Abstract

Strategic Planning: A Conceptual Model

for Small and Midsize Cooperatives

James J. Wadsworth

Jim J. Staiert

Agricultural Economists

Beverly Rotan

Economist

Agricultural Cooperative Service

U.S. Department of Agriculture

This report presents a conceptual model of strategic planning for use by

small and midsize farmer cooperatives. Basic elements and attributes of strategic planning are defined and described in the context of cooperative organizational structure. Information on how strategic planning can be implementedas a system or process-in small or midsize cooperatives is provided.

Keywords: Strategic planning, cooperative, concept, objectives, strategies.

ACS Research Report 112

February 1993
Preface

Strategic planning is at the forefront of current governing innovations

among cooperatives. The concept has gained importance as cooperatives

strive to position themselves for the future in the uncertain marketplace and

changing structure of agriculture. In essence, strategic planning is a decisionmaking and planning tool that, when effectively implemented, enhances cooperative operations and probability of success.

This report describes strategic planning in the context of small and midsize

farmer cooperatives. The objective is to provide information to cooperatives

interested in initiating strategic planning or enhancing their present strategic

planning system.

The information in this report was obtained from direct strategic planning

experience with cooperatives, interviews with cooperative personnel involved in

strategic planning, and textbooks, journals, articles, and other documents on

strategic planning.

i
Highlights

Strategic planning involves the formulation, implementation, and evaluation of strategies that enables a cooperative to reach its objectives. A number of

characteristics and elements are fundamental to effectively incorporating a

strategic planning process or system into small and midsize cooperatives:

l Strategic planning must be molded and adapted to a cooperative’s distinct operational and organizational structure.

l Everyone involved in cooperative operations must be fully committed to

strategic planning-directors, management, and employees alike.

l The board of directors must play a significant role in all areas of the

strategic planning process.

l A mission statement that essentially directs strategic planning must be

developed and regularly reviewed.

l A current condition and outlook analysis must be periodically carried out

and regularly updated. This analysis should include a review of the cooperative’s internal and external environment, strengths and weaknesses, and opportunities and threats.

l Short- and long-term objectives must be developed on a regular basis

and continually reassessed.

l Strategies must be developed and implemented to reach objectives.

Action plans to direct cooperative resources in coordination with strategies aid

strategy implementation.

l Feedback is imperative to effective strategic planning. Mechanisms for

monitoring and assessing strategies should be designed and used to enhance

feedback.

l Strategic planning meetings should be for strategic planning only. These

meetings are likely to be more successful when held away from cooperative

headquarters.

l Strategic plans must be well documented and clearly written.

l Cooperative communication channels between directors, employees,

members, and patrons must be open and well developed.

l A planning horizon should be specified and adhered to, and a planning

cycle for regular updating and development of strategic plans should be determined and followed.

l Strategic planning thinking must become continual-once begun, strategic planning must never end but, rather, expand and build on itself.
Strategic Planning:

A Conceptual Model

for Small and Midsize

James J. Wadsworth

Jim J. Staiert

Agricultural Economists

Beverly L. Rotan

Economist

Cooperatives

Strategic planning is becoming increasingly

common among the governing functions carried

out by cooperative leaders in the United States.

Strategic planning has gained importance to cooperatives as they strive to operate in difficult economic times and adapt to the continually changing

structure of agriculture.

Strategic planning can enhance cooperative

management and the effectiveness of the operation.

Astute cooperative leaders recognize the importance of knowing where their cooperatives are,

where they are headed, and how they are going to

get there. In essence, strategic planning answers

such questions.

Strategic planning is identified in this report

as a concept. This is because the interpretation and

understanding of strategic planning are dependent

on how individuals or leadership groups perceive

it in relation to the distinctive governing style and

structure of their organizations.

As a concept, strategic planning does not

require any specific number or ordering of strategic

planning elements or techniques. Nor is there an

exact method for organizing and employing strategic planning in an organization. However, there are

a number of key elements basic to the concept of

strategic planning and some common ways to

employ it.

This report provides a general philosophy and

describes the basic elements and features of strate1 The terms “small” and “midsize” are meant to identify cooperatives that have a somewhat simple organizational structure. They may encompass one or more business units but

generally have limited division or line-business managers.

gic planning. The objective is to provide information to small and midsize farmer cooperatives

interested in initiating strategic planning or

enhancing their present strategic planning system.’

A strategic planning model is developed by providing a definition of strategic planning, relating

the strategic planning concept to the uniqueness of

cooperatives as business enterprises, defining

directors’ and employees’ role in strategic planning, describing basic elements of strategic planning and how they work, and indicating how

strategic planning can be integrated into cooperative organizational structure.

