The Central Role Of Strategic Planning
Strategic planning carries great importance for an organization because it provides a sense of direction to the organization and outlines quantifiable goals. A leading cause of business failure is an absence of a strategic plan. If a business does not have a strategic planning concept, it will go ahead without any aim and priorities with its employees thoroughly puzzled about the purpose of their jobs. This is why the strategic planning process is critical to business success, even if it takes up time and resources.
Different from business planning, the strategic planning steps involve vision, mission and out-of-the-box thinking. Strategic planning describes where you want your company to go and how. The primary purpose of strategic planning is to collectively address the mission and vision by asking about the purpose of your existence( Mission), what you want to achieve through your organization( Vision) and how you are going to get there(Plan).
Benefits Of Strategic Planning
The strategic planning components also help you reveal ways to improve performance. It gives you a deeper understanding about the organization and thus helps to restructure your organization to reach the planned goal. As your business grows, there will always be opportunities and challenges of different shapes and sizes which, the strategic plan, will help the organization to respond to.
The most important reason to do strategic planning is that it provides direction and focus to the organization by way of a written document. Having a clearly defined mission and vision enables the company to develop a strategic plan that is written down with clear work delegations and due dates so that the employees know what they should do and by when.
Often confused with business operation plans, strategic plans are expressions of ownership thoughts and visions of successful outcomes. Strategic planning functions just like a blueprint depicting how to build something. The strategic plan displays the finished product or goal.
Even if you have strong mission and vision statements, most leaders walk around without a written document on strategic planning. They know the organization’s strategic details and the tactics that need to be executed. Unfortunately, because the strategy isn’t down on paper and only a few people know about it, the strategy cannot be executed successfully. Thus, strategic planning serves as a blueprint for what must be implemented to create short and long-term success.
Moreover, everyone participating in the strategic planning process fosters cooperative interactions among colleagues and creates an opportunity for discussion on the direction the organization is taking. In addition, the process helps in resolving grievances and working out effective solutions.
Strategic planning is , by definition, brainstorming at its best. It depends on creativity, out-of-the-box thinking and also on the solid principles of management. The more understanding you have of your company and the market scenario, the better a strategic plan you will create.
A strategic planning tool like SWOT Analysis is a great way to prepare for developing a strategic plan. Identifying the Strengths, Weaknesses, Opportunities and Threats related to your company’s existence is often the primary building block of strategic plans.
Strategic planning starts with defining a company mission. A mission is important to an organization because it enables the management and employees to associate their actions and decisions with a clearly defined vision. “To grow considerably in the next one year,” is too broad a mission. “To grow the sales turnover by 30% in the next one year,” is a mission that is both workable and achievable. So you have to ensure that your mission is neither too broad nor too narrow.
A Brief Concept Of Strategic Business Units
To understand marketing management, we must understand strategic planning. Most large companies consist of four organizational levels: the corporate level, the division level, the business unit level, and the product level. Corporate headquarters is responsible for designing a corporate strategic plan to guide the whole enterprise; it makes decisions on the amount of resources to allocate to each division, as well as on which businesses to start or eliminate. Each business unit develops a strategic plan to carry that business unit( SBU) into a profitable future. Finally, each product level (product line, brand) within a business unit develops a marketing plan for achieving its objectives in its product market.(Philip Kotler)
Measurable Goals In Strategic Planning
Strategic objectives are based on the best information you have of the marketing scenario at the time and your most realistic assessments of what your company can achieve. Organizations also include a stage in the strategic planning process that involves evaluating goals and progress after a certain period of time against the earlier defined goals and take into account any new development in the industry. For example, if you plan to grow your business 25 percent during a specific year, but a major competitor enters the market, you’ll probably redefine your objectives and evaluate progress in terms of keeping your market share intact.
Conceiving goals and then defining strategies you’ll incorporate to achieve your objectives is the crux of strategic planning. The intricacies of the strategic planning process are expressed in measurable goals. Measurable goals set specific, tangible objectives expressed in terms of quantities and timelines. Measurable goals are important to an organization because they enable managers and employees to assess progress. For example, if you believe you must find new markets for your products to achieve increased sales volumes, you’ve also identified the method to use your strategy and reach company goals. By selecting the strategy, you have defined the method to employ in your comprehensive specifications in your plan.
Strategy Leads To Action
As critical as strategic planning is to the success of your company, all plans are useless unless you take action. As discussed above, an additional benefit of strategic planning is the obvious action plan that stems from identifying your strategy. While strategic planning involves your vision, mission and dreams, it automatically defines the basics of your action plan to reach your goal.
A clear set of goals, when combined with the SWOT analysis of your organization, shows you what’s important, what’s relevant and what’s actionable in your environment. Every business owner needs to know this because the business landscape is constantly changing, and faster than ever before. New government rules & regulations, changing workforce demographics, higher technology and economic uncertainty affect every business in different ways.
A strategic plan allows you to put these business challenges into perspective and gives you the discernment you need to tackle them in a well coordinated way. You’ll have a better view of how your business is affected by any particular change, and it will be easier for you to to take control of your business’s future.
Conclusion Of The Strategic Planning Process
Thus, your strategic plan does more than just focus your attention. It’s also essential for communicating your vision to investors, managers and employees, and it illustrates the process by which that vision will be tangibilized. Through the strategic planning process, you create a written and exhaustive document regarding your future plans and goals.
In order to grow your business, you’ve got to evaluate your strategic plan as often as possible, checking criterions and timelines and revising strategy in the face of changes in the internal and external business environments. A plan with an ongoing purpose is crucial to an effective business growth strategy.