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The Business Planning Process: 6 Steps To Creating a New Plan

In this article, we will define and explain the basic business planning process to help your business move in the right direction.

What is Business Planning?

Business planning is the process whereby an organization’s leaders figure out the best roadmap for growth and document their plan for success.

The business planning process includes diagnosing the company’s internal strengths and weaknesses, improving its efficiency, working out how it will compete against rival firms in the future, and setting milestones for progress so they can be measured.

The process includes writing a new business plan. What is a business plan? It is a written document that provides an outline and resources needed to achieve success. Whether you are writing your plan from scratch, from a simple business plan template , or working with an experienced business plan consultant or writer, business planning for startups, small businesses, and existing companies is the same.

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The Better Business Planning Process

The business plan process includes 6 steps as follows:

• Do Your Research
• Calculate Your Financial Forecast
• Draft Your Plan
• Revise & Proofread
• Nail the Business Plan Presentation

We’ve provided more detail for each of these key business plan steps below.

1. Do Your Research

Conduct detailed research into the industry, target market, existing customer base,  competitors, and costs of the business begins the process. Consider each new step a new project that requires project planning and execution. You may ask yourself the following questions:

• What are your business goals?
• What is the current state of your business?
• What are the current industry trends?
• What is your competition doing?

There are a variety of resources needed, ranging from databases and articles to direct interviews with other entrepreneurs, potential customers, or industry experts. The information gathered during this process should be documented and organized carefully, including the source as there is a need to cite sources within your business plan.

You may also want to complete a SWOT Analysis for your own business to identify your strengths, weaknesses, opportunities, and potential risks as this will help you develop your strategies to highlight your competitive advantage.

2. Strategize

Now, you will use the research to determine the best strategy for your business. You may choose to develop new strategies or refine existing strategies that have demonstrated success in the industry. Pulling the best practices of the industry provides a foundation, but then you should expand on the different activities that focus on your competitive advantage.

This step of the planning process may include formulating a vision for the company’s future, which can be done by conducting intensive customer interviews and understanding their motivations for purchasing goods and services of interest. Dig deeper into decisions on an appropriate marketing plan, operational processes to execute your plan, and human resources required for the first five years of the company’s life.

3. Calculate Your Financial Forecast

All of the activities you choose for your strategy come at some cost and, hopefully, lead to some revenues. Sketch out the financial situation by looking at whether you can expect revenues to cover all costs and leave room for profit in the long run.

Begin to insert your financial assumptions and startup costs into a financial model which can produce a first-year cash flow statement for you, giving you the best sense of the cash you will need on hand to fund your early operations.

A full set of financial statements provides the details about the company’s operations and performance, including its expenses and profits by accounting period (quarterly or year-to-date). Financial statements also provide a snapshot of the company’s current financial position, including its assets and liabilities.

This is one of the most valued aspects of any business plan as it provides a straightforward summary of what a company does with its money, or how it grows from initial investment to become profitable.

4. Draft Your Plan

With financials more or less settled and a strategy decided, it is time to draft through the narrative of each component of your business plan . With the background work you have completed, the drafting itself should be a relatively painless process.

If you have trouble writing convincing prose, this is a time to seek the help of an experienced business plan writer who can put together the plan from this point.

5. Revise & Proofread

Revisit the entire plan to look for any ideas or wording that may be confusing, redundant, or irrelevant to the points you are making within the plan. You may want to work with other management team members in your business who are familiar with the company’s operations or marketing plan in order to fine-tune the plan.

Finally, proofread thoroughly for spelling, grammar, and formatting, enlisting the help of others to act as additional sets of eyes. You may begin to experience burnout from working on the plan for so long and have a need to set it aside for a bit to look at it again with fresh eyes.

6. Nail the Business Plan Presentation

The presentation of the business plan should succinctly highlight the key points outlined above and include additional material that would be helpful to potential investors such as financial information, resumes of key employees, or samples of marketing materials. It can also be beneficial to provide a report on past sales or financial performance and what the business has done to bring it back into positive territory.

Business Planning Process Conclusion

Every entrepreneur dreams of the day their business becomes wildly successful.

But what does that really mean? How do you know whether your idea is worth pursuing?

And how do you stay motivated when things are not going as planned? The answers to these questions can be found in your business plan. This document helps entrepreneurs make better decisions and avoid common pitfalls along the way. ​

Business plans are dynamic documents that can be revised and presented to different audiences throughout the course of a company’s life. For example, a business may have one plan for its initial investment proposal, another which focuses more on milestones and objectives for the first several years in existence, and yet one more which is used specifically when raising funds.

Business plans are a critical first step for any company looking to attract investors or receive grant money, as they allow a new organization to better convey its potential and business goals to those able to provide financial resources.

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The 7 Steps of the Business Planning Process: A Complete Guide

In this article, we'll provide a comprehensive guide to the seven steps of the business planning process, and discuss the role of Strikingly website builder in creating a professional business plan.

Step 1: Conducting a SWOT Analysis

The first step in the business planning process is to conduct a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. This analysis will help you understand your business's internal and external environment, and it can help you identify areas of improvement and growth.

Strengths and weaknesses refer to internal factors such as the company's resources, capabilities, and culture. Opportunities and threats are external factors such as market trends, competition, and regulations.

You can conduct a SWOT analysis by gathering information from various sources such as market research, financial statements, and feedback from customers and employees. You can also use tools such as a SWOT matrix to visualize your analysis.

What is a SWOT Analysis?

A SWOT analysis is a framework for analyzing a business's internal and external environment. The acronym SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.

Strengths and weaknesses include internal factors such as the company's resources, capabilities, and culture. Opportunities and threats are external factors such as market trends, competition, and regulations.

A SWOT analysis can help businesses identify areas of improvement and growth, assess their competitive position, and make informed decisions. It can be used for various purposes, such as business planning, product development, marketing strategy, and risk management.

Importance of Conducting a SWOT Analysis

Conducting a SWOT analysis is crucial for businesses to develop a clear understanding of their internal and external environment. It can help businesses identify their strengths and weaknesses and uncover new opportunities and potential threats. By doing so, businesses can make informed decisions about their strategies, resource allocation, and risk management.

A SWOT analysis can also help businesses identify their competitive position in the market and compare themselves to their competitors. This can help businesses differentiate themselves from their competitors and develop a unique value proposition.

Example of a SWOT Analysis

Here is an example of a SWOT analysis for a fictional business that sells handmade jewelry:

• Unique and high-quality products
• Skilled and experienced craftsmen
• Strong brand reputation and customer loyalty
• Strategic partnerships with local boutiques
• Limited production capacity
• High production costs
• Limited online presence
• Limited product variety

Opportunities

• Growing demand for handmade products
• Growing interest in sustainable and eco-friendly products
• Opportunities to expand online presence and reach new customers
• Opportunities to expand product lines
• Increasing competition from online and brick-and-mortar retailers
• Fluctuating consumer trends and preferences
• Economic downturns and uncertainty
• Increased regulations and compliance requirements

This SWOT analysis can help the business identify areas for improvement and growth. For example, the business can invest in expanding its online presence, improving its production efficiency, and diversifying its product lines. The business can also leverage its strengths, such as its skilled craftsmen and strategic partnerships, to differentiate itself from its competitors and attract more customers.

Step 2: Defining Your Business Objectives

Once you have conducted a SWOT analysis, the next step is to define your business objectives. Business objectives are specific, measurable, achievable, relevant, and time-bound (SMART) goals that align with your business's mission and vision.

Your business objectives can vary depending on your industry, target audience, and resources. Examples of business objectives include increasing sales revenue, expanding into new markets, improving customer satisfaction, and reducing costs.

You can use tools such as a goal-setting worksheet or a strategic planning framework to define your business objectives. You can also seek input from your employees and stakeholders to ensure your objectives are realistic and achievable.

What is Market Research?

Market research is an integral part of the business planning process. It gathers information about a target market or industry to make informed decisions. It involves collecting and analyzing data on consumer behavior, preferences, and buying habits, as well as competitors, industry trends, and market conditions.

Market research can help businesses identify potential customers, understand their needs and preferences, and develop effective marketing strategies. It can also help businesses identify market opportunities, assess their competitive position, and make informed product development, pricing, and distribution decisions.

Importance of Market Research in Business Planning

Market research is a crucial component of the business planning process. It can help businesses identify market trends and opportunities, assess their competitive position, and make informed decisions about their marketing strategies, product development, and business operations.

By conducting market research, businesses can gain insights into their target audience's behavior and preferences, such as their purchasing habits, brand loyalty, and decision-making process. This can help businesses develop targeted marketing campaigns and create products that meet their customers' needs.

Market research can also help businesses assess their competitive position and identify gaps in the market. Businesses can differentiate themselves by analyzing their competitors' strengths and weaknesses and developing a unique value proposition.

Different Types of Market Research Methods

Businesses can use various types of market research methods, depending on their research objectives, budget, and time frame. Here are some of the most common market research methods:

Surveys are a common market research method that involves asking questions to a sample of people about their preferences, opinions, and behaviors. Surveys can be conducted through various channels like online, phone, or in-person surveys.

• Focus Groups

Focus groups are a qualitative market research method involving a small group to discuss a specific topic or product. Focus groups can provide in-depth insights into customers' attitudes and perceptions and can help businesses understand the reasoning behind their preferences and behaviors.

