Strategic planning is one of the core management functions. It represents the process of selecting an organization’s goals and determining the paths to achieve them. Strategic planning provides the foundation for all managerial decisions—functions such as organization, motivation, and control are all oriented around the development of strategic plans.
This process creates a framework for managing members of the organization. Strategic planning is becoming increasingly relevant for Russian enterprises, which now face intense competition both among themselves and with foreign corporations.
Strategic planning defines what an organization should do now to achieve its desired future goals, assuming both the environment and the organization will change. In essence, it is a look from the future back to the present.
Strategic planning is a set of management functions that includes resource allocation, adaptation to the external environment, internal coordination, and awareness of organizational strategy.
Key Features of Strategic Planning
- The strategy is developed by top management.
- The strategic plan must be backed by research and factual data.
- Strategic plans should be flexible to allow for adjustments.
- The planning process should bring value and contribute to the company’s success.
- Implementation costs must be lower than the benefits obtained.
Stages of the Strategic Planning Process
- Defining the mission and goals of the organization
- Environmental analysis, including gathering data, assessing strengths and weaknesses, and identifying potential opportunities using internal and external information
- Choosing a strategy
- Implementing the strategy
- Evaluating and monitoring execution
Defining the Mission and Goals
The strategic planning process starts with defining the mission of the organization, which reflects the philosophy and purpose of its existence.
The mission is the organization’s core purpose. It typically clarifies the company’s status, describes its fundamental principles, reflects management’s true intentions, and outlines the most important business characteristics. The mission expresses forward-thinking intentions, indicating where the organization will focus its efforts and what values will guide its activities.
A mission should not be tied to the organization’s current state—financial issues or internal problems should not influence it. Profit generation, while essential to business survival, should not be the main purpose outlined in the mission.
The goal is the mission translated into a manageable form for implementation. A strategic goal is defined by:
- A clear timeframe
- Specificity and measurability
- Consistency and alignment with other goals and resources
- Targeted focus and controllability
Based on the mission and goals, development strategies and company policies are formed.
Strategic (Portfolio) Analysis
Strategic analysis—also known as portfolio analysis—is a core element of strategic planning. The main method involves building two-dimensional matrices to compare business units, departments, processes, and products using defined criteria.
There are three approaches to building these matrices:
- Tabular approach: Values increase from the top-left to bottom-right of the table.
- Coordinate approach: Values increase the further they are from the origin of the axes, analyzed from the bottom-left to top-right.
- Logical approach: Analysis proceeds from the bottom-right to the top-left of the matrix.
Environmental analysis is necessary within strategic analysis to assess the company’s current market position.
Three components of environmental analysis:
- External environment – evaluates economic conditions, legal regulations, politics, natural resources, social and cultural trends, scientific and technological progress, and infrastructure.
- Immediate environment – focuses on customers, suppliers, competitors, and the labor market.
- Internal environment – uncovers the company’s internal capabilities and potential to compete and achieve goals. It is assessed through:
- Human resources: qualifications, interests, and potential
- Management structure
- Production: organizational, operational, and technical characteristics
- R&D
- Finance
- Marketing
- Organizational culture
Strategy Selection
Strategy selection involves forming and evaluating alternative paths for the organization’s development and choosing the most suitable one. This stage uses tools such as quantitative forecasting, scenario planning, and portfolio analysis.
A strategy is a long-term, qualitatively defined direction of development. It addresses the organization’s scope, operations, relationships, and market position, guiding it toward its goals.
When choosing a strategy, it is important to consider:
- The company’s competitive position in its strategic business area
- Development prospects for that area
- Technologies the company possesses
Strategy Implementation
Implementing the strategy is a critical phase. Successful execution is what actually brings the company closer to its goals. Implementation occurs through programs, budgets, and procedures, which serve as mid- and short-term strategic action plans.
Key components of successful implementation:
- Communicate goals and strategies clearly to employees so they understand the direction and can participate in execution
- Management ensures timely provision of all resources needed for implementation and sets clear targets
- Each level of management solves its specific tasks and performs its assigned functions
Strategy Evaluation and Monitoring
Evaluation begins by answering the question: Will this strategy help the company achieve its goals? If yes, further evaluation focuses on:
- Alignment with external conditions and requirements
- Suitability for the company’s internal potential and resources
- Acceptable level of strategic risk
The outcomes of strategy implementation are monitored using a feedback system that helps adjust earlier stages if needed.
After selecting a strategy and developing an implementation plan, leadership should review the organization’s structure to ensure it supports the strategic goals.
Conclusion: Strategic Planning as a Dynamic Process
Strategic planning is not static—it is a dynamic process that demands ongoing assessment of current conditions and the definition of next steps. This requires a deep understanding of both the organization and its environment.
The goal is to conduct a comprehensive analysis of external opportunities and threats, internal strengths and weaknesses, and upcoming challenges. Based on this, the company develops key performance indicators for the planning period.
Strategic planning enables management to understand the present, which in turn allows them to effectively plan for the future. In a fast-changing world, strategic thinking becomes the foundation of success.
