Strategic planning is the set of managerial decision and action that determines the long-run performance of a corporation.

It includes environmental scanning (both external and internal), strategy formulation (strategic or long range planning), strategy implementation, and evaluation and control. The study of strategic management therefore emphasizes the monitoring and evaluating of external opportunities and threats in lights of a corporations strengths and weaknesses.

Strategic planning is characterized as a systematic effort to produce fundamental decisions and actions that shape and guide what a business organization is, what it does, and why it does it. The objective of strategic planning is to develop a map by which to manage an organization's positioning. Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations. This model is most applicable to strategic management at the business unit level of the organization. For large corporations, strategy at the corporate level is more concerned with managing a portfolio of businesses. For example, corporate level strategy involves decisions about which business units to grow, resource allocation among the business units, taking advantage of synergies among the business units, and mergers and acquisitions. In the process outlined here, "company" or "firm" will be used to denote a single-business firm or a single business unit of a diversified firm. This strategic planning process starts with the companys mission to set goals or objectives. With goals in mind a situation analysis can then be conducted so a strategy can be formulated and ultimately implemented. This type of process is most useful for business-unit-level strategic management. With large corporations, the overarching strategy set by executives applies to managing the businesses total portfolio. The preparation of a strategic planning model is a multi-step process covering business mission, objectives, situation analysis (SWOT), strategies, goals and programs. These are discussed below.

Business Mission The nature of a business is often expressed in terms of its Mission which indicates the purpose and activities of the business, for example, "to design, develop, manufacture and market specific product lines for sale on the basis of certain features to meet the identified needs of specified customer groups via certain distribution channels in particular geographic areas". A statement along these lines indicates what the business is about.

A company's mission is its reason for being. The mission often is expressed in the form of a mission statement, which conveys a sense of purpose to employees and projects a company image to customers. In the strategy formulation process, the mission statement sets the mood of where the company should go. When drafting a mission statement, critically examine every noun, adjective and verb to ensure that they are focused, realistic and justified. Objectives The next key element is to explicitly state the business's Objectives in terms of the results it needs/wants to achieve in the medium/long term. Aside from presumably indicating a necessity to achieve regular profits (expressed as return on shareholders' funds), objectives should relate to the expectations and requirements of all the major stakeholders, including employees, and should reflect the underlying reasons for running the business. These objectives could cover growth, profitability, technology, offerings and markets. Objectives are concrete goals that the organization seeks to reach, for example, an earnings growth target. The objectives should be challenging but achievable. They also should be measurable so that the company can monitor its progress and make corrections as needed. Situation Analysis(SWOT) Once the firm has specified its objectives, it begins with its current situation to devise a strategic plan to reach those objectives. Changes in the external environment often present new opportunities and new ways to reach the objectives. An environmental scan is performed to identify the available opportunities. The firm also must know its own capabilities and limitations in order to select the opportunities that it can pursue with a higher probability of success. The situation analysis therefore involves an analysis of both the external and internal environment. The external environment has two aspects: the macro-environment that affects all firms and a micro-environment that affects only the firms in a particular industry. The macro-environmental analysis includes political, economic, social, and technological factors and sometimes is referred to as a PEST analysis. A situation analysis can generate a large amount of information, much of which is not particularly relevant to strategy formulation. To make the information more manageable, it sometimes is useful to categorize the internal factors of the firm as strengths and weaknesses, and the external environmental factors as opportunities and threats. Such an analysis often is referred to as a SWOT analysis. Use SWOTs to help identify possible strategies by building on strengths, resolving weaknesses, exploiting opportunities and avoiding threats. Having built up a picture of the company's past aims and achievements, the all-important SWOT (strengths, weaknesses, opportunities and threats) analysis can commence.

Strengths & Weaknesses Strengths and weaknesses are essentially internal to the organization and relate to matters concerning resources, programs and organization in key areas. These include: Sales - marketing - distribution - promotion - support; Management - systems - expertise - resources; Operations - efficiency - capacity - processes; Products - services - quality - pricing - features - range - competitiveness; Finances - resources - performance; R&D - effort - direction - resources; Costs - productivity - purchasing; Systems - organization - structures.

