Strategic planning is an organization's process of defining its strategy, or direction, and

making decisions on allocating its resources to pursue this strategy, including its capital
and people. Various business analysis techniques can be used in strategic planning,
including SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats ), PEST
analysis (Political, Economic, Social, and Technological), STEER analysis (Socio-
cultural, Technological, Economic, Ecological, and Regulatory factors), and EPISTEL
(Environment, Political, Informatic, Social, Technological, Economic and Legal).

Strategic planning is the formal consideration of an organization's future course. All

strategic planning deals with at least one of three key questions:

1. "What do we do?"
2. "For whom do we do it?"
3. "How do we excel?"

In business strategic planning, the third question is better phrased "How can we beat or
avoid competition?". (Bradford and Duncan, page 1).

In many organizations, this is viewed as a process for determining where an organization

is going over the next year or - more typically - 3 to 5 years (long term), although some
extend their vision to 20 years.

In order to determine where it is going, the organization needs to know exactly where it
stands, then determine where it wants to go and how it will get there. The resulting
document is called the "strategic plan."

It is also true that strategic planning may be a tool for effectively plotting the direction of
a company; however, strategic planning itself cannot foretell exactly how the market will
evolve and what issues will surface in the coming days in order to plan your
organizational strategy. Therefore, strategic innovation and tinkering with the 'strategic
plan' have to be a cornerstone strategy for an organization to survive the turbulent
business climate.
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[edit] Vision statements, Mission statements and values

Vision: Defines the desired or intended future state of an organization or enterprise in
terms of its fundamental objective and/or strategic direction. Vision is a long term view,
sometimes describing how the organization would like the world in which it operates to
be. For example a charity working with the poor might have a vision statement which
read "A world without poverty"

Mission: Defines the fundamental purpose of an organization or an enterprise, succinctly

describing why it exists and what it does to achieve its Vision.
It is sometimes used to set out a 'picture' of the organization in the future. A mission
statement provides details of what is done and answers the question: "What do we do?"
For example, the charity might provide "job training for the homeless and unemployed"

Values: Beliefs that are shared among the stakeholders of an organization. Values drive
an organization's culture and priorities and provide a framework in which decisions are
made. For example, "Knowledge and skills are the keys to success" or "give a man bread
and feed him for a day, but teach him to farm and feed him for life". These example
values may set the priorities of self sufficiency over shelter.

Strategy: Strategy narrowly defined, means "the art of the general" (from Greek
stratigos). A combination of the ends (goals) for which the firm is striving and the means
(policies) by which it is seeking to get there.

Organizations sometimes summarize goals and objectives into a mission statement

and/or a vision statement. Others begin with a vision and mission and use them to
formulate goals and objectives.

While the existence of a shared mission is extremely useful, many strategy specialists
question the requirement for a written mission statement. However, there are many
models of strategic planning that start with mission statements, so it is useful to examine
them here.

• A Mission statement tells you the fundamental purpose of the organization. It

defines the customer and the critical processes. It informs you of the desired level
of performance.

• A Vision statement outlines what the organization wants to be, or how it wants
the world in which it operates to be. It concentrates on the future. It is a source of
inspiration. It provides clear decision-making criteria.

An advantage of having a statement is that it creates value for those who get exposed to
the statement, and those prospects are managers, employees and sometimes even
customers. Statements create a sense of direction and opportunity. They both are an
essential part of the strategy-making process.

Many people mistake the vision statement for the mission statement, and sometimes one
is simply used as a longer term version of the other. The Vision should describe why it is
important to achieve the Mission. A Vision statement defines the purpose or broader goal
for being in existence or in the business and can remain the same for decades if crafted
well. A Mission statement is more specific to what the enterprise can achieve itself.
Vision should describe what will be achieved in the wider sphere if the organization and
others are successful in achieving their individual missions.
A mission statement can resemble a vision statement in a few companies, but that can be
a grave mistake. It can confuse people. The mission statement can galvanize the people to
achieve defined objectives, even if they are stretch objectives, provided it can be
elucidated in SMART (Specific, Measurable, Achievable, Relevant and Time-bound)
terms. A mission statement provides a path to realize the vision in line with its values.
These statements have a direct bearing on the bottom line and success of the
organization.

