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Overview of the Strategic Planning Process
If you are unfamiliar with strategic planning and want to gain a basic understanding
of the concept and process, you are in the right place. Read on. You may, if you wish, print out the information for later
review.
Does your business exist in a vacuum? Highly unlikely. It is, no doubt, constantly subjected to the forces of change whether they be economic, competitive,
environmental, or political. Very few of us can escape change - it is all around us. Your firm is probably no different from many other organizations which are facing uncertainty and challenges
from: What follows is:
- Introduction to Strategic Planning
- Objective of Strategic Planning
- Principal Players
- Strategic Planning Components
- Three Phases of Strategic Planning
- Benefits of Strategic Planning
- Guidelines for Success in Strategic Planning.
- Introduction
Rapid-paced changes in trade, technology and investment patterns are
elements that are impacting your business in one way or another. Although you may have a
general sense of direction as to where your business is going, you might not always be
able to fully understand the environment in which it operates nor assess the implications
this environment holds for your future. You may also need to provide certain direction to
your daily activities. All this is pointing to a need for strategic planning.
Strategic planning is: "...a continuous and systematic process where people make
decisions about intended future outcomes, how these outcomes are to be accomplished, and
how success is to be measured and evaluated." Strategic planning will help you:
- capitalize on your strengths,
- overcome your weaknesses,
- take advantage of opportunities, and
- defend against threats to your organization.
It is often viewed as a process of organizational renewal. It offers a systematic means
of analysing the economic and competitive prospects for your business and helps in
charting a long-term course of action. Strategic planning must be a dynamic process.
What follows here, and in other sections of this site, is a planning process that
assists owners and managers by providing them with many of the necessary tools and skills
to develop their own plan to best exploit perceived opportunities and protect vulnerable
areas. Although planning templates are provided to assist you, there is no need to adhere
to them. Be creative. Don't feel bound by ours. Devise your own and share them with us.
- Objective of Strategic Planning
The main objective of
strategic planning is to strengthen the management decision making process by having it
recognize and address key internal and external factors that affect the business. It is
undertaken to improve organizational performance and serves as the foundation for future
management actions including the business and operational plan. It is also a means for the
organization to adapt its services and activities to meet the changing needs of its
environments. It helps the organization relate to what it should be doing to meet the
needs of its clients.
The emphasis of the process is on developing strategies that hold promise to make the
organization a leader in its category.
- Principal Players
Unless you are a sole
proprietorship, strategic planning should not be undertaken by one individual.
Organizations are encouraged to carry out all aspects of the strategic planning process in
a team environment headed, in many cases, by the President of the company. Input should be
sought from all parts of the organization. The team will identify key products and
services on which to focus, participate in the diagnosis of the challenges facing those
key products and services, the subsequent strategy formulation and the eventual
implementation of the plan itself. If there is no commitment to strategic planning, the
process is a waste of time.
- Strategic Planning Components
Your strategic plan will
help you define strategies that meet the external and internal
challenges facing your organization. Having identified and defined the proper
strategies for your key products and services and the company as a whole, you will then
need to revisit or redefine your company's mission and vision. It
is important not to adopt strategies without thought as to how they will actually be
implemented.
- The Three Phases of Strategic Planning
The planning
process highlighted here consists of three distinct phases. Each phase deals with a
gradually increasing level of strategic and operational focus on the information and
issues defined and analysed in the preceding phase. The process ends with the definition
of a new corporate mission, a new vision of the future, the review of the current
management philosophy and implementation of the strategic plan.
Once these steps are completed, you have all the elements of your new strategic plan.
It is very important that the strategic planning process be followed by an action plan to
ensure the implementation of your vision. Your strategic plan will be the foundation for
this business plan.
You should revisit your strategic plan and action plan from time to time. Technological
change, government regulation and other business environment factors will be key elements
in determining the frequency.
- The Benefits of Strategic Planning
Foremost, the
strategic planning process will help you to build a vision for the future describing the
characteristics, qualities and behaviours you wish to see in your organization and to
which all can subscribe. The process can improve efficiency and effectiveness as well as
decision making in the organization. The planning process will also enable you to
recognize and take advantage of opportunities emerging from today's business environment.
Apart from contributing to the subsequent business and operational planning cycles, a
significant benefit of the strategic planning process will be the team-building that takes
place among decision makers within the company.
- Guidelines for Success
Once you decide your company
needs to develop a strategic plan, make a total commitment to planning. You should adapt
and personalize the planning process to suit your needs. Be selective, you should always
identify and target what you consider to be the most important strategic factors. Since no
two businesses are alike, the process you choose should always be geared toward your
particular needs, culture, structure and the nature of your business. Unless you are a
small firm, don't try and do one plan for the entire company, it may not work.
Effective resource allocation requires that you focus your efforts on key products and
services and critical functions. The segmentation exercise in Phase 1 will help you
determine your company's key products and services. Finally, the strategy your planning
team develops should always be linked to an action plan and above all, in working through
the process, be creative and don't feel bound by what has gone on before.
You are now ready to move into Phase 1.
Internal and External Challenges
The Six System Diagnostic Model derives its name from the fact it provides for
the analysis of six (6) key external and internal business systems or factors as part of
the strategic planning process. Following the analysis, you will be able to identify the
challenges and corresponding issues they pose to your your organizations key products and
services. You will then develop the corresponding strategies to address those challenges.
I
General Environment
(Government; Economy; Socio-Demography; Technology)
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III
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Industry
&
Competition
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IV
Marketing
Mix
(Outputs)
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A
B
C |
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V
Internal
Ressources
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Competitors
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VI
Inputs
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The external factors you will be analysing for each key product or
service consist of the:
- Environment in which it operates,
- Markets and Clients
- Industry it serves and Competition it faces.
Your analysis of the internal factors will include the company's:
- Marketing Mix
- Internal Resources, and
- Inputs
Mission and Vision
The mission of an organization is generally expressed as a very broad
description of the nature and purpose of the business, what it is about, or its
"Raison d'etre" It usually covers the major functions and operations of the
organization and answers the following questions:
- What are the company's products and services?
- What industry is it in?
- Which markets does it serve? and
- What is its major driving force?
A organization's vision, on the other hand, does not determine how the
organization will work, but rather how it will look and act if the strategic plan is
implemented successfully. It is a vision of the future and of success. A vision statement
helps guide daily decisions and actions so that all are working toward the same goals and
objectives in a complementary and coordinated fashion. The vision statement also
communicates to your clients, your strategic intent and an indication of how you prefer to
operate.
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