Fairfield Institute of Management and Technology

STRATEGIC PLANNING CONCEPT

& ITS FEATURES

Subject:
Business Policy & Strategic Management

Subject Code: 308

Submitted to :- Submitted by :-
MS. DEEPIKA Tarun Sharma
Enrollment No : 44451401718
Course: BBA(G)
Semester - 6th
STRATEGIC
PLANNING
CONCEPT AND
FEATURES
 Table of Contents

Contents Page No
Introduction 1
Objective 2
Strategic planning concept 3
Major approaches and process of 3-6
strategic planning
Common Problems 6-7
Importance and stages of planning 8-11
Features 12
Conclusion 13
Bibliography 14
 Introduction
The strategic planning process contains various steps, exercises and
opportunities to develop a culture of alignment and follow-through
within your organization. This resource will serve as a step-by-step
overview for the strategic planning process. Whether you're gearing
up to lead your own strategy session, or plan on attending and
participating in one, this guide will help you through each stage of the
planning process. 
 Objective

To develop further understanding of the theories and

concept covered in the course
To develop a practice of learning new aspects of the
subject and develop a habit of research related to the
subject
 Strategic Planning Concept

Strategic planning may be defined as a systematic process of having a vision for the desired
future, translation of this vision into the set of broadly defined goals or objectives and then a
sequence of steps to achieve them. In simplest terms, strategic planning is a methodical and
disciplined exercise consisting of a set of decisions to formulate strategies.
The word ‘strategy’ has been derived from the Greek word ‘strategos’ (a combination of
stratos, army, and agein, to conduct) which means preparing and implementing overall, top-
level plans to achieve the long-term plans of winning a war (through battles, negotiations, or
any other means available, according to the changing situation).
According to Schendel and Hatten, strategy refers to “the basic goals and objectives of the
organisation, the major programmes of action chosen to reach these goals and objectives and
major patterns of resource allocation used to relate the organisation to its environment.”
Thus, strategy in organisations may be defined as a comprehensive and integrated plan
designed to assure accomplishment of organisational objectives.

Major Approaches to Strategic Planning:-

1. Formal Structured Approach:

Under this approach, systematic procedures and planning programmes are set since it is
formal and structured approach; planners are making the best use of different types of
planning system. Such as – strategic, long-range or corporate planning, depending on the
variables of the situation.

This being the first approach, in the process of strategic decision making, it is classified into a
three-tier process:

i. Diagnostic Phase – It is devoted to identify the company’s aims and objectives.

ii. Directions Phase – In this stage, necessary direction are given adhering to the strategies
and the preferential choice as laid down in the alternative strategies.
iii. Implementation Phase – Lastly, the process deals with the implementation of the action
plan so as to achieve the goal.

2. Entrepreneurial Approach:

Under this approach, every attempt is made to exploit the available opportunities in the best
interest of the company. The strategist anticipates opportunities and based on this assumption,
he takes strategic decisions after carefully diagnosing them to his best capacity. With such a
necessary precaution; he will select the course of action best suited to get maximum benefits.
He, being responsible for good or bad results, should analyse the probable consequences of
the decisions taken. This approach is by nature of self-interest and self-oriented and, hence, is
commonly adopted by individual entrepreneurs and small business houses. It is seldom
practiced in the corporate sector.

3. Incremental Approach:

Also known as muddling through Approach. The management under this types of approach is
least interested to have strategies one after the other as a regular process but prefers to have
one strategy or an alternative only when it is compelled by unavoidable circumstances. The
main aim of the management is to settle the issues of negotiation with different groups
concerned in the organisation.
Even when alternatives are suggested, the management will see that they are simple. Easily
understandable and important from the point of view of employees so that changes made will
prove non- disruptive. The whole emphasis under this approach is laid on negotiated
settlement and hence whatever strategic decisions seldom taken are for remedial nature.
This type of approach is largely adopted by public companies which are generally supposed
to work under social and political pressure and deal with the human behaviour that goes on
changing with the passage of time.

