strategic planning process advantages and disadvantages

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• What are the advantages and disadvantages of strategic planning?

Every year companies prepare their strategic planning, and it is common for organizations to get involved in this planning to develop, implement and evaluate strategies of a different nature.

But you may be thinking: is it worth embarking on a strategic planning process? The fact is that there are some advantages and disadvantages to this process, and this is what we will show you throughout this article. Keep reading!

What you will see in this post:

What is strategic planning?

Strategic planning is the process that generates new ideas and actions that provide a central structure for the company to project its future. It is with him that the company decides today what it wants to be in the future, and how it intends to get there.

For this reason, you can have an immediate and decisive influence on your organization. But is it enough to apply some of the types of strategic planning for everything to turn out well? The answer is no.

There are advantages and disadvantages of strategic planning. And it is up to each company to carry out the appropriate process that helps it to benefit from all these advantages and avoid suffering the disadvantages that may exist.

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Understand the importance of strategic planning

If your company is small, medium, or large, if you are not already planning the next steps and performing your actions well, stay tuned: you may be missing great opportunities to create a competitive advantage in your business.

A company that does not plan, does not know what it wants to achieve and does not direct its actions towards it. In practice, that is “management in the dark.”, and at best, it means stagnation.

No matter what your goal is, one thing is certain: any team that does not have good planning on its hands cannot act decisively. Developing a strategic vision for the future of your company brings benefits to both your company and your customers. After all, it guarantees a healthy and stable growth of the business and, at the same time, manages to generate value for the public, that is, everyone wins.

So why not start now?

5 advantages of strategic planning

1- proactive and not reactive organizations.

Strategic planning can help your business be more proactive than reactive in countless situations.

This type of document allows organizations to predict their future and be adequately prepared. In other words, organizations are better able to keep up with constantly changing market trends, always staying one step ahead of the competition.

2- Establish a sense of direction

A strategic plan helps define the direction an organization should take. In addition, it helps to set realistic goals and objectives, which are aligned with the vision and mission of the company.

3- Increased operational efficiency

Well-structured strategic planning provides a kind of road map to align the functional activities of the organization to achieve the established objectives. It guides management discussions and decision-making to determine resource needs to achieve previously defined objectives and thereby increase operational efficiency.

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4- Increase market share and profitability

A well-targeted and structured approach to turning all sales and marketing efforts into the best possible results can go a long way in increasing profitability and market share.

5- Increased business durability

Many companies end up closing their doors very soon precisely because they have not been strategically prepared. With markets increasingly globalized and in constant transformation, organizations that do not have a solid foundation, focus, and forecast will have difficulties in the middle of the road, being able to close their activities much sooner than one might think. However, the chances are more favorable for those who have a strong and well-defined strategic plan.

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3 Disadvantages of strategic planning

1- application difficulties.

Strategic planning includes various types of continuous processes that check all the major critical components of a business. Being a complex process, it requires a lot of patience, discipline, and persistence. And that, for some, can be a great disadvantage.

2- Time-consuming process

The implementation of strategic planning is not an overnight process. The management team of the company must take a long time to get the new processes correct.

Because it is a long process, weighing the advantages and disadvantages of strategic planning, immediate companies end up rushing. This type of thinking ends up sidelining the strategy, which can hurt the business much more soon. 

3- High cost for small and medium enterprises

A good strategic plan can be expensive for small and medium-sized businesses or those just starting out. This is because additional efforts are needed, for example, to analyze indoor and outdoor environments.

In addition, some specific tools are needed to implement strategic planning accordingly, as well as the possible recruitment of competent personnel.

Technology as a way to help the implementation of strategic plans in your company

An institution that manages to build and delegate a good Strategic Plan has great possibilities of overcoming the adversities of the globalized world and becoming a benchmark in the field in which it operates. However, it is important to note that a company that has not defined its planning will end up being part of the group of “another institution with plans for the future”, running the risk of not having that “future”.

However, it cannot be forgotten that to achieve the desired objective of Strategic Planning it is necessary to have the support and commitment of the entire functional body of the company, since those responsible for the different phases of the process are the members of the organization themselves. 

Therefore, I invite you to discover Seed , a software capable of taking your company to a new stage and helping the process of strategic planning of your organization. Do you want to receive more content like this? Don’t forget to follow Actio on Instagram , Linkedin and Facebook .

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Advantages and disadvantages of strategic planning

This detailed article explores the key advantages and disadvantages of strategic planning. When done correctly, strategic planning can help organisations make the most of their resources, create a sense of direction, and remain competitive. However, it has several drawbacks as well.

What is strategic planning?

According to Cote (2020) strategic planning is the ongoing organisational process of using available knowledge to document a business’s intended direction. 

It is a process used by organisations to plan for the future and set long-term goals. It involves analysing the current situation of the business, forecasting potential changes, and creating plans to achieve desired outcomes.

While strategic planning has a number of advantages, it in fact has some disadvantages too.  However, advantages usually outweigh disadvantages and therefore, many organisations spend a considerable amount of time and money in strategic planning.

