major component of the strategic planning process

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2.2 Components of the Strategic Planning Process

Learning objectives.

• Explain how a mission statement helps a company with its strategic planning.
• Describe how a firm analyzes its internal environment.
• Describe the external environment a firm may face and how it is analyzed.

Strategic planning is a process that helps an organization allocate its resources to capitalize on opportunities in the marketplace. Typically, it is a long-term process. The strategic planning process includes conducting a situation analysis and developing the organization’s mission statement, objectives, value proposition, and strategies. Figure 2.2 “The Strategic Planning Process” shows the components of the strategic planning process. Let’s now look at each of these components.

Figure 2.2 The Strategic Planning Process

Conducting a Situation Analysis

As part of the strategic planning process, a situation analysis must be conducted before a company can decide on specific actions. A situation analysis involves analyzing both the external (macro and micro factors outside the organization) and the internal (company) environments. Figure 2.2 “The Strategic Planning Process” and Figure 2.3 “Elements of a SWOT Analysis” show examples of internal and external factors and in a SWOT analysis. The firm’s internal environment—such as its financial resources, technological resources, and the capabilities of its personnel and their performance—has to be examined. It is also critical to examine the external macro and micro environments the firm faces, such as the economy and its competitors. The external environment significantly affects the decisions a firm makes, and thus must be continuously evaluated. For example, during the economic downturn in 2008–2009, businesses found that many competitors cut the prices of their products drastically. Other companies reduced package sizes or the amount of product in packages. Firms also offered customers incentives (free shipping, free gift cards with purchase, rebates, etc.) to purchase their goods and services online, which allowed businesses to cut back on the personnel needed to staff their brick-and-mortar stores. While a business cannot control things such as the economy, changes in demographic trends, or what competitors do, it must decide what actions to take to remain competitive—actions that depend in part on their internal environment.

Conducting a SWOT Analysis

Based on the situation analysis, organizations analyze their s trengths, w eaknesses, o pportunities, and t hreats, or conduct what’s called a SWOT analysis . Strengths and weaknesses are internal factors and are somewhat controllable. For example, an organization’s strengths might include its brand name, efficient distribution network, reputation for great service, and strong financial position. A firm’s weaknesses might include lack of awareness of its products in the marketplace, a lack of human resources talent, and a poor location. Opportunities and threats are factors that are external to the firm and largely uncontrollable. Opportunities might entail the international demand for the type of products the firm makes, few competitors, and favorable social trends such as people living longer. Threats might include a bad economy, high interest rates that increase a firm’s borrowing costs, and an aging population that makes it hard for the business to find workers.

You can conduct a SWOT analysis of yourself to help determine your competitive advantage. Perhaps your strengths include strong leadership abilities and communication skills, whereas your weaknesses include a lack of organization. Opportunities for you might exist in specific careers and industries; however, the economy and other people competing for the same position might be threats. Moreover, a factor that is a strength for one person (say, strong accounting skills) might be a weakness for another person (poor accounting skills). The same is true for businesses. See Figure 2.3 “Elements of a SWOT Analysis” for an illustration of some of the factors examined in a SWOT analysis.

Figure 2.3 Elements of a SWOT Analysis

The easiest way to determine if a factor is external or internal is to take away the company, organization, or individual and see if the factor still exists. Internal factors such as strengths and weaknesses are specific to a company or individual, whereas external factors such as opportunities and threats affect multiple individuals and organizations in the marketplace. For example, if you are doing a situation analysis on PepsiCo and are looking at the weak economy, take PepsiCo out of the picture and see what factors remain. If the factor—the weak economy—is still there, it is an external factor. Even if PepsiCo hadn’t been around in 2008–2009, the weak economy reduced consumer spending and affected a lot of companies.

Assessing the Internal Environment

As we have indicated, when an organization evaluates which factors are its strengths and weaknesses, it is assessing its internal environment. Once companies determine their strengths, they can use those strengths to capitalize on opportunities and develop their competitive advantage. For example, strengths for PepsiCo are what are called “mega” brands, or brands that individually generate over $1 billion in sales 1 . These brands are also designed to contribute to PepsiCo’s environmental and social responsibilities.

PepsiCo’s brand awareness, profitability, and strong presence in global markets are also strengths. Especially in foreign markets, the loyalty of a firm’s employees can be a major strength, which can provide it with a competitive advantage. Loyal and knowledgeable employees are easier to train and tend to develop better relationships with customers. This helps organizations pursue more opportunities.

Although the brand awareness for PepsiCo’s products is strong, smaller companies often struggle with weaknesses such as low brand awareness, low financial reserves, and poor locations. When organizations assess their internal environments, they must look at factors such as performance and costs as well as brand awareness and location. Managers need to examine both the past and current strategies of their firms and determine what strategies succeeded and which ones failed. This helps a company plan its future actions and improves the odds they will be successful. For example, a company might look at packaging that worked very well for a product and use the same type of packaging for new products. Firms may also look at customers’ reactions to changes in products, including packaging, to see what works and doesn’t work. When PepsiCo changed the packaging of major brands in 2008, customers had mixed responses. Tropicana switched from the familiar orange with the straw in it to a new package and customers did not like it. As a result, Tropicana changed back to their familiar orange with a straw after spending $35 million for the new package design.

Tropicana’s Recent Ad

(click to see video)

Tropicana’s recent ad left out the familiar orange with a straw.

Individuals are also wise to look at the strategies they have tried in the past to see which ones failed and which ones succeeded. Have you ever done poorly on an exam? Was it the instructor’s fault, the strategy you used to study, or did you decide not to study? See which strategies work best for you and perhaps try the same type of strategies for future exams. If a strategy did not work, see what went wrong and change it. Doing so is similar to what organizations do when they analyze their internal environments.

Assessing the External Environment

Analyzing the external environment involves tracking conditions in the macro and micro marketplace that, although largely uncontrollable, affect the way an organization does business. The macro environment includes economic factors, demographic trends, cultural and social trends, political and legal regulations, technological changes, and the price and availability of natural resources. Each factor in the macro environment is discussed separately in the next section. The micro environment includes competition, suppliers, marketing intermediaries (retailers, wholesalers), the public, the company, and customers. We focus on competition in our discussion of the external environment in the chapter. Customers, including the public will be the focus of Chapter 3 “Consumer Behavior: How People Make Buying Decisions” and marketing intermediaries and suppliers will be discussed in Chapter 8 “Using Marketing Channels to Create Value for Customers” and Chapter 9 “Using Supply Chains to Create Value for Customers” .

When firms globalize, analyzing the environment becomes more complex because they must examine the external environment in each country in which they do business. Regulations, competitors, technological development, and the economy may be different in each country and will affect how firms do business. To see how factors in the external environment such as technology may change education and lives of people around the world, watch the videos “Did You Know 2.0?” and “Did You Know 3.0?” which provide information on social media sites compared to populations in the world. Originally created in 2006 and revised in 2007, the video has been updated and translated into other languages. Another edition of “Did You Know?” (4.0) focused on changing media and technology and showed how information may change the world as well as the way people communicate and conduct business.

Did You Know 2.0?

To see how the external environment and world are changing and in turn affecting marketing strategies, check out “Did You Know 2.0?”

Did You Know 4.0?

To see how fast things change and the impact of technology and social media, visit “Did You Know 4.0?”

Although the external environment affects all organizations, companies must focus on factors that are relevant for their operations. For example, government regulations on food packaging will affect PepsiCo but not Goodyear. Similarly, students getting a business degree don’t need to focus on job opportunities for registered nurses.

The Competitive Environment

All organizations must consider their competition, whether it is direct or indirect competition vying for the consumer’s dollar. Both nonprofit and for-profit organizations compete for customers’ resources. Coke and Pepsi are direct competitors in the soft drink industry, Hilton and Sheraton are competitors in the hospitality industry, and organizations such as United Way and the American Cancer Society compete for resources in the nonprofit sector. However, hotels must also consider other options that people have when selecting a place to stay, such as hostels, dorms, bed and breakfasts, or rental homes.

A group of competitors that provide similar products or services form an industry. Michael Porter, a professor at Harvard University and a leading authority on competitive strategy, developed an approach for analyzing industries. Called the five forces model (Porter, 1980) and shown in Figure 2.5 “Five Forces Model” , the framework helps organizations understand their current competitors as well as organizations that could become competitors in the future. As such, firms can find the best way to defend their position in the industry.

Figure 2.5 Five Forces Model (Porter, 1980)

Competitive Analysis

When a firm conducts a competitive analysis, they tend to focus on direct competitors and try to determine a firm’s strengths and weaknesses, its image, and its resources. Doing so helps the firm figure out how much money a competitor may be able to spend on things such as research, new product development, promotion, and new locations. Competitive analysis involves looking at any information (annual reports, financial statements, news stories, observation details obtained on visits, etc.) available on competitors. Another means of collecting competitive information utilizes mystery shoppers , or people who act like customers. Mystery shoppers might visit competitors to learn about their customer service and their products. Imagine going to a competitor’s restaurant and studying the menu and the prices and watching customers to see what items are popular and then changing your menu to better compete. Competitors battle for the customer’s dollar and they must know what other firms are doing. Individuals and teams also compete for jobs, titles, and prizes and must figure out the competitors’ weaknesses and plans in order to take advantage of their strengths and have a better chance of winning.

According to Porter, in addition to their direct competitors (competitive rivals), organizations must consider the strength and impact the following could have (Porter, 1980):

• Substitute products
• Potential entrants (new competitors) in the marketplace
• The bargaining power of suppliers
• The bargaining power of buyers

When any of these factors change, companies may have to respond by changing their strategies. For example, because buyers are consuming fewer soft drinks these days, companies such as Coke and Pepsi have had to develop new, substitute offerings such as vitamin water and sports drinks. However, other companies such as Dannon or Nestlé may also be potential entrants in the flavored water market. When you select a hamburger fast-food chain, you also had the option of substitutes such as getting food at the grocery or going to a pizza place. When computers entered the market, they were a substitute for typewriters. Most students may not have ever used a typewriter, but some consumers still use typewriters for forms and letters.

When personal computers were first invented, they were a serious threat to typewriter makers such as Smith Corona.

mpclemens – Smith-Corona Classic 12 – CC BY 2.0.

Suppliers, the companies that supply ingredients as well as packaging materials to other companies, must also be considered. If a company cannot get the supplies it needs, it’s in trouble. Also, sometimes suppliers see how lucrative their customers’ markets are and decide to enter them. Buyers, who are the focus of marketing and strategic plans, must also be considered because they have bargaining power and must be satisfied. If a buyer is large enough, and doesn’t purchase a product or service, it can affect a selling company’s performance. Walmart, for instance, is a buyer with a great deal of bargaining power. Firms that do business with Walmart must be prepared to make concessions to them if they want their products on the company’s store shelves.

Lastly, the world is becoming “smaller” and a more of a global marketplace. Companies everywhere are finding that no matter what they make, numerous firms around the world are producing the same “widget” or a similar offering (substitute) and are eager to compete with them. Employees are in the same position. The Internet has made it easier than ever for customers to find products and services and for workers to find the best jobs available, even if they are abroad. Companies are also acquiring foreign firms. These factors all have an effect on the strategic decisions companies make.

The Political and Legal Environment

All organizations must comply with government regulations and understand the political and legal environments in which they do business. Different government agencies enforce the numerous regulations that have been established to protect both consumers and businesses. For example, the Sherman Act (1890) prohibits U.S. firms from restraining trade by creating monopolies and cartels. The regulations related to the act are enforced by the Federal Trade Commission (FTC), which also regulates deceptive advertising. The U.S. Food and Drug Administration (FDA) regulates the labeling of consumable products, such as food and medicine. One organization that has been extremely busy is the Consumer Product Safety Commission, the group that sets safety standards for consumer products. Unsafe baby formula and toys with lead paint caused a big scare among consumers in 2008 and 2009.

The U.S. Food and Drug Administration prohibits companies from using unacceptable levels of lead in toys and other household objects, such as utensils and furniture. Mattel voluntarily recalled Sarge cars made in mid-2000.

U.S. Consumer Product Safety Commission – public domain.

As we have explained, when organizations conduct business in multiple markets, they must understand that regulations vary across countries and across states. Many states and countries have different laws that affect strategy. For example, suppose you are opening up a new factory because you cannot keep up with the demand for your products. If you are considering opening the factory in France (perhaps because the demand in Europe for your product is strong), you need to know that it is illegal for employees in that country to work more than thirty-five hours per week.

The Economic Environment

The economy has a major impact on spending by both consumers and businesses, which, in turn, affects the goals and strategies of organizations. Economic factors include variables such as inflation, unemployment, interest rates, and whether the economy is in a growth period or a recession. Inflation occurs when the cost of living continues to rise, eroding the purchasing power of money. When this happens, you and other consumers and businesses need more money to purchase goods and services. Interest rates often rise when inflation rises. Recessions can also occur when inflation rises because higher prices sometimes cause low or negative growth in the economy.

During a recessionary period, it is possible for both high-end and low-end products to sell well. Consumers who can afford luxury goods may continue to buy them, while consumers with lower incomes tend to become more value conscious. Other goods and services, such as products sold in traditional department stores, may suffer. In the face of a severe economic downturn, even the sales of luxury goods can suffer. The economic downturn that began in 2008 affected consumers and businesses at all levels worldwide. Consumers reduced their spending, holiday sales dropped, financial institutions went bankrupt, the mortgage industry collapsed, and the “Big Three” U.S. auto manufacturers (Ford, Chrysler, and General Motors) asked for emergency loans.

The demographic and social and cultural environments—including social trends, such as people’s attitudes toward fitness and nutrition; demographic characteristics, such as people’s age, income, marital status, education, and occupation; and culture, which relates to people’s beliefs and values—are constantly changing in the global marketplace. Fitness, nutrition, and health trends affect the product offerings of many firms. For example, PepsiCo produces vitamin water and sports drinks. More women are working, which has led to a rise in the demand for services such as house cleaning and daycare. U.S. baby boomers are reaching retirement age, sending their children to college, and trying to care of their elderly parents all at the same time. Firms are responding to the time constraints their buyers face by creating products that are more convenient, such as frozen meals and nutritious snacks.

The composition of the population is also constantly changing. Hispanics are the fastest-growing minority in the United States. Consumers in this group and other diverse groups prefer different types of products and brands. In many cities, stores cater specifically to Hispanic customers.

The technology available in the world is changing the way people communicate and the way firms do business. Everyone is affected by technological changes. Self-scanners and video displays at stores, ATMs, the Internet, and mobile phones are a few examples of how technology is affecting businesses and consumers. Many consumers get information, read the news, use text messaging, and shop online. As a result, marketers have begun allocating more of their promotion budgets to online ads and mobile marketing and not just to traditional print media such as newspapers and magazines. Applications for telephones and electronic devices are changing the way people obtain information and shop, allowing customers to comparison shop without having to visit multiple stores. As you saw in “Did You Know 4.0?” technology and social media are changing people’s lives. Many young people may rely more on electronic books, magazines, and newspapers and depend on mobile devices for most of their information needs. Organizations must adapt to new technologies in order to succeed.

Technology changes the way we do business. Banking on a cell phone adds convenience for customers. Bar codes on merchandise speed the checkout process.

first direct – first direct Banking ‘on the go’ iPhone App – front – CC BY-NC-ND 2.0; Paul Domenick – Lasered – CC BY-NC-ND 2.0.

