Steps of Strategic Planning Process

Steps of Strategic Planning Process

Strategic Planning Process

Strategic Planning Process

Strategic Planning Process can be defined as the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities.
Strategic Planning Process sets the stage for the rest of the planning in the firm.
There are four steps to the Strategic Planning Process, as depicted in Figure 2.3.
Defining a clear company mission.
Setting supporting company objectives.
Designing a sound business portfolio.
Planning and coordinating marketing and other functional strategies.

Defining the Company’s Business and Mission

An organization exists to accomplish something. When management senses that the organisation is drifting, it is time to renew its search for purpose by asking:
What is our business?
Who is our customer?
What do customers value?
What should our business be?
According to Peter Drucker, every organization must ask an important question “What business are we in?” and get the correct and meaningful answer. For example, Indian Railways will make a big mistake if they think they are in the business of moving trains and wagons; whereas they are actually in the business of transportation and material handling system.
The first step in the strategic planning process is defining the company mission.
Mission statement is a statement of the organization’s purpose – what it wants to accomplish in the larger environment.
A clear mission statement acts as an “invisible hand” that guides people in the organization.
Market definitions of a business are better than product or technological definitions. Products and technologies can become outdated, but basic market needs may last forever.
A market-oriented mission statement defines the business in terms of satisfying basic customer needs.
The mission statement must avoid being too narrow or too broad. Mission statements must:
Be realistic
Be specific
Fit the market environment
Indicate distinctive competencies
Be motivating
A strategic vision is a roadmap of the company’s future – providing specifics about technology and customer focus, the geographic and product markets to be pursued, the capabilities it plans to develop, and the kind of company that management is trying to create.
An organization’s Mission states what customers it serves, what needs it satisfies, and what type of product it offers.
A company’s mission statement is typically focused on its present business scope – “who we are and what we do”; mission statements boldly describe an organization’s present capabilities, customer focus, activities and business makeup.

Setting Company Objectives and Goals

The company’s mission needs to be turned into detailed supporting objectives for each level of management. This second step in the strategic planning process requires the manager to set company goals and objectives and be responsible for achieving them.
The mission leads to a hierarchy of objectives including business and marketing objectives.
Objectives should be as specific as possible.
Objectives are an organization’s performance targets — the results and outcomes it wants to achieve. They function as yardsticks for tracking an organization’s performance and progress.
Strategic objectives relate to outcomes that strengthen an organization’s overall business position and competitive vitality; financial objectives relate to the financial performance targets management has established for the organization to achieve.
Objectives are open-ended attributes that denote the future state or outcomes, whereas goals are close-ended attributes, which are precise and expressed in specific terms.
Key Questions for an Organisation to Answer
An organization seeking success in business must answer important questions dealing with the concepts of mission, objective, strategy and tactics.

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