Strategic Planning
The Determination of Objectives
Small Business
The resources at the disposal of the entrepreneur are always thought to
be limited.
In spite of limitations, however, entrepreneurs are not
discouraged from pursuing their objectives.
They can make use of some techniques that have been proven
valuable in business operations.
In the quest for attainment of business objectives, one technique has
slowly been adopted by business persons.
The concept, called STRATEGIC PLANNING, is borrowed from the
military and has found useful applications in large corporate enterprises.
Its relevance to small business, however, has also been
recognized.
Strategic Planning
- refers to the process of determining the primary objectives of the
entrepreneurship and then adopting courses of action and
allocating resources to achieve those objectives.
The definition involves three distinct steps:
(1) determination of objectives,
(2) adoption of course of action, and
(3) allocation of resources.
Strategic planning provides the
entrepreneur with a systematic approach
to the achievement of the firm’s
objectives.
Fig.1 shows that the determination of objectives is
a prerequisite step before a strategy is adopted. In
turn, strategy is a requirement before resources
are allocated.
for 1.
The objectives of the firm are important components of the firm’s
strategic planning, but before these are determined, the firm’s
mission statement must first be adopted.
THE MISSION STATEMENT
- This term refers to the basic description of the fundamental
nature, rationale and direction of the firm.
It consists of three concerns:
1. How the entrepreneur intends to use his resources;
2. How the entrepreneur expects to relate to the ever-changing
environment; and
3. The kinds of values the entrepreneur intends to offer his customers.
Strategic Objectives
- This term refers to specific performance targets that the
entrepreneurs hope to accomplish.
- The objectives define, in specific terms, how the firm’s mission
will be realized.
Examples of strategic objectives are the following:
● Expand production capacity by 50% within two years;
● Increase production sales by 50% by the year 2021;
● Increase market share by 10% every two years; and
● Increase the number of outlets by three within three years.
2. Adoption of Course of Action
After the primary (or strategic) objectives are established, the
entrepreneur must develop a strategy which is alternately called
course of action.
A strategy is a carefully designed plan for achieving the
firm’s objectives.
A strategy indicates how the entrepreneur will attempt to
accomplish the goals with the resources available.
Examples of strategics are the following:
● Establish branches in strategic locations;
● Design a system that will attract persons with high potentials to
work with the company;
In developing realistic strategies, the entrepreneur can
make use of the most popular tools.
A. SWOT ANALYSIS
- The firm which is fully aware of its internal environment
(specifically its strengths and weaknesses) as well as its
external environment (specifically threats and
opportunities is most likely to develop a strategy that
considers the firm’s needs.
SWOT ANALYSIS is an organized method of assessing a firm's strengths
and weaknesses and the opportunities and threats in the external
environment that confront or will confront the firm.
Purpose of SWOT analysis
➔ is to match the firm's strengths and weaknesses with the
external opportunities and threats to determine what
strategy to adopt.
B. FORECASTS OF FUTURE SALES PERFORMANCE.
- Forecasts are supplementary tools for SWOT analysis.
- It is an estimate or prediction of the future sales or
income of the firm.
- Forecasts may be short term (one year or less), medium
term (one to five years), Long term (over five years).
SALES FORECASTS are often determined through a combination of
statistical and intuitive forecasts tempered by the experience of the
entrepreneur.
3. Allocation of Resources
TIPS IN ALLOCATING RESOURCES

Firm’s strength
- refers to a skill, a competence, a valuable organizational resource
or competitive capability, or an achievement that gives the firm a
market advantage.

Examples of strengths are as follows:

● The firm's exclusive supply contract with a reliable manufacturer.
● A company’s ownership of the land that is the source of high grade
material required for producing its products.

Firm’s weakness
- refers to something a company lacks or does poorly (compared
with others) or a condition that puts it at a disadvantage. It must
be noted however, that depending on the competitive situation, a
weakness may or may not make a company vulnerable to
competition.

Examples of weakness are as follows:

Deploying Resources
● Lack of qualified managers; - The specific aim of planning is to be able to deploy the right
● Poor design of the firm’s products;
quality and quantity of resources in the various activities required
to achieve the objectives.
Opportunity
- refers to the chance offered by the external environment to Strategy Concerns of Small Business
improve the firm’s situation significantly. In determining what strategy to adapt, the entrepreneur is confronted
with two general situations:
Examples of opportunity are as follows:
1. New Business — Is he organizing a New Business?
● For a motorcycle trading firm
- the escalating cost of fuel. 2. Old Business — Is he currently running an Old Business?
● For a small restaurant
- the withdrawal from business of a major competition.

Threats
- refers to a challenge posed by an unfavorable trend or
development in the external environment that would lead to, in
absence of purposeful entrepreneurial action, the erosion of the
entrepreneurship's position.

Examples of threats are as follows:

● To the grocery store
- the proposed opening of a mall in the vicinity.
● To the restaurant
- the proposed construction of a diversion road by passing
the highway and the restaurant.
Why S.B Operators ignore Strategic Planning
1. Lack of expertise
- Few small business operators are trained in strategic
planning.

2. Inability to get started

- Even if small business operators are convinced about the
importance of planning, they fail to get started for lack of
sufficient exposure to planning activities.

3. Uncontrollable, often intangible variables

- The uncontrollable and often intangible variables
complicate planning which later on discourages the small
business operator from repeating the exercise.

4. Resource poverty
- Planning requires time, but the small business operator
oftentimes does not have it.
- This is so because he must attend to the problems related
to lack of adequate capital, managerial experience, and
other key assets.

5. Focus on daily operations

- The daily requirements of small business usually keep the
small business operator so busy that he is left with no
time for panning.

6. Failure to realize the importance of strategic planning

- The small business operator is exposed to the
environment of successful Filipino businesses who do not
engage in strategic planning.
- Thus gives sufficient reason to disregard the benefits of
strategic planning.

“A well-written strategic plan can play a pivotal role in your small

business’s growth and success .”