Natural Resources

Natural resources are scarce commodities, and consumers are becoming increasingly aware of this fact. Today, many firms are doing more to engage in “sustainable” practices that help protect the environment and conserve natural resources. Green marketing involves marketing environmentally safe products and services in a way that is good for the environment. Water shortages often occur in the summer months, so many restaurants now only serve patrons water upon request. Hotels voluntarily conserve water by not washing guests’ sheets and towels every day unless they request it. Reusing packages (refillable containers) and reducing the amount of packaging, paper, energy, and water in the production of goods and services are becoming key considerations for many organizations, whether they sell their products to other businesses or to final users (consumers). Construction companies are using more energy efficient materials and often have to comply with green building solutions. Green marketing not only helps the environment but also saves the company, and ultimately the consumer, money. Sustainability, ethics (doing the right things), and social responsibility (helping society, communities, and other people) influence an organization’s planning process and the strategies they implement.

Although environmental conditions change and must be monitored continuously, the situation analysis is a critical input to an organization’s or an individual’s strategic plan. Let’s look at the other components of the strategic planning process.

The Mission Statement

The firm’s mission statement states the purpose of the organization and why it exists. Both profit and nonprofit organizations have mission statements, which they often publicize. The following are examples of mission statements:

PepsiCo’s Mission Statement “Our mission is to be the world’s premier consumer products company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity 2 .” The United Way’s Mission Statement “To improve lives by mobilizing the caring power of communities 3 .”

Sometimes SBUs develop separate mission statements. For example, PepsiCo Americas Beverages, PepsiCo Americas Foods, and PepsiCo International might each develop a different mission statement.

Key Takeaway

A firm must analyze factors in the external and internal environments it faces throughout the strategic planning process. These factors are inputs to the planning process. As they change, the company must be prepared to adjust its plans. Different factors are relevant for different companies. Once a company has analyzed its internal and external environments, managers can begin to decide which strategies are best, given the firm’s mission statement.

Review Questions

• What factors in the external environment are affecting the “Big Three” U.S. automobile manufacturers?
• What are some examples of Walmart’s strengths?
• Suppose you work for a major hotel chain. Using Porter’s five forces model, explain what you need to consider with regard to each force.

1 PepsiCo, Inc., “PepsiCo Brands,” http://www.pepsico.com/Company/Our-Brands.html (accessed December 7, 2009).

2 PepsiCo, Inc., “Our Mission and Vision,” http://www.pepsico.com/Company/Our-Mission-and-Vision.html (accessed December 7, 2009).

3 United Way Worldwide, “Mission and Vision,” http://www.liveunited.org/about/missvis.cfm (accessed December 7, 2009).

Principles of Marketing Copyright © 2015 by University of Minnesota is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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The strategic planning process in 4 steps, to assist you throughout your planning process, we have created a how-to guide on the basics of strategic planning which will take you through the planning process step-by-step..

Free Strategic Planning Guide

What is Strategic Planning?

Strategic Planning is a process where organizations define a bold vision and create a plan with objectives and goals to reach that future. A great strategic plan defines where your organization is going, how you’ll win, who must do what, and how you’ll review and adapt your strategy.

Overview of the complete strategic planning process:

Getting started: strategic planning introduction.

The strategic management process is about getting from Point A to Point B more effectively, efficiently, and enjoying the journey and learning from it. Part of that journey is the strategy and part of it is execution. Having a good strategy dictates “how” you travel the road you have selected and effective execution makes sure you are checking in along the way. On average, this process can take between three and four months. However no one organization is alike and you may decide to fast track your process or slow it down. Move at a pace that works best for you and your team and leverage this as a resource. For more of a deep dive look into each part of the planning phase, you will see a link to the detailed How-To Guide at the top of each phase.

Phase Duration

1-2 weeks (1 hr meeting with Owner/CEO, Strategy Director and Facilitator (if necessary) to discuss information collected and direction for continued planning.)

Questions to Ask:

• Who is on your Planning Team?
• Who will be the business process owner (Strategy Director) of planning in your organization?
• Fast forward 12 months from now, what do you want to see differently in your organization as a result of embarking on this initiative?
• Planning team members are informed of their roles and responsibilities.
• Planning schedule is established.
• Existing planning information and secondary data collected.

Action Grid:

Step 1: Determine Organizational Readiness

Set up your planning process for success – questions to ask:.

• Are the conditions and criteria for successful planning in place at the current time? Can certain pitfalls be avoided?
• Is this the appropriate time for your organization to initiate a planning process? Yes or no? If no, where do you go from here?

Step 2: Develop Your Team & Schedule

Who is going to be on your planning team? You need to choose someone to oversee the implementation (Chief Strategy Officer or Strategy Director) and then you need some of the key individuals and decision makers for this team. It should be a small group of approximately 12-15 persons.

OnStrategy is the leader in strategic planning and performance management. Our cloud-based software and hands-on services closes the gap between strategy and execution. Learn more about OnStrategy here .

Step 3: Collect Current Data

Collect the following information on your organization:

• The last strategic plan, even if it is not current
• Mission statement, vision statement, values statement
• Business plan
• Financial records for the last few years
• Marketing plan
• Other information, such as last year’s SWOT, sales figures and projections

Step 4:Review collected data:

Review the data collected in the last action with your strategy director and facilitator.

• What trends do you see?
• Are there areas of obvious weakness or strengths?
• Have you been following a plan or have you just been going along with the market?

Strategic Planning Phase 1: Determine Your Strategic Position

Want More? Deep Dive Into the “ Evaluate Your Strategic Position ” How-To Guide.

Action Grid

Step 1: identify strategic issues.

Strategic issues are critical unknowns that are driving you to embark on a strategic planning process now. These issues can be problems, opportunities, market shifts or anything else that is keeping you awake at night and begging for a solution or decision.

• How will we grow, stabilize, or retrench in order to sustain our organization into the future?
• How will we diversify our revenue to reduce our dependence on a major customer?
• What must we do to improve our cost structure and stay competitive?
• How and where must we innovate our products and services?

Step 2: Conduct an Environmental Scan

Conducting an environmental scan will help you understand your operating environment. An environmental scan is also referred to as a PEST analysis, which is an acronym for Political, Economic, Social and Technological trends. Sometimes it is helpful to also include Ecological and Legal trends as well. All of these trends play a part in determining the overall business environment.

Step 3: Conduct a Competitive Analysis

The reason to do a competitive analysis is to assess the opportunities and threats that may occur from those organizations competing for the same business you are.  You need to have an understanding of what your competitors are or aren’t offering your potential customers.  Here are a few other key ways a competitive analysis fits into strategic planning:

• To help you assess whether your competitive advantage is really an advantage.
• To understand what your competitors’ current and future strategies are so you can plan accordingly.
• To provide information that will help you evaluate your strategic decisions against what your competitors may or may not be doing.

Step 4: Identify Opportunities and Threats

Opportunities are situations that exist but must be acted on if the business is to benefit from them.

What do you want to capitalize on?

• What new needs of customers could you meet?
• What are the economic trends that benefit you?
• What are the emerging political and social opportunities?
• What niches have your competitors missed?

Threats refer to external conditions or barriers that may prevent a company from reaching its objectives.

What do you need to mitigate?

Questions to answer:.

• What are the negative economic trends?
• What are the negative political and social trends?
• Where are competitors about to bite you?
• Where are you vulnerable?

Step 5: Identify Strengths and Weaknesses

Strengths refer to what your company does well.

What do you want to build on?

• What do you do well (in sales, marketing, operations, management)?
• What are your core competencies?
• What differentiates you from your competitors?
• Why do your customers buy from you?

Weaknesses refer to any limitations a company faces in developing or implementing a strategy.

What do you need to shore up?

• Where do you lack resources?
• What can you do better?
• Where are you losing money?
• In what areas do your competitors have an edge?

Step 6: Customer Segments

Customer segmentation defines the different groups of people or organizations a company aims to reach or serve.

Who are we providing value to?

• What needs or wants define your ideal customer?
• What characteristics describe your typical customer?
• Can you sort your customers into different profiles using their needs, wants and characteristics?
• Can you reach this segment through clear communication channels?

Step 7: Develop Your SWOT

A SWOT analysis is a quick way of examining your organization by looking at the  internal  strengths and weaknesses in relation to the  external  opportunities and threats. By creating a SWOT analysis, you can see all the important factors affecting your organization together in one place. It’s easy to read, easy to communicate, and easy to create. Take the Strengths, Weaknesses, Opportunities and Threats you developed earlier, review, prioritize and combine like terms. The SWOT analysis helps you ask, and answer, the following questions: “How do you….”

• Build on your strengths
• Shore up your weaknesses
• Capitalize on your opportunities
• Manage your threats

Strategic Planning Process Phase 2: Developing Strategy

Want More? Deep Dive Into the “Developing Your Strategy” How-To Guide.

Step 1: Develop Your Mission Statement

The mission statement describes an organization’s purpose or reason for existing.

What is our purpose? Why do we exist? What do we do?

• What does your organization intend to accomplish?
• Why do you work here? Why is it special to work here?
• What would happen if we were not here?

Outcome: A short, concise, concrete statement that clearly defines the scope of the organization.

Step 2: discover your values.

Your values statement clarifies what your organization stands for, believes in and the behaviors you expect to see as a result.

How will we behave?

• What are the key non-negotiables that are critical to the success of the company?
• What are the guiding principles that are core to how we operate in this organization?
• What behaviors do you expect to see?
• If the circumstances changed and penalized us for holding this core value, would we still keep it?

Outcome: Short list of 5-7 core values.

Step 3: casting your vision statement.

A Vision Statement defines your desired future state and provides direction for where we are going as an organization.

Where are we going?

• What will our organization look like 5–10 years from now?
• What does success look like?
• What are we aspiring to achieve?
• What mountain are you climbing and why?

Outcome: A picture of the future.

Step 4: identify your competitive advantages.

A Competitive Advantage is a characteristic(s) of an organization that allows it to meet their customer’s need(s) better than their competition can.

What are we best at?

• What are your unique strengths?
• What are you best at in your market?
• Do your customers still value what is being delivered? Ask them.
• How do your value propositions stack up in the marketplace?

Outcome: A list of 2 or 3 items that honestly express the organization’s foundation for winning.

Step 5: crafting your organization-wide strategies.

Your strategies are the general methods you intend to use to reach your vision. No matter what the level, a strategy answers the question “how.”

How will we succeed?

• Broad: market scope; a relatively wide market emphasis.
• Narrow: limited to only one or few segments in the market
• Does your competitive position focus on lowest total cost or product/service differentiation or both?

Outcome: Establish the general, umbrella methods you intend to use to reach your vision.

Phase 3: Strategic Plan Development

Want More? Deep Dive Into the “Build Your Plan” How-To Guide.

Strategic Planning Process Step 1: Use Your SWOT to Set Priorities

If your team wants to take the next step in the SWOT analysis, apply the TOWS Strategic Alternatives Matrix to help you think about the options that you could pursue. To do this, match external opportunities and threats with your internal strengths and weaknesses, as illustrated in the matrix below:

TOWS Strategic Alternatives Matrix

Evaluate the options you’ve generated, and identify the ones that give the greatest benefit, and that best achieve the mission and vision of your organization. Add these to the other strategic options that you’re considering.

Step 2: Define Long-Term Strategic Objectives

Long-Term Strategic Objectives are long-term, broad, continuous statements that holistically address all areas of your organization. What must we focus on to achieve our vision?  What are the “big rocks”?

Questions to ask:

• What are our shareholders or stakeholders expectations for our financial performance or social outcomes?
• To reach our outcomes, what value must we provide to our customers? What is our value proposition?
• To provide value, what process must we excel at to deliver our products and services?
• To drive our processes, what skills, capabilities and organizational structure must we have?

Outcome: Framework for your plan – no more than 6

Step 3: Setting Organization-Wide Goals and Measures

Once you have formulated your strategic objectives, you should translate them into goals and measures that can be clearly communicated to your planning team (team leaders and/or team members). You want to set goals that convert the strategic objectives into specific performance targets. Effective goals clearly state what, when, how, and who, and they are specifically measurable. They should address what you need to do in the short-term (think 1-3 years) to achieve your strategic objectives. Organization-wide goals are annual statements that are specific, measurable, attainable, responsible and time bound.  These are outcome statements expressing a result expected in the organization.

What is most important right now to reach our long-term objectives?

Outcome: clear outcomes for the current year..

Step 4: Select KPIs

Key Performance Indicators (KPI) are the key measures that will have the most impact in moving your organization forward. We recommend you guide your organization with measures that matter.

How will we measure our success?

Outcome: 5-7 measures that help you keep the pulse on your performance. When selecting your Key Performance Indicators, begin by asking “What are the key performance measures we need to track in order to monitor if we are achieving our goals?” These KPIs include the key goals that you want to measure that will have the most impact in moving your organization forward.

Step 5: Cascade Your Strategies to Operations

Cascading action items and to-dos for each short-term goal is where the rubber meets the road – literally. Moving from big ideas to action happens when strategy is translated from the organizational level to the individual. Here we widen the circle of the people who are involved in the planning as functional area managers and individual contributors develop their short-term goals and actions to support the organizational direction. But before you take that action, determine if you are going to develop a set of plans that cascade directly from the strategic plan, or instead if you have existing operational, business or account plans that should be synced up with organizational goals. A pitfall is to develop multiple sets of goals and actions for directors and staff to manage. Fundamentally, at this point you have moved from planning the strategy to planning the operations; from strategic planning to annual planning. That said, the only way strategy gets executed is to align resources and actions from the bottom to the top to drive your vision.

Questions to Ask

• How are we going to get there at a functional level?
• Who must do what by when to accomplish and drive the organizational goals?
• What strategic questions still remain and need to be solved?

Department/functional goals, actions, measures and targets for the next 12-24 months

Step 6: Cascading Goals to Departments and Team Members

Now in your Departments / Teams, you need to create goals to support the organization-wide goals. These goals should still be SMART and are generally (short-term) something to be done in the next 12-18 months. Finally, you should develop an action plan for each goal. Keep the acronym SMART in mind again when setting action items, and make sure they include start and end dates and have someone assigned their responsibility. Since these action items support your previously established goals, it may be helpful to consider action items your immediate plans on the way to achieving your (short-term) goals. In other words, identify all the actions that need to occur in the next 90 days and continue this same process every 90 days until the goal is achieved.

Examples of Cascading Goals:

Phase 4: Executing Strategy and Managing Performance

Want More? Deep Dive Into the “Managing Performance” How-To Guide.

Step 1: Strategic Plan Implementation Schedule

Implementation is the process that turns strategies and plans into actions in order to accomplish strategic objectives and goals.

How will we use the plan as a management tool?

• Communication Schedule: How and when will you roll-out your plan to your staff? How frequently will you send out updates?
• Process Leader: Who is your strategy director?
• Structure: What are the dates for your strategy reviews (we recommend at least quarterly)?
• System & Reports: What are you expecting each staff member to come prepared with to those strategy review sessions?

Outcome: Syncing your plan into the “rhythm of your business.”

Once your resources are in place, you can set your implementation schedule. Use the following steps as your base implementation plan:

• Establish your performance management and reward system.
• Set up monthly and quarterly strategy meetings with established reporting procedures.
• Set up annual strategic review dates including new assessments and a large group meeting for an annual plan review.

Now you’re ready to start plan roll-out. Below are sample implementation schedules, which double for a full strategic management process timeline.

Step 2: Tracking Goals & Actions

Monthly strategy meetings don’t need to take a lot of time – 30 to 60 minutes should suffice. But it is important that key team members report on their progress toward the goals they are responsible for – including reporting on metrics in the scorecard they have been assigned. By using the measurements already established, it’s easy to make course corrections if necessary. You should also commit to reviewing your Key Performance Indicators (KPIs) during these regular meetings.

Your Bi-Annual Checklist

Never lose sight of the fact that strategic plans are guidelines, not rules. Every six months or so, you should evaluate your strategy execution and plan implementation by asking these key questions:

• Will your goals be achieved within the time frame of the plan? If not, why?
• Should the deadlines be modified? (Before you modify deadlines, figure out why you’re behind schedule.)
• Are your goals and action items still realistic?
• Should the organization’s focus be changed to put more emphasis on achieving your goals?
• Should your goals be changed? (Be careful about making these changes – know why efforts aren’t achieving the goals before changing the goals.)
• What can be gathered from an adaptation to improve future planning activities?

