Definition:
Strategic planning is an organization‘s process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. https://en.wikipedia.org/wiki/Strategic_planning
Strategic planning activities include meetings and other communication among the organization’s leaders and personnel to develop a common understanding regarding the competitive environment and what the organization’s response to that environment (its strategy) should be. A variety of strategic planning tools (described in the section below) may be completed as part of strategic planning activities.
The organization’s leaders may have a series of questions they want to be answered in formulating the strategy and gathering inputs, such as:
- What is the organization’s business or interest?
- What is considered “value” to the customer or constituency?
- Which products and services should be included or excluded from the portfolio of offerings?
- What is the geographic scope of the organization?
- What differentiates the organization from its competitors in the eyes of customers and other stakeholders?
- Which skills and resources should be developed within the organization?[1][5]
A business cannot stand still. So if your business cannot stand still it must be going somewhere, it must have direction. You can decide where you are going or just let change happen.
Who needs a Strategic Plan?
If you are not in charge of your companies direction then you don’t need a strategic plan. Whatever happens, will happen.
If you wish to be in charge of your companies direction then you need a strategic plan.
So, do you know what direction you are heading in?
Great, I will attempt to help you to understand how to get there.
The first question is:
Do I need a Strategic Planning Planning Model or a Strategic Planning Framework?
A strategic planning model is actually a collective term for a number of elements that contribute to the strategic planning process. The core components of a strategic planning model typically include:
- A templated structure for creating goals.
- Frameworks for helping you to actually decide what you want to work on.
- A loose structure of governance to help you manage and track your strategy.
You can think of strategic planning models as ‘templates’ into which you can drop your own ideas. In the end, you will come out with a strategic plan which is sensibly structured and gives you a clear set of actions upon which to work.
So the answer to the question is the model includes the structure, frameworks and governance.
Today we will focus on Frameworks.
There are a number of very useful frameworks that each contribute to your overall strategic plan implementation with complementing strengths.
Frameworks:
- SWOT Analysis
- Strategy Mapping
- Issues based strategic planning
- Balanced Scorecard
- Objective and Key Results
- Porter’s five forces
- Gap Analysis
- PEST Analysis
I will cover each of the frameworks in subsequent articles.
In this article, I will cover SWOT Analysis.
SWOT Analysis
The SWOT analysis helps you see how you stand out in the marketplace, how you can grow as a business and where you are vulnerable. This analysis helps you identify your company’s opportunities and any threats it faces. The process takes into account both the internal and external factors your company must navigate.
Strengths and weaknesses are often internal to your organisation, while opportunities and threats generally relate to external factors.
What are the benefits of a SWOT analysis?
What makes SWOT particularly powerful is that it can help you uncover opportunities that you are well placed to exploit. By understanding the weaknesses of your business, you can manage and eliminate threats that might otherwise catch you unaware.
By using the SWOT framework to look at yourself and your competitors, you can craft a strategy that helps you distinguish yourself from your competitors and better compete against them in your market.
How do you complete a SWOT analysis?
A SWOT analysis is generally completed by gathering input from your team during a workshop. These workshops are often facilitated by a strategic planning consultant.
It can be useful to gather the following information before completing a SWOT analysis:
Outside your company:
- What are the market trends in your industry?
- Who are your main competitors?
- What is your market share?
- How can you stand out in the market?
- How do clients perceive you?
- What pitfalls and dangers await you?
Inside your company:
- Sales and marketing performance
- The efficiency of your systems and processes
- Financial performance and trends
- Key internal personnel, competencies and governance structure
- Your company’s culture and strategy
- Your mission, vision and values
With this information in hand, you’ll be ready to assess your company’s internal strengths and weaknesses, after which you can focus on external factors that could impact your company.
Strengths
Make a list of your company’s internal strengths. These are any competitive advantage, skill, proficiency, experience, talent or any other internal factor that improves your company’s position in the marketplace and can’t be easily copied.
Examples include:
- solid financing
- a superior brand
- valuable intellectual property
- superior technology
- modern equipment
- a well-trained team
- low staff turnover
- management expertise
- operational efficiency
- high customer retention
- good supplier relationships
Consider your strengths from both an internal perspective, and from the point of view of your customers and people in your market.
When looking at your strengths, think about them in relation to your competitors. For example, if all of your competitors provide high-quality products, then a high-quality production process is not a strength in your organisation’s market, it’s a necessity.
Weaknesses
These are the factors that reduce your company’s ability to achieve its objectives.
Examples include:
- unreliable suppliers
- insufficient marketing efforts
- lack of financing
- outdated equipment
- management weaknesses
- gaps in expertise
I suggest you, consider this from an internal and external basis: Do other people seem to perceive weaknesses that you don’t see? Are your competitors doing any better than you?
Be as honest as you can when identifying these deficiencies. It’s best to be realistic now and face and address any unpleasant truths as soon as possible. Ignoring weaknesses means you can’t make decisions that will strengthen your company.
Opportunities
Opportunities are external factors that allow your business to grow and be more profitable.
Examples include:
- new potential markets
- consumer trends
- innovations
- technological advances
- support from governments, the community or business partners
Opportunities should reference demand for your products and services or development potential.
Threats
Threats are external obstacles your business must overcome.
Examples include:
- a declining economy
- a labour shortage
- a consumer shift to other products
- technological change
- community opposition
- legal or regulatory changes
It’s often useful to take a close look at your competitors’ strengths to identify external threats to your company. Again, be as honest as possible.
A SWOT analysis doesn’t have to be a long, complex document. Two or three pages of bullet point notes are usually sufficient to focus on the essential findings.
Future articles will cover the other aspects of your Strategic Framework:
- SWOT Analysis
- Strategy Mapping
- Issues based strategic planning
- Balanced Scorecard
- Objective and Key Results
- Porter’s five forces
- Gap Analysis
- PEST analysis
At https://balanced-business-growth.com/ we provide the expertise to work with you to build your Strategic Plan. Once the Strategic Plan is built we then assist you to deliver the identified benefits.