Strategic Planning

As I was teaching the slide that explained 'Strategic Planning' under Topic 02 of this module, I found that this term was not an easy one for many students to grasp.

So I would like to use this blog post to further elaborate on the term.

Topic 02 focuses on the what, why and how of "strategic planning".

Besides what was mentioned in the slides, here are more ways of understanding this term.

First, let's start by understanding what is strategic planning.

What is strategic planning?

Strategic planning is the process whereby a company considers its own capabilities and the changing environment to come up with a 'game-plan' that will let it achieve its long-term goals.

Why do companies need to do strategic planning?

• The business environment of today is highly competitive today.
• With the Internet, firms face not just local competition but global competition.
• Technological advancements make traditionally acceptable and profitable business methods outdated, unpopular and even unprofitable, causing the need for companies to introduce improvements to cope with these changes.
• However, improvements need money and resources, but companies have limited money and resources!
• Resource constraints and a dynamic global environment have made it necessary for companies to not just focus on their short-term goals, but to think in a strategic manner, who they are, what can they do, to ensure their long-term survival.

How do companies perform strategic planning?

Companies need to consider the following when performing strategic planning:

a) Establish mission statement that sets the overall direction for the company

b) Based on its mission, establish specific goals to accomplish over the next few years

c) Study what's going on inside the organization, including its strengths and weaknesses.  Study what's going on outside the organization and how it might affect the organization and identifying opportunities and threats. Look at the existing businesses of the company and decide which businesses to invest more or which to invest less.  Explore opportunities to grow the company in different ways.

d) Identify how the goals will be reached and set out action plans to reach them (strategies, objectives, responsibilities and timelines)

So if you consider the ideas elucidated above, they map directly to the 4 steps of strategic planning mentioned in the slides.

Hope that helps to give you a clearer idea of what Topic 2 - Strategic planning is about :)