July 15, 2024
Strategic Planning in the Czech Republic

In developed market economics, well-managed businesses are expected to all have a strategic plan; whereas, in the Czech Republic (country in the middle of Europe with exciting history as well called as ‘heart of Europe’; capital Prague; population 10.5 million; area 78,864 sq km) and the rest of the post-communist countries, having such management tools in place is all too frequently overlooked and missing.

Unfortunately, the above statement about management practices in the Czech Republic is an objective description of the current state of affairs. Times are changing however and the days when running a profitable business was a relatively simple task are long gone.

This change had to come some day; but, with the arrival of the current economic crisis, this change has come about more quickly than many could have expected. Thus, the existing management and business planning practices of most Czech businesses are facing a major test. For those businesses that have entered this tougher economic environment well prepared, this could be a favorable time; but, for those businesses that have failed to modernize and update their management practices, their very survival may be at stake.

It goes without saying that back in the 1990´s, a person with an average level of education and average skills could start practically any kind of business and make money. Back then, most business plans were put together, as they say, “on the back of an envelope”; and, ignoring the less-than-legal entrepreneurial activities and the money made through them, the majority of these business startups succeeded. They usually did so without any thorough analysis of their local business environment, without any long-term vision or strategy and without many predefined (or only very few) basic business objectives or plans for their accomplishment.

I recall a story in which a colleague of mine came back from a meeting with one of our clients – a medium-sized business and the leading (or if not then the number two) service provider in that field. The company’s owner, who is emblematic of the generation of entrepreneurs that grew their businesses in the early years after the fall of communism – in other words a successful man, who is currently in his mid-50’s – and his sales manager were having a discussion where tools such as SWOT analysis, long-term business planning and corporate strategy were mentioned. I was told that both the business owner and his sales manager had a blank look on their faces when these terms were mentioned. I couldn’t believe two such successful business people were unfamiliar with these concepts. It was almost hard to believe that a business with this type of an approach to corporate management was able to do so well. From all appearances, from the outside this looked like a modern, well-run business that had no problem getting orders from both the private and public sectors. However, internally it was running by the seat of the pants, lacking any long-term planning or business strategy. It was almost too startling an encounter with the state of many Czech businesses today.

At the time, we weren’t being asked to judge how this client was running his business, which had somehow managed to do well for nearly two decades, or to tell him what to do. We did, however want to prepare them in terms of their ability to assess potential future risks to his business and help him maintain his standing on the market and continue to grow in the future. At that time, our client may not have felt the need to come to us and request the use of some of our services – however, when times get tough, with orders down and harder to come by, it is companies like the one I just described that will come to us, asking for advice. We’ve seen how a tough economy can find a company desperately trying to hang in there with hurried and impulsively made decisions, which are usually too late and ignore the long-term ‘big’ picture. Such rushed decisions, with the absence of any in-depth analysis or proper management, usually – and, in today’s environment especially – can lead to financial losses, which could have been easily prevented or at least mitigated.

The above business example is unfortunately not an isolated situation. Rather, just the opposite. But, in the sense that the glass can be half-full (rather than half-empty), the above example points out the opportunistic tools the Czech business community now has available to it to help its businesses succeed. Strategic planning and strategic management, a wide range of business analysis methodologies and approaches and market studies can all be combined with creative thinking to produce long-term visions and long-term objectives to guide the management of each and every business. Unfortunately, the use of these tools and concepts still remain confined to just a small percentage of the business community and those companies, which use them, are usually the ones that set new market trends and which are able to maintain their long-term profitability.

By taking the ‘glass half-full’ approach, Czech companies can look forward to a very successful future. Competitors operating in the same segments of an industry segments have a greater opportunity to get ahead of others and those that start to take advantage of and put to use the concept of strategic planning and related business tools can look forward to gaining a competitive advantage.