Why Track Your Goals?

• Ownership: Having a stake and responsibility in the plan makes you feel part of it and leads you to drive your goals forward.
• Culture: Successful plans tie tracking and updating goals into organizational culture.
• Implementation: If you don’t review and update your goaFls, they are just good intentions
• Accountability: Accountability and high visibility help drive change. This means that each measure, objective, data source and initiative must have an owner.
• Empowerment: Changing goals from In Progress to Complete just feels good!

Step 3: Review & Adapt

Guidelines for your strategy review.

Restricting the meeting to reporting on measurements can help you stay on task and keep the meeting within 30 minutes, but if you can commit to a full hour, the meeting agenda should also include some time devoted to working on one specific topic or on one of the quarter’s priorities where decisions need to be made. Once agreed upon, this topic should be developed to conclusion. Holding meetings helps focus your goals on accomplishing top priorities and accelerating growth of the organization. Although the meeting structure is relatively simple, it does require a high degree of discipline.

Strategy Review Session Questions:

• What were our three most important strategic accomplishments of the last 90 days – how have we changed our field of play in the past 90 days?
• What are the three most important ways we fell short of our strategic potential?
• In the last 90 days, what are the three most important things that we have learned about our strategy?  (NOTE: We are looking for insight to decision to action observations.)

Step 4: Annual Updates The three words  strategic planning off-site  provoke reactions anywhere from sheer exuberance to ducking for cover. In many organizations, retreats have a bad reputation because stepping into one of the many planning pitfalls is so easy. Holding effective meetings can be tough, and if you add a lot of brainpower mixed with personal agendas, you can have a recipe for disaster. That’s why so many strategic planning meetings are unsuccessful. Executing your strategic plan is as important, or even more important, than your strategy. Critical actions move a strategic plan from a document that sits on the shelf to actions that drive organizational growth. The sad reality is that the majority of organizations who have strategic plans fail to implement. Don’t be part of the majority! In fact, research has shown that 70% of organizations that have a formal execution process out-perform their peers. (Kaplan & Norton) Guiding your work in this stage of the planning process is a schedule for the next 12 months that spells out when the quarterly strategy reviews are, who is involved, what participants need to bring to the meetings and how you will adapt the plan based on the outcomes of the reviews. You remain in this phase of the strategic management process until you embark on the next formal planning sessions where you start back at the beginning. Remember that successful execution of your plan relies on appointing a strategy director, training your team to use OnStrategy (or any other planning tool), effectively driving accountability, and gaining organizational commitment to the process.

Strategic planning frequently asked questions

Read our frequently asked questions about strategic planning to learn how to build a great strategic plan..

Business Strategic Planning is a process where your business defines a bold vision of the future and creates a plan to reach that future. It helps your business define where you’re going, how you’ll get there, how you’ll grow, and what you must do to reach your desired future.

A great strategic plan determines where your organization is going, how you’ll win, what roles each team member has in the execution, and your game plan for reviewing and adapting your strategy. Elements include a current state analysis, SWOT, mission, vision, values, competitive advantages, growth strategy, growth enablers, a 3-year roadmap, and annual plan with goals, KPIs, and OKRs.

Typically, the average strategic planning process takes about 3-4 months, but depending on your organization, it could take more or less time. Every organization is different, so you should work at a pace that works for you.

There are four overarching phases to the strategic planning process that include: determining position, developing your strategy, building your plan, and managing performance. Each phase plays a unique but distinctly crucial role in the strategic planning process.

Prior to starting your strategic plan, you must go through this pre-planning process to determine your organization’s readiness by following these steps:

Ask yourself these questions: Are the conditions and criteria for successful planning in place now? Can we foresee any pitfalls that we can avoid? Is there an appropriate time for our organization to initiate this process?

Develop your team and schedule. Who will oversee the implementation as Chief Strategy Officer or Director? Do we have at least 12-15 other key individuals on our team?

Research and Collect Current Data. Find the following resources that your organization may have used in the past to assist you with your new plan: last strategic plan, mission, vision, and values statement, business plan, financial records, marketing plan, SWOT, sales figures, or projections.

Finally, review the data with your strategy director and facilitator and ask these questions: What trends do we see? Any obvious strengths or weaknesses? Have we been following a plan or just going along with the market?

Determining your positioning entails conducting a scan of macro and micro trends in your environment and industry, identifying marketing and competitive opportunities and threats, clarifying target customers and value propositions, gathering and reviewing staff and partner feedback for strengths and weaknesses, synthesizing the data into a SWOT, and solidifying your competitive advantages.

Developing your strategy includes determining your primary business model and organizational purpose, identifying your corporate values, creating an image of what success would look like in 3-5 years, solidifying your competitive advantages, formulating organization wide-strategies that explain your base, and agreeing on strategic issues you need to address in the planning process. .

Once you get to the strategic plan development process in the planning process, you must begin developing your strategic framework and defining long-term strategic objectives, set short-term SMART organizational goals, and select the measure that will be your KPIs (key performance indicators.)

The last phase of strategic planning is implementation, execution, and ongoing refreshes. This step entails establishing an implementation schedule, rolling out your plan, executing against your key results, and reviewing process and refreshing your plan quarterly. p>

The ideal execution schedule for your strategic plan will differ from team to team or organization to organization, but generally, you should try to set 4 quarterly reviews, a mid-year executive survey, 12 monthly check-ins, and a year-end plan review and annual refresh.

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What is Strategic Planning? The Key Components, Process & Role Leaders Play in Ensuring a Strategy's Success

What is Strategic Planning? The Key Components, Process & Role Leaders Play in Ensuring a Strategy's Success by SkylineG

Strategic planning is a process that is essential for companies to ensure successful and sustainable growth.

An intelligent and actionable strategic plan is a vital part of competing within the marketplace. It directs businesses to take meaningful action to help them reach their organization's goals by mapping out a clear direction, creating measurable goals, and allocating resources to pursue these specific objectives.

What is Strategic Planning?

A strategic plan is an essential process and strategy execution document for any company looking to make the most of its resources and reach long-term organizational goals.

This vital and continually evolving document outlines a clear direction, sets objectives that must be achieved, and provides an actionable roadmap for success; it also helps organizations stand out from competitors by allowing them to differentiate themselves in the marketplace with their unique approach.

A well-crafted strategic plan will help companies stay focused on their mission while making decisions based on core values guiding them toward achieving desired results by ensuring everyone is moving in the same direction.

What are the Key Components of a Strategic Plan?

Several key components make up a well-developed strategic plan. These key components include:

A Mission Statement

An organization's mission statement states the company's purpose and the reasons why it exists. Although you might be already clear on the mission, reiterating your mission statement and connection to the plan acts as a foundation for the strategic plan and your strategy.

A Vision Statement

The company vision is the bigger objective that the company aspires to achieve. This may be as broad as making the world a better place through your product or service or ridding bathrooms of mildew. Whatever your vision, it should be connected to your strategic plan

Aligning the company mission and vision statements is the first crucial step to strategic planning.

SWOT Analysis

An overall evaluation of the company's strengths, weaknesses, opportunities, and threats. Knowing these points will help you leverage your resources, shore up gaps, and realistically plan your path and the potential risks. Your SWOT analysis will help ensure that your strategic plan is based upon reality and play an important part in your strategic management process.

Goals & Objectives

Goals and objectives need specific, measurable, achievable, and time-bound targets the company wants to achieve. Ensure your goals are achievable, measurable, and can be clearly communicated as part of your strategic planning. High-level company objectives should cascade and align with the objectives of various divisions and teams. The Strategic plans of each division and team should map directly to broader company goals and methods.

The specific courses of action that the company will take to achieve its measurable goals and specific strategic issues.

Action Plans

Detailed project plans outlining the specific steps that will be taken to implement the strategies.

Resource Allocation

The allocation of financial, human, and other resources to implement the action plans.

Evaluation and Control

Evaluation and control are based on measures and systems to monitor the company's progress toward achieving its organization's goals, objectives, and financial plan and to make adjustments as necessary.

Who is Responsible for Creating a Strategic Plan?

In general, creating a strategic plan is the responsibility of the company's top management team - the CEO, CFO, other executives, etc.

However, though the top management will do the strategic thinking, it’s essential for key members throughout the entire organization to be involved in the strategic planning process as different departments, employees, and human resources will have valuable insights and perspectives to contribute to the strategy formation. Also, when various constituents are a part of and the planning process a sense of ownership and commitment to the strategic plan's success is reinforced.

It’s also common for companies to seek input from external stakeholders, customers, suppliers, and industry experts as part of the strategic planning process. As part of your planning process make sure to identify any critical stakeholders outside of your company.

What Makes the Strategic Planning Process Effective?

Below are some key factors that contribute to the overall effectiveness of a successful strategic plan and the strategic planning process. Understanding these points will help make your strategic planning process more effective:

The plan needs to be clear & concise, with specific strategic goals & objectives that are easy for everyone to understand. Senior leadership plays a critical role in ensuring that each objective is clear and how objectives will be achieved is understood.

The strategic plan needs to take the company's resources & capabilities into account, and the goals need to be realistic & achievable based on the market data.

The plan needs to be flexible enough to allow for adjustments to be made in response to changes in the external environment after deployment.

The plan must be aligned with the company's mission, vision & values and should support the organization's overall direction in terms of business plan and annual budgets.

Easily Communicated

The plan needs to be communicated effectively to all stakeholders & investors, including employees & customers.

The plan needs clear & actionable steps and a timeline for implementation. It must be followed consistently to ensure progress toward business goals like increasing sales and maximizing profit.

The plan needs to measure & evaluate progress, collect feedback, and be reviewed and updated regularly to ensure continuous progress toward company goals and that the plan remains relevant and practical and targets logical key performance indicators.

An effective strategic plan identifies potential factors that might derail the plan and, at a minimum, provides high-level alternatives should the plan become derailed.

When Do Strategic Plans Fail?

Listed below are a few potential reasons why strategic planning might fail. Understanding why strategic plans fail will help create more effective strategic planning outcomes:

Lacks Clarity

Plans need to be clear and specific. If not, it may be difficult to understand and challenging to implement. When a strategic plan is ambitious it is tough for people to feel connected and motivated to take action.

Lack of Realistic Options and Objectives

Plans need to be realistic. If the plan cannot really be achieved, it'll be difficult to implement and lead to frustration, disappointment, and potential failure.

Lack of Flexibility

The plan needs to be flexible; if it's not is not flexible and doesn’t allow for adjustments in response to changes in the environment (internal and external) or from evaluation or measurement, it may become irrelevant or ineffective.

Lack of Alignment

The plan needs to be aligned with the company's mission, vision, and values; if not consistent with the organization's overall direction, it can quickly become out of sync with its underlying purpose and be ineffective in helping to reach desired goals.

Lack of Understanding

The plan needs to be communicated effectively to all key stakeholders and take feedback from all stakeholders; otherwise, it may be misunderstood or, worse - ignored or seen as not valuable.

Lack Actionable Steps

The strategic plan needs to be implemented swiftly and consistently; if the action steps are not clear or too hard to implement, they may not be implemented effectively.

Lack of Measurable Outcomes

The strategic plan needs to be reviewed and updated regularly, and its performance evaluated after implementation; otherwise, it may become ineffective or outdated, therefore ineffective at achieving desired outcomes.

External Factors

Changes in the external environment can have a huge effect. Changes like shifts in the economy or customer preferences, if not accounted for, can seriously impact the effectiveness of a once brilliant strategic plan.

However, as in life and business, things change, and every business must be able to adapt quickly to changing circumstances. This is why an effective plan includes contingencies.

What is a Company Leader's Role in Ensuring the Strategic Plan is Implemented Successfully?

Strategic management.

Company leaders are responsible for ensuring that the strategic plan is implemented successfully.

Some specific ways business leaders can ensure the plan is implemented properly are:

Clearly Communicate the Plan

Business leaders need to communicate the strategic plan effectively to all key stakeholders, including employees, customers, and investors. Any questions need to be answered and clarified, so everyone is aligned. The strategic plan should be shared in a way that you (the leader) demonstrate ownership and enthusiasm and can share with your team how each role is vital to achieving the plan's objectives.

Providing Resources

Leaders need to ensure that resources, such as funding, personnel, and technology, are available to everyone needed in order to implement the plan successfully.

Setting Expectations

Leaders need to set clear expectations for implementing the plan and hold the designated employees accountable for meeting those expectations. Clear and achievable timelines need to be established and committed to by each stakeholder.

Leading by Example

Leaders need to model the behaviors and values outlined in the plan and encourage others to do the same.

Providing Support

Leaders need to provide support and guidance to employees as they work through problems toward achieving the strategic goals and objectives of the plan.

Monitoring Progress

Leaders need to monitor the progress towards achieving the goals and objectives outlined in the plan and make adjustments in the operational plans as they see fit, as needed.

Celebrating Successes

Leaders need to recognize and celebrate wins along the way to help keep morale high and encourage continued progress toward the ultimate goals.

What's the Role of Each Individual Employee in Implementing & Supporting the Strategic Plans Success?

Employees are the driving force and critical in implementing and supporting the strategic plan's success. Your employees will be the eyes and ears of how the strategic plan works. This is why it is vital for leaders to create a business environment where there is open communication and all types of information can be shared and reviewed in relation to its impact on the long-term strategy. Leaders must foster an open environment where questions can be asked and bad and good news shared. Leaders can help employees play their part by ensuring employees are supported and are clear on their ability to do the following:

Understand the Plan

Employees need to understand the strategic plan, how it aligns with the company's mission, the steps to take, and most importantly, the goals.

Aligning Work and Job Goals with the Plan

Leaders, managers, and employees need to align their work with the strategic plan and prioritize tasks that support achieving the plan's goals & strategic objectives.

Manage Implementation

Employees must consistently follow through on their assigned tasks and responsibilities to implement the plans, steps, and processes.

Provide Feedback

During the initial review of the organization's current status, employees must provide feedback and suggestions to improve the plan. During its implementation, employees need to provide feedback based on performance and potentially adjust the plan if needed for better performance and goals.

Communicate Laterally and Up

Employees need to communicate with coworkers to ensure everyone is working towards the same goals & objectives and, most importantly, employees need to communicate to their manager on how their contribution is proceeding.

Seek Support and Guidance

Employees need to seek support and guidance from leaders if they need help implementing any steps of the plan or achieving goals.

Do Some Companies Believe that Strategic Planning is a Waste of Time?

Sure. It's possible some companies may view strategic planning as a waste of time. This could be due to a variety of reasons: resources required upfront, lack of understanding of the benefits of strategic planning, a lack of buy-in from senior management, or a lack of resources to dedicate to the process.

However, for massively successful companies, strategic planning is recognized as an invaluable tool to help organizations achieve their long-term goals and be outstanding in a competitive marketplace.

Strategic planning can also help companies be more agile and adapt to changes in the external environment. For these reasons, it's generally recommended that companies engage in strategic planning and review results on a regular basis.

What Makes a Great Strategy?

What makes a great competitive strategy? Several characteristics are often considered to be key elements of great strategy execution:

A great strategy is clear & easy to understand, with specific goals & strategic objectives that are well-defined.

A great strategy is a focused strategy. A great strategy is focused on a specific area of the business and doesn't try to do too many things at once.

A great strategy is aligned with the company's overall mission, vision for the future, and values, supporting the organization's overall direction.

Flexibility

A great strategy is flexible and allows for adjustments to be made in response to results and changes in the external environment.