List of the advantages of strategic planning

Sense of direction

Strategic planning helps to create a sense of direction and focus. It helps to ensure that everyone in the organisation is working towards the same goals, and that their efforts are being directed towards the most important tasks. This can help to improve employee morale.

Risk management

No business is without risks. Therefore, organisations need to have some mechanisms in place to identify these risks. One of the most important advantages of strategic planning is that it helps organisations identify and manage risks.

Strategic planning forces managers to think. It can encourage creativity and initiative by tapping the ideas of the management team (BPP Learning Media, 2010). It may include both top-down and bottom-up approaches to engage employees in the strategic planning process.

Clarification of aims and objectives

Aims and objectives may sometimes need clarity. Strategic planning clarifies aims and objectives of an organisation. It requires planners to define what they would like to achieve.

Identifying resistance to change

Managers entrusted with strategic planning need to inform the whole organisation of the aims and objectives, strategic changes, future plans etc. This dissemination of information helps them identify resistance to change and take remedial actions as necessary.

Collaboration

Organisations consist of different departments and carry out a number of tasks. Consequently, they need collaboration and cooperation across the spectrum.  

However, managers in finance, marketing, operations, HRM etc. often compete rather than collaborate. So, what is the solution? The solution is strategic planning as it facilitates collaboration among the managers.

Allocation of resources

Organisations need to allocate resources e.g. people, money, land, and time to implement strategic plans. Moving people from one team to another or moving the facilities from one country to another may be necessary sometimes. This allocation of resources help organisations identifies right resources for right place which is a key to the success of strategic planning.

List of the disadvantages of strategic planning

Vulnerable to outside influences

Strategic plans often fail due to outside influences such as changes in the economic environment, competitor actions and/or technological change. Macro-environmental factors may sometimes change extremely rapidly which may frustrate any strategic plans.

Costly and time-consuming

If organisations carry out strategic planning thoroughly, it becomes a costly, rigid, and time-consuming process. It may sometimes take five or more years to implement a strategic plan. Consequently, benefits of strategic planning may not be immediately visible.

Organizations must dedicate resources to analyse the current situation, forecast changes, and create plans to respond to them. This can be difficult for smaller organisations, especially if they lack the resources or expertise needed to develop a comprehensive plan.

Strategic planning is a very complex process. It involves addressing several things: hence the complexity.  

Lack of success

According to several studies cited in Olson (2022) 60-90% of strategic plans never fully launch. When implemented, some of them fail as well.

Components of a good strategic plan

Creating a successful strategic plan requires careful consideration and a thorough understanding of the organisation and its goals. Here are some of the key components of a good strategic plan:

Mission statement

A mission statement should clearly articulate the organisation’s purpose and goals.

Aims and objectives

Clear aims and objectives. Objectives should follow the SMART criteria i.e. Specific, Measurable, Achievable, Realistic, and Time-bound.

Strategies should be developed to achieve the aims and the objectives. They should be designed to take advantage of the organisation’s strengths and address its weaknesses.

Action plans

Action plans should be developed to ensure that the strategies are implemented in a timely manner. They should include a timeline, a budget, and a list of tasks to be completed.

Strategic plans should be evaluated regularly to ensure that they are still relevant and are achieving the desired results.

Strategic planning tools

There are a number of tools available to help organisations with their strategic planning. Here are some of the most popular ones:

SWOT Analysis

A SWOT analysis is a tool used to assess an organisation’s Strengths, Weaknesses, Opportunities, and Threats.

Gap Analysis

A Gap analysis is a tool used to assess the gap between an organisation’s current state and its desired state. It can help organisations identify areas for improvement and develop strategies to bridge the gap.

PESTEL Analysis

A PESTEL analysis helps organisations identify different macro-environmental factors that can impact on their plans and operations.

Summary of the advantages and disadvantages of strategic planning

Strategic planning is a valuable tool for managing a business. It involves looking at the big picture, allowing organisations to identify opportunities for growth and create plans to capitalise on them.

By leveraging strategic planning, organisations can ensure that they are well-positioned for long-term success. However, as discussed above, strategic planning has several drawbacks that they need to be aware of.

We hope the article on the ‘Advantages and disadvantages of strategic planning’ has been helpful. Please share the article link on social media to support our work. You may also like:

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Last update: 03 January 2023

References:

BPP Learning Media (2010) Business Essentials: Business Strategy, 2 nd edition, London: BPP Learning Media Ltd

Cote, C. (2020) What is strategic planning, available at: https://online.hbs.edu/blog/post/why-is-strategic-planning-important (accessed 02 January 2023)

Olson, A. (2022) 4 common reasons strategies fail, available at: https://hbr.org/2022/06/4-common-reasons-strategies-fail (accessed 03 January 2023)

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Author: joe david.

Joe David has years of teaching experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality, and tourism management. He holds a Postgraduate Diploma in Management Studies and a Post Graduate Diploma in Marketing Management.

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18 Advantages and Disadvantages of Strategic Planning

Strategic planning is a process that involves defining an organization’s goals, developing strategies to achieve those goals, and allocating resources to implement those strategies. 

It is a comprehensive and systematic approach that helps organizations achieve competitive advantage and adapt to changing environments.

