STRATEGIC PLANNING

Strategic Planning in Building a Business & Making it Effective

Strategic Planning in Building a Business & Making it Effective

Introduction

Strategic planning is a process by which organizations put business plans into action in the marketplace. This process differs from the annual planning process in which most organizations engage in that it is typically geared toward a longer-term planning horizon. Most organizations today consider the duration of a strategic plan to be anywhere from three to five years. However, in rapidly changing industries, strategic planning timelines may be shorter. This paper discusses strategic planning in building a business & making it effective in a concise and comprehensive way.

Strategic Planning in Building a Business & Making it Effective

I do believe that strategic planning does play its due role in building a business & making it effective because the purpose of developing a strategic plan is to determine the long-term direction of the organization and to set it up to succeed in its endeavors. In the business world, this often means identifying “white space” in the marketplace—that is, areas in which there are few or no competitors—and identifying areas of competitive advantage for the organization. When it is crafted properly, a strategic plan can be used as a framework for decision making, provide a basis for more detailed planning, explain the purpose and goals of the business to others, engage and motivate others, and facilitate benchmarking.

In broad terms, the development of a strategic plan is typically based on a rigorous analysis of the competitive landscape in which the organization operates or wants to enter. This analysis examines competitors and competitor activity, identifies existing and emerging consumer trends, identifies market opportunities, and forecasts the growth potential of entering a particular area of the market.

Although there are many ways to approach the strategic planning process, these can all be broken down into three basic steps: (1) an analysis of the current state and resources, (2) an explication of the desired future state, and (3) a description of the steps needed to reach the future state.

Step 1: Analysis of the Current State

The analysis of the current state and resources consists of conducting an internal and external environmental scan to assess the organization's goals, resources, and competitors. Many organizations conduct what is known as a SWOT analysis during this phase. A SWOT analysis is a form of competitor analysis that is characterized by an in-depth look at the organization's strengths, weaknesses, opportunities, and threats for the purpose of understanding how it fares against competitors in a particular industry, market space, or even market segment.

According to Michael Porter, a renowned strategist and Harvard professor, a sophisticated competitor analysis is essential to a well-conceived strategy because, without it, faulty and dangerous assumptions about competitors can creep into management thinking. For example, senior leadership may make invalid assumptions about a competitor's plans or activities based on prior knowledge and experience that may no longer be relevant. In addition, Porter recommends conducting an industry ...