STRATEGIC PLANNING DEFINED

The explicit words used to label the conceptstrategic planning-described in this report vary in

much of the literature on the subject. What is

labeled strategic planning herein is often referred

to as long-range planning, long-range strategic

planning, corporate planning, strategic management, planning, etc. Whatever words are used, the

basic implication is the same-that strategic planning relates to indepth organizational and operational decisions for employing an organization’s

resources.

The definition of strategic planning as a concept, like the words that provide its label, differs

depending on the perspective being studied.

David, who identifies the concept as strategic management, defines it as the formulation, implementation, and evaluation of actions that will enable an

organization to reach its objectives.*

2 David, Fred R., Fundamentals of Strategic Management,

Merrill Publishing Co.: Columbus, OH, 1986 (p. 4).

1
This definition is simple but sound. In this

report, David’s definition is adopted as the general

postulate of strategic planning. However, we

emphasize that strategic planning is more than just

a pre-described framework for making decisions; it

includes a conviction toward an organization’s

purpose and future success that is generated

through continuous thought, intuition, experience,

and analysis.

COOPERATIVE STRATEGIC PLANNING

The major implication of strategic planning as

it relates to cooperatives is that its execution must

be intended to enhance present and future operations for the strength and viability that will ensure

that cooperatives accomplish their fundamental

purpose-improving the economic well-being and

quality of life of farmers.

Strategic planning answers four basic but

important strategic questions that cooperatives

constantly face: (1) Where is the cooperative now?,

(2) Where is the cooperative going?, (3) Where

should the cooperative be going?, and (4) How is

the cooperative going to get where it should be

going?

Commitment

Commitment is fundamental to successful

strategic planning in cooperatives. Without commitment to the process, strategic planning will fail.

The board of directors and management must be

fully committed to determining the cooperative’s

future direction and policies based upon sound

strategic planning concepts. Direct employee

involvement, where appropriate, will increase the

probability of strategic planning success. This is

because “ownership” of, or “linkage” to, an idea

imparts a strong desire to ensure that a plan works.

Thus, the ultimate success of strategic planning in

an organization depends on the personal stake of

the people involved in the organization in seeing

the plan through.

Directors’ Role

Strategic planning begins with the direct commitment and involvement of the board of directors.

Directors must understand their roles as strategic

planners. Since cooperatives exist to serve and

improve the economic well-being and quality of

life of member-owners, it is incumbent on directors

to be actively involved in determining the future

course of their cooperative through the strategic

planning process. In essence, the board is the voice

and conscience of member-owners.

Director involvement should extend-in some

manner-to all the basic elements of strategic planning: defining the organization’s mission, developing short- and long-range objectives relative to the

mission, formulating strategies to reach the objectives, providing management with a mandate to

implement plans, and evaluating the progress the

cooperative makes against the plans (fig. 1). Since

poorly implemented plans are unlikely to succeed,

directors must ensure that managers and other

cooperative personnel-the plan implementersare active participants in the planning process.

Employees’ Role

Upper management (e.g., general manager,

assistant general manager, comptroller) plays a significant role in the strategic planning process.

Upper management is responsible for setting the

tone and pace for the onset of planning. Analyzing

the cooperative’s position in its environment,

proposing objectives, providing ideas on possible

strategies, setting time periods, maintaining control

of strategic planning procedures, developing

resources, proposing needed changes to strategies,

and evaluating strategic plans are all part of the role

that upper management needs to assume (fig. 1).

Middle management (e.g., division or linebusiness management, location managers) and

other employees must understand the importance

and process of strategic planning as it applies to

them. Since these individuals (in most cases) actually physically implement strategies, they must be

active participants in strategic planning so they can

work to see that strategies develop correctly and
Figure l-Director and Employee Involvement in Strategic Planning

Board of

Directors

-.Role.

Planning Policy

Mission Statement

Current Condition

and Outlook

Objectives

Strategies

Evaluate

Cooperative

Employees

Upper Management

BQ!!z

Set Tone for Planning

Current Condition

and Outlook

Objectives

Strategies

Implementation

Monitor Plans

Evaluate

Feedback

Middle Management

and Subordinates

BQ!!z

Information Resource

Strategy Implementation

Monitor Strategies

Feedback

progress. Employees must also report any negative

consequences resulting from strategy implementation to management and the board.

Individuals directly involved in planning

must be willing to disagree with “conventional

wisdom,” to inform management and the board of

directors of the dangers of maintaining conformance to internally comfortable plans. Thus, it is

essential that upper management creates an environment conducive to free exchange of ideas. In

other words, individuals involved in the planning

process must be prepared to offer a range of perspectives.