• Redaction Team
• September 28, 2023
• Business Planning , Entrepreneurship

Advantages of Strategic Planning

• Clear Direction : Strategic planning provides a clear sense of direction for an organization, helping leaders and employees understand where the organization is headed and what it aims to achieve.
• Alignment : It aligns the efforts of employees and departments toward common goals, fostering a shared vision and purpose within the organization.
• Prioritization : Strategic planning helps organizations prioritize initiatives and allocate resources effectively to focus on high-impact activities.
• Adaptability : While it sets long-term objectives, strategic plans are often flexible and adaptable, allowing organizations to adjust to changing circumstances and seize opportunities.
• Resource Management : It assists in the efficient allocation of resources, including finances, time, and personnel, to support the organization's strategic goals.
• Performance Measurement : Strategic plans often include key performance indicators (KPIs) that enable organizations to track progress and assess the success of their strategies.
• Enhanced Decision-Making : Having a strategic plan in place can guide decision-making processes and reduce uncertainty by providing a framework for evaluating options.
• Communication : It facilitates effective communication both internally and externally, ensuring that stakeholders, employees, and partners are aware of the organization's objectives.

Disadvantages of Strategic Planning

• Time-Consuming : The strategic planning process can be time-consuming, requiring significant input from leaders and employees, which can divert resources from day-to-day operations.
• Costly : Developing and implementing a strategic plan can be expensive, especially when consultants or specialized software are involved.
• Rigidity : Overly rigid strategic plans can hinder an organization's ability to respond quickly to unexpected challenges or opportunities.
• Resistance to Change : Employees may resist changes that are part of the strategic plan, leading to internal conflicts and morale issues.
• Complexity : Strategic planning can become overly complex, making it difficult for employees at all levels of the organization to understand and execute.
• Uncertainty : The future is inherently uncertain, and strategic plans may not always account for unforeseen events or market shifts.
• Limited Focus : In some cases, strategic planning may lead to a narrow focus on achieving specific goals, potentially overlooking broader organizational or societal responsibilities.
• Implementation Challenges : Developing a strategic plan is only the first step; ensuring successful implementation can be challenging, and many strategies fail due to poor execution.
• Lack of Accountability : Without clear accountability and monitoring mechanisms, strategic plans may not be effectively executed, leading to unmet goals.
• Overemphasis on Process : Some organizations become overly focused on the process of strategic planning rather than the outcomes, leading to bureaucratic and time-consuming procedures.

One of the main advantages of strategic planning is that it helps organizations set clear goals and objectives. By having a well-defined strategic plan, organizations can align their resources and efforts towards a common purpose. This clarity of purpose allows employees to understand their roles and responsibilities, which leads to increased motivation and productivity.

Strategic planning also helps organizations identify and leverage their strengths. By conducting a thorough analysis of the internal environment, organizations can identify their core competencies and unique capabilities. This information can then be used to develop strategies that capitalize on these strengths and give the organization a competitive advantage.

Another advantage of strategic planning is that it helps organizations anticipate and adapt to changes in the external environment. By conducting a thorough analysis of the market, industry trends, and competition, organizations can identify potential threats and opportunities. This early identification allows organizations to proactively respond to changes and stay ahead of the competition.

Strategic planning also provides a framework for resource allocation. By setting priorities and making informed decisions about resource allocation, organizations can use their limited resources effectively. This ensures that resources are allocated to the most important and strategic initiatives, maximizing the organization’s impact and return on investment.

In addition, strategic planning helps organizations align their internal processes and functions. By involving different stakeholders and departments in the planning process, organizations can create a shared understanding and commitment to the strategic goals. This alignment improves coordination and collaboration, leading to increased efficiency and effectiveness.

Furthermore, strategic planning provides a basis for evaluating performance and progress. By setting clear goals and key performance indicators, organizations can track their progress and make necessary adjustments along the way. This monitoring and evaluation process allows organizations to learn from their experiences and continuously improve their performance.

Despite its many advantages, strategic planning also has some drawbacks that organizations should be aware of. One of the main disadvantages is the complexity of the process. Strategic planning requires a significant amount of time, effort, and expertise. It involves analyzing large amounts of data, conducting market research, and engaging stakeholders. This complexity can make the planning process challenging and resource-intensive for organizations.

Another disadvantage of strategic planning is the resistance to change it may encounter. Implementing a strategic plan often involves making significant changes to the organization’s structure, processes, and culture. This can create resistance among employees who may be reluctant to change and may fear the unknown. Overcoming this resistance requires effective change management strategies and strong leadership.

Moreover, strategic planning may not always guarantee success. While a good strategic plan provides a roadmap for the organization’s future, its implementation is not always straightforward. External factors, such as changes in the market or unexpected competition, can affect the business and its ability to achieve its strategic goals. Internal factors, such as lack of resources or poor execution, can also hinder the successful implementation of the plan.

Lastly, strategic planning can sometimes overlook the importance of human resources. While strategic plans focus on organizational strategies and objectives, they may not pay enough attention to the people who will execute those strategies. It is essential for organizations to consider the capabilities, skills, and motivation of their employees when developing and implementing strategic plans.