Interviews are a qualitative market research method that involves one-on-one conversations between a researcher and a participant. Interviews can be conducted in person, over the phone, or through video conferencing and can provide detailed insights into a participant's experiences, perceptions, and preferences.

• Observation

Observation is a market research method that involves observing customers' behavior and interactions in a natural setting such as a store or a website. Observation can provide insights into customers' decision-making processes and behavior that may not be captured through surveys or interviews.

• Secondary Research

Secondary research involves collecting data from existing sources, like industry reports, government publications, or academic journals. Secondary research can provide a broad overview of the market and industry trends and help businesses identify potential opportunities and threats.

By combining these market research methods, businesses can comprehensively understand their target market and industry and make informed decisions about their business strategy.

Step 3: Conducting Market Research

Market research should always be a part of your strategic business planning. This step gathers information about your target audience, competitors, and industry trends. This information can help you make informed decisions about your product or service offerings, pricing strategy, and marketing campaigns.

There are various market research methods, such as surveys, focus groups, and online analytics. You can also use tools like Google Trends and social media analytics to gather data about your audience's behavior and preferences.

Market research can be time-consuming and costly, but it's crucial for making informed decisions that can impact your business's success. Strikingly website builder offers built-in analytics and SEO optimization features that can help you track your website traffic and audience engagement.

Step 4: Identifying Your Target Audience

Identifying your target audience is essential in the business planning process. Your target audience is the group of people who are most likely to buy your product or service. Understanding their needs, preferences, and behaviors can help you create effective marketing campaigns and improve customer satisfaction.

You can identify your target audience by analyzing demographic, psychographic, and behavioral data. Demographic data include age, gender, income, and education level. Psychographic data includes personality traits, values, and lifestyle. Behavioral data includes buying patterns, brand loyalty, and online engagement.

Once you have identified your target audience, you can use tools such as buyer personas and customer journey maps to create a personalized and engaging customer experience. Strikingly website builder offers customizable templates and designs to help you create a visually appealing and user-friendly website for your target audience.

What is a Target Audience?

A target audience is a group most likely to be interested in and purchase a company's products or services. A target audience can be defined based on various factors such as age, gender, location, income, education, interests, and behavior.

Identifying and understanding your target audience is crucial for developing effective marketing strategies and improving customer engagement and satisfaction. By understanding your target audience's needs, preferences, and behavior, you can create products and services that meet their needs and develop targeted marketing campaigns that resonate with them.

Importance of Identifying Your Target Audience

Identifying your target audience is essential for the success of your business. By understanding your target audience's needs and preferences, you can create products and services that meet their needs and develop targeted marketing campaigns that resonate with them.

Here are reasons why identifying your target audience is important:

• Improve customer engagement. When you understand your target audience's behavior and preferences, you can create a more personalized and engaging customer experience to improve customer loyalty and satisfaction.
• Develop effective marketing strategies. Targeting your marketing efforts to your target audience creates more effective and efficient marketing campaigns that can increase brand awareness, generate leads, and drive sales.
• Improve product development. By understanding your target audience's needs and preferences, you can develop products and services that meet their specific needs and preferences, improving customer satisfaction and retention.
• Identify market opportunities. If you identify gaps in the market or untapped market segments, you can develop products and services to meet unmet needs and gain a competitive advantage.

Examples of Target Audience Segmentation

Here are some examples of target audience segmentation based on different demographic, geographic, and psychographic factors:

• Demographic segmentation. Age, gender, income, education, occupation, and marital status.
• Geographic segmentation. Location, region, climate, and population density.
• Psychographic segmentation. Personality traits, values, interests, and lifestyle.

Step 5: Developing a Marketing Plan

A marketing plan is a strategic roadmap that outlines your marketing objectives, strategies, tactics, and budget. Your marketing plan should align with your business objectives and target audience and include a mix of online and offline marketing channels.

Marketing strategies include content marketing, social media marketing, email marketing, search engine optimization (SEO), and paid advertising. Your marketing tactics can include creating blog posts, sharing social media posts, sending newsletters, optimizing your website for search engines, and running Google Ads or Facebook Ads.

To create an effective marketing plan , research your competitors, understand your target audience's behavior, and set clear objectives and metrics. You can also seek customer and employee feedback to refine your marketing strategy.

Strikingly website builder offers a variety of marketing features such as email marketing, social media integration, and SEO optimization tools. You can also use the built-in analytics dashboard to track your website's performance and monitor your marketing campaign's effectiveness.

What is a Marketing Plan?

A marketing plan is a comprehensive document that outlines a company's marketing strategy and tactics. It typically includes an analysis of the target market, a description of the product or service, an assessment of the competition, and a detailed plan for achieving marketing objectives.

A marketing plan can help businesses identify and prioritize marketing opportunities, allocate resources effectively, and measure the success of their marketing efforts. It can also provide the marketing team with a roadmap and ensure everyone is aligned with the company's marketing goals and objectives.

Importance of a Marketing Plan in Business Planning

A marketing plan is critical to business planning. It can help businesses identify their target audience, assess their competitive position, and develop effective marketing strategies and tactics.

Here are a few reasons why a marketing plan is important in business planning:

• Provides a clear direction. A marketing plan can provide a clear direction for the marketing team and ensure everyone is aligned with the company's marketing goals and objectives.
• Helps prioritize marketing opportunities. By analyzing the target market and competition, a marketing plan can help businesses identify and prioritize marketing opportunities with the highest potential for success.
• Ensures effective resource allocation. A marketing plan can help businesses allocate resources effectively and ensure that marketing efforts are focused on the most critical and impactful activities.
• Measures success. A marketing plan can provide a framework for measuring the success of marketing efforts and making adjustments as needed.

Examples of Marketing Strategies and Tactics

Here are some examples of marketing strategies and tactics that businesses can use to achieve their marketing objectives:

• Content marketing. Creating and sharing valuable and relevant content that educates and informs the target audience about the company's products or services.
• Social media marketing. Leveraging social media platforms like Facebook, Twitter, and Instagram to engage with the target audience, build brand awareness, and drive website traffic.
• Search engine optimization (SEO). Optimizing the company's website and online content to rank higher in search engine results and drive organic traffic.
• Email marketing. Sending personalized and targeted emails to the company's email list to nurture leads, promote products or services, and drive sales.
• Influencer marketing. Partnering with influencers or industry experts to promote the company's products or services and reach a wider audience.

By using a combination of these marketing strategies and tactics, businesses can develop a comprehensive and effective marketing plan that aligns with their marketing goals and objectives.

Step 6: Creating a Financial Plan

A financial plan is a detailed document that outlines your business's financial projections, budget, and cash flow. Your financial plan should include a balance sheet, income statement, and cash flow statement, and it should be based on realistic assumptions and market trends.

To create a financial plan, you should consider your revenue streams, expenses, assets, and liabilities. You should also analyze your industry's financial benchmarks and projections and seek input from financial experts or advisors.

.jpg)Image taken from Strikingly Templates

Strikingly website builder offers a variety of payment and e-commerce features, such as online payment integration and secure checkout. You can also use the built-in analytics dashboard to monitor your revenue and expenses and track your financial performance over time.

What is a Financial Plan?

A financial plan is a comprehensive document that outlines a company's financial goals and objectives and the strategies and tactics for achieving them. It typically includes a description of the company's financial situation, an analysis of revenue and expenses, and a projection of future financial performance.

A financial plan can help businesses identify potential risks and opportunities, allocate resources effectively, and measure the success of their financial efforts. It can also provide a roadmap for the finance team and ensure everyone is aligned with the company's financial goals and objectives.

Importance of Creating a Financial Plan in Business Planning

Creating a financial plan is a critical component of the business planning process. It can help businesses identify potential financial risks and opportunities, allocate resources effectively, and measure the success of their financial efforts.

Here are some reasons why creating a financial plan is important in business planning:

• Provides a clear financial direction. A financial plan can provide a clear direction for the finance team and ensure everyone is in sync with the company's financial goals and objectives.
• Helps prioritize financial opportunities. By analyzing revenue and expenses, a financial plan can help businesses identify and prioritize financial opportunities with the highest potential for success.
• Ensures effective resource allocation. A financial plan can help businesses allocate resources effectively and ensure that financial efforts are focused on the most critical and impactful activities.
• Measures success. A financial plan can provide a framework for measuring the success of financial efforts and making adjustments as needed.

Examples of Financial Statements and Projections

Here are some examples of financial statements and projections that businesses can use in their financial plan:

• Income statement. A financial statement that shows the company's revenue and expenses over a period of time, typically monthly or annually.
• Balance sheet. A financial statement shows the company's assets, liabilities, and equity at a specific time, typically at the end of a fiscal year.
• Cash flow statement. A financial statement that shows the company's cash inflows and outflows over a period of time, typically monthly or annually.
• Financial projections. Forecasts of the company's future financial performance based on assumptions and market trends. This can include revenue, expenses, profits, and cash flow projections.

Step 7: Writing Your Business Plan

The final step in the business planning process is to write your business plan. A business plan is a comprehensive document that outlines your business's mission, vision, objectives, strategies, and financial projections.

A business plan can help you clarify your business idea, assess the feasibility of your business, and secure funding from investors or lenders. It can also provide a roadmap for your business and ensure that you stay focused on your goals and objectives.

Importance of Writing a Business Plan

Writing a business plan is an essential component of the business planning process. It can help you clarify your business idea , assess the feasibility of your business, and secure funding from investors or lenders.

