Definition of Strategic Planning
Strategic planning is the tool which clearly identify goals and objectives of an organization as well as it also assess the internal and external situation required to formulate and implement the strategy.
Meaning of Strategic Planning Why We Need It
An effective plan is always required to accomplish anything. If you are coaching a football team, doing preparation for exam, or running a business, you need a strategic plan. Today business world become much competitive and the olden days of budget oriented planning or forecast based planning gone away. The strategic planning is required and compulsory for the survival of a large corporation. This also helps the organization to evaluate the progress of the strategy and make necessary adjustments to for the purpose of staying at the track. It is because of strategic planning that business management determine where to spend time, human capital, and money resources.
Following diagram shows the steps of strategic planning model
Steps of Strategic Planning Process
- Vision, Mission & Objectives
- Situation Analysis or Environmental Scanning
- Strategy Formulation
- Strategy Implementation
- Strategy Evolution & Control
Vision, Mission & Objectives
Vision statement shows “what an organization wants to achieve in future? A mission statement shows the basic purpose of an organization and communicates the essence of a company. An organization’s should be focused, purposeful and one that reflect the vision of the organization.
A mission statement includes following:
- Purpose: why a particular organization exists, and what it seeks to accomplish
- Business: the main methods, products or activities by which the organization tries to achieve purpose
- Values: this refers to those beliefs and principles which guides an organization’s management as well as its employees as they pursue the organization’s purpose
After the development of vision and mission statement then companies need to define goals and objectives. Goals may be financial like sales or producing new products and innovation etc.
Situation Analysis or Environmental Scanning
After development of mission and objective in this step companies need to do situation analysis. There are two type of situation analysis:
- Internal analysis
- External analysis (PEST Analysis)
In internals analysis companies needs to identify the strengths and weakness and in external analysis companies should identify the threats and opportunities. Porter’s five forces and SWOT analysis provide a platform for conducting situation analysis or environmental scanning. By the help of situation analysis and quality information an organization can make effective and achievable decisions. Environmental scanning also helps in listing of critical and most important issues which demand a specific response from the organization.
After development of organization’s mission and objectives and situation analysis, it is time to figure out or formulate strategies. Companies may formulate effective strategies by the help of group discussion, formal decision-making techniques and by marketers and management meetings. Strategies provide a frame structure for action stage.
After formulating strategies next step is to practically implement those strategies. For the purpose of strategy implementation a company needs to organize its resources and motivate staff to achieve its objectives. If there are different people or department who formulate the strategies and those who are implementing these, then care must be taken to communicate the strategies. If care not taken then there may be chances of strategies failures because of misunderstanding by lower level staff.
Strategy Evaluation & Control
This is the last step of strategic planning process. In this step management and marketer required to monitor the strategies and made necessary adjustments. Management should regularly measure the performance as well as compare the performance with predefined goals and objectives and make changes if required.
Pulling up all together, step by step strategic process is required for smooth running of an organization in order to achieve its goals and objectives in modern competitive era.