Strategic planning is setting up a company's long-term goals and defining the ways to reach them. It helps highlight a brand’s priorities and create a roadmap for future development.
In the article, we explain what strategic planning is and why it is vital, and describe its benefits and models. We also provide the steps to help you develop a strategic plan that will boost your company in the market.
Why is strategic planning important?
Cascade states that business leaders in 49% of organizations spend only one day a month analyzing how they implement their strategy. Such an attitude may badly influence their companies’ success because strategic planning requires more effort to be effective. Discover why it is vital for your business’ success.
Strategic planning helps you define a clear mission and direction in which you want to move your brand. You can use them as a guideline to align your everyday decisions with the business’s main goal. It lets companies reach their objectives faster and manage time wisely.
Also, this process influences your staff’s motivation positively. When your employees have a clear vision of the company’s future, they feel more inspired to work hard and reach the goal as fast as possible. Moreover, it gives them a better understanding of the company's processes and makes communication between employees and the employer more productive.
Finally, strategic planning lets you evaluate the efficiency of your work and improve the roadblocks immediately. You can use the strategy as a benchmark to discover the issues with your company’s development. This is the reason to revise it regularly and track your business performance in an ever-changing market.
Now you understand why strategic planning is so essential. Continue reading to discover the main benefits of this process.
4 Benefits of Strategic Planning
It is difficult to overrate the importance of a strong strategy for long-term company development. We explain the main benefits of strategic planning and how they influence your brand’s performance below.
- Measurable goals and easy progress evaluation. A clear strategy should include specific and concrete objectives you will use as guidelines for future decisions. They help align the brand’s efforts with pre-set goals to reach them faster. Also, it is easier for companies to measure the effectiveness of their activities. A strategic plan gives a sense of direction and lets business owners make adjustments to the current strategy to optimize business performance.
- Better staff motivation. According to Harvard Business School, 95% of employees do not understand or are unaware of the company’s current strategy. It is one of the reasons why brands fail in their implementation. However, when your managers understand the direction your company moves, it inspires them to work better and be more creative. Employees understand the link between their performance and compensation, so they try to work more productively.
- Effective crisis management. Strong strategies make businesses more durable and resistant to market changes. The planning process lets companies evaluate possible roadblocks and weaknesses and prevent them before they influence their performance. It helps save time and resources necessary to overcome problems if they occur.
- Increased profitability. According to Balance Marketing Group, brands that use strategic plans are 12% more profitable. It happens due to effective crisis management, more goal-oriented actions, and higher employee motivation. A strong strategy gives you a competitive advantage and helps turn all company’s efforts into the best results to increase revenue and market share.
Understanding all these benefits motivates many business owners to build strategic plans for their companies. Find out the models you can use in the next section.
10 Strategic Planning Models
There are many ways to create your strategy and plan a brand's development. Some models appeal to small businesses, some to huge companies, and some are universal. We'll review the peculiarities of the most widespread models below.
- The basic model is rather simple and ideal for small businesses and startups. The first step is to define the brand's mission, values, and goals. Then you should highlight the ways to reach these objectives and create an action plan that will serve you as a roadmap. Finally, this model requires continuous tracking and optimizing the strategy to improve the results.
- SWOT analysis is necessary to define the advantages and disadvantages of your current strategy. It is an acronym that means ‘strengths, weaknesses, opportunities, and threats.’ You can use SWOT analysis to optimize the company’s processes. Raise the success of your performance by solving problems and empowering the strengths of your company.
- An issue-based model uses SWOT analysis as a framework to build more complex strategies. Marketers identify the most appealing scenarios and develop action plans to overcome possible issues. Then, companies allocate resources to turn these strategies into reality and optimize them constantly to improve their effectiveness.
- The PEST model is similar to the SWOT analysis, but it focuses on external factors. This acronym means ‘political, economic, sociocultural, and technological.’ All these factors can influence your company’s health and performance, so it is vital to evaluate them and find the possible issues. Build a plan and solve them to strengthen your company. You may also expand this model and use the PESTLE acronym to include legal and environmental factors in your study.
