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7 strategic planning models, plus 8 frameworks to help you get started
Strategic planning is vital in defining where your business is going in the next three to five years. With the right strategic planning models and frameworks, you can uncover opportunities, identify risks, and create a strategic plan to fuel your organization’s success. We list the most popular models and frameworks and explain how you can combine them to create a strategic plan that fits your business.
A strategic plan is a great tool to help you hit your business goals . But sometimes, this tool needs to be updated to reflect new business priorities or changing market conditions. If you decide to use a model that already exists, you can benefit from a roadmap that’s already created. The model you choose can improve your knowledge of what works best in your organization, uncover unknown strengths and weaknesses, or help you find out how you can outpace your competitors.
In this article, we cover the most common strategic planning models and frameworks and explain when to use which one. Plus, get tips on how to apply them and which models and frameworks work well together.
Strategic planning models vs. frameworks
First off: This is not a one-or-nothing scenario. You can use as many or as few strategic planning models and frameworks as you like.
When your organization undergoes a strategic planning phase, you should first pick a model or two that you want to apply. This will provide you with a basic outline of the steps to take during the strategic planning process.
During that process, think of strategic planning frameworks as the tools in your toolbox. Many models suggest starting with a SWOT analysis or defining your vision and mission statements first. Depending on your goals, though, you may want to apply several different frameworks throughout the strategic planning process.
For example, if you’re applying a scenario-based strategic plan, you could start with a SWOT and PEST(LE) analysis to get a better overview of your current standing. If one of the weaknesses you identify has to do with your manufacturing process, you could apply the theory of constraints to improve bottlenecks and mitigate risks.
Now that you know the difference between the two, learn more about the seven strategic planning models, as well as the eight most commonly used frameworks that go along with them.
1. Basic model
The basic strategic planning model is ideal for establishing your company’s vision, mission, business objectives, and values. This model helps you outline the specific steps you need to take to reach your goals, monitor progress to keep everyone on target, and address issues as they arise.
If it’s your first strategic planning session, the basic model is the way to go. Later on, you can embellish it with other models to adjust or rewrite your business strategy as needed. Let’s take a look at what kinds of businesses can benefit from this strategic planning model and how to apply it.
Small businesses or organizations
Companies with little to no strategic planning experience
Organizations with few resources
Write your mission statement. Gather your planning team and have a brainstorming session. The more ideas you can collect early in this step, the more fun and rewarding the analysis phase will feel.
Identify your organization’s goals . Setting clear business goals will increase your team’s performance and positively impact their motivation.
Outline strategies that will help you reach your goals. Ask yourself what steps you have to take in order to reach these goals and break them down into long-term, mid-term, and short-term goals .
Create action plans to implement each of the strategies above. Action plans will keep teams motivated and your organization on target.
Monitor and revise the plan as you go . As with any strategic plan, it’s important to closely monitor if your company is implementing it successfully and how you can adjust it for a better outcome.
2. Issue-based model
Also called goal-based planning model, this is essentially an extension of the basic strategic planning model. It’s a bit more dynamic and very popular for companies that want to create a more comprehensive plan.
Organizations with basic strategic planning experience
Businesses that are looking for a more comprehensive plan
Conduct a SWOT analysis . Assess your organization’s strengths, weaknesses, opportunities, and threats with a SWOT analysis to get a better overview of what your strategic plan should focus on. We’ll give into how to conduct a SWOT analysis when we get into the strategic planning frameworks below.
Identify and prioritize major issues and/or goals. Based on your SWOT analysis, identify and prioritize what your strategic plan should focus on this time around.
Develop your main strategies that address these issues and/or goals. Aim to develop one overarching strategy that addresses your highest-priority goal and/or issue to keep this process as simple as possible.
Update or create a mission and vision statement . Make sure that your business’s statements align with your new or updated strategy. If you haven’t already, this is also a chance for you to define your organization’s values.
Create action plans. These will help you address your organization’s goals, resource needs, roles, and responsibilities.
Develop a yearly operational plan document. This model works best if your business repeats the strategic plan implementation process on an annual basis, so use a yearly operational plan to capture your goals, progress, and opportunities for next time.
Allocate resources for your year-one operational plan. Whether you need funding or dedicated team members to implement your first strategic plan, now is the time to allocate all the resources you’ll need.
Monitor and revise the strategic plan. Record your lessons learned in the operational plan so you can revisit and improve it for the next strategic planning phase.
The issue-based plan can repeat on an annual basis (or less often once you resolve the issues). It’s important to update the plan every time it’s in action to ensure it’s still doing the best it can for your organization.
You don’t have to repeat the full process every year—rather, focus on what’s a priority during this run.
3. Alignment model
This model is also called strategic alignment model (SAM) and is one of the most popular strategic planning models. It helps you align your business and IT strategies with your organization’s strategic goals.
You’ll have to consider four equally important, yet different perspectives when applying the alignment strategic planning model:
Strategy execution: The business strategy driving the model
Technology potential: The IT strategy supporting the business strategy
Competitive potential: Emerging IT capabilities that can create new products and services
Service level: Team members dedicated to creating the best IT system in the organization
Ideally, your strategy will check off all the criteria above—however, it’s more likely you’ll have to find a compromise.
Here’s how to create a strategic plan using the alignment model and what kinds of companies can benefit from it.
Organizations that need to fine-tune their strategies
Businesses that want to uncover issues that prevent them from aligning with their mission
Companies that want to reassess objectives or correct problem areas that prevent them from growing
Outline your organization’s mission, programs, resources, and where support is needed. Before you can improve your statements and approaches, you need to define what exactly they are.
Identify what internal processes are working and which ones aren’t. Pinpoint which processes are causing problems, creating bottlenecks , or could otherwise use improving. Then prioritize which internal processes will have the biggest positive impact on your business.
Identify solutions. Work with the respective teams when you’re creating a new strategy to benefit from their experience and perspective on the current situation.
Update your strategic plan with the solutions. Update your strategic plan and monitor if implementing it is setting your business up for improvement or growth. If not, you may have to return to the drawing board and update your strategic plan with new solutions.
4. Scenario model
The scenario model works great if you combine it with other models like the basic or issue-based model. This model is particularly helpful if you need to consider external factors as well. These can be government regulations, technical, or demographic changes that may impact your business.
Organizations trying to identify strategic issues and goals caused by external factors
Identify external factors that influence your organization. For example, you should consider demographic, regulation, or environmental factors.
Review the worst case scenario the above factors could have on your organization. If you know what the worst case scenario for your business looks like, it’ll be much easier to prepare for it. Besides, it’ll take some of the pressure and surprise out of the mix, should a scenario similar to the one you create actually occur.
Identify and discuss two additional hypothetical organizational scenarios. On top of your worst case scenario, you’ll also want to define the best case and average case scenarios. Keep in mind that the worst case scenario from the previous step can often provoke strong motivation to change your organization for the better. However, discussing the other two will allow you to focus on the positive—the opportunities your business may have ahead.
Identify and suggest potential strategies or solutions. Everyone on the team should now brainstorm different ways your business could potentially respond to each of the three scenarios. Discuss the proposed strategies as a team afterward.
Uncover common considerations or strategies for your organization. There’s a good chance that your teammates come up with similar solutions. Decide which ones you like best as a team or create a new one together.
Identify the most likely scenario and the most reasonable strategy. Finally, examine which of the three scenarios is most likely to occur in the next three to five years and how your business should respond to potential changes.
5. Self-organizing model
Also called the organic planning model, the self-organizing model is a bit different from the linear approaches of the other models. You’ll have to be very patient with this method.
This strategic planning model is all about focusing on the learning and growing process rather than achieving a specific goal. Since the organic model concentrates on continuous improvement , the process is never really over.
Large organizations that can afford to take their time
Businesses that prefer a more naturalistic, organic planning approach that revolves around common values, communication, and shared reflection
Companies that have a clear understanding of their vision
Define and communicate your organization’s cultural values . Your team can only think clearly and with solutions in mind when they have a clear understanding of your organization's values.
Communicate the planning group’s vision for the organization. Define and communicate the vision with everyone involved in the strategic planning process. This will align everyone’s ideas with your company’s vision.
Discuss what processes will help realize the organization’s vision on a regular basis. Meet every quarter to discuss strategies or tactics that will move your organization closer to realizing your vision.
6. Real-time model
This fluid model can help organizations that deal with rapid changes to their work environment. There are three levels of success in the real-time model:
Organizational: At the organizational level, you’re forming strategies in response to opportunities or trends.
Programmatic: At the programmatic level, you have to decide how to respond to specific outcomes or environmental changes.
Operational: On the operational level, you will study internal systems, policies, and people to develop a strategy for your company.
Figuring out your competitive advantage can be difficult, but this is absolutely crucial to ensure success. Whether it’s a unique asset or strength your organization has or an outstanding execution of services or programs—it’s important that you can set yourself apart from others in the industry to succeed.
Companies that need to react quickly to changing environments
Businesses that are seeking new tools to help them align with their organizational strategy
Define your mission and vision statement. If you ever feel stuck formulating your company’s mission or vision statement, take a look at those of others. Maybe Asana’s vision statement sparks some inspiration.
Research, understand, and learn from competitor strategy and market trends. Pick a handful of competitors in your industry and find out how they’ve created success for themselves. How did they handle setbacks or challenges? What kinds of challenges did they even encounter? Are these common scenarios in the market? Learn from your competitors by finding out as much as you can about them.
Study external environments. At this point, you can combine the real-time model with the scenario model to find solutions to threats and opportunities outside of your control.
Conduct a SWOT analysis of your internal processes, systems, and resources. Besides the external factors your team has to consider, it’s also important to look at your company’s internal environment and how well you’re prepared for different scenarios.
Develop a strategy. Discuss the results of your SWOT analysis to develop a business strategy that builds toward organizational, programmatic, and operational success.
Rinse and repeat. Monitor how well the new strategy is working for your organization and repeat the planning process as needed to ensure you’re on top or, perhaps, ahead of the game.
7. Inspirational model
This last strategic planning model is perfect to inspire and energize your team as they work toward your organization’s goals. It’s also a great way to introduce or reconnect your employees to your business strategy after a merger or acquisition.
Businesses with a dynamic and inspired start-up culture
Organizations looking for inspiration to reinvigorate the creative process
Companies looking for quick solutions and strategy shifts
Gather your team to discuss an inspirational vision for your organization. The more people you can gather for this process, the more input you will receive.
Brainstorm big, hairy audacious goals and ideas. Encouraging your team not to hold back with ideas that may seem ridiculous will do two things: for one, it will mitigate the fear of contributing bad ideas. But more importantly, it may lead to a genius idea or suggestion that your team wouldn’t have thought of if they felt like they had to think inside of the box.
Assess your organization’s resources. Find out if your company has the resources to implement your new ideas. If they don’t, you’ll have to either adjust your strategy or allocate more resources.
Develop a strategy balancing your resources and brainstorming ideas. Far-fetched ideas can grow into amazing opportunities but they can also bear great risk. Make sure to balance ideas with your strategic direction.
Now, let’s dive into the most commonly used strategic frameworks.
8. SWOT analysis framework
One of the most popular strategic planning frameworks is the SWOT analysis . A SWOT analysis is a great first step in identifying areas of opportunity and risk—which can help you create a strategic plan that accounts for growth and prepares for threats.
SWOT stands for strengths, weaknesses, opportunities, and threats. Here’s an example:
9. OKRs framework
A big part of strategic planning is setting goals for your company. That’s where OKRs come into play.
OKRs stand for objective and key results—this goal-setting framework helps your organization set and achieve goals. It provides a somewhat holistic approach that you can use to connect your team’s work to your organization’s big-picture goals. When team members understand how their individual work contributes to the organization’s success, they tend to be more motivated and produce better results
10. Balanced scorecard (BSC) framework
The balanced scorecard is a popular strategic framework for businesses that want to take a more holistic approach rather than just focus on their financial performance. It was designed by David Norton and Robert Kaplan in the 1990s, it’s used by companies around the globe to:
Align their team’s daily work with their company’s strategy
Prioritize products, services, and projects
Monitor their progress toward their strategic goals
Your balanced scorecard will outline four main business perspectives:
Customers or clients , meaning their value, satisfaction, and/or retention
Financial , meaning your effectiveness in using resources and your financial performance
Internal process , meaning your business’s quality and efficiency
Organizational capacity , meaning your organizational culture, infrastructure and technology, and human resources
With the help of a strategy map, you can visualize and communicate how your company is creating value. A strategy map is a simple graphic that shows cause-and-effect connections between strategic objectives.
The balanced scorecard framework is an amazing tool to use from outlining your mission, vision, and values all the way to implementing your strategic plan .
You can use an integration like Lucidchart to create strategy maps for your business in Asana.
11. Porter’s Five Forces framework
If you’re using the real-time strategic planning model, Porter’s Five Forces are a great framework to apply. You can use it to find out what your product’s or service’s competitive advantage is before entering the market.
Developed by Michael E. Porter , the framework outlines five forces you have to be aware of and monitor:
Threat of new industry entrants: Any new entry into the market results in increased pressure on prices and costs.
Competition in the industry: The more competitors that exist, the more difficult it will be for you to create value in the market with your product or service.
Bargaining power of suppliers: Suppliers can wield more power if there are less alternatives for buyers or it’s expensive, time consuming, or difficult to switch to a different supplier.
Bargaining power of buyers: Buyers can wield more power if the same product or service is available elsewhere with little to no difference in quality.
Threat of substitutes: If another company already covers the market’s needs, you’ll have to create a better product or service or make it available for a lower price at the same quality in order to compete.
Remember, industry structures aren’t static. The more dynamic your strategic plan is, the better you’ll be able to compete in a market.
12. VRIO framework
The VRIO framework is another strategic planning tool designed to help you evaluate your competitive advantage. VRIO stands for value, rarity, imitability, and organization.
It’s a resource-based theory developed by Jay Barney. With this framework, you can study your firmed resources and find out whether or not your company can transform them into sustained competitive advantages.
Firmed resources can be tangible (e.g., cash, tools, inventory, etc.) or intangible (e.g., copyrights, trademarks, organizational culture, etc.). Whether these resources will actually help your business once you enter the market depends on four qualities:
Valuable : Will this resource either increase your revenue or decrease your costs and thereby create value for your business?
Rare : Are the resources you’re using rare or can others use your resources as well and therefore easily provide the same product or service?
Inimitable : Are your resources either inimitable or non-substitutable? In other words, how unique and complex are your resources?
Organizational: Are you organized enough to use your resources in a way that captures their value, rarity, and inimitability?
It’s important that your resources check all the boxes above so you can ensure that you have sustained competitive advantage over others in the industry.
13. Theory of Constraints (TOC) framework
If the reason you’re currently in a strategic planning process is because you’re trying to mitigate risks or uncover issues that could hurt your business—this framework should be in your toolkit.
The theory of constraints (TOC) is a problem-solving framework that can help you identify limiting factors or bottlenecks preventing your organization from hitting OKRs or KPIs .
Whether it’s a policy, market, or recourse constraint—you can apply the theory of constraints to solve potential problems, respond to issues, and empower your team to improve their work with the resources they have.
14. PEST/PESTLE analysis framework
The idea of the PEST analysis is similar to that of the SWOT analysis except that you’re focusing on external factors and solutions. It’s a great framework to combine with the scenario-based strategic planning model as it helps you define external factors connected to your business’s success.
PEST stands for political, economic, sociological, and technological factors. Depending on your business model, you may want to expand this framework to include legal and environmental factors as well (PESTLE). These are the most common factors you can include in a PESTLE analysis:
Political: Taxes, trade tariffs, conflicts
Economic: Interest and inflation rate, economic growth patterns, unemployment rate
Social: Demographics, education, media, health
Technological: Communication, information technology, research and development, patents
Legal: Regulatory bodies, environmental regulations, consumer protection
Environmental: Climate, geographical location, environmental offsets
15. Hoshin Kanri framework
Hoshin Kanri is a great tool to communicate and implement strategic goals. It’s a planning system that involves the entire organization in the strategic planning process. The term is Japanese and stands for “compass management” and is also known as policy management.
This strategic planning framework is a top-down approach that starts with your leadership team defining long-term goals which are then aligned and communicated with every team member in the company.
You should hold regular meetings to monitor progress and update the timeline to ensure that every teammate’s contributions are aligned with the overarching company goals.
Stick to your strategic goals
Whether you’re a small business just starting out or a nonprofit organization with decades of experience, strategic planning is a crucial step in your journey to success.
If you’re looking for a tool that can help you and your team define, organize, and implement your strategic goals, Asana is here to help. Our goal-setting software allows you to connect all of your team members in one place, visualize progress, and stay on target.
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The Strategic Planning Process in 4 Steps
To assist you throughout your planning process, we have created a how-to guide on the basics of strategic planning which will take you through the planning process step-by-step..
Free Strategic Planning Guide
What is Strategic Planning?
Strategic Planning is a process where organizations define a bold vision and create a plan with objectives and goals to reach that future. A great strategic plan defines where your organization is going, how you’ll win, who must do what, and how you’ll review and adapt your strategy.
Overview of the complete strategic planning process:
Getting started: strategic planning introduction.
The strategic management process is about getting from Point A to Point B more effectively, efficiently, and enjoying the journey and learning from it. Part of that journey is the strategy and part of it is execution. Having a good strategy dictates “how” you travel the road you have selected and effective execution makes sure you are checking in along the way. On average, this process can take between three and four months. However no one organization is alike and you may decide to fast track your process or slow it down. Move at a pace that works best for you and your team and leverage this as a resource. For more of a deep dive look into each part of the planning phase, you will see a link to the detailed How-To Guide at the top of each phase.
1-2 weeks (1 hr meeting with Owner/CEO, Strategy Director and Facilitator (if necessary) to discuss information collected and direction for continued planning.)
Questions to Ask:
- Who is on your Planning Team?
- Who will be the business process owner (Strategy Director) of planning in your organization?
- Fast forward 12 months from now, what do you want to see differently in your organization as a result of embarking on this initiative?
- Planning team members are informed of their roles and responsibilities.
- Planning schedule is established.
- Existing planning information and secondary data collected.
Step 1: determine organizational readiness, set up your planning process for success – questions to ask:.
- Are the conditions and criteria for successful planning in place at the current time? Can certain pitfalls be avoided?
- Is this the appropriate time for your organization to initiate a planning process? Yes or no? If no, where do you go from here?
Step 2: Develop Your Team & Schedule
Who is going to be on your planning team? You need to choose someone to oversee the implementation (Chief Strategy Officer or Strategy Director) and then you need some of the key individuals and decision makers for this team. It should be a small group of approximately 12-15 persons.
OnStrategy is the leader in strategic planning and performance management. Our cloud-based software and hands-on services closes the gap between strategy and execution. Learn more about OnStrategy here .
Step 3: Collect Current Data
Collect the following information on your organization:
- The last strategic plan, even if it is not current
- Mission statement, vision statement, values statement
- Business plan
- Financial records for the last few years
- Marketing plan
- Other information, such as last year’s SWOT, sales figures and projections
Step 4:Review collected data:
Review the data collected in the last action with your strategy director and facilitator.
- What trends do you see?
- Are there areas of obvious weakness or strengths?
- Have you been following a plan or have you just been going along with the market?
Strategic Planning Phase 1: Determine Your Strategic Position
Want More? Deep Dive Into the “ Evaluate Your Strategic Position ” How-To Guide.
Step 1: identify strategic issues.
Strategic issues are critical unknowns that are driving you to embark on a strategic planning process now. These issues can be problems, opportunities, market shifts or anything else that is keeping you awake at night and begging for a solution or decision.
- How will we grow, stabilize, or retrench in order to sustain our organization into the future?
- How will we diversify our revenue to reduce our dependence on a major customer?
- What must we do to improve our cost structure and stay competitive?
- How and where must we innovate our products and services?
Step 2: Conduct an Environmental Scan
Conducting an environmental scan will help you understand your operating environment. An environmental scan is also referred to as a PEST analysis, which is an acronym for Political, Economic, Social and Technological trends. Sometimes it is helpful to also include Ecological and Legal trends as well. All of these trends play a part in determining the overall business environment.
Step 3: Conduct a Competitive Analysis
The reason to do a competitive analysis is to assess the opportunities and threats that may occur from those organizations competing for the same business you are. You need to have an understanding of what your competitors are or aren’t offering your potential customers. Here are a few other key ways a competitive analysis fits into strategic planning:
- To help you assess whether your competitive advantage is really an advantage.
- To understand what your competitors’ current and future strategies are so you can plan accordingly.
- To provide information that will help you evaluate your strategic decisions against what your competitors may or may not be doing.
Step 4: Identify Opportunities and Threats
Opportunities are situations that exist but must be acted on if the business is to benefit from them.
What do you want to capitalize on?
- What new needs of customers could you meet?
- What are the economic trends that benefit you?
- What are the emerging political and social opportunities?
- What niches have your competitors missed?
Threats refer to external conditions or barriers that may prevent a company from reaching its objectives.
What do you need to mitigate?
Questions to answer:.
- What are the negative economic trends?
- What are the negative political and social trends?
- Where are competitors about to bite you?
- Where are you vulnerable?
Step 5: Identify Strengths and Weaknesses
Strengths refer to what your company does well.
What do you want to build on?
- What do you do well (in sales, marketing, operations, management)?
- What are your core competencies?
- What differentiates you from your competitors?
- Why do your customers buy from you?
Weaknesses refer to any limitations a company faces in developing or implementing a strategy.
What do you need to shore up?
