What Is Strategic Planning? (With Benefits)
By Indeed Editorial Team
Updated November 26, 2022
Published July 26, 2021
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Strategic planning helps companies develop an identity and set specific goals for the future. Many modern companies rely on strategic planning to ensure operational efficiency and to boost productivity. Future employees' understanding of strategic planning and how applying the principles of strategic planning to an organization can help increase their chances of success is essential. In this article, we discuss strategic planning and its benefits, explain the steps involved in strategic planning, share the contents of a strategic plan, and provide tips to develop a strategic plan.
What is strategic planning?
Strategic planning is the process of setting long-term goals for a business and highlighting how to achieve them. Strategic planning evaluates your current position, where you want to be as a department or business, and how to get there. It involves selecting long-term priorities and allocating resources to them. It also involves remodelling the organization to ensure it's best suited to its goals. Strategic planning is a comprehensive process that involves all parts of an organization. It incorporates all departments to work together towards a specific goal. A strategic plan guides the daily activities and operations of businesses.
Benefits of strategic planning
Companies can gain competitive advantages over other businesses with effective strategic planning. Here are some benefits of strategic planning:
It encourages preparedness
Strategic planning involves actively working towards specific goals. This means companies know what they're doing each business year and what to expect, which helps companies prepare ahead. Companies that use strategic planning properly can preempt unfavourable situations and prepare ahead. It also puts companies in a position to accommodate new changes easily, which can encourage flexibility and adaptability.
It helps set specific targets
A strategic plan highlights the goals an organization aims to achieve. This gives a collective sense of direction and focus. A good strategic plan creates short-term objectives from larger company goals. This ensures that workers always know what to do. Strategic plans typically place timelines on tasks, creating a positive sense of urgency.
It boosts productivity
Strategic planning helps promote operational efficiency and resourcefulness. A good strategic plan makes it easier to differentiate essential tasks from distractions, which allows management to manage resources and allocate efforts to where they're needed, further promoting productivity. Strategic planning helps companies streamline their processes, reducing trial and error, and preventing the wastage of valuable time and resources.
It increases profitability
Strategic planning encourages detailed research on valuable market information. This grants a company essential insight into the industry and its consumers so it can form effective sales and marketing strategies that boost profitability. Key performance indicators (KPIs) and organizational alignment make it easier to reach sales targets because employees are well aware of their tasks and responsibilities and of how their work affects the organization.
It prolongs a company's lifespan
Strategic planning offers foresight to companies and helps them see ahead. This makes it easier for the management team to prepare and enjoy better stability. A solid strategic plan also helps companies make better and informed decisions. A company with specific goals and a game plan is unlikely to pursue distractions because they are more focused on the objectives they've created and the benefits they've realized are possible.
What are the steps involved in strategic planning?
Strategic planning is a thorough process that involves all parts of an organization. Follow these steps to develop a great strategic plan:
1. Assess the business environment
Strategic planning involves a thorough assessment of your current situation, with the first step being to assess the business environment the company is going to operate in. This involves gathering data on industry trends and consumer behaviour. It may also help to complete an analysis of your competitors and their recent activity. Assessing the business environment typically includes looking out for unique opportunities or ways to leverage your company's position in the industry.
Related: What Is a Business Analyst?
2. Evaluate your company's position
The next step in strategic planning is to consider your company's position in the industry. This involves an overall assessment of the company's capacity, popularity, and prospects. A popular tool for assessing a company is the SWOT analysis. SWOT, which stands for strengths, weaknesses, threats, and opportunities, allows you to understand your organization's core competencies so you can build a plan that makes the most sense.
Strengths: This refers to the unique value proposition of your company that differentiates you from the competition. It can be anything from clever cost-cutting mechanisms to a popular product or significant capital.
Weaknesses: Areas where your company underperforms or lacks capacity are your weaknesses. Strategic planning helps devise plans to reduce or bypass any shortcomings so your organization can realize success.
Opportunities: Opportunities are any steps that a business can take in order to prosper. Opportunities can present themselves as partnerships, new market trends, or innovation.
Threats: Threats refer to anything that can harm your company's business goals. Threats include unfavourable policies, harsh economic conditions, and aggressive competitors.
3. Adjust or create your mission statement
Your mission statement is a formal summary of the goals and objectives of your business. It spells out your company's values, what you aim to achieve, and the steps you'll take to achieve it. Your mission statement differentiates your organization from competitors and outlines how the company intends to approach its business decisions. The mission statement is usually for consumers or stakeholders, but it can also assist in managing employees. Consider how your mission statement can:
Be clear and concise
Be specific to your company
Motivate employees and investors
4. Adjust or create your vision statement
The vision statement of a company contains its long-term goals and aspirations. Your vision statement is essentially why you started your business and it highlights the destination to which the organization's founder intends to take a business. Your vision statement is to motivate employees and other stakeholders. A good vision statement is:
An ambitious yet attainable goal
Very brief, usually not exceeding a few sentences
Reveals the culture and values of your company
5. Determine your strategic goals
To attain a long-term objective, it's important to identify your strategic goals so everyone who's a part of the business understands the value of their work and can help the organization find success. Strategic goals can include projects like digitization to help consumers or a change in leadership structure. Consider how you can make your strategic goals precise and measurable, as attaching timelines to your goals can boost productivity.
6. Develop a plan
The main task of strategic planning is to create steps the business and its employees must take to achieve established goals. Your project needs to be tactical and consider all variables. Focus on prioritizing your goals in order of relevance so you're able to complete your key objectives first. A good strategic plan makes sure that all departments within the company are a part of the plan with their own goals and that all employees are working together towards the organization's common goals.
7. Implement and monitor your plan
The next step is to implement the plan you've developed. Then, you can inform relevant stakeholders in the company and all concerned employees of your project. You can also circulate the plan to all departments, along with their specific duties and KPIs. Consider mechanisms for feedback and determine how you'll record essential data. It may also help to speak to individual employees or stakeholders to track the plan's progress so you can decide if you need to make adjustments.
8. Analyze results and modify your plan
Use the data you received from your feedback to track the effectiveness of your plan. Ordinarily, strategy plans need to run for a period to allow you to assess how well the plan works. Once your test period is over, collect all data and perform a comprehensive analysis. You may need to make changes to allow for new information and realities and adjust your plan to support the company's goals better.
Related: What Is Quantitative Analysis?
Contents of a strategic plan
A strategic plan includes different items, depending on its purpose. Here are some common contents of a strategic plan:
Executive summary: An executive summary is brief, clear, and explains the document's purpose. The executive summary also encompasses all that's in the document.
Signature page: This a page provided for executives to indicate their approval with their signature.
Company information: The company information section contains relevant details about the company. It can highlight the company's value proposition, market position, and other relevant details.
Vision and mission statements: These are statements that summarize the company's values and aims. You can also expand upon the core values to help highlight your company's beliefs.
Industry analysis: A solid strategic plan includes details of your industry analysis and findings, which can help remind all involved in the plan of any competitor details or trends that are particularly useful when considering the steps of a plan.
Plan of action: This specifies how you intend to achieve all set objectives in a comprehensive and transparent way.
Scorecard: Your scorecard is a visual method that can help stakeholders keep track of your progress.
Tips for developing a strategic plan
You can follow these tips for a more effective strategic plan:
Keep your language simple, clear, and concise.
Consult senior staff for their opinions.
Recruit the help of specialists where necessary.
Conduct thorough research.
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