Strategic planning is an organizational management activity that helps align priorities, focuses on resources, and routes all stakeholders towards achieving business goals. During this process, the strategy is developed which serves as a roadmap to achieving the organizational goals.
The key elements of the strategic planning process established through a few steps that are:
- Developing the vision and mission statements, and business values
- The assessment of internal and external factors that affect the organization S
Effective mission and vision statements which are an essential part of strategic planning process, enables an organization to set priorities, reduce ambiguity, and provide a proper sense of direction
The strategic planning tools include:
1. Strategy Map:
Being often used under strategic planning, a strategy map is a visual tool designed with the purpose of communicating a strategy plan in order to achieve high level business goals. It shows the strategy on one page and is a prominent part of the balanced scorecard. It helps communicate information across the organization. Below is an example of a strategy map for a telecommunications company as explained by Intra Focus:
2. SWOT Analysis:
SWOT is an acronym for ‘strengths’, ‘weaknesses’, ‘opportunities’, ‘threats’. SWOT Analysis is one of the most commonly used tools to assess the organization internally as well as the external environment it is surrounded by. It helps ascertain how business core competencies can be utilized to overcome weaknesses and threats.
3. PESTLE Analysis:
PESTLE stands for political, economic, socio-cultural, technological, legal, and environmental. PESTLE analysis is an effective tool used to monitor the macro environment that influences an organization’s decision making. It has been used by marketers and business analysts ever since its inception in 1967 thanks to the Harvard professor, Francis Aguilar. Upon analyzing the factors included in the PESTLE analysis, businesses can make viable business decisions and operational efficiency can be enhanced.
4. Porter’s Five Forces:
Porter’s five forces analysis helps evaluate your business position in the market under the strategic planning model. The five forces being considered include the bargaining power of suppliers as well as that of the customers, threats posed by new entrants, threats of substitutes, and the rivalry of competitors in the industry.
The degree to which the suppliers are able to bargain with you by controlling the price of raw materials has an impact on the business so does that bargaining power of customers, depending on the elasticity of demand. If there are no barriers to entry, competitors can easily enter the market and create more options for your customers. The threat of substitutes creates an option of new products replacing yours, such as MP3 files replacing CDs. Lastly; the rivalry of competitors refers to the competitive nature of companies in the market.