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Introduction to Strategic Planning If you don’t know where your business is going, any road will get you there. What is a Strategic Plan? Entrepreneurs and business managers are often so preoccupied with immediate issues that they lose sight of their ultimate objectives. That’s why a business review or preparation of a strategic plan is a virtual necessity. This may not be a recipe for success, but without it a business is much more likely to fail. A sound plan should: * Serve as a framework for decisions or for securing support/approval.
Provide a basis for more detailed planning. * Explain the business to others in order to inform, motivate & involve. * Assist benchmarking & performance monitoring. * Stimulate change and become building block for next plan. For inspiration (and a few smiles), have a look at some of the quotations and examples of bad advice included in other pages! A strategic plan should not be confused with a business plan. The former is likely to be a (very) short document whereas a business plan is usually a much more substantial and detailed document.
A strategic plan can provide the foundation and frame work for a business plan. For more information about business plans, refer to How to Write a Business Plan, Insights into Business Planning and Free-Plan: Business Plan Guide & Template. A strategic plan is not the same thing as an operational plan. The former should be visionary, conceptual and directional in contrast to an operational plan which is likely to be shorter term, tactical, focused, implementable and measurable.
As an example, compare the process of planning a vacation (where, when, duration, budget, who goes, how travel are all strategic issues) with the final preparations (tasks, deadlines, funding, weather, packing, transport and so on are all operational matters). A satisfactory strategic plan must be realistic and attainable so as to allow managers and entrepreneurs to think strategically and act operationally – see Devising Business Strategies for further insights. Get Strategic Planning Help: Free Online Strategic Planner for creating a 3-page strategic plan. See Also: Expert tools for Assessing Business Ideas (US$ 229.95) and Evaluating Marketing Strategies (US$ 795. 00). See a sample strategic plan – use the back button on your browser to return to this page. Need More Help with your Strategic Planning ? Have a look at: * Plan Write Expert Business Planner: Combined business plan tool and expert system to help evaluate and develop your plan. * Quick Insight – Business Idea Assessor: Expert system to help evaluate and improve a new business idea. * Business Insight – Strategy Evaluator: Sophisticated expert system for evaluating, developing and comparing business and marketing strategies.
Useful Links More Info Develop strategic plan Devise business strategies Write strategic plan See planning surveys Buy planning book View sample plan See Also Get business ideas Write business plan Get planning insights Prepare financial projections Seek planning advice Plan to plan Business plan guide Software Tools Financial Planners Expert Business Planner Strategy Planner Idea Assessor Marketing Planners Free Planners Buy Software Financial Projections Cashflow Forecasts Business Plans Marketing Plans Strategic Plans Basic Approach to Strategic Planning
A critical review of past performance by the owners and management of a business and the preparation of a plan beyond normal budgetary horizons require a certain attitude of mind and predisposition. Some essential points which should to be observed during the review and planning process include the following: * Relate to the medium term i. e. 2/4 years * Be undertaken by owners/directors * Focus on matters of strategic importance * Be separated from day-to-day work * Be realistic, detached and critical * Distinguish between cause and effect
Be reviewed periodically * Be written down. As the precursor to developing a strategic plan, it is desirable to clearly identify the current status, objectives and strategies of an existing business or the latest thinking in respect of a new venture. Correctly defined, these can be used as the basis for a critical examination to probe existing or perceived Strengths, Weaknesses, Threats and Opportunities. This then leads to strategy development covering the following issues discussed in more detail below: * Vision * Mission * Values
Objectives * Strategies * Goals * Programs Top – Business Plan WareTop of Page 2. Key Steps towards a Strategic Plan The preparation of a strategic plan is a multi-step process covering vision, mission, objectives, values, strategies, goals and programs. These are discussed below. The Vision The first step is to develop a realistic Vision for the business. This should be presented as a pen picture of the business in three or more years time in terms of its likely physical appearance, size, activities, structure, scale offerings etc.
Answer the question: “if someone from Mars visited the business, what would they see (or sense)? ” Consider its future products, markets, customers, processes, location, staffing etc. Here is a great example of a vision: I will come to America, which is the country for me. Once there, I will become the greatest bodybuilder in history………. I will go into movies as an actor, producer and eventually director. By the time I am 30 I will have starred in first movie and I will be a millionaire…… I will collect houses, art and automobiles.
