Why is strategic planning important?

The importance of Strategic Planning

Strategic planning is an organizational activity take on by management in order to set priorities, focus, resources, and strengthen operations to ensure that team members are working toward the same goal by agreeing on the intended outcome and results desired.  The Strategic Plan is an official document used to communicate these goals to team members with clearly defined goals and actions needed to be successful as developed during the planning process.  Having this plan allows a company to stay on course and make adjustments as needed in order to maximize success.  Providing practical examples that include vision, scenario, and issues planning will help get buy in from the team members.

Primary components of a Strategic Plan

Thompson (2018) discusses how the five stages to implement a strategic plan are important.  First, defining the mission, vision, and overall goals of the organization and how this direction will be achieved.  This should clearly define the purpose of the company and what you are hoping to accomplish.  Next would be to define your core values and determine what defines you as a company.  This needs to be developed into the company culture in order for it to be successful. 

The second stage would include evaluation of your strengths and weaknesses and clearly defining company objectives.  These need to be designed around the SMART goals as outlined in by Lee (2010).  Having specific, measurable, attainable, realistic, and time-bound objectives will keep the team on track and help the company be successful. 

Third will be designing the strategy that will help the company achieve the goals and objectives.  These timelines can easily reach years into the future but must be obtained for the overall plan to be successful.  These strategies need to focus on what must be concentrated on as short-term priorities that lead to the long-term goals. 

Fourth would be the execution of the plan by the management structure with the goal of meeting or exceeding the financial and performance goals outlined by leadership. 

Last would be monitoring and adjusting the plan as needed in order to realign objectives to ensure the original vision is maintained and goals are met.  Having flexibility with your plan is critical to a company's success. 

Strategic Planning for a Single-Business and Multi-Business company

Developing a strategic plan for a single business has the advantage of being able to stick to your primary strengths.  By focusing your marketing and production on a few key areas you can increase efficiency and maximize profitability on a smaller scale.  When looking a strategic planning for a multi-business company, this give you the advantage of diversifying into multiple areas of profitability and pursuing additional activities to increase your market share. 

Strategic Planning in the International Marketplace

Srivastava (2013) discusses how the developing world does not approach innovation in the same way the developed world does.  They state, "therefore, as firms globalize, they must be mindful of some fundamental differences as they craft their innovation strategies".  The approach must be different when looking at developing countries and the managers must be able to develop an innovation strategy and tailor their technology systems accordingly.  Managers must also determine how to develop the think-local, act-local approach to be able to tailor their product mix to accommodate new markets.  Companies cannot assume that selling the same product that is popular in a develop country will automatically be popular in an undeveloped country. 

The difficulty in executing a Strategic Plan

            Developing a successful strategic plan is difficult but in many cases the execution of this plan is even harder.  Several key challenges can come into play that can cause issues.  These include a weak strategy, a poor training plan, not enough resources to achieve your goals, poor communication, and lack of follow through.  The execution of the strategic plan is critical for the success of the company.  A true commitment to the vision is key by all levels of the organization.  The willingness to review the performance of all levels of the organization and be willing to make needed adjustments is vital.  Even though managers must be focused on short-term goals, they cannot lose focus on the long-term goals of the company to succeed. 

References:

Lee KPW. (2010). Planning for success: setting SMART goals for study. British Journal of

Midwifery, 18(11), 744–746. 

Srivastava, S. C., Mithas, S., & Jha, B. (2013). What Is Your Global Innovation Strategy? IT

 Professional, 15(6), 2–6.