Conclusion of Advantages and Disadvantages of Strategic Management Planning

In conclusion, strategic planning has both advantages and disadvantages for organizations. It helps set clear goals, leverage strengths, adapt to changes, allocate resources effectively, and align internal processes. However, it is a complex process that requires time, effort, and expertise. It may face resistance to change and does not guarantee success. Therefore, organizations should carefully consider these factors when deciding to engage in strategic planning.

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The advantages and disadvantages of strategic management

Introduction

This article is designed to provide you with a realistic understanding of some of the advantages and disadvantages of implementing a strategic management system.

Strategic Management vs. Strategic Planning

I have deliberately used the words strategic management and NOT strategic planning. Webster’s defines planning as “a proposed or intended course of action, or a formulated scheme setting out stages of procedure”. Oxford defines planning as a “formulated or organized method by which a thing is to be done”. Yet, when we think of management we tend to think of a systems approach to the optimization of the organization.

Strategic planning still has the connotation of a process that is discrete, separate, and independent from the business of an organization. While strategic management connotes the planning, implementation, evaluation, on-going maintenance, and adjustment of the organization’s strategy. Because I believe that strategic management is an integral aspect of an organization’s business and not just a once per every three-year retreat, I have used the term strategic management throughout this article.

The Advantages of Strategic Management

Discharges Board Responsibility

The first reason that most organizations state for having a strategic management process is that it discharges the responsibility of the Board of Directors.

Forces An Objective Assessment

Strategic management provides a discipline that enables the board and senior management to actually take a step back from the day-to-day business to think about the future of the organization. Without this discipline, the organization can become solely consumed with working through the next issue or problem without consideration of the larger picture.

Provides a Framework For Decision-Making

Strategy provides a framework within which all staff can make day-to-day operational decisions and understand that those decisions are all moving the organization in a single direction. It is not possible (nor realistic or appropriate) for the board to know all the decisions the executive director will have to make, nor is it possible (nor realistic or practical) for the executive director to know all the decisions the staff will make. Strategy provides a vision of the future, confirms the purpose and values of an organization, sets objectives, clarifies threats and opportunities, determines methods to leverage strengths, and mitigate weaknesses (at a minimum). As such, it sets a framework and clear boundaries within which decisions can be made. The cumulative effect of these decisions (which can add up to thousands over the year) can have a significant impact on the success of the organization. Providing a framework within which the executive director and staff can make these decisions helps them better focus their efforts on those things that will best support the organization’s success.

Supports Understanding & Buy-In

Allowing the board and staff participation in the strategic discussion enables them to better understand the direction, why that direction was chosen, and the associated benefits. For some people simply knowing is enough; for many people, to gain their full support requires them to understand.

Enables Measurement of Progress

A strategic management process forces an organization to set objectives and measures of success. The setting of measures of success requires that the organization first determine what is critical to its ongoing success and then forces the establishment of objectives and keeps these critical measures in front of the board and senior management.

Provides an Organizational Perspective

Addressing operational issues rarely looks at the whole organization and the interrelatedness of its varying components. Strategic management takes an organizational perspective and looks at all the components and the interrelationship between those components in order to develop a strategy that is optimal for the whole organization and not a single component.

The Disadvantages of Strategic Management

The Future Doesn’t Unfold As Anticipated

One of the major criticisms of strategic management is that it requires the organization to anticipate the future environment in order to develop plans, and as we all know, predicting the future is not an easy undertaking. The belief being that if the future does not unfold as anticipated then it may invalidate the strategy taken. Recent research conducted in the private sector has demonstrated that organizations that use planning process achieve better performance than those organizations who don’t plan – regardless of whether they actually achieved their intended objective. In addition, there are a variety of approaches to strategic planning that are not as dependent upon the prediction of the future.

It Can Be Expensive

There is no doubt that in the not-for-profit sector there are many organizations that cannot afford to hire an external consultant to help them develop their strategy. Today there are many volunteers that can help smaller organizations and also funding agencies that will support the cost of hiring external consultants in developing a strategy. Regardless, it is important to ensure that the implementation of a strategic management process is consistent with the needs of the organization, and that appropriate controls are implemented to allow the cost/benefit discussion to be undertaken, prior to the implementation of a strategic management process.

Long Term Benefit vs. Immediate Results

Strategic management processes are designed to provide an organization with long-term benefits. If you are looking at the strategic management process to address an immediate crisis within your organization, it won’t. It always makes sense to address the immediate crises prior to allocating resources (time, money, people, opportunity, cost) to the strategic management process.

Impedes Flexibility

When you undertake a strategic management process, it will result in the organization saying “no” to some of the opportunities that may be available. This inability to choose all of the opportunities presented to an organization is sometimes frustrating. In addition, some organizations develop a strategic management process that become excessively formal. Processes that become this “established” lack innovation and creativity and can stifle the ability of the organization to develop creative strategies. In this scenario, the strategic management process has become the very tool that now inhibits the organization’s ability to change and adapt.

