Understanding Strategic Planning
What is Strategy?
Strategy means consciously choosing to be clear about your company’s direction in relation to what’s happening in the dynamic environment.
The fine points of strategy are as follows:
- Establishes unique value proposition compared to your competitors
- Executed through operations that provide different and tailored value to customers
- Focuses on activities that fit together and reinforce each other
- Drives continual improvement within the organization and moves it toward its vision
A strategic plan is the formalized roadmap that describes how your company executes the chosen strategy.
A plan spells out where an organization is going over the next year or more and how it’s going to get there. Typically, the plan is organization-wide or focused on a major function such as a division or a department.
A strategic plan is a management tool that serves the purpose of helping an organization do a better job, because a plan focuses the energy, resources, and time of everyone in the organization in the same direction.
A Strategic Plan
- Is for established businesses and business owners who are serious about growth
- Helps build your competitive advantage
- Communicates your strategy to staff
- Prioritizes your financial needs
- Provides focus and direction to move from plan to action
A Business Plan
- Is for new businesses, projects, or entrepreneurs who are serious about starting up a business
- Helps define the purpose of your Business
- Helps plan human resources and operational needs
- Is critical if you’re seeking funding
- Assesses business opportunities and provides structure to ideas
The term strategic planningrefers to a process of developing and maintaining a strategic fit between organization’s goals and capabilities in the light of changing marketing opportunities. For a profit-making business, this process involves four main steps:
- Defining a clear company mission and vision
- Setting supporting company objectives and goals
- Designing sound business portfolio
- Developing detailed marketing and departmental plans
The Components of a Strategic Plan
An outline of a typical strategic plan is as follow:
1. Mission statement: To define the organization’s core purpose. Why do we exist?
2. Vision statement: To explain where you are headed your future state. To formulate a picture of what your organization’s future makeup will be and where the organization is headed. What will our organization look like in 5 to 10 years from now?
3. Values statement or guiding principles: To clarify what you stand for and believe in.
4. SWOT Analysis: To assess the particular strengths, weaknesses, opportunities, and threats that is strategically important to your organization. (You may or may not choose to include your SWOT in your strategic plan but as supporting documentation.)
5. Competitive advantage: To define what you are best at. What can your organization potentially do better than any other organization?
6. Strategic objectives: To connect your mission to your vision. Strategic objectives are long-term, continuous strategic areas that get you moving from your mission to achieving your vision. What are the key activities that you need to perform in order to achieve your vision?
7. Strategies: To establish a guide that matches your organization’s strengths with market opportunities to position your organization in the mind of the customer. Does your strategy match your strengths with how you will provide value and be perceived by your customers?
8. Short-term goals/priorities/initiatives: To set goals that converts the strategic objectives into specific performance targets. Effective goals clearly state what, when, how, who and are specifically measurable. What are the 1- to 3-year goals you are trying to achieve to get to your strategic objectives?
9. Action items/plans: To set specific actions plans that lead to implementing your goals. Are your action items comprehensive enough to achieve your goals?
10. Scorecard: To measure and manage your strategic plan. What are the key performance measures you can track in order to monitor if you are achieving your goals?
11. Financial assessment: To determine if your strategic plan makes financial sense. Do the estimated revenue projections exceed your estimated expenses?
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