The strategic planning process includes Steps and basics of strategic planning

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The ability to anticipate future changes in time, especially when things are going well in the company, and there is a possession of strategic planning skills.

If you recognize the strengths and weaknesses of the organization, choosing the right path to achieve the goal, this can do a good job: save the company from ruin or bankruptcy, help get ahead of competitors, reduce product costs, increase its competitiveness, master new technologies.

In many ways, the success of the company in the market determines the strategic planning in the organization. As a method, it is a phased study of various aspects of activity with the further development of a procedure execution technique aimed at the theoretical and practical construction of a model of the future. A clear program for the transition of an organization or enterprise to an optimal management or production model in market conditions.

Strategy or closed loop

Sages say it's better to do a good plan today than a perfect plan tomorrow. The fact is that, even without special economic knowledge, any company must go through the process of strategic planning. It includes eight main stages, united in a closed cycle. This is:

• the mission of the enterprise (organization), or the reason why the organization arose;
• goals set for the company, opportunities to achieve them;
• assessment of the impact of external factors on the existence of the organization;
• determination of competitiveness, strengths and weaknesses of the enterprise;
• strategy of matching external possible threats and opposing them to the strengths of the organization;
• choosing strategic alternatives is one of the central points of the strategic planning process;
• implementation and selection of methods, development of a marketing strategy to achieve the goal;
• assessment of the chosen strategy and transition to a new stage of development.

Mission Possible

The purpose of creating an organization or company determines its mission. This is the first step in the strategic planning process, which details the reasons for the emergence of any enterprise and determines its guidelines at various levels of management.

Formulating the content of the mission, it is necessary to disclose the following sequence of actions:

• activities or tasks facing the organization, taking into account consumer requirements and the possibility of using existingtechnologies;
• objective impact of external factors on the company;
• principles of forming a corporate culture, attracting employees of the appropriate level of professionalism;
• determining the value and goals of the work of the entire team, which are not limited to making a profit.

The formulated mission or vision of the organization of its activities in the market, first of all, should answer the main questions indicated in the figure below.

Specific goals are the basis of the company's strategy

Any organization, be it a commercial enterprise or an educational center, must form specific goals based on the intended mission.

The more specific the goal, the sooner it will be achieved. Therefore, any task facing the organization must meet the following requirements:

1. Measurability in absolute numbers. For example, for a university, this is the number of trained specialists; for social services - support for a certain number of poor citizens.
2. The goal must be oriented in time, when the final limit is set for its achievement. At the same time, the implementation of short-term tasks is formed within one year, and long-term tasks - up to five years.
3. Goals set by organizations must be achievable. You can not set the task for the outlet to fly to Mars. But there can be any goal that raises the level of the company's authority in the market, while not interfering with the achievement of other plans of the organization. For example, for the centersocial assistance, the strategic planning process includes the following goals that do not contradict one another:

• protecting the rights of families and children;
• prevention of juvenile delinquency;
• improving living standards and family well-being;
• restoring lost family relationships, improving the psychological climate of the family, etc.

In order not to miss

Athletes-archers have their own secrets and techniques for hitting the target. Such as taking into account the strength of the wind, the opposition of the sun, the length of the arrow, the curvature of the bow. Similar secrets, taking into account the impact of external factors on the effectiveness of hitting the target, exist in the economy of enterprises.

Thus, the process of strategic planning includes, at the third stage, the study of the external environment and those external and independent factors that influence the activities of the organization.

The following indicators should be taken into account at this stage:

• the impact of external changes, such as possible changes in the political and economic legislative and other regulatory functions of the state;
• assessment and analysis of the external environment that affects the functioning of the company;
• the most accurate definition of factors that pose a threat to the organization's activities; precise definition of those that may pose a threat to the strategy;
• mandatory consideration of all positively influencing conditions to achieve the goal;
• constant adjustment of strategic plans.

In professional language, a similar techniqueidentification and study is called pest analysis. During its implementation, special attention is paid to social, political, investment and other factors affecting the activities of the organization.

Thus, the possibility of the influence of external factors is revealed, their control in relation to the enterprise, timely neutralization of unwanted obstacles and detection of threats.

The table below defines the main indicators of pest analysis that are considered during its implementation.

What is the strength, brother…

Management research plays a significant role in successful planning.

The basics of strategic planning inevitably lead to an examination of the strengths and weaknesses of an organization. Internal research relates to the analysis of the effectiveness of marketing activities, finances, production capacities. Up to the culture and education of the company's staff.

Shortly, such a study is called a study of strengths and weaknesses under the influence of external and internal. Based on the data obtained, a SWOT analysis matrix is compiled. This data processing method is based on the study of strong (S - strenght) and weak (W - weakness) aspects of the object of study, with the definition of opportunities (O - opportunities) and the identification of potential threats (T - troubles) of the external environment.

Popular all over the world

A thorough study of a company's strengths and weaknesses is a popular business analysis of performance around the world. Is fairly objective and complete.

What gives a similaranalysis:

1. Studying the features of marketing allows you to accurately determine the competitiveness of the company and its place in the market; increase or decrease the share of new goods and services in a timely manner; effectively use advertising opportunities to improve customer service.
2. The study of the financial condition of the organization allows you to predict the organization's ability to increase production, strengthen its position in the market, create the necessary financial reserves in case of force majeure. Equally important is the study of finance in the public sector to optimize existing financial resources, identify additional sources of funding.
3. Studying the possibilities of production allows you to identify opportunities to reduce the cost of production, increase production volumes, reduce product prices and increase its competitiveness. In the same aspect, the possibilities of access to advanced technologies are being studied, the introduction of which ensures the demand for the organization in the market.
4. Analysis of the level of selected personnel, competence and professionalism of employees help to identify areas where professional development of employees of all levels is required.
5. Developing your own image of the company, which will positively affect relationships with suppliers and customers. In addition, the formation of a positive psychological climate in the company contributes to the constant influx of good labor resources.