Here are some reasons why writing a business plan is important:

• Clarifies your business idea. Writing a business plan can help you clarify your business idea and understand your business's goals, objectives, and strategies.
• Assesses the feasibility of your business. A business plan can help you assess the feasibility of your business and identify potential risks and opportunities.
• Secures funding. A well-written business plan can help you secure funding from investors or lenders by demonstrating the potential of your business and outlining a clear path to success.
• Provides a roadmap for your business. A business plan can provide a roadmap and ensure that you stay focused on your goals and objectives.

Tips on How to Write a Successful Business Plan

Here are some tips on how to write a business plan successfully:

• Start with an executive summary. The executive summary is a brief business plan overview and should include your business idea, target market, competitive analysis, and financial projections.
• Describe your business and industry. Provide a detailed description of your business and industry, including your products or services, target market, and competitive landscape.
• Develop a marketing strategy. Outline your marketing strategy and tactics, including your target audience, pricing strategy, promotional activities, and distribution channels.
• Provide financial projections. Provide detailed financial projections, including income statements, balance sheets, and cash flow statements, as well as assumptions and risks.
• Keep it concise and clear. Keep your business plan concise and clear, and avoid using jargon or technical terms that may confuse or intimidate readers.

Role of Strikingly Website Builder in Creating a Professional Business Plan

Strikingly website builder can play a significant role in creating a professional business plan. Strikingly provides an intuitive and user-friendly platform that allows you to create a professional-looking website and online store without coding or design skills.

Using Strikingly, you can create a visually appealing business plan and present it on your website with images, graphics, and videos to enhance the reader's experience. You can also use Strikingly's built-in templates and a drag-and-drop editor to create a customized and professional-looking business plan that reflects your brand and style.

Strikingly also provides various features and tools that can help you showcase your products or services, promote your business, and engage with your target audience. These features include e-commerce functionality, social media integration, and email marketing tools.

Let’s Sum Up!

In conclusion, the 7 steps of the business planning process are essential for starting and growing a successful business. By conducting a SWOT analysis, defining your business objectives, conducting market research, identifying your target audience, developing a marketing plan, creating a financial plan, and writing your business plan, you can set a solid foundation for your business's success.

Strikingly website builder can help you throughout the business planning process by offering a variety of features such as analytics, marketing, e-commerce , and business plan templates. With Strikingly, you can create a professional and engaging website and business plan that aligns with your business objectives and target audience.

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Planning And Decision Making: Characteristics, Importance, Elements, Limitations

In everyday life, all of us make and execute certain plans to achieve our goals. For example, before going on a trip, we make a plan i.e. where and when to go, how to reach the destination, the duration of the trip, where to stay and luggage to carry, etc. All these tasks require creating an effective plan which consists of certain activities for the successful execution of a trip. Process of making such plans to achieve some goal or objective is called “Planning . “ In other terms, in order to execute activities in future, prior forethought is necessary and this forethought comes under the concept of “planning.”

From an organizational point of view, planning is defined as “process by which an organization identifies its short-term and long-term goals, design, and implement strategies to achieve them.” One of the important aspects of planning is to allocate resources and manpower in an organization.

The planning function was put forth by Henri Fayol, known for his Management Theories i.e. 14 principles of management and 5 basic functions of management.

Planning is one of the six management functions/processes of Henri and the management process starts with planning function in any organization.

For example, manpower planning or human resource planning is a crucial planning process which ensures the right kind of people at the right place, and at the right time to fulfil the right type of jobs in the organizations. This process includes different activities in the planning process to meet organizational goals.

The Purpose Of Planning

1. achievement of goals, 2. cost-effective decision-making, 3. forecasting, 4. productive utilisation of available resources, 5. facilitate other management functions, 6. risk-management, characteristics/nature of planning, 1. basic and important management function.

Planning is not only the base for the rest of the management functions i.e. staffing, directing, organizing, and controlling, but it is also one of the most crucial processes for any organization to meet goals. All the above management functions involve effective planning as without proper planning no function can be performed well. Therefore, the results might be ambiguous.

2. Goal-Oriented

Planning is focused on defining organizational goals or objectives, identifying different action plans, deciding and implementing the best action plan to achieve goals.

3. Omnipresent

Planning is involved at all the levels i.e. top, middle, and bottom. The effective functioning of different departments of organizations like sales, purchase, IT, HR, finance among others depends on planning their systems, optimum use of resources, etc. The scope may vary in different functions.

4. Continuous Process

Planning is a continuous process in an organization which involves making plans for a particular time period i.e. monthly or quarterly, half-yearly, yearly, etc. New plans are initiated after the previous plans lapse to fulfil organizational goals.

5. Demands Strong Analytical Skills

Planning requires robust analytical abilities i.e. analyzing information, problem-solving, decision-making, critical thinking, etc. at each level and function.

6. Forecast

Planning process demands forecasting future needs, i.e. analyzing and detecting future requirements, challenges in accomplishing organizational goals, etc.

Importance Of Planning

1. increase in efficiency.

Planning helps in increasing efficiency by aiming at cost-reduction and generating maximum output. It controls the wastage of available resources and their duplicity.

2. Minimize Risks

Risk-management is an important aspect of any organization, especially in forecasting. Planning predicts various risks related to business and further helps in generating action plans to control and reduce these risks. So, with effective planning, organizations prepare themselves for any future uncertainty.

3. Smooth Coordination

Planning ensures effective coordination at different levels, between various departments or functions. Plans are formulated at each level i.e. top, middle, and bottom as well as in different departments. Effective execution of these plans requires proper coordination which is possible through effective planning. Similarly, different plans like short-, mid-, and long-term plans require coordination to achieve organizational goals where planning plays an important role.

4. Optimum Utilization Of Available Resources

An organization needs different resources like funds, manpower, physical assets to disburse activities of different departments. These resources are limited. So, it’s necessary to utilize and organize them efficiently to produce maximum output. Planning helps in organizing these resources carefully.

5. Smooth Supervision And Direction

Planning paves a path for supervising subordinates, providing right instructions, and rendering top-notch guidance. It aims to provide help, direction for performing various tasks, and methods for carrying out different activities.

6. Facilitates Control

Performance of staff can be controlled or improved by devising plans for improvement in performance according to the variance in performance plans and actual performance at work. Without planning, this process of control could not be smooth.

7. Staff Motivation

Attractive monetary and non-monetary benefits can be designed through proper planning which is helpful in boosting the morale of the staff. This leads to high motivation among staff and reduces turnovers of quality staff.

8. Trouble-Free Decision-Making

Making effective and right decisions in an organization is essential to achieve goals. A supervisor has to make different plans and strategies for the smooth functioning of the department and to decide the most appropriate plan. So, planning helps in smooth decision-making in an organization.

9. Goal-Oriented

Proper planning ensures that the best strategies and decisions are made to fulfil organizational goals. Different plans made at different levels are aimed at achieving individual, departmental, and organizational goals.

10. Encouraging Creativity And Innovative Ideas

Planning demands thinking and implementing the best ideas or strategies for organizational success. Both supervisors and subordinates are encouraged to exploit their creative skills and present their innovative plans.

Elements/Components Of Planning

The planning process revolves around different aspects as shown in the diagram below:

Mission or purpose is the base of planning in any organization. The mission of an organization specifies its reason for existence, customers, products or services, service locations, etc. and mostly in written form. It acts as a direction towards achieving organizational goals. Mission also includes an organization’s values and belief system. It also clears the organization’s viewpoint on staff. Organizational goals are defined based on the mission statement of an organization.

The ultimate aim of the functioning of each department in an organization is to achieve organizational goals and objectives. Planning also requires setting of goals to make a plan further. Goals can be individual or team based. For example:

• Individual goal of Hiring Manager in the HR department: To recruit top talent in the organization in given time-frame.
• Team goal of Human Resource Department: To ensure the development of employees by fulfilling an individual’s personal, professional needs and by meeting organizational goals.

Goals are specific, measurable, achievable, realistic, and time-bound. Short-term goals can be for less than a year and long-term goals are defined for a time-period of more than a year.

3. Policies

Planning is also based on defined policies of an organization. Policies are a set of guidelines to accomplish any task effectively and also includes procedure and actions. These are defined as a set of plans to handle different situations. Different policies like an insurance policy, travel policy, HR policies are designed to facilitate smooth functioning in any organization. Similarly, if an organization policy says that the minimum annual salary increment of staff will be 10% of the salary then increment can’t be less than 10%. So, policies act as a decision-making element as well.

Planning is connected to a process, and it is an important element of planning. A process defines guidelines to execute different activities, i.e. action plan. In any planning activity, the process is practical. A process like planning is aimed at achieving something. These are step-by-step inter-related activities to be performed and require different resources like money, manpower, machinery, etc. to produce the desired output. For example, in a manufacturing company, different processes are present like production process, quality control and quality assurance process, maintenance process etc.

Plans that are made for estimating income and expenses for a specific period are defined as “budget.” Budget is a set of financial plans which are made for a specific period and reviewed at regular intervals. Whether it is an organization or a family or an individual; all make budget plans to utilize their financial resources efficiently. For example, in an organization business budget is present that includes fixed and variable costs, expected sales, profits, etc.

A well-designed budget also helps in planning during a financial crisis.