A third way that flexibility can be impeded is through a well-executed alignment and integration of the strategy within the organization. An organization that is well aligned with its strategy has addressed its structure, board, staffing, and performance and reward systems. This alignment ensures that the whole organization is pulling in the right direction, but can inhibit the organization’s adaptability. Again, there are a variety of newer approaches to strategy development used in the private sector (they haven’t been widely accepted in the not-for-profit sector yet) that build strategy and address the issues of organizational adaptability.

Like any process or tool, there are both advantages and disadvantages to a strategic management process. Unfortunately, many of the disadvantages are because of inappropriate application (often by poor consultants) as opposed to inherent limitations. As with any tool or process, you as the client have the final responsibility to ensure that the strategic management process you are using is appropriate for your needs. While I believe that strategic management in some form can be beneficially applied to most organizations, it is you – the client – who is ultimately responsible for its use or lack thereof.

Ron Robinson is the president of ABARIS Consulting Inc. He can be reached at (519) 472-9788 or [email protected] . This article is provided free of charge, for information purposes only and is not intended, represented or to be inferred as providing advice. ABARIS Consulting Inc. makes no warranty, express or implied, or assumes any legal liability for accuracy, completeness, or usefulness of any information provided in whole or in part within this article.

ABARIS Consulting Inc. is credited as the source on all copies, reproductions and distributions, and CharityVillage.com is credited as the original publisher.

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Advantages and Disadvantages of Strategic Planning Assignment Help

Advantages and Disadvantages of Strategic Planning

Students must note that not all strategic planning will be the same, rather it will vary between organizations. Different organizations will approach the process with different degrees of sophistication, thoroughness and commitment. Some organizations due to resource limitations may be unable to follow the formal process of strategy formulation. Other organizations may lack the necessary managerial commitment to implement a strategic plan. Managers who utilize the concepts of strategy development informally without implementing a formal process could still earn significant benefits from it.

Advantages:

•    It provides consistent guidelines for the organizations activities. •    The planning process helps managers anticipate problems before they arise and to deal with them before they become too severe. •    It helps managers make decisions as the careful analysis provided by strategic planning gives managers more of the information they need to make decisions. •    It minimises the chance of mistakes and unpleasant surprises, because goals, objectives and strategies are subjected to careful scrutiny and analysis. Disadvantages:

•    It requires considerable investment in time, money and people, for example it can take years for it to function smoothly. •    It involves many start up costs, training of planners, hiring new people, market research, survey and expensive data processing. •    Sometimes it tends to restrict the organization to the most rational and risk free option, as managers learn to develop only those strategies that can survive the detailed analysis of the formal planning process. This means attractive opportunities that are difficult to analyze may be overlooked.

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Strategic Planning: Meaning, Importance and Limitation

After reading this article you will learn about:- 1. Meaning of Strategic Planning 2. Features of Strategic Planning 3. Importance 4. Limitations.

Meaning of Strategic Planning:

Strategic planning means planning for making and implementing strategies to achieve organisational goals. It starts by asking oneself simple questions like : What are we doing, should we continue to do it or change our product line or the way of working, what is the impact of social, political, technological and other environmental factors on our operations, are we prepared to accept these changes etc.

Strategic planning helps in knowing where we are and where we want to go so that environmental threats and opportunities can be exploited, given the strengths and weaknesses of the organisation. Strategic planning is “a thorough self-examination regarding the goals and means of their accomplishment so that the enterprise is given both direction and cohesion.”

It is “a process through which managers formulate and implement strategies geared to optimising strategic goal achievement, given available environmental and internal conditions.” Strategic planning is planning for long periods of time for effective and efficient attainment of organisational goals. Strategic planning is based on extensive environmental scanning. It is a projection into environmental threats and opportunities and an effort to match them with organisational strengths and weaknesses.

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Strategic planning is done to comprehend, anticipate and absorb environmental vagaries. It is a continuous process. Every time business organisations want to increase the growth rate or change their operations, desire for better management information system, co-ordinate activities of different departments, remove complacency from organisations; they make strategic plans.

Features of Strategic Planning :

The following are the salient features of strategic planning:

1. Process of questioning:

It answers questions like where we are and where we want to go, what we are and what we want to be.

2. Time horizon:

It aims at long-term planning, keeping in view the environmental opportunities. It helps organisations analyse their strengths and weaknesses and adapt to the environment. Managers should be farsighted to make strategic planning meaningful.

3. Pervasive process:

It is done for all organisations, at all levels; nevertheless, it involves top executives more than middle or lower-level managers since top executives envision the future through scientific techniques of forecasting.

4. Focus of attention:

It focuses organisation’s strengths and resources on important and high-priority activities rather than routine and day-to-day activities. It reallocates resources from non-priority to priority sectors.

5. Continuous process:

Strategic planning is a continuous process that enables organisations to adapt to the changing, dynamic environment.

6. Co-ordination:

It coordinates organisation’s internal environment with the external environment, financial resources with non-financial resources and short-term plans with long- term plans.

Importance of Strategic Planning :

Strategic planning offers the following benefits:

1. Financial benefits:

Firms that make strategic plans have good sales, low costs, high EPS (earnings per share) and high profits. Firms have financial benefits if they make strategic plans. Companies like Reliance, Infosys, Tata, Wipro, Deloitte, etc. are the giants who report good financial results as a result of sound strategic planning.

