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Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. An organization (or organisation &mdash see spelling differences) is a social arrangement which pursues collective goals which controls its own performance and A Strategy is a long term plan of action designed to achieve a particular goal, most often "winning Various business analysis techniques can be used in strategic planning, including SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats ) and PEST analysis (Political, Economic, Social, and Technological analysis). SWOT Analysis is a strategic planning method used to evaluate the S trengths W eaknesses O pportunities and T hreats involved in a PEST analysis stands for " P olitical E conomic S ocial and T echnological analysis" and describes a framework of macroenvironmental

Strategies are different from tactics in that:

1. They are proactive and not re-active as tactics are.

2. They are internal in source and the business venture has absolute control over its application.

3. Strategy can only be applied once, after that it is process of application with no unique element remaining.

4. The outcome is normally a strategic plan which is used as guidance to define functional and divisional plans, including Technology, Marketing, etc.

Strategic planning is the formal consideration of an organization's future course. All strategic planning deals with at least one of three key questions:

  1. "What do we do?"
  2. "For whom do we do it?"
  3. "How do we excel?"

In business strategic planning, the third question is better phrased "How can we beat or avoid competition?". (Bradford and Duncan, page 1).

In many organizations, this is viewed as a process for determining where an organization is going over the next year or more -typically 3 to 5 years, although some extend their vision to 20 years.

In order to determine where it is going, the organization needs to know exactly where it stands, then determine where it wants to go and how it will get there. The resulting document is called the "strategic plan".

It is also true that strategic planning may be a tool for effectively plotting the direction of a company; however, strategic planning itself cannot foretell exactly how the market will evolve and what issues will surface in the coming days in order to plan your organizational strategy. Therefore, strategic innovation and tinkering with the 'strategic plan' have to be a cornerstone strategy for an organization to survive the turbulent business climate.

Contents

Vision, mission and values

Vision: Defines where the organization wants to be in the future. It reflects the optimistic view of the organization's future.

Mission: Defines where the organization is going now, basically describing the purpose, why this organization exists.

Values: Main values protected by the organization during the progression, reflecting the organization's culture and priorities.

It is generally agreed that spending a period of time reflecting on strategy and goals before taking action is a wise course of action for any individual or institution.

Methodologies

There are many approaches to strategic planning but typically a three-step process may be used:

One alternative approach is called Draw-See-Think

An alternative to the Draw-See-Think approach is called See-Think-Draw

In other terms strategic planning can be as follows:

Situational analysis

When developing strategies, analysis of the organization and its environment as it is at the moment and how it may develop in the future, is important. SWOT Analysis is a strategic planning method used to evaluate the S trengths W eaknesses O pportunities and T hreats involved in a The analysis has to be executed at an internal level as well as an external level to identify all opportunities and threats of the new strategy.

There are several factors to assess in the external situation analysis:

  1. Markets (customers)
  2. Competition
  3. Technology
  4. Supplier markets
  5. Labor markets
  6. The economy
  7. The regulatory environment

It is rare to find all seven of these factors having critical importance. It is also uncommon to find that the first two - markets and competition - are not of critical importance. (Bradford "External Situation - What to Consider")

Analysis of the external environment normally focuses on the customer. A customer is someone who makes use of the paid products of an individual or Organization. Management should be visionary in formulating customer strategy, and should do so by thinking about market environment shifts, how these could impact customer sets, and whether those customer sets are the ones the company wishes to serve.

Analysis of the competitive environment is also performed, many times based on the framework suggested by Michael Porter. Michael Eugene Porter (born 1947) is a University Professor at Harvard Business School, with academic interests in Management and Economics

Goals, objectives and targets

Strategic planning is a very important business activity. A business (also called firm or an enterprise) is a legally recognized organizational entity designed to provide goods and/or services to It is also important in the public sector areas such as education. The public sector is the part of economic and administrative life that deals with the delivery of goods and services by and for the Government, whether national Regional Education encompasses both the Teaching and Learning of Knowledge, proper conduct, and technical competency It is practiced widely informally and formally. Strategic planning and decision processes should end with objectives and a roadmap of ways to achieve those objectives.