A great strategy is realistic & achievable, taking into account the company's resources & capabilities and what can actually get done.

Differentiation

The great strategy sets the company apart from its competitors in the marketplace and helps it to differentiate itself from competitors to customers.

A great strategy can be executed effectively, with clear action steps, a timeline for implementation, and who is responsible for each action step.

Evaluation & Feedback

The great strategy includes measures for evaluating progress and collecting feedback, and it needs to be reviewed regularly & potentially updated to ensure it remains relevant & effective.

When is a Great Strategy Not Enough to Ensure Company Success?

While a great strategy can certainly be a key factor in a company's success, it's not the only factor needed to be successful. There are a number of other internal and external factors that can impact a company's success, including:

Even the best strategy will not be a successful strategy if executed poorly.

A company needs resources, period. Resources like funding, personnel, and technology, are essential to implement strategy effectively.

Changes in external factors are equally important as the internal environment. For example, economic shifts or customer preferences can impact a company's success.

Competition

A company's success can also be impacted by its competitors' actions and even competitors' reactions to strategy implementation.

Market Demand

A company's success will depend partly on the market demand for its products or services. Demand should absolutely be a part of the strategy formulation.

A company's success will highly depend on the quality of its products or services and its ability for its products to meet customer needs.

The senior leadership of a company can play a key role in its success, or failure, as they set the vision & direction of the organization.

How Does Company Leadership Play a Critical Part in a Company's Strategic Success?

Without involved leadership, a strategic plan will more than likely fail. A company's leadership plays a critical role in strategic success in several ways:

Setting the Direction

A company's leadership is responsible for setting the organization's vision and direction and creating a strategic management plan that aligns with that direction.

A company's Leadership is responsible for ensuring that the necessary resources, such as funding, personnel, and technology, are available to implement the strategic plan.

Communicating the Plan

A company's leadership communicates the strategic management plan effectively and consistently to all stakeholders, including employees, customers, and investors.

A company's leadership needs to model the behaviors and values aligned with the plan and encourage others to do the same.

A company's leadership needs to provide support & guidance to employees as they work towards achieving the goals and objectives of the strategic plan. This will help in employee retention and strategic success.

A company's leadership needs to monitor progress toward achieving the goals & objectives of the plan and make necessary adjustments as needed.

A company's leadership needs to recognize and celebrate successes along the way to help keep team morale high and encourage continued progress to achieve goals.

How Can Companies Prepare & Support their Leaders to Implement & Ensure Strategic Planning Success?

There are many ways in which companies can prepare and support their leaders to implement and ensure the success of their strategic planning initiative.

Provide Proper Training

Companies need to provide training & strategy development opportunities to help their leaders acquire the knowledge and skills they need to implement & support the strategic vision effectively.

Encourage Open Communication

Companies need to foster an environment of open, clear communication and encourage leaders to seek input & feedback from their teams within the strategic framework - even when the strategy map is not positive.

Align Leadership with Company Values

Companies must ensure that their leadership's values align with the company's values and culture and that their leaders are committed to the mission and vision of the organization.

Encourage Collaboration

Companies need to encourage collaboration & cross-functional teamwork as a part of project management to ensure that all departments work towards the same goals & objectives.

Provide Resources

As part of the strategic planning process, companies need to ensure their leadership has the necessary resources, such as funding, personnel, & technology, to implement the strategic plan effectively for the entire duration.

Establish Clear Expectations

Companies must set clear expectations for how strategic planning should be activated and implemented and hold leadership accountable for meeting expectations as per the strategic plan document.

Monitor Progress

Company leaders need to monitor the progress toward achieving the goals and objectives of the strategic plan and provide their support and guidance as needed. Strategic planning is essential for business success, and the key to achieving successful results lies in the hands of leadership. For leaders to ensure a strategy's success, they must become strategic planners and the details of the business's strategic plan must be organized and understood by each person responsible.

Leaders and managers need to communicate the strategic plan through consistent discussions that foster collaborative decision-making. Responsibilities for the planning process and success also extend beyond the leader and onto each individual employee to help realize the steps of an effective strategic plan. Companies must set clear strategic objectives that align with their mission and strategic goals while preparing business leaders to carry out those plans. When done correctly, with careful attention paid to all levels of the organization, successful strategic planning can lead a company in the right direction toward long-term sustainability and future opportunities.

Having a clear strategic plan is one of those obvious items that every company should have in place yet many companies don't.

Although the effort of investing the time and resources into creating a strategic planning template can be demanding, the value and impact of your investment can return a healthy multiple.

Once your mission and vision statements and strategic plan are in place they become a touchstone to focus your business, align teams, and what makes your way of navigating your market and competition unique.

We hope that this resource provides a road map and helps facilitate the development of your strategic plan if you don't have one yet. For those that do have strategic plans, we hope this resource helps act as a checklist to fortify the strategy development you've already created.

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• What is strategic planning? 5 steps and ...

What is strategic planning? 5 steps and processes

A strategic plan helps you define and share the direction your company will take in the next three to five years. It includes your company’s vision and mission statements, goals, and the actions you’ll take to achieve those goals. In this article we describe how a strategic plan compares to other project and business tools, plus four steps to create a successful strategic plan for your company.

Strategic planning is when business leaders map out their vision for the organization’s growth and how they’re going to get there. Strategic plans inform your organization’s decisions, growth, and goals. So if you work for a small company or startup, you could likely benefit from creating a strategic plan. When you have a clear sense of where your organization is going, you’re able to ensure your teams are working on projects that make the most impact. 

The strategic planning process doesn’t just help you identify where you need to go—during the process, you’ll also create a document you can share with employees and stakeholders so they stay informed. In this article, we’ll walk you through how to get started developing a strategic plan.

What is a strategic plan?

A strategic plan is a tool to define your organization’s goals and what actions you will take to achieve them. Typically, a strategic plan will include your company’s vision and mission statements, your long-term goals (as well as short-term, yearly objectives), and an action plan of the steps you’re going to take to move in the right direction. 

Your strategic plan document should include: 

Your company’s mission statement

Your company’s goals

A plan of action to achieve those goals

Your approach to achieving your goals

The tactics you’ll use to meet your goals

An effective strategic plan can give your organization clarity and focus. This level of clarity isn’t always a given—according to our research, only 16% of knowledge workers say their company is effective at setting and communicating company goals. By investing time into strategy formulation, you can build out a three- to five-year vision for the future of your company. This strategy will then inform your yearly and quarterly company goals. 

Do I need a strategic plan?

A strategic plan is one of many tools you can use to plan and hit your goals. It helps map out strategic objectives and growth metrics. Here’s how a strategic plan compares to other project management and business tools.

Strategic plan vs. business plan

A business plan can help you document your strategy as you’re getting started so every team member is on the same page about your core business priorities and goals. This tool can help you document and share your strategy with key investors or stakeholders as you get your business up and running.

You should create a business plan when you’re: 

Just starting your business

Significantly restructuring your business

If your business is already established, consider creating a strategic plan instead of a business plan. Even if you’re working at a relatively young company, your strategic plan can build on your business plan to help you move in the right direction. During the strategic planning process, you’ll draw from a lot of the fundamental business elements you built early on to establish your strategy for the next three to five years.

Key takeaway: A business plan works for new businesses or large organizational overhauls. Strategic plans are better for established businesses. 

Strategic plan vs. mission and vision statements

Your strategic plan, mission statement, and vision statements are all closely connected. In fact, during the strategic planning process, you will take inspiration from your mission and vision statements in order to build out your strategic plan.

As a result, you should already have your mission and vision statements drafted before you create a strategic plan. Ideally, this is something you created during the business planning phase or shortly after your company started. If you don’t have a mission or vision statement, take some time to create those now. A mission statement states your company’s purpose and it addresses what problem your organization is trying to solve. A vision statement states, in very broad strokes, how you’re going to get there. 

Simply put: 

A mission statement summarizes your company’s purpose

A vision statement broadly explains how you’ll reach your company’s purpose

A strategic plan should include your mission and vision statements, but it should also be more specific than that. Your mission and vision statements could, theoretically, remain the same throughout your company’s entire lifespan. A strategic plan pulls in inspiration from your mission and vision statements and outlines what actions you’re going to take to move in the right direction. 

For example, if your company produces pet safety equipment, here’s how your mission statement, vision statement, and strategic plan might shake out:

Mission statement: “To ensure the safety of the world’s animals.” 

Vision statement: “To create pet safety and tracking products that are effortless to use.” 

Your strategic plan would outline the steps you’re going to take in the next few years to bring your company closer to your mission and vision. For example, you develop a new pet tracking smart collar or improve the microchipping experience for pet owners. 

Key takeaway: A strategic plan draws inspiration from your mission and vision statements. 

Strategic plan vs. company objectives

Company objectives are broad goals. You should set these on a yearly or quarterly basis (if your organization moves quickly). These objectives give your team a clear sense of what you intend to accomplish for a set period of time. 

Your strategic plan is more forward-thinking than your company goals, and it should cover more than one year of work. Think of it this way: your company objectives will move the needle towards your overall strategy—but your strategic plan should be bigger than company objectives because it spans multiple years.

Key takeaway: Company objectives are broad, evergreen goals, while a strategic plan is a specific plan of action. 

Strategic plan vs. business case

A business case is a document to help you pitch a significant investment or initiative for your company. When you create a business case, you’re outlining why this investment is a good idea, and how this large-scale project will positively impact the business. 

You might end up building business cases for things on your strategic plan’s roadmap—but your strategic plan should be bigger than that. This tool should encompass multiple years of your roadmap, across your entire company—not just one initiative.

Key takeaway: A business case tackles one initiative or investment, while a strategic plan maps out years of overall growth for your company. 

Strategic plan vs. project plan

A strategic plan is a company-wide, multi-year plan of what you want to accomplish in the next three to five years and how you plan to accomplish that. A project plan, on the other hand, outlines how you’re going to accomplish a specific project. This project could be one of many initiatives that contribute to a specific company objective which, in turn, is one of many objectives that contribute to your strategic plan. 

A project plan has seven parts: 

Success metrics

Stakeholders and roles

Scope and budget

Milestones and deliverables

Timeline and schedule

Communication plan

Key takeaway: You may build project plans to map out parts of your strategic plan. 

When should I create a strategic plan?

You should aim to create a strategic plan every three to five years, depending on your organization’s growth speed. That being said, if your organization moves quickly, consider creating one every two to three years instead. Small businesses may need to create strategic plans more often, as their needs change. 

Since the point of a strategic plan is to map out your long-term goals and how you’ll get there, you should create a strategic plan when you’ve met most or all of them. You should also create a strategic plan any time you’re going to make a large pivot in your organization’s mission or enter new markets. 

What are the 5 steps in strategic planning?

The strategic planning process should be run by a small team of key stakeholders who will be in charge of building your strategic plan. 

Your group of strategic planners, sometimes called the management committee, should be a small team of five to 10 key stakeholders and decision-makers for the company. They won’t be the only people involved—but they will be the people driving the work. 

Once you’ve established your management committee, you can get to work on the strategic planning process. 

Step 1: Determine where you are

Before you can get started with strategy development and define where you’re going, you first need to define where you are. To do this, your management committee should collect a variety of information from additional stakeholders—like employees and customers. In particular, plan to gather:

Relevant industry and market data to inform any market opportunities, as well as any potential upcoming threats in the near future

Customer insights to understand what your customers want from your company—like product improvements or additional services

Employee feedback that needs to be addressed—whether in the product, business practices, or company culture

A SWOT analysis to help you assess both current and future potential for the business (you’ll return to this analysis periodically during the strategic planning process). 

To fill out each letter in the SWOT acronym, your management committee will answer a series of questions:

What does your organization currently do well?

What separates you from your competitors?

What are your most valuable internal resources?

What tangible assets do you have?

What is your biggest strength? 

Weaknesses:

What does your organization do poorly?

What do you currently lack (whether that’s a product, resource, or process)?

What do your competitors do better than you?

What, if any, limitations are holding your organization back?

What processes or products need improvement? 

Opportunities:

What opportunities does your organization have?

How can you leverage your unique company strengths?

Are there any trends that you can take advantage of?

How can you capitalize on marketing or press opportunities?

Is there an emerging need for your product or service? 

What emerging competitors should you keep an eye on?

Are there any weaknesses that expose your organization to risk?

Have you or could you experience negative press that could reduce market share?

Is there a chance of changing customer attitudes towards your company? 

Step 2: Identify your goals and objectives

This is where the magic happens. To develop your strategy, take into account your current position, which is where you are now. Then, draw inspiration from your original business documents—these are your final destination. 

To develop your strategy, you’re essentially pulling out your compass and asking, “Where are we going next?” This can help you figure out exactly which path you need to take. 

During this phase of the planning process, take inspiration from important company documents to ensure your strategic plan is moving your company in the right direction like:

Your mission statement, to understand how you can continue moving towards your organization’s core purpose

Your vision statement, to clarify how your strategic plan fits into your long-term vision

Your company values, to guide you towards what matters most towards your company

Your competitive advantages, to understand what unique benefit you offer to the market

Your long-term goals, to track where you want to be in five or 10 years

Your financial forecast and projection, to understand where you expect your financials to be in the next three years, what your expected cash flow is, and what new opportunities you will likely be able to invest in

Step 3: Develop your plan

Now that you understand where you are and where you want to go, it’s time to put pen to paper. Your plan will take your position and strategy into account to define your organization-wide plan for the next three to five years. Keep in mind that even though you’re creating a long-term plan, parts of your strategic plan should be created as the quarters and years go on.

As you build your strategic plan, you should define:

Your company priorities for the next three to five years, based on your SWOT analysis and strategy.

Yearly objectives for the first year. You don’t need to define your objectives for every year of the strategic plan. As the years go on, create new yearly objectives that connect back to your overall strategic goals . 

Related key results and KPIs for that first year. Some of these should be set by the management committee, and some should be set by specific teams that are closer to the work. Make sure your key results and KPIs are measurable and actionable.

Budget for the next year or few years. This should be based on your financial forecast as well as your direction. Do you need to spend aggressively to develop your product? Build your team? Make a dent with marketing? Clarify your most important initiatives and how you’ll budget for those.

A high-level project roadmap . A project roadmap is a tool in project management that helps you visualize the timeline of a complex initiative, but you can also create a very high-level project roadmap for your strategic plan. Outline what you expect to be working on in certain quarters or years to make the plan more actionable and understandable.

Step 4: Execute your plan

After all that buildup, it’s time to put your plan into action. New strategy execution involves clear communication across your entire organization to make sure everyone knows their responsibilities and how to measure the plan’s success. 

Map your processes with key performance indicators, which will gauge the success of your plan. KPIs will establish which parts of your plan you want achieved in what time frame. 

A few tips to make sure your plan will be executed without a hitch: 

Align tasks with job descriptions to make sure people are equipped to get their jobs done

Communicate clearly to your entire organization throughout the implementation process 

Fully commit to your plan 

Step 5: Revise and restructure as needed

At this point, you should have created and implemented your new strategic framework. The final step of the planning process is to monitor and manage your plan.

Share your strategic plan —this isn’t a document to hide away. Make sure your team (especially senior leadership) has access to it so they can understand how their work contributes to company priorities and your overall strategic plan. We recommend sharing your plan in the same tool you use to manage and track work, so you can more easily connect high-level objectives to daily work. If you don’t already, consider using a work management tool .

Update your plan regularly (quarterly and annually). Make sure you’re using your strategic plan to inform your shorter-term goals. Your strategic plan also isn’t set in stone. You’ll likely need to update the plan if your company decides to change directions or make new investments. As new market opportunities and threats come up, you’ll likely want to tweak your strategic plan to ensure you’re building your organization in the best direction possible for the next few years.

