Strategic Planning In Business Schools: Fact or Fiction?


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Strategic Planning In Business Schools: Fact or Fiction?

  1. 1. Strategic Planning In Business Schools: Fact or Fiction? Page 1 of 6 Strategic Planning In Business Schools: Fact or Fiction? Nessim Hanna, Northern Illinois University A mail survey was sent to a national sample of 129 business schools as listed in the Index of College Majors. The survey was conducted to ascertain the extent to which institutions of higher education, and particularly business schools, use strategic planning. The survey touched on ten different strategic planning issues ranging from whether or not the school uses a strategic plan to the components of the plan and the extent of support given to it by the school's administration. Results indicate that even though strategic planning is being practiced in some institutions, many others still do without planning or may use some form of forecasting and budgetary controls which they erroneously call strategic planning. With an ever changing environment, disseminating knowledge regarding the benefits, uses, and components of strategic planning becomes a must for today's institutions of higher education. INTRODUCTION Unlike long range planning which prevailed in the fifties and which was based on the assumption that past trends will continue into the future, strategic planning, which emerged in the late 1960's, assumes that past extrapolations for purposes of planning are inadequate (Ansoff, 1979). Instead, it focuses on the ever changing environment facing the institution and emphasizes not only projections but also in depth understanding of the environment--particularly the institution's public and its competitors (Andrews, 1983). The purpose of strategic planning is not only to have insight into current conditions but also to be able to anticipate change and prepare for it in advance. Strategic planning can be defined as the process by which realistic objectives are set; recognizing demand, opportunities, and threats from external and internal sources; and actions or methods of achieving those objectives are determined (Webb, 1982). While strategies are major plans for achieving major objectives and goals, tactics are the plans devised to implement the strategies (Buell, 1984). Strategic planning was introduced into the institutions of higher education in the mid 1980's. Over the past few years, it has increasingly become an integral part of the management of these institutions, both public and private, small and large. Unfortunately, strategic planning in higher education has lagged behind strategic planning in the business world. School administrators, historically, paid little attention to planning activities. However, the trend toward declining enrollment higher operating costs, shrinking sources of public and/or private financial support, and increased competition from other institutions acted as a strong motivator for the implementation of strategic planning in higher education. In regard to strategic planning in institutions of higher education, a university is not a single entity, but instead a collection of distinct units (colleges) which need to be analyzed separately. Individual units within an institution may play different roles in achieving the institution's objectives. Not all units (colleges) within the institution or subunits (departments within each college) need to grow at the same rate, produce the same level of service, or contribute equally to the institution's reputational objectives. This concept of the organization as a collection of units and subunits having different objectives is at the very root of contemporary approaches to strategic planning. file://C:WINDOWSDesktop1995SMA95swa239.htm 5/24/04
  2. 2. Strategic Planning In Business Schools: Fact or Fiction? Page 2 of 6 Realizing the importance of strategic planning in today's institutions of higher education, several issues of interest are: the extent to which institutions of higher education practice strategic planning today; the degree to which these institutions understand the requirements of such activity; and the extent the administration provides the necessary support for its success. PURPOSE OF THE STUDY This study surveyed a national sample of 129 business schools, both public and private, regarding strategic planning practices and the methods of developing and executing such strategic plans. A mail survey was sent to a random sample of colleges and universities selected from the college list in Index of College Majors. Sixty-eight responses were returned, representing a response rate of approximately 52%. It is based on the responses of this group of institutions that this article reports its findings. The survey centered around a number of issues which were included in ten questions discussed in the following paragraphs. 1. DOES YOUR COLLEGE OF BUSINESS HAVE A FORMAL WRITTEN STRATEGIC PLAN? Of the sixty-eight schools which responded to the survey, forty-one schools (60%) indicated that they do have a formal written plan, thirteen (19%) reported having an informal plan, and the remaining fourteen schools (21%) stated that they have no such plans. 2. IF YOUR COLLEGE DOES NOT PRESENTLY HAVE A STRATEGIC PLAN, ARE YOU CONSIDERING USING ONE IN THE NEAR FUTURE? Out of the twenty-seven schools which reported having no plan, thirteen schools (48%) indicated that the use of a strategic planning process is being considered. 