What is Strategic Planning?
Strategic planning is the process of developing unique business strategies, implementing them, and assessing the results in light of a company's larger long-term goals. This idea emphasises how combining various industries, such as finance, sales, and human resource management, helps a firm reach its vision and goal.
A strategic plan results from strategic thinking. It frequently appears in a planning document. Staff members, clients, business partners, and shareholders will find these strategies easy to discuss, understand, and use. To evaluate the effects of evolving market, commercial, economic, and regulatory concerns, businesses regularly engage in strategic planning. Then, a strategic plan can be modified and updated to accommodate any prospective present-day future plans.
Types of strategic plans
Strategic planning activities typically focus on three areas: business, corporate or functional. They break out as follows:
- Business. An organization's competitive elements are the main emphasis of a business-centric strategic plan, which also creates chances for growth. These plans use a goal-making process that includes assessing the external business environment, formulating objectives, and allocating resources—financial, human, and technological—to achieve those objectives. This article's core objective and typical strategic plan.
- Corporate. A corporate-centric plan outlines the organization's operations. It focuses on structuring and coordinating senior leadership, corporate policies, and procedures in order to achieve desired goals. For instance, the management of a research and development skunkworks may be set up to operate flexibly and as needed. The management team in finance or HR would not look like it.
- Functional. Strategic plans that are focused on functions, such as marketing, human resources, finance, and development, can be integrated into corporate-level strategies and offer a detailed analysis of certain departments or divisions. While establishing budgets and resource allocations, functional plans have a strong emphasis on policy and process, including security and compliance.
A strategic plan will typically include components from each of the three focus areas. However, depending on the needs and type of business, the strategy may tilt more toward one core area.
What is strategic management?
Strategic management is a practise used by organisations that are most successful at matching their activities with their strategic plans. The purpose and vision statements of an organization's strategic plan are supported by continuous procedures that are established as part of the strategic management process.
The execution of the strategy is, to put it simply, strategic management. Consequently, strategic management is also known as strategy execution. In order to achieve predetermined objectives, strategy execution entails setting benchmarks, allocating financial and human resources, and exercising leadership.
A prescriptive or descriptive approach to strategic management may be used. A prescriptive approach concentrates on the creation of strategies. To take into account risks and possibilities, it frequently employs an analytical strategy, such as SWOT analysis or balanced scorecards. A descriptive method relies on broad ideas or guidelines and concentrates on how strategies should be used.
Strategic management and planning are similar enough that they are occasionally used interchangeably.
Where and when to use strategic planning
Strategic planning can be useful activity throughout the life of a business in addition to the initial start-up period. In general, each business must decide for itself exactly when or how frequently to engage in strategic planning. Some firms perform strategic planning annually or every two years, modifying their objectives and plans as necessary. Schools, for instance, create strategic plans each year in the field of education. They are typically produced in the late spring and are based on student performance from the previous academic year. But in the finance industry, quarterly financial reporting periods are frequently synchronised with strategic planning.
Strategic planning can also be beneficial for organizations during any of the following circumstances:
- Changing industry trends or economic market
- Before the launch of a new product or branch of the business
- Following a merger with another organization
- Following a change in senior leadership
Next steps for strategic planning
Here are three helpful steps to take following the initial strategic planning:
- Align your resource allocation with your strategic plan. The financial and human resources of a firm should be deployed in accordance with the strategic plan if it is to serve as the main guiding document for that company. It might be necessary to involve operational and financial workers who weren't perhaps involved in the initial strategy creation.
- Create cascading objectives. Businesses are designed with cascading goals, which connect objectives from the highest levels of the organisation down to the level of the individual employee. Business owners start with the strategic plan's highest level goals and work backward from there to prepare for the smaller sub-goals that offices and individual employees must complete in order to reach the larger outcomes. By doing this, you may make it easier for staff members to understand how their contributions affect the overall success of the company, which will motivate and engage them more.
- Create a framework for performance management. Your firm can stay on track with its strategic planning process by developing a solid infrastructure for performance management. To do this, it is vital to identify the pertinent data points, as well as the people who will be in charge of collecting, evaluating, and reporting the data. The structured checkpoints give you the chance to modify the plan as necessary in response to how your business performed over a predetermined period of time, like one fiscal year.
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