Steps in Strategic Planning

Jamie Strong
Ashleigh Young
Chapter 3 Summary
Strategic Planning:
A process that involves describing the organizations destination, assessing barriers that stand in
the way of that destination and selecting approaches for moving forward.
Allocate resources in a way that provides organizations with a competitive advantage, overall a
strategic plan acts as a blueprint that defines how the organization will allocate its resources in pursuit
of its goals.
Strategic Plan and its purposes:
Helps define the organization’s identity
Helps organizations prepare the future
Enhances ability to adapt to environmental changes
Provides focus and allows better allocation of resources
Produces an organizational culture of cooperation
Allows for the consideration of new options and opportunities
Provides employees with information to direct daily activities
Performance management:
Performance management systems should rely on the strategic plan to be useful. The
behaviors, results, and developmental plans of all employees must be aligned with the vision, mission,
goals, strategies of the organization and unit. Benefits would be management knows that employees
are focused on important goals, employees had more decision-making power. There is better
communication between the levels which allowed a better understanding between the levels.
Steps in Strategic Planning
Step 1: Perform an Environmental Analysis:
First step in the creation of a successful strategic plan
The identification of the internal and external parameters of the environment in which the
organization operates.
o External environment includes a consideration of opportunities and threats.
o Opportunities are characteristics of the environment that can help the organization
 Examples: markets not currently being served, untapped labor pools, new
technological advances
 Lists of internal issues that should be considered in any environmental analysis
Organizational structure: Current structure conducive to fast and
effective communication?
Organizational culture: Includes the unwritten norms and values, is the
culture likely to encourage or hinder innovation and entrepreneurial
Politics: Are the units of the organization that encourages cross-unit
Processes: Are the supply chains working properly? Can customers
reach us when they need to?
Size: Is the organization too small or too large? Are we growing to fast?
Threats are characteristics of the external environment that can prevent the
organization from being example.
 Examples: economic recession, innovative products of competitors
 List of external factors that should be considered in any environmental analysis
 Economic: Is there an economic recession? Is the current economic
recession likely to end?
 Political/legal: How will political changes in domestic or international
markets we are planning on entering affect our entry strategy?
 Social: Impact of an aging workforce on our organization.
 Technological: What technological changes are anticipated in the
industry and how they will affect our business?
 Competitors: How do the strategies and products of our competitors
affect our own strategies and products? Can we anticipate our
competitor’s next move?
 Customers: What do the customers want now, in the next five years?
 Suppliers: What is the relationship with our suppliers now and is it likely
to change in the future?
After external and internal issues have been considered, information is collected using
the SWOT Analysis and the information is then used to conduct a gap analysis:
 Gap Analysis: analyzes the external environment in relation to the internal
 The pairing of external opportunities and threats with internal strengths and
weaknesses leads to the following situations (ranked from most to least
 Opportunity+Strength=Leverage. Opportunity in the environment
matches a strength within the organization. Obvious direction the
organization should pursue.
 Opportunity+Weakness=Conflict. The external opportunity is present
but the internal situation is not conducive to taking advantage.
Threat+Strength=Vulnerability. There is an external threat that can be
contained because of the presence of internal strength.
Threat+Weakness =Problem. There is an external threat accompany by
an internal weakness.
Step 2: Write a Mission Statement: summarizes the organization’s most important reason for its
existence, provides information on the purpose of the organization and its scope. Precedes an
environmental analysis.
Components of a mission statement:
 Basic product or service offered
 Primary markets or customer groups to be served
 Unique benefits and advantages of products or services
 Technology to be used in production or delivery
 Fundamental concern for survival through growth and profitability
 Include information about the organization’s values and beliefs
Step 3: Write a Vision Statement: statement of future aspirations. A description of what the
organization would like to become in the future. Typically written after the mission statement.
Includes two core components:
 Core ideology: the mission. Contains the core purpose and core values of the
 Envisioned future: the vision. Specifies long-term objectives and a picture of
what the organization aspires to.
Characteristics of a good vision statement:
 Brief
 Verifiable
 Bound by a timeline
 Current
 Focused
 Understandable
 Inspiring
 A stretch
Step 4: Generate specific goals that will help fulfill the mission and vision: setting goals formalize the
statements about what the organization hopes to achieve in the future.
Provide more specific information regarding how the mission will be implemented.
Source of motivation
Provide employees with a target for which to strive to
Provide a good basis for making decisions
Provide the basis for performance measurement
Step 5: Create strategies: are descriptions of game plans or how-to procedures to reach the stated
Issues addressed:
 Growth
 Survival
 Turnaround
 Stability
 Innovation
 Leadership
HR function plays a critical role in creating and implementing the strategies because
they have knowledge of the mission and vision of the organization as well as the
organization’s internal abilities.