If a startup is being planned, the strengths and weaknesses are related mainly to the promoter(s) their experience, expertise and management abilities - rather than to the project. The objective is to build up a picture of the outstanding good and bad points, achievements and failures and other critical features within the company. Threats & Opportunities The external threats and opportunities confronting a company can exist or develop in the following areas: The company's own industry where structural changes may be occurring (Size and segmentation; growth patterns and maturity; established patterns and relationships, emergence/contraction of niches; international dimensions; relative attractiveness of segments) The marketplace which may be altering due to economic or social factors (Customers; distribution channels; economic factors, social/demographic issues; political & environmental factors) Competition which may be creating new threats or opportunities (Identities, performances, market shares, likely plans, aggressiveness, strengths & weaknesses) New technologies which may be causing fundamental changes in products, processes. (Substitute products, alternative solutions, shifting channels, cost savings.)

Use the SWOTs to help identify possible strategies as follows:

Build on strengths Resolve weaknesses Exploit opportunities Avoid threats

Careful determination and classification of a company's strengths, weaknesses, opportunities, and threats provides an excellent way for a company to analyze its current and future situation. It is not necessary for a company to take advantage of all opportunities, nor is it necessary for a company to develop methods to deal with all threats. Additionally, a company need not strengthen all of its weaknesses or be too smug about all its strengths. All of these factors should be evaluated in the context of each other in order to provide the company with the most useful planning information.

Goal formulation Next is the Goal formulation. Goals are specific interim or ultimate time-based measurements to be achieved by implementing strategies in pursuit of the company's objectives, for example, to achieve sales of $3m in three years time. Goals should be quantifiable, consistent, realistic and achievable. They can relate to factors like market (sizes and shares), products, finances, profitability, utilization, efficiency. Strategy Formulation Once a clear picture of the firm and its environment is in hand, specific strategic alternatives can be developed. While different firms have different alternatives depending on their situation, there also exist generic strategies that can be applied across a wide range of firms. Michael Porter identified cost leadership, differentiation, and focus as three generic strategies that may be considered when defining strategic alternatives. Porter advised against implementing a combination of these strategies for a given product; rather, he argued that only one of the generic strategy alternatives should be pursued. Strategy can be formulated on three different levels: Strategies exist at several levels in any organization ranging from the overall business (or group of businesses) through to individuals working in it. Corporate Strategy - is concerned with the overall purpose and scope of the business to meet stakeholder expectations. This is a crucial level since it is heavily influenced by investors in the business and acts to guide strategic decision-making throughout the business. Corporate strategy is often stated explicitly in a "mission statement". Business Unit Strategy - is concerned more with how a business competes successfully in a particular market. It concerns strategic decisions about choice of products, meeting needs of customers, gaining advantage over competitors, exploiting or creating new opportunities etc. Operational Strategy - is concerned with how each part of the business is organized to deliver the corporate and business-unit level strategic direction. Operational strategy therefore focuses on issues of resources, processes, people etc.

Program formulation The next stage is the Program formulation which sets out the implementation plans for the key strategies. These should cover resources, objectives, time-scales, deadlines, budgets and performance targets. It goes without saying that the mission, objectives, strategies and goals must be inter-linked and consistent with each other. This is much easier said than done because many businesses which are set up with the clear objective of making their owners wealthy often lack strategies, realistic goals or concise missions. Statements on mission, objectives, values, strategies and goals are not just elements of future planning. They also provide benchmarks for a historic review. Most managers will find it exceedingly difficult to develop a future strategy for a business without knowing its current strategies and measuring their success to date. Implementation
Strategy implementation is the sum total of the activities and choices required for the execution of strategic plan by which strategies and policies are put into action through the development of programs , budgets and procedures. Although implementation is usually considered after strategy has been formulated, implementation is a key part of strategic planning. Thus strategy formulation and strategy implementation are the two sides of same coin.

The strategy likely will be expressed in high-level conceptual terms and priorities. For effective implementation, it needs to be translated into more detailed policies that can be understood at the functional level of the organization. The expression of the strategy in terms of functional policies also serves to highlight any practical issues that might not have been visible at a higher level. The strategy should be translated into specific policies for functional areas such as:

Marketing Research and development Procurement Production Human resources Information systems

In addition to developing functional policies, the implementation phase involves identifying the required resources and putting into place the necessary organizational changes. Feedback and Control Once implemented, the results of the strategy need to be measured and evaluated, with changes made as required to keep the plan on track. Control systems should be developed and

implemented to facilitate this monitoring. Standards of performance are set, the actual performance measured, and appropriate action taken to ensure success. After the strategy is implemented it is vital to continually measure and evaluate progress so that changes can be made if needed to keep the overall plan on track. This is known as the control phase of the strategic planning process. While it may be necessary to develop systems to allow for monitoring progress, it is well worth the effort. This is also where performance standards should be set so that performance may be measured and leadership can make adjustments as needed to ensure success.

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