Strategic planning is one of the most important components of strategic management.
It is called strategic because it involves developing a strategy for the development of the organization. The word strategy is borrowed from military terminology, has ancient Greek origins, and literally means “leading the troops.”
The word strategy is spreading to other areas of public life. In turn, the strategic plan is a process of creating strategies. It provides management answers to three basic questions.
- 1. What will we do and for whom will we do it?
- 2. What goals do we want to achieve?
- 3. How will we manage the company’s activities?
The main thing that distinguishes strategic planning from company planning, as a more general process is:
The time frame. On the one hand, strategic planning identifies goals and activities for a relatively long period of time, and on the other hand, their implementation has a long-term impact on the organization;
Impact on the organization. Strategic planning identifies significantly greater changes in the organization and in the directions of its action. The directors of each organization must explain the company’s strategy to the employees. Reference: “Aligning people with organizational strategies”, https://bvop.org/learn/aligningpeoplewithstrategies/
The concentration of efforts. The strategy usually requires a concentration of the organization’s efforts and resources to achieve a limited number of strategic goals. This leads to their reduction in other routine activities, which are not directly related to the implementation of strategic goals;
Decision-making model. When choosing goals and strategies, a number of strategic decisions are made. In order for them to be implemented, a number of other management decisions must be made, with more limited time and scale of impact. Strategic and support decisions that support their implementation have hierarchical subordination and form a pyramid;
All aspects of the company’s activity are carried out in the light of the set long-term goals and basic ways of achieving them. It can be argued that the interest of organizations in strategic planning has been growing recently. Reference: “Planning the activities of the organization”, https://www.yahowto.com/planning-the-activities-of-the-organization/
Strategic planning in the organization can be carried out at the following management levels depending on the size and degree of diversification of the company:
Strategic planning at the organization level
In it, the management defines the company’s mission and goals and formulates strategies for achieving these goals. These goals and strategies determine the framework in which the activities of the individual units are planned.
This global company planning takes into account the financial capabilities and needs of the company, its production and marketing capabilities, the efforts of research departments, staff needs, etc.
Strategic planning at the level of strategic business unit
In order to increase the efficiency of their management, large and diversified organizations are divided into separate structural units called strategic business unit
A characteristic of a strategic business unit is that:
- They serve their market segment. In addition, they have certain regular external customers;
- They have specific competitors;
They have a relatively high degree of independence, which is expressed in the fact that their leaders themselves formulate and implement strategic activities within the general guidelines for the development of the entire organization, make strategic decisions themselves, choose where to acquire resources;
The results of their activity must be able to be assessed by the amount of profit or loss.
Strategic planning at the functional level
The functional level of management of the organization consists of managers responsible for a particular management function. They are usually heads of departments of production, marketing, finance, personnel, etc.
At this level, the annual objectives and short-term strategies in the respective field of action are developed. With the development of functional strategies, the implementation and execution of the main company strategies are actually ensured. That is why at this level the maximization of the efficiency of the activities that ensure the achievement of the company’s goals is sought.
Strategic planning consists of several related stages. The sequence of these stages describes an effective, albeit insufficiently detailed, the procedure for the practical implementation of this planning.
- 1. Global goal planning and organizational planning.
- 2. Defining the goals of the organization
- 3. formulation of the strategic plan
- 4. Implementation of the strategic plan
- 5. Evaluation and adjustment of the strategic plan
Strategic planning should be seen as a process that is influenced by an ever-changing environment. Changing operating conditions of the organization requires timely planning by making adjustments to the entire chain of components.