The Strategic Planning Process
The competitive nature of today’s global economy makes it imperative for organizations to understand that planning and business go hand in hand if they want to ensure survival and growth. Good strategic planning should state clear and actionable objectives, provide a valid analysis of the internal and external environments, outline the steps necessary for implementation, and provide tools for evaluating the progress in reaching organizational objectives as well as providing a plan or strategy flexible enough for the creation of adjustments.
The area of planning and business, or the strategic business planning process, can be broken into five critical areas: mission and objectives, environmental assessment, formulization of strategy, implementation of strategy and finally, strategic appraisal and regulation.
The first step in conducing planning for business is the creation of the organizational mission and objectives. This will provide a description of the organization’s values and ethics and foresight. It will also explain the purpose the purpose of the organization and act as a guidebook for the evaluation of new and potential opportunities.
Another critical area in planning for business is to complete an evaluation of the internal and external environments in which the organization operates. During the execution of this part of the process, a formal SWOT (strengths, weaknesses, opportunities and threats) analysis should be performed that encompasses the key spheres of the internal and external environment such as demographics, politics, society, culture, nature and the economy.
Once an environmental analysis has been performed, then the focus of the strategic planning process should shift to the formulization of strategy. This is when the organization should pair the identified strengths of the organization to appropriate opportunities. It should also tackle how to handle identified weaknesses and threats.
Again, guided by the organization mission and objectives, the formulization of strategy should also include financial objectives. This includes areas such as sales and earnings potential and expectations. Financial objectives should also take into account any stated strategic objectives such as market share that may impact revenue projections.
The next step in creating sound planning for your business is to create an implementation of the strategy. Strategy is executed through a series of plans, budgets and outlined methods. The implementation of strategy requires that a firm’s resources be organized and where applicable, motivated towards the accomplishment of the organizations stated objectives. Special care must be given in the communication of strategy and the outlining of areas of responsibility if the organization hopes to achieve success. Failure for management or other stakeholders to understand the importance of and the reasoning behind initiatives will cause erosion in motivation and performance.
The final step in the strategic planning process is to create strategic appraisal and regulation. This creates definitions of what and how success or failure is to be measured, and creates opportunities for necessary changes to be made based on changing conditions or unexpected results.
The strategic planning process should be ongoing and organizations should be aware that failure to implement a sound strategic planning process, especially in the area of appraisal and regulation is the same as planning for failure.
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