ELEMENTS OF STRATEGIC PLANNING

This section identifies and describes six major

elements of strategic planning: (1) Mission statement, (2) Current condition and outlook, (3)

Objectives, (4) Strategies, (5) Strategy implementation, and (6) Feedback. These six elements are considered to be fundamental, and thus critical to

sound strategic planning. Their inclusion plays a

key role in answering basic strategic questions such

as the four identified earlier. Table 1 outlines the

alliance between the six strategic planning elements and the four questions. Furthermore, when

the six elements are viewed in conjunction, they

form the solid foundation of a strategic planning

process (fig. 2).

Mission Statement

A key component of strategic planning is the

mission statement (sometimes referred to as a

vision statement). The mission statement declares

3
Table l-Basic strategic questions answered by strategic planning

Strategic Question Elements Yielding Answers

Where is the cooperative now? Current Condition and Outlook

Feedback

Where is the cooperative going? Current Condition and Outlook

Feedback

Where should the cooperative be going? Mission Statement

Current Condition and Outlook

Objectives

Feedback

How is the cooperative going to get where it needs to go? Strategies

Action Plans

Feedback

Figure P-Strategic Planning Process Model

MISSION STATEMENT

Reason for existence \

\>

CURRENT CONDITION AND OUTLOOK

Overall assessment of the cooperative -

OBJECTIVES

Short- and long-term d

t

DEVELOP AND EVALUATE

ALTERNATIVE STRATEGIES

Most feasible emerge

IMPLEMENT STRATEGIES

Action plans

Budgets

Monitor strategies

Modify strategies

t

FEEDBACK

Evaluate plan success

4
the reason for the cooperative’s existence. It establishes boundaries around planning and holds

strategic planning within these boundaries. The

mission statement also acts to consolidate thinking

of the board and management and defines the

direction the cooperative will take.

Defining the mission statement is a board

responsibility. The board must reach a clear consensus as to what the cooperative is and what it hopes

to be. This consensus is then developed into a fairly

brief mission statement.

Current Condition and Outlook

Critical to strategic planning is an analysis of

the conditions under which the cooperative is currently operating and is likely to confront in the

future.

Analyzing the cooperative’s current condition

and future outlook is management’s responsibility.

All personnel in the cooperative able to effectively

contribute to this analysis should be involved.

Directors should also play a role in the current condition and outlook analysis by serving as the voice

of members in assessing the cooperative’s services

and products and its performance relative to members’ requirements and expectations, and marketplace demand.

The current condition and outlook analysis

should provide an overall assessment of the cooperative. It should include identifying the cooperative’s strengths and weaknesses and opportunities

and threats, analyzing internal factors (e.g., organizational structure), determining the cooperative’s

position in its external environment, identifying

strategic issues, and making assumptions about the

future (fig. 3).

Figure 3-Current Condition and Outlook Analysis

Internal Factors External Environment

Current Condition

and

Outlook Analysis Threats

I

Strategic Issues

5
The focus of the current condition and outlook

analysis should be to accurately and objectively

assess the entire cooperative business. Directors

and management must be realistic in self-assessment. This is important since it is possible for a

planning process to result in a strategic plan that is

internally acceptable to the cooperative but fails in

the marketplace. Such a result can occur when

planners are more concerned with internal politics

than with an objective view of current and future

conditions.

l Are directors voicing concerns of members

and are they doing a good job?

l Are members (patrons) satisfied with their

cooperative?

l What are current and forthcoming strategic

issues and is the cooperative prepared to deal with

these issues?

While answering questions such as these is

not an easy task for management and directors, it is

important that it be done objectively. Assessments

of strengths and weaknesses will invariably direct

strategic planning to areas where it is most needed.

Strengths and Weaknesses

External Environment

Defining cooperative strengths and weaknesses is instrumental in understanding where the

cooperative is now and where the cooperative is

going. What is the cooperative presently doing well

or right and what is it doing inadequately or

wrong?

When scrutinizing strengths and weaknesses,

cooperatives should review a range of different

areas such as financial status, member service,

communication avenues, market and competitive

position, management and employee situation,

director involvement, and member and patron relationships. Some questions addressing these areas

might include:

l Is the cooperative making financial

progress?

l Is the cooperative providing the right service and/or product mix to patrons and is it doing

an efficient job providing the mix?

l Are communication channels between management, directors, employees, members, and

patrons adequate?

l Is the cooperative of the correct size to handle its present marketing territory and functions

efficiently?

l Does the cooperative have sufficient market

share?

l What is the cooperative doing better or

worse than competition?

l Are employees good and properly trained?

l Are job positions the correct ones for carrying out cooperative functions and efficiently serving patrons?

Factors linked to the external environment can

significantly affect everyday and future operations

of cooperatives. Cooperatives need to assess, on

both a present and future basis, their position relative to the general economy, the agricultural economy, and competition. This assessment helps identify opportunities the cooperative might be able to

take advantage of and threats the cooperative may

be able to counter.

