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Strategic planning is essential for organizational success. In this lesson, you’ll learn about strategic planning, including the steps in the process. A short quiz is provided after the lesson.

Definition of the Strategic Planning Process

Strategic planning is a process undertaken by an organization to develop a plan for achievement of its overall long-term organizational goals.

Model

There is no one model of strategic planning. However, the strategic planning process should include a situational analysis.

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This consists of looking at the current external and internal environment the organization finds itself in, formulating organizational objectives and strategies based upon the environmental assessment, and developing procedures to implement and evaluate the strategic plan. Strategic plans for business organizations often cover a three-to-five year period, but if the business or its environment is highly dynamic, a shorter period may be advisable.

Strategic Planning Steps

Here are the main steps for strategic planning.1. Analysis of the current stateHere, you analyze your organization’s external and internal environment.

You may conduct a SWOT analysis, which is an examination of your organization’s strengths, weaknesses, opportunities, and threats. You will also carefully examine the specific external environmental factors, such as your rivals, the power of your suppliers, the power your buyers or customers have, whether there is a viable threat that major clients or customers can effectively substitute your product or service, and whether there are any barriers to entry into a new market.2. Defining the future stateHere, you will develop an organizational vision and a mission statement that describes the future of your organization – where it wants to be, its essential values, and what it wants to do. After you have defined the organization’s vision and mission, you can begin to formulate a detailed strategy to achieve them.

3. Determination of objectives and strategiesNow that you have defined the organization’s vision and mission, you can develop a set of objectives that will lead you to the overall strategic goal or vision. For an example, an objective may be to increase market share year-over-year by at least five percent.

Think of achieved objectives as building blocks in constructing your goal or vision.4. Implementation and evaluationThe next step is to implement and evaluate the plan. Implementation in large organizations, such as governmental agencies or large corporations, will be done by a different set of organizational members than the members that created the plan. Different parts of the plan are typically distributed to various parts of the organization. You will also need to constantly monitor and assess the implementation of the plan to determine if the plan is achieving the objectives leading to the strategic goal. If not, then adjustments to the long-term strategy will be necessary.

Example

Let’s say you are the president of a traditional magazine publishing company. Your company has been getting slaughtered in the market for the past three years. In fact, if you can’t turn the ship around within the next 18 months, you will be left with no choice but to close up shop and place the company into bankruptcy.

You meet with your core management team to assess the situation within and outside of the company. You note that much of your company’s equipment and techniques are out of date. You also note that most of your competitors, the ones that are still in business, have gone digital to some degree or another.You and your team develop a strategic vision for an online electronic subscription service, coupled with some free content as an inducement to come to the site. You create a mission statement describing this vision and where you see the company in the future.

With the help of your team, you develop a set of short-term, medium-term, and long-term objectives that you believe will lead to the achievement of the company’s strategic vision. You divide the implementation of the plan among the relevant parts of the organization and continue to assess the plan’s progress throughout the implementation phase in order to make any necessary adjustments.

Lesson Summary

Strategic planning is a process by which an organization develops a long-term vision and a plan to implement it. The process requires you to analyze both the internal and external environment of the organization. Typical steps in strategic planning include an analysis of the current state, defining the future state, developing objectives and strategies to achieve the vision, and implementation and assessment of the plan.

Learning Outcomes

You will have the ability to do the following after watching this video lesson:

  • Define strategic planning
  • Explain the general steps to strategic planning

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