Planning Cycle
Analyze
→Formulate
→Implement
→Evaluate
Introduction
Strategic planning is the process of defining an organization's direction and making decisions on allocating resources to pursue this strategy. It provides the framework for all major business decisions.
Step 1: Vision and Mission
Vision Statement
What the organization aspires to become—the future desired state. It should be inspirational, clear, and future-oriented.
Mission Statement
The organization's purpose—why it exists. Answers: What we do, for whom, how, and why it matters.
Example: Google
Mission: "To organize the world's information and make it universally accessible and useful."
Step 2: Environmental Analysis
External Analysis
- PESTEL: Political, Economic, Social, Technological, Environmental, Legal
- Industry Analysis: Porter's Five Forces
- Competitor Analysis: Strengths, strategies, likely moves
Internal Analysis
- Resources: Financial, physical, human, organizational
- Capabilities: What we do well
- Value Chain: Activities that create value
Step 3: Strategy Formulation
| Level | Question | Decisions |
|---|---|---|
| Corporate | Where to compete? | Diversification, acquisitions |
| Business | How to compete? | Cost leadership, differentiation |
| Functional | How to support? | Marketing, operations, HR |
Step 4: Strategy Implementation
- Structure: Organizational design to support strategy
- Systems: Processes and procedures
- People: Right skills and capabilities
- Culture: Values aligned with strategy
- Resources: Budget and allocation
Key Insight: Strategy fails more often in implementation than formulation. The best strategy is worthless without effective execution.
Step 5: Evaluation and Control
- KPIs: Key performance indicators
- Balanced Scorecard: Financial, customer, process, learning
- Reviews: Regular strategic reviews
- Feedback: Adjust based on results
Conclusion
Key Takeaways
- Vision: Where we want to be; Mission: Why we exist
- External: PESTEL, Five Forces, competitors
- Internal: Resources, capabilities, value chain
- Three levels: Corporate, business, functional
- Implementation requires structure, systems, people, culture
- Strategy is a continuous process