I will marry a glamorous and intelligent wife. By 32, I will have been invited to the White House. Attributed to Arnold Schwarzenegger who was elected Governor of the State of California in 2003. The Mission The nature of a business is often expressed in terms of its Mission which indicates in a factual way the purpose and activities of the business in terms of operations, (unique) characteristics, functions, customers, offerings, sectors/segments, scale/scope/penetration, methodologies, technologies, resources etc.
Just answer the questions as to what the business really is and does in qualitative terms. If planning for a startup, base the mission statement on the business as it would be once operational – be realistic and practical rather than aspirational. For example, “to design, develop, manufacture and market specific product lines for sale on the basis of certain features to meet the identified needs of specified customer groups via certain distribution channels in particular geographic areas”.
A statement along these lines indicates what the business is about and is infinitely clearer than saying, for instance, “we’re in electronics” or worse still, “we are in business to make money” (assuming that the business is not a mint ! ). Also, some people confuse mission statements with value statements (see below) – the former should be very hard-nosed while the latter can deal with ‘softer’ issues surrounding the business. The following table contrasts hard and soft mission statements. Hard Soft What business is/does Primary products/services Key processes & technologies
Main customer groups Primary markets/segments Principal channels/outlets Reason for existence Competitive advantages Unique/distinctive features Important philosophical/social issues Image, quality, style, standards Stakeholder concerns Compare the following statements: Hard Statement Soft Statement X Corp. designs, develops, assembles and markets systems for data base management. These systems integrate its proprietary operating system software with hardware supplied by major manufacturers, and are sold to small, medium and large-sized companies for a range of business applications.
Its systems are distinguished by a sophisticated operating system, which permits use without trained data-processing personnel. Our mission is to enhance our customers’ business by providing the very highest quality products and services possible. Our customer support strategy is based upon total, no-compromise customer satisfaction and we continually strive to offer a complete package of up-to-date value added solutions to meet our customers’ needs. We value above all our long term customer relations. Intel’s original plan, written on the back of a menu (view copy), is an excellent example of a hard statement:
The company will engage in research, development, and manufacture and sales of integrated electronic structures to fulfill the needs of electronic systems manufacturers. This will include thin films, thick films, semiconductor devices, and ……… A variety of processes will be established, both at a laboratory and production level …… as well as the development and manufacture of special processing and test equipment required to carry out these processes. Products may include dioded transistors ……. Principal customers for these products are expected to be the manufacturers of advanced electronic systems …..
It is anticipated that many of these customers will be located outside California. If you’d prefer a soft statement, use the Dilbert Mission Statement Generator. When drafting a mission statement, critically examine every noun, adjective and verb to ensure that they are focused, realistic and justified. The Values The next element is to address the Values governing the operation of the business and its conduct or relationships with society at large, customers, suppliers, employees, local community and other stakeholders. The Objectives
The third key element is to explicitly state the business’s Objectives in terms of the results it needs/wants to achieve in the medium/long term. Aside from presumably indicating a necessity to achieve regular profits (expressed as return on shareholders’ funds), objectives should relate to the expectations and requirements of all the major stakeholders, including employees, and should reflect the underlying reasons for running the business. These objectives could cover growth, profitability, technology, offerings and markets.
The Strategies Next are the Strategies – the rules and guidelines by which the mission, objectives etc. may be achieved. They can cover the business as a whole including such matters as diversification, organic growth, or acquisition plans, or they can relate to primary matters in key functional areas, for example: o The company’s internal cash flow will fund all future growth. o New products will progressively replace existing ones over the next 3 years.
All assembly work will be contracted out to lower the company’s break-even point. Use SWOTs to help identify possible strategies by building on strengths, resolving weaknesses, exploiting opportunities and avoiding threats. For further discussion on strategies, refer to the paper on Devising Business Strategies as well as these items below: Use Hindsight when Strategic Planning, Effect not Equal to Cause when Planning Strategy and SWOTs – Keys to Business Strategies. The Goals