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Strategic Planning Process

The strategic planning process involves defining objectives, assessing internal/external factors, formulating strategy, implementing strategy, and evaluating progress. It begins with establishing a mission/objectives and environmental scanning. Strategy is then formulated by matching strengths to opportunities while addressing weaknesses/threats. The selected strategy is implemented through programs/budgets, and its implementation is monitored and adjustments made as needed.

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405 views3 pages

Strategic Planning Process

The strategic planning process involves defining objectives, assessing internal/external factors, formulating strategy, implementing strategy, and evaluating progress. It begins with establishing a mission/objectives and environmental scanning. Strategy is then formulated by matching strengths to opportunities while addressing weaknesses/threats. The selected strategy is implemented through programs/budgets, and its implementation is monitored and adjustments made as needed.

Uploaded by

maxmartinloafer
Copyright
© Attribution Non-Commercial (BY-NC)
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  • The Strategic Planning Process: This section introduces strategic planning, outlining the overall process used to achieve corporate objectives and adjust to changing environments.
  • Strategy Formulation: Discusses the process of translating environmental insights into strategic plans considering strengths and competitive advantages.
  • Environmental Scan: Focuses on analyzing internal and external environments, identifying strategic considerations through models such as PEST and SWOT analyses.
  • Evaluation & Control: Explains the monitoring and adjustment of strategies to ensure alignment with objectives through evaluation and control steps.
  • Strategy Implementation: Covers the execution of formulated strategies using organizational resources, programs, and budgets.

The Strategic Planning Process

In today's highly competitive business environment, budget-oriented planning or


forecast-based planning methods are insufficient for a large corporation to survive and
prosper. The firm must engage in strategic planning that clearly defines objectives and
assesses both the internal and external situation to formulate strategy, implement the
strategy, evaluate the progress, and make adjustments as necessary to stay on track.

A simplified view of the strategic planning process is shown by the following diagram:

The Strategic Planning Process

Mission &
      Objectives      

  Environmental  
Scanning

Strategy
    Formulation     

Strategy
 Implementation  

      Evaluation      
& Control

Mission and Objectives


The mission statement describes the company's business vision, including the
unchanging values and purpose of the firm and forward-looking visionary goals that
guide the pursuit of future opportunities.

Guided by the business vision, the firm's leaders can define measurable financial and
strategic objectives. Financial objectives involve measures such as sales targets and
earnings growth. Strategic objectives are related to the firm's business position, and
may include measures such as market share and reputation.

Environmental Scan

The environmental scan includes the following components:

 Internal analysis of the firm


 Analysis of the firm's industry (task environment)
 External macroenvironment (PEST analysis)

The internal analysis can identify the firm's strengths and weaknesses and the external
analysis reveals opportunities and threats. A profile of the strengths, weaknesses,
opportunities, and threats is generated by means of a SWOT analysis

An industry analysis can be performed using a framework developed by Michael Porter


known as Porter's five forces. This framework evaluates entry barriers, suppliers,
customers, substitute products, and industry rivalry.

Strategy Formulation

Given the information from the environmental scan, the firm should match its strengths
to the opportunities that it has identified, while addressing its weaknesses and external
threats.

To attain superior profitability, the firm seeks to develop a competitive advantage over
its rivals. A competitive advantage can be based on cost or differentiation. Michael
Porter identified three industry-independent generic strategies from which the firm can
choose.

Strategy Implementation
The selected strategy is implemented by means of programs, budgets, and procedures.
Implementation involves organization of the firm's resources and motivation of the staff
to achieve objectives.

The way in which the strategy is implemented can have a significant impact on whether
it will be successful. In a large company, those who implement the strategy likely will be
different people from those who formulated it. For this reason, care must be taken to
communicate the strategy and the reasoning behind it. Otherwise, the implementation
might not succeed if the strategy is misunderstood or if lower-level managers resist its
implementation because they do not understand why the particular strategy was
selected.

Evaluation & Control

The implementation of the strategy must be monitored and adjustments made as


needed.

Evaluation and control consists of the following steps:

1. Define parameters to be measured


2. Define target values for those parameters
3. Perform measurements
4. Compare measured results to the pre-defined standard
5. Make necessary changes

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