The Importance of Learning the Strategic Planning and Project

Management

“If you don’t know where you're going, any road will take you there.”
- Lewis Carroll, as paraphrased by George Harrison

A strategic plan is a written document that points the way forward for your
business. It both lays out your company’s goals and explains why they’re important. The
strategic planning process also helps you uncover ways to improve performance. It can, for
instance, spark insights about how to restructure your organization so that it can reach its
full potential. Developing new products, expanding operations, reaching into new market
segments, solving organizational problems – as you grow your business, a well-designed
strategic plan will dictate how you respond to opportunities and challenges of every color,
shape and size.

Strategic planning is important to an organization because it provides a sense of

direction and outlines measurable goals. Strategic planning is a tool that is useful for
guiding day-to-day decisions and also for evaluating progress and changing approaches
when moving forward.

Ever since the dawn of the computer age, business and IS executives have been
working to improve the alignment between business and IS as a top business priority. In
this context, alignment means that the IS organization and its resources are focused on
efforts that support the key objectives defined in the strategic plan of the business. This
implies that IS and business managers have a shared vision of where the organization is
headed and agree on its key strategies. This shared vision will guide the IS organization in
hiring the right people with the correct skills and competencies, choosing the right
technologies and vendors to explore and develop, installing the right systems, and focusing
on projects that will best help the organization meet its mission.

Strategic Planning

Every business owner needs to be able to make these kinds of distinctions, because
the business landscape is constantly changing, and faster than ever before. New government
regulations, changing workforce demographics, advancing technology and economic
uncertainty affect every business differently.
A strategic plan allows you to put these business challenges into perspective. It gives you
the foresight you need to tackle them in a coordinated way. You’ll have a better view of the
ways your business is affected by any particular problem, which in turn makes it easier to
take control of your own future.

The strategic plan must take into account that the organization and everything
around it is changing: consumers’ likes and dislikes change; old competitors leave and new
ones enter the marketplace; the costs and availability of raw materials and labor fluctuate,
as does the fundamental economic environment (interest rates, growth in gross domestic
product, inflation rates); and the degree of industry and government regulation changes.

The following is a set of frequently cited benefits of strategic planning:

  Provides a framework and a clearly defined direction to guide decision making at all
levels throughout the organization.
 Ensures the most effective use is made of the organization’s resources by focusing
those resources on agreed-on key priorities.
 Enables the organization to be proactive and take advantage of opportunities and
trends, rather than passively reacting to them.
 Enables all organizational units to participate and work together toward
accomplishing a common set of goals.
 Provides a set of measures for judging organizational and personnel performance.
 Improves communication among management and the board of directors, shareholders,
and other interested parties.

The CEO of an organization must make long-term decisions about where the organization is
headed and how it will operate and has ultimate responsibility for strategic planning.
Subordinates, lower-level managers, and consultants typically gather useful information,
perform much of the underlying analysis, and provide valuable input. But the CEO must
thoroughly under- stand the analysis and be heavily involved in setting high-level business
objectives and defining strategies. The CEO also must be seen as a champion and supporter of
the chosen strategies; otherwise, the rest of the organization is unlikely to “buy into” those
strategies and take the necessary actions to make it all happen.

Through the strategic planning process, you’ll create a written document that clearly details the
future plans and goals of your company. Your business allies won’t have questions about how
they fit in, and they won’t be confused about how they can help you achieve your vision. The
strategic planning process ensures that everyone is on the same page.

There are a variety of strategic planning approaches, including issues based, organic, and goals
based.

Issues-based strategic planning - begins by identifying and analyzing key issues that face the
organization, setting strategies to address those issues, and identifying projects and initiatives
that are consistent with those strategies.
Organic strategic planning - defines the organization’s vision and values and then identifies
projects and initiatives to achieve the vision while adhering to the values.
Goals-based strategic planning - is a multiphase strategic planning process that begins by
performing a situation analysis to identify an organization’s strengths, weaknesses,
opportunities, and threats. Next, management sets direction for the organization by defining its
mission, vision, values, objectives, and goals. The results of the situation analysis and direction-
setting phases are used to define strategies to enable the organization to fulfill its mission.
Initiatives, programs, and projects are then identified and executed to enable the organization
to meet the objectives and goals. These ongoing efforts are evaluated to ensure that they
remain on track toward achieving the goals of the organization. The major phases in goals-based
strategic planning are (1) analyze situation, (2) set direction, (3) define strategies, and (4) deploy
plan.
Analyze Situation