Keep in mind that your plan won’t last forever—even if you do update it frequently. A successful strategic plan evolves with your company’s long-term goals. When you’ve achieved most of your strategic goals, or if your strategy has evolved significantly since you first made your plan, it might be time to create a new one.

The benefits of strategic planning

Strategic planning can help with goal-setting by allowing you to explain how your company will move towards your mission and vision statements in the next three to five years. If you think of your company trajectory as a line on a map, a strategic plan can help you better quantify how you’ll get from point A (where you are now) to point B (where you want to be in a few years).

When you create and share a clear strategic plan with your team, you can:

Align everyone around a shared purpose

Proactively set objectives to help you get where you want to go

Define long-term goals, and then set shorter-term goals to support them

Assess your current situation and any opportunities—or threats

Help your business be more durable because you’re thinking long-term

Increase motivation and engagement

Sticking to the strategic plan

To turn your company strategy into a plan—and ultimately, impact—make sure you’re proactively connecting company objectives to daily work. When you can clarify this connection, you’re giving your team members the context they need to get their best work done. 

With clear priorities, team members can focus on the initiatives that are making the biggest impact for the company—and they’ll likely be more engaged while doing so.

Related resources

Marketing leaders talk AI: How to optimize your tech stack

4 types of concept maps (with free templates)

Marketers are AI skeptics. Here’s how to fix that.

Human-centric AI at work: A playbook for powering your organization with AI

What is the strategic management process + how to get started

Every day in every department of your organization, people are making decisions.

It’s important that all of those decisions are aligned with the same goals — goals that give your business a competitive edge.

But how do you determine your company’s strategy? How can you be sure you’re headed in the right direction?

The answer lies in the strategic management process. The strategic management process guides you through planning, implementing, and maintaining the strategies that lead to the best business performance.

This article introduces the strategic management process and gives you tips on how to do it right.

What is the strategic management process?

Strategic management is the process of defining and implementing an organization’s strategy. It involves analyzing current circumstances, developing a plan to reach important goals, and executing that plan.

All businesses can benefit from strategic management to help them meet long-term objectives. The process is especially important when the organization is going through big changes or facing aggressive competition. For example, a start-up moving into the scale-up phase can implement strategic management to guide growth.

Why is strategic management important?

Strategic management ensures that the actions of everyone in your organization are aligned with your major goals. It helps departments and business leaders make better, faster decisions.

Strategic management keeps departments on the same page.

Instead of every department head making their own choices about what the company needs, a strategic plan provides a framework for prioritizing projects.

It helps your organization find new opportunities and anticipate new challenges.

Strategic management involves an in-depth analysis of your current circumstances, the market, and the competitive landscape. This helps you discover new opportunities for success.

Strategic management allows for more efficient organizational performance.

Having a strategy helps people in your organization make tactical decisions more quickly, and it keeps you from wasting time on projects that don’t align with the company’s mission.

This streamlines your processes and creates greater operational efficiency.

What are the 5 steps of the strategic management process?

Now you know why strategic management is so important, let’s take a look at the 5 essential steps in the strategic management process:

1. Goal setting

The strategic management process is all about creating a roadmap to help you achieve your vision. So before you go any further, you need to clarify what your company wants to achieve.

Many companies kick off the strategic management process by writing a vision statement. A vision statement communicates where you want to be in the future. It’s different from your mission statement — which describes why your company exists — but both statements should inform your strategic plan.

Once you’ve created or reviewed your vision statement, it’s time to pick some broad areas of focus. You don’t need to have specific, measurable goals yet, but you should go into the planning process with an idea of what you want to work on.

For example, growing revenue or improving customer service could be goals at this point.

2. Environmental scanning and analysis

The next part of the process is analysis. Before you can define strategies and tactics, you need to know where you stand currently. That includes internal factors, like your location, structure, and talent, as well as external factors like your competition and market forces.

The more information you have, the stronger the foundation of your strategic plan. Here are some tips for conducting an analysis.

1. Solicit feedback.

Talk to team leaders to get a better understanding of internal operations. Employee surveys, interviews, and discussion groups can be used to learn about the perspectives of everyone in the company.

2. Learn about your customers.

You can survey your existing customers or email list to learn more about how your customers and prospects feel. For example, if they’re generally frustrated with your customer service team’s response time, then improving that can be a strategic objective. Or maybe you’ll learn about new product features they want, and you can plan to develop them.

3. Research the competitive environment.

Researching your competitors can help you find your weak spots and learn where you stand out from the crowd.

You can use Miro’s competitor analysis template to analyze and evaluate the competitive landscape for products, services, and companies.

4. Consider your resources.

When you’re setting your goals, you’ll have to know if you have the people and resources to accomplish them. Having a clear idea of your resources from the start will help you set realistic objectives.

5. Conduct a SWOT analysis.

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. You can organize your SWOT analysis visually by using Miro’s SWOT Analysis template .

3. Strategy formulation

It’s finally time to write your strategic plan. In addition to your mission and vision statement, a strategic plan has a few key components.

Strategic objectives

Strategic objectives are high-level goals that help you accomplish your mission. Some examples of strategic objectives include:

• Grow earnings per share by 10% per year
• Launch two new products per year
• Increase NPS to 50 by 2024

For each strategic objective, use tactics that tell you specific actions to achieve the goal. For example, if your strategic objective is to increase awareness of your brand, a tactic could be to create profiles on the major social media sites.

Part of the strategic planning process is determining how you’re going to measure your progress toward your objectives. Choose a metric for each goal and make sure you have the ability to track it.

What about projects?

Your strategic plan doesn’t need to go into the projects that each department will undertake. Projects are related to strategic planning as the vehicle for accomplishing a strategic objective. However, projects can be planned by individual departments once the plan is complete.

For example, if your strategy is to improve customer loyalty and your tactic is to implement a rewards program, the marketing or customer experience teams will be put in charge of managing the creation of the program.

4. Strategy implementation

You’ve determined your organization’s strategy, but the work has just begun. Now you need to make a plan for implementing your strategic objectives.

Secure any resources you need.

Make sure you have the resources, budget, and approvals necessary to execute your plan.

Delegate the work.

Roles should be clearly defined at this point. Who’s in charge of communicating the plan to teams? Who will report on plan progress? Which departments will be responsible for which tactics?

Launch the plan.

Communicate the details of the plan to the company.

Depending on your organization, you may also need a plan to communicate your strategy with the board, key customers, investors, or the public.

Communication is a two-way street. Give people a way to ask questions or submit concerns about the plan.

Offer training.

If business decisions are going to be based on your company strategy, decision-makers need to know what that strategy is.

For people who require a deep understanding of your strategic plan, like department leaders, offer educational sessions to get them up to speed.

Make a plan to share your progress.

The whole company is working toward common goals — make sure you keep everyone updated on how they’re doing. Regular communication about how the strategic plan is going will increase buy-in.

5. Strategy evaluation

Most strategic plans cover the next three to five years. But that doesn’t mean you can’t adjust your strategies along the way.

Part of your implementation plan should be a schedule for continually reviewing your strategic plan, including its relevance to your current circumstances, its practicality, and how much progress you’ve made so far.

If any of your strategic objectives or tactics haven’t been implemented on time, ask yourself:

• Are we still making progress toward this goal?
• Do we have the resources to achieve the goal?
• Can the goal be accomplished if the deadline is extended?
• Is the goal still relevant to our current circumstances?
• Can the goal be changed slightly to accomplish something similar?

Some strategies may need to be removed from the plan or updated.

Strategic management process secrets for success

The strategic management process has many points of possible failure. Some organizations never agree on a plan, while others have great ideas that fall apart in the implementation process.

Following these best practices will give you the best chance of strategic management success.

Start with a core team that owns the process.

Brainstorming and collaboration are easiest if you start with a small group of stakeholders. This shouldn’t just be a few executives. Bring in a diverse group of thinkers from around the organization.

These people will help make and implement the plan. Their buy-in will also be important in making sure that every department is enthusiastic about the company’s new direction.

Make your goals optimistic but realistic.

Setting your strategy for the next several years is exciting — you get to decide the direction your company is headed and what you intend to accomplish. It’s okay to be optimistic about your vision.

But don’t get too carried away. If your objectives aren’t realistic, the plan will fall by the wayside quickly.

Agree on due dates.

To make sure your plan is carried out, everything should be on a schedule. That includes your strategic objectives (like “increase revenue 30% by the end of 2023 ) as well as elements of the strategic management process, such as holding the planning meeting, communicating the plan to your company, and reporting on your progress.

Have a plan for communication.

Part of the strategic planning process is letting everyone in the company know about the plan — and inspiring them to be enthusiastic about it.

Consider having a company-wide strategic plan kickoff event. When you introduce the plan, you can also let employees know about any rewards that will be given to teams or individuals that exceed the plan’s goals.

Use tools that make collaboration easy.

The strategic management process involves the entire organization, so collaboration is key. But group work can be disorganized and unproductive if you don’t have methods to stay on track and share ideas.

The right tools can help you keep planning sessions organized, share ideas, make collaborative decisions, and convey your ideas to others.

Miro’s online whiteboard is a full-featured digital space that makes it easy to plan, share, discuss, and review information in real-time. Try brainstorming ideas, add comments and questions using sticky notes , and vote on potential courses of action using our plugin .

The strategic management process sets the long-term direction for your organization, so it’s important to get it right. That means bringing teams together to share ideas and work toward a common goal.

Miro can aid and enhance collaboration on your strategic management process. Get started with one of the fully-customizable templates from our strategic planning suite. Try it for free .

Miro is your team's visual platform to connect, collaborate, and create — together.

Join millions of users that collaborate from all over the planet using Miro.

Keep reading

Pert chart: how to build better plans in project management.

How to use the Ansoff Matrix for strategic planning (with examples)

How to hold a strategic planning meeting: A simple, step-by-step guide for facilitators

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Effective Strategic Planning: The 3 essential component

By Ron Price, HR.com , October 2016

Very few organizations large or small understand what it takes to create an effective strategic plan. Terminology is confusing, plan documents gather dust, and planning processes get bogged down without effective implementation. Too often, the result of strategic planning is detachment between the plan and day-to-day realities.

Many companies know they should, but simply don’t have a strategic plan. But like any other meaningful business initiative, strategic planning can make a huge difference in employee engagement and overall effectiveness.

First, it’s important to differentiate between strategy and tactics. Strategy is direction. It usually includes one or more “big picture” destinations desired by leadership. Tactics are the day-to-day operational tasks to achieve the big picture objectives. Strategy and tactics are often used synonymously, which represents one of the major problems in planning. Managers cannot think strategically and tactically at the same time. Every time that a strategic planning session dissolves into discussion of tactical issues, the strategic discussion is lost.

Effective strategic planning is a process that should be broken down into three separate, equally important components: strategic thinking, long-range planning, and operational planning.

Strategic Thinking

This first component addresses the big picture questions of an organization, including:

Who are we?

Why are we in business?

What business are we in?

What business should we be in?

Who are our customers?

Who should our customers be?

What impact will external factors have on our business?

This thinking includes reflective analysis about an organization's mission, vision, values, and 10-20 year objectives. It includes a broad look at what makes an organization unique, including internal strengths and limitations, as well as external opportunities and threats. The focus here is on intuitively feeling the organization's future at a deeper, contemplative level.

Long-Range Planning

This component focuses on studying the strategic issues of the organization using facts, figures, and research. It includes an in-depth understanding and analysis of the marketplace, competition, and metrics surrounding the organization's strengths, limitations, opportunities and threats. This step uses data to validate the conclusions reached during the initial intuitive thinking phase. Long range planning results in 5-7 major strategic objectives that will become the focus for the next several years.

Just as it is critical for the strategic thinking phase to be intuitive, it is critical for the long range planning phase to be analytical, rich in facts and figures, and detailed. Without both intuitive and analytical thinking, planning is incomplete and the results will show it.

Operational Planning

The final phase of strategic planning is creating an operational plan with 12-18 monthly goals. These goals include specific action plans, timelines, assignments, and systems of accountability. The goals are the result of completing the ideological analyses in first two planning phases, gaining total commitment from management. You have probably heard of SMART goals, or Specific, Measurable, Achievable, Relevant, and Timely. The goals in your operational plan should be SMART, incorporating schedules to review and adjust the plan and measure its success. Once again, this is rarely connected effectively to strategic planning.

Most organizational leaders excel in only one of these three phases of strategic planning. As a result, there is a disconnect and loss of focus between the creation and execution of a plan. How do we change this pattern?

In order to properly implement the three phases of planning, you may want to consider some of these tactics:

It all starts at the top. The impact of the strategic planning process on an organization depends on the commitment from top management. While it’s appropriate for the CEO to assemble a team to create a plan, executing the strategy is ultimately the responsibility of the company’s top executive.

Hire a professional facilitator to guide the strategic planning process. This means more than just hiring someone to start a discussion at a resort one weekend. Bring in a consultant as a partner and "strategic conscience.” Since a facilitator does not carry day-to-day responsibilities, they are uniquely positioned to remind the organization of what matters most.

Set aside at least four review meetings a year, ranging from 1-3 days. Ideally, the meeting will review your strategic thinking during the first session, then work on long range planning, and finish with operational planning. It is critical to develop focus without squeezing strategic planning into a pre-determined time frame that exhausts everyone. Companies may also need monthly or bi-monthly meetings to keep the process moving.

In one way or another, engage everyone in the organization in creating and implementing the plan. Confidentiality is usually over-emphasized. While I don't advocate distributing the strategic plan for the whole world to see, most organizations don't use the plan to transform and direct an entire organization. The result is unrealized potential, limited commitment, and ineffective execution.

Keep improving the strategic planning process. Periodically, take a step back and review the purpose of strategic planning. Double-check that the plan is creating clarity about why the organization exists, what it stands for, how it brings unique value to the marketplace, its direction for upcoming years, competitors, and ideal customers.

Every organization has an almost infinite reservoir of possibilities in its people, markets, and infrastructure. Effective strategic planning defines this potential based on what makes the organization unique, in combination with the realities of the marketplace

A realistic, focused, well-executed strategic plan is still the most dynamic path to success. The chances are pretty good that your competitors still haven't learned how to do it right! So, what are you waiting for?

Source: HR.Com

Strategic Management & Strategic Planning Process

Strategic management process is a method by which managers conceive of and implement a strategy that can lead to a sustainable competitive advantage. [1 ]

Strategic planning process is a systematic or emerged way of performing strategic planning in the organization through initial assessment, thorough analysis, strategy formulation, its implementation and evaluation.

What is strategic planning process?

The process of strategic management lists what steps the managers should take to create a complete strategy and how to implement that strategy successfully in the company. It might comprise from 7 to nearly 30 steps [4] and tends to be more formal in well-established organizations.

The ways that strategies are created and realized differ. Thus, there are many different models of the process. The models vary between companies depending upon:

• Organization’s culture.
• Leadership style.
• The experience the firm has in creating successful strategies.

All the examples of the process in this article represent top-down approach and belong to the ‘design school’.

Components of strategic planning process

There are many components of the process which are spread throughout strategic planning stages. Most often, the strategic planning process has 4 common phases: strategic analysis, strategy formulation, implementation and monitoring (David [5] , Johnson, Scholes & Whittington [6] , Rothaermel [1] , Thompson and Martin [2] ). For clearer understanding, this article represents 5 stages of strategic planning process:

Initial Assessment

Situation analysis.

• Strategy Formulation
• Strategy Implementation

Strategy Monitoring

Components: Vision statement & Mission statement Tools used: Creating a Vision and Mission statements.

The starting point of the process is initial assessment of the firm. At this phase managers must clearly identify the company’s vision and mission statements.

Business’ vision answers the question: What does an organization want to become? Without visualizing the company’s future, managers wouldn’t know where they want to go and what they have to achieve. Vision is the ultimate goal for the firm and the direction for its employees.