- Where do you lack resources?
- What can you do better?
- Where are you losing money?
- In what areas do your competitors have an edge?
Step 6: Customer Segments
Customer segmentation defines the different groups of people or organizations a company aims to reach or serve.
Who are we providing value to?
- What needs or wants define your ideal customer?
- What characteristics describe your typical customer?
- Can you sort your customers into different profiles using their needs, wants and characteristics?
- Can you reach this segment through clear communication channels?
Step 7: Develop Your SWOT
A SWOT analysis is a quick way of examining your organization by looking at the internal strengths and weaknesses in relation to the external opportunities and threats. By creating a SWOT analysis, you can see all the important factors affecting your organization together in one place. It’s easy to read, easy to communicate, and easy to create. Take the Strengths, Weaknesses, Opportunities and Threats you developed earlier, review, prioritize and combine like terms. The SWOT analysis helps you ask, and answer, the following questions: “How do you….”
- Build on your strengths
- Shore up your weaknesses
- Capitalize on your opportunities
- Manage your threats
Strategic Planning Process Phase 2: Developing Strategy
Want More? Deep Dive Into the “Developing Your Strategy” How-To Guide.
Step 1: Develop Your Mission Statement
The mission statement describes an organization’s purpose or reason for existing.
What is our purpose? Why do we exist? What do we do?
- What does your organization intend to accomplish?
- Why do you work here? Why is it special to work here?
- What would happen if we were not here?
Outcome: A short, concise, concrete statement that clearly defines the scope of the organization.
Step 2: discover your values.
Your values statement clarifies what your organization stands for, believes in and the behaviors you expect to see as a result.
How will we behave?
- What are the key non-negotiables that are critical to the success of the company?
- What are the guiding principles that are core to how we operate in this organization?
- What behaviors do you expect to see?
- If the circumstances changed and penalized us for holding this core value, would we still keep it?
Outcome: Short list of 5-7 core values.
Step 3: casting your vision statement.
A Vision Statement defines your desired future state and provides direction for where we are going as an organization.
Where are we going?
- What will our organization look like 5–10 years from now?
- What does success look like?
- What are we aspiring to achieve?
- What mountain are you climbing and why?
Outcome: A picture of the future.
Step 4: identify your competitive advantages.
A Competitive Advantage is a characteristic(s) of an organization that allows it to meet their customer’s need(s) better than their competition can.
What are we best at?
- What are your unique strengths?
- What are you best at in your market?
- Do your customers still value what is being delivered? Ask them.
- How do your value propositions stack up in the marketplace?
Outcome: A list of 2 or 3 items that honestly express the organization’s foundation for winning.
Step 5: crafting your organization-wide strategies.
Your strategies are the general methods you intend to use to reach your vision. No matter what the level, a strategy answers the question “how.”
How will we succeed?
- Broad: market scope; a relatively wide market emphasis.
- Narrow: limited to only one or few segments in the market
- Does your competitive position focus on lowest total cost or product/service differentiation or both?
Outcome: Establish the general, umbrella methods you intend to use to reach your vision.
Phase 3: strategic plan development.
Want More? Deep Dive Into the “Build Your Plan” How-To Guide.
Strategic Planning Process Step 1: Use Your SWOT to Set Priorities
If your team wants to take the next step in the SWOT analysis, apply the TOWS Strategic Alternatives Matrix to help you think about the options that you could pursue. To do this, match external opportunities and threats with your internal strengths and weaknesses, as illustrated in the matrix below:
TOWS Strategic Alternatives Matrix
Evaluate the options you’ve generated, and identify the ones that give the greatest benefit, and that best achieve the mission and vision of your organization. Add these to the other strategic options that you’re considering.
Step 2: Define Long-Term Strategic Objectives
Long-Term Strategic Objectives are long-term, broad, continuous statements that holistically address all areas of your organization. What must we focus on to achieve our vision? What are the “big rocks”?
Questions to ask:
- What are our shareholders or stakeholders expectations for our financial performance or social outcomes?
- To reach our outcomes, what value must we provide to our customers? What is our value proposition?
- To provide value, what process must we excel at to deliver our products and services?
- To drive our processes, what skills, capabilities and organizational structure must we have?
Outcome: Framework for your plan – no more than 6
Step 3: Setting Organization-Wide Goals and Measures
Once you have formulated your strategic objectives, you should translate them into goals and measures that can be clearly communicated to your planning team (team leaders and/or team members). You want to set goals that convert the strategic objectives into specific performance targets. Effective goals clearly state what, when, how, and who, and they are specifically measurable. They should address what you need to do in the short-term (think 1-3 years) to achieve your strategic objectives. Organization-wide goals are annual statements that are specific, measurable, attainable, responsible and time bound. These are outcome statements expressing a result expected in the organization.
What is most important right now to reach our long-term objectives?
Outcome: clear outcomes for the current year..
Step 4: Select KPIs
Key Performance Indicators (KPI) are the key measures that will have the most impact in moving your organization forward. We recommend you guide your organization with measures that matter.
How will we measure our success?
Outcome: 5-7 measures that help you keep the pulse on your performance. When selecting your Key Performance Indicators, begin by asking “What are the key performance measures we need to track in order to monitor if we are achieving our goals?” These KPIs include the key goals that you want to measure that will have the most impact in moving your organization forward.
Step 5: Cascade Your Strategies to Operations
Cascading action items and to-dos for each short-term goal is where the rubber meets the road – literally. Moving from big ideas to action happens when strategy is translated from the organizational level to the individual. Here we widen the circle of the people who are involved in the planning as functional area managers and individual contributors develop their short-term goals and actions to support the organizational direction. But before you take that action, determine if you are going to develop a set of plans that cascade directly from the strategic plan, or instead if you have existing operational, business or account plans that should be synced up with organizational goals. A pitfall is to develop multiple sets of goals and actions for directors and staff to manage. Fundamentally, at this point you have moved from planning the strategy to planning the operations; from strategic planning to annual planning. That said, the only way strategy gets executed is to align resources and actions from the bottom to the top to drive your vision.
Questions to Ask
- How are we going to get there at a functional level?
- Who must do what by when to accomplish and drive the organizational goals?
- What strategic questions still remain and need to be solved?
Department/functional goals, actions, measures and targets for the next 12-24 months
Step 6: Cascading Goals to Departments and Team Members
Now in your Departments / Teams, you need to create goals to support the organization-wide goals. These goals should still be SMART and are generally (short-term) something to be done in the next 12-18 months. Finally, you should develop an action plan for each goal. Keep the acronym SMART in mind again when setting action items, and make sure they include start and end dates and have someone assigned their responsibility. Since these action items support your previously established goals, it may be helpful to consider action items your immediate plans on the way to achieving your (short-term) goals. In other words, identify all the actions that need to occur in the next 90 days and continue this same process every 90 days until the goal is achieved.
Examples of Cascading Goals:
Phase 4: executing strategy and managing performance.
Want More? Deep Dive Into the “Managing Performance” How-To Guide.
Step 1: Strategic Plan Implementation Schedule
Implementation is the process that turns strategies and plans into actions in order to accomplish strategic objectives and goals.
How will we use the plan as a management tool?
- Communication Schedule: How and when will you roll-out your plan to your staff? How frequently will you send out updates?
- Process Leader: Who is your strategy director?
- Structure: What are the dates for your strategy reviews (we recommend at least quarterly)?
- System & Reports: What are you expecting each staff member to come prepared with to those strategy review sessions?
Outcome: Syncing your plan into the “rhythm of your business.”
Once your resources are in place, you can set your implementation schedule. Use the following steps as your base implementation plan:
- Establish your performance management and reward system.
- Set up monthly and quarterly strategy meetings with established reporting procedures.
- Set up annual strategic review dates including new assessments and a large group meeting for an annual plan review.
Now you’re ready to start plan roll-out. Below are sample implementation schedules, which double for a full strategic management process timeline.
Step 2: Tracking Goals & Actions
Monthly strategy meetings don’t need to take a lot of time – 30 to 60 minutes should suffice. But it is important that key team members report on their progress toward the goals they are responsible for – including reporting on metrics in the scorecard they have been assigned. By using the measurements already established, it’s easy to make course corrections if necessary. You should also commit to reviewing your Key Performance Indicators (KPIs) during these regular meetings.
Your Bi-Annual Checklist
Never lose sight of the fact that strategic plans are guidelines, not rules. Every six months or so, you should evaluate your strategy execution and plan implementation by asking these key questions:
- Will your goals be achieved within the time frame of the plan? If not, why?
- Should the deadlines be modified? (Before you modify deadlines, figure out why you’re behind schedule.)
- Are your goals and action items still realistic?
- Should the organization’s focus be changed to put more emphasis on achieving your goals?
- Should your goals be changed? (Be careful about making these changes – know why efforts aren’t achieving the goals before changing the goals.)
- What can be gathered from an adaptation to improve future planning activities?
Why Track Your Goals?
- Ownership: Having a stake and responsibility in the plan makes you feel part of it and leads you to drive your goals forward.
- Culture: Successful plans tie tracking and updating goals into organizational culture.
- Implementation: If you don’t review and update your goaFls, they are just good intentions
- Accountability: Accountability and high visibility help drive change. This means that each measure, objective, data source and initiative must have an owner.
- Empowerment: Changing goals from In Progress to Complete just feels good!
Step 3: Review & Adapt
Guidelines for your strategy review.
Restricting the meeting to reporting on measurements can help you stay on task and keep the meeting within 30 minutes, but if you can commit to a full hour, the meeting agenda should also include some time devoted to working on one specific topic or on one of the quarter’s priorities where decisions need to be made. Once agreed upon, this topic should be developed to conclusion. Holding meetings helps focus your goals on accomplishing top priorities and accelerating growth of the organization. Although the meeting structure is relatively simple, it does require a high degree of discipline.
Strategy Review Session Questions:
- What were our three most important strategic accomplishments of the last 90 days – how have we changed our field of play in the past 90 days?
- What are the three most important ways we fell short of our strategic potential?
- In the last 90 days, what are the three most important things that we have learned about our strategy? (NOTE: We are looking for insight to decision to action observations.)
Step 4: Annual Updates The three words strategic planning off-site provoke reactions anywhere from sheer exuberance to ducking for cover. In many organizations, retreats have a bad reputation because stepping into one of the many planning pitfalls is so easy. Holding effective meetings can be tough, and if you add a lot of brainpower mixed with personal agendas, you can have a recipe for disaster. That’s why so many strategic planning meetings are unsuccessful. Executing your strategic plan is as important, or even more important, than your strategy. Critical actions move a strategic plan from a document that sits on the shelf to actions that drive organizational growth. The sad reality is that the majority of organizations who have strategic plans fail to implement. Don’t be part of the majority! In fact, research has shown that 70% of organizations that have a formal execution process out-perform their peers. (Kaplan & Norton) Guiding your work in this stage of the planning process is a schedule for the next 12 months that spells out when the quarterly strategy reviews are, who is involved, what participants need to bring to the meetings and how you will adapt the plan based on the outcomes of the reviews. You remain in this phase of the strategic management process until you embark on the next formal planning sessions where you start back at the beginning. Remember that successful execution of your plan relies on appointing a strategy director, training your team to use OnStrategy (or any other planning tool), effectively driving accountability, and gaining organizational commitment to the process.
Strategic planning frequently asked questions
Read our frequently asked questions about strategic planning to learn how to build a great strategic plan..
Business Strategic Planning is a process where your business defines a bold vision of the future and creates a plan to reach that future. It helps your business define where you’re going, how you’ll get there, how you’ll grow, and what you must do to reach your desired future.
A great strategic plan determines where your organization is going, how you’ll win, what roles each team member has in the execution, and your game plan for reviewing and adapting your strategy. Elements include a current state analysis, SWOT, mission, vision, values, competitive advantages, growth strategy, growth enablers, a 3-year roadmap, and annual plan with goals, KPIs, and OKRs.
Typically, the average strategic planning process takes about 3-4 months, but depending on your organization, it could take more or less time. Every organization is different, so you should work at a pace that works for you.
There are four overarching phases to the strategic planning process that include: determining position, developing your strategy, building your plan, and managing performance. Each phase plays a unique but distinctly crucial role in the strategic planning process.
Prior to starting your strategic plan, you must go through this pre-planning process to determine your organization’s readiness by following these steps:
Ask yourself these questions: Are the conditions and criteria for successful planning in place now? Can we foresee any pitfalls that we can avoid? Is there an appropriate time for our organization to initiate this process?
Develop your team and schedule. Who will oversee the implementation as Chief Strategy Officer or Director? Do we have at least 12-15 other key individuals on our team?
Research and Collect Current Data. Find the following resources that your organization may have used in the past to assist you with your new plan: last strategic plan, mission, vision, and values statement, business plan, financial records, marketing plan, SWOT, sales figures, or projections.
Finally, review the data with your strategy director and facilitator and ask these questions: What trends do we see? Any obvious strengths or weaknesses? Have we been following a plan or just going along with the market?
Determining your positioning entails conducting a scan of macro and micro trends in your environment and industry, identifying marketing and competitive opportunities and threats, clarifying target customers and value propositions, gathering and reviewing staff and partner feedback for strengths and weaknesses, synthesizing the data into a SWOT, and solidifying your competitive advantages.
Developing your strategy includes determining your primary business model and organizational purpose, identifying your corporate values, creating an image of what success would look like in 3-5 years, solidifying your competitive advantages, formulating organization wide-strategies that explain your base, and agreeing on strategic issues you need to address in the planning process. .
Once you get to the strategic plan development process in the planning process, you must begin developing your strategic framework and defining long-term strategic objectives, set short-term SMART organizational goals, and select the measure that will be your KPIs (key performance indicators.)
The last phase of strategic planning is implementation, execution, and ongoing refreshes. This step entails establishing an implementation schedule, rolling out your plan, executing against your key results, and reviewing process and refreshing your plan quarterly. p>
The ideal execution schedule for your strategic plan will differ from team to team or organization to organization, but generally, you should try to set 4 quarterly reviews, a mid-year executive survey, 12 monthly check-ins, and a year-end plan review and annual refresh.
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What is Corporate Strategic Planning?
Corporate Strategic Planning is a companywide approach at the business unit and corporate level for developing strategic plans to achieve a longer-term vision. The process includes defining the corporate strategic goals and intentions at the top and cascading them through each level of the organization. Many organizations confuse the annual budgeting process with corporate planning. Corporate strategic planning should come first and annual budgeting should be driven by the strategy, not by prior year’s budget spend.
Why is Corporate Strategy Important?
A corporate strategy can focus every employee and resource in a company on the same objectives, and it aims to use them all efficiently. It gives every employee a set of guidelines they can use in their everyday work to move toward certain targets, which promote the vision and mission of the company. Corporate level planning can also improve efficiency within the organization and help identify unseen bottlenecks or pain-points.
The corporate strategy gives leaders and employees ideas to use for the improvement of distinctive activities (processes and operations) that create a competitive advantage. The strategy can also help executives to protect the company from entering into costly or irrelevant opportunities. What are the steps involved in strategic corporate planning? Corporate strategic planning begins by clarifying the vision and mission of the organization and the space the business chooses to compete in. Clarifying the organizations position will help you develop and effective strategic planning framework.
1) Competitive Analysis
A competitive analysis needs to be conducted, to understand the trends that could impact the success of your strategy. Common factors that could be analyzed include political, legal, social, environmental, technological. There may be other factors you may want to consider that are relevant to your business and industry.
2) Strategic Goals & Priorities
Once you have completed a competitive analysis, the corporate leadership team will set the overarching strategic goals and priorities for the organization.
Once the strategic goals and priorities are finalized, each business unit needs to define its strategic goals and plans on how it can contribute to the overall direction of the enterprise. That includes not only what is to be accomplished, but how it will be accomplished including high level plans, budgets, human resources, etc.
Once business unit plans and directions have been set, the information needs to be communicated and shared with leadership inside the business unit so that priorities and plans can be aligned and integrated within a single budget.
What is Strategic Business Planning?
At the corporate level, an enterprise develops a portfolio of businesses they choose to compete in. This is a high-level analysis of a business’s competitive and core capabilities, and how each business contributes to the overarching corporate goals. Supported by the corporate strategic business planning process, these businesses are then set up, sponsored, and supported as business units at the operating level.
What Are The Types of Corporate Strategy?
When looking at the types of corporate strategy, it is important to consider a positioning grid that looks at the source of competitive advantage as well as the space where the business competes (markets, geography, size, etc).
Strategy 1: Low Cost Strategy
This type of strategy is one in which your source of advantage is simply competing on cost and being the low-cost provider. With this strategy an organization must exploit all sources of cost advantage. This includes things such as:
- Economies of scale
- Cost of inputs
- Operations excellence to help drive down costs
- This type of strategy requires an organization to compete more broadly (markets, geography, size)
Strategy 2: Differentiated Strategy
In a Differentiated Strategy, the focus is on competing by being unique or distinctively different in your industry. A differentiated strategy provides a product or service in more of a niche market where customers see the importance of offerings and are willing to pay a premium price. While this strategy still has a broad focus on how and where it competes (markets, geography, size), it serves its customers in a differentiated way. Differentiation can include factors such as:
- Technical superiority
- Products or services that are difficult to copy
- Customer Service
Strategy 3: Segmented Strategy
A segmented strategy is one in which you have clearly differentiated yourself from the competition. The space in which you compete has a narrow focus. You serve a distinct group of customers with specialized needs. In this space, there are few product or service substitutes that can be offered and while you may not have the volume of customers, profit margins tend to be higher because of the lack of substitutes. and there are few substitutes for your offerings. It is important for every organization to understand where on a strategic position grid it currently sits and where it may want to be — adapted from Michael Porter
What Is the Difference Between Corporate Strategy and Business Strategy?
Corporate strategy, in contrast, involves the plans that a larger enterprise must form when it is composed of multiple smaller businesses or entities. For example a business unit may need to examine factors unique to the industry or competitive landscape that is fundamentally different than its corporate parent.
As a large enterprise, company, or private equity group takes on more acquisitions, it must work with its respective businesses to craft a business strategy and plan that is unique to them and drive competitive advantage through their products, services, and market positioning.
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What is Corporate Strategy? The Four Key Components
by Tom Wright, on May 7, 2022
Table of Contents
What is Corporate Strategy?
Corporate strategy is the strategy level that concerns itself with the entirety of the organization, where decisions are made with regard to the overall growth and direction of a company. Corporate strategies are arguably the most essential and broad-ranging strategy level within an organizational strategy.
The Components of Corporate Strategy are:
- Objective Setting
- Allocation of Resources
- Strategic Trade-offs (Prioritization)
Visioning involves setting the high-level direction of the organization - namely the vision, mission, and potentially corporate values.
Objective Setting involves developing the visioning aspects created and turning them into a series of high-level (sometimes still rather abstract) objectives for the company, typically spanning 3-5 years in length.
Allocation of Resources refers to decisions that concern the most efficient allocation of human and capital resources in the context of stated goals and aims.
Strategic Trade-Offs are at the core of corporate strategic planning . It's not always possible to take advantage of all feasible opportunities. In addition, business decisions almost always entail a degree of risk. Corporate-level decisions need to take these factors into account in arriving at the optimal strategic mix.
Use this free corporate strategy template to quickly start the development of your own corporate strategy.
The corporate, business and functional level strategies
A complete organizational strategy is divided into three distinct levels .
- Corporate level strategy
- Business level strategy
- Functional level strategy
Corporate level strategy refers to the highest level of corporate strategic planning. In this article, we dive deeper into it, but it’s useful to understand the other strategic levels as well and how they are related.
Business level strategy is the strategic level that mediates the abstract strategic goals of the corporate strategy, with the needs and capacities of the business unit level.
It takes a corporate-level strategic goal and turns it into a practical strategic goal based on business-level knowledge and experience.
Functional level strategy is the most granular level of strategy - the realm of practical decisions and concerns which are less relevant at the business or corporate strategic levels.
At the functional level, strategies and goals from the business and corporate level are turned into meaningful, functional results which ultimately determine outcomes for a business.
For example, the functional level of a telecom company like Vodafone might be a district or even a store. At this level of strategic planning, general strategic goals are reduced to concrete strategic measures.
Corporate level strategy vs Business level strategy
Every company has a corporate level strategy, no matter its size.
That’s not true for the business strategy level. Only organizations big enough to have multiple business units should be concerned with a business strategic plan.
It’s not that it doesn’t benefit other organizations, it just merges with the functional strategy level.
The business strategy is the first grounding attempt to the company’s strategic plan . It inserts the first dose of reality and challenges the corporate strategy from the context of the capacity and the needs of the business units.
To move from corporate planning to business planning is to take a step from the abstract plane towards the concrete reality.
📚 Read more: The 7 Best Business Strategy Examples I've Ever Seen
How the three strategy levels relate to each other
The information flow on the three strategy levels is not unilateral.
While there is a hierarchical order, each level of decision making involves two-way influence .
Take, for example, a manufacturing business. A corporate strategy will necessarily be influenced by functional strategic concerns such as R&D and marketing. Which will in turn be impacted by the productive capabilities of the functional strata such as capital and personnel.
Understanding how the three strategy levels communicate helps you build a solid strategic plan.
What are the benefits of a Corporate Level Strategy?
The benefits of a well-defined corporate strategy for an organization increase as the organization scales. It’s possible for small or even medium-sized businesses to get by without investing time in developing corporate strategy.
However, as the needs of an organization grow, it becomes increasingly necessary to attack the strategic planning process in a manner that reflects the complexity of that organization.