2. Guide to organisational activities:

Strategic planning guides members towards organisational goals. It unifies organisational activities and efforts towards the long-term goals. It guides members to become what they want to become and do what they want to do. It focuses on specific goals making it clear for members to know the direction towards which they have to move. Earning profits is less meaningful than earning a growth rate of 10% per year.

Paying high dividends is less meaningful than paying dividends at the rate of 40%. Meeting society’s needs is less meaningful than providing free education to school children of a specific community. Allocation of resources and attempts to meet the goals is facilitated through clear specifications in strategic planning. It makes the objectives operational and provides right direction to organisational activities.

3. Competitive advantage:

In the world of globalisation, firms which have competitive advantage (capacity to deal with competitive forces) have better sales and financial performance. This is possible if they foresee the future. Future can be predicted through strategic planning. It enables managers to anticipate problems before they arise and solve them before they become worse.

4. Minimise risk:

Strategic planning provides information to assess risk and frame strategies to minimise risk and invest in safe business opportunities. Chances of making mistakes and choosing wrong objectives and strategies, thus, get reduced.

Risk is inherent in every business and failure to anticipate risk through strategic planning is almost sure to lead the business to failure unless otherwise proved by chance. Lack of strategy, framing wrong strategies or ineffective implementation of strategy cannot be afforded by business enterprises operating in the dynamic, changing and risky environment.

5. Beneficial for companies with long gestation gap:

The time gap between investment decisions and income generation from those investments is called gestation period. During this period, changes in technological or political forces can affect implementation of decisions and plans may, therefore, fail. Strategic planning discounts future and enables managers to face the threats and opportunities. Huge capital investments in projects is followed by expected financial returns.

6. Promotes motivation and innovation:

Strategic planning involves managers at top levels. They are not only committed to objectives and strategies but also think of new ideas for implementation of strategies. This promotes motivation and innovation. It also provides motivation to people at lower levels when they know their efforts are contributing towards organisational goals.

Satisfied workforce is the strength of the organisation. It saves huge costs on reducing absenteeism, labour turnover, role conflicts etc. It promotes discipline in the organisation and enhances human resource effectiveness and also organisational effectiveness.

7. Optimum utilisation of resources:

Strategic planning makes best use of resources to achieve maximum output. Resources are scarce and strategic planning helps in their use in the areas where they are required most.

General Robert E. Wood remarks, “Business is like war in one respect. If its grand strategy is correct, any number of tactical errors can be made and yet the enterprise proves successful.” Effective allocation of resources, scientific thinking, effective organisation structure, co­ordination and integration of functional activities and effective system of control, all contribute to successful strategic planning.

Limitations of Strategic Planning :

1. Lack of knowledge:

Strategic planning requires lot of knowledge, training and experience. Managers should have high conceptual skills and abilities to make strategic plans. If they do not have the knowledge and skill to prepare strategic plans, the desired results will not be achieved. It will also result in huge financial losses for the organisation. This limitation can be overcome by training managers to make strategic plans.

2. Interdependence of units:

If business units at different levels (corporate level, business level and functional level) are not coordinated, it can create problems for effective implementation of strategic plans.

3. Managerial perception:

In order to avoid developing risky objectives and strategies which they will not be able to achieve, managers may land up framing sub-optimal goals and plans. Sometimes, short-term commitments also defer making long-term strategies.

4. Financial considerations:

Strategic planning requires huge amount of time, money and energy. Managers may be constrained by these considerations in making effective strategic plans. These limitations are by and large, conceptual and can be overcome through rational, systematic and scientific planning. Researchers have proved that companies which make strategic plans outperform those which do not do so.

Related Articles:

• Importance of Studying Strategic Management
• Process of Strategic Planning: 8 Steps
• Notes on Planning in an Organisation: Meaning, Importance and Principles
• Strategic Planning, Alternatives and Implementation | Business Marketing

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Strategic management involves long-term plans and objectives that allow a company to leverage capabilities, increase opportunities, and achieve competitive advantage. Although there are many advantages to strategic management, such as reducing the resistance to change and promoting collaboration, there are also disadvantages. The strategic management process is complex, time consuming, and difficult to implement; it requires skillful planning in order to avoid pitfalls.

A Complex Process

Strategic management involves continuous assessments of critical components, such as external and internal environments, short-term and long-term objectives, organizational structure, and strategic control. These components are interrelated, so a change in one component may affect other areas.

For example, in an economic downturn, a company may need to reduce its workforce. The external factor, which is the poor economy, changes the internal environment, which is the number of people employed. Then, a company may need to review objectives and make necessary adjustments. All of these factors ultimately influence a company’s management, leadership and structural systems, which have a bearing on decision-making.

Time Consuming

Managers spend a great deal of time preparing, researching and communicating the strategic management process, which may impede day-to-day operations and negatively impact the business. For example, managers may overlook daily issues needing resolution, and inadvertently cause a decrease in employee productivity and short-term sales. When issues are not resolved in a timely manner, higher employee turnover can result. This could force a company to redirect critical resources, putting strategic management initiatives on a sidetrack.