6. Projects

Project in an organization refers to the set of inter-related activities which are planned to fulfil certain goals in a specific time period at a given cost using limited resources. Project planning includes defining goals, project schedule, resources, budget, project quality, manpower, and risk management. So, this element of planning consists of other planning elements as well. For example, software companies work on different projects for their clients.

7. Strategies

Strategies are a set of plans and actions that are defined to meet certain results. Proper planning and implementation of strategies are essential for organizational success and to meet certain goals.

Types Of Planning

Planning is mainly of four types i.e. Operational, Strategic, Tactical, and Contingency.

a) Operational Planning

Operational plan or work plan refers to the planning process aimed at achieving departmental and organizational goals. It is related to the day-to-day functioning of organizations. These plans clear planned activities of departments for the near future in detail. The operational plan provides answers of: -What goals have to be achieved and what strategies to use?

-Who will be responsible for different activities?

-What is the time limit to complete activities?-

-How much budget in terms of financial resources is required and available to complete activities?

For example, the goal of the marketing team of an engineering college is to increase the number of students by increasing marketing promotional activities. Marketing operational plan is explained in the diagram below:

Operational planning is of two types i.e. single use plans or ongoing plans. Single-use plans are developed for one-time activities or tasks like sales or marketing event or seminar. Ongoing plans have a defined set of policies, rules, and procedures to achieve goals and are continued for the future as well, like a performance management system for employees.

b) Strategic Planning

Strategic planning is defined as the strategies made by management to achieve its objectives. It also includes defining directions and allocating resources for execution. Strategic planning is meant for long-term business decisions. A strategic plan starts with the vision and the mission statement of an organization.

The process of strategic planning includes vision clarity, collecting and analyzing information, strategy formulation, and implementation of strategy, evaluating, and controlling. For example, the strategic plan of an organization which aims to reduce the current turnover rate is explained in the below diagram:

Models of Strategic Planning

There are five models of strategic planning which represents its designs or blueprints. Selection of the right model depends on an organization’s goals, mission, and vision. These models are:

1. The basic model of strategic planning

These are used by new organizations having less experience in using strategic business planning. It is mainly useful for small-scale organizations and business. This planning includes defining mission, goals, identifying strategies, creating action plans, evaluation etc.

2. Goal-oriented model

This one is an extended version of the basic strategic planning model and is used by established organizations which aim at introducing an improved strategic process. The process of this model includes a SWOT analysis (strength, weakness, opportunity and threat), identifying goals and mission, making strategies, action plans, operational plans, budget allocation, and evaluation on yearly basis.

3. Scenario-based model

This model is more of a technical model. It is used by organizations to face different challenges or scenarios which arise due to external factors or environmental change. Change can be demographic or in the form of rules and regulations. The process includes identifying problem areas in business and different scenarios- both best and worst, designing suggestions for an action plan of business in different scenarios, selecting common strategies to handle changes, and identifying common issues through which business is being affected or will be affected in the near future.

4. Alignment model

This model is useful in making a balance between an organization’s mission and available resources as well as aligning resources to the mission. It helps in identifying any gaps in planning i.e. gap between actual results and expected results. Organizations facing huge efficiencies prefer this strategic planning model to rectify issues.

The process includes identifying an organization’s mission, resources, process, etc, inspecting which areas are working in the right direction and which areas need improvement. It also requires finding ways of improvement and incorporating these improvements in the form of strategies in the plan.

5. Organic model

This strategic model is the self-organizing model which is based more on the value system and less on the process. The process includes clearing values and vision to stakeholders in a meeting; an action plan is established by each person as per values and vision, everyone clears results of actions and update values, vision accordingly.

c) Tactical Planning

This type of planning is for short duration i.e. plans and actions by functions for short-term and aims at contributing to the strategic plan of an organization. Tactical planning is based on today’s need and is a bit more detailed. This planning needs to be flexible to meet unexpected issues which are not predefined. It answers what to do to achieve the strategic objective rather than how-to-do as in case of operational plans. Below is an example of tactic planning by HR Hiring Manager to achieve the goal of hiring twenty sales representatives in the first quarter:

d) Contingency Planning

These type of plans are need-based and are formulated when the need for change arises or during the occurrence of any unexpected circumstance. It is also called alternate plans as it comes under picture once other plans fail to produce desired results. The process includes formulating policy, identifying critical factors of a business, risk analysis, preventive control measures, developing recovery strategies, and testing, training, monitoring plan.

An example of contingency planning can be seen in the diagram below which is a crisis situation of organization i.e. what-if HR Head, who is taking care of all HR gamut of organization, left suddenly. To handle such unexpected situations, contingency plans are made. Like in the below diagram, an organization has formulated a plan i.e. performance development program to train the rest of the HR staff to work at the capacity of HR Head in such crisis situations.

Planning Process

The planning process is defined as the steps to define goals and making the best action plans to achieve it.

Steps In Planning Process

1. Defining goal or objective

Goal setting is the first and important step in the planning process. Goals are defined at the organizational, department, and individual level and are meant to be achieved in future in a specific time period. A goal can be short-term, mid-term or long-term. Plans are devised which are aimed at achieving these predefined goals. Goals specify what to achieve by defined rules, policies, process, resources, strategies, etc.

2. Collecting information

Gathering information like facts and figures required to achieve goals is a necessary part of planning. Target audience, circumstances, market information, competitor’s strategy, etc. are required to make a right and effective plan.

3. Analyzing information

The next step in the planning process is interpreting information as per goals. Analyzing information includes organizing collected information as per importance, identifying accuracy and relevancy of information from different sources, its unique features, sources and reliability for the organization.

4. Making a plan

Once relevant information is collected and analyzed, the next step is to formulate a plan to achieve defined goals; the plan includes identifying different activities, required resources, timelines, etc. to implement a plan.

5. Implement the plan

Implementing a plan refers to allocate defined activities, resources, time guidelines to individuals. In this step, strategies and plans are converted into actions to achieve goals. Implementation of plans also requires allocation of responsibility in the team which is responsible for accomplishing the plan.

6. Monitor the plan

Once a plan is implemented, it’s necessary to evaluate and monitor its effectiveness and impact according to desired goals.

The planning process can be understood further in below example of an organization plan to formulate competitive compensation and benefits structure or plan for employees.

Planning Limitations

Although planning has lots of advantages for any organization aiming to achieve its goals; it also has certain constraints or limitations. Few of them are:

1. Costly process

Planning requires much investment as lots of aspects, i.e. funds, resources, manpower etc, are included in the process of planning. Due to limited capital or funds in small and medium organizations, it is quite challenging to have comprehensive plans. It is hard to allocate funds for information gathering, predicting future needs, developing strategies, and hiring specialists. If a plan is more detailed, then the cost is high too.

2. Time-consuming task

The planning process is a bit time-consuming and, sometimes, there is a delay in decision-making especially in immediate decisions. Due to this, the planning process can’t be detailed in some organizations.

3. Fewer employee initiatives

Planning demands work under predefined policies and rigid processes. This, in turn, marks an impact on initiatives and innovative ideas from the employees. Complexity arises in managerial work as well.

4. Change resistance

The planning process is backed by a change in methods, policies, rules, etc. Employees resist this change due to insecurity, the uncertainty of new plans’ success, and getting used to the current plan. This fails the new plan.

5. Budget constraints

The planning process requires an appropriate or fixed financial budget for future actions. An investment in purchasing fixed assets by organizations puts a constraint on the budget required for implementing the planning process.

6. Scope of inaccuracy

Planning cannot be 100% accurate and reliable as it is based on forecasting and the future is uncertain, data and information used in making plans may not be accurate, vague decisions made by incompetent planner etc. There is no surety of risks in future.

Apart from these, there are few other external factors like change in government policies i.e. tax policy, import-export policy etc. The trade-unions may also hinder a smooth planning process.

Decision-Making

Decision-making is defined as the process by which different possible solutions or alternatives are identified and the most feasible solution or course of action is finalized. It is an integral part of planning. Decision-making results in selecting the right action among different available options.

It is also one of the important management functions and effective decision-making leads to fulfilling expected goals by sorting out different problems related to such decisions. Decision-making is also a time-bound process and eliminates confusions to reach a conclusion. It has a minimum of two or more alternatives or solutions to a problem so that the best can be decided. If only one alternative is available, then there is no requirement of decision-making.

Relation Between Planning And Decision-Making

Both planning and decision-making are connected to each other. These are the most important aspects of management functions. Planning requires a series of decisions to be incorporated in advance. The foundation of planning is decision-making. The role of a planner demands good decision-making abilities also as the planner has to take a lot of decisions simultaneously. So, decision-making is an important task in planning. Simultaneous and a number of decisions make a plan. In the absence of decision-making, it’s not possible to answer what, how, when, and who is planning. To execute planned activities, decision-making is compulsory.

So, planning has an important role to play in decision-making.

Characteristics of Decision-Making

Different characteristics of decision-making are mentioned below:

1. Process-oriented

Decision-making consists of a process to choose the best solution to a problem among available alternatives. The process includes identifying and analyzing problems, collecting different facts and figures, finding different solutions, and, finally, narrowing down and implementing the best one to meet organizational goals.

2. Demands creativity and Intellectual mind

Decision-making process requires creativity and logical thinking. It demands a lot of mental exercise and other components, i.e. education, experience level, intelligence, etc.

3. Demonstrates commitment

Decision-making process ensures better results based on the decisions made. So, it indicates the commitment of desired results. It requires joint efforts of the team.