In the end, corporate strategy benefits any organization, regardless of scale.
1. Corporate strategic planning offers your business strategic direction
Without differentiation between the abstract needs and goals of an organization which is evident at a corporate strategic level, and the core competencies and resources that business and functional units can utilize to realize these goals, it is difficult to develop and grow a business.
2. Corporate strategy allows you to adapt
It increases the understanding of your organization. In a dynamic world, organizations need to keep pace with changes as they happen.
By continually defining corporate strategy and strategic goals in relation to opportunities or threats as they present themselves, corporate strategy allows us to perform optimally.
3. Corporate strategy improve decision making
It motivates your employees. Without clearly defined strategies at a corporate level, business and functional level units will perform sub-optimally.
The abstract level of decision making that is only possible at the corporate level will translate to better results at other decision-making levels, and help employees to feel that their organization has a clear direction and purpose.
The Common Issue with Corporate Strategy
The common issue with strategy and even more so for corporate strategy is that it's stuck in the boardroom. Leaders are the experts, they’ve climbed the ropes, and they have the scars to prove it.
Naturally, they are the best equipped to make strategic decisions and develop the plan that steers the company in the right direction. Sounds reasonable, but there's a lie within that statement.
That static PowerPoint document they create is not a strategy no matter how long or pretty it is. Mike Lardner, Ex-Director Corporate Strategy at Whirlpool in our state of strategy report elaborates on this by saying "the main problem with strategy is that it's usually not even strategy, it's just the first pass at next year's budget!"
It's an annual cycle of secret meetings that exhausts resources and ultimately no one is closer to understanding where, why, or what they should be doing! This is left in a PowerPoint until next year and it's such a manual effort to synthesize that it's often not even updated or tracked to give people an update on progress.
Strategy is everywhere, all the time, not just annually - you should be asking big, bold questions, assessing trends, investing in tech, and keeping tabs on where you are vs where you want to be, and not just in a purely financial sense!”.
Invest in your corporate strategy with the World's #1 Strategy Platform!
How is Corporate Strategy Implemented?
Corporate strategy is characterized by its dynamic nature.
In response to the needs and the environment of a business, your corporate strategy must reflect an optimal approach to these variables. Thus, it’s helpful to divide corporate strategy into three classifications based on external and internal factors.
Growth strategies are strategies designed to grow a business in a given way. Growth strategies might include entering new markets, increasing or diversifying existing ones, or using forward or backward integration to take advantage of economies of scale.
Stability strategies are designed to consolidate an organization's current position, with an eye towards creating a strategic environment that will provide greater flexibility for the future employment of growth or retrenchment strategies.
Stability strategies are more conservative strategies, focused on preserving profit, reducing costs, and investigating future strategic possibilities.
Retrenchment strategies are a response to unprofitable or damaging elements of a business or organization. These might include the elimination or sale of unprofitable assets or product lines.
What Should My Corporate Strategy Model Look Like?
There are a number of different models that can be applied to the strategic planning process, each with their own merits.
Corporate strategy planning is the topmost level of strategic planning within a business or organization.
As a result, the corporate planning process is the most sophisticated level of strategic planning and must take into account a huge number of variables.
Defining a Mission
Reducing complexity is a must . Corporate planning starts with defining an abstract vision or overarching goal, based on the current organization and the environment in which it exists.
This vision will provide a point of reference for your mission and your mission will be a point of reference against which goals and strategies can be measured.
Follow our guide for an in-depth explanation of the process of writing a vision statement .
Describe Your Company’s Values
The vision statement of your organization is a destination. Company values describe the manner in which you will arrive at this destination.
The values that you outline should be clear, concise, and above all real. To get a good sense of the process of ascertaining and defining your company values, read our guide .
Choose Focus Areas
Focus areas can be thought of as the pillars on which corporate planning is based. The abstract ideas represented in your vision statement and company values are here applied to choose areas in which your company can act in order to effect its stated goals.
Once a clear vision has been defined and areas of focus selected, corporate strategists must outline the strategic objectives .
They will represent a more concrete and specific example of what you want to achieve, with stated deadlines and objectives.
Note that you might have several different levels of objectives aligned to each other at your corporate strategy level.
The corporate planning process ends with the definition of KPIs which will allow corporate strategists to track and adjust the strategic objectives based on results.
Note : We've deliberately omitted 'Projects' from our corporate strategy model. This is because projects should not generally exist in a corporate strategy. Instead, projects would commence at either the business level or the functional level of your strategy.
Corporate Strategic Planning
Corporate strategic planning provides your company with the essential conceptual tools required to succeed in competitive markets. Taking the time to plan a well structured corporate strategy will quickly yield benefits that are quantifiable and provide insights into the operation of your organization as a whole.
Download our guide on “ How to write a strategic plan ” that hundreds of companies use to kick off the development of their corporate strategy.
Or grab your free corporate strategy template to follow a structured approach and create a highly effective corporate strategic plan that keeps everyone aligned with the business objectives.
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What Is Corporate Planning?
Corporate planning is setting long-term objectives and goals within the organization’s scope to enable an environment conducive to growth in terms of revenue and profit margins. It includes defining strategies, decision-making, and allocating resources. The corporate planning strategy aids the whole team to work in one direction- the organization’s goals.
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A corporate planning cycle is a dynamic and continuous process throughout the organization’s life. Through planning on a corporate level, hurdles that might hinder the growth towards the pre-determined goals come to light, and the management can provide solutions to solve them. Moreover, it allows the company to manage its resources more efficiently.
Table of contents
Corporate planning process explained.
- Advantages and Disadvantages
- Difference Between Corporate Planning and Strategic Planning
- Difference Between Corporate Planning and Functional Planning
Frequently Asked Questions (FAQs)
Recommended articles, key takeaways.
- Corporate planning is the process through which companies draw a map of their plan of action that enables their growth in quantifiable terms.
- It is typically carried out through the top-level management of the company. It is a medium-term goal that acts as the basis for macro-level planning, called strategic planning.
- To create a foolproof corporate plan, the organization must collect sufficient data about their company and gain insights into their competitor’s business model.
- It is a continuous process that helps the organization grow continuously through constant technological developments.
Corporate planning is the process through which the organizations’ goals are set with a clearly defined plan to achieve them. Then, it allows them to find opportunities and methods that facilitate the efficiency of the whole process.
The planning process’s effectiveness depends on the data of the company’s strategies, the strengths, weaknesses, and tactics of competitors, and the industry’s growth forecast. However, a wiser way to begin the planning process is by identifying customer needs and finding a solution to meet those needs.
Once the solutions for customer needs are drawn, the company can set quantitative targets such as a certain amount of increase in revenue, gross margin percentages, and productivity. Setting goals that can be quantified is vital; otherwise, growth cannot be calculated in an absolute manner.
Since the area of development and means to measure the improvement are drawn at this point, the company has to design action plans to reach the determined goals. This part of the process is particular and guides the team with the workflow that will help the company achieve its goals and objectives.
As a corporate planning manager, it is essential to look at the developmental aspects of the company from an outsider.- say, a competitor or customer. This helps in drawing a plan that considers a lot more data points. A successful corporate plan has the six elements mentioned below:
#1 – Information
The first step towards creating a foolproof corporate plan is collecting information, regardless of whether the data paints a good or bad picture of the company’s current status. Moreover, similar information about competitors gives an even better view of the areas that can be improved to gain a more significant market share .
#2 – Objectives & Strategies
Objectives refer to the overall outcome of the plan. On the other hand, strategies are specific steps taken to reach organizational goals. For example, objectives could be an increase in sales by 25% or responding to customer support issues within 2 hours. Making a product the market leader by the end of the financial year through influencer and social media marketing could be an example of a strategy.
#3 – Devising a Plan of Action
Once the objectives and goals are devised, the company must articulate a step-by-step plan that helps its employees gain significant insights into the plan’s intricacies. This part of the process could be fulfilled by employee training, a new approach to production, or a change in marketing strategy.
#4 – Implementation
The action is taken toward the objectives and goals of the pillars of the organization’s growth story. Irrespective of how well-planned a strategy is, it will deliver average results unless implemented or executed to perfection. The implementation comes in different forms depending on the specifics of the plan.
#5 – Monitoring
Once the implementation process is underway, the corporate planning manager monitors the progress or decline in following the procedure. Since the plan is not a one-time action, it must be supervised and monitored regularly.
#6 – Evaluation
After a certain period, the manager can check for differences after implementing the corporate planning strategy. The check will provide the management insights into the progress, decline, or stagnancy toward organizational goals.
Since each organization is bound to have different plans based on its organizational framework, management style, and product, naturally, they might want to implement a plan that fits their work style better rather than opting for a generic method. Therefore, let us discuss different types of corporate planning through the points below:
#1 – Tactical Planning
A tactical plan is usually implemented after a strategic plan has been set in motion. A tactical plan is a short-term goal to address immediate goals, which over time, contribute to the bigger plan. Typically, a short-term goal helps tackle hindrances that prevent the company from achieving its medium or long-term goals.
#2 – Contingency Planning
A contingency plan is when a company develops strategies that help them tackle an event from stopping its operations. This strategy is carried out in an adverse scenario, such as a natural calamity or pandemic. However, a contingency plan can also be initiated for positive events, such as a high inflow of unexpected client funds.
#3 – Operational Planning
Operational planning is a form of action where the daily tasks of each employee and manager are specified and monitored. It is usually planned for a period beyond one year. However, to reach short-term objectives that aid the enormous growth of the business, operation planning is a wise choice as it optimally allocates financial, physical, and human resources.
Let us understand the concept with the help of the examples below:
Audacity Corporation manufactures microphones and is one of the market leaders in the domain. They have produced studio and live performance microphones for over half a decade. Their CEO Brendon wanted to ensure that their range of microphones for streamers and gamers were market leaders by the end of the financial year.
To ensure their product was top-selling in the market, they studied their competitors in the domain and found that most of them produced these microphones in-house, and their cost of raw materials was high.
Audacity tied up with companies in China and Taiwan to procure raw materials at lower prices and trained their employees to assemble these products more efficiently.
That year, their streaming and gaming microphones sold 20% more than any competitor.
ExxonMobil is one of the largest oil and gas companies internationally. In their announcement about their corporate plans in 2022, they declared that they plan on increasing their investments in emission reduction solutions.
By 2027 , they plan to increase investments by $17 billion in this domain to gain a competitive advantage over other layers in the market and tackle climate change and carbon emissions.
Advantages And Disadvantages
The extensive planning for the future allows businesses to tackle quite a few situations better. However, they have their set of disadvantages too. Let us discuss the advantages and disadvantages of corporate planning through the points below:
- Reduces Uncertainty: Running a business is filled with constant uncertainties and risks. However, an excellent corporate plan helps the company by forecasting risk value in the future, thereby reducing the risk of uncertainty.
- Unity: A well-defined plan helps the employees to understand their roles in a better manner. In addition, since all employees are clear on their roles, there is less conflict and higher levels of unity within the organization.
- Aids Growth: With cooperation from employees and constant development of the processes within the company’s scope, objectives, and strategies and easier to implement, a higher success rate can be expected.
- Rigidity: Following a set of rules as a part of the plan can become an inflexible environment. As a result, it can lower the morale of employees.
- Time: From collecting data, devising a plan, implementing, monitoring, and evaluating, it can take quite some time before the company begins to see results.
- Ambiguity: Since most of the planning is based on the prediction of the future, it cannot be foolproof as situations opposite to the plan can occur, and businesses can be caught off-guard.
Difference Between Corporate Planning And Strategic Planning
Let us understand the difference between corporate planning and strategic planning through the table below:
Difference Between Corporate Planning And Functional Planning
Let us understand the difference between corporate and functional planning through the points below:
- A corporate plan devises a plan for the whole organization to achieve overall growth in revenue , profits , or a higher customer base.
- It is typically a top-level management that curates a corporate plan.
- It is a continuous process that is monitored and evaluated regularly.
- A corporate plan is to cater to the short to medium-term goals of the organization.
- This plan formulates objectives within the organization’s scope to derive better results outside the organization through factors beyond the control of the organization and its managers.
- Functional planning aims to ensure the standardization of management protocols at every level of the organization.
- Quantifiable goals are set to measure growth, decline, or stagnancy after a given period.
- Managers of different departments are expected to look for gaps or inefficiencies in processes and provide insights into developing them.
- An operational plan is usually for a period slightly above a year.
- While supervising the processes, managers must be able to explain the utilization of resources in specific areas. In addition, the top management level is usually keen on ensuring cost efficiency is kept in mind during the whole process.
A corporate plan is a process that maps out a path through which companies grow in terms of profits, brand identity, and revenue. It is a tool that organizations use to ensure an upper hand over their competitors. Moreover, a corporate plan is a foundation on which a macro-level strategy is built. This macro plan is called strategic planning.
It helps the organization face uncertainties in the future in a better manner as they have planned for contingencies well in advance. Moreover, a clear plan and an objective for each employee give them a sense of belonging and unity.
Since a corporate plan involves the organization’s overall growth, it is vital to ensure that the resources are being used efficiently and there is minimal to no wastage in the process.
The very nature of planning is to ensure the whole process is forward-looking. Moreover, it is a continuous process and a big goal consisting of smaller goals for the short-term that helps the employees and their managers to quantify the growth effectively.
This has been a guide to what is Corporate Planning & its meaning. We explain its process, elements, examples, and advantages and comparison with strategic and functional planning. You can learn more about finance from the following articles –
- Human Resource Planning
- Enterprise Resource Planning
- Corporate Strategy
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Difference Between Corporate Planning and Strategic Planning
May 1, 2015 Posted by Admin
Corporate Planning vs Strategic Planning
In the surface level, strategic planning and corporate planning are interrelated though, there is difference between corporate planning and strategic planning in the sense that strategic planning refers to the larger extent when compared to the corporate planning. In simple, the strategic planning relates to the entire company, and the corporate planning relates to the specific functions of the company. Therefore, the corporate planning is less in extent. Furthermore, the strategic planning determines the overall direction of the company while the corporate planning determines and function on the foundations of the business. Also, the strategic planning says how to exist in the volatile business environments and it emphasizes ways and means of obtaining the competitive advantages over the competitors. In the mean time, the corporate planning helps to determine the internal functions and issues in the company. Interconnecting these two, the strategy is a definite part of corporate planning and the corporate plan incorporates the strategic related issues.
What is Corporate Planning?
Corporations are entities that are designed around a certain set of elements that determines the shape of a business . Among them, the core of the business is important. This refers to the major business activity. For an instance, it can be either producing a product, delivering a service , or a conjunction between the two. Depending on the product or the service the company produces, there is a set of buyers known as the target audience. So, all these elements are managed by the corporate plan of the company . Also, the corporate planning involves functioning the company as well. In this regard, determining the number of units of the company and assigning people to those units (i.e. departments) depending on their capabilities are also addressed under corporate planning. Therefore, almost all the internal functionality is handled by the corporate plan.
Corporate Planning takes a short period into consideration
What is Strategic Planning?
By having a strategy plan, it is expected to determine a long-term direction of a company . Also, the competitive edge of the company is achieved by executing the strategy . Therefore, gaining competitive advantage is also addressed in this regard. These facts depict that strategic plan always address the entire company. Therefore, this involves observing the environment that is really volatile in nature and determining changes accordingly. This scanning aspect requires research and development in the company level. As strategic planning determines the long-term direction of the company, setting mission and vision is also addressed. Allocating resources among different projects in order to achieve the end state of affairs happens in the perspective of strategic planning. There are personnel called strategic managers in a company. They are responsible for scanning the environment and imposing alterations accordingly. This shows that they should possess business intuition .
Some acknowledge the strategic planning as a cycle. Determining the company-wide objectives, and ways and means of achieving the objective is highlighted in this cycle. Once the outcomes are observed, the measurement procedures are also set by the strategic plan. Finally, alterations in the observed results are applied, only if they are needed. Thus, this is acknowledged as a cycle since this a continuous process.
A diagram of the (strategic) planning cycle
What is the difference between Corporate Planning and Strategic Planning?
• time factor:.
• Corporate Planning usually comprises of short time periods.
• Strategic planning comparatively comprises of long time periods.
• Corporate planning deals with the internal aspects of the company.
• Strategic planning deals with the overall business (i.e. internal and external) and external environments.
• Corporate planning sets parameters and objectives within the company.
• Strategic planning sets the overall direction of the company.
• Response Nature:
• Corporate planning responds to the market segments which the company deals with.
• Strategic planning selects which market segments to deal with.
• Corporate plans facilitate or help to achieve strategic plans, and corporate plans are set according to the motives of the strategic plan.
- Typing via Pixabay (Public Domain)
- A diagram of the (strategic) planning cycle by Compo ( CC BY-SA 3.0 )
About the Author: Admin
Coming from Engineering cum Human Resource Development background, has over 10 years experience in content developmet and management.
October 9, 2021 at 12:43 pm
This is a good write up on differences. Matches with what I thought/guessed. I bumped on corporate planning need recently after two decades or so, had been working on strategic planning for a long time. Hence wanted to know the difference and got this. I just felt, corporate planning is an older concept still there in few organisations and not a general taught curriculum even in MBA courses. Strategic planning has replaced it more extensively in the industry as it is also a superset of corporate planning and and already takes care of that as part in its overall ambit. I suppose, this can be included as a difference above. The good part about your writing is, it’s short part at the end, point wise broken to different aspects and explanations given.
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Corporate Planning Definition – Strategy, Importance, Objectives and Elements
March 30, 2021 By Hitesh Bhasin Filed Under: MANAGEMENT
Corporate planning is a type of strategic planning, responsible for mapping out a course of strategies and their implementations to empower top-management. It optimizes exposure, reach, leads, sales, profits, credibility, loyalty, sustainability, and opportunities of a business.
With the help of corporate strategic planning, a business can efficiently channelize corporate management by leveraging its resources with better acumen than the other market players.
Businesses of any size should incorporate such strategic planning, as it offers-
- Clarity & Direction
- Efficient use of resources
- A way of measuring progress
- Optimized decision-making
- Better coordination in business activities
- Effective allocation of responsibilities
- Motivation and guidance to members
- Analysis Strengths and weaknesses along with opportunities and threats via SWOT analysis, etc.
All in all, corporate planning empowers any kind of business to accomplish its business goals in a more effective and organized manner.
Table of Contents
Corporate Planning Definition
Corporate Planning is defined as forming long-term goals and objectives within the organization’s strengths and weaknesses in the existing and prospective environment.
This is done to ensure the achievement of their plans by combining their short-term and long-term objectives or bringing amendments in the structural working in the organization’s composition.
In the words of David E. Hussey, writer of the book- Corporate Planning: Theory and Practice-
Corporate planning includes the setting of objectives, organizing the work, people and systems to enable those objectives to be achieved, motivating through the planning process and through the plans, measuring performance and so controlling progress of the plans and developing people through better decision-making, clearer objectives, more involvement, and awareness of progress.
What is Corporate Planning Strategy?
Corporate Planning is a strategic process applied by several business organizations to form a roadmap to grow in the market, enhance profits, gain industrial exposure, and strengthen brand identity.
It is a vital tool that successful business organizations use to leverage their existing resources better and more analytically than competitors.
It is the determination of business goals, formulation of diverse strategies for attaining objectives, transforming the goals into tactical plans, implementing and reviewing it to find out the progress of strategies, and finding out loopholes.
Different factors around which corporate planning is channelized via effective SWOT analysis and process of corporate management are-
- Creation of long-range corporate goals and objectives.
- Analysis of Macro and Micro Environments.
- Analysis of Strengths and weaknesses of the business
- Coordination between short term and long term business plans
- Structural changes in the business
- Implementation of the strategic plan as per business goals
- Adept use of scarce financial resources.
- Right evaluation of performance as well as feedback for purposeful corporate planning
Importance of Strategic Corporate Planning
In the current modern era, corporate planning holds a crucial position in a business organization, be it large-sized, medium, or even a new entrant.
The importance of corporate planning can be justified because some companies even hire departmental corporate managers to check the industry’s current scenario and the current status of the organization in the market.
Some of the points that describe the need and importance of corporate planning are mentioned below:
1. Long-term goals
Corporate Planning broadly focuses on long-term goals and sets a blueprint to achieve them in a stipulated period. Long-term goals help an organization keep its core focus on maintaining its efforts, workforce, and efforts on a pre-decided target.
Corporate Planning keeps the employees engaged in their respective tasks with deadlines and ensures effectiveness and efficiency. It also brings harmony, peace, and cooperation among the employees and supervisors in a firm as they all smoothly work towards a common objective.
A strategic business plan helps a business organization provide a focal point not to get deviated or distracted from its end goal. The first and foremost step of corporate planning involves devising a mission statement that tells the world its roles and objectives.
Formulation of a mission statement aids the firm stick to its focus, do all the requisite tasks, assign responsibilities to the employees, and evaluate their work to achieve that final destination.
3. Better Decisions
Developing a strategic plan helps a company make better decisions that are beneficial and helpful in attaining the mission statement. A corporate plan should be structured to spell all the information in the organization’s interest, like the skills required with the employees, machinery or equipment required, etc.
Forming a roadmap to achieve the final goal helps the business people hire the best personnel for their form, arrange funds according to the tasks, and further invest in the most viable propositions.
4. A Measure of Success
Corporate planning also acts as a yardstick to determine an organization’s success in achieving its goals. A firm shall periodically analyze its work to check its progress and make further amendments like replacing personnel, hiring more employees, arranging more funds, upgrading the machinery, etc.