For the general economy, factors such as inflation, unemployment, interest rates, consumer legislation, new businesses, and changing values should

be considered. For the agricultural economy, size of

farms, future farm population, age of farmers,

environmental concerns, technology, and government policies and emphasis are areas that should

be appraised.

Competitors must be analyzed as to how they

affect the cooperative’s business-who are they,

what are their strengths and weaknesses, what is

their market share, what will they likely do in the

future?

In assessing future position, the implications

of strategic issues (e.g., biotechnology, international

trade) should be evaluated. Assumptions also need

to be made regarding such things as competition,

market structure, governmental regulations and

programs, the agricultural economy, the general

economy, technology, social and community values, weather, etc.

Issues and assumptions are often subject to

change or may already be outdated by the time

6
plans are implemented. Thus, their inclusion in

strategic plans requires regular review and modification.

Objectives

Cooperative objectives (or goals) indicate tangible areas where the cooperative wants to make

progress.3 Objectives should be created with a view

toward both short- and long-term planning horizons. In this respect, short-term objectives are

defined as benchmark results designed to achieve

long-term objectives, and long-term objectives are

defined as the long-range results (usually in a 3- to

5-year planning horizon) that cooperatives will

strive to achieve.

Objectives should be oriented toward, and

consistent with, the cooperative’s mission statement. They should also be developed in accord

with the results of the cooperative’s current condition and outlook analysis. Issues concerning possible opportunities and the amount of risk the cooperative is prepared to assume must be discussed in

the objective formulation process. The creation of

objectives invariably further defines where the

cooperative should be going?

Objectives should possess particular

attributes. For example, they should be:

- consistent with the mission statement and

the cooperative’s articles, by-laws, and policies.

- specific-so that what is to be accomplished

is explicitly defined and easily understood by the

personnel implementing the plan.

- attainable-given available resources the

objective must be able to be realistically achieved.

- flexible-objectives should not be so rigid as

to disallow modification if changes in the internal

and/or external environment invalidates the original objective.

Objectives may also be written with the following additional attributes:

3 Objectives and goals are not distinguished in this publication as being different. To be consistent, the term “objective”

is used.

- result forecasted (i.e., expressed as a

result)-provides management with a concrete

base for monitoring and measuring progress.

- time-specific-provides a definite timeframe

against which management can base progress.

Objectives should be clearly, concisely, and

accurately written. With well-written objectives,

there is less possibility of disagreement regarding

interpretation.

Although objectives must be explicit, they

should be flexible as well. Since objectives are often

written based on a set of external environmental

assumptions, outside forces will often influence

cooperative operations and force the need to adjust

objectives accordingly. Objectives must be

reviewed periodically to ensure that they are consistent with external conditions and kept in line

with ongoing cooperative operations.

Strategies

Strategies are means by which to achieve

ends. They define a precise set of actions needed to

reach stated objectives. Strategy determination

involves spelling out precisely how the cooperative

will go forward. This often includes making major

decisions that may greatly influence the organization’s behavior. In the process of developing strategies, objectives should be prioritized and designated as short- or long-term so that strategies are

designed consistent with each objective’s intent.

Strategies must be developed in-line with the

cooperative’s mission and within the boundaries of

the human, physical, and financial resources available to the cooperative. Thus, a solid understanding of the cooperative’s mission and the results of a

comprehensive analysis of the cooperative’s current condition and outlook are imperative to strategy development (fig. 4).

Strategy determination will at certain times

involve a number of different scenarios or contingency plans. Thus, alternative strategies should be

developed based on different possible scenarios.

These different scenarios should represent an array

of plausible changes in the economic environment

or reactions by competitors. Alternative strategies

should be developed in the same detail and with

7
Figure 4-Development of Objectives and Strategies in Strategic Planning

Mission

Current Condition and Outlook

Available Resources

Cooperative Position

Resource Movement

8
the same clear description as with the original

strategy. It is important that these alternative scenarios differ significantly, even radically, from the

base or initial scenario. This makes the contingency

plan more useful and avoids the problem of frequently modifying plans because of nominal

changes.

Once an array of alternative strategies has

been designed, selection of the most feasible strategies takes place. Management should assist in outlining the most feasible strategies, but the final

choice of strategies rests with the board of directors.

Strategy selection can be difficult since tradeoffs are required. Inevitably, some strategies must

be foregone in order to implement others. This

might involve losing ground to competition in one

area in order to make strides in another area. The

most important question concerning a particular

strategy is whether it is the best strategy to lead the

cooperative to the intended objective.

Strategy Implementation

Following strategy selection, management

commits resources for implementation. “Action

plans” are often used to spell out precisely what

the implementation process will entail and to organize the allocation of resources. Action plans help

ensure effective strategy implementation. Their

development should be seriously considered in

strategic planning since strategies poorly implemented will do little justice to the time and effort

expended in their development.

