Strategic planning

Strategic planning is an important element of organizational management that sets the goals to which the company needs to follow in the foreseeable future. Strategic plan helps the company to determine the essence of competitive advantages in a certain period of time. The ability to think strategically, to plan is the most important managerial quality for any manager. A specialist who possesses these features is able to actively shape the future of the company, so he will always be in demand in the labor market.

Concept and functions of strategic planning

Strategic planning is a structure, scheme or a set of management methods and tools for determining the main directions of the organization’s activities. Such planning is used for forecasting, formation of indicators of the company’s development, determination of its purpose in the market, prospects and success in this business.

Proper organization of strategic planning activities in the management system allows correct assessment of external threats to the company, search for potential opportunities for development based on the analysis performed. The result of the process is a strategic plan it’s a document describing strategic and tactical goals supported by calculations and practical research. Strategic plans are made for a long-term period (from three to five years), medium-term period (annual), there is also a composite short-term plan (less than a year). They are united by the combination of a common business idea and the management will of the owners of the organization.

The pros of implementing a strategic planning system include:

1. Conducting a comprehensive analysis of possible hazards to the business;
2. Optimization of staff activities;
3. Developing an enabling environment for successful strategy implementation;
4. Emergence of prerequisites for the development of strategic thinking of top management;
5. Rational allocation of the resource base;
6. Effective management of internal processes;
7. Concentration on key areas of development.

Strategic planning is carried out regularly and recorded in writing. This is necessary for the plans to be clearly and correctly understood by all participants in the work process. No matter how concrete and clearly formulated plans may seem in the heads of managers, they must be recorded and communicated in writing to subordinates to avoid incorrect interpretation or double interpretation. In this way, a number of misunderstandings are avoided, and coherence and accountability of the actions of managers and staff are ensured.

Strategic planning is an effective tool that helps in making management decisions. It helps to make timely adjustments in the activities of the organization. The essence of strategic planning lies in its functions. They include:

• Adaptation of the company to external conditions, organization of communication with the environment. Modern business must have sufficient flexibility to adapt to favorable opportunities and threats. For this purpose, various options are developed to ensure that the company’s strategy adapts to the external environment.
• Rational allocation of valuable, scarce resources, including a company’s funds, technology, or the managerial expertise of its management.
• Coordinating all units, departments of the organization, identifying its strengths and weaknesses for successful internal integration.
• Awareness of organizational strategy using the experience of previous decisions.

Stages of strategic planning

Strategic planning is a multi-step management process consisting of several steps. These steps include:

• Formation of mission, key objectives;
• Strategic Analysis;
• Choosing a strategy;
• Realization;
• Evaluation and control of its execution.

Defining the mission, key objectives

The mission of the company forms its purpose, philosophy, direction of activity. It affects the principles of the company’s work, its status, basic business characteristics. Shapes the image of the company, reflects its values. Helps in the development of corporate standards. Provides the relationship of the organization with the external environment: population, economy, political system.

The mission lays down the vector of the company’s future development. It demonstrates the direction in which efforts should be directed. It does not depend on the financial stability and state of the enterprise at a given time. Despite the fact that the reason for the existence of commercial organizations is to make profit, their mission should pursue other goals.

The purpose of strategic planning is a detailed description of the company’s mission. It creates clear guidelines for its development for a certain time interval. Be specific, commensurate, not contradictory to the mission and resources available to the company. To be targeted and controlled. It is necessary for planning not to be “detached” from real life.

Strategic analysis

Includes a detailed study of the external, internal environment in which the company operates. The external environment is formed by the following factors:

• The economic situation of the region or country;
• Regulatory and legal requirements for carrying out this type of activity;
• Political, societal, socio-cultural influences on the market;
• Consumer needs and preferences, market rules.

Internal analysis is done with consideration:

• The quality of its own products and services;
• Estimates of the market segment occupied by the company;
• Realizable pricing policy;
• Effectiveness of advertising activities;
• Resources used, costs of production;
• Optimization options.