- The scenario model is useful if many external factors influence your company’s performance. It involves studying various market elements, such as competition, trends, changes in consumer behavior, etc., evaluating their effect on your strategy, and creating from 2 to 5 possible scenarios for future development. You should build the most appealing and worst scenarios one suggest ways to overcome problems.
- A strategy map is a diagram that shows the logical connections between the situations that may occur and the company's actions. It is better to combine this visual tool with other models, such as basic, issue-based, or scenario one. A well-defined map lets you create a clear vision of your business goals and how you are going to reach them, unify all the data in one strategy and discover how market elements affect each other and influence your brand’s development.
- Porter’s Five Forces model evaluates the influence of the most important external factors on your company. They include the threat of entry to your marketplace, the threat of substituting your products, the bargaining powers of consumers and suppliers, and the existing competition. You should examine all these factors, determine how they will influence your strategy, and suggest ways to reduce their impact and optimize the company's performance.
- The VRIO model can be a framework to strengthen your existing strategy. Marketers use it to identify the competitive advantages of their products. VRIO is an acronym for ‘value, rarity, imitability, and organization.’ You should examine these qualities of your products, identify the strongest ones, and highlight them in future promotional campaigns to stand out from the competitors. If you also discover the weak elements of your strategy, improve them and make your product even more appealing.
- An organic model focuses on the brand’s values and is based on the self-organization of people who have the same goal. It includes three main steps. Firstly, you identify the company's values and vision of its future development together with your team. Secondly, all employees create personal action plans on what they will do to reach the main goal. Finally, all workers take responsibility for turning this plan into reality and report on the progress.
- An alignment model aims to structure the important perspectives of business development. You need to examine and evaluate technology and competitive potential, the service level, and the strategy that drives your company’s performance. Ideally, if all these factors work together and empower each other. If there is some discrepancy between them, you will discover what to improve to strengthen your strategy implementation.
Besides the fact that these models are rather different, the main steps in planning your company’s performance are similar. Continue reading to discover how to build a strong strategy to boost your company on the market.
5 Strategic Planning Steps
According to The Economist, 39% of brands state that one of the main reasons for their success is the skilled implementation of pre-built plans. Find out the main steps to create an effective strategy and implement it accurately.
- Define your mission and values. This step is required to identify the direction you want to move to. Also, a clear understanding of your mission and values lets you align your actions with the messages you want to transmit. Identify how you want to influence consumers’ lives and what experiences you want to provide.
- Study your existing position. You can use SWOT or PEST analysis to create a holistic image of the current situation in the company. Collect data about consumers, study your competitors and analyze internal factors that influence your sales. Then define your strengths and weaknesses. As a result, you will understand what aspects of your market performance you should focus on.
- Set measurable goals. It may be difficult for you to work with a few objectives at once, so it is better to prioritize them. You may set SMART goals, which should be specific, measurable, achievable, realistic, and timely. Such an attitude lets you manage and achieve them easier. Remember that also your goals should correspond with the mission and values you have defined before.
- Use one of the planning models and create a future strategy. It is time to build a step-by-step plan to reach your objectives. Focus on the initiatives that strengthen your long-term position. You can mix a few planning models to create a more complex strategy. Define possible scenarios and identify how you will react to the market changes to prevent potential issues.
- Implement and optimize your strategy. Determine the resources you need to turn your plan into reality. Measurable pre-set goals will let you analyze your strategy and identify the roadblocks quickly. You may also need to reevaluate the current plan after a certain time to optimize it and make it even more effective. Remember that your strategy should be flexible, so update it regularly.
Congrats, now you know what strategic planning is and why it is important, understand its benefits and models. You can also build a strategy for your company to optimize its performance and raise profits.
Last Updated: 28.10.2022