Strategic Planning: A Closer Look - Principles of Management

As noted earlier, most plans within an organization are embedded within the overall strategicplan of the enterprise. Strategic plans form the context within which operating and unit plansare formulated. Because strategic planning is such an important activity, here we examine thesteps involved in formulating and implementing a strategic plan and how that plan drivesoperating and unit plans. Figure charts what can be viewed as an archetypal strategicplanning process.

The process starts with a statement of the mission, vision, values, and goals of an organization.Then it moves on to an analysis of the external operating environment and theinternal environment of the organization.As noted earlier, the aim here is to identifythe strengths and weaknesses of the organization and the opportunities and threats in theexternal environment. Next, in a process known as SWOT analysis, managers choosestrategies.

The aim is to select strategies that are consistent with the vision, values, andgoals of the organization and that exploit environmental opportunities, counter threats,build on organizational strengths, and correct weaknesses. Then managers draft actionplans. Action plans specify with precision how strategies will be put into effect; theyinclude subgoals, responsibilities, timelines, and budgets. Action plans are drafted at thebusiness level, operating level, and unit level within functions. In other words , each strategic,operating, and unit plan should have a component that is an action plan.

Strategic Planning

Once actionplans have been drafted and agreed on, they are implemented. The process does not stophere, however; planning is also a control mechanism. Thus managers compare actualperformance against the plan, and through a feedback process make necessary adjustmentsto goals and strategies. Planning, in other words, is an iterative process in which plans areadjusted over time in response to new information. Next we take a closer look at each ofthese elements.

SETTING THE CONTEXT: MISSION, VISION,VALUES, AND GOALS

The mission, vision, values, and goals of an organization are the starting points of strategicplanning. They set the context for the rest of the process and for the operating and unit plansthat are embedded within a strategic plan.

Mission The mission of an organization describes its purpose. For example, the mission of Kodak is to provide “customers with the solutions they need to capture, store, process, output,and communicate images—anywhere, anytime.” This mission focuses on the customer needsthat Kodak is trying to satisfy (the need for imaging) as opposed to the products the companycurrently produces (film and cameras). Kodak’s mission statement is a customer-orientedmission statement, not a product-oriented one.

There is general agreement that a good mission statement focuses on the customerneeds an organization is satisfying rather than the goods or services it is producing. Aproduct- oriented mission statement, which focuses on the attributes of the products.


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