Strategic planning functions

Strategic planning functions consist of several activities performed by management in every organization. They are directed to long term goal setting and decision making. Management roles and responsibilities for strategic planning include several activities (management functions):

• decision-making process in critical business areas,
• strategic programming,
• developing strategies on corporate level,
• developing strategies for company business units (SBU)
• developing of functional strategies,
• developing business plans,
• selecting business objectives, primarily regarding the specification of products (services), calculation of prices, marketing functions, costs, quality, production, technological parameters, etc.
• creating innovation and adapting to changes in environment,
• developing ways to meet the needs and expectations of customers as well as to improve position of the company in a competitive environment,
• long-term planning and forecasting,
• integrating and coordinating factor for other functional programs, investment projects and operating plans.

Fig. 1. Strategic planning system in the company

Strategic planning as a system

Managers should pay attention to the relationship and differences between planning and forecasting. The plan is a defined course of action - the action program, and the forecast is a prediction of processes beyond our control. Plan therefore relates to these processes and components, in which manager can make a choice - take a decision. Prediction defines only forecast of the future state of processes or economic phenomena, not assuming any interference in this state through the decisions and action. The plan is evaluated in terms of effectiveness and impact resulting from undertaken activities activities, the forecast is evaluated only in terms of its relevance. Forecasting and planning are closely linked in the management process, but they should not be equated with each other.

Role of strategic planning

Strategic planning is a powerful system, which form the structure of the various strategies (programs) and plans. They are developed at corporate level, for each SBU, and also at the level of businesses or departments. The degree of detail and accuracy of their preparation increases as plans are passed to lower levels of management.

Functional strategies and plans usually relate to specific issues, such as: improvement of the organizational structure of enterprises, research and development, improvement of manufacturing technology, staff development, productivity improvement, total quality management implementation. In such plans there is a connection with the projections of the diagnostic part in shaping the future of the company. If these projections are optimistic, in business practice they are referred to as a strategy or development plans.

Examples of Strategic planning functions

• Setting Goals and Objectives: Management must set and communicate the organization’s mission statement, goals, and objectives. This should be done with input from the board of directors and other stakeholders. Goals should be measurable, achievable, and relevant to the organization.
• Analyzing the current state of the organization: Management must assess the current state of the organization and identify areas of strength and weakness. This process should include gathering data and feedback from internal and external sources, such as surveys, interviews, reports, and financial analysis.
• Assessing the external environment: Management must analyze the external environment to identify opportunities and threats. This includes studying political, economic, social, technological, and competitive trends to determine the potential impact on the organization.
• Developing a strategic plan: Management must create a plan to achieve the organization’s goals. The plan should include strategies, tactics, resource allocation, and a timeline for implementation.
• Implementing the strategic plan: Once the plan is created, management must implement it. This includes organizing resources, assigning tasks and responsibilities, and monitoring progress.
• Evaluating and adjusting the plan: Management must regularly evaluate the plan to ensure it is being followed and that it is achieving the desired results. If necessary, adjustments can be made to the plan to ensure it is still relevant and effective.

Advantages of Strategic planning functions

Strategic planning functions provide a variety of advantages that are essential for achieving long-term objectives and making informed decisions. These advantages include:

• Clear vision and objectives: Strategic planning helps to define and communicate a clear vision and objectives to all stakeholders, ensuring everyone is working towards the same goal.
• Improved efficiency: A well-crafted plan helps to streamline processes, eliminating wasteful activities and improving overall efficiency.
• Enhanced decision-making: Strategic planning helps to identify and prioritize key decisions, ensuring that the right decisions are made at the right time.
• Increased accountability: A strategic plan provides clarity and direction, making it easier to measure progress and hold people accountable.
• Enhanced resource allocation: Strategic planning helps to identify, allocate, and manage resources effectively, ensuring that the right resources are available for the right tasks.
• Improved stakeholder engagement: Strategic planning helps to inform and engage stakeholders in the planning process, allowing for more effective and collaborative decision making.
• Enhanced competitiveness: A well-crafted strategic plan can help to differentiate an organization from its competitors and position it for future success.

Limitations of Strategic planning functions

Strategic planning functions involve a variety of activities that are essential for the long-term success of any organization. However, there are certain limitations that should be taken into consideration when implementing them. The following are the main limitations of strategic planning functions:

• Limited access to resources: Strategic planning often requires access to significant resources, such as financial resources, personnel, and technologies. Organizations may not have the resources available to successfully implement a strategic plan.
• Difficulty in predicting the future: Strategic planning requires making decisions based on assumptions about the future. It is difficult to accurately predict the future and this can lead to decisions that may not be the best for the organization.
• Limited organizational flexibility: Strategic planning often involves rigid processes and procedures which can limit the organization’s flexibility in responding to changes in the external environment.
• Lack of stakeholder involvement: Strategic planning can be limited if stakeholders are not adequately involved in the process. Without stakeholders’ input, the strategic plan may not be well-informed or reflective of their needs.
• Limited success rate: Strategic planning is not a guarantee of success, as it is based on assumptions and predictions. Organizations may not always achieve the desired outcomes, making strategic planning a risky endeavor.

Other approaches related to Strategic planning functions

Other approaches related to Strategic planning functions include scenario planning, SWOT analysis, portfolio analysis, and game theory. Scenario planning is a predictive tool used by organizations to identify alternative futures and prepare for them. SWOT analysis is a method of assessing an organization's strengths, weaknesses, opportunities, and threats. Portfolio analysis is a technique for analyzing an organization's mix of businesses and investments. Game theory is an approach to decision making that uses game-like strategies to assess the optimal decision to make in complex situations.

In summary, strategic planning functions involve goal setting, analyzing, decision making, implementation, and monitoring & evaluating. Other approaches related to strategic planning include scenario planning, SWOT analysis, portfolio analysis, and game theory. All of these approaches can be used to help organizations identify and take advantage of opportunities to meet their goals.

Strategic planning functions — recommended articles

Definition of controlling — Methodology for strategy definition — Importance of strategic management — Strategic management system — Strategic management — Business plan — Strategic decision — Nature of strategic management — Strategic planning

References

• Das, T. K. (1991). Time: The hidden dimension in strategic planning. Long Range Planning, 24(3), 49-57.
• Glaister, K. W., & Falshaw, J. R. (1999). Strategic planning: still going strong?. Long Range Planning, 32(1), 107-116.
• Mintzberg, H. (1994). The fall and rise of strategic planning. Harvard business review, 72(1), 107-114.
• Steiner, G. A. (2010). Strategic planning. Simon and Schuster.
• King, W. R. (1983). Evaluating strategic planning systems. Strategic management journal, 4(3), 263-277.

Author: Krzysztof Wozniak