The lack of clear direction in companies causes employees to have a low level of commitment and their performance to be limited. On the other hand, when there is strategic planning, it allows them to be focused and work towards the same objectives in a productive way. In other words, every company needs a strategic plan to meet its goals in a timely manner.
What is strategic planning?
Strategic planning is a documented process that brings together the organization’s objectives and the actions necessary to achieve them. It also includes an evaluation in order to visualize the situation your business is in and the opportunities it has to achieve success.
The main objective of strategic planning is that you and your collaborators can respond in the best way to the challenges and opportunities that arise, as well as move together towards the same goal thanks to appropriate actions.
Read More: How to Get a PMP Certification: An Overview
Objectives of strategic planning
Strategic planning is a process that allows establishing the objectives and general direction of an organization in the long term. Some of the objectives that can be set with strategic planning are the following.
- Establish direction and purpose
Helps the organization define its mission, vision, and core values. These elements determine the overall direction and purpose of the organization, providing clear guidance for decision-making and resource allocation.
- Identify opportunities and challenges
Organizations analyze their internal and external environment to identify opportunities and challenges. This allows them to anticipate and adapt to market changes, industry trends, customer demands, and other relevant factors.
- Establish goals
Defining goals and objectives provides a framework to guide the organization’s activities and efforts, and allows it to evaluate its progress and success.
- Prioritize resources and activities
You can identify the key areas on which investment should be focused and determine the most important activities to achieve the desired results.
- Improve decision-making
By having a clear vision of objectives and strategic direction, decisions can be made in a more informed and coherent manner, avoiding complacent or contradictory actions.
- Evaluate and adjust performance
Strategic planning establishes key performance indicators and monitoring mechanisms to evaluate progress toward strategic objectives. This allows you to identify areas for improvement, make adjustments, and take corrective action when necessary to ensure long-term success.
Organizational planning is made up of several steps and at each stage, it will be essential to have order and a broad vision to be able to successfully implement any action. It goes without saying that having organizational planning helps companies achieve their objectives.
Contact with IBAS: +201000498154
The importance of strategic planning
Strategic planning is a key piece for the growth of your company: it helps you have a realistic vision of the future of your business and focus all your efforts to meet medium and long-term objectives. These, in turn, will lead you to expand your trading strategies.
In addition, it is essential that your company has a document that indicates the route to follow to align the activities of your organization and establish objectives.
What is strategic planning for?
These are other benefits of strategic planning:
- It allows your decision-making to be more efficient, both at a managerial and operational level.
- Align your activities to the company’s vision and mission.
- It helps you position yourself in the market, according to the current state.
- It makes it easy for you to effectively direct your sales and marketing efforts for better results.
- Describe measurable goals and objectives that make it easier to evaluate the progress of your business.
Read More: What is a business venture? Characteristics and examples
Characteristics of strategic planning
- Requires the participation of the entire company
According to Indeed, strategic planning requires active leadership of the board of directors, as well as rapport between management and operational collaborators to achieve success.
- It is the basis for activities
Since it provides general guidance, it is the basis for the monthly and bimonthly decisions of managers and coordinators, as well as the daily actions of employees. Ideally, activities should directly or indirectly meet the objectives of the plan.
- It has measurable components
The level of performance of activities can be monitored through indicators or KPIs. Therefore, the quantitative aspect of the objectives is essential, in order to evaluate the level of progress in each one
Elements of strategic planning
- Vision, mission, and objectives
- Key partners
- Product, prices, distribution, and suppliers
- Market and customers
- Marketing strategies
- Analysis of the state of the company
Although each type of strategic planning brings together certain particular elements, here we will list the most common ones.
- Vision, mission and objectives
Strategic planning requires starting from the general vision of the company (what does it want to achieve in the long term?), its mission (why does it exist?), and the specific objectives that give meaning to its activities (what should achieve to achieve the vision, according to the mission?).
- Key partners
Key partners are all those interested parties that enable the achievement of objectives. They can be large clients or companies with which you collaborate, as well as certain organizations, etc.
- Product, prices, distribution and suppliers
At this point, the product characteristics and pricing model are defined, as well as the distributor chains and key suppliers.
- Market and customers
For strategic planning, it is necessary to start with extensive knowledge about the clientele, as well as carry out a market research analysis that takes into account current opportunities and the state of the competition.
- Marketing strategies
In this element, the marketing and advertising strategies are defined according to the characteristics and needs of the clients, as well as the type of positioning that will be sought (digital, offline, or a combination of both…).
- Analysis of the state of the company
It is vital to analyze the current situation of the company. This way you will know what you have to achieve the objectives, mission, and vision, and readjust the activities whenever necessary.
Read More: What is the Research Methodology? Definition, Types, and Examples
Scenarios in the strategic planning process
When we talk about strategic planning for your company, we mean projecting different scenarios that help you clarify decision-making and actions according to what may happen.
The scenarios allow you to identify possible challenges, trends and market opportunities for your business. There are different types of scenarios such as:
- Probable scenario
Also known as a feasible scenario, it refers to all the events that may occur; In this scenario, causal factors must be considered.
- Possible scenario
They are those that apparently are valid or likely to happen, regardless of whether their probability is high or low.
- Desirable scenario
They are the scenarios where you seek to reach. Without a doubt, it is a convenient place for your company. They are part of the possible scenarios since they may or may not happen.
How to do strategic planning
- Establish the mission, vision, and objectives
- Describe your company’s services, products, and processes
- Evaluate your market
- Determine marketing goals
- Perform the analysis with the SWOT matrix
How to evaluate and mitigate risks in strategic planning
Assessing and mitigating risks in strategic planning is a crucial part of the process to ensure the success of strategy implementation. Here are some steps you can follow to do so:
Identify potential risks:
Conduct a thorough analysis of the organization’s internal and external environment to identify potential risks that could affect the implementation of the strategy.