3. DOES YOUR STRATEGIC PLAN HAVE A STATEMENT OF MISSION? Among the fifty-four colleges which reported using some form of strategic planning, whether formal or informal, fifty-one (94%) indicated that their strategic plans did have a statement of mission. Only three colleges (6%) reported the absence of such a mission statement in their plan. 4. IS YOUR STRATEGIC PLAN DRAWN FOR EACH DEPARTMENT, FOR THE WHOLE COLLEGE, OR FOR THE ENTIRE INSTITUTION? This question intended to find out how general or specific the respondents' strategic plans were. It allowed respondents to mark more than one answer, i.e., the college of business as a whole may have a plan, and at the same time departments within the college may have one. In other instances, the college of business may be a part of a university-wide strategic plan. Nine respondents out of the fifty-four schools (17%) indicated that their college of business strategic plan is merely a part of a university-wide plan. Thirty-nine respondents (72%) reported that the college of business draws its own strategic plan regardless of whether or not the whole university has one. In addition, nineteen respondents (35%) disclosed that strategic planning at their colleges is file://C:WINDOWSDesktop1995SMA95swa239.htm 5/24/04
  3. 3. Strategic Planning In Business Schools: Fact or Fiction? Page 3 of 6 drawn at the department level. 5. DOES YOUR STRATEGIC PLAN SPECIFY PROCEDURES FOR MONITORING THE ENVIRONMENT? This question addresses environmental monitoring, because one characteristic of successful planning is its ability to promptly adjust to changing conditions and emerging trends. This ability becomes possible only if the plan specifies detailed analysis of the environment so as to allow for adjustment. Of the fifty-four schools which have formal or informal plans, forty-one (76%) indicated that their strategic plan specifies procedures for monitoring the environment. The remaining thirteen schools (24%) reported the absence of environmental monitoring procedures in their plans. 6. WHO IS ASSIGNED THE RESPONSIBILITY FOR DEVELOPING YOUR STRATEGIC PLAN? Institutions vary in their philosophy as to what entity is most qualified to draw the strategic plan. Recognizing the differences in the structure of such entities, multiple responses to this question were provided, including administrators, faculty, boards of executive advisors, senate, college councils, students, and others. Out of the fifty-four schools having strategic plans, forty-three schools (80%) indicated that planning is a joint effort between administrators and faculty, with sixteen of these schools getting input from their boards of executive advisors and another thirteen schools involving students in the process. The remaining schools (20%) indicated that strategic planning is the responsibility of the college council with the help from the senate and/or the dean. 7. TO WHAT EXTENT DOES THE TOP ADMINISTRATION SUPPORT THE STRATEGIC PLANNING PROCESS? The support of the top administration is a must for the success of the strategic planning activities since planning results in setting strategies and allocating resources-activities which top administrators alone have the power to handle. In addition, the attitudes of top administrators toward planning send important signals to the rest of the faculty and administrators regarding the importance of such activity. Of the fifty-four schools having strategic plans, thirty schools (55%) indicated that top administrators "very strongly" support the strategic planning activity, sixteen respondents (30%) reported "strong support," seven respondents (13%) reported "moderate" support, and only one institution (2%) admitted "weak" support for the strategic planning activity. 8. DOES YOUR INSTITUTION HAVE A PERIODIC PLANNING CYCLE? This question dealt with when the strategic plan is developed and how often it is revised in business schools. In strategic planning, there is a need to update the plan frequently (in most cases annually) since competitive, environmental, and economic forces constantly change. Of the forty-one schools that have a written strategic plan, twenty schools (49%) indicated that the strategic plan is revised annually; five other schools (12%) reported making these revisions file://C:WINDOWSDesktop1995SMA95swa239.htm 5/24/04
  4. 4. Strategic Planning In Business Schools: Fact or Fiction? Page 4 of 6 every two years; six schools stated that revisions are made every three years; one school (2%) revised every four years; and two schools (4%) took longer than five years to revise strategic plans. 9. WHAT IS THE ENROLLMENT SIZE OF YOUR INSTITUTION? Of the fifty-four schools which use strategic planning, forty-six schools (85%) indicated having enrollment of 5000 students or greater, while eight schools (15%) indicated having enrollments of less than 5000 students. Of the forty-six "large" schools, thirty-seven are public schools and seven are private. In the case of the nineteen "small" schools, sixteen are private and three are public. 