addition, the properly forecasted economic difficulties that the business environment may face will help the companies to easily use them to their advantage, which will further help them gain profit. For example, Zara Company encountered the crisis in Europe after the new collection release and its authorities have decided to send cheaper items to Europe for sale and even organize sales to bring back the collection investment.
Along with these major causes, the former strategic decision department is inefficient primarily due to the improper attitude of employees to their work. For example, they are engaged in the formal strategic planning just for the sake of planning without properly analyzing of the market. However, the market analysis could prevent the huge mistakes such as profit loss, wrong reactions to the turbulent environment and possible crisis situations. Moreover, the formal strategic planning department is unable to find and follow the right focus that can serve as a peculiarity of the company in the future. Thus, the combination of all these elements makes the formal strategic planning department inefficient in making decisions. This post was published by Red Gun. If you are interested in more works by this author, he leaves them here https://essaysprofessors.com