Which comes first? The mission statement or the vision statement? That depends. If you
have a new start up business, new program or plan to reengineer your current services,
then the vision will guide the mission statement and the rest of the strategic plan. If you
have an established business where the mission is established, then many times, the
mission guides the vision statement and the rest of the strategic plan. Either way, you
need to know your fundamental purpose - the mission, your current situation in terms of
internal resources and capabilities (strengths and/or weaknesses) and external conditions
(opportunities and/or threats), and where you want to go - the vision for the future. It's
important that you keep the end or desired result in sight from the start Features of an
effective vision statement include:

• Clarity and lack of ambiguity

• Vivid and clear picture
• Description of a bright future
• Memorable and engaging wording
• Realistic aspirations
• Alignment with organizational values and culture

To become really effective, an organizational vision statement must (the theory states)
become assimilated into the organization's culture. Leaders have the responsibility of
communicating the vision regularly, creating narratives that illustrate the vision, acting as
role-models by embodying the vision, creating short-term objectives compatible with the
vision, and encouraging others to craft their own personal vision compatible with the
organization's overall vision. In addition, mission statements need to be subjected to an
internal assessment and an external assessment. The internal assessment should focus on
how members inside the organization interpret their mission statement. The external
assessment — which includes all of the businesses stakeholders — is valuable since it
offers a different perspective. These discrepancies between these two assessments can
give insight on the organization's mission statement effectiveness.

Another approach to defining Vision and Mission is to pose two questions. Firstly, "What
aspirations does the organization have for the world in which it operates and has some
influence over?", and following on from this, "What can (and/or does) the organization
do or contribute to fulfill those aspirations?". The succinct answer to the first question
provides the basis of the Vision Statement. The answer to the second question determines
the Mission Statement.

[edit] Strategic planning outline

The preparatory phase of a business plan relies on planning. The first chapters of a
business plan include Analysis of the Current Situation and Marketing Plan Strategy and
Objectives.

Analysis of the current situation - past year

• Business trends analysis

• Market analysis
• Competitive analysis
• Market segmentation
• Marketing-mix
• SWOT analysis
• Positioning - analyzing perceptions
• Sources of information

Marketing plan strategy & objectives - next year

• Marketing strategy
• Desired market segmentation
• Desired marketing-mix
• TOWS-based objectives as a result of the SWOT
• Position & perceptual gaps
• Yearly sales forecast

According to Arieu, "there is strategic consistency when the actions of an organisation

are consistent with the expectations of management, and these in turn are with the market
and the context" (S.K. Sharman in Human Resource Management: A Strategic Approach
to Employment)

[edit] Methodologies
There are many approaches to strategic planning but typically a three-step process may
be used:

• Situation - evaluate the current situation and how it came about.

• Target - define goals and/or objectives (sometimes called ideal state)
• Path - map a possible route to the goals/objectives

One alternative approach is called Draw-See-Think

• Draw - what is the ideal image or the desired end state?

• See - what is today's situation? What is the gap from ideal and why?
• Think - what specific actions must be taken to close the gap between today's
situation and the ideal state?
 • Plan - what resources are required to execute the activities?

An alternative to the Draw-See-Think approach is called See-Think-Draw

• See - what is today's situation?

• Think - define goals/objectives
• Draw - map a route to achieving the goals/objectives

In other terms strategic planning can be as follows:

• Vision - Define the vision and set a mission statement with hierarchy of goals and
objectives
• SWOT - Analysis conducted according to the desired goals
• Formulate - Formulate actions and processes to be taken to attain these goals
• Implement - Implementation of the agreed upon processes
• Control - Monitor and get feedback from implemented processes to fully control
the operation

[edit] Situational analysis

When developing strategies, analysis of the organization and its environment as it is at
the moment and how it may develop in the future, is important. The analysis has to be
executed at an internal level as well as an external level to identify all opportunities and
threats of the external environment as well as the strengths and weaknesses of the
organizations.

There are several factors to assess in the external situation analysis:

1. Markets (customers)
2. Competition
3. Technology
4. Supplier markets
5. Labor markets
6. The economy
7. The regulatory environment

It is rare to find all seven of these factors having critical importance. It is also uncommon
to find that the first two - markets and competition - are not of critical importance.
(Bradford "External Situation - What to Consider")

Analysis of the external environment normally focuses on the customer. Management

should be visionary in formulating customer strategy, and should do so by thinking about
market environment shifts, how these could impact customer sets, and whether those
customer sets are the ones the company wishes to serve.
Analysis of the competitive environment is also performed, many times based on the
framework suggested by Michael Porter.

[edit] Goals, objectives and targets

Strategic planning is a very important business activity. It is also important in the public
sector areas such as education. It is practiced widely informally and formally. Strategic
planning and decision processes should end with objectives and a roadmap of ways to
achieve them.

One of the core goals when drafting a strategic plan is to develop it in a way that is easily
translatable into action plans. Most strategic plans address high level initiatives and over-
arching goals, but don’t get articulated (translated) into day-to-day projects and tasks that
will be required to achieve the plan. Terminology or word choice, as well as the level a
plan is written, are both examples of easy ways to fail at translating your strategic plan in
a way that makes sense and is executable to others. Often, plans are filled with
conceptual terms which don’t tie into day-to-day realities for the staff expected to carry
out the plan.

