Before mentioning anything about STRATEGIC PLANNING, it is necessary to understand the term "STRATEGIC MANAGEMENT" of which STRATEGIC PLANNING is but a TOOL.
According to David F. (Strategic Management, Columbus: Merrill Publishing Company, 1989), "Strategic management is the art and science of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its objectives".
The term "MANAGEMENT" is now being gradually replaced with "STRATEGIC MANAGEMENT" to describe the responsibility and working at higher levels of management. However, these higher levels of management can only influence the organization's effectiveness with the help of certain tools of management such as,
the organization's planning (Strategic planning) and control systems, the organizational structure, the organization's competitive strategy and the management styles.
Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. Various business analysis techniques can be used in strategic planning, including SWOT (Strengths, weaknesses, opportunities, threats) analysis and PEST analysis.
Get your grade
or your money back
using our Essay Writing Service!
The outcome is normally a strategic plan which is used as guidance to define functional and divisional plans, including Technology, Marketing, etc.
There is no standard definition for STRATEGIC PLANNING. However, different versions of it's definition do exist. For eg. "The systematic process by which an organisation formulates achievable policy objectives for future growth and development over the long term, based on its mission and goals, and on a realistic assessment of the human and material resources available to implement the plan." (Scottishmuseums.org)
Vision, mission and values
Vision: Defines where the organization wants to be in the future. It reflects the optimistic view of the organization's future.
Mission: Defines where the organization is going now, basically describing the purpose, why this organization exists.
Values: Main values protected by the organization during the progression, reflecting the organization's culture and priorities.
Strategic planning saves time, every minute spent in planning saves ten minutes in execution.
The purpose of individual strategic planning is for you to increase your return on energy, the return on the mental, emotional, physical and spiritual capital you have invested in your life and career.
Every minute an individual spends planning their goals, activities and time in advance saves ten minutes of work in the execution of those plans. Careful advance planning gives you a return of ten times, or 1,000%, on your investment of mental, emotional and physical energy.
There are many approaches to strategic planning but typically a three-step process may be used:
Situation - evaluate the current situation and how it came about.
Target - define goals and/or objectives (sometimes called ideal state)
Path - map a possible route to the goals/objectives One alternative approach is called Draw-See-Think Draw - what is the ideal image or the desired end state?
See - what is today's situation? What is the gap from ideal and why?
Think - what specific actions must be taken to close the gap between today's situation and the ideal state?
Plan - what resources are required to execute the activities?
An alternative to the Draw-See-Think approach is called See-Think-Draw
See - what is today's situation?
Think - define goals/objectives
Draw - map a route to achieving the goals/objectives
In other terms strategic planning can be as follows:
Vision - Define the vision and set a mission statement with hierarchy of goals
SWOT - According to the desired goals conduct analysis
Formulate - Formulate actions and processes to be taken to attain these goals
Implement - Implementation of the agreed upon processes
Control - Monitor and get feedback from implemented processes to fully control the operation.
Main Components of the strategic plan
Vision and Mission Statement
A mission statement is a statement of the company's purpose or it's fundamental reason for existing. The statement spotlights what business a company is presently in and the customer needs it's presently striving to meet. To build a solid foundation for a successful business, it's essential to have a written, clear, concise, and consistent mission statement. This statement should simply explain who you are and why you exist. The mission statement of Olsen & Associates Public Relations is "Dedicated to improving and optimizing public perceptions on behalf of our clients." If the company doesn't live up to this mission, it has no reason to exist.
Always on Time
Marked to Standard
Elements of an effective mission statement
Your mission statement serves as a guide for day-to-day operations and as the foundation for future decision-making. Make sure that your statement includes the following criteria:
_ Focuses on satisfying customer needs: Focus the business on satisfying customer needs instead of spotlighting your product or service.
_ Based on your core competencies: Base the mission on a competitively superior internal strength or resource that the company performs well in comparison to your competitors.
For e.g. McDonald's core competency is providing low-cost food and fast service to large groups of customers.
_ Motivates and inspires employee commitment: The mission statement should be motivating. Don't base it on making more sales or profits but on employees' significant work and how the mission contributes to people's lives.
_ Realistic and clear: Avoid making the mission too narrow or too broad. A mission needs to contain a purpose that's realistic to avoid "mission creep." Many organizations can go off on tangents that aren't core to their purpose and are unrealistic because their mission isn't clearly defined.
_ Specific, short, sharply focused, and memorable: Write a precise statement of purpose that describes the essence of the business in words the employees and customers can remember you by.
_ Clear and easily understood: Develop and write our mission statement so that you can quickly and briefly tell people you meet at a party or on airplanes why your company exists. If you keep that concept in mind, your statement can automatically be short and comprehensible.
_ Says what the company wants to be remembered for: In the end, a mission statement leaves a lasting impression. How do you want the world to think of you? The statement can provide simple insight into why you do business.
Forming a strategic vision should provide long-term direction, delineate what
kind of enterprise the company is trying to become, and infuse the organization with a sense of purposeful action. Vision serves as a unifying focal point for everyone in the organization - like a North star. In fact, your vision statement needs to be something you can achieve at some point in the future.
Visions are also referred to as big, hairy, audacious goals or BHAGs. A vision statement can be as far reaching as 100 years or as short as five years. Some people think if you aren't planning for 20 years in the future, you're being too short-sighted. Others say that the world is changing too quickly to plan more than a few years out. Either way, your vision statement needs to work for your company and the industry you operate in. I recommend developing a vision statement that's far reaching but attainable. If you attain it in a shorter amount of time, congratulations! But if you don't push your thinking out far enough, you find yourself being too tactical in your strategic planning.