Difficult to Implement

The implementation process requires a clearly communicated plan, implemented in a way that requires full attention, active participation, and accountability of not only company leaders, but also of all members across the organization. Managers must continuously develop and improve synergies among employees to ensure buy-in and to garner support for the company’s objectives and mission. There are instances where this can become particularly challenging. For example, if a manager was involved in the strategic formulation process, but not equally involved in the implementation process, he in turn may not feel accountable for decisions made.

Requires Skillful Planning

Although strategic plans help reduce uncertainty in meeting long-term objectives, the planning process itself provides opportunities for missteps. An organization needs to anticipate the future, which involves various degrees of change as well as risks. In order to avoid pitfalls, managers need to have the right skill sets to plan the strategy and mitigate risk factors. For example, managers should monitor as well as develop business contingency plans to address possible future changes in the external environment, such as market conditions, competitive forces, and economic factors that may negatively affect the business.

• McGraw-Hill Higher Education: Part One -- Overview of Strategic Management
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• Reference for Business -- Encyclopedia of Business, 2nd ed.: Strategic Planning Failure

Kelley Katsanos has worked in business roles involving marketing analysis and competitive intelligence. She earned a Master of Science in information management from Arizona State University. Katsanos also holds a bachelor’s degree in Business with an emphasis in marketing. Her interests include technology, marketing strategy and business process improvement.

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Strategic Planning

5 benefits of strategic planning.

By Mary King

20 january 2023.

• 1 1. It makes your organization proactive rather than reactive
• 2 2. It instills a shared sense of responsibility
• 3 3. It increases operational efficiency among leadership
• 4 4. It improves staff satisfaction and retention
• 5 5. It manages expectations and bolsters trust
• 6 Get the template ↓

Many organizations understand the importance of strategic planning, and they’ll invest a great deal of time and money coming up with the strategic plan itself. But once the strategic planning process is complete, it’s really common for that plan to just… well, sit there. Maybe it gets reviewed once a year–an obligatory thing your company or organization simply “has to do.” Or worse, it becomes a glossy (and expensive) document that sits gathering dust on the shelf.

Well, as the leading provider of strategic planning and execution software , we disagree! A strategic plan is the compass for your goals, and we’re here to re-ignite that strategic planning spark. To get you started, you can grab our Free Strategic Plan Template , which you can download as a PDF.

In this post, we are going to look at five of the major benefits of a strong strategic plan, the purpose of strategic planning in the first place, and how it will improve virtually every aspect of your operations – from employee engagement, to plan execution, to leadership.

“If you don’t know where you are going, you are certain to end up somewhere else.” – Yogi Berra

A strategic plan is so much more than words on a page (or a shelf!)

If you have a strategic plan that you (and your employees) reference regularly, then it becomes a living document, a dynamic process that guides, responds to, and helps actualize large-scale dreams.

Here are five benefits of strategic planning.

1. It makes your organization proactive rather than reactive

Why is strategic planning important?

A strategic plan allows organizations to anticipate things that are most likely to happen and prepare accordingly. Through strategic planning, companies can anticipate certain unfavorable scenarios before they happen and take necessary precautions to avoid them. And, if something unfortunate–whether a small scale mishap, or a full blown crisis–does happen, then you already have something in place to ensure you’re able to get back on track.

When a crisis hits, such as the COVID-19 pandemic, having a strategic plan versus not having one can make a huge difference. For example, instead of having to halt construction plans, further disrupt learning, and be stuck in a pattern of only reacting during the pandemic, White Bear Lake Area Schools, MN, leaned on their strategic plan :

“We’ve completed projects already. Construction continued throughout the pandemic, which was really exciting for us. And through it all, our strategic plan has continued to inform our decisions about what type of learning environment we’re building for our students. That’s been invaluable . We’ve had to make decisions on learning models, remote work, distance learning… we’ve been able to root those decisions in asking what does our strategic plan compel us to do, and what opportunities have emerged along the way?” – Dr. Alison Gillespie, the Assistant Superintendent for Teaching and Learning with WBLAS.

Of course, the importance of strategic planning and being proactive is not just for catastrophe prevention, or mitigating poor outcomes. Another benefit of a strategic plan is it also gives you a competitive edge.

When you make being engaged with your strategic plan a habit, an integral part of how your organization operates, it means your overall vision, and the steps required to be there, are front of mind. This will keep your team alert, attentive, and able to keep up with changing trends.

While other strategic plans for other organizations may sit on the shelf, excellent strategic planning is enough to maintain a competitive edge. Staying one step ahead of what everyone else is doing requires a clear idea of what exactly you are doing. Rather than just always reacting to the trends, you want to be anticipatory. Better yet, be the trendsetter.

A strategic plan gives you this ability to be truly proactive – and, therefore, flexible – in your vision.

2. It instills a shared sense of responsibility

A strategic plan helps to define the direction in which an organization must travel, and aids in establishing realistic objectives and goals that are in line with the vision and mission charted out for it. But it also creates a sense of collaboration and collective responsibility.