4. Ensures the best solution

Decision-making also provides the best solution to any problem as the best solution is decided after evaluating different available alternatives.

5. Impacts of decision-making

Decision-making can be either positive or negative. A positive or right decision can bring positive results and negative or wrong decisions can bring negative results.

6. Decision-making is a final process

After disbursing different activities and tasks, decision-making takes place to get the results of the work done. It is the end result of discussions, comparisons, etc.

7. An ongoing and changing process

Organizations take decisions on a regular basis; so, decision-making is a continuous process. Every decision consists of separate situations that make decision-making a changing process.

Decision-Making Process

There are different steps in effective decision-making process;

a. Situation analysis and information gathering

The first step of the decision-making process is analyzing any situation, defining a problem, collecting relevant information, and identifying goals. This step includes collecting data and information to identify a real issue or problem. Problem identification is necessary for furthering the decision-making process. Once the problem is identified, an effective solution is determined. Problems are solved as per priority. After the solution is improvised, an action plan is designed to achieve the solution.

b. Plan and make alternatives

After collecting information, the next step is to develop different action plans or an alternative course of action. It requires imagination skills of a decision maker. Sometimes, additional information is also required to define better alternatives.

c. Evaluating and selecting the best alternative

This step in the decision-making process not only includes the analysis of different alternatives available or solutions but also an examination of each one of them based on results they are going to produce. The actual results of these solutions are not known as it’s based on performance in the future. So, it comes with uncertainty. It also includes choosing the best solution to achieve objectives. Different alternatives or solutions are judged based on different criteria, i.e. risk involvement, the least effort, the least timing based on the urgency of the situation, limited resources etc.

d. Implementing and evaluating decisions

After deciding the best solution to address a problem, the next step is to make and implement plans. This requires getting and allocating resources, budgets, time frame, etc. Once made, decisions are evaluated to know the progress by preparing progress reports.

Evaluating and monitoring decisions will clear different aspects, i.e. if everything is going as per the plan, different internal and external factors influencing decisions, the performance of subordinates as expected etc.

Example of the decision-making process is shown in the below visual presentation to solve the problem of high employee turnover in an organization;

Factors Affecting Decision-Making

1. timelines.

The quality of decisions depends on how much time has been devoted to making decisions. Most of the time decision-makers have to take decisions in a limited time frame as instructed by the management. Due to the time limit, decision-makers are not able to collect all the necessary information that influences decisions and are, also, not able to look for more alternatives.

2. Value and beliefs of decision-makers

In addition, the quality of decisions also depends upon the value and belief system of the decision-makers. Anyone’s reaction to a particular situation is more likely to depend on the individual’s values, likes and dislikes, thoughts, and beliefs. It is also a behavioural aspect of the decision-makers and reflects in their decisions related to goals, strategy-making activities. So, value-based decisions help in prioritizing tasks and making goals, identifying different solutions to problems, and finalizing the best solution or alternative.

3. Policies of organization

Decisions are affected by the policies of an organization. Decisions taken have to be in the boundary or within the limits of these policies. Decisions which violate policies are not considered for implementation. Though there is a scope to make changes in policies as per decision, most of the time decisions should be at par with the policy guidelines. However, a change in policy is a time-consuming task and requires lots of things to be considered before any change. Comparatively, a change in proposed decisions is much easier.

4. Other factors like budget, manpower, values of management also influence decision-making .

Types of decisions.

Decisions can be of different types depending upon their nature and influence:

1. Programmed and non-programmed decisions

Programmed decisions are meant for daily routine issues and for those problems that repeat frequently. A Set of tasks are defined to handle such problems or issues and are mostly initiated by the entry-level decision-makers.

For example, HR department issues like handling grievances related to leaves or attendance of employees require programmed decisions. Non-programmed decisions are made for tough situations where defining different alternatives is a challenging task. These types of decisions strategically affect organizations.

For example, decisions related to expanding the operation of an organization to other countries, launching a new product, introducing performance management system for the first time to the employees are non-programmed decisions where decision-making is a challenging task and these decisions are mostly taken by management or at the top-level.

2. Routine and strategy-oriented decisions

Routine decisions are a regular activity in an organization once identified. These are quick decisions and don’t require deep thinking or analysis. These decisions are generally taken by the bottom-management staff. Different alternatives are not required in these as everyone is aware of what action to take on a daily basis.

Examples of such decisions include what reports to generate from the biometric system of attendance by the HR staff.

Decisions, in which involvement of organizational goals, resources, and policies is required, are termed as strategic decisions. Strategy-based decisions are future-related and executed by the top management. These are for the long term and are centrally focused. A large amount of investment is required to execute strategic decisions. Different alternatives or course of actions are considered and evaluated to finalize such decisions.

For example, developing a performance management system (PMS) strategy for employees demands strategic decisions. Steps involved in strategic decision-making for formulating PMS strategy starts with identifying goal which might be retaining and motivating the quality staff. Further steps involved are: developing a process for monitoring performance and formulating a comprehensive PMS plan.

3. Policy-related and operational decisions

Decisions related to policy issues are policy-related or tactical decisions. These decisions come under the preview of the top management and leave a long-term impact. For example, changing leave structure or office timings are policy-related decisions.

Operating decisions are for operational functioning and on a daily basis. Middle- and bottom-level management is responsible for such decisions. Different departments or functions of an organization like sales, IT, production, purchase, accounts, or HR take operations decisions.

For example, Diwali bonus payment to employees is a policy matter and calculation of such bonus to handover to employees is considered an operational decision.

4. Organization-based and personal decisions

Decisions, taken by an individual as office staff, are organizational decisions. For example, conducting a campus interview decision by hiring executives is an organizational decision. Wherein, personal decisions are related to an individual’s decision to meet personal commitments. These are also known as life decisions. Buying a house is a personal decision.

5. Major and minor decisions

Major decisions are those which require much time, effort, and thinking to finalize and have a long-term impact. For example, a decision regarding higher studies whether to continue in own country or to go abroad is a major decision. Minor decisions are routine decisions and don’t require much time and deep thinking. Like purchasing stationery for different departments is a minor decision.

6. Individual and group decisions

Individual decisions are taken by one person i.e. routine decisions; as the decision of making an excel sheet for attendance management to keep the attendance record is an individual decision.

Decisions which are taken by a group of people aiming to achieve a common goal are group decisions. For example, employee engagement activities demand HR staff to work as a group and take decisions for better employee engagement programs.

Importance of Decision-Making

1. optimum utilization of resources.

With the help of decision-making, all resources of organizations i.e. money, men, material, machine, market and method are used carefully and as per requirement.

2. Problem-solving approach

By decision-making, organizations can determine and face different problems in working. It not only helps in identifying problems but also solving them by making correct and fast decisions.

3. Contributes to organizational growth

As decision-making ensures optimum utilization of resources, making the right decisions to solve problems or issues helps in achieving organizational goals and overall growth.

4. Encourage initiatives and innovations

Decision-making task is performed at all levels of organization i.e. top, middle and bottom. This motivates the staff members to contribute to decisions through brainstorming or alternatives to solve the problem. Thus, it encourages innovative thoughts and ideas which, in turn, help the organization to be at a competitive place in the market.

5. Employee motivation

Good decisions help in increasing the productivity of organizations that result in more profits. Surplus profits help in increasing compensation benefits to employees which ultimately boosts their morale and keeps them motivated.

To conclude, planning is a systematic process that supports organizations to carry out all its present and future activities to achieve desired objectives. Planning, being a continuous function, works well in adverse situations too. Plans can be modified and restructured as per requirement and available information.

Decision making is also an important activity that supports the organization by reducing risks in projects with quick and better decisions.

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Excellent notes on planning and decision making i have ever seen, thank you keep posting on Management based topice with real example of companies how it is working.

thank you for good notes on planning and decision making

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Strategic Planning Process Definition, Steps and Examples

Published: 03 January, 2024

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Digital Strategy

Table of Contents

Organizations use Strategic Planning to gather all their stakeholders to evaluate the collection of current circumstances and decide upon their ongoing goals and benchmarks. They decide upon long-term objectives and establish a vision for the company’s future.

The efforts behind an organization’s Strategic Planning Processes are vital to its success, and yet, while many organizations acknowledge they need to do this kind of planning, they often don’t understand how to make it a reality. In this article, we explain the reasons behind Strategic Planning and how to make your Strategic Planning Process as powerful as possible.

What is a Strategic Plan

Strategic planning is a systematic process wherein the leaders of an organization articulate their vision for the future and delineate the goals and objectives that will guide the trajectory of the organization.

What is the Strategic Planning Process

Strategic planning is a process of defining an organization’s direction and making decisions on allocating its resources to pursue this direction . It involves creating a long-term plan that outlines the organization’s vision, mission, values, and objectives, as well as the strategies and tactics that will be used to achieve them.

Strategy is often misunderstood, which is surprising because fundamentally it’s a pretty basic concept. Strategy is a clearly expressed direction and a verified plan on how to get there. Your Strategic Planning Process formalizes the steps you’ll take to decide on your plan. The Strategic Planning Process facilitates using a Strategic Execution Framework that articulates where you’ll invest in innovation and where you can cut costs.

As far as business development planning is concerned, your Strategic Execution Framework is a vital tool for driving innovation, but first you must define the process you’ll undertake to determine how you and your team see the future of your organization. In this article, we discuss how to create your Strategic Plan and define its relationship to other concepts and documents that direct your business and its activities.