A vision should include:
_ A vision statement: A short, concise statement of the organization's future state.
_ A vivid description: A long list of words and phrases that describe what that future state is like.
Here are two examples of visions or BHAGs that were very lofty at the time they were established:
_ We will put a man on the moon before the end of the decade and bring him back (President John F. Kennedy).
_ A computer on every desk and in every home using great software as an empowering tool (Microsoft).
These two statements don't sound so far-fetched now!
Elements of an effective vision statement
The vision statement needs to incorporate many elements. The following list contains elements that one can include in an effective vision statement :
_ Audacious: Represents a dream that's beyond what you think is possible. It represents the mountaintop the company is striving to reach. Visioning takes you out beyond your present reality.
_ Capitalizes on core competencies: Builds on the company's core competencies.It builds on what is already established: company history, customer base, strengths, and unique capabilities, resources, and assets.
_ Futurecasting: Provides a picture of what the business looks like in the future.
_ Inspiring: Engaging language that inspires. It creates a vivid image in people's heads that provokes emotion and excitement. It creates enthusiasm and poses a challenge.
This Essay is
a Student's Work
This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.Examples of our work
_ Motivating: Clarifies the direction in which the organization needs to move and keeps everyone pushing forward to reach it.
_ Purpose-driven: Gives employees a larger sense of purpose, so they see themselves as building a cathedral instead of laying stones.
Many people mistake vision statement for mission statement. The Vision describes a future identity and the Mission describes why it will be achieved. A Mission statement defines the purpose or broader goal for being in existence or in the business. It serves as an ongoing guide without time frame. The mission can remain the same for decades if crafted well. Vision is more specific in terms of objective and future state. Vision is related to some form of achievement if successful.
A mission statement can resemble a vision statement in a few companies, but that can be a grave mistake. It can confuse people. The vision statement can galvanize the people to achieve defined objectives, even if they are stretch objectives, provided the vision is SMART (Specific, Measurable, Achievable, Relevant and Timebound).
A mission statement provides a path to realize the vision in line with its values. These statements have a direct bearing on the bottomline and success of the organization.
Goals, objectives and targets
Strategic planning is a very important business activity. It is also important in the public sector areas such as education. It is practiced widely informally and formally. Strategic planning and decision processes should end with objectives and a roadmap of ways to achieve those objectives.
The following terms have been used in Strategic Planning: desired end states, plans, policies, goals, objectives, strategies, tactics and actions. Definitions vary, overlap and fail to achieve clarity. The most common of these concepts are specific, time bound statements of intended future results and general and continuing statements of intended future results, which most models refer to as either goals or objectives (sometimes interchangeably).
One model of organizing objectives uses hierarchies. The items listed above may be organized in a hierarchy of means and ends and numbered as follows: Top Rank Objective (TRO), Second Rank Objective, Third Rank Objective, etc. From any rank, the objective in a lower rank answers to the question "How?" and the objective in a higher rank answers to the question "Why?" The exception is the Top Rank Objective (TRO): there is no answer to the "Why?" question. That is how the TRO is defined.
People typically have several goals at the same time. "Goal congruency" refers to how well the goals combine with each other. Does goal A appear compatible with goal B? Do they fit together to form a unified strategy? "Goal hierarchy" consists of the nesting of one or more goals within other goal(s).
One approach recommends having short-term goals, medium-term goals, and long-term goals. In this model, one can expect to attain short-term goals fairly easily: they stand just slightly above one's reach. At the other extreme, long-term goals appear very difficult, almost impossible to attain. Strategic management jargon sometimes refers to "Big Hairy Audacious Goals" (BHAGs) in this context. Using one goal as a stepping-stone to the next involves goal sequencing. A person or group starts by attaining the easy short-term goals, then steps up to the medium-term, then to the long-term goals. Goal sequencing can create a "goal stairway". In an organizational setting, the organization may co-ordinate goals so that they do not conflict with each other. The goals of one part of the organization should mesh compatibly with those of other parts of the organization.
Having goals, objectives, and strategies are great, but knowing how they all work together (if in fact they do) and if you need them all is another story. I suggest ignoring the semantics and focusing on establishing a time frame. What matters is having a combination of long-term and short-term markers to keep your organization moving in the right direction. Think of the following hierarchy to demystify the terms of your priorities:
Core Values: Your guiding principles that rarely change and that you to stick to no matter what vision you're pursuing
_ Mission: The underlying reason why you're in business in the first place
_ Vision: The big, hairy, bold goal you're headed for, and the thing concept that everything your company does is focused on.
_ Strategy: The guiding statement that explains how you get to your vision
_ Three-year strategic objectives: Intermediate goals that are broad and continuous, that you achieve on the way to your vision, and that explain the activities you need to be in to achieve your vision
_ One-year goals: One-year markers that support your long-term strategic objectives
_ Action items: Items that explain who and the when
Future success? Or future shock? Only companies that plan ahead will survive the changes in business today and tomorrow. Companies that don't chart a course will be at the mercy of their customers...and their competitors. As such, Strategic Planning is of utmost importance for any organization's survival!
The Strategic Plan for one organization will never be the same for another owing to different markets, competitors etc.
It is very important to consider the above mentioned components of the Strategic plan as each one has their own part to play, and omission of even one of them could be disastrous for an organization.
In short, I would like to conclude that strategic leaders must have good knowledge about the Environment (PEST) and consider the above mentioned components while chalking out their strategic plan, however complicated and daunting the task may be, if they want to see their organization not just survive, but flourish.