The following terms have been used in strategic planning: desired end states, plans,
policies, goals, objectives, strategies, tactics and actions. Definitions vary, overlap and
fail to achieve clarity. The most common of these concepts are specific, time bound
statements of intended future results and general and continuing statements of intended
future results, which most models refer to as either goals or objectives (sometimes
interchangeably).

One model of organizing objectives uses hierarchies. The items listed above may be
organized in a hierarchy of means and ends and numbered as follows: Top Rank
Objective (TRO), Second Rank Objective, Third Rank Objective, etc. From any rank, the
objective in a lower rank answers to the question "How?" and the objective in a higher
rank answers to the question "Why?" The exception is the Top Rank Objective (TRO):
there is no answer to the "Why?" question. That is how the TRO is defined.

People typically have several goals at the same time. "Goal congruency" refers to how
well the goals combine with each other. Does goal A appear compatible with goal B? Do
they fit together to form a unified strategy? "Goal hierarchy" consists of the nesting of
one or more goals within other goal(s).

One approach recommends having short-term goals, medium-term goals, and long-term
goals. In this model, one can expect to attain short-term goals fairly easily: they stand just
slightly above one's reach. At the other extreme, long-term goals appear very difficult,
almost impossible to attain. Strategic management jargon sometimes refers to "Big Hairy
Audacious Goals" (BHAGs) in this context. Using one goal as a stepping-stone to the
next involves goal sequencing. A person or group starts by attaining the easy short-term
goals, then steps up to the medium-term, then to the long-term goals. Goal sequencing
can create a "goal stairway". In an organizational setting, the organization may co-
ordinate goals so that they do not conflict with each other. The goals of one part of the
organization should mesh compatibly with those of other parts of the organization.

[edit] References
1. ^ στρατηγικός, Henry George Liddell, Robert Scott, A Greek-English Lexicon, on
Perseus Digital Library
2. ^ στρατηγός, Henry George Liddell, Robert Scott, A Greek-English Lexicon, on
Perseus Digital Library
3. ^ ἀγός, Henry George Liddell, Robert Scott, A Greek-English Lexicon, on
Perseus Digital Library
4. ^ ἄγω, Henry George Liddell, Robert Scott, A Greek-English Lexicon, on Perseus
Digital Library

The Strategic Planning Process

In the 1970's, many large firms adopted a formalized top-down strategic planning model.
Under this model, strategic planning became a deliberate process in which top executives
periodically would formulate the firm's strategy, then communicate it down the
organization for implementation. The following is a flowchart model of this process:

The Strategic Planning Process

Mission
|
V
Objectives
|
V
Situation Analysis
|
V
Strategy Formulation
|
V
 Implementation
|
V
Control

This process is most applicable to strategic management at the business unit level of the
organization. For large corporations, strategy at the corporate level is more concerned
with managing a portfolio of businesses. For example, corporate level strategy involves
decisions about which business units to grow, resource allocation among the business
units, taking advantage of synergies among the business units, and mergers and
acquisitions. In the process outlined here, "company" or "firm" will be used to denote a
single-business firm or a single business unit of a diversified firm.

Mission

A company's mission is its reason for being. The mission often is expressed in the form
of a mission statement, which conveys a sense of purpose to employees and projects a
company image to customers. In the strategy formulation process, the mission statement
sets the mood of where the company should go.

Objectives

Objectives are concrete goals that the organization seeks to reach, for example, an
earnings growth target. The objectives should be challenging but achievable. They also
should be measurable so that the company can monitor its progress and make corrections
as needed.

Situation Analysis

Once the firm has specified its objectives, it begins with its current situation to devise a
strategic plan to reach those objectives. Changes in the external environment often
present new opportunities and new ways to reach the objectives. An environmental scan
is performed to identify the available opportunities. The firm also must know its own
capabilities and limitations in order to select the opportunities that it can pursue with a
higher probability of success. The situation analysis therefore involves an analysis of
both the external and internal environment.

The external environment has two aspects: the macro-environment that affects all firms
and a micro-environment that affects only the firms in a particular industry. The macro-
environmental analysis includes political, economic, social, and technological factors and
sometimes is referred to as a PEST analysis.

An important aspect of the micro-environmental analysis is the industry in which the firm
operates or is considering operating. Michael Porter devised a five forces framework that
is useful for industry analysis. Porter's 5 forces include barriers to entry, customers,
suppliers, substitute products, and rivalry among competing firms.

