How to Implement the strategic planning

Strategic planning is a formal system for supporting strategic decision making. Strategic decisions* are

decisions that are integrative, competitively consequential, involve considerable resource commitment, and are hard

to reverse. Such decisions have the potential to critically affect organizational health and survival. Examples of

strategic decisions are: restructuring, new product introduction, organizational change, joint venture and strategic

alliance, acquisitions, divestments, new process technologies, new marketing venues, geographic expansion,

diversification to other industries, capacity expansion, creating new facilities, fundamental revision of human

resource policies, and engaging in quality initiatives.

Planning is a “formalized procedure to produce articulated result, in the form of an integrated

system of decisions”. It clearly consists of future thinking and often is motivated by attempts to control what comes

next. It means trying to design a desired future and identifying ways to bring it about. It involves resource allocation,

priorities, and actions needed to reach strategic goals. Strategic plans are converted into action through

organizational policies, procedures, and rules. Policies provide general guidelines for decision making and actions.

Procedures provide customary ways for sets of activities. Rules are specific courses of actions.

Strategic planning is “an explicit process for determining the firm’s long-range objectives, procedures for

generating and evaluating alternative strategies, and a system for monitoring the results of the plan when

implemented,”. It is based on a profile of the decisions and the predispositions of those who control the firm with

respect to its environment, context, and structure. The process of strategic planning consists of determining the

firm’s mission, major objectives, strategies, and policies that govern the acquisition and allocation of resources to

achieve the firm’s goals. This process is formal in that it “involves explicit systematic procedures used to gain the

involvement and commitment of those principal stakeholders affected by the plan”. Planning is formal in as much as

it involves a preordained flow and processing of information. This preordained flow has to be regular and scheduled.

According to Mintzberg strategic planning “must be seen, not as decision making, not as strategy making,

and certainly not as management, or as the preferred way of doing any of these things, but simply as the effort to

formalize parts of them—through decomposition, articulation, and rationalization.” Strategic planning supports, but

it is not a substitute for, strategic thinking. Strategic planning supports strategic decision making both before and

after such decisions are made. As input, strategic planning provides data and analysis. As output, it elaborates and

operationalized strategic decisions.

 Other definitions of strategic planning include the following: Kallman and Shapiro maintain that it is a

process of analyzing and understanding a system, formulating goals and objectives, assessing capabilities, designing

alternative courses of action, evaluating effectiveness, choosing, initiating actions for implementation, and engaging

in continuous surveillance. Kudla holds that it is a systematic process for determining goals and objectives for a

number of years into the future and developing strategies to govern resource acquisition and use. Liedtka sees it as a

“mechanism for setting and reviewing objectives, focusing on choices of long-term significance, identifying options,

allocating resources, and achieving coordination,

monitoring, and control.” And Hax and Majluf define it as a disciplined and well-defined effort aimed at

establishing objectives and assigning responsibilities for execution.

CHARACTERISTICS OF STRATEGIC PLANNING SYSTEMS

Strategic planning systems vary between firms and industries. Boyd and Reuning-Elliott note that there is

remarkably little consistency in the operationalization of strategic planning. Based on an extensive literature review,

they identify and test seven internally consistent indicators of strategic planning. These are the extents to which each

of the following are emphasized: mission statement, environmental trend analysis, competitor analysis, long-term

goals, annual goals, short-term action plans, and ongoing evaluation.

The role and realm of decisions are different across the hierarchical levels in the firm. At the corporate

level, strategic decisions and, hence, planning efforts are directed at integrating the variety of businesses the

corporation operates and managing the trade-offs necessary to maximize the benefits to the whole organization. At

the business level, efforts are made to achieve long-term competitive advantage over specific competitors and within

a specific industry context, congruent with the general corporate direction and with the resources allocated to the

particular business unit. Finally, functional strategic planning deals with the specific functional parts of each

business (such as manufacturing, R&D, sales, marketing, logistics, and service) where the unique competencies of

the business are developed and leveraged. Because

functional strategies are both so heavily dependent on business and corporate decisions and very

specific, they are rarely studied by strategic planning researchers.

At the business level, the sequence of strategic planning commonly progresses in four steps:

(1) developing of firm’s vision, mission, and goals

(2) performing external and internal analyses

(3) creating, evaluating, and choosing strategies

(4) implementation, control, and feedback

In large, multidivisional corporations the typical annual corporate-level strategic planning cycle involves more steps.

(1) planning guidelines

(2) draft business plan

(3) discussion with corporate headquarters

(4) revision of the business plan

(5) annual capital and operating budgets

(6) aggregate corporate plan

(7) board approval

(8) performance targets and

(9) performance appraisal.