Definition and Purpose of Strategic Planning
Definition of strategic planning
Strategic planning is a management tool that is used to improve the performance of an organization. It entails a set of activities that are used in setting goals for an organization and coming up with activities that are geared towards achieving these goals.
The steps of strategic planning include:
- Identifying an organization’s current situation including its major strengths, weaknesses and core values as well as what it aims to achieve.
- Setting up goals, mission statement, vision statement and values of the organization.
- Coming up with activities that can help to achieve the set goals and evaluation programs to monitor the set plan
- Carrying out frequent monitoring and evaluation activities and revising the plans as need arises
Activities involved in strategic planning include carrying out surveys, meetings and brain storming sessions to determine what plan would best accommodate all stakeholders involved. There are also several techniques which strategic planners use to improve an organization. These include:
- SWOT analysis. This is an analysis that evaluates the strengths, weaknesses, opportunities and threats that affect an organization.
- PESTEL analysis. This evaluates the external factors that affect the organization including the political factors, economic, social, technological, environmental and legal factors that may affect an organization.
- Porter’s five forces analysis. This analysis is carried out to address the industry attractiveness as well as competition.
- Scenario planning. This entails imagining future scenarios and then planning goals and activities tailored to these scenarios.
- Balanced scorecard. This is an evaluation method that is used to assess and monitor the strategy being implemented.
Importance of strategic planning
It is an agreed phenomenon that every organization requires strategic planning in order to thrive in the ever changing business markets. The following are some of the major purposes of carrying out strategic planning.
- Define an organization’s goals and objectives. The mission and vision statements are derived from strategic planning. These help to define what an organization stands for and where exactly it is headed.
- Narrow operations of the organization to what is important in achieving the set goals and priorities. Through identifying strong objectives goals, strategic planners are able to come up with activities that can be used to achieve these goals. They help the organization to focus on these activities instead of meandering and deviating from set objectives. this guides the employees on what activities to undertake in order to achieve set objectives
- Increase efficiency and reduce waste. Strategic planning also takes into consideration the resources available at the disposal of the company. This helps to ensure that the set objectives and matching activities are achievable given the available resources. Ultimately, the organization can be able to increase efficient use of these resources and reduce wastage.
- Boost productivity and motivate employees. Strategic planning helps to boost productivity and motivate employees because it offers guidance on what activities they should get involved in so as to attain the goals set. This reduces confusion in the company and helps in organizing the employees and makes them more confident of where they are headed.
- Identify strategies that make the organization compete effectively. Through strategic planning an organization can easily identify its main rivals and their weaknesses as well as strengths. This can help the organization to improve on their own services and also capitalize on the loopholes of their rivals hence competing effectively in the market.
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