Strategic Planning

 

OBJECTIVES

The objective of strategic planning is to achieve a sustainable competitive advantage that will deliver healthy profits. The strategic plan analyses the optimum fit between a business's resources and opportunities and takes into account how a business may, or will, need to adapt to thrive in a changing competitive environment. Strategic planning focuses on the medium- to longer-term future of a business, generally a time horizon of three to five years, or occasionally up to ten years.

 

Gary Hamel and C.K. Prahalad, two business strategists, advocate that strategy involves setting goals that stretch the business, but the strategic planning element of a business plan should focus on the tangible and concrete rather than the aspirational.

 

For a new business, the strategy is the foundation on which the business plan is built. For a business being developed within an existing business, the strategy behind the new business must fit with the overall strategy of the existing business. The marketing strategy will be either implicit in the strategic plan or an explicit subsection of it.

 

APPROACHES TO STRATEGIC PLANNING

All businesses have a strategy, be it implicit or explicit. At its simplest, the strategic plan is a description of what the business is doing and the rationale behind it. In larger businesses, strategic planning has become a formalised process with a department dedicated to that process. In other cases, strategy is part of the marketing function, that is, strategic planning is synonymous with strategic market planning.

 

Some authors distinguish between "prescriptive" and "emergent" approaches to strategic planning. The prescriptive approach emphasises the sequential nature of the planning process as shown in Chart 4.1. This implies that analysis and strategy selection are distinct from implementation.

 

The emergent approach is more experimental – a strategy is constantly adjusted in the light of operational reality. This implies a more short-term tactical approach to planning. In practice, the difference between the two approaches may simply be the frequency of reviews. Although it would be wrong to follow blindly a prescribed course once it has been set, a "flavour of the month" supposedly emergent approach to strategy makes organisational life extremely difficult.

 

A business plan should involve a prescriptive approach because it relates to a point in time at which the business plan is made.