Assess probability and impact:
Assess the likelihood of the identified risks occurring and the impact they would have on the organization if they materialize. Assigns a rating or score to each risk based on its probability and impact; This will help you prioritize and focus your mitigation efforts.
Develop mitigation strategies:
These strategies may include preventative actions to reduce the likelihood of risks occurring, as well as contingency actions to mitigate the impact if risks materialize.
Assign responsibilities and resources:
Assign clear responsibilities to the individuals or teams tasked with implementing mitigation strategies.
Monitor and review regularly:
Establish a continuous monitoring process to identify any changes in the environment that may affect the identified risks. Conduct regular reviews of risks and mitigation strategies to ensure they remain relevant and effective.
Adjust and adapt:
As you move forward with strategy implementation, remain open to adjustments and adaptations in mitigation strategies. If a new risk arises or circumstances change, modify your mitigation strategies accordingly.
Read More: How to Start a Business in Saudi Arabia for Residents and Foreigners?
Types of strategic planning models
Strategic planning matrices are tools that allow you to select the appropriate strategic plan for your products or services. They help you make your work easier when you establish goals and objectives since they indicate the position of your products or services with respect to the competition (and this way you can better take advantage of the opportunities that arise).
Below, we mention some of the matrices for you to use as additional tools in the strategic planning of your company.
- Matrix of external factors
- Internal factors matrix
- Internal and external matrix
- Competitive position matrix
- SWOT matrix
- Grand Strategy Matrix
- MPCE Quantitative Matrix
- Ansoff matrix
- BCG Growth Matrix
Below, we mention some of the matrices for you to use as additional tools in the strategic planning of your company.
- Matrix of external factors
This tool, also known as EFE, allows you to evaluate the factors that you determine as threats and opportunities; facilitates opportunities, and minimizes external dangers. To create this matrix, you must make a list of the 10 most important external factors that impact the success of your brand. Among the most common are economic, social, cultural, political, legal, and technological components and brands that are competitors.
- Matrix of internal factors
This tool is used to analyze what influences the company negatively and positively. Helps you understand your strengths and weaknesses through an internal audit; It is advisable to do it before you create the strategic planning. The internal factors matrix is also known as MEFI and details the strengths and weaknesses of your company that often go unnoticed; It allows you to reflect on the current situation of your business.
- Internal and external matrix
This tool is designed for making strategic decisions about business portfolios. It is based on the weighted totals of the EFI matrix and the weighted totals of the EFE matrix.
- Competitive position matrix
This tool allows you to do a comparative study with your competition, details the key factors for success, and defines what you want to examine. Since your company has a strong influence on the behavior of other competitors, it is important to take into account the internal factors of the companies to analyze and compare the results, with the purpose of defining the competitive position between them.
- SWOT Matrix
The matrix or SWOT analysis is an analysis tool that determines the strengths, weaknesses, opportunities, and threats that could help you reach your company’s objectives. It will allow you to make strategic decisions to improve the current and future situation of your business. External and internal factors change over time, which is why we advise you to carry out successive analyses of this matrix, taking the first one you do as a reference.
The results obtained from this analysis will allow you to use the strengths and take advantage of the opportunities of your business, in order to define the strategic planning that best suits your company.
Contact with IBAS: +201000498154
- Grand Strategy Matrix
This tool is used to formulate different alternative strategies based on the position of your company and its quadrants (such as market growth and competitive position). Additionally, it indicates whether a strategy should be aggressive, conservative, defensive, or competitive based on internal and external factors.
Among the internal factors to consider are financial strength and competitive advantage; external factors, the stability of the macro environment that surrounds your company, and the strength of the industry.
- MPCE quantitative matrix
This tool evaluates alternative strategies objectively. It helps you classify strategies to create a priority list and tells you which are the best alternative strategies for your company.
The quantitative matrix allows you to evaluate a series of strategies in sequence or simultaneously, based on critical internal and external factors. This way you could evaluate strategies at the corporate level, then divisions, and, finally, functions.
The number of strategies that can be analyzed with the MPCE matrix has no limits. It can be applied to any type of organization, as it allows many key factors and strategies to be considered at the same time.
- Ansoff matrix
It is one of the main tools of business strategy. It was created by Igor Ansoff in 1957 and helps you determine the strategic direction of growth of your company. It is a guide that will help you if your goal is to grow in your current market or in other markets. Its main objective is to identify growth opportunities and consists of relating products and markets according to their relevance. Through this matrix you can track possible scenarios and make projections.
The Ansoff matrix can be interpreted as a derivation of the SWOT analysis, which involves an analysis of business opportunities. Use this information together with that of your company and that of the market to compare results and better exploit the potential of your business.
- BCG Growth Matrix
The growth matrix is a tool that helps you determine the role of products in terms of future profitability. It is responsible for analyzing product growth and share and provides a strategic vision of your business as a whole. This matrix was developed by the Boston Consulting Group in the 1970s and is still valid.
It consists of analyzing the company’s portfolio based on two factors: market growth rate and market share. Its objective is to help you make decisions with different approaches so that you have a better perspective on which areas you should invest in or stop investing in.
Now that you know everything you need, remember that the more communication there is in all stages of the process, the stronger your company’s strategic planning will be and will bring you closer to success.
we invite you to approach our team, who will help you learn more details about the entire admission process and other Educational Support that will help you give a boost to your career.
Contact with Ecc