Strategizing in the real world

Strategic planning has insignificant effects on profits for four reasons. First, formalization undercuts planning's contributions. Second, nearly all managers hold very inaccurate beliefs about both their firms and their market environments. Third, no–one can forecast accurately over the long term. Fourth, several fundamental barriers make it very difficult to attain high profits through strategic actions. However, planners can make strategic planning more realistic and can use it to build healthier, more alert and responsive firms. They can make sensible forecasts and use them to foster alertness; exploit distinctive competencies, entry barriers, and proprietary information; broaden managers' horizons and help them to develop more realistic beliefs; and plan in ways that make it easier to change strategies later.