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Process of Strategic Planning

The basic steps followed din strategy formulation is as follows:

1. Objective formulation:

Strategies are goal- oriented. The overall purpose or mission of the organization must be clearly stated. Mission explains the reason why business is in existence. It identifies the scope of products/ services. The goals can be economic or social and may relate to size of the organization, goods or services or simply the technology or the way an organization operates its business.

2. Identify the current objectives and strategies:

When objectives for strategic planning are identified, they are compared with existing objectives and strategies before fresh strategies are framed. Sometimes new objectives and strategies are similar to the existing ones in which case no strategies need to be framed. Only if new objectives are different from existing ones or existing strategies fail to achieve the existing objectives, managers should engage in the process of strategy formulation.

3. Analyse the available information:

 Complete information that businesses collects from various sources, like government agencies, banks, customers, journals, bulletins, suppliers, other business associations etc., may not be required for strategy formulation. Information is screened and only relevant information is analyzed for formulating objectives and strategies.

4. Analyse the impact of environment:

Environment analyses is the “ systematic assessment of information about the firm’s external environment during the strategic planning process to identify strategic opportunities for the company as well as major threats, problems, or other possible impediments.”Active managers scan the environment, pick relevant information and use it for strategy formulation.

5. Analyse resource position of the firm:

After analyzing the external environment, firms evaluate their internal resource position. This helps them identify their strengths and weaknesses in relation to competitors. Resources being limited, organizational strengths and weaknesses should be analyzed to use the resources in areas where they can be optimally utilized.

6. Establish alternative straggles:

Managers carry out gap analyses to develop alternative strategies, i.e., analyse the present strategies and the objectives formulated.  “ It is the difference between the objectives established in the goal formulation process and the results likely to be achieved if the existing strategy is continued.” It reveals gap between the present state and future aspirations of the origination. If existing strategies can help in reaching the desired objectives, new strategies need not be formulated but if there is a gap, managers develop strategies to attain the objectives.

7. Evaluate alternative strategies:

Different strategic options are evaluated on the basis of their competitive advantages in terms of

(a) Risk; Will the strategy be able to achieve the objectives?
(b) Time: Is it being adopted and implemented at her right time? and
(c) Target: Does it target at comparing internal strengths and weaknesses of the organization with its external environment?

8. Choice of a strategy:

After evaluating strategies in terms of risks and turns (ability to achieve the goals), they are ranked in order of priority and the strategy best suited to achieve the goals is chased.

9. Implementation of strategy:

After selection, the strategy is put into action and practiced. It becomes a guide for the organization and members to direct their efforts in a unified direction.

10. Measurement and control of strategy:

After the strategy is implemented, managers measure organizational performance at periodic intervals to assess whether strategic objectives are being achieved or not. A formal strategic control system is designed which answers questions such as:
(a) Is the strategy being implemented as planned?
(b) Are the critical assumptions on the basis of which it was selected still valid?
(c) Is the strategy achieving the intended result?

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