Strategic planning is the process of formulating, implementing and evaluating strategies to support the cross functional decision of the company. In today’s world, everything is changing with unexpected speed.Competition,Innovation,polices,environment,technology and human resource are some major concerns of the company.Companies follow the traditional ad-hoc,forecasting methods to compete in the market will not work for long term. Strategic planning is now become mandatory process to clearly define company objectives,goals,internal resources,external factors and to evaluate overall cycle for eliminating bottlenecks.[sky]
Strategic planning process compromise of following following phases.
1-Company vision & mission
4-Formulation of strategy
5-Implementation of strategy
6-Evaluation of strategy
The figure below shows the strategic planning process and the feedback cycle.
Company vision & mission
In this phase company define its vision which the future roadmap and mission to determine the company[linkunit] objectives,products,business,employees etc. In short mission statement communicate the reason of existence of the company both internally and externally.
This phase help out company to determine financial and strategic objective for the company.Financial objective consist of budget,revenues and sales and strategic objectives comprise of market share,customer base and sales. Mission and vision is vital for every organization whether its small or large does not matter, both the statement act as a soul for the company.
The internal audit assist the company to find out their internal resources. Internal audit clearly identify the internal strengths and weakness of the company. Internal strengths is the valuable resources of the company to exploit new opportunities. Internal weakness are overcome with time and company will look forward to convert these to strengths to avoid risk for the future. Internal audit performed by different method include statistical, mathematical and ratio analysis. The strategic management tool IFE matrix evaluate company internal factors on the basis of numeric values.
Company deal with two environment one is internal as discussed above and other is external. Internal environment can be controlled by the company [adsense1]but external environment is not within control of the company. The external environment is made of (PEST) political,legal and social and technological issues, change in any one of these environment will impact the company.It’s not necessary change always harm the company objectives sometimes it also in favor of company.
EFE matrix is the famous strategic tool to evaluate the external environment of the company.EFE matrix with combination of porter five forces model can give valuable findings to the strategists.
Formulation of strategy
Strategy is the road map to achieve goal and objectives of the company.The result of internal and external audit will allow the company to develop strategies by looking at their strengths,weakness,opportunities and threats. To attain better profitability company develop core competencies over its rivals.
Implementation of strategy
It’s not necessary best strategy always produce better result. Strategy that company adopt will works as company thought is totally depend upon this stage. The people implementing the strategy are important for the success of the strategy, they must know the objectives of the company,
People who involve in strategy development should become the part of the implementation team. All the team performing activities should have the full understanding of the strategy otherwise without knowledge they can misunderstood and can be implemented in the wrong direction.
Evaluation of Strategy
The implementation of strategy is monitored and if any discrepancy and bottleneck are found it should be removed during that time to avoid future loss.This phase can revert back to any other phase of strategic management cycle for correction or improvement of the strategy.