Strategy implementation can be risky and

uncertain. Often, results deviate from what was

actually planned. For this reason, strategic plans

need to be carefully monitored. If applicable to a

particular strategy, a time constraint should be designated and a forecast should be made. Time constraints enable management to make proper commitments early and then work to carry strategies

through to completion. Forecasts aid management’s effectiveness in monitoring strategy

progress and making corrective modifications.

Feedback

It is vital to be able to measure whether implemented strategies were successful and effective.

Were the strategies carried out in the correct manner? Did they work toward accomplishing the

intended objectives? Did they improve the overall

economic condition of the cooperative? Did they

provide benefits to members? Did they reach or

exceed forecasts? Feedback information enables

planners to more effectively reassess the cooperative’s mission, current condition and outlook,

objectives, and strategies (fig. 5). In other words,

determining the effectiveness of strategies, the

problems that developed, and the mistakes will

provide beneficial experience for future strategic

planning.

To measure the progress and performance of

strategies, performance measures (e.g., ratios or

indicators) can be useful. Performance measures or

factors should:

- be measurable at reasonable expense.

- be controllable either directly (e.g., unit operating costs) or indirectly (e.g., market share).

- be accounted for by a single manager or

employee.

- be readily understood.

- cover the key elements or challenges of the

cooperative’s business.

- indicate operating results as well as financial

results. (Operating results are frequently available

on a current basis, permitting fast control response.

Financial results are generally not available until

well into the following month.)

- include key comparisons with competitors.

- be combined into groupings of not less than

4 or 5, not more than 8 to 10, so they can be comprehended as a group and provide an effective

overview of the cooperative’s business.

- be appraised or adjusted periodically to

ensure that they continue to represent the key elements or challenges in the cooperative’s business.

- be supported by additional performance

measures required down through the lower working levels.

Strategic plans must be continually reviewed

and updated at regular intervals. Directors and

9
Figure 5-The Feedback Mechanism of Strategic Planning

I Mission 1

Feedback

[Plan Evaluation]

Measurement

Effectiveness

Success

management should strictly review the cooperative’s strategic plan at least once a year. Reviews

and updates should include: (1) reassessing cooperative conditions and future outlook; (2) taking

another hard look at strategies in line to be implemented, (3) reviewing and revising objectives, (4)

refining strategies and/or designing new strategies, and (5) choosing and implementing strategies.

OTHER STRATEGIC PLANNING FEATURES

Meetings

Strategic planning meetings should be used to

provide a forum for the development of strategic

plans. All individuals explicitly involved in the

strategic planning process should attend these

meetings. The board of directors may wish to

develop a strategic planning subcommittee for special meetings, or the entire board of directors can

participate in all meetings. Upper and middle management also needs to select appropriate cooperative personnel (i.e., employees) to participate in

these meetings. Individuals should be selected to

represent all relevant divisions, locations, or

departments of the cooperative.

Brainstorming sessions, used to develop a list

of thoughts and ideas consistent with the cooperative’s mission, current condition, and future outlook, are helpful in getting strategic planning

rolling. These sessions should involve interaction

between the full board of directors, upper and

lower level management and other attending personnel. Relatively new employees should be

included in the process for they often bring a fresh

outlook. Also, the presence of a strategic planning

facilitator can lead to more efficient strategic planning meetings. For objectivity, the facilitator should

be from outside the cooperative.

It is important that strategic planning meetings be limited to strategic planning discussions.

No other business should be conducted. The meetings should be held outside the cooperative at a

local motel or convention center, the next town, or

any location where the session will be free from

interruptions.

Strategic planning meetings should be held at

regular times during the year. However, sometimes

it may be necessary to call for emergency or issuespecific strategic planning meetings. Since strategic

planning must be approached as a process of continual thought, analysis, and action, the schedule

should remain flexible.

10
All strategic planning work cannot be completed during meetings, especially the current condition and outlook analysis. Background work

needs to be done before the process can go forward. Thus, proper preparation for meetings by all

relevant individuals is imperative.

Communication

Communication channels must be open

between management and directors and between

management and employees for effective strategic

planning. Directors must communicate the feelings

of membership during their participation in the

strategic planning process. This takes work on both

sides--directors communicating to members and

members communicating to directors.

Cooperatives must also make a major effort to communicate to members the strategic direction the

cooperative is taking. Keeping members attuned to

the direction the cooperative is planning to take

will enable them to better communicate their ideas.

Documentation

Strategic plans should be documented as they

are developed. Putting plans into writing helps to

avoid misinterpretation of what is to be accomplished and how it is to be done. Also, having written and detailed strategic plans allows for more

efficient implementation, monitoring, and reviewing. Three forms are included in the appendix to

provide examples for documenting strategic plans.