Finding, evaluating, and analyzing the loopholes periodically that block the ways of achieving the mission statement helps in the upgradation of the work and ensure efficiency and effectiveness of the tasks devised. The touchstone function of corporate planning works best in the organizations that devise plans that allow for changes in attaining the tasks.
5. Saves money
The extra benefit associated with corporate planning is that it forms budgets that help save substantial sums. Budgeting allows a firm to allocate its financial resources to the projects that require it the most by cutting out unimportant expenses.
Having a detailed budget tells how much cash is earned, spent, or lent. This wipes out confusion regarding the amount of money allocated to different projects.
Objectives of Corporate planning in Management
Following are the basic objectives of corporate plans:
1. Setting a strategy
The fundamental objective of framing a corporate plan is setting a business strategy. At this stage, companies should look at the opportunities and analyze the threats in the market. For this, they can make a SWOT analysis and select viable propositions for investing their funds.
2. Planning the operations
Once a firm knows its mission statement, it can use these objectives and find ways of attaining them. The sole purpose of corporate planning is to help a firm plan and prepare a list of resources it requires to deliver to achieve its goals.
3. Monitoring and Control
There should be measurable indicators present in a strategic plan to evaluate the progress of the work rate vis-à-vis the initial plans. It mainly includes financial theory related to accounts, the value of output, etc.
Establishing and forming well-devised instruments to devise annual reports is a crux to a successful corporate plan. Since the market environment constantly changes with events happening in the economy, a company regularly needs to review its plans, policies, and even rules and regulations associated with the operations.
Elements of Successful Corporate Plan
There are six elements in a successful corporate plan:
1. Gathering information
Having all the information related to the firm, industry, and competitors are the primary step towards a well-defined corporate plan. Either a business is big or small, it should be aware of the happenings in the market in its sectors, find out opportunities, grab them at the right moment and beware of the threats.
2. Set the objectives of the plan
Having a well-devised mission statement helps a firm stick to its focus of achieving it and keeps all the strategic work smooth in operations. Setting objectives helps form a clear mind about the work done, and the purpose of doing the work makes it fascinating.
3. Devise strategies to meet goals
Having a blueprint helps in effectively achieving the objectives. Forming strategies define the work to be done by the employees. Managers and leaders mainly devise strategies considering the funds available, personnel in the organization, and the deadline to achieve the requisite target. It brings efficiency to the operations of a business.
4. Implementing the plan
The next step is to implement the plans effectively. It involves the execution of the assigned tasks by the personnel within the guidelines and deadlines set. It involves the execution of the assigned tasks by the personnel within the guidelines and deadlines set.
5. Monitor plan performance
An organization should monitor its work by forming progress reports, finding the drawbacks, and work on them immediately.
6. Evaluate the effectiveness of the plan
In the end, a firm should see if the corporate strategy devised by it is competitive or up to the market standards. A plan should be challenging to achieve. A plan that is easy to achieve may not be a viable option in the existing scenario. This may require the organization to reset its plans and considering the market standards.
What to include in a Strategic Corporate Plan?
1. vision statement.
The vision statement of a business talks about business goals that it is supposed to achieve. While planning your corporate strategy, it is important to focus on your vision statement. You should also plan as per your short as well as long term goals. Your goals should be backed for your strategic planning, plus your goals should also be SMART.
2. Mission statement
Next thing upon which you should pay heed while making corporate planning is a mission statement. It tells you how you are going to achieve your vision statement. It will let you know what you are planning to offer, the target market, and the USP of your company. It will offer an elevator pitch to your corporate planning just in a few lines.
3. Resources and scope
Your corporate planning should also pay attention to things that you have in your organization such as your systems, structures, employees, products, accounting, assets, divisions, programs, finance, etc that play a key role in accomplishing your goals. You need to map the current structural existence of your organization to have a proper view of things incorporated and associated with your organization.
You should also include different business objectives and the ways you are going to measure success in your corporate planning strategy. Here, your objectives need to be measurable, strategic, realistic, achievable, and time-driven. Including vague objectives in your corporate planning statement is of no use here. Different types of objectives might include financial objectives, customer objectives, internal objectives, learning, and growth objectives.
Finally, you should include strategies that will help you accomplish your business objectives. Such strategic planning can be for launching any new product, or decreasing labour costs by a certain percentage, but your strategies have to directly address the associated objectives. You should also chalk out a proper plan for implementing those strategies.
Here is a video by Marketing91 on Corporate Planning.
Corporate planning vs. Business Planning
Business planning involves strategies that a business uses and applies to attain its goals and objectives. Corporate planning consists of strategies that the employees follow to meet the objectives of an organization. The following points highlight the difference between corporate planning and business planning:
A business plan may exist without a corporate plan, but its strategies are linked with corporate plans. Without business planning, the goals and objectives of a firm would be ambiguous. Thus, both business plans and corporate plans are complementary to each other.
A planning process aids a business to succeed in the market and suggests new directions and amendments as per the industry’s short as well as long-range requirements. Thus, there can be several diversified effects on business and corporate plans.
Corporate planning reviews each step of the working of an organization devised for achieving the mission statement. However, a business plan focuses on the organization’s overall goals, objectives, and progress. To evaluate the tasks, a business should consider several factors such as progress rate, personnel performance, requisite funds for further operations, and many more.
Corporate Planning Jobs in an Organization
Corporate Planning jobs fall under the broader career category of Chief Executives. Corporate planners are responsible for determining and formulating policies and strategies to offer an overall direction for the companies as per the guidelines suggested by the board of directors.
Strategy planning in such jobs revolves around planning, directing, and coordinating different activities at the top-most level of management by taking the services of staff managers and subordinate executives. Corporate planner jobs are also understood as strategic planner jobs.
Common corporate planning jobs are-
- Communicating with Supervisors, Peers, or Subordinates
- Getting Information from all relevant sources
- Communicating with Persons Outside Organization
- Directing, Guiding, and Motivating Subordinates
- Developing and Building Teams
- Establishing and Maintaining Interpersonal Relationships
- Developing Objectives and Strategies
- Monitoring and Controlling Resources
- Analyzing Data or Information
- Judging the Qualities of Things, People, and Services
- Resolving Conflicts and Negotiating with Others
- Evaluating Information to Determine Compliance with Standards
- Identifying Objects, Actions, and Events
- Interacting With Computers
- Organizing, Planning, and Prioritizing Work
- Interpreting the Meaning of Information for Others
- Updating and Using Relevant Knowledge
- Compiling, categorizing, coding, calculating, auditing, tabulating, or verifying information or data
- Coordinating the Work and Activities of Others
- Coaching and Developing Others
- Thinking Creatively
- Staffing Organizational Units
- Selling or Influencing Others
- Monitor Processes, Materials, or Surroundings
- Provide Consultation and Advice to Others
- Estimating the Quantifiable Characteristics of Products, Events, or Information
- Scheduling Work and Activities
- Performing Administrative Activities
- Training and Teaching Others
- Performing for or Working Directly with the Public
- Documenting/Recording Information
The corporate planning process is an activity that involves a series of steps to be followed to achieve the end goal. Specifically, it involves a process that personnel in an organization does to achieve the mission statement.
The process to attain the end goal involves strategies at each level or department with clear and detailed tasks assigned to them within stipulated deadlines. The employees then execute the tasks assigned by their leaders and mentors following some guidelines.
Then managers and leaders analyze the work, make amendments to that, and suggest further improvement guidelines. The organization then check the viability of its plan in terms of its difficulty, market standards, and check whether it is practically achievable or not. Further changes to plans are made after evaluating previous plans to upgrade the formation of plans.
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About Hitesh Bhasin
Hi, I am an MBA and the CEO of Marketing91. I am a Digital Marketer and an Entrepreneur with 12 Years of experience in Business and Marketing. Business is my passion and i have established myself in multiple industries with a focus on sustainable growth.
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Business Planning Process and Strategy - Steps & Plan
The business planning process needs a thorough and deep understanding of the market and customers to make appropriate predictions that can be applied in the planning process. When developing a business plan, organizations identify their goals. A business planning strategy involves establishing a method and sequence to achieve these goals for the business to arrive at its intended vision.
What is a Business Plan?
All businesses require a business plan or a business planning strategy to be successful. A well-defined business planning strategy is the most fundamental step in setting up a business. A business planning process is a documented road map to the success of a company that includes detailed plans about the process of achieving the objectives.
Objectives of a Business Plan
When it comes to business planning process, an entrepreneur has to be concerned about every aspect of the business and should have clear goals set for success. The essential objectives of any business planning strategy include the following elements:
- Staying Profitable
- Staying Ahead of the Competition
- Optimum Productivity of Personnel and Resources
- Reaching the Right Customers
- Excellent Customer Service
- High Employee Retention and Absorption
- Adapting to Change
How to Prepare for a Business Plan
The first step of the business planning process should be spending some time determining what the essential goals for your business are and chalk out the business planning strategy according to that. Identify the company's strengths, weaknesses, challenges, and opportunities and lay down all the steps necessary to initiate the proposed business.
Preparing a business strategy for growth involves the following steps:
Businesses must review the available business plans and scan the market for threats and opportunities to create an effective business planning process and strategy. Seeking professional advice in the form of consultants and experts will go a long way in assessing the future of the business.
Idea generation is a creative process that businesses use. It is an integral part of any business planning process. In this stage, ideas are developed and created, or solutions to perceived or actual problems are generated. Idea generation can be a powerful tool to solve problems, collaborate and generate new thoughts.
Sources of New Ideas
Businesses can obtain ideas through a variety of sources. The most significant ones are:
- Market research and development
- Competitors in the industry
- Vendors and Retailers
Methods of generating New Ideas
- Data obtained through surveys and questionnaires
- Market research
- Group discussion and brainstorming activities
- Social Media research
- Mind Mapping
- Adding value to existing products and services
The success of every business planning process depends on several internal and external factors. You must study your business's external environment to stay ahead. An environmental scan is necessary to make the right choice for your business and obtain knowledge about the factors that directly or indirectly affect your business.
The external environment can be identified as competitors, customers, suppliers, demographics, socio-political situation, economic condition, technology, and all other factors directly related to the company's operations.
The internal environment includes factors that exist within the business. These factors include the capital, technological, financial and human resources present in the company, the company culture, the organization structure, and the availability of tools and equipment. Any change in these factors will directly affect the company's performance.
Feasibility Analysis is one of the essential business plan steps. It is the analysis of different alternatives to achieving business success. A feasibility analysis addresses the critical question of "Is this business venture viable?" It narrows down the scope of the business to identify the best situations and the worst scenarios in which the company can be.
The different variables included in a feasibility analysis are:
Market analysis provides data on the niche that the business wants to explore. It forms the base on which a company's marketing and sales plans are laid down – critical to make the ideal business planning strategy. The core elements of a market analysis are industry analysis assessing the industry, target market analysis that evaluates the targeted audience, and a competitive analysis that identifies the competition and their strengths and weaknesses.
This part of the feasibility analysis is operational. It analyses the operational aspects required to carry on the business successfully. For instance, an idea discussed might have great potential. Still, it may not be feasible when it comes to operational costs. That is when the significance of operational analysis comes to the fore.
The primary parameters examined during the operational analysis are – location to carry out the business, processes to be put in place to carry out operations, physical resources, raw materials and assets required to carry out the business, and assessing the distribution channels to deliver services or products to your customers.
Financial analysis is carried out to assess the business's financial issues, including monthly operating expenses, forecasted income statements, cash flow, balance sheet, and capital expenditure. Estimates of land, building, machinery, production and initial costs have to be carried out in the feasibility analysis.
In a business planning process, the top executives must ensure that the functional business strategic planning and process sync with the business goals. Once the feasibility analysis gives the go-ahead, a business plan draft is drawn up.
This draft involves preparing the following functional plans:
Marketing Plan – Business strategy for growth or marketing the product or service involving the four Ps of Product, Price, Promotion and Place.
Production/ Operation Plan – Production plans are for businesses involved in the manufacturing industry, while operation plans are for those in the service industry.
Organizational Plan – This plan deals with the organizational structure and the guidelines that focus on the organization’s culture.
Financial Plan – The financial plan deals with projected cash flows, projected break-even points, and projected balance sheets.
Human Resource Plan – This plan consists of details about staffing requirements, recruitment, selection, salaries and budget.
Project Report Preparation
Project report preparation is a crucial part of every business planning process. Experts prepare the project report. This report acts as a plan of action that describes the goals and objectives of the business. It is a document that includes all relevant information regarding the proposed business and is a step-by-step description of the strategies involved in commencing and operating the business.
Project reports allow the business idea to take shape and turn into a productive venture with clear-cut business planning strategy. It helps track the progress of the business planning process and compare it with the original plan. It also identifies any risks or challenges and helps take corrective action whenever necessary.
The project report is prepared once the environmental scanning and feasibility analysis have been completed.
Plan Your Marketing Strategy
A well-planned marketing strategy and business development plan will help the business reach its target audience. Without a defined marketing strategy, you will be experimenting to find what works. Remember, this is costing you time, resources, and money.
A marketing strategy aligns your team to the specified goals and allows your business to identify your target audience.
To create an effective marketing strategy that contributes to the business planning process, follow the below steps:
- Build a marketing plan including the short- and long-term marketing goals.
- Create a user/ buyer persona.
- One or more high-level marketing strategies.
- Determine a budget.
- Conduct market research and analyses it.
- Develop an implementation schedule.
- Create an evaluation process.
Evaluation, Control and Review
The final part of your business planning strategy is evaluation and review. All the strategies prepared for a business are open to modifications due to internal and external factors. Managers need to determine whether the current strategy helps achieve the organization’s goals and objectives.
The critical evaluation, control and review activities include measuring performance based on the current strategy and taking corrective action to enhance or improve the business goal.
What is Business Strategic Planning?
Business strategy planning means defining a company's goals and developing a plan to achieve those goals. Identifying the required resources, allocating the responsibilities and setting deadlines are essential parts of the business strategy planning.
Successful businesses continuously work to re-evaluate their business strategy and innovate to ensure that they are constantly delivering the results as promised to the stakeholders.
A lot of planning is based on past performance and present trends. Thus, it is vital to consider various analytic data while planning a Business Strategy.
Risks of the Operation
Comparing past and present data can give you a good idea of the risks involved in turning your dreams into reality.
After analyzing ample data, you will be able to predict or forecast, with high accuracy, the outcomes of carrying out the steps you are planning to take.
Decision-making Using Data
Analytics will help you make decisions based on precise data instead of gut feelings. It will present you with an added advantage over your competitors.
Analyzing Your Staff
When it comes to a group of personnel retiring or resigning, how do you ensure the business doesn't suffer? This question can be best answered by data-driven analytics. Only the data will tell you how to mix hiring and layoffs, retirements and inexperienced new joiners to stay on firm grounds.
Insightful Analysis of Market Dynamics
Strategic Business Planning requires you to analyses the past demand and supply fluctuations due to different forces. It will help you insightfully forecast market dynamics and prevent massive business disruption.
Follow a Unique Planning Approach
Consider all the readily available options and create a unique system that works best for your business.
Businesses must investigate and test different probable future events that may impact the company's value.
Preventative Risk Mitigation Measures
It is paramount that businesses plan for different measures to mitigate future risks. It will save the company from suffering massive losses during challenging times.
BMGI's Approach to Strategy Planning
After working with different kinds of businesses, BMGI has developed a robust process for business strategy planning. It encompasses all the aspects required for the best business strategy planning.
For the long-term goals, BMGI focuses on the following three aspects:
- Defining the strategy
- Establish how to implement the strategy
- Implementing the strategy and managing the changes
BMGI has a process in place for businesses to define how to implement their strategy as follows:
BMGI recommends the analysis of-
- Market and Customers
- Probable Trends of the Future
- PESTEL (Political, Economic, Social, Technological, Environmental, Legal)
Discover your business's SWOT (Strengths, Weaknesses, Opportunities, Threats) and compare them against various scenarios to determine your position.
The assessments mentioned above, along with the understanding of its impact, in the long run, enable businesses to plan their business strategy efficiently.
Impact Areas of Strategic Planning
The strategy used by BGMI focuses on specific parameters to efficiently organize and implement business plans for numerous companies. It enables BGMI to deliver consistent results. The impact of BGMI's strategies can be mainly attributed to the following vital areas:
A solid foundation to enable slow but steady growth for businesses. Many organizations succumb to the challenges presented by the organic growth strategy. But those who can endure it become industry leaders.
This growth route focuses on analyzing and implementing strategies for each business unit individually. It is a time-taken process, but the results can be brilliant in the long run.
This strategy is risky and requires the utmost knowledge of the running of the whole business. In this method, the senior management steers the direction of the entire organization based on its core principles and values.
Businesses look out for opportunities in places with potential for promising growth in the near future. Companies are finding such promises mostly in third world countries.
Taking small steps toward the uncertain future allows stable growth despite waves of changes. These models tend to stand the test of time.
Examples of Successful Business Planning Process and Strategy
Toyota's US invasion in the '70s
Cars have had an enormous impact on Americans since the good old days. The three biggest American car companies ruled over the car market in the US. However, the Japanese car manufacturer, Toyota, did market analysis and started selling cheaper and more efficient cars during the '70s.
The US car companies did not worry about Toyota at first. They thought that Toyota must be losing money exporting their vehicles into the US at such low prices. However, within a few years, Toyota started production in the US.
Toyota soon became the largest car company in the US. But what was their business strategy for growth?
Of course, Toyota was using the cost leadership strategy. However, Toyota's manufacturing process was so efficient that it cost them far less to produce cars than American companies. Besides, Toyota’s supply chain management made a crucial difference in their survival, and it was a part of their business planning process.
The multi-billion-dollar idea began with the founders of Airbnb renting their mattresses to strangers. It was a business space no one had explored before.
They struggled to make ends meet initially, but they saw potential in their idea. So, the founders created a website where people could rent out their mattresses to travelers and strangers.
There were some scattered online bookings, but they were not enough to be a sustainable business. The founders conducted operational analysis and discovered that the problem was with poorly presented listings.
They visited all the nearby locations where people were renting out their mattresses. They moved things around to make them look more pleasing and clicked photos. After adding images to their website, the bookings started pouring in.
Then, they hired professional photographers to click photos of all the listings and their owners. The online orders kept skyrocketing.
The founders of Airbnb analyzed data to discover the one problem that was keeping them from succeeding in their revolutionary idea. Airbnb is now valued at over 100 billion Dollars!
Strategizing a Business Plan is the most important step a business can take to see real growth. It allows companies to be updated about upcoming opportunities and risks. It can provide companies with clarity on how they should steer their business for significant success.
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What questions should be asked in a business plan?
The vital questions to ask in a business plan are as follows: a) What makes you different? b) Who is your audience? c) How will you make profits? d) How will you promote your business? e) How will you get started?
What is the most crucial part of any business plan?
The executive summary is the most important part of your business plan. It contains the overview of your entire business plan and everything it encompasses.
How many years should a business plan cover?
It is recommended to have a business plan of at least one year to 3 years to address your business goals and possible objections.
How do you overcome lack of planning?
a) Automate repetitive tasks such as data entry
b) Set up a network between all your software so that your position is constantly getting updated
c) Improve the communication between all the departments in your company
d) Deploy cloud-based technologies for effectively sharing information
What are the barriers to planning?
Here is a list of things that pose as barriers to planning: a) Incompetent leaders b) Continuous distractions c) Limited resources for task completion d) Impractical expectations in senior management
How to define a company’s Vision and Mission?
A company's vision statement lists what an organization wants to represent in society. A mission statement lists the things a company does to achieve its vision.
Who benefits from a good business strategy?
A good business strategy can benefit both the business and the consumers.
More From Forbes
How to plan a business expansion in 2023.
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By Nellie Akalp
Consult knowledgeable legal, accounting, and human resource experts when expanding a company.
If you plan to expand your business—by serving new markets, extending your portfolio of products or services, or adding staff—you have much to think about. In this article, we’ll discuss a few talking points business owners should consider as they strive to grow their companies.
5 key considerations when growing your business
1. forming an llc or corporation.
Many small businesses start as sole proprietorships or general partnerships because those business structures offer administrative simplicity and no statutory compliance requirements. However, they do not provide protection for business owners’ personal assets or give any tax treatment flexibility.
Business growth aspirations prompt many entrepreneurs to change from a sole proprietorship or partnership to a limited liability company (LLC) or corporation.
Rightly so! Forming either of those business structures creates a separate legal entity for the company. That means the owner’s personal assets (home, vehicles, retirement investments, etc.) receive protection from the debts and legal liabilities of the business.
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Also, LLCs and C Corporations that meet the IRS’s qualification criteria may choose to be taxed as S Corporations. In the case of an LLC, the S Corp election helps minimize a business owner’s self-employment tax obligations. The primary benefit of S Corporation election for a C Corp is that it avoids the double taxation of income distributed to shareholders.
2. Getting the required licenses and permits
If you’re expanding your product or service lines or extending your reach to other locales or market areas, you may need to apply for new licenses or permits. States and local government agencies’ rules and regulations vary for different types of business activity. Examples of the possible licensing requirements include the following:
- General business license
- Sales tax license
- Alcohol license
- Bakery license
- Food and beverage license
- Zoning permit
- Music license
- Health license
- Landscaping license
- Sign permit
- Entertainment license
- Professional licenses (e.g., accounting, attorney, physician, engineer)
As you can imagine, there are many more applicable to different industries and business activities. Entrepreneurs need to research the requirements for any locations where they will conduct business.
