Last updated: November 2016
What is strategic planning?
Strategic planning is an important topic in strategic management. Organisations engage in strategic planning in order to develop, implement and evaluate their strategies. Strategic planning refers to the decision-making and planning process that guides the long-term direction of an organisation (Plunkett & Attner, 1994).
The steps in strategic planning process
Different writers have identified different stages in strategic planning. For example, Plunkett & Attner (1994) identified six stages which had subsequently been followed by many writers. The discussion that follows will focus on the six stages of strategic planning.
Evaluate current mission, objectives and strategies
The first step in strategic planning is evaluating current mission, objectives and strategies of a company. This step is very crucial because organisations develop objectives and strategies to achieve their mission. An organisation may lack a sense of purpose without a clear mission. Organisations develop their mission in line with the nature and industry in which they operate. For example, Google’s mission is to organize the world’s information and make it universally accessible and useful.
Analyse the environments
The next stage in strategic planning is the analysis of the internal and external environments. Organisations need to identify the strengths and weaknesses they possess and opportunities and challenges they face. A number of tools can be used in this stage. SWOT and PESTEL are two widely discussed and used tools.
Reassess mission and objectives
Analysing the environments lead organisations to decide whether they should continue with the current mission, objectives and strategies or develop new ones. This stage is important because organisations may have to redefine their mission due to a change in the environments. Many big companies changed their mission more than once in the last decade.
Strategies can be formulated in corporate, business, and functional levels of an organisation. Corporate level is the highest level of an organisation and the strategies formulated at this level impact on the long-term direction of the organisation. The decisions of growth, retrenchment, and CSR are some of the decisions taken at the corporate level.
Strategies must be implemented once they are formulated. Otherwise, it is a waste of time and resources. A number of resources may be necessary to implement a strategy e.g. finance, land, time, technology, and raw materials to name but a few. Likewise, issues such as leadership, structure and culture, and managerial commitment are also important to implement a strategy.
Monitor and evaluate results
Managers need to monitor the implementation of the strategy and evaluate the results it produces. This is very important for two main reasons. Firstly, managers need to see if the strategy is being implemented in line with the aims and objectives set at the outset. If it is not, then managers need to put some corrective actions in place. Secondly, they need to find out if the strategy has brought about the intended results. If the strategy has failed to bring about any positive results, then the managers need to engage in a fact-finding mission to see what went wrong. What makes or breaks a strategy? Is it the formulation or the implementation of the strategy?
Johnson, G., Scholes, K. and Whittington, R. (2006) Exploring Corporate Strategy: Text and Cases, 7th Edition, UK: Prentice Hall
Plunkett, W. & Attner, R. (1994) Introduction to Management, 5th edition, USA: International Thomson Publishing
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.