In This Article

  1. Introduction
  2. Vision and Mission
  3. Environmental Analysis
  4. Strategy Formulation
  5. Strategy Implementation
  6. Evaluation and Control
  7. Conclusion

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.

  • Inspirational and aspirational
  • Clear and memorable
  • Future-oriented

Mission Statement

The organization's purpose—why it exists.

  • What we do
  • For whom (customers)
  • How we do it (approach)
  • Why it matters (value)

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
  • Core Competencies: Unique strengths

SWOT Integration

Combine internal (S, W) and external (O, T) analysis to identify strategic options.

Step 3: Strategy Formulation

Three Levels of Strategy

LevelQuestionDecisions
CorporateWhere to compete?Diversification, acquisitions, portfolio
BusinessHow to compete?Cost leadership, differentiation, focus
FunctionalHow to support?Marketing, operations, HR strategies

Setting Objectives

SMART objectives: Specific, Measurable, Achievable, Relevant, Time-bound

Step 4: Strategy Implementation

Key Elements

  • Structure: Organizational design to support strategy
  • Systems: Processes and procedures
  • People: Right skills and capabilities
  • Culture: Values aligned with strategy
  • Leadership: Champions to drive change
  • Resources: Budget and resource 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
  • Learning: Capture lessons for future

Conclusion

Key Takeaways

  • Vision: Where we want to be; Mission: Why we exist
  • External analysis: PESTEL, Five Forces, competitors
  • Internal analysis: Resources, capabilities, value chain
  • Three strategy levels: Corporate, business, functional
  • Implementation requires structure, systems, people, culture
  • Evaluation: KPIs, Balanced Scorecard, regular reviews
  • Strategy is a continuous process, not a one-time event