STRATEGIC PLANNING AS A SYSTEM

Together, the elements and actions of strategic

planning form a strategic planning system (fig. 6).

The components can be modified or ordered in any

manner that will enable them to best fit into individual cooperative structures to ensure that strategic planning is efficient and effective.

Each component or attribute of the system

summarized in figure 6 was described in greater

detail earlier in the text. The words in parentheses

(within each element box) label the participants

that would likely play major roles in the various

segments of the system.

All participants within a strategic planning

system need to have a common understanding of

the elements and characteristics included. For this

reason, cooperatives often develop strategic planning policy manuals or guides to follow in carrying

out their strategic planning. Manuals or guides

ensure that planning is completed in an efficient

and effective manner and that all aspects of strategic planning from the cooperative’s distinct system

are covered.

Planning Horizon and Planning Cycle

Although there is no universally defined time

that strategic planning should cover, most planning

horizons extend out to 3 to 5 years. Whether the

planning horizon is 3 years or more, the first year

should coincide with the current fiscal or budget

year. This permits capital resources to be budgeted

for allocation on a yearly basis in accord with the

implementation of strategies.

The planning cycle is a repetitious process of

strategic research and analysis, review, development, implementation, and performance measurement. This process generally is repeated on an

annual basis, but frequency can vary from a few

months to 2 or more years. The importance of monitoring and feedback in the process suggests that

strategic plans be updated frequently.

Table 2 shows how the strategic planning system can be incorporated into a yearly planning

cycle. The process begins in January and continues

through the year as strategies are implemented.

The timeframe shown in this cycle would coincide

with a fiscal year that begins in July and ends in

June. In that respect, annual budgets and operating

plans could be coordinated with the strategic plan.

It should be noted that strategies being implemented from current strategic plans can continue while

strategic plans are being updated.

Implementing a fixed planning cycle is not imperative, but will aid in keeping strategic planning efficient and active. However, if additional or special

meetings need to be called for strategic planning

purposes, they should be called, even at the

11
Figure 6-Cooperative Strategic Planning System

Commit to Strategic Planning Make commitment and remain dedicated to strategic planning. (Board of

directors, management, employees)

&

Develop Mission Statement Develop new mission statement or review existing one. (Board of directors)

t

Analyze Cooperative Environment Analyze current conditions and future outlook. (Upper management, pertinent personnel, board of directors)

t

Brainstorm Develop an array of ideas and issues to address. (Board of directors,

management, pertinent employees; outside facilitator, optional)

I

t

1

Develop Objectives

Develop Strategies

Develop short- and long-range objectives and order according to prioriiy.

(Board of directors, management)

t

Develop alternative strategies to reach objectives. Develop contingency

strategies based on possible changes. (Board of directors, management)

Review Old Plan

+

Ensure that new strategic plan coincides with previous plan and that no 1

Choose Strategies

important issues have been ignored or forgotten in

new plan. (Board of directors, management)

t

Choose best strategies to reach objectives. (Board of directors with input

from management)

Develop Actlon Plans

t

Direct cooperative resources to implement

chosen strategies. Coordinate strategic plan with annual operating plan

1 Monitor and Modify Strategies

t

Monitor implementation process closely for any adverse effect on the I

Assess Strategic Plan

cooperative or members. Modify strategies if necessary. (Board of directors, management, employees)

t

Utilize feedback mechanisms to evaluate plan effectiveness and success.

Reassess mission, current condition and outlook, objectives, and strategies. Update strategic plan. (Board of directors, management)

Utilize Strategic Planning Features l Make strategic planning meetings specific to strategic planning. Hold

major strategic planning meetings away from cooperative headquarters.

l Communicate, in a broad manner, strategic effort of the cooperative to

members and patrons.

l Consolidate information and document into a detailed strategic plan.

1 2
expense of throwing the planning cycle temporarily off schedule.

Incorporation Into Cooperative Structure

Incorporating strategic planning into cooperative structure involves defining who the participants will be and what their roles will entail.

Figure 7 presents the organizational structure of a

hypothetical midsize farm supply and grain marketing cooperative. This cooperative would likely

include the general manager, assistant general

manager, comptroller, and divjsional management

(feed production, agronomy production, farm supply merchandise, and grain marketing managers)

in its upper management team that would work

and brainstorm with the board of directors during

strategic planning meetings. These meetings would

be held to discuss and debate the cooperative’s current condition and outlook, and to develop objectives and strategies. General management and divisional management would represent the

cooperative’s distinct divisions as well as the managers and employees of the three separate locations

of the cooperative. The comptroller would provide

input on the cooperative’s available resources and

financial position. Information needed for planning

on the three locations would be solicited from location managers by upper management (in turn, location managers would solicit input from their subordinates).