Situation analysis is defined as an analysis of the internal and external factors of a

business. It clearly identifies a business's capabilities, customers, potential customers and
business environment, and their impact on the company. A situation analysis is an essential part
of any business plan and should be reviewed periodically to ensure that it is current.
All levels and business units of an organization must be involved in assessing its strengths
and weaknesses. Preparing a historical perspective that summarizes the company’s
development is an excellent way to begin this strategic planning step. Next, a multitude of data
is gathered about internal processes and operations, including survey data from customers and
suppliers and other objective assessments of the organization. The collected data is analyzed to
identify and assess how well the firm is meeting current objectives and goals, and how well its
current strategies are working. This process identifies many of the strengths and weaknesses of
the firm.
Strategic planning requires careful study of the external environment surrounding the
organization and assessing where the organization fits within it. This analysis begins with an
examination of the industry in which the organization competes: What is the size of the market?
How fast is it growing or shrinking? What are the significant industry trends?
Next, the organization must collect and analyze facts about its key customers, competitors, and
suppliers. The goal is twofold: capture a clear picture of the strategically important issues that
the organization must address in the future and reveal the firm’s competitive position against its
rivals. During this step, the organization must get input from customers, suppliers, and industry
experts—all of whom will likely be able to provide more objective viewpoints than employees.
Members of the organization should be prepared to hear things they do not like, but that may
offer tremendous opportunities for improvement. It is critical that unmet customer needs are
identified to form the basis for future growth.

The most frequently used model for assessing the nature of industry com- petition is
Michael Porter’s Five Forces Model, which identifies the fundamental factors that determine
the level of competition and long-term profitability of an industry.
The fundamental factors that determine the level of competition and long- term profitability of
an industry are the following:
1. The threat of new competitors will raise the level of competition. Entry barriers
determine the relative threat of new competitors. These barriers include the capital required to
enter the industry and the cost to customers to switch to a competitor.

2. The threat of substitute products can lower the profitability of industry competitors.
The willingness of buyers to switch products and the relative cost and performance of
substitutes are key factors in this threat.

3. The bargaining power of buyers determines prices and long-term profit- ability. This
bargaining power is stronger when there are relatively few buyers but many sellers in the
industry, or when the products offered are all essentially the same.

4. The bargaining power of suppliers can significantly affect the industry’s profitability.
Suppliers have strong bargaining power in industries that have many buyers and only a few
dominant suppliers and in industries that do not represent a key customer group for suppliers.

5. The degree of rivalry between competitors is high in industries with many equally sized
competitors or little differentiation between products.
Many organizations also perform a competitive financial analysis to deter- mine how their
revenue, costs, profits, cash flow, and other key financial parameters match up against those of
their competitors. Most of the information needed to prepare such comparisons is readily
available from competitors’ annual reports.
 The analysis of an organization’s internal assessment and study of its external
environment is summarized into a Strengths, Weaknesses, Opportunities, Threats (SWOT)
matrix, is a framework used to evaluate a company's competitive position and to develop
strategic planning. SWOT analysis assesses internal and external factors, as well as current
and future potential.

A SWOT analysis is designed to facilitate a realistic, fact-based, data-driven look at

the strengths and weaknesses of an organization, its initiatives, or an industry. The
organization needs to keep the analysis accurate by avoiding pre-conceived beliefs or gray
areas and instead focusing on real-life contexts. Companies should use it as a guide and not
necessarily as a prescription.

 Strengths describe what an organization excels at and what separates it from the
competition: a strong brand, loyal customer base, a strong balance sheet, unique
technology, and so on. For example, a hedge fund may have developed a proprietary
trading strategy that returns market-beating results. It must then decide how to use
those results to attract new investors.
 Weaknesses stop an organization from performing at its optimum level. They are areas
where the business needs to improve to remain competitive: a weak brand, higher-
than-average turnover, high levels of debt, an inadequate supply chain, or lack of
capital.
 Opportunities refer to favorable external factors that could give an organization a
competitive advantage. For example, if a country cuts tariffs, a car manufacturer
can export its cars into a new market, increasing sales and market share.
 Threats refer to factors that have the potential to harm an organization. For example, a
drought is a threat to a wheat-producing company, as it may destroy or reduce the crop
yield. Other common threats include things like rising costs for materials, increasing
competition, tight labor supply and so on.