In addition, mission describes company’s business. It informs organization’s stakeholders about the products, customers, markets, values, concern for public image and employees of the organization (David, p. 93) [5] . Thorough mission statement acts as guidance for managers in making appropriate (Rothaermel, p. 34) [1] daily decisions.

Components: Internal environment analysis, External environment analysis and Competitor analysis Tools used: PEST , SWOT , Core Competencies, Critical Success Factors, Unique Selling Proposition, Porter’s 5 Forces , Competitor Profile Matrix , External Factor Evaluation Matrix , Internal Factor Evaluation Matrix, Benchmarking , Financial Ratios, Scenarios Forecasting, Market Segmentation, Value Chain Analysis , VRIO Framework

When the company identifies its vision and mission it must assess its current situation in the market. This includes evaluating an organization’s external and internal environments and analyzing its competitors.

During an external environment analysis managers look into the key external forces: macro & micro environments and competition. PEST or PESTEL frameworks represent all the macro environment factors that influence the organization in the global environment. Micro environment affects the company in its industry. It is analyzed using Porter’s 5 Forces Framework.

Competition is another uncontrollable external force that influences the company. A good example of this was when Apple released its IPod and shook the mp3 players industry, including its leading performer Sony. Firms assess their competitors using competitors profile matrix and benchmarking to evaluate their strengths, weaknesses and level of performance.

Internal analysis includes the assessment of the company’s resources, core competencies and activities. An organization holds both tangible resources: capital, land, equipment, and intangible resources: culture, brand equity, knowledge, patents, copyrights and trademarks (Rothaermel, p. 90) [1] . A firm’s core competencies may be superior skills in customer relationship or efficient supply chain management. When analyzing the company’s activities managers look into the value chain and the whole production process.

As a result, situation analysis identifies strengths, weaknesses, opportunities and threats for the organization and reveals a clear picture of company’s situation in the market.

Components: Objectives, Business level, Corporate level and Global Strategy Selection Tools used: Scenario Planning, SPACE Matrix, Boston Consulting Group Matrix , GE-McKinsey Matrix, Porter’s Generic Strategies, Bowman’s Strategy Clock, Porter’s Diamond, Game Theory, QSP Matrix.

Successful situation analysis is followed by creation of long-term objectives. Long-term objectives indicate goals that could improve the company’s competitive position in the long run. They act as directions for specific strategy selection. In an organization, strategies are chosen at 3 different levels:

• Business level strategy. This type of strategy is used when strategic business units (SBU), divisions or small and medium enterprises select strategies for only one product that is sold in only one market. The example of business level strategy is well illustrated by Royal Enfield firms. They sell their Bullet motorcycle (one product) in United Kingdom and India (different markets) but focus on different market segments and sell at very different prices (different strategies). Firms may select between Porter’s 3 generic strategies: cost leadership, differentiation and focus strategies. Alternatively strategies from Bowman’s strategy clock may be chosen (Johnson, Scholes, & Whittington, p. 224 [6] ).
• Corporate level strategy. At this level, executives at top parent companies choose which products to sell, which market to enter and whether to acquire a competitor or merge with it. They select between integration, intensive, diversification and defensive strategies.
• Global/International strategy. The main questions to answer: Which new markets to develop and how to enter them? How far to diversify? (Thompson and Martin, p. 557 [2] , Johnson, Scholes, & Whittington, p. 294 [6] )

Managers may choose between many strategic alternatives. That depends on a company’s objectives, results of situation analysis and the level for which the strategy is selected.

Components: Annual Objectives, Policies, Resource Allocation, Change Management, Organizational chart, Linking Performance and Reward Tools used: Policies, Motivation, Resistance management, Leadership, Stakeholder Impact Analysis, Changing organizational structure, Performance management

Even the best strategic plans must be implemented and only well executed strategies create competitive advantage for a company.

At this stage managerial skills are more important than using analysis. Communication in strategy implementation is essential as new strategies must get support all over organization for effective implementation. The example of the strategy implementation that is used here is taken from David’s book, chapter 7 on implementation [5] . It consists of the following 6 steps:

• Setting annual objectives;
• Revising policies to meet the objectives;
• Allocating resources to strategically important areas;
• Changing organizational structure to meet new strategy;
• Managing resistance to change;
• Introducing new reward system for performance results if needed.

The first point in strategy implementation is setting annual objectives for the company’s functional areas. These smaller objectives are specifically designed to achieve financial, marketing, operations, human resources and other functional goals. To meet these goals managers revise existing policies and introduce new ones which act as the directions for successful objectives implementation.

The other very important part of strategy implementation is changing an organizational chart. For example, a product diversification strategy may require new SBU to be incorporated into the existing organizational chart. Or market development strategy may require an additional division to be added to the company. Every new strategy changes the organizational structure and requires reallocation of resources. It also redistributes responsibilities and powers between managers. Managers may be moved from one functional area to another or asked to manage a new team. This creates resistance to change, which has to be managed in an appropriate way or it could ruin excellent strategy implementation.

Components: Internal and External Factors Review, Measuring Company’s Performance Tools used: Strategy Evaluation Framework, Balanced Scorecard, Benchmarking

Implementation must be monitored to be successful. Due to constantly changing external and internal conditions managers must continuously review both environments as new strengths, weaknesses, opportunities and threats may arise. If new circumstances affect the company, managers must take corrective actions as soon as possible.

Usually, tactics rather than strategies are changed to meet the new conditions, unless firms are faced with such severe external changes as the 2007 credit crunch.

Measuring performance is another important activity in strategy monitoring. Performance has to be measurable and comparable. Managers have to compare their actual results with estimated results and see if they are successful in achieving their objectives. If objectives are not met managers should:

• Change the reward system.
• Introduce new or revise existing policies.

The key element in strategy monitoring is to get the relevant and timely information on changing environment and the company’s performance and if necessary take corrective actions.

Different models of the process

There is no universal model of the strategic management process. The one, which was described in this article, is just one more version of so many models that are established by other authors. In this section we will illustrate and comment on 3 more well-known frameworks presented by recognized scholars in the strategic management field. More about these models can be found in the authors’ books.

Source: David (p. 46)

• Strategy Evaluation
• Develop vision and mission
• External environment analysis
• Internal environment analysis
• Establish long-term objectives
• Generate, evaluate and choose strategies
• Implement strategies
• Measure and evaluate performance
• Indicates all the major steps that have to be met during the process.
• Illustrates that the process is a continuous activity.
• Arrows show the two way process. This means that companies may sometimes go a step or two back in the process rather than having to complete the process and start it all over from the beginning. For example , if in the implementation stage the company finds out that the strategy it chose is not viable, it can simply go back to the strategy selection point instead of continuing to the monitoring stage and starting the process from the beginning.
• Represents only strategy formulation stage and does separate situation analysis from strategy selection stages.
• Confuses strategy evaluation with strategy monitoring stage.

Source: Rothaermel (p. 20)

• Formulation
• Implementation
• Initial analysis
• External and internal analysis
• Business or corporate strategy formulation
• Shows that the process is a continuous activity.
• Separates initial analysis (in this articles it’s called initial assessment) from internal/external analysis.
• Emphasizes the main focus of strategic management: “Gain and sustain competitive advantage”.
• Does not include strategy monitoring stage.
• Arrows indicate only one way process. For example , after the strategy formulation the process continues to the implementation stage while this is not always the truth. Companies may go back and reassess their environments if some conditions had changed.

Source: Thompson and Martin (p.36)

• Where are we?
• Where are we going?
• How are we getting there?
• How are we doing?
• Situation appraisal: review of corporate objectives
• Situation assessment
• Clarification of objectives
• Corporate and competitive strategies
• Strategic decisions
• Monitor progress
• The model is supplemented by 4 fundamental strategic management questions.
• Arrows indicate only one way process.

Limitations

It is rare that the company will be able to follow the process from the first to the last step. Producing a quality strategic plan requires time , during which many external and even internal conditions may change. This results in the flawed strategic plan which has to be revised, hence requiring even more time to finish.

On the other hand, when implementing the strategic plan, the actual results do not meet the requirements of the strategic plan so the plan has to be altered or better methods for the implementation have to be discovered. This means that some parts of strategic management process have to be done simultaneously, which makes the whole process more complex .

• Rothaermel, F. T. (2012). Strategic Management: Concepts and Cases. McGraw-Hill/Irwin, p. 20, 32-45, 90
• Thompson, J. and Martin, F. (2010). Strategic Management: Awareness & Change. 6th ed. Cengage Learning EMEA, p. 34, 557, 790
• Clark, D. N. (1997). Strategic management tool usage: a comparative study. Strategic Change Vol. 6, pp. 417-427
• David, F.R. (2009). Strategic Management: Concepts and Cases. 12th ed. FT Prentice Hall, p. 36-37, 45-47, 93
• Johnson, G, Scholes, K. Whittington, R. (2008). Exploring Corporate Strategy. 8th ed. FT Prentice Hall, p. 11-13, 224, 294
• Virtual Strategist (2012). Overview of the Strategic Planning Process (VIDEO). Available at: https://www.youtube.com/watch?v=sU3FLxnDv_A
• Strategic Management & Strategic Planning

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6 Elements of Effective Strategic Planning

While the business operations framework is a continuous cycle in which each stage informs the next, developing a strategic plan is the best place to start.

During the strategic planning process, an organization performs three steps:

• Builds or modifies the foundational strategic vision and mission
• Commits to goals that drive overall health
• Develops a long-term plan to achieve the goals

A strong strategic plan positions the organization for success and clearly defines it at every level.

A common mistake we see businesses make is starting tactical initiative execution without first communicating and aligning on the goal. Skipping these important steps can leave your organization without direction.

Read ahead to learn more about the six vital elements of strategic planning: vision , mission , objectives , strategy , approach , and tactics . 

1.     Define your vision

An organization’s vision statement is an aspirational description of what it wants to achieve in the future..

A vision statement serves as a clear guide for choosing current and future courses of action — a definition of where you want your organization to be in the long term. It sets the tone and provides a North Star on the horizon.

One example of a company with a strong vision statement is Warby Parker, the online prescription glasses retailer founded in 2010 that is now worth an estimated $3 billion.

Warby Parker’s vision statement has two parts: “We believe that buying glasses should be easy and fun. It should leave you happy and good-looking, with money in your pocket. We also believe that everyone has a right to see.”

With just three sentences, the vision statement tells you exactly what the company aims to achieve. Namely, to make the process for buying prescription glasses and sunglasses fun and straightforward (unlike the traditional method). The vision also aims for customers to have fashionable frames, but at a lower cost than existing options.

The last sentence of the vision statement adds in a purpose statement (aka why the company exists): “We also believe that everyone has a right to see.” Since the beginning, Warby Parker has touted its “Buy a Pair, Give a Pair” program that donates glasses to people who can’t otherwise afford them. According to the CEO, this purpose is what motivates employees to join and stay with the company. Not all leaders include a social impact focus in their company’s vision and purpose statement, but it’s becoming increasingly popular with the growing buying power of Millennial and Gen Z consumers.

A powerful vision statement helps company employees focus their work in the right direction — and a strong vision statement will do the same for your organization.

2.     Create your mission

While your vision is an organization-wide goal, your mission how you plan to achieve the vision..

Without a mission, your organization lacks the why and how. If everyone in your organization has their own interpretation of the vision, it can lead to conflicting strategies and initiatives.

For Warby Parker, there are many possible routes to achieve the company vision that states “buying glasses should be easy and fun. It should leave you happy and good-looking, with money in your pocket.”

The company’s mission statement is: “By circumventing traditional channels, designing glasses in-house, and engaging with customers directly, we’re able to provide higher-quality, better-looking prescription eyewear at a fraction of the going price.”

After the founding team realized early on that one large company dominated the eyewear industry with inflated prices, they decided to find a way to lower prices and increase quality, while also turning a profit. The resulting actions included bringing many traditionally outsourced services in-house, such as design and consumer marketing/sales.

3.     Set your objectives

Objectives are specific results that a person or system aims to achieve within a time frame..

Defining success early lets you know if you are on the path to achieve your mission and vision. Clearly articulating your objectives creates goal posts by which your organization can measure its overall health and the impact of strategic initiatives.

In general, good objectives should be clear, measurable and be supported by multiple strategic initiatives across the organization.

While Warby Parker isn’t a public company and is not legally required to release annual financial statements, the organization does voluntary release an annual impact report. The report provides a window into the company’s strategic objectives with the inclusion of priority issues relevant to both stakeholders and the company. For the most recent 2019 report , the top issues cited are the Buy a Pair, Give a Pair program, customer experience, innovation, product safety, and responsible sourcing.

For the Buy a Pair, Give a Pair program, Warby Parker’s relevant objective might be aimed at growing the program, while the innovation priority may be tied to the objective of innovating to meet the strategic vision and mission. The issue of responsible sourcing could lead to an objective of using all recycled packaging or becoming carbon neutral. While the listed issues are presented through an impact lens, they also have a financial purpose.

4.    Develop your strategy

Your strategy is a long-term plan that enables you to achieve your organization’s objectives..

An effective strategy brings together vision and execution. Strategies are much more specific than an organization’s vision, mission, and objectives. They are typically only shared within an organization and ideally built around an organization’s needs and market context. Strategies should map long-term plans to objectives and actionable steps, foster innovative thinking, as well as anticipate and mitigate potential pitfalls.

Strategic plans often look out 3-5 years, and there may be a separate plan for each individual objective within the organization. In the Warby Parker annual impact report, we have insight into the strategy for each of the objectives identified above. We’ll highlight potential strategies for two areas: the Buy a Pair, Give a Pair program and innovation.

By the end of 2019 Warby Parker had distributed seven million pairs of glasses to 23 countries through the Buy a Pair, Give a Pair Program and will be likely focus on expanding those numbers in 2021 and beyond. According to the impact report, 2.5 billion people around the world lack access to affordable glasses to learn and work. In order to make a positive impact, Warby Parker needed to develop strategies to continue chipping away at that need, as well as meet company objectives, mission and vision. An example strategy for this program could be expanding the US-based Pupils Project, which gives school children access to free vision services and glasses. In the 2019-2020 school year, Warby Parker expanded the program from New York City and Baltimore to Philadelphia, providing vision services to an estimated 25,000 students in the School District of Philadelphia.

In addition, Warby Parker has traditionally been focused on eyewear and reimagining the customer experience for glasses wearers, so naturally the company’s leadership identified an innovation opportunity to add daily contact lenses in November 2019, which was likely the result of a multi-year strategic plan. Like Warby Parker’s eyeglasses process, the company allows a trial period for contact wearers, who can request 6 days of contacts in their prescription before committing to a full 90-day supply.

5.     Outline your approach

An approach provides a methodology for executing your strategy..

The approach is a framework for answering key questions that will later determine tactics. Plus, it guides an organization on how to execute the strategic plan.

Within our Warby Parker example, each strategic plan included an approach that guided the leadership team in their analysis and plan execution. While we won’t cover each decision the company made in 2019, we’d like to focus on two big ones: the Pupils Project expansion and the launch of the contact lens brand Scout.

When it came to expanding the Pupils Project, the Warby Parker leadership team needed an approach for addressing each key decision for the program. There were likely more decisions than we can cover in one whitepaper, but will focus on two: whether to partner with existing non-profits or create its own program and how to make the greatest impact with the funds available.

Leading up to the decision points, like whether to expand the Pupils Program to Philadelphia, the leadership’s approach probably included a consideration of whether to develop the program infrastructure and manage it internally or partner with existing non-profits. The approach also likely included a cost-benefit analysis of that question, evaluating the financial ROI and social impact of each option. The company ultimately choose to work with two local Philadelphia nonprofits.