3. Hiring employees
If you can no longer do everything on your own—or you want to do more but don’t have the time or specific skillset to accomplish it—it’s time to get help. Hiring employees can take some of the administrative and operational pressures off of you. Of course, adding employees to the payroll adds some new responsibilities, which includes:
Here’s a summary of what most companies need to handle payroll:
- A federal tax ID number (EIN) from the IRS
- Payroll tax registration with the state (and possibly local) tax agencies.
- Employee information and tax documents (e.g., obtaining W-4 and I-9 forms from employees, and sending W-2 forms to employees)
- Salary and wage information (e.g., wages, salaries, overtime pay, paid time off compensation, tips, bonuses, commissions)
- Health insurance documentation
- Retirement plan documentation
- Employee bank information (if direct depositing wages into employees’ bank accounts)
- Workers’ compensation insurance policy
- Payroll software or payroll services vendor
Managing payroll, particularly handling payroll taxes properly, is essential for ensuring employees get paid accurately and on time. Moreover, it’s critical for keeping a business in good standing with federal, state, and local tax agencies.
Employers must withhold certain taxes and other payments from employees’ pay and then submit those monies to the appropriate tax agencies or organizations. Also, some employment-related taxes are paid directly by employers.
Payroll withholdings from employees’ pay
- Federal income tax
- State income tax
- Local income tax
- FICA tax (Social Security and Medicare)—Half of this tax is deducted/withheld from the employee’s pay, and the employer pays the other half.
- Wage garnishments (e.g., alimony, child support, loans, bankruptcy payments)
- Benefits deductions (e.g., retirement fund contributions, employee’s portion of health and life insurance premiums, union dues)
Employment related taxes paid by employers
- FUTA tax— The Federal Unemployment Tax Act is a program that provides compensation to workers who lose their jobs through no fault of their own. FUTA tax is a cost to the employer; it is not deducted from employees’ pay.
- SUTA tax— States also have unemployment programs. Most require only employers to pay into the fund, but some states also require employees to contribute.
- Other payroll taxes— Some other taxes (such as for short-term disability and family medical leave) may exist depending on the state or municipality. Employers should contact their local tax agencies and the state revenue department to determine all their payroll tax obligations.
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4. Outsourcing to independent contractors
Working with independent contractors and freelancers can improve your business’s efficiency and productivity by bringing in people with specialized skills and expertise to handle tasks you aren’t personally proficient in. However, it's important to be aware that independent contractors are NOT employees. Businesses must not mistakenly treat individuals as independent contractors when they should be classified as employees.
So, what’s the difference? The IRS has classification rules for differentiating between independent contractors and employees. Some states have even more definitive parameters for distinguishing the two. Generally, independent contractors are self-employed professionals who enter into an agreement (written or verbal) with a business or individual.
- They are not on their clients' payroll but issue invoices to request payment for their services.
- Unlike company employees, independent contractors do not receive benefits or paid time off from their clients.
- Independent contractors are mainly in control of how and when they work, whereas those things are usually dictated to employees by their employers.
- Typically, contract workers are responsible for providing the tools and equipment needed to perform their assignments.
- While the business paying an independent contractor may set the goals and deliverables for projects and assignments, the independent contractor decides how to best accomplish their assigned tasks.
- Independent contractors are responsible for reporting and remitting their taxes (including self-employment taxes) to the IRS, state, and local tax authorities.
When working with independent contractors, there are two tax-related forms businesses must pay attention to.
- They should request a Form W-9 from the independent contractor, which identifies the individual’s personal information for tax purposes (Compensation paid to independent contractors is tax-deductible for a business.)
- Businesses should issue Form 1099-NEC to any independent contractors to whom they paid more than $600 in the year.
5. Expanding your business out of state
What if you want to expand your business operations beyond your home state (where you initially formed your business)? When a business created in one state meets the definition of “conducting business” or “nexus” in another state, it must seek authorization to operate in the new state. Typically, that means completing a process called “foreign qualification.”
A business is considered a domestic entity in the state where it’s initially registered and a foreign entity in any state where it’s foreign qualified.
Definition of conducting business
What constitutes “conducting business” varies by state. Generally, states consider that a company is conducting business if it meets one or more of the following criteria:
- Has a physical presence (office, warehouse, or retail store) in the state
- Has employees working in the state
- Holds in-person meetings with clients or customers in the state
- Has reached a certain sales threshold in the state
The following activities alone usually do not qualify as doing business in a state:
- Defending or settling a lawsuit in the state
- Collecting debts in the state
- Conducting internal business activities, such as holding LLC member meetings in the state
- Having a bank account in the state
- Selling services or products through independent contractors in the state
- Engaging in isolated, non-repeated transactions completed within 180 days in the state
What does nexus mean?
Nexus implies that a business has a physical or economic connection to a state. Determining nexus can get complicated because different states have their own interpretation of what nexus is.
General characteristics of nexus
- The company has a physical presence—such as an office, warehouse, store, or employees—in the state.
- The company has reached a certain sales threshold, with or without a physical presence, in the state. Many states consider a business to have economic nexus if it has $100,000 in sales or 200 sales transactions (or both) in the state during the year.
The rules for determining nexus change often and vary from state to state. So, it’s critical for business owners to research and stay on top of nexus rules in any states where they have staff, physical locations, or sell their products and services.
Where to turn for guidance
Most state and local government websites provide business registration, licensing, and tax information. They also post contact information for the agencies that oversee business activity in their jurisdictions. For federal tax-related information and employer issues, the IRS and Department of Labor websites are excellent resources.
Business owners should also consult knowledgeable legal, accounting, and human resource experts when expanding a company. Every business’s situation is unique from others in some way, and trusted professionals can offer insight and information tailored to your specific circumstances.
About the Author
Nellie Akalp is a passionate entrepreneur, business expert, professional speaker, author, and mother of four. She is the founder and CEO of CorpNet.com , a trusted resource and service provider for business incorporation, LLC filings, and corporate compliance services in all 50 states.
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The art of formulating business strategies, implementing them, and evaluating their impact based on organizational objectives
What is Strategic Planning?
Strategic planning is the art of creating specific business strategies, implementing them, and evaluating the results of executing the plan, in regard to a company’s overall long-term goals or desires. It is a concept that focuses on integrating various departments (such as accounting and finance, marketing, and human resources) within a company to accomplish its strategic goals. The term strategic planning is essentially synonymous with strategic management.
The concept of strategic planning originally became popular in the 1950s and 1960s, and enjoyed favor in the corporate world up until the 1980s, when it somewhat fell out of favor. However, enthusiasm for strategic business planning was revived in the 1990s and strategic planning remains relevant in modern business.
CFI’s Course on Corporate & Business Strategy is an elective course for the FMVA Program.
Strategic Planning Process
The strategic planning process requires considerable thought and planning on the part of a company’s upper-level management. Before settling on a plan of action and then determining how to strategically implement it, executives may consider many possible options. In the end, a company’s management will, hopefully, settle on a strategy that is most likely to produce positive results (usually defined as improving the company’s bottom line) and that can be executed in a cost-efficient manner with a high likelihood of success, while avoiding undue financial risk.
The development and execution of strategic planning are typically viewed as consisting of being performed in three critical steps:
1. Strategy Formulation
In the process of formulating a strategy, a company will first assess its current situation by performing an internal and external audit. The purpose of this is to help identify the organization’s strengths and weaknesses, as well as opportunities and threats ( SWOT Analysis ). As a result of the analysis, managers decide on which plans or markets they should focus on or abandon, how to best allocate the company’s resources, and whether to take actions such as expanding operations through a joint venture or merger.
Business strategies have long-term effects on organizational success. Only upper management executives are usually authorized to assign the resources necessary for their implementation.
2. Strategy Implementation
After a strategy is formulated, the company needs to establish specific targets or goals related to putting the strategy into action, and allocate resources for the strategy’s execution. The success of the implementation stage is often determined by how good a job upper management does in regard to clearly communicating the chosen strategy throughout the company and getting all of its employees to “buy into” the desire to put the strategy into action.
Effective strategy implementation involves developing a solid structure, or framework, for implementing the strategy, maximizing the utilization of relevant resources, and redirecting marketing efforts in line with the strategy’s goals and objectives.
3. Strategy Evaluation
Any savvy business person knows that success today does not guarantee success tomorrow. As such, it is important for managers to evaluate the performance of a chosen strategy after the implementation phase.
Strategy evaluation involves three crucial activities: reviewing the internal and external factors affecting the implementation of the strategy, measuring performance, and taking corrective steps to make the strategy more effective. For example, after implementing a strategy to improve customer service, a company may discover that it needs to adopt a new customer relationship management (CRM) software program in order to attain the desired improvements in customer relations.
All three steps in strategic planning occur within three hierarchical levels: upper management, middle management, and operational levels. Thus, it is imperative to foster communication and interaction among employees and managers at all levels, so as to help the firm to operate as a more functional and effective team.
Benefits of Strategic Planning
The volatility of the business environment causes many firms to adopt reactive strategies rather than proactive ones. However, reactive strategies are typically only viable for the short-term, even though they may require spending a significant amount of resources and time to execute. Strategic planning helps firms prepare proactively and address issues with a more long-term view. They enable a company to initiate influence instead of just responding to situations.
Among the primary benefits derived from strategic planning are the following:
1. Helps formulate better strategies using a logical, systematic approach
This is often the most important benefit. Some studies show that the strategic planning process itself makes a significant contribution to improving a company’s overall performance, regardless of the success of a specific strategy.
2. Enhanced communication between employers and employees
Communication is crucial to the success of the strategic planning process. It is initiated through participation and dialogue among the managers and employees, which shows their commitment to achieving organizational goals.
Strategic planning also helps managers and employees show commitment to the organization’s goals. This is because they know what the company is doing and the reasons behind it. Strategic planning makes organizational goals and objectives real, and employees can more readily understand the relationship between their performance, the company’s success, and compensation. As a result, both employees and managers tend to become more innovative and creative, which fosters further growth of the company.
3. Empowers individuals working in the organization
The increased dialogue and communication across all stages of the process strengthens employees’ sense of effectiveness and importance in the company’s overall success. For this reason, it is important for companies to decentralize the strategic planning process by involving lower-level managers and employees throughout the organization. A good example is that of the Walt Disney Co., which dissolved its separate strategic planning department, in favor of assigning the planning roles to individual Disney business divisions.
An increasing number of companies use strategic planning to formulate and implement effective decisions. While planning requires a significant amount of time, effort, and money, a well-thought-out strategic plan efficiently fosters company growth, goal achievement, and employee satisfaction.
Thank you for reading CFI’s guide to Strategic Planning. To keep learning and advancing your career, the additional CFI resources below will be useful:
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Strategic Planning in Business
Table of Contents
What is business strategic planning, the strategic planning process in 3 steps, what is a business strategic plan, key components of a business strategic plan, business strategic plan example, strategic plan vs. business plan.
Strategic planning is key for success in business. By planning strategically for the future, a business can achieve its goals. It’s easier said than done, but the more you know about strategic planning, the better chance you have at succeeding.
Business strategic planning is the process of creating a business strategy and an accompanying business strategic plan to implement a company’s vision and achieve its goals over time. The main goal of strategic planning is to take a company from its current state to its desired state through a series of business actions.
The business strategic planning process usually consists of defining business goals, doing a SWOT analysis to assess the company’s business environment and developing a business strategy. The leadership team is in charge of business strategic planning, as it has a very important impact on the overall direction of a company.
To oversee the execution of a business strategic plan, managers need to manage time, costs and tasks. ProjectManager is a project planning tool that allows managers to plan, schedule and manage their team’s work. Plan your work with professional tools such as Gantt charts, kanban boards, task lists and calendars. Then track your progress in real time to stick to your strategic plan. Get started for free.
Strategic planning is very important, but it doesn’t need to be overly complex. Let’s simplify this process by breaking it down into three simple steps.
1. Set Business Goals
A business goal is simply an accomplishment that a company wants to achieve in the short, medium or long term. Business goals can take many forms such as increasing sales, revenue, customer satisfaction levels and brand positioning, among many other things.
2. Conduct a SWOT Analysis
The goal of a business strategy is to leverage the strengths of a business and minimize the impact of its weaknesses. Those two things are internal factors. The strengths of a company can become competitive advantages that can lead to business growth. There are many types of business strengths and weaknesses such as scale, speed, or R&D, just to name a few.
Threats and opportunities refer to external factors such as competitors or an untapped market. A successful business strategy considers all of these factors to define how a product or service will be created, marketed and sold, and a SWOT analysis is a great starting point.
3. Develop a Business Strategy & Strategic Plan
Once you’ve completed your SWOT analysis, you can create a business strategy that’s designed to help position your company in the market. Your business strategy guides how you produce, market and sell your product or service based on internal and external analysis.
Then, you’ll need a strategic plan to explain how you plan to execute that business strategy.
A business strategic plan is an implementation plan that’s meant to turn a business strategy into action items that can be executed over time. Business strategic plans are usually executed over the course of 3-5 years.
How to Develop a Strategic Plan
To develop a strategic plan, you should ask yourself the following three questions.
- Where Is the Business Now? Gather as much information on your business as possible including internal operations and what drives its profitability. Compare the business to competitors and note the similarities and differences in detail. This isn’t a day-to-day operational study, but a broader look at the business in context to itself and its environment. But don’t go crazy; stay realistic in terms of your business goals. Be detached and critical in your analysis.
- Where Do You Want to Go? Now it’s time to decide what your top-level objectives are for the future. Start with a vision statement , objectives, values, techniques and goals. Look forward to five years or more to forecast where you want the business to be at that time. This means figuring out what the focus of the business will be in the future. Will that focus differ from what it is now, and what competitive advantages do have you in the marketplace? This is where you build the foundation and initiate changes.
- How Can You Get There? Once you know where you are and where you want to go, it’s time to plan. What are the changes to the structure, financing, etc., necessary for the business to get there? Decide on the best way to implement those changes, the timeframe with deadlines and how to finance it. Remember, this is looking at the business at large, so consider major endeavors such as diversification, existing growth, acquisition and other functional matters. A gap analysis can be a big help here.
Once you’ve answered the above questions and have a way to achieve the long-term goals laid out in the strategic plan, the next step is making sure you have the right person to manage all of its moving parts. They must be analytical, a creative thinker and able to grasp operational detail.
That doesn’t mean the strategic plan is led by one person. It’s best to not do it alone; seek other opinions. The people in your organization, from bottom to top, are all great resources to offer perspectives from their standpoints. Don’t forget to take in the advice of stakeholders, including customers, clients, advisors and consultants.
To create a strong strategic plan, one must first have a strong understanding of the business that is to expand. How does the business work? Where does the business stand in relation to competitors in the marketplace? A strategic plan is built on the bones of the following foundational elements:
- Mission Statement: The mission statement describes what your company does.
- Vision Statement: The vision statement explains where your company expects to be in the future.
- Core Values: Guiding principles that shape your company’s organizational culture.
- Business Objectives: Consider using the SMART goal-setting technique . This simply means setting up specific, measurable, attainable, relevant and time-bound objectives that your company wants to achieve.
- SWOT Analysis: External and internal factors that make up your company’s business competitive environment.
- Action Plan: A plan outlining steps that will be taken to achieve the business objectives of your organization.
- Financials: A section that shows the financial performance expectations and the resources that will be required to implement the action plan.
- Performance Measurements: Performance indicators that will be used to measure the effectiveness of the action plan.
Never forget to check your strategic plan against reality. In addition to being achievable, it must be practical for your business environment, resources and marketplace.
Now let’s look at a simple business strategic plan example. This is a strategic plan for a small construction company.
1. Mission, Vision & Core Values
- Mission Statement: To build residential spaces that provide wellbeing for our clients.
- Vision Statement: To offer the best construction experience for our clients and expand our brand throughout the globe.
- Core Values: Sustainable innovation and respect for the environment.
2. Business Objectives
- Business Objective 1: Grow operating margin from 15% to 20% over the next year.
- Business Objective 2: Reduce operating costs by 5% over the next quarter
- Business Objective 3: Increase the number of new contracts generated by 10% over the next year
3. SWOT Analysis
- Strengths: Available financing, brand visibility and know-how.
- Weaknesses: Lack of PPE, human capital and expertise in construction areas such as plumbing, electrical work and masonry, which requires subcontractors.
- Opportunities: Lack of environmentally-friendly construction companies in the market.
- Threats: Larger construction companies compete for contracts in the area.
4. Action Plan
- Business Objective 1: To grow operating margin, new employees with plumbing, electrical work and masonry experience will be hired to cut down subcontractor costs. This must be done by the end of the first quarter.
- Business Objective 2: To reduce operating costs, the company will acquire property, plant and equipment. By doing this, the company will no longer rent equipment from third parties, which will reduce operating costs significantly in the medium and long term.
- Business Objective 3: To increase the number of new contracts generated, the leadership team will invest more in the PR, marketing and advertising departments. The company will also invest in key positions for the construction bidding process such as contract estimators.
- Financials: This section will explain in detail what are the costs associated with the work items in the action plan as well as the expected financial benefits for the company.
Strategic Plan Template
Our free strategic plan template helps leadership teams gather important information about their business strategy, which makes it the perfect tool to start shaping a strategic plan for your business or project.
A strategic plan is a type of business plan, but there are distinctions between the two. Whereas a strategic plan is for implementing and managing the strategic direction of a business, a business plan is more often the document that starts a business.
A business plan is used primarily to get funding for the venture or direct the operation, and the two plans target different timeframes in business history. A strategic plan is used to investigate a future period, usually between three-to-five years. A business plan is more routinely a year out.
A Different Intent
A strategic plan offers a business focus, direction and action to help the business grow from the point it presently resides to a greater market share in the future. A business plan, on the other hand, is more focused on offering a structure to capture and implement ideas that initially define a business.
With a strategic plan, existing resources are prioritized to increase revenue and return on investment. The business plan is different in that it’s seeking funding for a venture that doesn’t yet exist. Where a strategic plan is building a sustainable competitive advantage in the future, a business plan is designed to take advantage of a current business opportunity.
So, a strategic plan is communicating direction to teams and stakeholders in order to achieve future goals. A business plan isn’t talking to staff, which is likely nonexistent or minimal at this point. It’s speaking to banks and other financial supporters.
Strategic planning, like any planning, requires keeping a lot of balls in the air. That means having the right tool to plan, monitor and report on all the various tasks and resources. ProjectManager is online project management software that gives you control over every aspect of creating and implementing a strategic plan. Try it today with this free 30-day trial.
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What is corporate planning?
It might seem frivolous to generate business plans for the next three to five years when it seems like we’re facing a new disruption every three to five days. But during times like these, intentionality and planning are most important. When faced with uncertainty, a comprehensive, flexible corporate plan can actually help the business and its various branches stay on course.
The corporate planning process is essential to executing your business plan. Here’s what you need to know to engage in corporate strategic planning.
Why Corporate Strategic Planning Matters
There are different types of planning in the business world, and they can sometimes run together. But a corporate plan isn’t just a business plan by another name: They’re two separate items, and each one plays an essential role in moving your company forward.
Here are some of the differences between business planning and corporate planning, as well as why corporate planning is essential for bringing the business plan to life.
Business Planning vs. Corporate Planning
The business plan typically covers the business’s long-term goals, especially concerning the industry and other external forces. The business planning stage often occurs at the company’s inception or before a significant change is made. The business plan should be reviewed and updated frequently (at least once every one or two years).
Exercises like strengths, weaknesses, opportunities, and threats (SWOT) analysis are deployed at the business planning stage to get a sense of the business compared to competitors.
Corporate planning , on the other hand, looks internally. Corporate planning answers the question of how you’ll carry out the business plan. Corporate plans should span three to five years. Their goal is typically to align business units that have traditionally operated in silos and govern core services like HR, payroll, accounting, IT, and security.
Corporate strategic planning uses similar exercises (such as the SWOT analysis ) to arrive at broad operating principles and strategic actions to carry out the business plan.
The Importance of Corporate Planning
Your corporate plan may seem less important than the broader vision set out in the business plan. But without the corporate plan, the business plan has no movement. The principles and actions laid out in the corporate plan are necessary to bring the business plan to life.
If one of your business goals is to increase company profits by 25% within the next five years, for instance, you need a corporate plan to visualize the steps you’ll have to take internally to get there. One key aspect of turning a profit is reducing operating costs. HR can work with other department heads to evaluate employee efficiency, spot weaknesses, and develop a plan to increase profit per employee.
3 Types of Corporate Planning
Your overarching corporate plan should connect areas that have historically existed in silos. Develop corporate plans that cut across and pull together the different types of work within the company.
Here are three types of corporate planning to implement at your company.
The corporate strategic planning process evaluates the resources available to the company and identifies gaps that you will need to fill to drive business results. These could be gaps within tangible resources (inventory, technology, or headcount) or intangible (institutional knowledge or role-specific skills).
Strategic planning usually starts in the same place as the business plan: the C-suite, with critical internal stakeholders present. Business and department leaders need to have a conversation to identify the resources the company will need to carry out the business plan.
The strategic planning process provides a high-level blueprint of your corporate plan and feeds into the operational and project planning processes.
Operational planning takes the business plan and lays out the actions you’ll need to take internally to reach those goals. Within the operational plan, you’ll assign individual people to take ownership of those actions.
An objectives and key results (OKR) framework can help take the high-level business plan down to the level of individual actions. Using this model, business leaders set strategic goals at the top, moving down the organization from corporate management to individual team members.
