Why is strategic planning important?

Strategic Planning

Strategic planning is a broad activity organized by typically higher management. It takes the organizations purpose (mission & vision) setting a focus on outlining priorities, structure, resources, operations in hopes that the outline can be instituted and delivered for maximum profitability and efficiency for the organization. Strategic planning has been recognized as a fundamental activities of an organization (Segars) Meeting and exceeding management and shareholder interest. It is important to make improvements and validate modifications to please shareholders as they have a strong interest in the organizations stability and sustainability.  

Components- Importance

Strategic planning starts from the head of the organization, it is devised from shareholders and upper management based off the direction the company plans to carry its goals and operations. In turn is trickled down to lower management and employees to carry out. This is done through extensive analysis of operational, financial and rivalry data. Building strong and efficient resources and capabilities including production, supply and delivery. Each level of the business is incorporated and responsible for fulfillment in order to be successful. 

Assessing an organizations stand in the industry, market and competitions is the baseline for analysis. Identifying strengths, weaknesses, opportunities and threats (SWOT) are critical in strategic planning. Knowing this information helps look internal and assess the company operational flow and how to do so with the current financial, technological and workforce. Each category is critical to executing the strategic plan. Though there has been some controversy if strategic planning (SP) and organizational performance (OP) are linked. It is evident that they are closely related and effect each other to some degree (Ali)

Single Business vs Multi Business SP

Strategic planning for a single business is slightly different than multi-business due to the suppliers, resources and regulations. Multi businesses have greater coverage and require a streamlined strategic plan. Meaning that the foundation or purpose is the same, yet needs to be modified according to operation of each business. This could be greater resources and capabilities that need to still create the same expected performance as they are tied to the sister or parent organization. If multi business sectors or industries vary, then the SP has to be tailored to the industry, however the same plan or model should be followed. 

Summary

SP is critical for an organization to operate and evaluate the action plan, once established the organization can assign the proper management to institute and deliver the end results. Planning is ever changing and can always be improved especially with the changes in technology. No need to go back to the drawing board or reinvent the wheel, but rather to take what can work better considering the changes and add or subtract to create value, better work flow and of course end result- efficiency.

Laurie

Ali, A. A. (2018). Strategic planning–organizational performance relationship: Perspectives of previous studies and literature review. International Journal of Healthcare Management, 11(1), 8–24. 

Albert H. Segars, & Varun Grover. (1999). Profiles of Strategic Information Systems Planning. Information Systems Research, 10(3), 199. 

Thompson, A. Crafting & Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases. 

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.