While it’s true that every business is different and must develop their own processes, we believe there are some process  of strategic planning stepsthat benefit all organizations.

Below are our recommendations for the steps to take when undergoing your Strategic Planning Process, along with the questions we suggest you answer during each specific step.

Step One: Analyze your Business Environment

• Who are your competitors?
• What relevant market data do you have, and what do you still need?
• What technology has emerged that impacts your business model?
• How have customer expectations changed since your last Strategic Plan?
• What advantages do you have over competitors?
• Where is your company weaker compared to competitors?
• What predictable complications are on the horizon?
• Which unpredictable complications seem most likely or most potentially impactful?

Step Two: Set your Strategic Direction

• What is your overall Business Purpose ?
• How have your operations reflected your Purpose and Goals recently?
• How should your operations reflect your Purpose and Goals?
• Where do you see your business going in the next year?
• In two years? In three years?
• What are the metrics you’ll use to measure success?
• What are your make-or-break necessities?

Step Three: Set and develop Strategic Goals and Strategic Objectives

• Have you considered short-, mid-, and long-term business goals , and what are they?
• How do your Strategic Goals reflect your Mission Statement?
• How do your Strategic Goals reflect your company values and vision?
• What daily operations must be completed to work toward your Strategic Objectives?
• How will you communicate your Strategic Goals and Strategic Objectives?
• Who is responsible for reporting on success?
• How will strategic data be collected?

Related: Strategic Goals: Examples, Importance, Definitions and How to Set Them

Step Four: Drill down to Department-Level Objectives

• What are specific department concerns?
• How will your budget influence and be influenced by your Strategic Goals and Objectives?
• Which departments have resources that could be shared to better advantage?
• What roles do individual departments play in your overall Strategic Goals?
• What ongoing projects become a priority because of your new Strategic Goals?
• Are Departmental Objectives complementing each other and the overall Business Model?

Step Five: Manage and Analyze Performance

• Who is on the Strategic Planning team?
• Are tasks and job descriptions properly aligned to ensure the right work is getting completed?
• What is the schedule for the meeting for Strategic Planning?
• What are your metrics for measuring performance and success?
• Have you clearly articulated and shared KPIs?
• Who is responsible for gathering data?
• How will data be collected?
• How will data be reported?
• What’s at stake for strategy success or failure?

Step Six: Review and develop your Strategic Plan

• How should your Strategic Plan look on paper?
• What is your Strategy Execution Framework —how will you guarantee the Strategic Plan Team’s decisions are respected and executed?
• What is the review process?
• How often do you evaluate your Strategic Plan?
• How will you communicate your final Strategic Plan?

Strategic Planning Process Examples

1) apple strategic plan process.

• Vision and Mission: Apple’s strategic planning begins with a clear vision and mission. Apple’s vision is to create innovative products that inspire and enrich people’s lives.
• Environmental Analysis: Apple conducts thorough environmental analyses, considering technological trends, market demands, and competitive landscapes. This includes staying at the forefront of cutting-edge technologies.
• SWOT Analysis: Apple evaluates its strengths, weaknesses, opportunities, and threats. For example, one of Apple’s strengths is its strong brand image, while a weakness might be dependence on a limited product line.
• Setting business Goals and Objectives: Apple sets specific, measurable, achievable, relevant, and time-bound (SMART) goals. This could include objectives like maintaining a certain market share, launching new products, or achieving specific financial targets.
• Strategies and Tactics: Apple develops strategies based on its goals. For instance, a strategic move might be expanding its ecosystem by integrating hardware, software, and services. Tactics could include aggressive marketing campaigns and product launches.
• Implementation and Execution: Apple’s strategic plans are meticulously executed. The launch of iconic products like the iPhone, iPad, and Mac series demonstrates effective implementation of their strategies.
• Monitoring and Adjusting: Apple constantly monitors its performance metrics, customer feedback, and market dynamics. If necessary, adjustments are made to the strategic plan to stay responsive to changing conditions.

2) Tesla Strategic Plan Process

• Vision and Mission: Tesla’s strategic planning revolves around its mission to accelerate the world’s transition to sustainable energy. The vision includes producing electric vehicles and renewable energy solutions.
• Market Analysis: Tesla analyzes global markets for electric vehicles, renewable energy, and energy storage. This involves understanding regulatory environments, consumer behaviours, and technological advancements.
• Risk Assessment: Tesla conducts risk assessments related to manufacturing, supply chain, and market volatility. For instance, it considers risks associated with battery production and global economic conditions.
• Setting Bold Objectives: Tesla is known for setting ambitious objectives, such as achieving mass-market electric vehicle adoption and establishing a robust network of charging stations worldwide.
• Innovative Strategies: Tesla’s strategic planning involves innovation in technology and business models . For instance, the “Gigafactories” for mass production of batteries and the “Autopilot” feature in vehicles reflect innovative strategies.
• Agile Adaptation: Due to the rapidly changing automotive and energy sectors, Tesla maintains an agile approach. The company adapts its plans swiftly to capitalize on emerging opportunities, as seen in the expansion of its energy products.
• Continuous Improvement: Tesla places emphasis on continuous improvement. The iterative development of electric vehicle models, software updates, and advancements in battery technology showcase a commitment to refinement.

These examples demonstrate how strategic planning is a dynamic and integral part of the business processes of leading companies. They highlight the importance of a well-defined vision, rigorous analysis, adaptability, and innovation in the strategic planning process.

Tactical vs. Strategic Planning Process

An easy way to distinguish your company’s Tactical Planning from your Strategic Planning is to separate your wants from your HOWs.

In your Strategic Planning, you identify what you WANT for the company. These are big-picture dreams (achievable, but big ) that are your definition of success. In your Tactical Planning, you identify the HOW for reaching those dreams, including the smaller necessary steps.

Each kind of planning is vital for securing the organization’s future, but they require different sorts of attention and philosophy, and teams that are good at planning one way may not necessarily be good at the other kind of planning.

Strategic Planning vs. Your Business Purpose

Your Strategic Planning Process will of course be deeply connected to your Business Purpose .

We like to think of Business Purpose in broad terms, choosing especially to think of a business’s role in massive transformation. Embedded within a Business Purpose is the Business Plan that directs operations and how a company delivers value to its customers.

What is the relationship between your Strategic Planning and your Business Purpose? One feeds into the other. Your Business Purpose must point to a larger impact you’ll have on the people who purchase your goods and services, and your Strategic Planning takes into account how you’ll grow and expand that Purpose as you reach more customers more successfully.

Strategic Planning vs Business Planning

Strategic planning and business planning are two distinct processes that are often used interchangeably, but they have some key differences.

Strategic planning is a top-level process that focuses on determining the direction of an organization over the long term. It involves setting goals, determining the key resources and actions necessary to achieve those goals, and allocating those resources in a way that best serves the organization’s future. The outcome of strategic planning is typically a long-term strategic plan that outlines the organization’s vision, mission, values, and objectives.

Business planning , on the other hand, is a more tactical process that focuses on the implementation of specific initiatives and projects to support the organization’s long-term goals. Business plans typically outline the steps necessary to launch a new product, enter a new market, or achieve a specific objective. They may also include budgets, marketing plans, and other operational details.

In short, strategic planning is about setting the direction for an organization, while business planning is about implementing specific initiatives to support that direction. Both processes are important for the success of an organization and should be used in conjunction to ensure that resources are allocated effectively and that the organization is moving in the right direction.

Why is Strategic Planning Important?

Imagine this scenario: A warehouse full of goods sits, unsold and unmoved. A collection of brilliant people languishes at desks all day. Outside, the world spins and changes. It’s ready for what these people could do, can do, and yet nothing happens. Needs remain unmet. Progress is halted. Everyday life takes several backwards steps. This is what your business will look like without proper Strategic Planning.

Strategic Planning forces you to consider your Strategic Objectives and critically compare them to the resources you have available. As you continuously evaluate the circumstances of your business and your customers, your Strategic Plan evolves to match your goals and business capabilities.

The process involved pushes decision-makers to practice Strategic Thinking . It limits wasteful spending, especially when upper-level managers are willing to forgo pet projects in favor of operations with a broader use and appeal.

Strategic Planning is important because it directs your resources to efficiently meet your overall Business Goals. Without Strategic Planning, you are likely to waste resources, make conflicting decisions, or fail to grow your business to its greatest potential.

When Do You Create a Strategic Plan?

Most businesses find value in reviewing their Strategic Plan every three years. This allows enough time to pass that you can evaluate the success of previous plans, reflect on the achievement of your Strategic Goals, consider developments outside your organization that affect your business, and begin formulating new goals that will become the next version of your plans.

When businesses first begin, they often have too many fires burning at once. They remain focused on existing today rather than planning for tomorrow. Most entrepreneurs remember those stressful early days of starting their businesses and can understand why formalities like Strategic Plans can fall by the wayside. We believe if your business lasts longer than a year it’s important to develop a plan for the future. Think of Strategic Planning as a celebration of a first anniversary—a sign that you’re poised to continue moving forward for years to come.

However, Strategic Planning is not a one-off event that is over once the cookies are all gone and the room clears. Your Strategic Planning team should meet regularly to measure how effective the plans are at helping you reach your Strategic Goals. Ad hoc subcommittees can play a role in gathering evidence to ensure that your plans remain appropriate, especially if conditions change.

