Baltic Journal of Economic Studies (Dec 2017)
METHOD OF STRATEGIC PLANNING AND MANAGEMENT DECISION-MAKING CONSIDERING THE LIFE CYCLE THEORY
Abstract
The subject of the study is a set of theoretical and methodological aspects of development strategy formed for objects (country, region, branch, enterprise) on the basis of the life cycles theory under the external environment uncertainty. The methodology of strategic planning under the external environment uncertainty with the consideration of the life cycle theory includes: the definition of key criteria for assessing the product lifecycle, the definition of the limits scope for the solvable problem, the definition of parameters of models stability, the formation of models for analysis, setting the problem under uncertainty, the mechanism of step-by-step adjustment, and effectiveness assessment of strategic decisions based on strategies, the algorithm for the integrated assessment of the strategies effectiveness taking into account the uncertainty factors. Strategic planning is not characterized by temporal intervals but by a set of strategies, each of which is determined by the ways of achieving the main object objectives. For a rapid analysis of the product life cycle, the external indicators are used, such as: the growth rate of the product market, the relative growth rate of the product (compared to the growth rate of the entire market of the region or country), the firm market share, the firm relative market share (compared to the market share of leading competitor), and internal indicators, such as: the dynamics of enterprise revenue by product, the dynamics of company profits by product, the dynamics of enterprise profitability by product, the dynamics of enterprise investment. For each indicator that describes the enterprise performance, the directions of change are taken: α – growth, const – constant or β – decrease. The methodology involves a certain sequence of studying the product life cycle in retrospect and at the current moment, then the modelling and development of options for short- and long-term strategies implementation are made. Results of the survey are to substantiate the methodology of strategic planning under conditions of external environment uncertainty with the consideration of the life cycle theory. Practical implications: the possibilities of using life-cycle models allow: 1. reasonably predicting sales and plan production program; 2. determining the basic strategies at different stages of development; 3. determining the sequence of stages of enterprise development; 4. ensuring harmonious interaction of organizational characteristics with the external environment factors that influence the process of organizational development. Increasing the sustainability of the organization’s development can be achieved by re-establishment of dynamic changes in the plan in terms of using effective methods for forecasting with the consideration of the life cycle theory. It is necessary to take into account the interconnection between all levels of life cycles: industry, technology, enterprises, product; ensuring the competitive advantage of the organization. Using the theory of optimal solutions making in uncertain conditions under the analysis of long-term projects allows transferring qualitative factors into quantitative indicators that can be used in the future to bring investment projects to the same kind and choose the best. In conditions of increased uncertainty of the external environment, it is necessary to develop the theory of enterprise management, taking into account its life cycle, as well as the life cycle of its separate elements and processes at all levels. Combination of strategic management with the life cycles theory will increase the objectivity and effectiveness of taken management decisions. The accounting of the organization life cycles in strategic planning allows choosing an effective strategy.
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