Strategic plans are drawn up on the basis of actual data containing detailed information on market conditions, customers, competitors. They are made on the basis of two-dimensional matrices that help to analyze the work of departments, product quality, production status by various criteria.

There are three approaches used to implement strategic analysis:

1. One of the approaches is tabular, in which the values of the studied parameters are arranged in ascending order as they move away from the graph. The analysis is performed diagonally, from the upper left corner to the lower right corner.
2. Coordinate, where values increase as they move away from the center of intersection of coordinate lines. The analysis is performed from the lower left to the upper right indicator.
3. Logical. In this case, a brief analysis is performed from the lower right to the upper left corner.

Strategy selection

Strategy indicates the way to achieve the goal. It determines the course of development for a long period of time. Affects all areas of the company’s activities, including the form of production, personnel, and market position. When developing a strategy, several options are considered and the best one is chosen. The following points are taken into account:

• Competing environment;
• Prospects for the development of the sphere in which the organization operates;
• The technology at disposal.

The strategy must lead to the achievement of the ultimate goal. By choosing a strategy of development and staying on the market, the company moves in the right direction. In a simplified form, the options of strategic development can be as follows:

• Limiting growth. It is considered the safest way of doing business. Approved indicators are used as a benchmark for development in this case. For example, sales plans based on the plans of previous periods.
• Free growth is accompanied by a gradual increase in the set indicators to be achieved in the short and long term. This type of development is suitable for young companies starting out in free market niches. They grow by increasing their product range or opening new outlets in different cities.
• Reduction due to a decrease in performance. This occurs when a business is liquidated, unprofitable or unprofitable trading facilities are closed, production is reduced due to economic crises or business priorities are changed.

Downsizing involves three scenarios:

• The first is liquidation, with a complete sale of the company’s assets and inventory;
• The second is to cut off the unnecessary (units or activities);
• The third is reorientation (partial reduction of activities to increase profits).

These strategies can be used individually or in combination.

Strategy implementation

All employees are involved in the implementation of the strategy. Each of them performs their own functions and tasks to achieve the desired result. For successful implementation of the strategy, the following conditions must be met:

• Communicate to each employee the content of the company’s mission, goals, and strategy to achieve their understanding of the management’s actions, and to involve them in the process of realizing the goals.
• Ensure that all required resources are available in a timely manner.
• To form target settings for movement on the intended plan.
• Responsibly complete tasks at every level.

At this stage, the most important guidelines of strategic planning are developed: tactics, policies, procedures and rules of the company’s existence.

Evaluation and monitoring of implementation

This is the final stage of strategic planning, which compares projected and achieved results with an assessment of profitability. The purpose of the assessment is to get answers to the following questions:

• To what extent is the strategy aligned with the company’s capabilities?
• Are the perceived threats and risks embedded in it?
• Does the enterprise have enough resources for its realization?
• Does it take into account the external, internal environment?
• Is the chosen strategic path the best use of the company’s resources?

Quantitative and qualitative criteria are used to evaluate and analyze the strategy.

Organization of strategic planning in LeaderTask

Any planning requires clear structuring. A correctly drafted, realistically achievable strategic plan is the key to success and effective development of any company. It is convenient to use special software an electronic planner LeaderTask – to compile, adjust, and control its execution.

In the application you can make to-do lists, future and current tasks. Set goals, structure them in the form of a prioritized tree. Make any changes to tasks and projects. Share information with colleagues and subordinates. Delegate tasks with progress and deadlines control. The application has an option to color-code important tasks, calendar display of tasks. There is a diverse set of tools for planning for a day, week, year, and other periods.

We have considered the topic of strategic planning and have seen how important this tool is for the development and prosperity of companies in today’s business environment. With its help, the company can determine its profitable niche in the market and gain an advantage among competitors. A competent strategic plan gives an objective understanding of the current situation for successful planning of the future. In times of rapid change, strategic thinking and vision is a powerful success factor for any manager.