The SWOT analysis matrix is shown in the diagram below.

Alternative delights, or On all four sides

The study of strategic alternatives is referred to as the fifth level or stage of analysis. It can be started after assessing all external and internal factors that determine the activities of the organization.

In fact, there are four promising paths for any company to choose from.

Analysis of strategic alternatives offers the following possibilities:

1. Applying a limited growth strategy - a similar option is used in industrial sectors in enterprises with stable and static technology. This is the most reliable way to maintain the results achieved earlier, taking into account inflationary processes, it saves the organization from unjustified risks.

2. Annual growth strategy - implies an increase in indicators in the short and long term compared to the previous ones. A similar strategy is possible for companies operating in emerging industries using new technologies. The strategy of dynamic growth is internal - with the expansion of production of goods or services; external - with expansion in the market and absorption of other firms.

3. reduction strategy. A similar method is used when it is necessary to reduce the results achieved. The choice of this strategy is usually caused by objective factors. This is:

• liquidation of an enterprise, organization with a complete sale of property values;
• reduction of some divisions or activities as unnecessary and unprofitable;
• new benchmarks - reducing the old and mastering the new activity.

4. Mix and match of any of the above three strategies, which is usually suitable for large firms.

Course on efficiency

The choice of strategy is a vital moment in the life of any organization. An analysis of alternatives will tell you which one is most suitable for the enterprise, and will ensure the effective operation of the company at all levels for a long time.

What can affect the result of the enterprise, what factors have a special influence on the choice of alternatives?

• First of all, determining the level of risk. If the level is too high, the organization may self-destruct. The acceptability of risk largely determines the choice of strategic alternative.
• Knowledge and experience of past methods of work often influence the choice of strategy in the present, this may not always lead to success.
• Restrictions set by the owners of a company, its shareholders, for example, may affect the choice of a strategic alternative.
• When choosing a strategic alternative, it is always necessary to take into account the time factor, which can either ensure success or lead to the collapse of the organization if the time to market is unsuccessful.

Objective reality: plan according to the shaft or shaft according to the plan

Any strategic plan adopted must first of all be realistic.

Its implementation is the seventh step of the strategic planning process andincludes tactics, policies, procedures, rules.

• Tactical means developing short-term strategies that meet the goals of long-term planning. Tactical plans are developed at the level of middle management and serve the overall development of the adopted strategy. As a rule, the result of tactical plans are concrete actions in the short term. While the results of the main strategy may only appear in a few years.
• The policy of the organization is determined by the leaders of the highest level of management and is in fact a general guide to action or decision-making, as a rule, is formed for a long period of time. For example, the policy of non-disclosure of industrial or scientific secrets of the organization or the policy of targeted social assistance to employees.
• Planning procedures for making planned decisions. Usually these are specific actions taken by employees of organizations in specific situations. For example, in case of emergencies, registration of pension or maternity leave and other procedures.
• Rules limit some actions of employees of the organization. Developed instructions ensure that specific actions are performed in ways determined by management. For example, the rule to follow the dress code, the rule to smoke in designated areas or otherwise.

Often employees try to break rules and procedures. To prevent this from happening, management is obliged to inform subordinates in a timely manner of their importance and necessity, explaining why they should beobserve.

Management resources

Consistency in management in the implementation of tasks is the key to success. Efficient use of managerial resources is the foundation of strategic planning.

What opportunities are hidden under the concept of distribution of control and can they be quantified?

The organization's budget is a method of using available resources expressed in quantitative terms. The management process consists of four interrelated stages:

1. The first stage of management consists of the formulation of goals from the management to the next level of employees down the line in the field of information, clarification of plans, support for horizontal and vertical planning, coordination of management resources.
2. The second stage is to determine the necessary measures to solve the tasks. It consists in delegating authority, assessing the necessary time spent on the execution of tasks, checking deadlines and necessary adjustments to planned actions.
3. At the third stage, the degree of implementation of plans is determined, the identification of the reasons that affect their change. Identification of the personal contribution of employees to the degree of problem solving, followed by remuneration for effective performance, targeted encouragement. In case of deviation from the intended goals, the reasons are clarified and measures are established to eliminate interference.
4. The fourth stage - summing up. With the normal development of the management process, the goals are achieved,new tasks are set for the future period of activity.

Comparison is only beneficial

Assessing and comparing performance against set goals is the final step in the strategic planning process. Evaluation of the organization's performance should be carried out continuously and systematically. The evaluation results answer the following questions:

1. Matching strategy to organizational capabilities.
2. Is there a degree of risk for the company when using the chosen strategy.
3. Availability of resources needed to implement strategic plans.
4. Occurrence of new opportunities or risks not taken into account in the strategic development plan.
5. Is the chosen strategy the best way to use all the capabilities and resources of the organization.

The goal determines how to achieve it

The effectiveness of the applied strategy is evaluated by quantitative indicators: the growth of production or services, the level of costs per unit of output. Qualitative indicators of the assessment - the possibility of attracting highly qualified personnel to work, expanding and improving the quality of services provided.

In general, the chosen strategy should contribute to the achievement of the set goals, determine the structure of the organization, and comply with the concept of the plans developed.