The internal analysis considers the situation within the firm itself, such as:

• Company culture
• Company image
• Organizational structure
• Key staff
• Access to natural resources
• Position on the experience curve
• Operational efficiency
• Operational capacity
• Brand awareness
• Market share
• Financial resources
• Exclusive contracts
• Patents and trade secrets

A situation analysis can generate a large amount of information, much of which is not
particularly relevant to strategy formulation. To make the information more manageable,
it sometimes is useful to categorize the internal factors of the firm as strengths and
weaknesses, and the external environmental factors as opportunities and threats. Such an
analysis often is referred to as a SWOT analysis.

Strategy Formulation

Once a clear picture of the firm and its environment is in hand, specific strategic
alternatives can be developed. While different firms have different alternatives depending
on their situation, there also exist generic strategies that can be applied across a wide
range of firms. Michael Porter identified cost leadership, differentiation, and focus as
three generic strategies that may be considered when defining strategic alternatives.
Porter advised against implementing a combination of these strategies for a given
product; rather, he argued that only one of the generic strategy alternatives should be
pursued.

Implementation

The strategy likely will be expressed in high-level conceptual terms and priorities. For
effective implementation, it needs to be translated into more detailed policies that can be
understood at the functional level of the organization. The expression of the strategy in
terms of functional policies also serves to highlight any practical issues that might not
have been visible at a higher level. The strategy should be translated into specific policies
for functional areas such as:

• Marketing
 • Research and development
• Procurement
• Production
• Human resources
• Information systems

In addition to developing functional policies, the implementation phase involves

identifying the required resources and putting into place the necessary organizational
changes.

Control

Once implemented, the results of the strategy need to be measured and evaluated, with
changes made as required to keep the plan on track. Control systems should be developed
and implemented to facilitate this monitoring. Standards of performance are set, the
actual performance measured, and appropriate action taken to ensure success.

Dynamic and Continuous Process

The strategic management process is dynamic and continuous. A change in one

component can necessitate a change in the entire strategy. As such, the process must be
repeated frequently in order to adapt the strategy to environmental changes. Throughout
the process the firm may need to cycle back to a previous stage and make adjustments.

Drawbacks of this Process

The strategic planning process outlined above is only one approach to strategic
management. It is best suited for stable environments. A drawback of this top-down
approach is that it may not be responsive enough for rapidly changing competitive
environments. In times of change, some of the more successful strategies emerge
informally from lower levels of the organization, where managers are closer to customers
on a day-to-day basis.

Another drawback is that this strategic planning model assumes fairly accurate
forecasting and does not take into account unexpected events. In an uncertain world,
long-term forecasts cannot be relied upon with a high level of confidence. In this respect,
many firms have turned to scenario planning as a tool for dealing with multiple
contingencies.

The Purpose of Planning

Strategic planning is intended to accomplish three important tasks:

• to clarify the outcomes that an organization wishes to achieve;

• to select the broad strategies that will enable the organization to achieve
those outcomes;
 • to identify ways to measure progress

In addition, many organizations use the process to affirm their links to important
stakeholders by involving them in the creation of the plan.

corporate strategic planning

Definition
Systematic process of determining goals to be achieved in the foreseeable future. It consists of: (1)
Management's fundamental assumptions about the future economic, technological, and competitive
environments. (2) Setting of goals to be achieved within a specified timeframe. (3) Performance of
SWOT analysis. (4) Selecting main and alternative strategies to achieve the goals. (5) Formulating,
implementing, and monitoring the operational or tactical plans to achieve interim objectives.

Read more: http://www.businessdictionary.com/definition/corporate-strategic-

planning.html#ixzz11VB7wbwP

corporate strategic plan looks into the future over

a three to five year period.

It incorporates the annual plan, including a

summarized version of the marketing plan as the
working document for the coming year.

Every area of the business needs to be covered.

A realistic wish list is developed by every

department based on the parameters of the
strategic plan. Analysis and recommended
approaches (broad strategies) from the second
year on are developed similar to that of a
marketing plan.

However, corporate strategic planning

involves . . . input from individual managers at all
levels with each progressive layer of management
adding to the process including:
• Human Resource Needs
• New Products and Markets
• Diversification Approaches
• Working Capital Needs
• Orderly Transition of Power
• Capital Equipment Needs
• Facility Expansion Needs
• Retrenchment and/or Redirection
Budgets/Financial Statements . . . are developed
for each year of the strategic plan with increasing
generalization the further the need, desire, or idea
is from the first year.

Since the first year of a corporate strategic plan is

the annual plan . . . the strategic planning process
matures every year. It rolls-over . . . being used as
a blueprint for the next five years.
And while the annual plan may closely resemble
the second year of the previous year, variables
may significantly impact the remaining four years.

Developed and Implemented Properly . . .

strategic planning unites all levels of management
to achieve a common set of goals beyond the
annual marketing plan and budget.

FOCUS Associates . . . is ready to help you

implement the strategic planning process! FOCUS
will work with you to visualize your company's
future goals.