Introduction

Strategic Planning Process is a tool that makes it possible for an enterprise to achieve its mission. It’s the roadmap to achieving the goals set by the management. It involves identifying the internal and external environment of an enterprise, challenges faced and the way forward in order to facilitate success. As business expands and competition increases, the need for strategic planning becomes important. Once a strategic plan is formulated it’s communicated to all stakeholders, both insiders and outsiders (Grunig, etal, 2005)

A strategic plan prepares an enterprise for any uncertainties that may arise along the way. It facilitates flexibility when need arises. Today’s market is ever evolving and thus the need for firms to be prepared to tackle new challenges that may occur. Strategic planning also enhances communication among the workmates. This facilitates timely decisions, tactical approaches and enhances goals achievement. Since 1970’s, many firms have adopted a top-down strategic planning model. According to this model, the executive periodically formulates the organization’s strategy and then communicates it down the firm for implementation. Shown below is the flow chart model of strategic planning (Lorange, 1994)

The Strategic Planning Process:

Mission

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    V

Objectives

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    V

Situation Analysis

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    V

Strategy Formulation

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    V

Implementation

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    V

Control

Mission

Each company has a reason for being in operation. The mission of a company is usually expressed in form of a statement which conveys the company’s purpose to stakeholders. The mission statement sets the strategic plan into operation. It is the benchmark of strategic planning and it’s usually visited in order to keep track of the main mission. A company whose mission statement is well identifiable with the operations it’s involved in captures the hearts of investors in a better way. A mission statement can attract potential investors if the company is able to set strategies in line with its mission.

Objectives

These are goals that a firm wishes to achieve. An example is a target to increase revenue. The objectives ought to be challenging, motivating but at the same time achievable. The goals should not be set too high such that it strains the employees to achieve them. This may make them to lose morale. Instead, market study need to carried out so that the objectives set become manageable and non – constraint. On the other hand, easy to achieve objectives may result to reluctance of the employees to work hard and challenge themselves. Another strategy employed by some industries involves dividing its employees into groups and each group given a target to achieve. This increase competition and ensures the objectives are implemented in small functions. Such a strategy goes a long way in facilitating healthy competition within an organization.

Situation Analysis

This is the next stage after setting the objectives. It involves analyzing the current environment in order to come up with a strategic plan that will help the firm achieve all its objectives. Examination of the external environment enables the firm to identify new and available opportunities. The firm is also expected to do an internal analysis to determine its capabilities and limitations. This ensures that the opportunities selected are achievable and chances of success are high (Lorange, 1994). The environment situation is relative to issues happening at the time. At times the inflation rate is high while interest rates remain low. These factors have to be considered in situation analysis stage. Other markets are affected by political environment experienced at the time. It’s important to ensure all factors that are crucial to the process and put into consideration.

The external environment comprises of micro and macro- environment. Micro-environment looks into those aspects that affect the firms which belong to a certain industry. Such aspects are company culture, substitute products, competitors, market share, financial resources e.t.c. Macro-environment on the other hand focuses on external aspects that generally affects all industries. This includes social, political, technological and economic factors. Situation analysis generates vital information. In order to make sense of information generated, it’s important to categorize the external factors as threats and opportunities while the internal aspects are categorized as strengths and weaknesses (Grunig, etal, 2005). SWOT analysis has been proven to be an effective way of evaluating strategies proposed by the management. Strengths/Weaknesses are easy ways of establishing the position of an enterprise in regard to market share, chances of expansion and performance in respect to competitors.

Strategy Formulation

Once the environment has been analyzed, strategic alternatives are formulated. This will depend with the firm’s mission and vision. The situation in hand will also determine which strategies ought to be developed. Some strategies such as differentiation, cost leadership and focus can be applied to a number of firms. Though, only one of the above generic strategies can be applied at a time.

Implementation

In order to effectively implement the strategy formulated, it’s useful to translate it to functional components that are manageable and well understood. Breaking down the strategy to small elements also highlights any defaults that might not have been seen at a higher level. Some of the functional policies are production, procurement, marketing, human resources e.t.c. The required resources are also identified at this stage.

Control

Once the strategy is implemented, the results are tabulated and analyzed. Comparison with the changes made is done to determine whether the plan is on track. In order to facilitate monitoring, control systems are developed and put in place for effective monitoring. Actual performance is measured and proper adjustments made to ensure success.

The strategic planning process is continuous and flexible. A change in one aspect may result to a change in the entire strategy. This calls for a frequent repeat of the process to make sure it fully adapts to changes in environment (Grunig, etal, 2005).

Drawbacks of this Process

A top-down strategic approach is best suited for environments that are stable. It is not suitable for a rapidly changing and competitive sector. It does not put into consideration the occurrence of unexpected events. Many organizations now days are turning to scenario planning which has proved to be effective in dealing with uncertainties.

Conclusion

A strategic plan is simply a guide to achieving a firm’s goals. It has a starting point and an end point. Its starting point consists of its current conditions and environment while the end point is its future success. In between is the most challenging phase which involves hard work and dedication. This phase consists of opportunities, barriers and all other elements that are either in favor or against the strategies put forward. In order for a strategic plan to meet its goals, it must have the support of stakeholders and be embraced fully by the employees. Strategic planning takes different forms in order to fit to the style and culture of the company concerned. Its main advantage is that it facilitates timely decision making process that is guided by current market situation. When used in an effective way, strategic plan provides an enterprise with a competitive advantage. It improves the quality of relationship between the employees, suppliers, customers and financial institutions.

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