Strategy implementation would involve all

employees. Responsibilities for carrying out the

strategies specific to the three divisions would be

held by the division managers. Location managers

would be responsible for carrying out strategies

Table 2-A strategic planning cycle

Agenda Item Time-Frame

(1) Background Research

Review Current Conditions and Outlook

Review Previous Strategic Plan

(2) General Strategic Planning Meeting

Review and Reconfirm Cooperative Mission

Reconfirm and/or Develop Objectives

(3) Specific Strategic Planning Meeting

Develop Alternative Strategies

Select Most Feasible Strategies

(4) Strategic Plan Documentation and Development

Consolidate Preliminary Documentation

Develop Strategy Action Plans

Coordinate Strategies with Next Year’s Budget Guidelines

(5) Strategic Plan Approval Meeting

Action Plans Approved by Board of Directors

(6) Strategy Implementation

Direct Resources-Implement Action Plans

Monitor/Modify Strategies

(7) Strategy Feedback

Assess Strategic Plan Effectiveness

[Fiscal year begins]

January

February

April

May - June

June

July - (Ongoing)

Ongoing

December

1 3
Figure 7-Organizational Structure: Farm Supply and Grain Marketing Cooperative

Members

I

Board of Directors

I

General Manager

I

Assistant

General Manager I

-

Feed

-

Agronomy

Production Production

Manager Manager

Employees

1 Not an employee of the cooperative.

3

Location

Manager 1

I

I I

I

Employees

Location

Manager 3

Employees

14
that are applicable to their respective location. In

each strategy implementation case, employees

would be directed to carry out strategies that are

applicable to their specific assignments or positions

in the cooperative. Monitoring implemented strategies would be the responsibility of the general

manager, assistant general manager, comptroller,

accountant, division management, and when applicable, location management. Any major adjustments to strategies would be authorized by the

board of directors.

The documentation of strategic plans and the

development of action plans to carry out specific

strategies could be assigned to the cooperative’s

division and location managers. In this case, these

individuals would then report to the board of

directors, general manager, assistant general manager, and comptroller for input and approval of

their action plans and to consolidate individual

division and location (business unit) plans into the

overall cooperative strategic plan.

Since an outside attorney is included in this

cooperative’s organizational chart, this individual

could be used as a facilitator in the strategic planning process. The attorney, as shown in this case,

would likely have substantial knowledge of the

cooperative’s operations and would also likely be

objective, providing opinions from an outside perspective.

Since this cooperative appears to have two

distinct functions-marketing grain and selling

farm supplies-strategic plans might best be developed and documented in two separate sections that

present a mission, objectives, and strategies of each

function (business) individually. Of course, some

interrelationships or cross-over objectives and/or

strategies between the two business functions

would likely occur and thus, should be so noted.

SUMMARY AND IMPLICATIONS

Strategic planning is the means by which a

cooperative organizes its resources and actions to

achieve its objectives. It is a process or system

which explicitly defines the mission of the cooperative, the environment in which it operates, the

objectives of the organization, the strategies to be

employed to reach those objectives, and finally the

feedback loops that tell cooperative leadership

whether each of these steps has been correctly

identified and implemented.

Six major elements of strategic planning are

identified and described in this report: (1) Mission

statement, (2) Current condition and outlook, (3)

Objectives, (4) Strategies, (5) Strategy implementation, and (6) Feedback. These elements are fundamental to strategic planning. When allowed to

interact, they form a solid foundation of a strategic

planning system. Inherent in the implementation of

these elements into a system is full commitment to

the process by directors, management, and employees.

No strategic planning system is complete

unless it is successfully integrated into the operations and structure of an organization.

Cooperatives undertaking strategic planning must

coordinate various strategic planning components

and actions into a system that fits their distinct

operational and organizational structure. No two

cooperatives are completely alike, thus no two

strategic planning systems will be entirely alike.

Small and midsize cooperatives can successfully

adopt the principles of strategic planning by working to ensure that everybody plays an active role in

the fundamental strategic planning elements and

by incorporating them into ongoing cooperative

operations. It is incumbent upon directors and

upper management to become full participants in

strategic planning and to designate the roles that

lower level management and employees need to

assume. As a system, strategic planning should be

implemented on a cyclical, flexible basis taking into

account the cooperative’s planning horizon, fiscal

year, and availability of the resources required.

When successfully implemented, strategic

planning becomes an innate part of the governance, management, and operational character of

an organization. It provides a means for making

proactive decisions through a systematic identification and examination of issues, problems, and

opportunities, and the evaluation of alternative

courses of action. Strategic planning also provides

an understanding of the assumptions and limitations supporting decisions so that as conditions

15
change during plan implementation, necessary

adjustments can be made quickly and accurately.

