Strategic planning is a systematic process of envisioning an organization’s desired future by designing the organization’s strategies or directions and making related decisions on allocating available resources to pursue all the goals. Strategic planning starts with the desired end, and the management meets expectations retrograde of the present circumstances as opposed to long-term planning which begins with present status of the organization and sets out strategies and mobilizes resource allocation to meet the company’s evaluated future objectives. Therefore, strategic planning involves determining the action plans to accomplish the set purposes, defining goals, as well as pooling the company’s accessible resources to execute the outlined operations (Coe, 1987).
History and Origin of Strategic Planning
Strategic planning originated from warfare. The term ‘strategy’ is derived from the Greek word strategos which means a combination of stratos, army, and agein of conduct. It refers to the civil-military group or officials elected by Athenian citizens to assume leadership during times of war. The military units were expected to design and implement leveled plans for achieving long-term goals of winning war. Although strategic planning in business can be traced back to much earlier in history, its extended and corporate use started after the Second World War. In the early 1960s, it became a standard management tool for running the business in both big and small companies. Consequently, it was included in many respected business school curriculums. Since then, strategic planning has undergone various fashioning and has been the subject of many theories and business approaches. Besides its application in military and business world, strategic planning was incorporated into the public and semi-public sector in the late 1980s when the liberal market philosophy was dominating all management thinking. It was of the opinion that government administration should be more cost-effective, as well as result-oriented which could be achieved by applying strategic management principles.
Overview of Strategic Planning
Like any other procedure, strategic planning incorporates inputs, activities, yields, results, as well as limitations. A few components of the critical arranging procedures can be persistent while others are discrete tasks measures with a definitive start and end amid the method. Also, strategic planning gives different contributions to strategic thinking which acts as a manual for the execution of the real methodology development (Coe, 1987). The general result of strategic planning in the organization includes but is not constrained to the diagnosis of the environment and competitive plan, a managing strategy on the association’s future objectives, and a key initiative in accomplishing the organization’s directing approach.
Importance of Strategic Planning
Strategic planning gives direction to the management of the organization. It guides through financing, marketing, human resource strategy, and organizational development among others. Hence, it provides the organization with the clarity of their plans, direction, as well as focus. Strategic planning drives the organization’s alignment as it incorporates the participation of all members of the group thus fostering collegiality and creation of a platform for discussion in matters concerning the future of the organization. Besides, the process of strategic planning promotes the open, critical, and creative exchange of individual ideas including resolving of disputes among the employees, as well as working out sustainable and effective solutions to these conflicts (Strategic Planning, 1987).
A strategic plan helps in communicating the organization’s message and goals. Most companies have enthusiastic employees who spend most of their effort in areas that do not affect the company’s future goals. Strategic planning and involvement of employees in the planning process ensure that every employee is on the same track in the execution of the planning process, as well as enabling employees to make strategic decisions in the best interest of the company’s plans and goals. Strategic planning gives a sense of direction to an organization as it acts as a guide to the management and provides solutions, as well as guides in areas concerning finances, marketing, organizational development and human resource among others. Also, strategic planning dictates the degree of control and supervision as it embodies the importance of individual strategic decision making (Del, 2013).
Pros of Strategic Planning
Strategic planning encourages correspondence and cooperation among various administrators to achieve synergy among various departments in the organization. In many organizations, finance managers, marketing managers, human resource, and operations managers are often in a regular competition as opposed to cooperation to achieve the desired objectives. Hence, through strategic planning, collaboration among the managers to attain a set goal is facilitated (Del, 2013). It identifies strategic goals and strategic intents of the company through highlighting the company’s strength and weakness. Chief executive officers create goals, as well as envision the company’s future. Nonetheless, they are often engaged in other activities and lack the required time and commitment in searching for the company’s best strategic fit. Hence, through a strategic plan, other employees can push the company’s agenda forward as it is already identified in the plan (Strategic Planning, 1987).
Also, strategic planning reduces resistance to change, as well as improves resource allocation. Through explanation of the company’s plan, strategic change, current situation’s implications, and expected changes to the managers at the entry level, strategic planning reduces resistance to these changes as managers are often less uncertain about the future (Del, 2013). New procedures, administration, products and objectives require resource allocation which is accomplished more efficiently when aligned with the organization’s strategic plans. A competitive advantage can be achieved without any strategic planning. However, if the company’s desire is to reach a sustainable competitive advantage, it must be aligned with a strategic plan.
Cons of Strategic Planning
The cons of strategic planning are represented when the financial resources of a company are low which affects the morale and purpose of the employees. A sustainable strategic plan requires resources and can prove to be costly for small and medium enterprises. It increases expenses to the organization as managers and strategic planners must be hired. Therefore, additional efforts and commitments are required in analyzing the internal and external environment. Also, some tools and innovations have to be designed to sustainably implement a strategic plan (Strategic Planning, 1987).
Strategic planning is complex as it comprises of various interconnected steps which must always be balanced. Some unforeseen factors frequently develop and change the entire system which prompts an adjustment to the entire strategic process. Subsequently, due to the complexity and overwhelming sense of duty regarding strategic objectives, it is rarely executed effectively. Consequently, the poor implementation of a strategic plan, misaligned operations, and strategic goals often lead to the failure of a strategic plan (Del, 2013).
Using a Strategic Plan
Strategic planning is a company’s management activity that is used to identify and set priorities, focus on organization’s strengths, and allocate resources to various actions in achieving the desired results. Strategic plans are utilized to fortify operations and guarantee that administration, employees, and other stakeholders are working towards a shared common. Strategic planning is often used when an organization is seeking to change its operations, services, brands or products and gain a competitive advantage in the market or its areas of operations. A viable strategic plan express not only where an organization is heading or activities expected to gain ground but also having insights on the accomplishment of the strategic plan.
Lesson learned in Strategic Planning Process
The success rate of the implementation of any strategic plan is dismal with the percentage failure in implementation ranging from about 63 percent to 90 percent. The creation and implementation of strategic plans are easy. Hence, having a clear future for the organization is not enough; the management, employees, and other stakeholders must be able to work towards the common future, which is the hard part. It is often advisable to have a designated responsible party to act as a visible and accountable leader for each strategic goal. Besides, individuals who accomplish meaningful goals are invaluable and should often be rewarded for their efforts. This motivates other employees to work towards the set strategic goals and achieve the company’s desired results. Consequently, tolerance of failure is essential and necessary because, during the application of a strategic plan, mistakes are guaranteed.
In conclusion, the advantage of having an explicit action and action plan for an organization makes strategic planning a powerful tool. However, it is advisable for the management to anticipate undesirable effects before taking the plunge rather than focusing on the desired and fulfilling insights of a strategic plan.
Coe, B. A. (January 01, 1987). An open focus framework for strategic plan implementation in public-private partnerships. Western Governmental Researcher: the Journal of the Western Governmental Research Association, 3, 1.). Retrieved from: http://www.legalnetwork.com/wp-content/uploads/sites/19/2017/08/TLR-Public-Private-Partnership-3rd-ed-book.pdf
Del, P. M. (March 01, 2013). The importance of strategic planning. Reinforced Plastics, 57, 2, 16. Retrieved from: http://www.businessmanagementideas.com/management/strategic-planning/strategic-planning-meaning-importance-and-limitation/4771
Strategic Planning. (January 01, 1987). Journal of the American Planning Association, 53, 1.). Retrieved from: http://www.tandfonline.com/toc/rjpa20/current