BusinessEssays.net

A simplified view of the strategic planning process is shown by the following diagram:

Mission and Objectives

The mission statement describes the company’s business vision, including the unchanging values and purpose of the firm and forward-looking visionary goals that guide the pursuit of future opportunities. Guided by the business vision, the firm’s leaders can define measurable financial and strategic objectives. Financial objectives involve measures such as sales targets and earnings growth. Strategic objectives are related to the firm’s business position, and may include measures such as market share and reputation.

Environmental Scan

The environmental scan includes the following components: (a) internal analysis of the firm; (b) analysis of the firm’s industry (task environment); (c) external macro-environment analysis. (PEST analysis)

Several techniques used in this stage include:

1. SWOT Analysis – The internal analysis can identify the firm’s strengths and weaknesses and the external analysis reveals opportunities and threats. A profile of the strengths, weaknesses, opportunities, and threats is generated by means of a SWOT analysis
2. Porter 5 Forces – An industry analysis can be performed using a framework developed by Michael Porter known as Porter’s five forces. This framework evaluates entry barriers, suppliers, customers, substitute products, and industry rivalry.
3. PESTLE Analysis – an analysis on the firm macro-environment, such as political, economic, social, technological, legal and environmental factors.

Strategy Formulation

Given the information from the environmental scan, the firm should match its strengths to the opportunities that it has identified, while addressing its weaknesses and external threats. To attain superior profitability, the firm seeks to develop a competitive advantage over its rivals. A competitive advantage can be based on cost or differentiation. Michael Porter identified three industry-independent generic strategies from which the firm can choose.

The technique that can be used in this stage is

1. Porter Generic Strategic Framework.
2. Ansoff Matrix.

Strategy Implementation

The selected strategy is implemented by means of programs, budgets, and procedures. Implementation involves organization of the firm’s resources and motivation of the staff to achieve objectives. The way in which the strategy is implemented can have a significant impact on whether it will be successful.

Among the techniques that can be used under this stage include:

1. Budgeting Process.
2. Business Process Re-engineering.
3. JIT (Just-in-Time).

Evaluation & Control

The implementation of the strategy must be monitored and adjustments made as needed. Evaluation and control consists of the following steps:

1. Define parameters to be measured
2. Define target values for those parameters
3. Perform measurements
4. Compare measured results to the pre-defined standard
5. Make necessary changes

Among the technique that can be used under this stage include:

1. The Balanced Scorecard.
2. Key Performance Indicators (KPIs).