National Renewable Energy Strategy Eight (8) Steps Designing the Strategic Planning

8/8/2019 National Renewable Energy Strategy Eight (8) Steps Designing the Strategic Planning [PDF]

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NATIONAL RENEWABLE ENERGY STRATEGY:EIGHT (8) STEPS DESIGNING THE STRATEGIC PLANNING

Bambang Sugiyono Agus Purwono, Ubud Salim, Djumahir, and Solimun

Doctorate Program in Management Science,Faculty of Economics University of Brawijaya - IndonesiaEmail:[email protected]

Abstract

Purpose The purpose of this paper is to introduce the eight (8) steps designing theStrategic Planning and to consider how to design the National (Indonesia) RenewableEnergy Strategic Planning that have not been published or designed.Design/methodology/approach Using the informants of 35 people from four different

countries, there are from the Republic Democratic of Timor Leste (there are eightpeople, three ministers, one producer, and four users), Malaysia (one informant who isthe Dean of Faculty Mechanical Engineering-University of Technology of Malaysia),German (one informant who is the Director of RDTL GTZ) and Indonesia (26 people,there are one minister, three ex ministers, one board of committee of the Bank Danamon,five producers, eight researchers, and the rest are users). The eight (8) steps designing theStrategic Planning are Vision, Missions, Objectives, Strategies, Policy, Program,Budgets, and Procedures. The method of analysis is Qualitative approach.Findings The paper finds that, practitioners can design the corporate strategic planningusing the eight (8) steps designing the Strategic Planning easily.Practical implications The findings of the study are useful for administrators, projectmanagers, and practitioners.Limitations - The findings of the study do not discuss the business ethics, values, and theexternal and internal factors.Original/value The paper is a part of the dissertation resulting the eight (8) stepsdesigning the Strategic Planning or is a part of the continuing study by the author(Bambang Sugiyono Agus Purwono) on the strategic planning.

Keywords Strategic Planning, Renewable Energy, Community.

Paper type Research paper

Introduction

The interesting phenomena in Indonesia (in some provinces) in the middle of the year2005 is the longest queuing of the public transportation and private cars in the SPBU(Public Gas Station). Some cars have to wait for queued fueling the gasoline or diesel oilfor a half day, because there is not enough fuel in the SPBU. If there is any gasoline ordiesel oil in the SPBU, the fuel price increases very highly and the volume is very


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limited. The problem solution is to substitute the fossil fuel or non- renewable energy(the gasoline and diesel oil) with the non-fossil oil or bio-fuel or alternative energy orrenewable energy (e.g. Straight Jatropha Curcas Oil/SJC Oil, Cassava, Algae, sugar caneresidual, etc).

The background of this paper is the decreasing of the deposit of the fossil fuel (the crudeoil and diesel oil), the increasing price of the crude oil and diesel oil, the increasing needfor the crude oil and diesel oil, the need for the alternative energy or renewable energy,creating the jobs for new workers in the agricultural and rural areas, concerning with thepollution because content of the exhaust gas or the emission of the exhaust gas from thepublic transportation system and private cars, and the publishing of the National EnergyPolicy of The Republic Of Indonesia and The Availability of Bio-fuel Act in January 25,2006.

The Economic Potential

The average diesel oil consumption level in Indonesia is up to 14 millions kiloliter or88.000 barrel (1 barrel =

1. The reduction of the operating cost in industries, because the price of the bio-fuelis lower compared to gasoline and diesel oil.

159,25 liter) every year. For making a substitution of 5% only,it needs about 700 thousand kiloliter (4.400.000 barrel) of bio-diesel every year. Thatbio-diesel demand actually can be obtained easily in Indonesia, because Indonesia is richenough with a lot of plants that can produce bio-diesel mixture. The main source of bio-diesel is the cheap CPO (Crude Palm Oil) and SJC oil.

The SJC plants specialist from ITB, Manurung, R, described that 1 Ha of SJC plant canproduce about 4.3 tons of oil per year or can be obtained about 4.7 kiloliter of bio-fuelper year. Remembering that the SJC plant can grow in the dry areas and Indonesia hasextensive dry areas, so castor planting is expected to give an excess for the society.

Besides, the planting SJC plants for bio-diesel supply is also good for increasing theproductivity of the dry areas and later can increase the land owners income. This dryarea exploitation also will not affect the food supply, because it never happens in such anarea to cause compete between food plant and SJC plant. According to the data fromBPS, in 2003 the critical area in Indonesia is up to 22 million Ha. Based on the estimationof Manurung, R, above, the planting of SJC plant in the critical area only 10% we canobtain 10.3 million kiloliter of bio diesel every year.

After the realization and distribution of the bio-fuel or bio-energy, the government andthe people will receive:

2. The fishermen will be able to fish and sail their boats (fueling the bio-diesel oil)which will allow them to produce for the domestic and export commodities.

3. The involvement of the people who live around the bio-fuel factories as workers(create new jobs).


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4. The reducing of the operating cost of the factories, because the bio-fuel price islower than the gasoline and diesel oil.

