Planning is the core of strategic management. It ensures the achievement of organizational goals, motivates teams, enables control, and serves as the foundation for team management. By implementing strategic planning, a company defines what needs to be done to achieve its objectives.
Functions of Strategic Planning:
- Awareness of organizational strategy
- Adaptation to the external environment
- Internal coordination
- Resource allocation
Key Aspects of Strategic Management
Strategic planning consists of several stages:
- Defining the mission and goals of the organization
- Strategic analysis
- Strategy selection
- Strategy implementation
- Evaluation and control
Defining the Mission and Goals of the Organization
The mission defines the philosophy and core purpose of the enterprise. A well-crafted mission communicates a lot about the company, including:
- The organization’s operating principles
- The enterprise’s status
- Key business characteristics
- The true intentions of leadership
The mission sets the organization’s future direction. It helps shape company values and guides efforts toward achieving strategic goals.
The mission should not depend on the current financial state or operational challenges. While generating profit is the reason an organization exists, profit should not be the mission itself.
A detailed description of the mission, used for managing and implementing processes, is referred to as the goal.
A strategic goal is characterized by:
- A clear action plan for a specific time period
- Specificity and measurability
- Consistency and alignment with other missions and available resources
- Clear assignment and controllability
Once the company defines its mission and goal, it begins structuring its management approach and defining policies.
Strategic Analysis
Strategic (or portfolio) analysis is an environmental review that includes data gathering and assessment of the company’s strengths, weaknesses, and potential opportunities, based on both internal and external information.
Plans must be based on facts—on information about the market, customers, and competitors. This requires research, which doesn’t necessarily need to be outsourced to a marketing agency. Internal experts and employees can be a valuable source of useful information that should be collected, processed, and analyzed.
The analysis is often done using two-dimensional matrix models, allowing comparison between departments, products, and operations using specific criteria.
Three approaches to strategic analysis:
- Tabular approach
- Coordinate-based approach
- Logical approach
Strategic analysis includes an assessment of the environment, necessary to understand the company’s current market position.
Environmental analysis consists of three components:
- External Environment – including economic factors, legal and regulatory influences, political processes, natural resources and ecological conditions, socio-cultural trends, scientific and technological progress, and infrastructure.
- Immediate Environment – analyzed through major components such as customers, suppliers, competitors, and the labor market.
- Internal Environment – reveals the organization’s potential in competitive scenarios. Analyzed through human resources (skills, qualifications, motivation), management structure, production (technical, operational, organizational characteristics), R&D, finance, marketing, and organizational culture.
Strategy Selection and Implementation
A strategy defines the organization’s long-term direction across all business areas, products, human resources, and market positions.
It allows the organization to evaluate various development paths and choose the most suitable alternative.
When choosing a strategy, it’s essential to consider:
- The level of competition in the strategic zone
- The growth prospects of that zone
- The technologies the company possesses
A strategy leads the company toward its goals. Strategy development can be supported by programs and proceduresrepresented by mid- and short-term implementation plans.
Strategic analysis begins with the question:
“Will the chosen strategy help achieve our goal?”
If yes, then follow-up analysis includes:
- Alignment of the strategy with the external environment’s conditions and demands
- Suitability of the strategy to the company’s potential and resources
- Acceptability of risks involved in the strategy
To ensure successful execution:
- Communicate the goals, strategy, and plans clearly to employees to foster understanding and engagement
- Management should ensure timely availability of resources and develop the strategy’s implementation plan through goal setting
- Each management level should address its own tasks and responsibilities as part of strategy execution
Evaluation and Control
The final stage is evaluating the outcomes of strategy implementation. Previous stages are adjusted using feedback mechanisms.
Strategic planning is a dynamic process. Companies must constantly assess their situation and refine future plans. This requires regular analysis of the external environment in which the organization operates.
The goal is to comprehensively assess the company’s opportunities and threats, as well as its internal strengths and weaknesses, and use this understanding to shape key performance indicators for the planning period.
Conclusion
A strategic plan helps a company anticipate what lies ahead by understanding its current situation. Strategic planning is a necessary condition for business success.