The more diligent cooperatives are at carrying

out their strategic planning activities, the more

effective their decisions will be. Further, to the

extent that cooperatives are able to execute strategic planning more effectively than their competitors, the greater advantage they will gain.

Periodically, questions are raised about the

effectiveness of strategic planning. This is due, in

part, to the unrealistic expectations that strategic

planning provides quick-fix solutions to complex

problems. Despite the criticism, there is growing

recognition that strategic planning is an effective

governing tool that is becoming more essential in

the modern business world.

REFERENCES

Birnbaum, William S., If Your Strategy Is So

Terrific, Howcome It Doesn’t Work, American

Management Association: NY, NY, 1990.

David, Fred R., Fundamentals of Strategic

Management, Merrill Publishing Co.: Columbus,

Ohio, 1986.

Gardner, James R., Robert Rachlin, and Allan

Sweeny, Handbook of Strategic Planning, J. Wiley:

NY, NY, 1986.

Simmons, William W., So You Want to Have a

Long Range Plan, The Planning Forum, Oxford,

Ohio, 1990.

Steiner, George A., Strategic Planning,

Macmillan: New York, 1979.

Walter, Susan, and Pat Choate, Thinking

Strategically, A Primer for Public Leaders, The

Council of State Planning Agencies, Washington,

D.C., 1984.

16
Appendix Example Form 1 -Cooperative Strategic Plan

STRATEGIC PLAN: Cooperative Name Date

MISSION STATEMENT: (Write out mission statement.)

SHORT-TERM OBJECTIVES: (List short-term objectives.)

(1)

(#)

(9

LONG-TERM OBJECTIVES:

STRATEGIES:

Objective

(List long-term objectives.)

(1)

(#)

(#)

(State each objective and list all strategies developed for each objective.)

(1)

Alternative Strategies:

(1)

(2)

(#)

Strategy Chosen

Objective (#)

Alternative Strategies:

(1)

(2)

(#)

Strategy Chosen

IMPLEMENTATION SCHEMES: (Write out summaries of action plans for implementing chosen strategies, include dates

and resources to allocate.)

MONITORING AND FEEDBACK PLANS:

(Write out specific plans for following up on implemented strategies

including individuals responsible and dates to review individual objectives and strategies.)

17
Appendix Example Form 2-Cooperative Strategic Plan: Specific Objective

STRATEGIC PLAN-Specific Obiective: Cooperative Name Date

OBJECTIVE: (#I m

ALTERNATIVE STRATEGIES: (List all strategies for this objective.)

(1)

(#)

CHOSEN STRATEGY: (Describe chosen strategy in detail.)

IMPLEMENTATION: (Write out detailed steps for implementing chosen strategies, include applicable dates

and resources to allocate.)

EFFECTIVENESS:

(Describe adjustments made during the implementation of strategies.)

(Describe results of strategy effectiveness analysis and any feedback received pertaining

to strategy effectiveness.)

NECESSARY CHANGES: (Write out any additional strategy corrective action necessary for strategies to reach intended

objectives.)

UPDATED PLANS: (Write out specific updated plans including applicable dates to complete or review strategies.) ’

18
Appendix Example Form 3-Cooperative Strategic Plan: Strategy Action Plan

STRATEGIC PLAN--Strategy Action Plan: Cooperative Name Date

OBJECTIVE: (#I

STRATEGY:

DATE STRATEGY DEVELOPED:

PLAN OF ACTION:

Division or Department

Responsibility

Dates:

Approval

Beginning

Proposed Completion

Resources Needed:

Capital

Human

Material

Detailed Steps:

Feedback (adjustments, etc.):

19
U.S. Department of Agriculture

Agricultural Cooperative Service

P.O. Box 96576

Washington, D.C. 20090-6576

Agricultural Cooperative Service (ACS) provides research, management, and

educational assistance to cooperatives to strengthen the economic position of

farmers and other rural residents. It works directly with cooperative leaders and

Federal and State agencies to improve organization, leadership, and operation

of cooperatives and to give guidance to further development.

The agency (1 ) helps farmers and other rural residents develop cooperatives to

obtain supplies and services at lower cost and to get better prices for products

they sell; (2) advises rural residents on developing existing resources through

cooperative action to enhance rural living; (3) helps cooperatives improve

services and operating efficiency; (4) informs members, directors, employees,

and the public on how cooperatives work and benefit their members and their

communities; and (5) encourages international cooperative programs.

ACS publishes research and educational materials and issues Farmer

Cooperatives magazine. All programs and activities are conducted on a

nondiscriminatory basis, without regard to race, creed, color, sex, age, marital

status, handicap, or national origin.