10. IS YOUR SCHOOL STATE-SUPPORTED OR A PRIVATE INSTITUTION? Results show that thirty-four respondents out of fifty-four (63%) are state-supported schools, while the remaining twenty schools (37%) are private institutions. SOME RELEVANT CORRELATIONS By looking at the results of the survey, some correlations were thought to be meaningful between the incidents of use of strategic planning in a school and size of its enrollment (regardless of whether the school is private or public) and the degree of administrative support for the strategic planning process. There seems to be a high positive correlation between enrollment size of a school and the incidents of strategic planning use. For example, out of the forty-nine responding schools with large enrollment (5000 students or greater), thirty-eight have formal strategic plans, six have informal plans, and only two use no planning. In contrast, out of the nineteen responding schools with small enrollment (less than 5000 students), two schools have formal plans six have informal plans and eleven use no planning. Table 1 illustrates the responding schools' use of strategic planning. Table 1. Description of Schools' Use of Strategic Planning School Size Adoption of Strategic Planning Total Formal Informal None Large 38 8 3 49 Small 2 6 11 19 40 14 14 68 As can be seen from Table 1, 93 percent of the large schools have either formal or informal strategic plans, with only three schools (6%) reporting having no such plans. In contrast, only 42 percent (8 schools) of the nineteen small schools indicated having formal plans (10%) or informal plans (32%). Approximately 58 percent of the small schools reported having no file://C:WINDOWSDesktop1995SMA95swa239.htm 5/24/04
  5. 5. Strategic Planning In Business Schools: Fact or Fiction? Page 5 of 6 strategic plans. Combining all schools, large and small, 61 percent had formal plans, 21 percent had informal plans, and 21 percent had no plans. A high positive correlation also emerged between the incidents of strategic planning use and whether the school is privately or publicly supported. Over 84% of schools with small enrollment are private schools, and the rest (16%) are public schools. In this category, over thirty eight percent of the schools use no strategic planning. In contrast, the majority of schools with large enrollment (86%) are public schools, with a minority (14%) of private schools. In this category, an overwhelming majority (77%) use formal strategic planning. Another correlation was found between the type of school (privately or publicly supported) and the degree of administrative support for planning. In the case of public schools, strong administrative support was reported by only fifty percent of the respondents. In the case of private schools, however, sixty-eight percent of these schools reported strong administrative support for the strategic planning process. CONCLUSION It is evident from the survey that even though strategic planning in some institutions of higher education is, to some extent practiced, the strategic planning process in many others is still either not practiced at all, or it is in its infant stage. Many schools seem to be unclear as to what strategic planning is all about and mix between strategic planning and some forms of forecasting or budgetary controls. In order for strategic planning to be used and practiced properly by the majority of the institutions of higher education, perhaps a concerted effort to disseminate information and knowledge regarding its benefits, components, and uses should be directed to educational institutions. This can be accomplished through articles on the subject in business and/or professional publications and including such topics in programs of scholarly conferences. A proposed useful strategic planning scheme for institutions of higher education may include, as a first step, a definition of the school's mission. That is, what shall be the market scope of the institution, the type and quality of offerings, and the market segment(s) to whom these offerings are to be served. Second, specific goals and objectives for each division are established. Third, expectations or objectives are based on a detailed analysis of environmental opportunities and threats, competitive analysis, self analysis, and the institution's capabilities and position. The fourth element includes creating functional strategies involving human and facilities needed to provide the planned offerings including executional schedules and promotional activities. Fifth, the administration has to allocate the necessary resources and budgets needed to carry out these plans (Glueck, 1983). Strategic planning involves the management of change and resource allocation over the long term. Therefore, periodic review of the plan has to be built into the system and adjustments made when required (Levitt, 1988). Without any doubt strategic planning in institutions of higher education can play an important role in anticipating future educational trends, making early decisions, and translating changes in the environment into effective programs. With the ever changing educational needs and sources file://C:WINDOWSDesktop1995SMA95swa239.htm 5/24/04
  6. 6. Strategic Planning In Business Schools: Fact or Fiction? Page 6 of 6 of financial support in today's learning institutions' world, and the speed by which opportunities and threats arise, it only makes good business sense to plan ahead. REFERENCES Andrews, Kenneth R., Strategic Planning of Mice and Men, Across The Board, (November 1983); pp. 6-9. Ansoff, H. Igor, Strategic Management, John Wiley & Sons, New York 1979. Buell, Victor, Marketing Management: A Strategic Planning Approach, McGraw-Hill, New York, NY. 1984, pp. 187-188. Glueck, Frederick, Stephen P., Kaufman, and A. Steven Walleck, The Four Phases of Strategic Management, Journal of Business Strategy, (Winter 1982); pp. 9-21. Levitt, Theodore, The Innovating Organization, Harvard Business Review, (January-February 1988); p. 7. Webb, Stan, Marketing and Strategic Planning for Professional Service Firms ANACOM, New York, NY. 1984, p. 226. file://C:WINDOWSDesktop1995SMA95swa239.htm 5/24/04