4. Initiative-Anticipatory Approach:

This approach is largely built up on forecasting the future by the promoter or chief executive,
who accordingly makes the strategic decisions. The success of this approach depends upon
the promoter’s intuition, experience, judgment and methods absorbed by him to deal with a
variety of strategic problems.
It is a promoter’s personal approach and he is responsible to do and undo business strategies
in the organization he is handling such an approach is generally adopted in the promotional
stage of the company
.
5. Adoptive Approach:

Under this approach, strategic decisions are taken on the basis of how a change in the
environment is going to have impact at a given time. Hence, no decision can be for a
considerably long time as environment under which the company operates is likely to change.
So, in order to keep pace with the changing environment, the strategy decisions must be
reviewed with reference to the current positions of the company, its objectives and
effectiveness of the existing strategy. When the management finds that the situation is
unstable, risky and the future is gloomy, it may adopt contingency planning instead of
adopting long-term strategies, which may not fit in the changing situations.
So, in an uncertain environment, the whole emphasis is on adoptive approach to face the
changes effectively. Taking the nature into consideration it may also be called as integrated
approach, varying from situation to situation. In this way, under the adoptive approach, there
will be different approaches to strategic decision making.

Strategic Planning Process:-

The strategic planning process requires considerable thought and planning on the part of a
company’s upper-level management. Before settling on a plan of action and then determining
how to strategically implement it, executives may consider many possible options. In the end,
a company’s management will, hopefully, settle on a strategy that is most likely to produce
positive results (usually defined as improving the company’s bottom line) and that can be
executed in a cost-efficient manner with a high likelihood of success, while avoiding undue
financial risk.
The development and execution of strategic planning are typically viewed as consisting of
being performed in three critical steps:
 

1. Strategy Formulation
In the process of formulating a strategy, a company will first assess its current situation by
performing an internal and external audit. The purpose of this is to help identify the
organization’s strengths and weaknesses, as well as opportunities and threats (SWOT
Analysis). As a result of the analysis, managers decide on which plans or markets they should
focus on or abandon, how to best allocate the company’s resources, and whether to take
actions such as expanding operations through a joint venture or merger.
Business strategies have long-term effects on organizational success. Only upper
management executives are usually authorized to assign the resources necessary for their
implementation.
 

2. Strategy Implementation
After a strategy is formulated, the company needs to establish specific targets or goals related
to putting the strategy into action, and allocate resources for the strategy’s execution. The
success of the implementation stage is often determined by how good a job upper
management does in regard to clearly communicating the chosen strategy throughout the
company and getting all of its employees to “buy into” the desire to put the strategy into
action.
Effective strategy implementation involves developing a solid structure, or framework, for
implementing the strategy, maximizing the utilization of relevant resources, and redirecting
marketing efforts in line with the strategy’s goals and objectives.
 
3. Strategy Evaluation
Any savvy business person knows that success today does not guarantee success tomorrow.
As such, it is important for managers to evaluate the performance of a chosen strategy after
the implementation phase. Strategy evaluation involves three crucial activities: reviewing the
internal and external factors affecting the implementation of the strategy, measuring
performance, and taking corrective steps to make the strategy more effective. For example,
after implementing a strategy to improve customer service, a company may discover that it
needs to adopt a new customer relationship management (CRM) software program in order to
attain the desired improvements in customer relations.
All three steps in strategic planning occur within three hierarchical levels: upper
management, middle management, and operational levels. Thus, it is imperative to foster
communication and interaction among employees and managers at all levels, so as to help the
firm to operate as a more functional and effective team.
 

Common Problem and key issues in Strategic Planning Process:-

i. Failure to develop an understanding of what strategic planning really is.

ii. Failure to accept and balance interrelationships among intuition, judgment, managerial
values, and the formality of the planning system.
iii. Failure to encourage managers to do effective strategic planning through an appropriate
rewards system.
iv. Failure to tailor and design the strategic planning system to the unique characteristics of
the company.
v. Failure of top management to spend sufficient time on the strategic process.
vi. Failure to modify the strategic planning system as conditions within the company change.
vii. Failure to mesh properly the process of strategic planning from the highest levels of
management to its complete implementation.
viii. Failure to keep the planning system simple.
ix. Failure to secure within the company a climate for strategic planning.
x. Failure to link the major elements of strategic planning and the implementation process.

Where does marketing planning fit in with the overall strategic planning of a
business?
Strategic planning is concerned about the overall direction of the business. It is concerned
with marketing, of course. But it also involves decision-making about production and
operations, finance, human resource management and other business issues.
The objective of a strategic plan is to set the direction of a business and create its shape so
that the products and services it provides meet the overall business objectives.
Marketing has a key role to play in strategic planning, because it is the job of marketing
management to understand and manage the links between the business and the
“environment”.
Sometimes this is quite a straightforward task. For example, in many small businesses there is
only one geographical market and a limited number of products (perhaps only one product!).
However, consider the challenge faced by marketing management in a multinational
business, with hundreds of business units located around the globe, producing a wide range of
products. How can such management keep control of marketing decision-making in such a
complex situation? This calls for well- organized marketing planning.

