The Strategic Planning Process
Strategic planning is the process that enables managers to define their objectives (where they want the organization to go), their strategy (how the organization will get there), the necessary resources it will take the organization to get there and the performance and control measures that will show that the organization is getting there. Strategic planning process is therefore a step-by step process of envisioning a desired future and translating this vision into broadly defined goals and objectives that enables the realization of the vision. Generally, strategic planning process
follows a systematic process beginning with business definition, environmental analysis, strategy formulation, strategy implementation, evaluation and control.
Step 1: Definition of the Business
This involves the creation or review of the company’s mission and vision statement.
Vision is a statement that shows where the firm wants to be in the future. It responds to the question; where do we want to be, which is the first question in strategic planning process. Vision refers to the ideal future of the organization, it refers to what the organization is trying to be or do. The vision of TTTI is to be the centre of excellence in technical, vocational and entrepreneurship training. In this vision, the institution expresses what it can be in the ideal world, and how the ideal world would look like. Vision statement provides a sense of direction
for the entire organization and motivates all the employees to focus on the future rather than on their current limitations.
While the vision statement is concerned with the future, the mission statement emphasize on the present position of the company. The vision statement explains what the firm wants to be in the future while the mission statement elaborates what the firm is doing to achieve the vision in the future. For instance, the vision of Faculty of Veterinary of the University of Nairobi is to be a leading centre of excellence in education and training, research, outreach and consultancy services in veterinary, biomedical, wildlife, fish, environmental and allied management sciences
for continued well-being of mankind. The faculty’s mission is:
i. To produce high calibre graduates who provide high quality services to farmers, government, national and international institutions.
ii. To provide diagnostic services, consultancy research, extension, advisory and clinical services nationally, regionally and internationally.
iii. To generate relevant technologies through research.
The University faculty shows how it will achieve its vision through the mission. A mission statement is important because it clarifies all stakeholders what the firm is striving to achieve.
Importance/Objectives of a mission statement
To ensure unity of purpose within an organization.
To provide a basis for motivating the use of organizational resources.
1. To identify the stakeholders a firm can work with while barring those it cannot.
2. To specify organizational purpose and transformation of this purpose into goals in such a way that cost, time, and performance parameters can be assessed and controlled.
Components of a mission statement
3. The firm’s business and the competitive strategy it aims to use
The firm’s business can be identified in the scope of the firm’s business which mainly includes the product/service, markets, and activities.
Mission statement identifies all the stakeholders of the company. Stakeholders refer to all groups of people that can affect the ability of the firm to achieve its objectives, and are directly or
indirectly affected by the activities of the firm.
5. Corporate Policies
Corporate policies refer to general guidelines that generally guide employees in their day-to-day behaviour and conduct.
6. Core Values
Core values govern how the firm does its business e.g. norms to be observed, and reflect the firm’s culture and attitude.
Step 2: Environmental/Situational Analysis
This is the analysis of both the internal and external environment that affects the operation of a firm.
Internal analysis refers to assessment of internal organization environment with the main aim of establishing the existing strengths and weaknesses. Internal analysis mainly involves:
(i) Organization resource strengths, competencies and competitive capabilities.
(ii) The personal ambitions, business philosophies, and ethical beliefs of managers.
(iii) The influences of shared values and organization culture on strategy.
Organization resource strengths, competencies and competitive capabilities
An organization’s resources, competencies, and competitive capabilities are important strategy determining
considerations because of the fact that they:
- Provide the organization with competitive strengths that may enable it capitalize on particular opportunities
- May give the organization a competitive edge in the market place.
The most feasible way for organization to achieve competitive advantage is when an organization has competitively valuable resources and competencies, where rivals do not have matching or offsetting resources and competencies, and where rivals cannot acquire comparable capabilities except at high cost and/or over an extended period of time. Even if an organization has no outstanding competencies and capabilities (and many usually do not), managers must still tailor the strategy to fit the organization identifiable resources and capabilities. Indeed it is unwise for managers to develop a strategic plan that cannot be realized through the resources and capabilities at the disposal of the organization, hence the need to match the organization’s strategy with its resources strengths and weaknesses and to its competitive capabilities. Winning strategies typically aim at capitalizing on organization’s resources strengths and neutralizing its resource deficiencies and skills gap. Indeed an organization’s resources strengths may make
some strategies and market opportunities quite attractive to pursue. Conversely, its resources deficiencies, its gaps in important skills and know-how, and the weaknesses in its competitive market position may make the pursuit of certain strategies or opportunities quite risky. In essence the type of resources, competencies and capabilities an organization has and how comparatively valuable they are critical strategy-determination consideration. Thus an organization strategy must be grounded in its resource strengths and what is good in doing.
Managers’ personal ambitions, business philosophies, and ethical beliefs
It is quite often the case that managers are never dispassionate about the strategic course for an organization as their personal ambitions, business philosophies and ethical beliefs tend to hold them captive. Their decisions are often influenced by the desire as to how to compete and to position their organization as well as by the type of the image and standing they desire for their organization. It is on this basis that the manager’s ambitions, values, business philosophies, risk predisposition, and ethical beliefs under in their strategic considerations. Quite often, this may be
conscious and deliberate yet in certain cases it may be simply be unconsciousness.
Organization culture and values
Cultural variables such as attitudes, traditions, and practices combine in an important way in determining the sort of strategic options an organization may opt to pursue. The success of strategic decisions depends on the ability of the organization to adapt the appropriate culture that is in line with new strategic direction.