Strategic planning involves defining a company’s vision, mission, values and strategy. Strategic planning is used in drawing up the “business plan,” which often includes a vision statement or mission statement, and outlines a company’s goals and plan for reaching those goals. A strategic plan maps out where the organization wants to be, and gives employees a common set of coordinates. Managers can factor these coordinates in when setting their own team’s goals and direction.
The vision and mission statements are chosen to communicate the goals of the organization to its customers, employees, shareholders and other stakeholders.
Mission Statement: The mission statement defines the organization’s purpose, its primary objectives and how the firm is going to measure its success. What is the firm’s “winning idea” and what performance measures are we going to use to make sure we succeed? A mission statement helps motivate people by giving them clear guidelines for how success will be measured.
Vision Statement: The vision statement defines the organization’s purpose in terms of the organizations values. That is, we take the firm’s mission and give it intrinsic human value. What is the business’s worldview, and how are the business’s products and services going to promote the values that its stakeholders hold? Values are the beliefs that are shared among the stakeholders of the organization and that drive organizational culture. The vision statement helps motivate people by communicating that their interests and the interests of their stakeholders align.
Strategy: The strategy is the road map for how the company is going to execute its vision and mission. Strategy formation typically begins with an environmental scan, such as performing a SWOT analysis (analyzing a company’s strengths, weaknesses, opportunities, and threats), or analyzing the attractiveness of an industry using Porter’s Five Forces framework. This type of internal and external analysis of the company and its environment will help the company identify their best strategic position and set their short and long-term objectives. The last step in strategy formation is designing the implementation plan. The implementation plan includes management tools and techniques that the company will focus on, these may include things such as TQM, Just-In-Time, or lean manufacturing. The strategic plan may also outline "critical success factors," which are objectives that must be met that will make or break the company's success.
A good strategy must include a plan for communicating that strategy, and monitoring and controlling the implementation of the strategy. Inside the company, managers may accomplish this by using performance measurement tools such as the balanced scorecard. The balanced scorecard includes a list of key performance indicators (KPIs) that reflect the objectives of the strategic plan. Strategy also includes details about where, how and when the company is going to compete: what is the company’s strategic position? How will the company design its system of activities so that they best support their strategic position? What is the company’s time-line?