5. The increasing of the knowledge and skill of the people who live around the bio-fuel oil factories.

6. The increasing of the regional income or tax for the regional government.

Government Commitment

There are many of the Government commitments such as the Presidential Regulation No.5 (2006), about National Energy Policy, the Presidential Directive No. 1 (2006), aboutsupplying and exploiting of Bio-fuel as another (alternative) fuel, the Government isplanning to mix diesel oil with SJC oil or bio-diesel up to 10% in 2010, PT Pertaminastarget to change 400.000 kiloliter of diesel oil with bio-fuel from SJC oil in three yearsand later will be marketed through more than 200 gas Station in Jakarta, Surabaya andDenpasar (Hanung Budya, Vice Director of Commercial of PT Pertamina, Ltd), LoC(Letter of Commitment) between Eco-Securities with 11 Indonesian companies to

guarantee SJC oil market (November 22, 2005), the forming of the National Team to Bio-fuel Program, which is recognized by Al-Hilal Alhamdi, Director General of Oil andnature Gas decree no. 3674K/24/DJM/2006 dated on March 17, 2006 about allowing themixing gasoline with 10% ethanol, and the Government has determined SNI 04-7182-2006, that is standard for substitution of fuel of diesel motor (B10). With these Letters, itmeans the using of B10 and E10 can be used legally by the society.

The eight (8) steps designing the Strategic Planning

Hitt, MA (2005: 7) stated that the strategy is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitiveadvantage. Koontz, H and Heinz Weihrich (1988: 58) stated that Strategic Planning canbe used as a set of concepts or statements that integrates the organizations goals,policies, and action in order to fulfill the organizations future mission. Strategic planningcan help the organizations to achieve their long-term objectives. Strategic planning is thesystematic identification of opportunities and threats that lie in the future. Strategicplanning can build expected future trends, data, and assumptions. Strategic planning ismuch more action oriented than long range planning. And the Strategic planning willimprove the company performance.

In this paper the writer will discuss the eight (8) steps that anyone can design their ownstrategic planning using these eight (8) steps designing the strategic planning. The eight(8) steps are:

1. Vision,2. Missions,3. Objectives,4. Strategies,5. Policy,6. Program,


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7. Budgets, and8. Procedures.

Figure 1 presents the eight (8) steps designing the strategic planning.

Figure 2 presents the definition of every step in the eight (8) steps designing the strategicplanning.

For the purpose of this discussion some of the steps will be taken separately.

Figure 1 The eight (8) steps designing the strategic planning

Figure 2 The definition of the strategic planning


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The eight (8) Step discussion

Step 1 - Vision

Determining the strategic direction of a firm involves developing a long-term vision of

the firms strategic intent. A long-term vision seems typically at least five to ten yearsinto the future. A philosophy with goals, this consist of the image and character of thefirm. The ideal long-term vision has two parts: a core ideology and an envisioned future.While the core ideology motivates employees through the company heritage, theenvisioned future encourages employees to stretch beyond their expectations of accomplishment and requires significant change and progress in order to be realized. Theenvisioned future serves as a guide to many aspects of a firms strategy implementationprocess, including motivation, leadership, employee empowerment, and organizationaldesign (Hitt, MA, 2005: 385).

A vision is a statement about what the organization wants to become. All members of the

organization should be able to identify themselves with it and it should help them to feelproud, excited, and be part of something that is much bigger than themselves. A visionshould stretch the organizations capabilities and image of itself. It gives shape anddirection to the organizations future.

Vision ranges in length from a couple of words to several pages, the shortest is, theeasiest to remember. Effective vision statements are clear, concise, catchy, andmemorable.

The definitions of the vision are:

1. The impossible dream, and2. A specific, detailed statement of direction.

The key vision ingredients are:

It is clear, It is challenging, It can be, and It must be.

Figure 3 presents the vision of National Renewable Energy Strategy.

Step 2 - Mission

When properly constructed, a mission statement should provide a clear, concisedescription of an organizations overall purpose. A mission statement should answerthree questions:

1. What do we do?


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2. How do we do it?3. For whom do we do it?

The mission can enable large groups of individuals to work in a unified direction towarda common cause. A good mission statement is compelling, passionate, and energizing. It

should be risky and challenging, but also achievable.

Figure 3 The Vision and Mission statements

An effective mission statement has these key characteristics:

Clear: No complex words; no awkward wording. Concise: The fewer words the better; less than 25 if possible.

Catchy: Snappy sounding without using slang or colloquialisms.

The definition of the mission are:

1. A statement of the organizations people what it wants to accomplish in thelarger environment.

2. It states who you wish to reach.3. What business are we in?

The prerequisite of the mission are:

1. Market oriented,2. Realistic,3. Specific,4. Market environment,5. Distinctive competencies, and6. Motivating.


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Figure 3 presents the mission of National Renewable Energy Strategy.