The following terms have been used in strategic planning: desired end states, plans, policies, goals, objectives, strategies, tactics and actions. Definitions vary, overlap and fail to achieve clarity. The most common of these concepts are specific, time bound statements of intended future results and general and continuing statements of intended future results, which most models refer to as either goals or objectives (sometimes interchangeably).

One model of organizing objectives uses hierarchies. The items listed above may be organized in a hierarchy of means and ends and numbered as follows: Top Rank Objective (TRO), Second Rank Objective, Third Rank Objective, etc. From any rank, the objective in a lower rank answers to the question "How?" and the objective in a higher rank answers to the question "Why?" The exception is the Top Rank Objective (TRO): there is no answer to the "Why?" question. That is how the TRO is defined.

People typically have several goals at the same time. "Goal congruency" refers to how well the goals combine with each other. Does goal A appear compatible with goal B? Do they fit together to form a unified strategy? "Goal hierarchy" consists of the nesting of one or more goals within other goal(s).

One approach recommends having short-term goals, medium-term goals, and long-term goals. In this model, one can expect to attain short-term goals fairly easily: they stand just slightly above one's reach. At the other extreme, long-term goals appear very difficult, almost impossible to attain. Strategic management jargon sometimes refers to "Big Hairy Audacious Goals" (BHAGs) in this context. ) Using one goal as a stepping-stone to the next involves goal sequencing. A person or group starts by attaining the easy short-term goals, then steps up to the medium-term, then to the long-term goals. Goal sequencing can create a "goal stairway". In an organizational setting, the organization may co-ordinate goals so that they do not conflict with each other. An organization (or organisation &mdash see spelling differences) is a social arrangement which pursues collective goals which controls its own performance and The goals of one part of the organization should mesh compatibly with those of other parts of the organization.

Mission statements and vision statements

Organizations sometimes summarize goals and objectives into a mission statement and/or a vision statement:

While the existence of a shared mission is extremely useful, many strategy specialists question the requirement for a written mission statement. A mission statement is a brief statement of the purpose of a Company, Organization, or Group. However, there are many models of strategic planning that start with mission statements, so it is useful to examine them here.

Many people mistake vision statement for mission statement. The Vision describes a future identity and the Mission describes why it will be achieved. A Mission statement defines the purpose or broader goal for being in existence or in the business. It serves as an ongoing guide without time frame. The mission can remain the same for decades if crafted well. Vision is more specific in terms of objective and future state. Vision is related to some form of achievement if successful.

A mission statement can resemble a vision statement in a few companies, but that can be a grave mistake. It can confuse people. The vision statement can galvanize the people to achieve defined objectives, even if they are stretch objectives, provided the vision is SMART (Specific, Measurable, Achievable, Relevant and Timebound). SMART is a Mnemonic used in Project management at the Project objective setting stage A mission statement provides a path to realize the vision in line with its values. These statements have a direct bearing on the bottom line and success of the organization.

Which comes first? The mission statement or the vision statement? That depends. If you have a new start up business, new program or plan to re engineer your current services, then the vision will guide the mission statement and the rest of the strategic plan. If you have an established business where the mission is established, then many times, the mission guides the vision statement and the rest of the strategic plan. Either way, you need to know where you are, your current resources, your current obstacles, and where you want to go - the vision for the future. It's important that you keep the end or desired result in sight from the start.

Features of an effective vision statement may include:

To become really effective, an organizational vision statement must (the theory states) become assimilated into the organization's culture. Hope is a Belief in a positive outcome related to events and Circumstances in one's life Leaders have the responsibility of communicating the vision regularly, creating narratives that illustrate the vision, acting as role-models by embodying the vision, creating short-term objectives compatible with the vision, and encouraging others to craft their own personal vision compatible with the organization's overall vision.

References

See also

External links

The Strategic and Defence Studies Centre (SDSC is a university department in the Research School of Pacific and Asian Studies at the Australian National University "Hoshin kanri is a method devised to capture and cement strategic goals as well as flashes of insight about the future and develop the means to bring these into reality
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