Strategic planning is very important for organizations in the fast changing world of today. This article describes the key concepts necessary for understanding the strategic planning process. Vision statement, mission statement, identification of goals and objectives, resource allocation, environmental analysis, strategy formulation and alternative strategy formulation are the key steps in strategic business planning.
Vision statement
Strategic plan helps the management to direct their focus on the futuristic approach for long term goals of an organization. Vision statement provides desired position of an organization in the future (Henry, 2011). The desired position guides the organization’s mission, objectives and goals to place it in the future.
Mission statement
A well communicated mission statement with the organization’s personnel results in twice the returns on shareholder’s equity than without it. A positive relationship has been found between organizational performance and mission statement of an organization.
Goals and objectives
Long term strategic goals and objectives represent the outcomes of the strategic implementation in the organization. If organization manages to successfully implement its strategies in the long run perspective, organizations succeed to achieve their pre defined strategic goals . Presence of goals and objectives in strategic business planning helps the employee empowerment to be more effective in their performance measures. These goals and objectives provide guidelines to every strategic decision made by the management of the organization . Management of an organization or key personnel can end up with wrong decisions if their organization’s goals and objectives are not well communicated to them.
Resource allocation for strategic planning
A proper resource allocation is required from management of the organization to ensure achievement of its strategic goals and objectives guided by mission and vision. Resource allocation for achievement of goals and objectives is a strategic decision (Henry, 2011) for strategy formulation and strategic business planning in an organization. Resource allocation can be a human resource function to ensure the effective management of resources.
Environmental analysis for strategic planning
Environmental analysis of an organization provides internal and external scanning about strengths, weaknesses, opportunities and threats for an organization . The strategic analysis of an organization’s environment provides a framework to plan strategies best fit the organization’s capabilities and environment.
Strategy formulation
When organization’s pre-requisites are done for formal strategic planning process, strategy formulation occurs on the basis of pre done business and market analysis. Strategy provides a road map to follow and lead the organization towards the achievement of strategic goals and objectives. A good strategy is formulated on basis of its efficiency in managing the standards of performance, beating the competition in market, building customer satisfaction and responding to the changing needs of the business environment (Olsen, 2007).
Alternative strategy evaluation
Strategy evaluation process before its implementation in the real time environment or system is of considerate importance. This ensures presence of a set of strategies competing together in the business environment of an organization which requires evaluation (Henry, 2011).