Importance of strategic planning:-

The importance of strategic planning may be understood in the light of the following points:

1. Establishes Relationship between Organisation and External Environment:

An organisation works within the framework of external environment which is ever changing
and highly turbulent. This posits a lot of challenges to the company for effective functioning.
With the help of suitable policy formulations, companies attempts at coping up with the
dynamic environment and reduce the uncertainty. The very crux of strategic planning lies in
identification of external opportunities and threats and matching them with internal strengths
and weaknesses of the organisations.

2. Provides Future Direction to Organisation:

The strategies formulated provide a broad direction for future operations, the way in which
resources would be deployed to achieve organisational objectives. With the help of strategic
planning, an organisation is able to answer certain questions like – (i) What is the current
level of operations?, (ii) What business we want to be in? How to achieve such goals?

3. Aims at Optimum Utilisation of Resources:

With intensive analysis of both external and internal environment, strategic planning
identifies what can be done and how to achieve it. With this backdrop, strategic planning
ensures attainment of organisational objectives with optimal utilisation of resources. Strategic
planning ensures that resources are deployed in the most efficient manner.

4. Increases Competitive Strength:

 With the efficient formulation of strategies, an organisation may be confident enough to
sustain in the highly competitive world. Since strategies are designed after due environmental
analysis, thus rival’s or competitor’s move is already taken into account while framing of the
strategies. This ensures that courses of action designed are competent enough to combat the
moves of competitors.

5. Facilitates Coordination and Control:

Corporate strategy is a strategy for organisation as a whole which is further subdivided into
departmental and functional level strategies. Such a strategy by providing a master plan
serves as a strong base for coordination amongst various departments. By providing the broad
base of operations and benchmarks for evaluating performance, strategic planning also
facilitates control.

Strategic Planning Stages

1. Generation of Strategic Alternatives: In this step, the firm seeks a number of
strategic alternatives in the light of the firm’s business, industry and competition. These
strategies may be acquisition and expansion, focusing on core competencies, increase in the
market share, etc.

1. Assessment of Strategic Alternatives: At this stage, the firm observes various strategies, on
the basis of the benefits. It questions:
1. Will it improve the firm’s position or market share?
2. Will it increase existing strengths?
3. Will it bring new opportunities?
4. Will it maximise shareholder’s wealth?
2. Selection of Strategy: The optimum strategy is selected at this stage, among various
alternative strategies.
3. Both internal and external analysis of the firm is performed during the exercise;
wherein internal analysis entails an evaluation of financial performance, operational
limitations, current market position/share corporate culture, strengths and weaknesses.
On the other hand, external analysis concentrates on the analysis of competition, trends,
changing business environment, opportunities and threats, latest technology and so forth.
Features of Strategic planning
1. Process of Questioning:
It answers questions like where we are and where we want to go, what we are and what we
should be

2. Time Horizon:
It aims at long-term planning, keeping in view the present and future environmental
opportunities. It helps organisations analyse their strengths and weaknesses and adapt to the
environment. Managers should be farsighted to make strategic planning meaningful.

3. Pervasive Process:
It is done for all organisations, at all levels; nevertheless, it involves top executives more than
middle or lower-level managers since top executives envision the future better than others.

4. Focus of Attention:
It focuses organisation’s strengths and resources on important and high-priority activities
rather than routine and day-to-day activities. It reallocates resources from non-priority to
priority sectors.

5. Continuous Process:
Strategic planning is a continuous process that enables organisations to adapt to the ever-
changing, dynamic environment.

6. Co-Ordination:
It coordinates organisations internal environment with the external environment, financial
resources with non- financial resources and short-term plans with long- term plans.
 Conclusion

Strategic planning is a critical component for effective governance

and management of a NGO. In simple words, Strategic planning is a
systematic process of deciding key decisions for an organization to
thrive successfully in the next few years.  The planning process is a
disciplined and time taking process produces fundamental decisions
and actions that shape the organization.
 Bibliography

1. Book : Strategic management by Azhar Kazmi

2. Website : www.wikipedia.com