Another key decision requiring a strong approach within the Pupils Program was how to have the greatest impact with the funds available. The company needed an approach that would help them answer and inform key decisions. Those decisions could have included an analysis of whether to contribute the glasses directly or make a cash equivalent donation to the nonprofits, how to identify schools for the project (for example considering the greatest overall need or the number of glasses Warby Parker can provide), as well as who should manage the logistics of the screenings and eyeglasses deliveries.

On the innovation side, Warby Parker needed a quality approach to ensure the contact lens brand launch (called Scout) was aligned with the existing mission, vision, objectives and strategies. In order to create a contact lens that was high quality, affordable, and with lower waste packaging, the company needed a multi-pronged approach. Two crucial areas of planning for the Scout contact lenses were undoubtedly the design of the product and choosing the right manufacturer.

Because contact lenses were completely new to the company, Warby Parker needed to either design them in house or hire an outside design team that would meet the high standards the leadership outlined in the 2019 impact report , “On top of creating a great shopping experience for our customers, we have high expectations for what a daily contact lens should be—high quality, moist, breathable, comfortable, innovative, and affordable. It’s a lot to ask of one product, but we were relentless in our search for a contact lens that checked all of those boxes.”

While the company does not say in the report which route it chose for design, the leadership likely did a cost benefit analysis of designing it in-house vs. working with an outside design company or freelance designers. The key considerations were likely the cost to design, the strategic importance of certain attributes (like breathability, moisture content, shape), the cost to manufacture, and the sustainability considerations.

In terms of the approach to find the right manufacturer, Warby Parker needed to find a partner that met the company’s quality, cost, and environmental standards. The sustainability standards included finding packaging with significant less waste and incorporating recycled materials from the manufacturing process. The company’s approach to finding a manufacturer probably included research and a ranking of multiple companies with the above criteria in mind, then doing a comparison across the top choices and additional due diligence before choosing a partner.

Through these examples, you can see how an approach ladders up to strategies, outcomes and eventually the company’s mission.

6.    Get down to tactics

Tactics are focused initiatives, projects, or programs that allow organizations to execute a strategic plan..

Tactics are the key to execution. They are the actions you take to make it all happen.

Within each decision Warby Parker made, the company used different tactics to move it from an idea to actual product or program. While each decision could have dozens of tactics, we’ve highlighted one or two examples for each.

For the Pupils Project at Warby Parker, the decision for how to have the largest impact possible required several tactics or initiatives to make that happen. The company choose to have the nonprofit partners run the screenings while Warby Parker provided the glasses and had the students choose their styles from 40 options in a truck show. One necessary tactic was bringing together the design and logistics teams to narrow down the style options that would be appealing to kids, cost effective, and easy to produce in large numbers.

Another important tactic was likely determining how to produce and deliver the glasses to the students, whether the glasses should deliver to their homes or the schools, and how to ensure the glasses fit correctly after they arrived. The Pupils Project’s overall goal is for children to have glasses to enable their ability to learn, and in order to do that, they need to actually use the glasses for the long-term, so it’s important to have styles that appeal to children, as well as well-fitting frames.

In terms of tactics for the Scout contact lens launch, once the company made the decision on a design team, the project leaders determined tactics to make the contacts idea a reality. The designers had specific research guidelines to find material and construction that fit the criteria of “high quality, moist, breathable, comfortable, innovative, and affordable.” The final product is made with a material that resists drying and constructed using new technology to increase eye comfort during wear.

The company design team also created flat pack packaging that is more hygienic, uses less raw materials, and takes up less space compared to traditional contact lens packaging. Even the placement of the contact (upside down) was intentional to reduce the chance of contamination from dirt or bacteria when the wearer puts them in their eye. Each of these items were likely framed as tactics and initiatives used to create the Scout lenses. Each was directly related to Warby Parker’s approach to the decision, the overall strategy, and aligned with the larger mission and vision.

On the surface, each tactic might not seem connected, but as you dig deeper, you’ll find that effective tactics should always tie back to the strategy, objectives, mission, and vision of the company.

This is the second in a 5-part blog series defining Spur Reply’s unique perspective on the often overlooked, but incredibly valuable world of business operations. 

Part 1: Overall business operations

Part 2: this blog focuses on strategic planning, part 3: operations design, part 4: initiative execution, part 5: business intelligence.

Dan Overgaag

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Fundamentals of Human Resource Management: Functions, Applications, Skill Development

Student resources, chapter summary.

2.1  Discuss the strategic planning process by classifying the major components of the external environment.

Strategic planning provides a process to evaluate our organization and its environment—both today and in the expected future—and determine what our organization wants to do to meet the requirements of that expected future. There are nine major external environmental forces that must be taken into account:

• Customers . Companies must continually improve products to create value for their customers.
• Competition. Organizations must compete against each other for customers, for the same employees, and sometimes for suppliers. Competitors’ changing strategic moves affect the performance of the organization.
• Suppliers . The firm’s performance is affected by its suppliers. Therefore, it is important to develop close working relationships with your suppliers.
• Labor force . The recruits available to, and the employees of, an organization have a direct effect on its performance. Management must recruit human resources from the available labor force outside the company’s boundaries.
• Shareholders . The owners of a corporation, known as shareholders, influence management. Most shareholders of large corporations are not involved in the day-to-day operation of the firm, but they do vote for the board of directors, and the top manager reports to the board of directors.
• Society . Individuals and groups within society have formed to pressure business for changes. People who live in the same area with the business do not want it to pollute the air or water or otherwise abuse natural resources.
• Technology . Computers and the Internet have changed the speed and the manner in which organizations conduct and transact business. Changing technologies require technologically savvy employees who have the ability to adapt to new processes.
• The Economy . No organization has control over economic growth, inflation, interest rates, foreign exchange rates, and so on. In general, as measured by gross domestic product (GDP), businesses do better when the economy is growing than they do during recessions.
• Governments . National, state, and local governments all set laws and regulations that businesses must obey. To a large extent, a business may not do whatever it wants to do; the government tells business what it can and cannot do.

2.2 Discuss how visions, missions, and objectives help to define the organization’s strategy.

A strategy is a plan of action designed to achieve a particular set of objectives. Visions and mission statements help focus organizational activities on achieving the strategic goals of the organization. The vision is what we expect to become as an organization at a particular point in time in the future. The vision is who we are, what we stand for, what we believe in, and what we want to become. The mission is where we start to become specific. It lays out our expectations of what we’re going to do in order to become the organization that we have envisioned. When you put the vision and mission together, all the people in the organization get a more complete picture of the direction in which they are expected to go. Setting objectives creates targets that enable management to measure its progress at achieving its vision and mission and other goals.

2.3  Explain the three major generic strategies.

• Cost Leadership—Cost leaders do everything they can to lower the internal organizational costs required to produce their products or services. This can give them a powerful edge in commodity product/service environments.
• Differentiation—This strategy attempts to create an impression of difference for the company’s product or service in the mind of the customer. The differentiator company stresses its advantages to the customer over its competitors.
• Focus/Niche—With this strategy, the company focuses on a specific portion, or segment, of a larger market. Within a particular target segment or market niche, the firm may use either a differentiation or a cost leadership strategy.

2.4  Summarize the importance of the major components of organizational structure.

Organizational structure refers to the way in which an organization groups its resources to accomplish its mission. Organizations structure their resources to transform inputs and outputs. All of an organization’s resources must be structured effectively to achieve its mission. As a manager in any department, you will be responsible for part of the organization’s structure.

All of an organization’s resources must be structured effectively if it is to achieve its mission. Structure is made up of three major components:

• Complexity is the degree to which three types of differentiation exist within the organization. These three types are vertical differentiation, horizontal differentiation, and spatial differentiation. The more the organization is divided—whether vertically, horizontally, or spatially—the more difficult it is to manage.
• Formalization is the degree to which jobs are standardized within an organization. The more we can standardize the organization and its processes, the easier it is to control those processes.
• Centralization is the degree to which decision making is concentrated within the organization at a single point—usually at the top. A highly centralized organization would have all authority concentrated at the top, while a decentralized organization would have authority spread throughout. If authority can be centralized, we can take advantage of learning curve effects that help to improve our decision making over time.

2.5  Discuss how organizational culture affects the members of the organization.

Organizational culture consists of the values, beliefs, and assumptions about appropriate behavior that members of an organization share. Organizational culture is primarily learned through observing people and events in the organization. Because organizational culture is based at least partly on assumptions, values, and beliefs, the culture can control how people act within its boundaries. Because assumptions, values, and beliefs are such strong influences, individuals will generally act to conform to the culture. For the most part, we all act to conform to the culture that we happen to be in at any given point in time, and that’s because cultural values push us to act that way.

2.6  Define data analytics by how it helps organizations make important decisions.

Data analytics is the process of accessing large amounts of data in order to analyze those data and gain insight into significant trends or patterns within organizations or industries. Analytics tools and processes can be used to guide decision making for many HR functions, such as talent acquisition and management, training and development, work and job analysis, productivity analysis, motivation, retention, and engagement. Data analytics on a large scale, or big data , will change how people are managed within organizations and ideally lead to increased performance of the organization.

2.7  Identify how human resource management systems (HRMS) can help HR make decisions.

Human resource management systems (HRMS) are interacting database systems that aim to generate and deliver HR information and allow us to automate some HRM functions. They are primarily database management systems, designed especially for use in HR functions.

HRMS allow us to maintain control of our HR information and make it available for use during the strategic planning process. Having this information immediately available makes the strategic planning process both quicker and smoother. We can also use the information stored in the database to make daily decisions within the HR department, such as a decision on whom to send to a particular training class. We can also use these databases when considering promotions, transfers, team assignments, and many other daily activities that are required inside the organization.

2.8  Recall the common measurement tools for strategic HRM.

We discussed two common tools in this chapter: economic value added (EVA) and return on investment (ROI).

EVA is a measure of profits that remain after the cost of capital has been deducted from operating profits. ROI is a measure of the financial return we receive because of something that we do to invest in our organization or its people.

• Strategic Management

Strategic Management Process - Meaning, Steps and Components

The strategic management process means defining the organization’s strategy. It is also defined as the process by which managers make a choice of a set of strategies for the organization that will enable it to achieve better performance.

Strategic management is a continuous process that appraises the business and industries in which the organization is involved; appraises it’s competitors; and fixes goals to meet all the present and future competitor’s and then reassesses each strategy.

Strategic management process has following four steps:

It helps in analyzing the internal and external factors influencing an organization.

After executing the environmental analysis process, management should evaluate it on a continuous basis and strive to improve it.

After conducting environment scanning, managers formulate corporate, business and functional strategies.

Strategy implementation includes designing the organization’s structure, distributing resources, developing decision making process, and managing human resources.

The key strategy evaluation activities are: appraising internal and external factors that are the root of present strategies, measuring performance, and taking remedial/corrective actions.

Evaluation makes sure that the organizational strategy as well as it’s implementation meets the organizational objectives.

These components are steps that are carried, in chronological order, when creating a new strategic management plan.

Present businesses that have already created a strategic management plan will revert to these steps as per the situation’s requirement, so as to make essential changes.

Strategic management is an ongoing process . Therefore, it must be realized that each component interacts with the other components and that this interaction often happens in chorus.

  Related Articles

• Strategy - Definition and Features
• Components of a Strategy Statement
• Vision & Mission Statements
• Environmental Scanning
• Strategy Formulation

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Authorship/Referencing - About the Author(s)

The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team . MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider . To Know more, click on About Us . The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.

• Strategic Management - Introduction
• Strategic Management Process
• Strategy Implementation
• Strategy Formulation vs Implementation
• Strategy Evaluation
• Strategic Decisions
• Benefits of Strategic Management
• Business Policy
• SWOT Analysis
• SWOT Analysis of Google
• SWOT Analysis of Starbucks
• SWOT Analysis of Blackberry
• Personal SWOT Analysis
• SWOT Analysis of Amazon
• SWOT Analysis of IKEA
• SWOT Analysis of Nike
• SWOT Analysis of Microsoft
• SWOT Analysis of China Mobile
• Competitor Analysis
• What is Competitive Advantage ?
• Human, Social, and Intellectual Capital as a Means of Competitive Advantage
• Porter’s Five Forces Model
• Blue Ocean Strategy and its Implications for Businesses
• Overfished Ocean Strategy: How to Drive Growth and Attain Profitability
• Porters Five Forces Analysis of the Airlines Industry in the United States
• Porters Five Forces Analysis of Samsung
• Porters Five Forces Analysis of Virgin Atlantic
• Porters Five Forces Analysis of China Mobile
• Strategic Leadership
• Some Pitfalls to be Avoided
• Corporate Governance
• Business Ethics
• Social Responsibilities of Managers
• Core Competencies
• Core Competency Theory of Strategy
• Ansoff Matrix
• Routes to Strategic Growth
• Diversification as a Viable Corporate Strategy
• 5 Configurations of Strategic Management
• Role of Planning, Plans and Planners
• Reasons for Avoiding Strategic Planning
• Strategic Management for the Millennials
• Strategizing for the Future
• PESTLE Analysis of the Global Aviation Industry
• PESTLE Analysis of Starbucks
• PESTLE Analysis of Samsung
• SWOT Analysis of Unilever
• Business Strategies to Beat the Downturn
• Analysis of Amazon’s Corporate Strategy
• How Amazon Can Improve its Corporate Strategy
• Cutting Costs Strategically
• Actualizing Business as Usual Strategies for Mission Critical Organizations and Functions
• Why Indian Firms Must Strive for Strategic Autonomy in Their Geoeconomic Strategies

3.2 Components of the Strategic Planning Process

Learning objectives.

The objectives of this section is to help students …

• Explain how a mission statement helps a company with its strategic planing.
• Describe how a firm analyzes its internal environment.
• Describe the external environment a firm may face and how it is analysed.

Strategic planning is a process that helps an organization allocate its resources to capitalize on opportunities in the marketplace. Typically, it is a long-term process. The strategic planning process includes conducting a situation analysis and developing the organization’s mission statement, objectives, value proposition, and strategies. Figure 3.2 “The Strategic Planning Process” shows the components of the strategic planning process. Let’s now look at each of these components.

Figure 3.2: The Strategic Planning Process

Conducting a Situation Analysis

As part of the strategic planning process, a situation analysis must be conducted before a company can decide on specific actions. A situation analysis involves analyzing both the external (macro and micro factors outside the organization) and the internal (company) environments. Figure 3.2 “The Strategic Planning Process” and Figure 3.3 “Elements of a SWOT Analysis” show examples of internal and external factors and in a SWOT analysis. The firm’s internal environment—such as its financial resources, technological resources, and the capabilities of its personnel and their performance—has to be examined. It is also critical to examine the external macro and micro environments the firm faces,such as the economy and its competitors. The external environment significantly affects the decisions a firm makes, and thus must be continuously evaluated. For example, during the economic downturn in 2008–2009, businesses found that many competitors cut the prices of their products drastically. Other companies reduced package sizes or the amount of product in packages. Firms also offered customers incentives (free shipping, free gift cards with purchase, rebates, etc.) to purchase their goods and services online, which allowed businesses to cut back on the personnel needed to staff their brick-and-mortar stores. While a business cannot control things such as the economy, changes in demographic trends, or what competitors do, it must decide what actions to take to remain competitive—actions that depend in part on their internal environment.

Conducting a SWOT Analysis

Based on the situation analysis, organizations analyze their strengths, weaknesses, opportunities, and threats, or conduct what’s called a SWOT analysis. Strengths and weaknesses are internal factors and are somewhat controllable. For example, an organization’s strengths might include its brand name, efficient distribution network, reputation for great service, and strong financial position. A firm’s weaknesses might include lack of awareness of its products in the marketplace, alack of human resources talent, and a poor location. Opportunities and threats are factors that are external to the firm and largely uncontrollable. Opportunities might entail the international demand for the type of products the firm makes, few competitors, and favorable social trends such as people living longer. Threats might include a bad economy, high interest rates that increase a firm’s borrowing costs, and an aging population that makes it hard for the business to find workers.