Step 3 - Goals/Objectives

Mission and vision, although frequently short statements, are broad, encompassing and

far-reaching. They can often seem overwhelming and perhaps even impossible toachieve. Goals and objectives create the bite size pieces, the road map and manageablestepping stones to achieve the mission, make the vision a reality, and navigate the coursewe have set for our business, or for ourselves.

Goals are the bigger fuzzy things and objectives are the SMART:

Specific, M easurable, Attainable (accountable), R ewarding (realistic), and T imed (timeliness).

Steps through which we achieve our goals.

To be effective goals and objectives they must be written. If they arent written theyremerely ideas with no real power or conviction behind them. Written goals and objectivesprovide motivation to achieve them and can then be used as reminder to you and others.Clearly and specifically written, they also eliminate confusion and misunderstanding.

Having well developed goals and objectives also helps:

Maintain focus and perspective, Establish priorities, Lead to greater job satisfaction, and Improve employee performance.

As time goes on and goals are achieved, or conditions and situations change, itsimportant to reevaluate and establish new goals and objectives. Failure to periodically setnew or more challenging goals can lead to stagnation in the business and boredom amongemployees.

The definition of the objectives (Figures 4 and 5) are:

1. The end results of planned activity,2. They state what is to be accomplished by when and should be quantified if

possible,3. A desirable change in its characteristics, and4. An object of effort or ambition.

The prerequisite of the objectives should be as specific as possible.


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The key objectives ingredients are:

1. Profitability (Net Profits),2. Efficiency (Low cost, etc),3. Growth (Increase in total assets, sales, etc),

4.

Shareholder wealth (Dividents plus stock price appreciation),5. Utilization of resources (ROE, ROI),6. Reputation (being considered a TOP Firm),7. Contribution to employees (Employement security, wages, diversity),8. Contribution to society (taxes paid, participation in charities, providing a needed

product or service),9. Market leadership (Market share),10. Technological leadership (Innovation, and creativity),11. Survival (avoiding bankcruptcy), and12. Personal needs of top management (using the firm for personal purposes, such as

providing jobs for relatives).

Figure 4 The Objectives statements

Step 4 - Strategy

For years the military used the word strategies to mean grand plans made in the light of what is believed and adversary might or might not do. While the term strategies stillusually has a competitive implication, managers increasingly use it to reflect broad areasof an enterprise operation.

Three definitions are indicative of the most common usages of the term strategies are

1. general programs of action and deployment of resources to attain comprehensiveobjectives,


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2. the program of objectives of an organization and their changes, resources used toattain these objectives, and policies governing the acquisition, use, and dispositionof these resources; and

3. the determination of the basic long-term objectives of an enterprise and theadoption of courses of action and allocation of resources necessary to achieve

these goals.

The definitions of the Strategy are:

1. The art (knowledge) or science (an organized knowledge) of war.2. Skill managing any affair.3. The use of a track in order to succeed in some purposes.

The prerequisite of the strategy are:

1. Market penetration,

2.

Product development,3. Market development, and4. Product diversification.

Step 5 - Policy

Policies also are plans in that they are general statements or understandings which guideor channel thinking in decision making. Not all policies are statement; they are oftenmerely implied from the actions of managers (Figure 6).

Policies define an area within which a decision is to be made and ensure that the decisionwill be consistent with, and contribute to, an objective or is a broad guideline for decisionmaking that links the formulation of strategy with its implementation. Policies helpdecide issues before they become problems, make it unnecessary to analyze the samesituation every time it come up, and unify other plans, thus permitting managers todelegate authority and still maintain control over what their sub-ordinates do.

Step 6 - Program

Program are a complex of goals, policies, procedures, task assignments, steps to be taken,resources to be employed, and other elements necessary to carry out a given course of action; they are ordinarily supported by budgets (Figure 7).

The definition of the program is activities needed to accomplish the plan.

Step 7 - Budgets

A budget is a statement of expected results expressed in numerical terms. It may bereferred to as a numberized program. In fact, the financial operating budget is oftencalled a profit plan. It may be expressed either in financial terms or in terms of labor-


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hours, unit of product, machine-hours, or any other numerically measurable term. It maydeal with operations, as the expense budget does; it may reflect capital outlays, as thecapital expenditures budget does; or it may show cash flow, as the cash budget does.

The definition of the budgets is the cost of programs or some budgets are also control

devices (Figure 8).

Figure 5 The Strategy statements

Figure 6 The Policy statements


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Figure 7 The Program statements

Figure 8 The Budgets statements

Figure 9 The Procedures statements


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Step 8 - Procedures

Procedures are plans that establish a required method of handling future activities. Theyare guides to action, rather than to thinking, and they detail the exact manner in whichcertain activities must be accomplished. They are chronological sequences of required

actions.

The definition of the procedures is sequence of steps needed to do the job (Figure 9).

Conclusions

The eight steps designing the strategic planning are Vision, Missions, Objectives,Strategies, Policy, Program, Budgets, and Procedures.

The eight steps designing the strategic planning is a part of the strategic managementprocess. It helps to create a corporate strategic planning by administrators, project

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