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Formal Strategic Planning Process
Formal Strategic Planning Process
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Strategic Planning Process
A set of procedures for -
• setting long range quantified overall corporate objectives and of
• determining the strategies, and
• assigning accountabilities, within policies that govern the acquisition and
allocation of resources
• to achieve the fundamental purpose of the organization.
FORMAL Strategic Planning Process
to convey that an organization’s strategic planning process involves
explicit systematic procedures
Purpose and Benefits
1. Ensure top managers are on the same page
2. Makes top managers paying attention to the same important matters at the same
time
3. Without the structure that comes with formal strategic planning contributions may
become unbalanced
4. Moderate the use of power in a planning group
5. Help groups to deal effectively with conflicts
6. Help to give a sense of direction to meetings
7. Formal planning procedures enable evaluation of progress
Five stages of Strategic Planning Process
Initial Assessment
Situation Analysis
Strategy Formulation
Strategy Implementation
Strategy Monitoring
1. Initial Assessment
To determine and assess the company ̓s:
• Vision
• Mission
To give a clear image of what success looks like for the business
Components of a Mission statement
Mission
Vision
Values
Goals
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2. Situation Analysis
To determine and assess the company ̓s current situation in the
market.
This includes evaluating an organization’s
• external environments – key external forces : macro and micro
environments and competition.
• Competitors - assess their competitors using competitors profile
matrix and benchmarking to evaluate their strengths, weaknesses
and level of performance.
• internal environments - includes the assessment of the company’s
resources, core competencies and activities.
2. Situation Analysis
It identifies strengths, weaknesses, opportunities and threats for
the organization and reveals a clear picture of company’s situation
in the market
3. Strategy Formulation
To develop strategic plan
To prioritize major objectives, important questions such as the following
should be asked:
• Which of these initiatives will have the greatest impact when it comes to achieving
our company mission/vision and improving our position in the market?
• What types of impact are most important (e.g. customer acquisition vs. revenue)?
• How will the competition react?
• Which initiatives are most urgent?
• What will we need to do to accomplish our goals?
• How will we measure our progress and determine whether we achieved our goals?
3. Strategy Formulation
The 3 different levels of strategies:
1. Business level strategy - used when strategic business units (SBU), divisions
or small and medium enterprises select strategies for only one product that
is sold in only one market.
2. Corporate level strategy - choosing which products to sell, which market to
enter, whether to acquire a competitor or merge with it, selecting between
integration, intensive, diversification and defensive strategies.
3. Global/International strategy. The main questions to answer: Which new
markets to develop and how to enter them? How far to diversify?
3. Strategy Formulation
4. Strategy Implementation
To execute and manage the plan
Communication is essential as new strategies must get support all
over organization for effective implementation.
6 steps of strategy implementation
1. Setting annual objectives;
2. Revising policies to meet the objectives;
3. Allocating resources to strategically important areas;
4. Changing organizational structure to meet new strategy;
5. Managing resistance to change;
6. Introducing new reward system for performance results if needed.
4. Strategy Implementation
5. Strategy Monitoring
• Implementation must be monitored to be successful.
• To measure performance which need to be measurable and
comparable
Main components of the strategic planning
process Feedback
External Analysis:
Opportunities Designing
and Threats Organization
Existing Business Model
Structure
Strategies:
Functional,
Mission, Designing
SWOT Strategic Business, Governance
Vision, Values, Organization
Choice Global, and and Ethics
and Goals Culture
Corporate-
Level
Designing
Internal Analysis: Organization
Strengths and Controls
Weaknesses