At the team level, managers and employees review the business’s strategic goals and craft their objectives that drive these priorities forward. This process results in clear ownership over each smaller objective feeding into the company’s larger business goals.
Additionally, bringing employees into the process to identify how they can support the business strategy often results in creative solutions to challenging problems. Employee innovations can be standardized and fed into the next round of corporate planning.
Project planning breaks down the business plan into individual projects with defined objectives. The project plan provides a blueprint for project managers to keep costs, schedules, and resources on track to deliver the plan’s results. Where operational planning bridges the strategic and project planning processes, project planning is purely tactical.
With your company OKRs in place, bring project managers on board to help execute them efficiently and effectively. Work with your project managers to evaluate your resources and create a realistic plan for achieving company priorities.
3 Stages of Corporate Planning
Corporate planning is a complex process that requires time and dedication at each stage. The corporate planning process follows three defined stages:
Forming the corporate plan is the first step. It should build on the business plan and will require input from critical stakeholders. At this stage, be sure to incorporate some scenario planning. The process of setting long-term objectives for the business plan should have anticipated potential future scenarios. Work contingencies into your final result to account for these scenarios as you form your corporate plan.
You need to create a plan that can flex without breaking, so return to the different types of corporate planning as you form your plan. What skill gaps might be amplified, for example, if the economy rebounds and the demand for your product or service doubles? How might that scenario change the actions you’ll have to take or the resources at your disposal?
Formulating a flexible plan on the front end requires a lot of work but improves your ability to implement and execute successfully.
Putting the plan into action requires clear roles and defined ownership over each objective. Before you can implement your corporate plan, you need to confirm buy-in and commitment from each person involved. Without a firm commitment, implementation often fails.
Implementing the plan comes down to setting all of the processes into motion at a high level. This could include authorizing the use of agreed-upon resources, for example, or consulting with team leads as they begin to execute their portions of the plan.
Your job isn’t complete just because you’ve set the plan into motion. You must constantly evaluate your corporate plan as it’s in progress and after it’s done. Check in frequently with department heads and managers to monitor their progress toward their portions of the plan.
Once you have completed your corporate plan, conduct a post-mortem to review what worked and what you need to improve as you design and implement your next plan. At this point, it’s a good idea to revisit your SWOT analysis. How have your strengths and weaknesses shifted? How have your opportunities and threats evolved?
The answers to these questions can feed into the next planning round, providing essential data and a frame of reference from previous experience executing a corporate strategy.
5 Elements of Successful Corporate Plan
The stages of corporate planning inform your process at a higher strategic level. But taking that process down to the tactical, day-to-day level is as important (if not more so) as the process of setting the plan at the top.
Drafting and implementing a successful corporate plan requires a steady tactical process and effective communication across organizational levels. Here’s a framework for outlining and executing your corporate plan.
Establish the Plan’s Objectives
Start with the business strategy and plan. What are the business objectives that the corporate plan needs to achieve? Drive these objectives down to the lowest levels of the company. Everyone must get an opportunity to think strategically and offer suggestions for achieving the larger business strategy.
Don’t be too proud to consult employees on the front lines regarding better and more effective working methods. Front-line employees often have the most significant insights into the processes and actions that bring the most value and drive the best results.
Develop Strategies for Achieving Goals
Break the larger plan down into specific projects and actions, with metrics indicating the success or failure of each venture. Using an OKR framework, each objective should have defined key results that show whether the company has met its objectives. This makes it easy to track progress toward larger business goals.
This is where you can get creative with operations and resources, especially human resources. Don’t confine your objectives to existing teams or departments. One of the keys to harnessing enterprise agility is assembling cross-functional teams to cut across silos.
Cross-functional teams can be risky, especially if the team members have never worked together. Such teams bring together different viewpoints and ways of working that can cause friction. But with the right facilitator, that healthy conflict can bring your corporate plan to life.
Implement Your Corporate Plan
Successfully implementing a corporate plan requires effort and input from every team member. To get that buy-in, employees at all levels — especially the front lines — need to see their role in moving the plan forward.
An OKR framework gives the sense of a flattened hierarchy where individuals can see their roles much more clearly. And when employees can see how they move the needle on business results, they bring more engagement and productivity to achieving them.
However, poor management can snuff out that engagement. To support the plan’s tactical implementation, train managers to manage work by outcomes rather than managing the employees themselves.
Keep Track of the Plan’s Performance
Just because you’ve implemented the plan doesn’t mean you’re done with it: Consult each team lead with ownership over each objective. Ask for their honest input on how the plan is progressing. Make sure that the owner of each objective knows that it’s better to admit that something isn’t working than to keep concentrating employee efforts on the wrong results or no results at all.
With a flexible corporate plan, you can course-correct if it isn’t producing the results you anticipated. In this case, you may need to implement one of your scenario plans to keep things moving forward and in the right direction.
One clear metric for tracking a plan’s performance is to align the key results with employee performance metrics. If employees are achieving their outcomes and are connected with the plan’s outcomes, you can see at a glance when something is off track.
Analyze the Impact of the Plan
After you have executed the plan, spend time analyzing its impact. Did it create the intended results at each point? What could you and your team have done differently to make a more significant impact?
Bring individuals in from across the organization to help with this post-mortem. Ask them to share their insights and experiences regarding the plan’s strengths and where it was weakest. Then, gather input on overcoming these challenges in future corporate plans.
Once you’ve gathered input from a representative slice of the workforce, sit down with the leadership team to apply these insights to the next planning process.
Achieve Your Vision
We can’t know the future, but we can set clear directions we want our companies to take. And, with a clear sense of our business plan and desired business outcomes, we can anticipate the potential challenges to getting there. The corporate strategic planning process takes our vision for the business and makes it possible to achieve.
Corporate planning isn’t an easy process: It forces you to be intentional, seek out new perspectives, and implement innovative ideas. But when successful, your corporate plan drives actual business results, helping you turn your business vision into reality.
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Difference Between Planning and Strategy
Last updated on February 7, 2023 by Surbhi S
In business, one might come across with the terms planning and strategy, end number of times. Planning is the basic function of management that tries to take a peep into the future. On the other hand, strategy is one of the components of planning and is also known as interpretative planning. The two terms have different meanings and usage in the business world. So, have a glance at the article that explains the difference between planning and strategy.
Content: Planning Vs Strategy
Comparison chart, definition of planning.
Planning is an organized process of thinking in advance about a future action. It means the preparation of the plan, i.e. the sequence of steps which will help in achieving organizational objectives. Planning is among the five management functions apart from organizing, controlling, motivating & leading and decision-making.
Planning is a future-oriented activity that takes place in routine decisions of a family, a friend group, a college, government and most importantly, in business management. It requires good judgment skills to choose which action is to be done earlier or later to avoid overlapping in actions.
Planning needs goal setting for which planning needs to be done. After that, alternative courses of action are found, and finally, deciding which plan will lead to your destination successfully. It doesn’t mean that everything will go according to your plan, or it may also happen that the plan may fail midway, so the second list of plans is also prepared, which act as a complementary plan to the original plan if it fails, for achieving the goals successfully in the limited time.
The creation of complementary plans is also a part of the planning procedure. Planning needs to be flexible in nature so that any change can be done if required by the organization. With the help of planning, an organization can exercise control over the action, i.e. whether everything is going as per plan or not.
Definition of Strategy
The strategy is a master game plan designed to achieve the objectives of an organization. It is a mix of competitive moves and actions made by the top-level management for the accomplishment of goals successfully. They are dynamic and flexible in nature. Strategies are based on practical experiences, not on theoretical knowledge, i.e. they are realistic and action-oriented activities. It requires deep analysis of the managers on any move or action, implementation timing, the sequence of actions, outcome, competitors’ reactions, etc.
In the business world, corporate strategies are made for the expansion and growth of entities, which include mergers, diversification, divestment, acquisition and many others. Strategies are made according to the present situations and conditions prevalent in the business environment, but it can’t be said that they are perfect because of the changing needs and demands of the people; strategies may fail.
Moreover, the market scenario will take an unexpected turn any time in the blink of an eye, and nothing lasts forever. Therefore the organization has to be ready for such unpredictable changes and develop a strategy for overcoming these situations. So, the organisation’s corporate strategy combines proactive and reactive strategies.
Video: Business Strategy
Key Differences Between Planning and Strategy
The major differences between Planning and Strategy are as under:
- Planning is anticipation and preparation in advance for uncertain future events. The strategy is the best plan chosen among the various alternatives for accomplishing objectives.
- Planning is like a map for guidance, while strategy is the path which takes you to your destination.
- Strategy leads to planning, and planning leads to programs.
- Planning is future-oriented, whereas Strategy is action-oriented.
- Planning takes assumptions, but Strategy is based on practical experiences.
- Planning can be for short-term or long-term, depending upon the circumstances, unlike Strategy, which is for the long term.
- Planning is a part of the managerial process. Conversely, Strategy is a part of decision-making.
Planning is a forethought of what is to be done in future, but Strategy is a blueprint of what you want to be and where you want to be. Both Planning and Strategy are made by the top-level managers as they know the mission and vision of the organization clearly, so they will make their plans and strategies to take a step forward towards their mission and vision. Planning is preventive in nature, whereas Strategy is quite competitive, but both aim at the optimum utilization of scarce resources.
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UCHENDU I. M. WOGU says
March 29, 2017 at 8:11 pm
Arun Kumar says
May 19, 2017 at 10:13 am
Thank you for sharing.
Dr. C. H. Rao says
December 21, 2017 at 7:03 pm
Very explicitly detailed and easily understood
March 27, 2019 at 1:20 pm
mikael ahmad says
May 25, 2019 at 4:19 pm
thanks for your effort.
Mohammad Halla says
June 14, 2019 at 5:42 pm
simply explained as insprational as any knowledge seeker requires to delve deeper. thank you so much
December 4, 2021 at 10:17 pm
Good comparison and examples
June 12, 2022 at 9:56 pm
Great comparisons and examples. Simplified and made easy to understand
December 13, 2022 at 8:23 pm
really a good explanation
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5 essential tips for creating a strong corporate plan
It’s a common conundrum for many companies with multiple business units or subsidiaries : how do you get everyone on the same page? How do you coordinate all of their activities, get the most of synergies and herd the entire organization toward common goals?
The answer starts with a corporate plan. Corporate plans are often confused with strategic and business plans, but they’re not the same thing. Mature or complex companies often need all three. But creating and implementing a strong corporate plan is a knotty process that often goes awry.
You want to make sure at the corporate level that you are leveraging each business .
Senior Business Advisor, BDC Advisory Services
“It’s common for business units or subsidiaries to be left operating in silos,” says Rony Israel , a Senior Business Advisor with BDC’s Advisory Services, who specializes in strategic planning advice. “A successful corporate plan breaks the silo mindset, supports collaboration and synergies, and unites the whole business around a long-term vision.”
Israel offers five essential tips for creating a strong corporate plan:
1. A corporate plan is not a strategic or business plan
A business plan explains how a new or existing company or project brings in money and how the business is run on a daily basis, including the budget and needed resources.
Meanwhile, a strategic plan is a blueprint for where the company is going. It describes its current state, a desired future state and how to get from here to there.
A corporate plan is similar to a strategic plan, but the difference is that a corporate plan guides a more complex company with multiple business units or subsidiaries. It describes where the overall business is headed and outlines a roadmap to get there. It has the same components as a strategic plan, but pertains only to the broader company and any shared services used by the various business units, such as marketing, human resources and finance.
It also sets out broad guiding principles for each business unit or subsidiary, which the latter then uses to develop its own strategic plans.
2. Corporate plan example
Corporate planning starts with the company’s senior leadership or management team, typically comprised of the CEO and heads of each unit and any shared services. This group develops a vision and goals for the overall business and shared services, and an action plan to achieve them.
Unit heads then take the corporate plan to their teams to develop a strategic plan to achieve the broader company’s vision and goals. Finally, these strategic plans are brought back to the leadership team for validation and approval.
It’s important to have a longer view for the entire organization.
Imagine a construction company with three divisions. One is dedicated to demolition and removing construction waste; a second provides cement to construction sites; the third supplies landscaping material.
Senior leaders create a corporate plan with the vision of becoming a one-stop shop and top construction provider in the province. Projects in the plan include developing synergies between the units, such as:
- requiring units to upsell clients to sister units and use sister units as potential suppliers
- allowing employees to be seconded between units for professional development
The organization will also acquire a snow removal company that will be turned into a fourth business unit.
Each unit head then works with their team to develop the unit’s own strategic plan with initiatives to support the corporate plan. Initiatives in the various strategic plans include updating the truck fleet, doing an operational efficiency exercise and acquiring a competing demolition company to expand market reach (Mergers and acquisitions can happen at both the corporate and strategic levels).
The same process would apply if the business was structured as a holding company with independently operating subsidiaries.
“You want to make sure at the corporate level that you are leveraging each business,” says Israel.
3. How to make a corporate plan
A corporate plan typically consists of the same elements as a strategic plan:
- An executive summary
- A company description
- Mission, vision and value statements
- Strategic analysis of the internal and external environment
- SWOT analysis (SWOT is an acronym for strengths, weaknesses, opportunities and threats)
- A description of your business goals and projects to achieve them
- A 12-month action plan that lists specific initiatives, who will carry them out, a timeline for doing so and key performance indicators (KPIs) to track progress
4. How to implement a corporate plan
The implementation process for corporate plans is similar to the process for strategic plans and faces the same challenges, which often derail even the best plans.
One of the most common problems is lack of follow-up . Senior leadership should hold regular meetings (monthly is typical) to review progress on the action plan and KPIs, take note of deviations, recognize successes and make needed course corrections.
A deeper dive should happen quarterly, and each year the plan should be thoroughly reviewed and updated with a new action plan for the next 12 months . The corporate-level meetings should also review progress on the strategic plans of each unit or subsidiary.
It’s also important to measure and incentivize progress. For example, KPIs could measure the number of clients each unit refers to sister units, or the number of staff assigned to sister units for personal development.
Incentive pay can be split into three portions: one tied to meeting one’s own unit targets, another to those of the corporate plan and a third to targets of sister units. “This will encourage the leader of each unit to be in regular contact with other unit heads to see how they’re doing and if they need any help,” says Israel. “Measurements and incentives drive behaviour.”
5. A final note on corporate plan timeframe
The timeframe for a corporate plan is generally longer than for a strategic plan. For example, if the units or subsidiaries have strategic plans for two to three years, the corporate plan may cover three to five years. If the smaller entities plan for three to five years, the corporate plan may go out to five or 10 years .
“The corporate plan is always looking a little bit beyond,” Israel says. “It’s important to have a longer view for the entire organization. Units can adjust more quickly than the larger business.”
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Strategic Planning in Diversified Companies
- Richard F. Vancil
- Peter Lorange
The widely accepted theory of corporate strategic planning is simple: using a time horizon of several years, top management reassesses its current strategy by looking for opportunities and threats in the environment and by analyzing the company’s resources to identify its strengths and weaknesses. Management may draw up several alternative strategic scenarios and appraise them […]
The widely accepted theory of corporate strategic planning is simple: using a time horizon of several years, top management reassesses its current strategy by looking for opportunities and threats in the environment and by analyzing the company’s resources to identify its strengths and weaknesses. Management may draw up several alternative strategic scenarios and appraise them against the long-term objectives of the organization. To begin implementing the selected strategy (or continue a revalidated one), management fleshes it out in terms of the actions to be taken in the near future.
In smaller companies, strategic planning is a less formal, almost continuous process. The president and his handful of managers get together frequently to resolve strategic issues and outline their next steps. They need no elaborate, formalized planning system. Even in relatively large but undiversified corporations, the functional structure permits executives to evaluate strategic alternatives and their action implications on an ad hoc basis. The number of key executives involved in such decisions is usually small, and they are located close enough for frequent, casual get-togethers.
Large, diversified corporations, however, offer a different setting for planning. Most of them use the product/market division form of organizational structure to permit decentralized decision making involving many responsibility-center managers. Because many managers must be involved in decisions requiring coordinated action, informal planning is almost impossible.
Our focus in this article is on formal planning processes in such complex organizations. However, the thought processes in undertaking planning (as described in the opening paragraph) are essentially the same whether the organization is large or small. Therefore, even executives whose corporate situation permits informal planning may find that our delineation of the process helps them clarify their thinking. To this end, formalizing the steps in the process requires an explanation of the purpose of each step.
Three Levels of Strategy
Every corporate executive uses the words strategy and planning when he talks about the most important parts of his job. The president, obviously, is concerned about strategy; strategic planning is the essence of his job. A division general manager typically thinks of himself as the president of his own enterprise, responsible for its strategy and for the strategic planning needed to keep it vibrant and growing. Even an executive in charge of a functional activity, such as a division marketing manager, recognizes that his strategic planning is crucial; after all, the company’s marketing strategy (or manufacturing strategy, or research strategy) is a key to its success.
These quite appropriate uses of strategy and planning have caused considerable confusion about long-range planning. This article attempts to dispel that confusion by differentiating among three types of “strategy” and delineating the interrelated steps involved in doing three types of “strategic planning” in large, diversified corporations. (Admittedly, although we think our definitions of strategy and planning are useful, others give different but reasonable meanings to these words.)
The process of strategy formulation can be thought of as taking place at the three organizational levels indicated in Exhibit I: headquarters (corporate strategy), division (business strategy), and department (functional strategy). The planning processes leading to the formulation of these strategies can be labeled in parallel fashion as corporate planning, business planning, and functional planning. We have to define these notations briefly before constructing the framework of the planning process:
Exhibit I Structure of a divisionalized corporation
- Corporate planning and strategy —Corporate objectives are established at the top levels. Corporate planning, leading to the formulation of corporate strategy, is the process of (a) deciding on the company’s objectives and goals, including the determination of which and how many lines of business to engage in, (b) acquiring the resources needed to attain those objectives, and (c) allocating resources among the different businesses so that the objectives are achieved. (See the sidebar, “Objectives and Goals,” for definitions of objectives and goals as used in this article.)
Objectives and Goals
It is worth differentiating between objectives and goals, since these terms are used separately here.
Objectives are general statements describing the size, scope, and style of the enterprise in the long term. They embody the values and aspirations of the managers, based on their assessment of the environment and of the capabilities and health of the corporation. For example, the financial objective of a large, diversified, multinational corporation might be to rank in the top 10 % worldwide in compound rate of growth in earnings per share.
Goals are more specific statements of the achievements targeted for certain deadlines. At the corporate level these statements are likely to include such aspects as sales, profits, and EPS targets. Annual budgets constitute goals at all levels in the organization.
- Business planning and strategy —Business planning, leading to the formulation of business strategy, is the process of determining the scope of a division’s activities that will satisfy a broad consumer need, of deciding on the division’s objectives in its defined area of operations, and of establishing the policies adopted to attain those objectives. Strategy formulation involves selecting division objectives and goals and establishing the charter of the business, after delineating the scope of its operations vis-à-vis markets, geographical areas, and/or technology.
Thus, while the scope of business planning covers a quite homogeneous set of activities, corporate planning focuses on the portfolio of the divisions’ businesses. Corporate planning addresses matters relevant to the range of activities and evaluates proposed changes in one business in terms of its effects on the composition of the entire portfolio.
- Functional planning and strategy —In functional planning, the departments develop a set of feasible action programs to implement division strategy, while the division selects—in the light of its objectives—the subset of programs to be executed and coordinates the action programs of the functional departments. Strategy formulation involves selecting objectives and goals for each functional area (marketing, production, finance, research, and so on) and determining the nature and sequence of actions to be taken by each area to achieve its objectives and goals. Programs are the building blocks of the strategic functional plans.
Obviously, these levels of strategy impinge on each other to some extent—for example, the corporation’s choice of business areas overlaps the scope of division charters, and the delineation of the markets by the division can dictate, at the department level, the choice of strategy in the marketing function. But the distinction remains valid and useful.
An important point to note about the planning process is that it requires formal interaction among the managers at different times. The more formal aspects—business planning, functional planning, and budgeting—are a way of organizing the interaction among managers at different levels in the hierarchy; one way of conceptualizing the planning process is as a series of meetings where executives are trying to arrive at decisions about actions to be taken. In each meeting, obviously, the basic question being addressed is the same: “What should we do?”
A detailed answer to that question is best developed by breaking it into a series of more specific questions dealt with in several meetings. These questions include: What are the objectives and goals of our company? What sort of environment can we expect to operate in? What businesses are we in? What alternative strategies could we pursue in those businesses? What other businesses should we enter? Should we make entry through an acquisition or through our research? What is the best combination of existing and new businesses to achieve corporate goals? What programs should the divisions undertake? What should each division’s operating budget be?
The series of agreements among individuals in the corporate hierarchy begin on a very broad level and then are framed in progressively more detailed terms. The options are numerous in the early stages of this ordering process but narrow gradually to the final choice: a set of specific goals (budgets) for each responsibility center in the corporation. Initially, only a small group of corporate executives is involved in the process; later, more and more managers at lower levels become involved. The process eventually engages all the managers who must be committed to making the strategy work.
The reason companies adopt a complex planning process such as that shown in Exhibit II is made clear by the example of a multibillion-dollar, diversified corporation, headquartered in Europe and multinational, which had a well-established budgeting process but found “negotiating” the final budget in the closing months of each year to be difficult. The company was divisionalized, but it had decentralized very little initiative for examining strategic options.
