So far, the focus has been on strategy formulation in two product-oriented businesses, Volkswagen and
Winnebago, but does strategic planning also apply to other kinds of organizations?
For a long time strategic planning meant making plans in light of the actions or potential actions of an adversary. In feet it is the military that has had long experience with strategic planning.
In the business world, strategic planning has been used extensively by product-oriented firms. The concern is about the deployment of resources to make the kind of product the customers want at a price they are willing to pay. Companies also have to decide whether they want to be a product leader or follow the lead of innovative competitors.
But to focus only on businesses that snake a distinct product leaves out the important sector of the service industry. Examples of service businesses are consulting, law, computer service firms, airlines, banks and theaters. Dan R. E. Thomas drew attention to the fact that strategic management for such enterprises is
significantly different from companies that make a physical product.14
Clearly, to describe services is abstract and more difficult that1 to show and demonstrate a product. There are two kinds of services: one is equipment-based (e.g. automatic car washes) while the other is people-based (e.g.
consulting). A few illustrations of the latter will indicate some in1plicatiotls for strategic planning. It may be extremely difficult to evaluate the quality of services of a consulting firm. Consequently, a client tends to employ the services of large consulting firms with established reputations. Unfortunately, this makes it
extremely difficult for a small consulting firm without such an image to enter the market. Another example pertains to pricing in the service industry. Product-oriented firms usually aim to reduce the cost and price of a product to increase their market share. In the service industry, however, a low price is often perceived as and associated with providing poorer quality of professional services.
Does Thomas suggest that strategic management does not apply to the service industry? Certainly not. What is needed, however, is a change in the thinking pattern away from product-oriented management to the application of techniques and language peculiar to service-oriented businesses.
Of all the different kinds of organizations, Western governments probably make the least use of strategic planning. For example, little systematic planning was done to prepare for the oil shortage. There is a tendency to respond to problems rather than to anticipate them and prepare contingency plans. Many large businesses
now make a situational analysis and establish goals that give the enterprise direction. Why should not the same managerial concept be applied by our government?