Strategic planning helps to adjust the Organisational direction as per the changing business or market environment. Further, it helps in decision making, shaping and guiding what will be good for the organisation. It identifies the needs of the organisation and also helps in making progress.
Steps in Strategic Planning & Management
There are no rules in particular regarding the pattern or framework for strategic planning and management. But some of the common steps that can be taken care of are: -
• Assessment and analysis of the environment as it helps to understand both internal and external business environment and accordingly the plan can be developed.
• Once the high-level strategy is developed then the plan is documented
• In the third stage, the plan is transformed into a more operational plan and action.
• Then the plan is evaluated in terms of culture, communication, performance evaluation, and other management issues.
Key Components of a Strategic Plan
In order to create an effective strategic plan, it’s vital to first have a strong understanding of the business and the business environment. For instance –
• Current position of the business – This includes the details related to the business, internal operations, how is the profit earned, comparison to the competitor, etc. It’s important to stay realistic in terms of objectives.
• Aim and goals- Then it's important to decide what are the objectives and goals. For this, the vision statement should be clearly defined along with the company goals, values, and objectives. Future five years should be considered while developing the vision and goals.
• How to attain the goal – Once the goals and objectives are clearly defined the employees and the management know where to go but how to reach there is the question. To determine this, it's important to understand the structure of the company, the financing and other essential resources that will help the company to reach the goal. SMART goal setting technique should be followed to plan strategically.
Benefits of strategic planning
• Foresee the future – Strategic planning allows the organisation to forecast the future and be prepared accordingly. The organisations can also anticipate a certain situation that is unfavourable and take steps to mitigate its impact or the risk. Thus, with strategic planning, organisations can be proactive rather than just being reactive.
• Sense of direction – Strategic planning defines the direction in which the organisation must move in order to attain its mission and vision. This is done by evaluating the success, helping the employees to enhance their performance and also by taking the right decisions.
• Operational efficiency – In order to align the organisation's functions with the goals strategic planning is necessary as it giddies the management in decision making and also to determine the resources required to attain the objectives. This leads to an increase in the operational efficiency.