For example, we recommended a close review of Strategic Plans and Strategic Goals once the COVID-19 pandemic made it clear that business was going to be affected at least short- to mid-term. We continue to recommend teams regularly revisit their Strategic Plans with global circumstances in mind to recognize opportunities and prepare for challenges.

The Benefits of Strategic Planning

As we’ve mentioned, there are many benefits of Strategic Planning . Some of those benefits include:

• Shared sense of power and importance
• United direction
• Clear path and purpose for decision-making and operations
• Boosted operational effectiveness
• Responsible, efficient use of available resources
• Meaningful work done on a daily basis
• Tracking of progress
• Ability to adjust to changing circumstances

What is a business without Strategic Planning? In most cases, it’s not much, nor is it long for the world. While it’s possible to accidentally find success without much planning, most successful businesses are a result of careful thought mixed with the urge to pounce on the opportunity.

What prepares you to pounce?

Your Strategic Planning and the processes that make it possible.

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• What is strategic planning? A 5-step gu ...

What is strategic planning? A 5-step guide

Strategic planning is a process through which business leaders map out their vision for their organization’s growth and how they’re going to get there. In this article, we'll guide you through the strategic planning process, including why it's important, the benefits and best practices, and five steps to get you from beginning to end.

Strategic planning is a process through which business leaders map out their vision for their organization’s growth and how they’re going to get there. The strategic planning process informs your organization’s decisions, growth, and goals.

Strategic planning helps you clearly define your company’s long-term objectives—and maps how your short-term goals and work will help you achieve them. This, in turn, gives you a clear sense of where your organization is going and allows you to ensure your teams are working on projects that make the most impact. Think of it this way—if your goals and objectives are your destination on a map, your strategic plan is your navigation system.

In this article, we walk you through the 5-step strategic planning process and show you how to get started developing your own strategic plan.

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What is strategic planning?

Strategic planning is a business process that helps you define and share the direction your company will take in the next three to five years. During the strategic planning process, stakeholders review and define the organization’s mission and goals, conduct competitive assessments, and identify company goals and objectives. The product of the planning cycle is a strategic plan, which is shared throughout the company.

What is a strategic plan?

A strategic plan is the end result of the strategic planning process. At its most basic, it’s a tool used to define your organization’s goals and what actions you’ll take to achieve them.

Typically, your strategic plan should include: 

Your company’s mission statement

Your organizational goals, including your long-term goals and short-term, yearly objectives

Any plan of action, tactics, or approaches you plan to take to meet those goals

What are the benefits of strategic planning?

Strategic planning can help with goal setting and decision-making by allowing you to map out how your company will move toward your organization’s vision and mission statements in the next three to five years. Let’s circle back to our map metaphor. If you think of your company trajectory as a line on a map, a strategic plan can help you better quantify how you’ll get from point A (where you are now) to point B (where you want to be in a few years).

When you create and share a clear strategic plan with your team, you can:

Build a strong organizational culture by clearly defining and aligning on your organization’s mission, vision, and goals.

Align everyone around a shared purpose and ensure all departments and teams are working toward a common objective.

Proactively set objectives to help you get where you want to go and achieve desired outcomes.

Promote a long-term vision for your company rather than focusing primarily on short-term gains.

Ensure resources are allocated around the most high-impact priorities.

Define long-term goals and set shorter-term goals to support them.

Assess your current situation and identify any opportunities—or threats—allowing your organization to mitigate potential risks.

Create a proactive business culture that enables your organization to respond more swiftly to emerging market changes and opportunities.

What are the 5 steps in strategic planning?

The strategic planning process involves a structured methodology that guides the organization from vision to implementation. The strategic planning process starts with assembling a small, dedicated team of key strategic planners—typically five to 10 members—who will form the strategic planning, or management, committee. This team is responsible for gathering crucial information, guiding the development of the plan, and overseeing strategy execution.

Once you’ve established your management committee, you can get to work on the planning process. 

Step 1: Assess your current business strategy and business environment

Before you can define where you’re going, you first need to define where you are. Understanding the external environment, including market trends and competitive landscape, is crucial in the initial assessment phase of strategic planning.

To do this, your management committee should collect a variety of information from additional stakeholders, like employees and customers. In particular, plan to gather:

Relevant industry and market data to inform any market opportunities, as well as any potential upcoming threats in the near future.

Customer insights to understand what your customers want from your company—like product improvements or additional services.

Employee feedback that needs to be addressed—whether about the product, business practices, or the day-to-day company culture.

Consider different types of strategic planning tools and analytical techniques to gather this information, such as:

A balanced scorecard to help you evaluate four major elements of a business: learning and growth, business processes, customer satisfaction, and financial performance.

A SWOT analysis to help you assess both current and future potential for the business (you’ll return to this analysis periodically during the strategic planning process). 

To fill out each letter in the SWOT acronym, your management committee will answer a series of questions:

What does your organization currently do well?

What separates you from your competitors?

What are your most valuable internal resources?

What tangible assets do you have?

What is your biggest strength? 

Weaknesses:

What does your organization do poorly?

What do you currently lack (whether that’s a product, resource, or process)?

What do your competitors do better than you?

What, if any, limitations are holding your organization back?

What processes or products need improvement? 

Opportunities:

What opportunities does your organization have?

How can you leverage your unique company strengths?

Are there any trends that you can take advantage of?

How can you capitalize on marketing or press opportunities?

Is there an emerging need for your product or service? 

What emerging competitors should you keep an eye on?

Are there any weaknesses that expose your organization to risk?

Have you or could you experience negative press that could reduce market share?

Is there a chance of changing customer attitudes towards your company? 

Step 2: Identify your company’s goals and objectives

To begin strategy development, take into account your current position, which is where you are now. Then, draw inspiration from your vision, mission, and current position to identify and define your goals—these are your final destination. 

To develop your strategy, you’re essentially pulling out your compass and asking, “Where are we going next?” “What’s the ideal future state of this company?” This can help you figure out which path you need to take to get there.

During this phase of the planning process, take inspiration from important company documents, such as:

Your mission statement, to understand how you can continue moving towards your organization’s core purpose.

Your vision statement, to clarify how your strategic plan fits into your long-term vision.

Your company values, to guide you towards what matters most towards your company.

Your competitive advantages, to understand what unique benefit you offer to the market.

Your long-term goals, to track where you want to be in five or 10 years.

Your financial forecast and projection, to understand where you expect your financials to be in the next three years, what your expected cash flow is, and what new opportunities you will likely be able to invest in.

Step 3: Develop your strategic plan and determine performance metrics

Now that you understand where you are and where you want to go, it’s time to put pen to paper. Take your current business position and strategy into account, as well as your organization’s goals and objectives, and build out a strategic plan for the next three to five years. Keep in mind that even though you’re creating a long-term plan, parts of your plan should be created or revisited as the quarters and years go on.

As you build your strategic plan, you should define:

Company priorities for the next three to five years, based on your SWOT analysis and strategy.

Yearly objectives for the first year. You don’t need to define your objectives for every year of the strategic plan. As the years go on, create new yearly objectives that connect back to your overall strategic goals . 

Related key results and KPIs. Some of these should be set by the management committee, and some should be set by specific teams that are closer to the work. Make sure your key results and KPIs are measurable and actionable. These KPIs will help you track progress and ensure you’re moving in the right direction.

Budget for the next year or few years. This should be based on your financial forecast as well as your direction. Do you need to spend aggressively to develop your product? Build your team? Make a dent with marketing? Clarify your most important initiatives and how you’ll budget for those.

A high-level project roadmap . A project roadmap is a tool in project management that helps you visualize the timeline of a complex initiative, but you can also create a very high-level project roadmap for your strategic plan. Outline what you expect to be working on in certain quarters or years to make the plan more actionable and understandable.

Step 4: Implement and share your plan

Now it’s time to put your plan into action. Strategy implementation involves clear communication across your entire organization to make sure everyone knows their responsibilities and how to measure the plan’s success. 

Make sure your team (especially senior leadership) has access to the strategic plan, so they can understand how their work contributes to company priorities and the overall strategy map. We recommend sharing your plan in the same tool you use to manage and track work, so you can more easily connect high-level objectives to daily work. If you don’t already, consider using a work management platform .  

A few tips to make sure your plan will be executed without a hitch: 

Communicate clearly to your entire organization throughout the implementation process, to ensure all team members understand the strategic plan and how to implement it effectively. 

Define what “success” looks like by mapping your strategic plan to key performance indicators.

Ensure that the actions outlined in the strategic plan are integrated into the daily operations of the organization, so that every team member's daily activities are aligned with the broader strategic objectives.

Utilize tools and software—like a work management platform—that can aid in implementing and tracking the progress of your plan.

Regularly monitor and share the progress of the strategic plan with the entire organization, to keep everyone informed and reinforce the importance of the plan.

Establish regular check-ins to monitor the progress of your strategic plan and make adjustments as needed. 

Step 5: Revise and restructure as needed

Once you’ve created and implemented your new strategic framework, the final step of the planning process is to monitor and manage your plan.

Remember, your strategic plan isn’t set in stone. You’ll need to revisit and update the plan if your company changes directions or makes new investments. As new market opportunities and threats come up, you’ll likely want to tweak your strategic plan. Make sure to review your plan regularly—meaning quarterly and annually—to ensure it’s still aligned with your organization’s vision and goals.

