Strategic Planning for a Business

Strategic Planning for a Business

How you will start your own business? Don’t have any idea? If you do so, it’s like you set a journey and you lost the way and never get your destination. So, what you need is a journey plan to aim your destination. Same like if you want start a business. Because success and survival in business depend greatly on the ability of an entity to plan and control business activities. What you need is a strategic planning. It is a fundamental and dynamic process that must commence with an entity having a thorough and complete understanding of where they wish to be in the market. An entity must determine the actual purpose of their existence and develop succinct vision and mission statement.  From such high order statement flow the mechanisms by which an entity would plan to achieve the target outcomes.

What if we have bad plans or lack of a plan of action?

This is the fundamental question that should be considered the outcome. In term of organizing a BBQ party it could be that the function does not have adequate condiments to address the flavour the sausages and in the case of a Clan in Western Province (PNG), failure to plan strategic food reserves such as Sago palm can be catastrophic in term of the outcome of a drought of the failure of the current season’s garden crops. Planning and strategy are interlinked. A classic text on strategy that remains relevant since it was produced around 500BC is Sun Tzu’s The Art of War and it has been adapted to a wide range of applications to provide structures for addressing a range of issue (it is required reading in many courses both military and civilian alike).

Let’s go deep with what is Strategic Planning is?

Business development and management should be supported by a range of plans and the most fundamental is the strategic plan. Strategic planning is an organizational planning process which usually results in the element as below:

The following outlines an overview of the elements of strategic planning

• ·   Vision statement: an aspirational description of what an organisation would like to achieve or accomplish in the mid-term or long-term, intended to serve as a clear guide for choosing current and future courses of action.
• ·    Mission statement: it is a succinct written declaration of a firm’s core purpose and focus which normally remain unchanged, whereas business strategy and practices may frequently be altered to adapt to the changing circumstance. It is used to communicate the firm’s purpose to all stakeholder groups (internal and external) and to guide employees in their contribution towards company success. A mission statement is different to a vision statement in that the former is the cause and the latter is the effect; a mission is something to be accomplished whereas a vision is something to be pursued for that accomplishment. Properly crafted mission statements serve as filters to:

o   Separate what is important from what is not

o   Clearly state which markets will be served and how

o   Communicate a sense of intended direction to the entire organisation

• ·     Goals: Summarized by the phrase “a dream with a deadline”, a goal is an observable and measurable end result having one or more objective to be achieved within a more or less fixed timeframe. In comparison, a purpose is an intention (internal motivation state) or mission. The question, “has the goal been achieved?” can always be answered with either “yes” or “no” whereas a purpose, is not achieved but instead is pursued every day.
• ·    Objectives: it is an end or outcome that can be reasonably achieved within an expected timeframe and with available resource. In general, an objective is broader in scope than a goal, and may consist of several individual goals. Objectives are basic tools underlying all planning and strategic activities that serve as basis for policy and performance appraisals, in particular when they include the development of specific Key Performance Indicators (KPI’s).
• ·    Situation analysis: an analysis is conducted of the key environmental variable in which a business operates:

o   PEST: an analysis in which Political-legal (e.g. government stability, spending, taxation, etc.); Economic (e.g. inflation, interest rates, unemployment, etc.); Socio-cultural (e.g. demographic, education, income distribution etc.); and Technological (e.g. knowledge generation, conversion of discoveries into products, rates of obsolescence, etc.) factors are examined to plan an organisation long-term plans.

o   SWOT: Strengths, Weakness, Opportunities and Threats (SWOT) analysis examines internal strengths and weakness of an organization and external opportunities and threats faced by it to plan an appropriate strategy.

• ·     Plans: A series of time based plans are required to be prepared with each supporting and reflecting the other:

o   Long-term plans: where an entity would like to be in greater than 5 years time

o   Medium-term plans: specific activities over 1- to  years

o   Annual plans: the activities to be undertaken over a 12 month period

• Monitoring and review: the monitoring and review process of supervising activities underway aims to ensure that they are progressing as expected and that they are on-schedule in meeting objectives and performance targets. Performance targets should be measurable and achievable and where the targets are assessed at other levels within an entity, the result should be available to the company stakeholders in a timely manner to provide immediate feedback to allow for corrective action.

Source of article: FMB by B.M.Jenkin