Explain the Strategic Planning Process?

Strategic planning is a continuous process that begins with the analysis of the situations faced by the organisation. Below are the steps involved in the strategic planning process –

I. Analysis – if we were to go on a long distance motorbike ride, we will check our capabilities as well as the place we are planning to travel. Similarly, analysis for Marketing planning involves analysing the organisations capabilities, economic conditions, competitors and customers to list out the strengths, weaknesses, threats and opportunities. (SWOT analysis)

II. Organisations mission and objectives – it refers to clearly laying out the purpose, responsibilities towards the market, product, organisations performance expectations and its stake holders. It also cover guidelines on its business strategy – human resources, research and development. Organisational mission refers to a long term commitment to a type of business as well as the place on the market. The mission statement gives direction to all the employees in an organisation towards a specified goal. Some mission statements of organisations-

Tata Information Systems: To be India’s most successful and most respected IT company.

Facebook: Facebooks mission is to give people the power to share and make the world more open and connected.

McKinsey & Co: To help business corporations and governments to be more successful.

Unilever: The mission of our company, as William Hasketh Lever saw it, is to make cleanliness commonplace, to lessen work for women, to foster health and to contribute to personal attractiveness, so that life may be more enjoyable for the people who use our products.

III. Business capabilities – it consists of different business activities within the organisation. An organisation enters a market with a particular product. When a company serves different markets with different products, it groups similar business functions to facilitate the planning. Basis this an organisation can do the following to expand its business-

a) Enter new markets with the same product,
b) Introduce new product in the existing market, or
c) Enter a new market with a new product (Diversification).

Understanding the business composition helps towards an effective business strategy.

IV. Establishing and Analysis of Strategic Business Units (SBU) – a Strategic Business Unit within an organisation performs all or most of the functions of serving a particular market.

Analyzing the past and present strategies of the SBU, the organisation does the SWOT analysis – determining the strengths, weaknesses, opportunities and threats.

Strengths and Weaknesses refer to the internal environment – Performance analysis which includes sales, profits, employee skills, past and current strategies, challenges, finance, etc.; and Opportunities and Threats refer to the external environment of the organisation – customer analysis, competitor analysis, environment analysis and market analysis (size, growth, distribution network, etc.).

V. Finalising the objectives and strategies of the SBU – Basis the SWOT analysis, objectives and strategies are made for the SBU, like how to beat competition in the market, coordination with other functions, etc. This provides guidelines for the SBU. The market strategy is selected basis the resources assigned by the management, attractiveness of the product in the market, SBU’s strengths, etc.