You can conduct a SWOT analysis of yourself to help determine your competitive advantage. Perhaps your strengths include strong leadership abilities and communication skills, whereas your weaknesses include a lack of organization. Opportunities for you might exist in specific careers and industries; however, the economy and other people competing for the same position might be threats. Moreover, a factor that is a strength for one person (say, strong accounting skills) might be a weakness for another person (poor accounting skills). The same is true for businesses. See Figure 3.3 “Elements of a SWOT Analysis” for an illustration of some of the factors examined in a SWOT analysis.

Figure 3.3: Elements of a SWOT Analysis

The easiest way to determine if a factor is external or internal is to take away the company, organization, or individual and see if the factor still exists. Internal factors such as strengths and weaknesses are specific to a company or individual, whereas external factors such as opportunities and threats affect multiple individuals and organizations in the marketplace. For example, if you are doing a situation analysis on PepsiCo and are looking at the weak economy, take PepsiCo out of the picture and see what factors remain. If the factor—the weak economy—is still there, it is an external factor. Even if PepsiCo hadn’t been around in 2008–2009, the weak economy reduced consumer spending and affected a lot of companies.

Assessing the Internal Environment

As we have indicated, when an organization evaluates which factors are its strengths and weaknesses, it is assessing its internal environment. Once companies determine their strengths, they can use those strengths to capitalize on opportunities and develop their competitive advantage. For example, strengths for PepsiCo are what are called “mega” brands, or brands that individually generate over $1 billion in sales1. These brands are also designed to contribute to PepsiCo’s environmental and social responsibilities.

PepsiCo’s brand awareness, profitability, and strong presence in global markets are also strengths. Especially in foreign markets, the loyalty of a firm’s employees can be a major strength, which can provide it with a competitive advantage. Loyal and knowledgeable employees are easier to train and tend to develop better relationships with customers. This helps organizations pursue more opportunities.

Although the brand awareness for PepsiCo’s products is strong, smaller companies often struggle with weaknesses such as low brand awareness, low financial reserves, and poor locations. When organizations assess their internal environments, they must look at factors such as performance and costs as well as brand awareness and location. Managers need to examine both the past and current strategies of their firms and determine what strategies succeeded and which ones failed. This helps a company plan its future actions and improves the odds they will be successful. For example, a company might look at packaging that worked very well for a product and use the same type of packaging for new products. Firms may also look at customers’ reactions to changes in products, including packaging, to see what works and doesn’t work. When PepsiCo changed the packaging of major brands in 2008,customers had mixed responses.Tropicana switched from the familiar orange with the straw in it to a new package and customers did not like it. As a result,Tropicana changed back to their familiar orange with a straw after spending $35 million for the new package design.

Watch Video Clip: Tropicana’s Ad

https://www.youtube.com/watch?v=LDnkqlnhGGI

Tropicana’s ad left out the familiar orange with a straw.

Individuals are also wise to look at the strategies they have tried in the past to see which ones failed and which ones succeeded. Have you ever done poorly on an exam? Was it the instructor’s fault, the strategy you used to study, or did you decide not to study? See which strategies work best for you and perhaps try the same type of strategies for future exams. If a strategy did not work, see what went wrong and change it. Doing so is similar to what organizations do when they analyze their internal environments.

Assessing the External Environment

Analyzing the external environment involves tracking conditions in the macro and micro market place that,although largely uncontrollable, affect the way an organization does business. The macro environment includes economic factors, demographic trends, cultural and social trends, political and legal regulations, technological changes, and the price and availability of natural resources. Each factor in the macro environment is discussed separately in the next section. The micro environment includes competition, suppliers, marketing intermediaries (retailers, wholesalers), the public, the company, and customers. We focus on competition in our discussion of the external environment in the chapter. Customers, including the public will be the focus of Chapter 3 “Consumer Behavior: How People Make Buying Decisions” and marketing intermediaries and suppliers will be discussed in Chapter 8 “Using Marketing Channels to Create Value for Customers” and Chapter 9 “Using Supply Chains to Create Value for Customers”.

When firms globalize, analyzing the environment becomes more complex because they must examine the external environment in each country in which they do business. Regulations, competitors, technological development,and the economy may be different in each country and will affect how firms do business. To see how factors in the external environment such as technology may change education and lives of people around the world, watch the videos “Did You Know 2.0?” and “Did You Know 3.0?” which provide information on social media sites compared to populations in the world. Originally created in 2006 and revised in 2007, the video has been updated and translated into other languages. Another edition of “Did You Know?” (4.0) focused on changing media and technology and showed how information may change the world as well as the way people communicate and conduct business.

Watch Video Clip: Did You Know 2.0?

https://www.youtube.com/watch?v=pMcfrLYDm2U

To see how the external environment and world are changing and in turn affecting marketing strategies, watch “Did You Know 4.0?”

Watch Video Clip: Did You Know 4.0?

https://www.youtube.com/watch?v=6ILQrUrEWe8

To see how fast things change and the impact of technology and social media, visit “Did You Know 4.0?”

Although the external environment affects all organizations, companies must focus on factors that are relevant for their operations. For example, government regulations on food packaging will affect PepsiCo but not Goodyear. Similarly, students getting a business degree don’t need to focus on job opportunities for registered nurses.

The Competitive Environment

All organizations must consider their competition, whether it is direct or indirect competition vying for the consumer’s dollar. Both nonprofit and for-profit organizations compete for customers’ resources. Coke and Pepsi are direct competitors in the soft drink industry, Hilton and Sheraton are competitors in the hospitality industry,and organizations such as United Way and the American Cancer Society compete for resources in the nonprofit sector. However, hotels must also consider other options that people have when selecting a place to stay, such as hostels, dorms, bed and breakfasts, or rental homes.

A group of competitors that provide similar products or services form an industry. Michael Porter,a professor at Harvard University and a leading authority on competitive strategy, developed an approach for analyzing industries. Called the five forces model (Porter,1980) and shown in Figure 3.4 “Five Forces Model”, the framework helps organizations understand their current competitors as well as organizations that could become competitors in the future. As such, firms can find the best way to defend their position in the industry.

Figure 3.4: Five Forces Model (Porter, 1980)

Competitive Analysis

When a firm conducts a competitive analysis, they tend to focus on direct competitors and try to determine a firm’s strengths and weaknesses, its image, and its resources. Doing so helps the firm figure out how much money a competitor may be able to spend on things such as research, new product development, promotion, and new locations. Competitive analysis involves looking at any information (annual reports, financial statements, news stories, observation details obtained on visits, etc.) available on competitors. Another means of collecting competitive information utilizes mystery shoppers, or people who act like customers. Mystery shoppers might visit competitors to learn about their customer service and their products. Imagine going to a competitor’s restaurant and studying the menu and the prices and watching customers to see what items are popular and then changing your menu to better compete. Competitors battle for the customer’s dollar and they must know what other firms are doing. Individuals and teams also compete for jobs, titles, and prizes and must figure out the competitors’ weaknesses and plans in order to take advantage of their strengths and have a better chance of winning.

According to Porter, in addition to their direct competitors (competitive rivals), organizations must consider the strength and impact the following could have (Porter, 1980):

• Substitute products
• Potential entrants (new competitors) in the marketplace
• The bargaining power of suppliers
• The bargaining power of buyers

When any of these factors change, companies may have to respond by changing their strategies. For example, because buyers are consuming fewer soft drinks these days, companies such as Coke and Pepsi have had to develop new, substitute offerings such as vitamin water and sports drinks. However, other companies such as Dannon or Nestlé may also be potential entrants in the flavored water market. When you select a hamburger fast-food chain, you also had the option of substitutes such as getting food at the grocery or going to a pizza place. When computers entered the market, they were a substitute for typewriters. Most students may not have ever used a typewriter, but some consumers still use typewriters for forms and letters.

Figure 3.5: Substitute products

When personal computers were first invented, they were a serious threat to typewriter makers such as Smith Corona. (pclemens –Smith-Corona Classic 12– CC BY 2.0)

Suppliers, the companies that supply ingredients as well as packaging materials to other companies, must also be considered. If a company cannot get the supplies it needs, it’s in trouble. Also, sometimes suppliers see how lucrative their customers’ markets are and decide to enter them. Buyers, who are the focus of marketing and strategic plans, must also be considered because they have bargaining power and must be satisfied. If a buyer is large enough, and doesn’t purchase a product or service, it can affect a selling company’s performance. Walmart, for instance, is a buyer with a great deal of bargaining power. Firms that do business with Walmart must be prepared to make concessions to them if they want their products on the company’s store shelves.

Lastly, the world is becoming “smaller” and a more of a global marketplace. Companies everywhere are finding that no matter what they make, numerous firms around the world are producing the same “widget” or a similar offering (substitute) and are eager to compete with them. Employees are in the same position. The Internet has made it easier than ever for customers to find products and services and for workers to find the best jobs available, even if they are abroad. Companies are also acquiring foreign firms. These factors all have an effect on the strategic decisions companies make.

The Political and Legal Environment

All organizations must comply with government regulations and understand the political and legal environments in which they do business. Different government agencies enforce the numerous regulations that have been established to protect both consumers and businesses. For example, the Sherman Act (1890) prohibits U.S. firms from restraining trade by creating monopolies and cartels. The regulations related to the act are enforced by the Federal Trade Commission (FTC), which also regulates deceptive advertising. The U.S. Food and Drug Administration (FDA) regulates the labeling of consumable products, such as food and medicine. One organization that has been extremely busy is the Consumer Product Safety Commission, the group that sets safety standards for consumer products. Unsafe baby formula and toys with lead paint caused a big scare among consumers in 2008 and 2009.

Figure 3.6: The legal environment

The U.S. Food and Drug Administration prohibits companies from using unacceptable levels of lead in toys and other house hold objects, such as utensils and furniture. Mattel voluntarily recalled Sarge cars made in mid-2000.

As we have explained, when organizations conduct business in multiple markets, they must understand that regulations vary across countries and across states. Many states and countries have different laws that affect strategy. For example, suppose you are opening up a new factory because you cannot keep up with the demand for your products. If you are considering opening the factory in France (perhaps because the demand in Europe for your product is strong), you need to know that it is illegal for employees in that country to work more than thirty-five hours per week.

The Economic Environment

The economy has a major impact on spending by both consumers and businesses, which, in turn, affects the goals and strategies of organizations. Economic factors include variables such as inflation, unemployment, interest rates, and whether the economy is in a growth period or a recession. Inflation occurs when the cost of living continues to rise, eroding the purchasing power of money. When this happens, you and other consumers and businesses need more money to purchase goods and services. Interest rates often rise when inflation rises. Recessions can also occur when inflation rises because higher prices sometimes cause low or negative growth in the economy.

During a recessionary period, it is possible for both high-end and low-end products to sell well. Consumers who can afford luxury goods may continue to buy them, while consumers with lower in comes tend to become more value conscious. Other goods and services, such as products sold in tradition at department stores, may suffer. In the face of a severe economic downturn, even the sales of luxury goods can suffer. The economic downturn that began in 2008 affected consumers and businesses at all levels worldwide. Consumers reduced their spending, holiday sales dropped, financial institutions went bankrupt, the mortgage industry collapsed, and the “Big Three” U.S.auto manufacturers (Ford, Chrysler, and General Motors) asked for emergency loans.

The demographic and social and cultural environments—including social trends, such as people’s attitudes toward fitness and nutrition; demographic characteristics, such as people’s age, income, marital status, education, and occupation; and culture, which relates to people’s beliefs and values—are constantly changing in the global marketplace. Fitness, nutrition, and health trends affect the product offerings of many firms. For example, PepsiCo produces vitamin water and sports drinks. More women are working, which has led to a rise in the demand for services such as house cleaning and day care. U.S. baby boomers are reaching retirement age, sending their children to college, and trying to care of their elderly parents all at the same time. Firms are responding to the time constraints their buyers face by creating products that are more convenient, such as frozen meals and nutritious snacks.

The composition of the population is also constantly changing. Hispanics are the fastest-growing minority in the United States. Consumers in this group and other diverse groups prefer different types of products and brands. In many cities, stores cater specifically to Hispanic customers.

The technology available in the world is changing the way people communicate and the way firms do business. Everyone is affected by technological changes. Self-scanners and video displays at stores, ATMs, the Internet, and mobile phones are a few examples of how technology is affecting businesses and consumers. Many consumers get information, read the news, use text messaging, and shop online. As a result, marketers have begun allocating more of their promotion budgets to online ads and mobile marketing and not just to traditional print media such as newspapers and magazines. Applications for telephones and electronic devices are changing the way people obtain information and shop, allowing customers to comparison shop without having to visit multiple stores. As you saw in “Did You Know 4.0?” technology and social media are changing people’s lives. Many young people may rely more on electronic books, magazines, and newspapers and depend on mobile devices for most of their information needs. Organizations must adapt to new technologies in order to succeed.

Figure 3.7: The technological environment

Technology changes the way we do business. Banking on a cell phone adds convenience for customers. Bar codes on merchandise speed the checkout process. “first direct –first direct Banking ‘on the go’ iPhone App”

(front– CC BY-NC-ND 2.0; Paul Domenick –Lasered– CC BY-NC-ND 2.0)

 Natural Resources

Natural resources are scarce commodities, and consumers are becoming increasingly aware of this fact. Today, many firms are doing more to engage in “sustainable” practices that help protect the environment and conserve natural resources. Green marketing involves marketing environmentally safe products and services in a way that is good for the environment. Water shortages often occur in the summer months, so many restaurants now only serve patrons water upon request. Hotels voluntarily conserve water by not washing guests’ sheets and towels every day unless they request it. Reusing packages (refillable containers) and reducing the amount of packaging, paper, energy, and water in the production of goods and services are becoming key considerations for many organizations, whether they sell their products to other businesses or to final users (consumers). Construction companies are using more energy efficient materials and often have to comply with green building solutions. Green marketing not only helps the environment but also saves the company, and ultimately the consumer, money. Sustainability, ethics (doing the right things), and social responsibility (helping society, communities, and other people) influence an organization’s planning process and the strategies they implement.

Although environmental conditions change and must be monitored continuously, the situation analysis is a critical input to an organization’s or an individual’s strategic plan. Let’s look at the other components of the strategic planning process.

The Mission Statement

The firm’s mission statement states the purpose of the organization and why it exists. Both profit and nonprofit organizations have mission statements, which they often publicize. The following are examples of mission statements:

PepsiCo’s Mission Statement “Our mission is to be the world’s premier consumer products company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity (2).”

The United Way’s Mission Statement “To improve lives by mobilizing the caring power of communities (3).” Sometimes SBUs develop separate mission statements. For example, PepsiCo Americas Beverages, PepsiCo Americas Foods, and PepsiCo International might each develop a different mission statement.

• A firm must analyze factors in the external and internal environments it faces throughout the strategic planning process.
• These factors are inputs to the planning process. As they change, the company must be prepared to adjust its plans.
• Different factors are relevant for different companies.
• Once a company has analyzed its internal and external environments, managers can begin to decide which strategies are best, given the firm’s mission statement

(1) PepsiCo, Inc., “PepsiCo Brands,” http://www.pepsico.com/Company/Our-Brands.html (accessed December 7, 2009).

(2) PepsiCo, Inc., “Our Mission and Vision,” http://www.pepsico.com/Company/Our-Mission-and-Vision.html (accessed December 7, 2009).

(3) United Way Worldwide, “Mission and Vision,” http://www.liveunited.org/about/missvis.cfm (accessed December 7, 2009).

Porter, M. E.,Competitive Strategy(New York: The Free Press, 1980), 3–33.

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