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What is strategic planning and how to do it?

Knowing what strategic planning is and how to do it, is one of those aspects that will help you achieve your company’s objectives.
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What is strategic planning and how to do it

What is Strategic Planning?

Knowing what strategic planning is and how to do it, is one of those aspects that will help you achieve your company’s objectives, regardless of its size or functions.

We will further discuss what it is, what it is not, why it is important, and explain the steps to do it correctly.

The definition of Strategic Planning tells us about a management tool which gives us the possibility of establishing the tasks and the path that organizations are supposed to follow in order to reach their goals, considering the demands and demands that may be imposed by their environment.

It is then considered as a fundamental tool for the internal decision making of any organization.

It comes to be seen as an exercise of formulation and establishment of objectives and, especially, of the action plans that will serve to reach those objectives. 

Now that we are talking about what Strategic Planning is, we find it vitally important to point out those aspects which it is not, but is often confused as a part of:

Strategic planning should never be considered as a prediction or forecasting tool with respect to trends or new events that will occur in relation to an organization. However, in the preparation of strategic planning it will be necessary to use production and financial forecasts, among others.

This tool involves not only future decisions, but also current and daily decisions that have an impact on the future.

Strategic planning is not designed to eliminate risks; on the contrary, it is responsible for identifying them and providing tools for better decision making in the event of risks.

Most popular strategic planning models

Now that you know what it is, we will complement the concept you have with some of the most popular strategic planning models to serve as a reference:

Balanced Scorecard

This is a methodology with which the performance of an organization can be evaluated from four perspectives: financial, customer, process and learning and growth. In addition, it will organize the tool as such in terms of objectives, indicators and initiatives.

Strategic Map

It is a visual tool that was created under the need to communicate the strategic plan to the entire organization. It is very important within the Balanced Scorecard, but that does not mean that it is exclusive to this methodology. It will serve to share information from management, in a format that is easy to digest and understand.

SWOT Analysis

Other people know it as SWOT analysis due to its acronym in English, this is an analysis tool of an organization based on its internal characteristics (weaknesses and strengths) and external (threats and opportunities), which helps to know the real situation of an organization in order to propose a strategy for the future.

PEST Analysis

This one specifically aims to analyze the business, or industrial, environment of an organization based on its four factors (political, economic, sociocultural and technological), in order to help determine how these environments can affect the organization.

Porter's Five Forces Analysis.

This is a strategic model that helps establish a framework for assessing the level of competition within an industry to develop a business strategy based on five forces that provide a real perspective of the intensity, competitiveness and rivalry within the industry.

Analysis of VRIO capabilities.

It will serve to help identify which weapons to compete with, which ones need to be developed, and which ones will be critical to achieve the objectives. Its purpose is to provide organizations with a competitive advantage in the marketplace.

Why is strategic planning important?

The importance of strategic planning lies in the fact that it provides a legal framework so that both leaders and members of the organization can understand and evaluate the situation that is being experienced in real time, and what is expected in the future. 

Everything we have explained so far serves the purpose of helping to align the team, with the sole intention of using a common working language based on the same information, which will benefit the organization in the form of the emergence of new profitable and valuable alternatives. 

The reason for strategic planning is simple to answer, it is all based on the need to establish the role of each member of the team, this helps to ensure that the actions of each one are always directed towards the fulfillment of the goals that have been set for the future.

Benefits of strategic planning.

The main benefit of strategic planning is to allow an organization to act proactively rather than reactively, however, its importance can also be based on other points such as the following:

It gives the entire work team a common sense of direction.

Its implementation helps to increase the profitability and market share of the business.

It will increase the longevity of the business.

It will increase the job satisfaction of each member of the team, by the simple fact of having a well-defined sense of direction and purpose.

With it, differentiation can be established and competitive convergence avoided.

When the time comes, it will be a tool that will allow the best possible decisions to be made.

Operational efficiency is another of the aspects that are increased due to its implementation.

It serves to identify and establish which are the priorities for an organization.

With it, a structure can be established to coordinate and control the organization's activities.

We could spend a long time pointing out the advantages of strategic planning, however, we believe that its importance is already quite clear.

The simple fact of facilitating the distribution of time and resources is already a very strong reason to take it into account.

How to make a strategic planning?

First, let’s clarify important aspects about how to do a strategic planning, and is that it should be taken into account mainly, as we have already mentioned before, that it is done at the level of the organization, considering a global approach of the company, based on objectives and general strategies, supported by strategic plans.

Now, since it takes into account the whole company, it should be carried out hand in hand with the top management of the company and projected in the long term. In theory, we are talking about a period of 5 to 10 years.

Although, from a practical point of view, nowadays it is managed between 3 to 5 years. 

It is also important to understand that strategic planning is the basis for all other company plans, both tactical and operational, so it cannot be considered as the sum of the previous ones. 

As in all planning, it is mobile and flexible. It must be analyzed from time to time in order to make the necessary changes.

Likewise, it is considered an interactive process, in which all members of the company can participate, which also helps commitment and motivation to achieve the objectives.

Steps for successful strategic planning.

1. Vision Statement

This is a statement that will serve to indicate where the company is heading in the long term, or what it intends to become.

It should answer the question of what we want to be.

2. Mission statement and establishment of values.

On one hand, the mission is a lasting statement of the object, purpose or reason for the company.

On the other hand, values are the positive qualities that the company possesses, such as the pursuit of excellence, the development of the community and its employees, among others.

3. External analysis of the company.

It consists of detecting and evaluating facts and trends that occur around the company, in order to know what the situation of its environment is and to detect possible opportunities and threats.

4. Internal analysis of the company.

It is the study of the various aspects, or elements, that may exist within the company.

This is done to know the capacity, or state, with which the company has and thus detect strengths and weaknesses.

5. Establishment of general objectives.

They refer to the objectives that will define the direction of the company, and are therefore always long-term.

They make it possible to achieve the mission and capitalize on the two previous points.

6. Design, evaluation and selection of strategies.

First the information from the external analysis is evaluated, then the internal analysis, the mission and values statement, the objectives, and then the strategies that have been used in the past to build a new one.

7. Design of strategic plans.

These are documents that specify how the general objectives that were proposed will be achieved, and how the strategies that were formulated will be implemented, or executed.

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