Strategic Planning for Business
The objective of this study is to examine the importance of strategic planning for business. Toward this end, this study will conduct a review of the literature in this area of inquiry.
Zuckerman (nd) writes that the concept of strategy ‘has roots in both political and military history, from Sun Tzu to Homer and Euripides. The word ‘strategy’ comes from the Greek ‘stratego’, which means to ‘plan the destruction of one’s enemies through effective use of resources’.” (p.5) Many of the terms that are associated with strategic planning including “objective, mission strength and weakness’ are reported as having been developed by or used in the military.” (Zuckerman, nd, p.5)
The work of Swayne, Duncan, and Ginter (2008) state that “strategic planning defines where the organization is going, sometimes where it is not going, and provide focus. The plan sets direction for the organization and — through a common understanding of the vision and broad strategic goals — provides a template for everyone in the organization to make consistent decisions that move the organization toward its envisioned future. Strategic planning, in large part, is a decision-making activity.” (Zuckerman, nd, p.6)
The work of Beckham (2000) states that true strategy is “a plan for getting from a point in the present to some point in the future in the face of uncertainty and resistance.” (Zuckerman, nd, p.6) The work of Evashwick and Evashwick (1988 define strategic planning as “the process for assessing a changing environment to create a vision of the future; determining how the organization fits into the anticipated environment based on its institutional mission, strengths, and weaknesses; and then setting in motion a plan of action to position the organization accordingly.” (Zuckerman, nd, p.6)
Zuckerman (nd) writes that strategic planning “has been used in the general business community since the mid-twentieth century. Planning, programming, and budgeting systems were introduced in the late 1940s and early 1950s but used only sparingly by business and government at that time. In the 1960s and 1970s, leading firms such as General Electric practiced strategic planning, promoting the merits of providing a framework beyond the 12-month cycle and a systematic approach to managing business units.” (nd, p.6)
According to Zuckerman (nd) competitive strategy, in the twenty-first century “has become a prominent feature in strategic planning practices, along with a notable uptick in plans that call for alliances and mergers. But today’s profoundly uncertain times have forced business strategists to acknowledge that strategic planning as usual will not provide the foundation needed to survive tumultuous economic conditions.” (p.6)
I. Strategic Planning Process Requirements
Strategic planning serves as a framework for decisions and for securing support and approval and as well provides a basis for more detailed planning and explains the business to others in order to “inform, motivate, and involve.” (Planware.org, 2012, p.1) The strategic plan serves to assist benchmarking and performance monitoring” and stimulates change becoming a building block for the next plan. (Planware.org, 2012, p.1)
The strategic plan is different from the business plan in that the strategic plan is generally a short document and the business plan is a longer document with much more in the way of details. The strategic plan serves as the basis and framework for the business plan. The strategic plan can also be differentiated from the operational plan in that the strategic plan is “visionary, conceptual, and directional in contrast to an operational plan which is likely to be shorter term, tactical, focused, implementable, and measurable.” (Planware.org, 2012, p.1)
The strategic plan should be “visionary, conceptual, and directional” and can be contrasted to the operational plan, which is generally “shorter term, tactical, focused, implementable, and measurable.” (Planware.org, 2012, p.1) The strategic plan is required to be both “realistic and attainable” as it enables managers to “think strategically and act operationally.” (Planware.org, 2012, p.1) The review and planning process involved in strategic planning is stated to include the following:
(1) Relate to the medium term i.e. 2/4 years
(2) Be undertaken by owners/directors
(3) Focus on matters of strategic importance
(4) Be separated from day-to-day work
(5) Be realistic, detached and critical
(6) Distinguish between cause and effect
(7) Be reviewed periodically
(8) Be written down. ( Planware.org, 2012, p.1)
II. Precursor to Strategic Planning
It is reported that prior to developing the strategic plan a SWOT should be conducted. A SWOT measures the company’s ‘Strengths, Weaknesses, Threats, and Opportunities’. The strategy development process follows and addresses the following issues in detail:
(6) Goals; and (7) Programs (Planware.org, 2012, p.1)
III. Benefits of Strategic Planning
The work of Lawler (nd) reports that there are benefits to strategic planning and that some of these benefits specifically include:
(1) Better Decisions – Information communicated through vision and strategy allows people to make the best decisions (hiring and rewarding the right people, adopting and developing the right systems, making the right investments, etc…);
(2) Increased Energy — Resulting from rallying behind a cause, and elimination of conflict and confusion of priorities.
(3) Increased Capacity — People are focused on what is important and less concerned about what isn’t.
(4) Improved Customer Satisfaction — A true test of value and leads to higher retention and growth.
(5) Competitive Advantage — Doing what you do better than others.
(6) Better Solutions — Uncovering the enormous intellectual and creative capacity of an organization that collectively works toward solutions rather than a relying on select few.
(7) Market Recognition — Over time you can “own” a position and space in the marketplace. Greatly enhances the chance of success! (Lawler, nd, p.2)
IV. Key Ingredients to Strategic Planning
Lawler writes that key ingredients to strategic planning include the following:
(1) Creating Vision and Direction that is Simple and Clear — a strategy may be fairly complicated at the highest level but the closer it gets to the front line and the marketplace, the simpler it has to be.
(2) A Good Plan — is well thought out, challenges assumptions, and is created with input from sources inside and outside the organization.
(3) Great Execution — requires commitment from the very top. This commitment must be demonstrated through behavior, investment, communication, and accountability. The plan is a living document that must become part of the culture and updated to reflect changes in the environment.
(4) Communicate, Communicate, and Communicate! — continuously using different medium and in terms that connect individuals and their roles to the vision and success. Too often communication is done half way. We tell, but don’t test for understanding. To close the loop, build in ways to test for employee, at every level an area within an organization, understanding of the vision and strategy. (Lawler, nd, p.2)
Summary and Conclusion
Strategic planning has been used throughout the history of mankind and is a process that sets out the direction that the organization will take in the short- and long-term. The strategic planning process is visionary, conceptual, and directional in nature and serves as the building block or framework for the business plan of the organization. benefits of the business plan include such as better decisions, increased energy, increased capacity, improved customer satisfaction, competitive advantage, better solutions, and market recognition. Key ingredients to strategic planning includes the creation of vision and direction that is both simple and clear, a good plan, great execution, and communication of the plan.
Lawler, JE (nd) The Importance of Strategic Planning. Practical Decisions. Retrieved from: http://www.practicaldecisions.com/strategic-planning.pdf
Business Planning Papers: Developing a Strategic Plan (2012) Planware.org. Retrieved from: http://www.planware.org/strategicplan.htm
Zuckerman (nd) Is Strategic Planning Still Relevant? Chapter 1. Retrieved from: http://www.ache.org/pubs/Zuckerman_Ch1.pdf