Strategic planning is related with the developing and implementing the best strategies, plans and policies for the business to achieve goals. Here you will get a complete understanding about meaning and importance of strategic planning.
Table of Contents:
- Meaning of Strategic Planning
- Importance of Strategic Planning
- Increases Profit and Sales
- Guide to Organizational Activities
- Provides Competitive Advantages
- Motivates Employees and Promotes Innovation
- Optimum Utilization of Resources
- Minimize Risk
- Process of Formulating Strategic Planning
- Difference Between Planning and Strategic Planning for an Organization
Now, let’s discuss each of the above listed topics in detail. Let’s understand the meaning of strategic planning first.
Meaning of Strategic Planning
Every organization work for achieving certain goals or objective in future. The objectives can either be short-term or long-term in nature. But achieving any objective of an organization is not an easy task. The management team has to make and implement different kinds of strategies, plans and policies so that the organizational goals can be achieved.
So, strategic planning is the process of developing and implementing best strategies that can directly help in achieving both the short-term and long-term objectives of the organization. It is identifying and analyzing strengths, weakness, opportunities and threats of an organization, developing best plans, policies and strategies and then allocating all available resources to better implement them. Strategic planning directs a business to achieve it’s mission, vision and long-term objectives through efficient and effective utilization of men, money, material and machine.
Importance of Strategic Planning
1. Increases Profit and Sales
An organization can have more financial benefits if strategic planning of management is good. Strategic planning has direct effect on the financial reports of a company. Higher earning and higher profit at lower cost can be achieved if the strategies, plans and policies that managers develop and implement are efficient and effective enough.
Companies such as Google, Facebook, Amazon, Microsoft etc. are know as the top companies of the world and they make highest profit than any other business because their management team have capacity to make best strategies, plans and policies.
2. Guide to Organizational Activities
Strategic planning guides and directs the activities to be performed in an organization. It helps to decide what to do, how to, where to do, when to do, by whom to do etc. In short, strategic planning clearly defines the roles and activities to be performed by all the subordinates so that long-term objectives can easily be achieved.
3. Provides Competitive Advantages
Strategic planning helps an organization to compete in the market. To fight with the competitors and sustain long-term in the market, management team always research about the strength and weaknesses of their competitors, market conditions, opportunities and threats available in the market, products and services their competitors provide, customer’s satisfaction etc.
Beating competitors by innovating new products and services, creating higher customer satisfaction, becoming pre ready to solve any problem and challenges, these all activities come under strategic planning.
4. Motivates Employees and Promotes Innovation
Employees are the drivers of any organization. If they are motivated then organization can perform well. So, strategic planning also focus on motivating all the subordinates to maximum utilize their potential and achieve maximum output.
It provides a clear direction to all the employees about what they have to do and what objective they actually have to achieve. On the other hand, creating new ideas, innovating new products and services, conducting research and development, all these activities also fall under strategic planning.
5. Optimum Utilization of Resources
Generally, an organization has four types of resources such as men, money, material and machine. And, as these resources are limited in any organization, they must be utilized properly. Strategic planning helps in the effective and efficient utilization of all available resources of an organization. Getting maximum output through proper utilization of organization’s resources highly depends on the strategic plans of management.
6. Minimize Risk
Each and every organization has a common factor and that is risk. No organization is risk free. Strategic planning helps an organization to minimize the risks by predicting all the future happenings. It tries to find all the opportunities and threats of coming future. So, organization become pre ready to get benefits from opportunities and overcome bad effects of future threats.
Process of Formulating Strategic Planning
Formulating strategic planning is a process to establish the direction and goals of an organization. The process has a number of steps that include: establishing organizational goals, developing an implementation plan, evaluating current situation and identifying opportunities for improvement.
The process starts with the formulation of a mission statement which is followed by the formulation of organizational goals. The next step is to develop an implementation plan which will be followed by evaluating the current situation and identifying opportunities for improvement that can be used to achieve the set goals.
Difference Between Planning and Strategic Planning for an Organization
- Planning is a process of organizing, coordinating and allocating resources to achieve specific goals. It includes setting objectives, determining the best way to achieve them, and taking action.
- Strategic planning, on the other hand, is a process of identifying strategic priorities, developing a plan to address them with an organization’s available resources and then executing that plan over time.
The key difference between these two is the focus on the long-term vision of an organization. Strategic planning looks at how an organization can make strategic decisions in order to be successful in the future. Planning focuses more on short-term goals and how they might impact long-term success.
So, this much is our explanation on “Meaning and importance of strategic planning”. Please post your question as a comment below. Thank You!
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