Strategic Planning Meaning
Strategic planning is not synonymous with corporate planning. It is a constituent of corporate planning Strategic planning is a systematic process of determining goals to be achieved in the foreseeable future. It is the managerial process of developing, monitoring, and maintaining a viable fit between the organisation’s objectives, skills, and resources and its changing opportunities. Strategic planning aims to shape the company’s businesses, products, services and messages so that they achieve targeted profits and growth.
A good strategic planning process shares the “vision” of the organisation with the employees and creates a strong organisational culture. Once goals and objectives are established, strategies are developed to assist in achieving goals and objectives. The strategic plan gives shape to the philosophy and culture of the organisation The organisation and information systems are designed to optimise the contributions of people and other resources within the organisation. Formal goals and strategies operationalisation and break this vision into tasks and activities that can be programmed and assigned to responsible individuals for implementation.
Strategic Planning Definition
According to William Glueck, “Strategic planning is a stream of decisions and actions, which lead to the deployment of an effective strategy or strategies to help achieve corporate objectives decisions and actions, which determine whether an enterprise excels, survives or dies”.
According to Hayes and Wheelwright, “Strategic planning is planning that is long-term, wide-ranging and critical to organisational success, in terms of the costs of the resources it affects and the outcomes it envisions”
Strategic planning is fundamental to developing competitive advantage. Successful CEOs understand that strategic planning using the combined experience, education and perspectives of the management team is a highly effective means of developing a focus on management and competitive advantage in the marketplace. A strategic business plan describes the overall direction an organisation will pursue within its environment and also guides the allocation of resources. Strategic planning covers the entire activities of the organisation, including all of the strategic business units (SBU) and each functional area. It provides the logic that integrates the perspectives of functional departments and operating units and points them all in the same direction.
Nature of Strategic Planning
Strategic planning has the following features:
- Effective Utilisation
- Forming Hedge in Uncertainties
- Futuristic Planning
- Proactive Decision Making
- Provides Growth Objectives and Strategies
The nature of Strategic Planning is explained as follows:
1) Flexibility: A mechanism for changing and updating the plan is built into the process.
2) Accountability: Responsibility is assigned for the successful completion of initiatives.
3) Balance: The plans guide not only financial decision-making but also operational and human resources issues.
4) Prioritisation: Priorities are established whenever there are multiple interdependent action plans.
5) Specificity: Expected results and milestones are clearly defined, along with the specific actions for implementation and the deliverables for each step.
6) Manageability: In-process measures are identified to ensure processes are working as intended, critical performance issues are addressed, resources required are projected, and methods of status reporting are in place.
7) Effective Utilisation: It ensures the best utilisation of the firm’s resources among the product-market opportunities.
8) Realism: The question of what the organisation can do versus what it would like to do is addressed rationally, though the tone is optimistic.
9) Forming a Hedge in Uncertainties: It serves as a hedge against uncertainty arising from environmental turbulence.
10) Sustainability: A sufficient period is covered to close performance gaps.
11) Provides Growth Objectives and Strategies: It lays down the growth objectives of the firm and also provides strategies needed for achieving them.
12) Futuristic Planning: Prepares the firm to not only face the future but even shape the future in its favour.
13) Proactive Decision Making: It helps the firm understand trends in advance and provides the benefit of a lead time for taking crucial decisions and actions.