Exhibit II Steps in the planning process
Top management, increasingly uneasy over its ability to resolve all the strategic issues implicit in the budget, decided to ask the divisions to prepare formal five-year plans for its approval before drawing up the final corporate budget. The controller’s department was to coordinate the preparation of the detailed plans. The company moved from a one-cycle planning system to a two-cycle system, as shown in Exhibit III. The result was a flood of paper work and very little strategic thinking on the division managers’ part.
Exhibit III Examples of one-, two-, and three-cycle planning processes
When top management reviewed the first set of five-year plans—a 20-pound packet of neat notebooks—it decided the results were unacceptable. It made suggestions to the divisions and requested a new set. This process was repeated no fewer than five times during the summer and early fall before all sides reached agreement and the budgeting could proceed.
After this experience corporate management agreed that the procedure needed much improvement. So in the following year the company installed a three-cycle system. The first step required no comprehensive financial projections; instead, each division manager was asked to identify three or four strategic issues for presentation and discussion at headquarters. Agreement on those issues set the stage for orderly functional planning and budgeting, which had been so cumbersome before.
An important point to note about Exhibit II is its demarcation vertically, by cycles, and also horizontally, by activities at the three managerial levels. The degree of involvement at these levels is different in each planning cycle.
In the first cycle, corporate executives and division managers are primarily involved. A division manager draws his functional subordinates into discussions about the unit’s strategy, but the functional managers’ role usually remains informal. At this point the division manager regards the strategy as “his”; then, seeking the head office’s endorsement, he formalizes it for better communication.
Once the division’s strategy is set, the second cycle begins; here functional managers play a much more important part. In both that cycle and the budgeting cycle, they have the primary responsibility for developing detailed programs and budgets. The division manager and his staff are involved more or less actively in these two cycles, while top management limits itself to a review of division proposals.
Exhibit II, of course, makes no pretense of depicting the planning process as it is universally practiced; it is only illustrative. Nor is the process as neat and orderly as it appears here. For one reason, the process does not start from scratch each year; the previous year’s efforts feed into the first cycle. Moreover, while managers plan, the world keeps turning; so during a cycle events may oblige them to hold many meetings involving two levels.
The first cycle of a formal planning process serves a dual purpose: (1) to develop a tentative set of agreements between corporate management and the division managers about overall strategy and goals, and thereby (2) to provide focus for the more detailed planning in the next cycle. The process of reaching these initial agreements requires three discrete activities: establishing corporate objectives, drawing up division charters, and setting corporate goals. The ensuing discussion centers on these activities in a hypothetical (but representative) corporation whose fiscal year corresponds with the calendar year.
Establishing Corporate Objectives
In the initial dialogue between corporate and division management—starting in early February—the two groups form a statement of the corporation’s purpose and objectives. Naturally, its scope and the degree of detail provided vary greatly from one company to another. Company X prepares a detailed statement, starting this year with the general assertion that it is a “systems-oriented, high-technology, multinational, and socially conscious company.”
The principles set out mainly for strategic planning include breakthrough strategies (such as “seek projects, internal or external, waiting for application rather than invention”), resource management (such as “continuous emphasis on market orientation as opposed to product orientation”), financing (“utilization of the borrowing power of subsidiaries to escape the provisions of the debentures and foreign investment regulations”), public relations (“genuine concern for the quality of life, inside and outside the company”), acquisitions, joint ventures, licensing (“export and import technology in the form of licenses or joint ventures, including third countries”), and so on.
The preparation of such a statement gives division managers guidance as they begin strategic planning for their businesses. So as a minimum the statement must include the intended company policies for allocating resources among the divisions. In effect, such policies constitute a statement of strategy for the entire corporation—although many businessmen are uncomfortable using the term “strategy” in such an abstract sense. Therefore, the delineation of an explicit statement of corporate strategy is often deferred until the final step in the first cycle.
Whether corporate strategy should be enunciated early or late in the planning process depends primarily on the degree of diversity in the company’s businesses. In general, the more diverse the corporation, the less feasible it is to develop an explicit, cohesive strategy for its businesses and, therefore, the more desirable it is to make the resource allocation policies explicit at an early stage. On the other hand, less diversified companies frequently delay preparing a strategy statement until the division heads have developed strategic proposals for their own businesses. Many large corporations are divisionalized, but not so many are highly diversified. The more common practice is to delay the definition (or redefinition) of corporate strategy until it can be stated in fairly explicit terms.
Drawing Up Division Charters
In mid-March headquarters calls on each division manager to (a) write or review the “charter” of his division, specifying the scope of its activities and his objectives for the business as he defines it, and (b) propose a strategy for the business and a tentative set of goals for the coming year.
Giving the initiative to the division manager at this step challenges him to think strategically about the scope of his activities and then propose a charter broad enough to permit him to contribute significantly to achieving corporate objectives. Formalizing this step in the planning process is an important device by which corporate management widens the horizons of division heads. An explicit charter also serves two secondary purposes: (1) it increases the likelihood of clear agreement between the top executives and the division manager about the scope of his activities, and (2) it reduces the risk of redundant efforts or competition between divisions.
Establishing a division’s charter is not a discrete activity; it is inextricably connected to the task of identification and analysis of alternative strategies that exploit the charter selected. Obviously, the decision based on this analysis is crucial because the long-term performance of any division is a function of the strategy it adopts, and the performance of the company as a whole is likewise a function of the strategies of its particular businesses.
Although the initiative for identifying and analyzing strategic options lies with the division manager, guidelines that headquarters gives him for presentation of his proposals affect the way he pursues the task. Increasingly common is a request by corporate management that when he proposes a strategy and specifies goals, at the same time he also present a statement of the alternative strategies which he has evaluated and rejected. The intent is not to permit the head office to second-guess the division manager’s thinking, but to ensure that he used strategic thinking in arriving at his recommendations.
In mid-May, four to ten weeks after headquarters presents its request for division proposals, the unit’s manager presents his recommendations to the corporate management group. The presentation consists at least of an integrated proposal for the division’s charter, its objectives, the strategy to be pursued, and tentative goals. The recommendations may also include a general statement of the action programs that would be developed to implement the strategy (developed in more detail in the second cycle) and a crude estimate of the resources that would be required. Detailed financial data are usually not included at this step because such information is not necessary to evaluate the strategy and because the effort of preparing it may go to waste if the recommendations are modified.
In the ensuing discussions, which extend over several meetings in late spring, corporate management and each division chief work toward reaching an agreement about the appropriate division strategy and goals.
Setting Corporate Goals
By the middle of June top management has prepared an explicit statement of corporate strategy and goals. In some companies this document is, in effect, a set of decisions on how resources are to be allocated among the divisions, as well as a forecast of the results expected from each. In most cases, however, the statement is not intended to constitute a final resource allocation decision; rather, it is designed to provide feedback to the division managers about the corporate implications of the agreed-on business strategies. The presentation and discussion of corporate strategy and goals are also commonly used as a device to initiate the second cycle of the planning process.
The sum of the recommended division goals is likely to be inadequate to achieve the goals envisioned by headquarters for the entire organization. In trying to close this “planning gap,” corporate management has only three choices:
1. It can improve division performance by pressing, during the review of division recommendations, for more aggressive strategies and more ambitious goals.
2. It can divert company resources into more promising businesses. This move may give rise to an acquisition program.
3. It can decide that the corporate goals are unrealistic and scale them down.
The fact that the corporation’s goals normally are more or less the sum of those division goals sought by top management implies that headquarters is concerned with rather minor adjustments of this portfolio of goals. If so, the first cycle of formal planning has the salutary effect of providing an annual “mid-course correction” to the trajectory of the combined businesses. Momentum is a factor in the continued success of a diversified corporation—as with a rocket headed for the moon—and a wise chief executive does not dissipate it needlessly. Rather, he nudges the bundle of energies represented by his division managers, trying to make minor adjustments early enough to be nondisruptive and at the same time affect the corporation’s position several years ahead.
Occasionally—perhaps inevitably—a major corporate shift is necessary, affecting one of its businesses. Care must be taken to isolate the effect on the remaining businesses. In late spring a couple of years ago, for example, top management of a major diversified corporation went through its usual review of division strategic plans. One operation, created to develop a substantial new business for the corporation, presented its usual story: “Buying market share in this high-technology business is very expensive, break-even is still two or three years away, and additional investment of several hundred million dollars is required. But the eventual profits will be enormous.”
The division’s management concluded that it was progressing about as expected and that its strategy was sound, and it recommended continued aggressive investment. With minor modifications, top management approved the proposal. Three months later the company abruptly announced that the business would be discontinued and the investment written off.
Poor planning? Obviously, the decision to enter the business was a mistake. But implementation of that decision, and the planning done to minimize the investment exposure without compromising the chances for success, were probably sound. There are two important lessons here about the process of corporate planning:
1. Strategic decisions—like this divestment—are not made in accordance with some precise timetable. They are made whenever top management reaches the conclusion that interference in a unit’s affairs is necessary.
2. Formal planning procedures are not intended to facilitate strategic decisions such as this—if only because a division manager rarely recommends the disposal of his operation. Rather, formal corporate strategic planning has the more modest, if no less crucial, purpose of seeking to optimize the collective thrust of the continuing businesses.
Approving a division’s strategic plan but closing the unit three months later is not hypocrisy or poor planning. The ax is much more merciful than the slow strangulation of providing inadequate resources. In the meantime, until the ax falls, division management must prove the viability of its business. For its part, headquarters must not fail to recognize the difference between a sound plan and a sound business. A sound plan deserves approval, but only top management can decide whether the business is sound enough to continue implementation of that plan.
The second planning cycle also has two purposes. First, each division head and his functional subordinates should reach tentative agreement on the action programs to be implemented over the next few years. Second, the involvement of functional managers in the long-range planning process should deepen and sharpen the strategic focus of the business and thus provide a better basis for the even more detailed budgeting task to follow.
The division manager in Company X initiates the functional planning process in the middle of June after reaching tentative agreement with top management about his organization’s charter, objectives, strategy, and goals. In the first planning meeting with subordinates, he briefly reviews the corporate/division dialogue that has just concluded and describes the approved division objectives and strategy.
At this time he usually does not make explicit the sales or profit goals, even though tentative agreement on targets has been reached. There are two reasons for dealing in generalities at this point. First, being specific might constrain the thinking of the functional managers, who have the chance in this cycle to make a creative contribution toward achieving the division’s objectives. Second, division goals will become final only when corporate management has approved the unit’s programs and allocated resources to implement them.
Long-range planning by functional managers is conceptually a simple process, being limited by the tentative agreements reached in the first cycle. It is operationally more complex than the planning activity in the first cycle, however, since it requires substantially more detailed plans and involves many more people. The purpose of such “programming”—so called because the activity focuses on specific programs—is to translate the division’s externally oriented business strategy into an internally directed, coordinated set of activities designed to implement it. Inasmuch as the resources available for implementation are always limited, programming must help ensure their optimal use.
Obviously, the scope, magnitude, and duration of a program depend on the nature of the goal. In the broadest sense, a product division of a diversified corporation might be conceived of as a “program.” The division manager’s goal may be stated in simple financial terms and extend over several years, and his discretion may be constrained only by a charter for his product line and the availability of corporate resources. In such a situation, the division program may be international in scope, almost unlimited in breadth of product line, and may involve hundreds of millions of dollars in expenditures. At the other end of the spectrum, the sales manager for a district in the northeast region of that division may have been charged with improving market penetration by 10 % over the next 18 months. His actions also fulfill the definition of a program.
The need to formalize the programming process grows as functional interdependence in the business increases and as more time is required to evaluate the effectiveness of alternative functional plans. Formalization is designed to improve the specification of programs and the matching of programs and goals.
The charter and strategy for the business and the objectives and goals that top management has set for it limit the functional manager’s strategic planning. Within those constraints, however, he may still enjoy very broad discretion concerning the best course to take. His challenge is to devise more effective ways to combine the available resources in order to achieve his goals. A useful way to look at the specification of programs is in terms of the chronology for involvement of the functional departments. In a typical manufacturing enterprise there are four types of programs to be developed:
- Existing revenue programs. An example is the development of a set of marketing programs for the existing product lines.
- New revenue programs. Planning the development and introduction of new products is an example.
- Manufacturing programs. Typically, sales forecasts by product line are furnished to the manufacturing function, which develops the programs necessary to meet the revenue goals in the marketing programs.
- Support programs. Managers of other functional support activities, such as administration, may also get involved in the development of programs.
The programming process, even when formalized, is inevitably haphazard because it requires repeated interaction among the departments. The intended result is a plan that is integrated like the two sides of a coin. On one side is the set of action programs and on the other a coordinated statement of the resources needed by each functional manager to execute his part of the program.
A major purpose of the formal programming process is to review the ongoing programs to see whether they can be expected to fulfill the goals for which they were designed. Or, if more effective programs have been devised, the existing ones must be modified or discontinued. At the same time, some “old” programs may be nearing completion, and new ones will need approval if the goals are to be met. Programming also involves coordination of functional activities to ensure that the selected programs can be implemented efficiently. Each functional department must understand the implications of a set of programs for its own activities, and the department manager must accept the tasks assigned him and the resources to be made available to him.
In our mythical Company X, after much analysis and discussion the division manager and his functional subordinates finally agree by the end of August on a set of programs to recommend to headquarters. This time, in contrast to the first, a more elaborate presentation is in order and a large number of managers—corporate and division, line and staff—may attend.
The third cycle of the formal planning process needs little explanation. Naturally, throughout the planning process top managers and division executives often discuss the allocation of resources among the divisions. But it becomes the focus of attention in the last step of the second cycle, when the divisions have completed their program proposals and sent them to the head office for approval. At this point (mid-September at Company X), decisions on allocation of resources can be made, subject to final approval when the detailed budgets are submitted (in mid-November). These general points are worth making here:
- Resource allocation is almost always a very informal, unstructured process, heavily dependent on the skill in advocacy and political weight of the executives concerned. Since it is also a continuous process, by the end of the second cycle the risk of serious mismatch between programs and resources is unlikely—if headquarters/division communications have been good.
- Although programs may have an expected life of several years, resources are usually allocated for only one year at a time. Whether top management will make a commitment to meet next year’s needs will depend on the scale and timing flexibility of the program in the competition for resources.
- Although resource allocation to projects is based on a perception of the desirability of each, corporate planning attempts to ensure that each also fits into a portfolio of undertakings.
Raising the Odds
The formal long-range planning process in large, diversified corporations is both simple and complex. Conceptually, the process is very simple—a progressive narrowing of strategic choices—although it may involve many steps along that path. Operationally, the process is far more complex than the activities we have described because the formal part of the process is only the tip of the iceberg. Good strategic planning can take place only when qualified managers engage in creative thinking—and creativity, by definition, cannot be produced on a schedule.
Yet there is little doubt that formalizing the planning process is worthwhile; it ensures that managers at all levels will devote some time to strategic thinking, and it guarantees each of them an audience for his ideas. While formal strategic planning cannot guarantee good ideas, it can increase the odds sufficiently to yield a handsome payoff.
- RV Mr. Vancil is professor of business administration at the Harvard Business School and chairman of its Control Area faculty. His most recent HBR article was “Inflation Accounting—The Great Controversy” (March–April 1976). His book, Strategic Planning Systems, will be published next January by Prentice-Hall.
- PL Peter Lorange is the president of IMD International in Lausanne, Switzerland, where he is also a professor of strategy and holds the Nestlé Chair.
- CIO strategy
- Stephen J. Bigelow, Senior Technology Editor
- Mary K. Pratt
What is strategic planning?
Strategic planning is a process in which an organization's leaders define their vision for the future and identify their organization's goals and objectives. The process includes establishing the sequence in which those goals should be realized so that the organization can reach its stated vision.
Strategic planning typically represents mid- to long-term goals with a life span of three to five years, though it can go longer. This is different than business planning, which typically focuses on short-term, tactical goals, such as how a budget is divided up. The time covered by a business plan can range from several months to several years.
The product of strategic planning is a strategic plan. It is often reflected in a plan document or other media. These plans can be easily shared, understood and followed by various people including employees, customers, business partners and investors.
Organizations conduct strategic planning periodically to consider the effect of changing business, industry, legal and regulatory conditions . A strategic plan may be updated and revised at that time to reflect any strategic changes.
Why is strategic planning important?
Businesses need direction and organizational goals to work toward. Strategic planning offers that type of guidance. Essentially, a strategic plan is a roadmap to get to business goals. Without such guidance, there is no way to tell whether a business is on track to reach its goals.
The following four aspects of strategy development are worth attention:
- The mission. Strategic planning starts with a mission that offers a company a sense of purpose and direction. The organization's mission statement describes who it is, what it does and where it wants to go. Missions are typically broad but actionable. For example, a business in the education industry might seek to be a leader in online virtual educational tools and services.
- The goals. Strategic planning involves selecting goals. Most planning uses SMART goals -- specific, measurable, achievable, realistic and time-bound -- or other objectively measurable goals. Measurable goals are important because they enable business leaders to determine how well the business is performing against goals and the overall mission. Goal setting for the fictitious educational business might include releasing the first version of a virtual classroom platform within two years or increasing sales of an existing tool by 30% in the next year.
- Alignment with short-term goals. Strategic planning relates directly to short-term, tactical business planning and can help business leaders with everyday decision-making that better aligns with business strategy. For the fictitious educational business, leaders might choose to make strategic investments in communication and collaboration technologies, such as virtual classroom software and services but decline opportunities to establish physical classroom facilities.
- Evaluation and revision. Strategic planning helps business leaders periodically evaluate progress against the plan and make changes or adjustments in response to changing conditions. For example, a business may seek a global presence, but legal and regulatory restrictions could emerge that affect its ability to operate in certain geographic regions. As result, business leaders might have to revise the strategic plan to redefine objectives or change progress metrics.
What are the steps in the strategic planning process?
There are myriad different ways to approach strategic planning depending on the type of business and the granularity required. Most strategic planning cycles can be summarized in these five steps:
Identify. A strategic planning cycle starts with the determination of a business's current strategic position. This is where stakeholders use the existing strategic plan -- including the mission statement and long-term strategic goals -- to perform assessments of the business and its environment. These assessments can include a needs assessment or a SWOT (strengths, weaknesses, opportunities and threats) analysis to understand the state of the business and the path ahead.
Prioritize. Next, strategic planners set objectives and initiatives that line up with the company mission and goals and will move the business toward achieving its goals. There may be many potential goals, so planning prioritizes the most important, relevant and urgent ones. Goals may include a consideration of resource requirements -- such as budgets and equipment -- and they often involve a timeline and business metrics or KPIs for measuring progress.
Develop. This is the main thrust of strategic planning in which stakeholders collaborate to formulate the steps or tactics necessary to attain a stated strategic objective. This may involve creating numerous short-term tactical business plans that fit into the overarching strategy. Stakeholders involved in plan development use various tools such as a strategy map to help visualize and tweak the plan. Developing the plan may involve cost and opportunity tradeoffs that reflect business priorities. Developers may reject some initiatives if they don't support the long-term strategy.
Implement. Once the strategic plan is developed, it's time to put it in motion. This requires clear communication across the organization to set responsibilities, make investments, adjust policies and processes, and establish measurement and reporting. Implementation typically includes strategic management with regular strategic reviews to ensure that plans stay on track.
Update. A strategic plan is periodically reviewed and revised to adjust priorities and reevaluate goals as business conditions change and new opportunities emerge. Quick reviews of metrics can happen quarterly, and adjustments to the strategic plan can occur annually. Stakeholders may use balanced scorecards and other tools to assess performance against goals.
Who does the strategic planning in a business?
A committee typically leads the strategic planning process. Planning experts recommend the committee include representatives from all areas within the enterprise and work in an open and transparent way where information is documented from start to finish.
The committee researches and gathers the information needed to understand the organization's current status and factors that will affect it in the future. The committee should solicit input and feedback to validate or challenge its assessment of the information.
The committee can opt to use one of many methodologies or strategic frameworks that have been developed to guide leaders through this process. These methodologies take the committee through a series of steps that include an analysis or assessment, strategy formulation, and the articulation and communication of the actions needed to move the organization toward its strategic vision.
The committee creates benchmarks that will enable the organization to determine how well it is performing against its goals as it implements the strategic plan. The planning process should also identify which executives are accountable for ensuring that benchmarking activities take place at planned times and that specific objectives are met.
How often should strategic planning be done?
There are no uniform requirements to dictate the frequency of a strategic planning cycle. However, there are common approaches.
- Quarterly reviews. Once a quarter is usually a convenient time frame to revisit assumptions made in the planning process and gauge progress by checking metrics against the plan.
- Annual reviews. A yearly review lets business leaders assess metrics for the previous four quarters and make informed adjustments to the plan.
Timetables are always subject to change. Timing should be flexible and tailored to the needs of a company. For example, a startup in a dynamic industry might revisit its strategic plan monthly. A mature business in a well-established industry might opt to revisit the plan less frequently.
Types of strategic plans
Strategic planning activities typically focus on three areas: business, corporate or functional. They break out as follows:
- Business. A business-centric strategic plan focuses on the competitive aspects of the organization -- creating competitive advantages and opportunities for growth. These plans adopt a mission evaluating the external business environment, setting goals, and allocating financial, human and technological resources to meet those goals. This is the typical strategic plan and the main focus of this article.
- Corporate. A corporate-centric plan defines how the company works. It focuses on organizing and aligning the structure of the business, its policies and processes and its senior leadership to meet desired goals. For example, the management of a research and development skunkworks might be structured to function dynamically and on an ad hoc basis. It would look different from the management team in finance or HR.