The key to successful strategic planning is to engage everyone with the plan as early as possible in the planning process, and build in measures and implementation steps that allow you to monitor the results at regular intervals. When you do this, goals become stepping stones to even greater goals, and everyone becomes familiar with the aspirations and pain-points of your overall vision, and their contribution to it.

When everybody has a sense of purpose in their role within the greater organization, they are going to care about the outcomes. Everybody wants to feel important, needed, valued, and heard. One benefit of a strategic plan is that it formalizes this process. It’s really important to make sure everyone implementing a plan feels responsible for their part in it; when people are intrinsically motivated to complete their tasks, this creates energy and momentum on all organizational levels.

For the people involved in the actual strategic planning process itself, it creates a sense of democratic engagement. People are able to bring their own perspectives, thoughts, and ideas to the table, and will be encouraged when they see their strategies and actions come to life. For people carrying out those actions, they will feel more encouraged to be responsible for those outcomes when the goals are attainable and clear. A strategic plan makes those actions clear.

A strategic plan offers both the much-needed foundation from which an organization can grow, but also helps establish the roles and boundaries for everyone, thus improving efficient decision making and creating a greater sense of overall momentum and direction.

Ensuring employees feel engaged and responsible is one of the most important strategic planning benefits.

3. It increases operational efficiency among leadership

When discussing the importance of strategic planning in an organization, we need to consider leadership. One way that an organizational vision can fall short in its implementation is when there isn’t a clear enough idea of what change is needed where, and how complex that level of change needs to be. That’s where we can really see the value of strategic planning. In terms of strategic management, a plan provides leaders with the roadmap to align the organization’s functional activities to achieve set goals.

At Envisio, we aren’t afraid of complex plans. In fact, we love them. Because we exclusively work with publicly accountable organizations, such as local governments, our clients frequently have really complex plans that can span years (sometimes even decades)!

What we’ve learned is that there is no need to shy away from a grand vision; what matters is making sure the strategy to get there is clear.

People in leadership roles are often juggling many different priorities and ideas, and they are overseeing the entire operation. Management discussions, meetings, and decision making can sometimes suffer from not being able to see the forest from the trees–meaning, everyone is capable of losing perspective. A strategic management plan helps carry some of that load for leadership.

A strategic plan also increases operational efficiency in that it helps determine those important, practical, company-wide leadership considerations, such as budget requirements to accomplish set objectives. These practical, operational considerations illustrate why strategic planning is important.

4. It improves staff satisfaction and retention

Research has shown that over the course of COVID-19, local government employees are feeling as though they lack autonomy in their jobs, are feeling burnt out, and are experiencing disconnection from their work and colleagues.

As previously mentioned, a strategic plan can help empower your employees to feel responsible and engaged with their work, but it can also be used to plan initiatives like improved career advancement, perks and benefits, and improving workplace culture.

The reality is that public sector workplaces (local government and beyond) need to find ways to empower and support employees, otherwise these sectors will experience high turnover. Incorporating improved onboarding processes, feedback processes, and building in a process for positive recognition are all things that can be formalized in a strategic plan. Having a strategic plan can also reduce the experience of being “micro-managed,” which can increase senses of autonomy, and therefore satisfaction, in the workplace.

5. It manages expectations and bolsters trust

A strategic plan increases transparency, which helps build trust and eliminate ambiguity–both inside the organization and among key stakeholders. Strategic planning done well is beneficial because it creates more opportunities for collaboration across teams. Working together to see what each department is doing, rather than having disjointed groups, improves trust in the overall direction of the organization. Because so much of strategic planning refers to determining organizational goals, this helps set expectations across the different areas of your organization, and improves the overall functioning of the company.

Public sector work requires a lot of passion and care; it tends to attract value-driven people. Ensuring that the values of the organization are built into the strategic plan communicates to staff a sense of openness, and helps assure them (and remind them) about the overall mission.

One of the other benefits of having a strategy is it shows how information is being managed, in a modernized, quantifiable, secure manner. Being able to back up decisions using data, for example, is an objective, non-partisan way to communicate the rationale behind the moves your organization is making. All of this goes a long way in improving trust – both internally, and externally, to the community being served.

And if you really want to boost trust with your external stakeholders, consider sharing your organizational progress against your strategic plan via a public strategic plan dashboard .

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Mary King is a professional writer and researcher based in Toronto. She comes to Envisio with a Masters Degree, where she researched the relationship between the disappearance of urban public spaces, and high level decision-making processes in local governments. For nearly a decade, Mary has worked as a community organizer, promoter, and supportive researcher in a variety of nonprofits and think-tanks, and her favorite area of focus was in connecting local artists with marginalized youth. Since 2017, her writings and research on policy, local governance, and its relationship to public art and public space has been presented at conferences internationally. She has also served as both a conference chair and lead facilitator on professional and academic conferences across Canada on how to better bridge academic research with local change-agents, policy makers, artists, and community members. Envisio’s mission of excellence and trust in the public sector maps onto Mary's interest in local government and community mobilization. She loves working at Envisio because she cares about having well organized, strategic, and transparent public organizations and local governments. Mary is also a creative writer and musician and has been supported in her practice by the Canada Council for the Arts. Her stories can be found in literary journals across Canada.

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