- Functional. Function-centric strategic plans fit within corporate-level strategies and provide a granular examination of specific departments or segments such as marketing, HR, finance and development. Functional plans focus on policy and process -- such as security and compliance -- while setting budgets and resource allocations.
In most cases, a strategic plan will involve elements of all three focus areas. But the plan may lean toward one focus area depending on the needs and type of business
What is strategic management?
Organizations that are best at aligning their actions with their strategic plans engage in strategic management. A strategic management process establishes ongoing practices to ensure that an organization's processes and resources support the strategic plan's mission and vision statement .
In simple terms, strategic management is the implementation of the strategy . As such, strategic management is sometimes referred to as strategy execution. Strategy execution involves identifying benchmarks, allocating financial and human resources and providing leadership to realize established goals.
Strategic management may involve a prescriptive or descriptive approach . A prescriptive approach focuses on how strategies should be created. It often uses an analytical approach -- such as SWOT or balanced scorecards -- to account for risks and opportunities. A descriptive approach focuses on how strategies should be implemented and typically relies on general guidelines or principles.
Given the similarities between strategic planning and strategic management, the two terms are sometimes used interchangeably.
What is a strategy map?
A strategy map is a planning tool or template used to help stakeholders visualize the complete strategy of a business as one interrelated graphic. These visualizations offer a powerful way for understanding and reviewing the cause-and-effect relationships among the elements of a business strategy.
While a map can be drawn in a number of ways, all strategy maps focus on four major business areas or categories: financial, customer, internal business processes (IBPs), and learning and growth. Goals sort into those four areas, and relationships or dependencies among those goals can be established.
For example, a strategy map might include a financial goal of reducing costs and an IBP goal to improve operational efficiency . These two goals are related and can help stakeholders understand that tasks such as improving operational workflows can reduce company costs and meet two elements of the strategic plan.
A strategy map can help translate overarching goals into an action plan and goals that can be aligned and implemented.
Strategy mapping can also help to identify strategic challenges that might not be obvious. For example, one learning and growth goal may be to increase employee expertise but that may expose unexpected challenges in employee retention and compensation, which affects cost reduction goals.
Benefits of strategic planning
Effective strategic planning has many benefits. It forces organizations to be aware of the future state of opportunities and challenges. It also forces them to anticipate risks and understand what resources will be needed to seize opportunities and overcome strategic issues.
Strategic planning also gives individuals a sense of direction and marshals them around a common mission. It creates standards and accountability. Strategic planning can enhance operational plans and efficiency. It also helps organizations limit time spent on crisis management , where they're reacting to unexpected changes that they failed to anticipate and prepare for.
Information technology is a key part of developing an effective strategic plan. Look at these six free IT strategic planning templates that can help make IT a driving force in a business.
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7 Proven Strategies for Launching a Successful Ecommerce Business
Whether you're planning to set up a dropshipping business or intending to develop, produce, and sell products, having the right knowledge about creating a successful ecommerce business is imperative. Discover the 7 proven strategies you need to know to launch and grow your online business faster and easier.
By Christina-Lauren Pollack • Mar 2, 2023
Opinions expressed by Entrepreneur contributors are their own.
If you aspire to be a successful entrepreneur in today's digital landscape, having an online presence is essential. Whether you're planning to set up a dropshipping business or intend to develop, produce and sell products, having the proper knowledge about setting up your business for success is imperative.
As an entrepreneur and executive with a background in manufacturing consumer goods, distributing products globally through mass retailers (like Walmart, Dollar Tree, etc), and building ecommerce businesses , I have 20 years of experience creating, launching and growing brands as well as advising entrepreneurs through my coaching business, Inspiring Brands Academy .
To help get your ecommerce business off the ground and running, here are seven proven strategies for launching a successful ecommerce business.
Step 1: Start with a clear business plan
If you plan to launch an ecommerce business, your roadmap for success must be laid out in a business plan . Here's an overview of the fundamentals that must be contemplated.
Executive summary — The executive summary should explain your company's purpose and vision, mission statement, target market audience, products or services offered and desired goals. Additionally, the overview should include information about key members of the team as well as financial estimates and any funding requirements.
Market analysis — The market analysis should describe your target customer, including demographics, actions, purchasing preferences, etc. Additionally, research competing businesses, uncovering their strengths while noting any disadvantages.
Product and service description — This section should provide an in-depth overview of all features, advantages and benefits to customers. Additionally, include details about the process used to develop products and any associated intellectual property.
Marketing and sales strategy — This part of your plan should detail how you will market and sell your product or service. Include pricing strategies to maximize profits, cost-effective distribution methods and promotional techniques such as advertising campaigns or loyalty programs.
Related: 3 Digital Marketing Strategies That Will Save You 20 Hours Every Week
Operations plan — Your business plan should include a fifth section dedicated to your operations strategy. This section should explain how you will manufacture products, organize logistics and manage customer service. Furthermore, details about who is on your team and any collaboration with vendors or partners should also be included.
The great aspect of an ecommerce business is that you can use website plugins or apps to easily integrate with your facilities, such as third-party warehouses that ship orders on your company's behalf and logistics programs. For example, one of my businesses, a photography print company, uses Etsy to sell products. Since I utilize a print-on-demand facility, when a customer places an order, it gets sent directly to my printing facility, producing and fulfilling the shipment.
Bottom line: I don't have to do anything other than market the business. This is a major benefit of using technology and systems to integrate so that it makes the scalability of your operation faster and easier.
Financial projections — The final section of your business plan should be the financial projections. This should provide a detailed forecast of your revenue and expenses, including your income statement, balance sheet, and cash flow statement. You should also include information about your funding needs and any potential sources of financing.
Related: 5 Ways To Fund Your Startup As A Solopreneur
Step 2: Choose the right platform
Having drawn up a comprehensive business plan, the next logical step is to select an appropriate ecommerce platform to run your online business. It is important to evaluate all your options when selecting an ecommerce platform. Though Shopify , WooCommerce and Magento (now known as Adobe Commerce) are popular choices, each has unique advantages and drawbacks. Evaluate your company's needs and wishes, and compare various platforms to decide which ecommerce platform is ideal for your online business.
Related: 10 Tools to Help Your eCommerce Business Get off the Ground
Step 3: Invest in a strong brand
Crafting a powerful brand is pivotal for any ecommerce business if you want to stand out from your rivals and acquire steadfast customers. Here are tips to get you started.
- Define your brand identity — Developing a solid brand for your ecommerce business begins with articulating your unique identity . Your company's image will be expressed to the public through its name, logo, color palette, tone of voice and other visuals/words.
- Conduct market research — Market studies help you acquire invaluable insights into your target customers — including their desires, preferences, and difficulties. This helps you craft an impactful brand that resonates with consumers and distinguishes itself from other competitors.
- Create your logo — Your logo is the centerpiece of your brand identity. You can hire a freelance graphic designer on platforms like Fiverr or Upwork to create a professional logo for your business or use online tools like Canva to design your logo.
- Choose your color scheme — When constructing your ecommerce brand, selecting a color scheme is one of the most important decisions you'll make. Your chosen colors should encompass and echo your company's values and attract potential customers.
- Develop your tone of voice — Your tone of voice is the key to connecting with your target customers. When crafting it, make sure that you reflect your brand's mission, values, and intended audience.
- Design your website — Your website is the nucleus of your ecommerce business, which should accurately present your brand's image and deliver a seamless experience for potential customers.
Step 4: Focus on search engine optimization (SEO)
If your goal is to attract more leads and customers, you need search engine optimization (SEO). Optimizing your website for higher rankings on SERPs allows potential visitors to quickly find what they're looking for when searching with keywords related to your business. To achieve this success, focus on developing compelling content that people want to read and share. Keyword optimizes the pages of your website and earns high-quality backlinks from authoritative websites.
Step 5: Use social media to your advantage
Leverage the power of social media (like TikTok, Instagram, etc.) to promote your ecommerce business and reach potential customers. Establishing a strong presence on platforms where your target audience is active will help you develop brand recognition, generate leads, and drive website traffic.
Related: Why Social Media Platforms Are Adopting Ecommerce as a Saving Grace
Step 6: Leverage influencer marketing
Another great way to grow your company is to use influencer marketing . All you need is to uncover influential figures in your niche that fit with what you are trying to promote and reach out with a clever partnership offer.
I've worked with hundreds of leading brands and retailers on sponsored campaigns, helping them drive brand awareness and boost product sales. Given my experience as an influencer, I've not only assisted brands around the world, but I've also learned how to tap into this knowledge to benefit my own companies and small businesses through influencer marketing strategies that result in viral content (1M+ views) and driving massive brand awareness for national product launches.
To make the most out of influencer marketing, consider these key steps:
- Uncover your industry's key influencers and bloggers whose readership aligns with your target demographic. You can explore them on social media networks or employ an influencer platform (like AspireIQ or TapInfluence).
- Contact the influencers with a proposal explaining what you want them to complete for you, including prompt deliverables, deadlines and payment.
- Gauge the efficacy of your influencer initiatives. ROI goes above and beyond sales conversions, extending into audience-building, brand awareness, engagement and other metrics and factors.
Step 7: Focus on customer service
When launching an ecommerce business, providing superior customer service is paramount. Promptly reply to inquiries and criticisms professionally, offer precise product information and give customers easy return options. If you provide them with a great customer experience, they're more apt to rave (rather than rant) about your company.
Ultimately, launching a profitable ecommerce business necessitates thoughtful preparation and well-executed strategies. Utilizing these seven proven strategies for launching a successful ecommerce business will help you launch and grow your business more easily and quickly.
Entrepreneur Leadership Network Contributor
Entrepreneur, Executive, Influencer & Business Branding Coach
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Strategic Planning Consultant
Strategic planning is important for small businesses to achieve their goals and compete in the market. It involves setting long-term objectives, developing strategies to achieve them, and implementing action plans to execute those strategies. Small businesses can use strategic planning to identify their strengths, weaknesses, opportunities, and threats, and develop plans to address them. This helps businesses make informed decisions, allocate resources effectively, and adapt to changes in the marketplace. Ultimately, strategic planning can help businesses improve their performance and achieve sustainable growth.
How Strategic Planning Consultants Help
A strategic planning consultant assists companies in developing and executing a strategic plan. They can provide objective insights and expertise to help a company identify their strengths and weaknesses, assess the market and competition, and formulate a plan to achieve its goals.
Some ways in which a strategic business consultant can assist companies:
- Facilitating strategic plan workshops and sessions
- Conducting market and industry research
- Analyzing company data and financials
- Developing a SWOT analysis
- Creating a strategic plan document and action plan
- Providing guidance and support during plan execution and implementation
- Monitoring progress and adjusting the plan as needed
Overall, a strategic planning consultant can bring a fresh perspective and outside expertise to the company’s strategic planning process, helping the company to develop a clear, achievable, and effective plan for success.
What is a strategy map?
A strategy map is a planning tool or template used to help stakeholders visualize the complete strategy of a business as one interrelated graphic. These visualizations offer a powerful way for understanding and reviewing the cause-and-effect relationships among the elements of a business strategy.
While a map can be drawn in a number of ways, all strategy maps focus on four major business areas or categories: financial, customer, internal business processes (IBPs), and learning and growth. Goals sort into those four areas, and relationships or dependencies among those goals can be established.
For example, a strategy map might include a financial goal of reducing costs and an IBP goal to improve operational efficiency. These two goals are related and can help stakeholders understand that tasks such as improving operational workflows can reduce company costs and meet two elements of the strategic plan.
A strategy map can help translate overarching goals into an action plan and goals that can be aligned and implemented.
Strategy mapping can also help to identify strategic challenges that might not be obvious. For example, one learning and growth goal may be to increase employee expertise but that may expose unexpected challenges in employee retention and compensation, which affects cost reduction goals.
What Are Key Strategic Goals and Objectives?
“Goals” and “objectives” are two interchangeable words that mean almost the exact same thing and could be used in the same way. However, there are some important differences between the two: Goals are long-term, general, and achievable. Objectives, on the other hand, are specific and measurable.
Strategic goals are the specific financial and non-financial target and outcome a company aims to accomplish over a specific period of time, usually the next three to five years.
Strategic objectives are purpose statements that help shape an overall vision and set goals and measurable steps for a company to help achieve the desired results. A strategic objective is most effective when it is measurable either by analytics or observable data.
A business that is set to success develops strategic objectives to advance the company vision, align company goals and drive decisions that impact daily productivity from the top levels of the organization to all other employees.
The Top Strategic Planning Firms on Earth
There are many strategic planning firms around the world, and the “top” firms can vary depending on factors such as industry focus, geographic reach, and the specific services offered. Here are some of the well-known strategic planning firms based on various factors:
McKinsey & Company – One of the largest and most well-known strategic consulting firms globally, with a focus on a wide range of industries.
Boston Consulting Group (BCG) – Known for its expertise in strategy consulting, with a focus on topics such as growth, innovation, and digital transformation.
Bain & Company – Specializes in strategy consulting, with a focus on private equity, M&A, and corporate renewal.
Deloitte – One of the “Big Four” accounting and consulting firms, providing a wide range of strategic planning services.
PwC – Another “Big Four” accounting and consulting firm, providing strategic planning services such as growth strategy, mergers and acquisitions, and digital transformation.
Accenture – A global consulting firm with expertise in digital, technology, and operations consulting, providing strategic planning services across a range of industries.
BSBCON – is one of the fastest growing consultancies, specializing in business plan writing, strategy consulting, financial forecasting, pitch decks and SOPs.
Other firms that may also be considered among the top strategic planning firms include Oliver Wyman, Strategy&, EY-Parthenon, and Roland Berger.
What is strategic planning?
Strategic planning is important in identifying where your organization is going and how you are going to get there. It’s a process for every business, big and small.
A strategic plan describes who you are as a company and creates a clear direction to achieve your goals. When unforeseen events occur, a strategic plan helps find new opportunities while staying firm to your values and mission.
On top of that, creating a strategic plan is a company’s team-development exercise that can unite employees and improve how they communicate.
What is a strategic planning consultant?
A strategic planning consultant helps organizations to perform efficiently by leading them towards the best use of company resources, while achieving its mission, goals and objectives through a structured approach.
It is so crucial for businesses to know where they stand, realize their path of success, and be able to strategically determine the course of action to reach there. A growth-oriented business clearly identifies specific processes that are preventing it, and identifies areas that need improvement. A strategic planning expert can help explore the available options and to work with the business to work out a comprehensive, achievable, and profitable course of action at minimal risk.
The strategic planning consultant also helps to set direct progressive plans, improve employees confidence and productivity, and develops future business strategies that aim at achieving company long-term goals. For better strategic planning, design, implementation, and performance management, you need an experienced consultant to manage your strategic planning needs to establish growth and sustainability.
What are the steps in the strategic planning process?
There is no single approach to creating a strategic plan, most approaches can be summarized to five overarching steps:
1. Define your vision Start with communicating the organization’s vision for the future then make a mission statement expressing organizational values and how you intend to reach the vision. A purpose-driven strategic goal sets forth the “why” of what the company is doing. It connects the vision statement to specific objectives.
2. Make a strategic assessment This stage includes analyzing an organization’s strategic position and gathering data from internal and external factors. One of the most common ways to conduct a comprehensive assessment is a SWOT analysis. The SWOT analysis is an exercise where you define the following:
- Strengths: What are the unique strengths of the business or its product? In what ways are you ahead?
- Weaknesses: What weaknesses can you identify in your product or service offering? How does your product or service compare to others in the marketplace?
- Opportunities: Are there areas for improvement that would help differentiate your business?
- Threats: Aside from weaknesses, are there existing potential threats to your initiative that could limit or prevent its success? How can those be assumed?
3. Determine your priorities and objectives After you have defined your vision and evaluated your current standing, you’ll be in a strong position to start organizing and ranking your priorities, and the specific objectives tied to those priorities.
4.Define methods and responsibilities
At this stage, it’s important to note that these may change over time, as you launch and gather initial data about your project. For this reasons it’s recommended that you:
- Develop a plan that has comprehensible benchmark for success
- Ensure that your plan is adaptable to shifting circumstances
- Outline clear roles and responsibilities, so it’s easy to amend a process or make small adjustments in a coordinated manner.
5. Manage, measure, and assess Before launching your plan, prepare a method to assess success or failure, so that everyone is well-oriented on progress and can agree to evaluate your initiative at regular intervals. Determine an interval so everyone can go over the results — this can take place weekly, monthly, or quarterly, depending on the nature of the project.
How often should you update a strategic plan?
There is no such thing as a universal strategic planning timeline. Whether you conduct a strategy facilitation every month, every quarter, or every few years, completing the document itself is less important than the purpose and process of strategic planning. Strategic planning is not a one-time or static event – it is recurring and requires ongoing strategic thinking. By understanding its purpose and process, you can ensure your company’s strategy is always updated and remains relevant in an ever-changing world.
Who does strategic planning in a business?
The company’s board of directors or management team commonly leads the strategic planning process. Strategic business consultants recommend the board of directors to get representatives from all departments within the business and work in an open and transparent way where information is documented from beginning to end.
The company’s board of directors gathers the information needed to understand the company’s current status and factors that will affect it in the future. The board of directors should solicit input and feedback to confirm or challenge its evaluation of the information.
They can choose to use one of many techniques or strategic plans that have been developed to guide leaders through this process. These techniques take the board through a series of steps that include an analysis or assessment, strategy formulation, and the articulation and communication of the actions needed to move the company toward its strategic vision.
How much should I pay for a strategic plan?
There is no absolute answer to this question as the price of preparing a strategic plan would really depend on the size and complexity of the company and the level and amount of data required. However, a rough estimate would be in the range of $8,500 – $100,000 USD.
Strategic plan creation should be considered as an investment rather than an expense. A well-executed strategy can help an organization achieve its goals and objectives, leading to increased profits and improved performance. Therefore, the benefits outweigh the price to pay for a strategic plan.
If you’re looking for help preparing a professional strategic plan, contact our strategic planning consultants today. Strategic planning is an essential process for any business, and a solid long-term investment.
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Factoring in your past, present, and future, our team of financial forecast consultants will guide you through the process of creating forward-looking projections. By understanding your business needs, we create financial projections that can aid in the identification of persistent issues that may arise in the future, find solutions and improve your company layer by layer.
A precise estimate will help determine whether (and by how much) your business will expand or contract. As a result, you can moderate your expectations and set goals which are practical.
Look no further if you want to find out how to create financial projections. Here are a few specific categories of drawing financials for a business plan that you should know of. Each of the following categories are included in our financial forecast services.
A key element of forecasting happens via income statement development, also known as the profit or loss statement. Here it illustrates how a business makes a profit or loss over time and how it forecasts future revenues, expenses and net earnings. The estimate in this statement is heavily reliant on budgets, and as such our team works directly with you to build custom financial projections.
Revenue, cost of goods sold (COGS), cost of sales, operating expenses, EBITDA, depreciation, amortisation, interest, and net income are all components of our completed financial forecasts for a business plan.
Cash Flow Statements
Cash Flow projections are made to evaluate your businesses cash position as you invest, pay dividends and grow year over year. Calculating your cash flow comes after creating your income statement. This starts with your cash position and includes the inflow and outflow of funds including dividend payments and the repayment of debt.
You can identify a future cash position for your business by calculating your income over a specific period and deducting expected and scheduled expenses. Businesses can then control their liquidity and determine if they will have the necessary cash to meet their debt obligations.
You may gain a more accurate insight into your company’s financial situation by using cash flow forecasting. In addition, you will be able to forecast if your business runs the risk of negative cash flow at any time in the future, which is inherently important for all responsible businesses to identify long before it ever potentially happens.
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A company’s financial health is often determined through its balance sheet. A balance sheet should be balanced between total assets and total liabilities + shareholders equity.
Assets in a balance sheet may include cash on hand, inventory, property, plant and equipment (PPE), prepaid expenses, accounts receivable and intangible assets including patents, copyrights and goodwill.
Liabilities in a balance sheet may include long-term debt owing, short-term debt owing, accounts payable, wages owed, sales taxes payable, or corporate taxes payable.
Shareholders equity in a balance sheet includes invested equity, and the cumulative sum of all retained earnings.
Financial Projection Services
Important financial parameters, including sales, income, and future revenues are anticipated in financial forecasting. These metrics are essential for financial activities like budgeting and overall financial planning. In the end, forecasting serves as a compass for your business, so you can mitigate challenges and steer your ship closer and closer to success.
If you are looking to work with America’s leading financial forecast consultants, contact us today. Our financial projection services will help you secure financing and become aware of potential challenges in the future, so you can mitigate them. Lets build custom financial projections for your business plan and get your startup, SMB or established business on the right track.
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A strategic plan is a tool to define your organization's goals and what actions you will take to achieve them. Typically, a strategic plan will include your company's vision and mission statements, your long-term goals (as well as short-term, yearly objectives), and an action plan of the steps you're going to take to move in the right direction.
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A strategic planning consultant assists companies in developing and executing a strategic plan. They can provide objective insights and expertise to help a company identify their strengths and weaknesses, assess the market and competition, and formulate a plan to achieve its goals. Some ways in which a strategic business consultant can assist ...
Massachusetts Institute of Technology
By Stephen MacLeod. - Reporter, Memphis Business Journal. Mar 3, 2023. The University of Memphis revealed its new strategic plan on March 1. The plan, which covers 2023-28, has seven objectives ...
• Informs transition planning for next generation management, leadership and ownership. The process of defining roles and responsibilities involves taking an inventory of all key tasks in the business. While this process can feel long and tedious, it is an important step to enable planning for a gradual transition of management and