Keep in mind that your plan won’t last forever, even if you do update it frequently. A successful strategic plan evolves with your company’s long-term goals. When you’ve achieved most of your strategic goals, or if your strategy has evolved significantly since you first made your plan, it might be time to create a new one.

Build a smarter strategic plan with a work management platform

To turn your company strategy into a plan—and ultimately, impact—make sure you’re proactively connecting company objectives to daily work. When you can clarify this connection, you’re giving your team members the context they need to get their best work done. 

A work management platform plays a pivotal role in this process. It acts as a central hub for your strategic plan, ensuring that every task and project is directly tied to your broader company goals. This alignment is crucial for visibility and coordination, allowing team members to see how their individual efforts contribute to the company’s success. 

By leveraging such a platform, you not only streamline workflow and enhance team productivity but also align every action with your strategic objectives—allowing teams to drive greater impact and helping your company move toward goals more effectively. 

Strategic planning FAQs

Still have questions about strategic planning? We have answers.

Why do I need a strategic plan?

A strategic plan is one of many tools you can use to plan and hit your goals. It helps map out strategic objectives and growth metrics that will help your company be successful.

When should I create a strategic plan?

You should aim to create a strategic plan every three to five years, depending on your organization’s growth speed.

Since the point of a strategic plan is to map out your long-term goals and how you’ll get there, you should create a strategic plan when you’ve met most or all of them. You should also create a strategic plan any time you’re going to make a large pivot in your organization’s mission or enter new markets. 

What is a strategic planning template?

A strategic planning template is a tool organizations can use to map out their strategic plan and track progress. Typically, a strategic planning template houses all the components needed to build out a strategic plan, including your company’s vision and mission statements, information from any competitive analyses or SWOT assessments, and relevant KPIs.

What’s the difference between a strategic plan vs. business plan?

A business plan can help you document your strategy as you’re getting started so every team member is on the same page about your core business priorities and goals. This tool can help you document and share your strategy with key investors or stakeholders as you get your business up and running.

You should create a business plan when you’re: 

Just starting your business

Significantly restructuring your business

If your business is already established, you should create a strategic plan instead of a business plan. Even if you’re working at a relatively young company, your strategic plan can build on your business plan to help you move in the right direction. During the strategic planning process, you’ll draw from a lot of the fundamental business elements you built early on to establish your strategy for the next three to five years.

What’s the difference between a strategic plan vs. mission and vision statements?

Your strategic plan, mission statement, and vision statements are all closely connected. In fact, during the strategic planning process, you will take inspiration from your mission and vision statements in order to build out your strategic plan.

Simply put: 

A mission statement summarizes your company’s purpose.

A vision statement broadly explains how you’ll reach your company’s purpose.

A strategic plan pulls in inspiration from your mission and vision statements and outlines what actions you’re going to take to move in the right direction. 

For example, if your company produces pet safety equipment, here’s how your mission statement, vision statement, and strategic plan might shake out:

Mission statement: “To ensure the safety of the world’s animals.” 

Vision statement: “To create pet safety and tracking products that are effortless to use.” 

Your strategic plan would outline the steps you’re going to take in the next few years to bring your company closer to your mission and vision. For example, you develop a new pet tracking smart collar or improve the microchipping experience for pet owners. 

What’s the difference between a strategic plan vs. company objectives?

Company objectives are broad goals. You should set these on a yearly or quarterly basis (if your organization moves quickly). These objectives give your team a clear sense of what you intend to accomplish for a set period of time. 

Your strategic plan is more forward-thinking than your company goals, and it should cover more than one year of work. Think of it this way: your company objectives will move the needle towards your overall strategy—but your strategic plan should be bigger than company objectives because it spans multiple years.

What’s the difference between a strategic plan vs. a business case?

A business case is a document to help you pitch a significant investment or initiative for your company. When you create a business case, you’re outlining why this investment is a good idea, and how this large-scale project will positively impact the business. 

You might end up building business cases for things on your strategic plan’s roadmap—but your strategic plan should be bigger than that. This tool should encompass multiple years of your roadmap, across your entire company—not just one initiative.

What’s the difference between a strategic plan vs. a project plan?

A strategic plan is a company-wide, multi-year plan of what you want to accomplish in the next three to five years and how you plan to accomplish that. A project plan, on the other hand, outlines how you’re going to accomplish a specific project. This project could be one of many initiatives that contribute to a specific company objective which, in turn, is one of many objectives that contribute to your strategic plan. 

What’s the difference between strategic management vs. strategic planning?

A strategic plan is a tool to define where your organization wants to go and what actions you need to take to achieve those goals. Strategic planning is the process of creating a plan in order to hit your strategic objectives.

Strategic management includes the strategic planning process, but also goes beyond it. In addition to planning how you will achieve your big-picture goals, strategic management also helps you organize your resources and figure out the best action plans for success. 

Related resources

15 creative elevator pitch examples for every scenario

How Asana streamlines strategic planning with work management

How to create a CRM strategy: 6 steps (with examples)

What is management by objectives (MBO)?

17.2 The Planning Process

• Outline the planning and controlling processes.

Planning is a process. Ideally it is future oriented, comprehensive, systematic, integrated, and negotiated. 11 It involves an extensive search for alternatives and analyzes relevant information, is systematic in nature, and is commonly participative. 12 The planning model described in this section breaks the managerial function of planning into several steps, as shown in Exhibit 17.3 . Following this step-by-step procedure helps ensure that organizational planning meets these requirements.

Step 1: Developing an Awareness of the Present State

According to management scholars Harold Koontz and Cyril O’Donnell, the first step in the planning process is awareness. 13 It is at this step that managers build the foundation on which they will develop their plans. This foundation specifies an organization’s current status, pinpoints its commitments, recognizes its strengths and weaknesses, and sets forth a vision of the future. Because the past is instrumental in determining where an organization expects to go in the future, managers at this point must understand their organization and its history. It has been said—“The further you look back, the further you can see ahead.” 14

Step 2: Establishing Outcome Statements

The second step in the planning process consists of deciding “where the organization is headed, or is going to end up.” Ideally, this involves establishing goals. Just as your goal in this course might be to get a certain grade, managers at various levels in an organization’s hierarchy set goals. For example, plans established by a university’s marketing department curriculum committee must fit with and support the plans of the department, which contribute to the goals of the business school, whose plans must, in turn, support the goals of the university. Managers therefore develop an elaborate network of organizational plans, such as that shown in Exhibit 17.4 , to achieve the overall goals of their organization.

Goal vs. Domain Planning

Outcome statements can be constructed around specific goals or framed in terms of moving in a particular direction toward a viable set of outcomes. In goal planning , people set specific goals and then create action statements. 15 For example, freshman Kristin Rude decides that she wants a bachelor of science degree in biochemistry (the goal). She then constructs a four-year academic plan that will help her achieve this goal. Kristin is engaging in goal planning. She first identifies a goal and then develops a course of action to realize her goal.

Another approach to planning is domain/directional planning , in which managers develop a course of action that moves an organization toward one identified domain (and therefore away from other domains). 16 Within the chosen domain may lie a number of acceptable and specific goals. For example, high-school senior Neil Marquardt decides that he wants to major in a business-related discipline in college. During the next four years, he will select a variety of courses from the business school curriculum yet never select a major. After selecting courses based on availability and interest, he earns a sufficient number of credits within this chosen domain that enables him to graduate with a major in marketing. Neil never engaged in goal planning, but in the end he will realize one of many acceptable goals within an accepted domain.

The development of the Post-it® product by the 3M Corporation demonstrates how domain planning works. In the research laboratories at 3M, efforts were being made to develop new forms and strengths of cohesive substances. One result was cohesive material with no known value because of its extremely low cohesive level. A 3M division specialist, Arthur L. Fry, frustrated by page markers falling from his hymn book in church, realized that this material, recently developed by Spencer F. Silver, would stick to paper for long periods and could be removed without destroying the paper. Fry experimented with the material as page markers and note pads—out of this came the highly popular and extremely profitable 3M product Scotch Post-it®. Geoff Nicholson, the driving force behind the Post-it® product, comments that rather than get bogged down in the planning process, innovations must be fast-tracked and decisions made whether to continue or move on early during the product development process. 17

Situations in which managers are likely to engage in domain planning include (1) when there is a recognized need for flexibility, (2) when people cannot agree on goals, (3) when an organization’s external environment is unstable and highly uncertain, and (4) when an organization is starting up or is in a transitional period. In addition, domain planning is likely to prevail at upper levels in an organization, where managers are responsible for dealing with the external environment and when task uncertainty is high. Goal planning (formulating goals compatible with the chosen domain) is likely to prevail in the technical core, where there is less uncertainty.

Hybrid Planning

Occasionally, coupling of domain and goal planning occurs, creating a third approach, called hybrid planning . In this approach, managers begin with the more general domain planning and commit to moving in a particular direction. As time passes, learning occurs, uncertainty is reduced, preferences sharpen, and managers are able to make the transition to goal planning as they identify increasingly specific targets in the selected domain. Movement from domain planning to goal planning occurs as knowledge accumulates, preferences for a particular goal emerge, and action statements are created.

Consequences of Goal, Domain, and Hybrid Planning

Setting goals not only affects performance directly, but also encourages managers to plan more extensively. That is, once goals are set, people are more likely to think systematically about how they should proceed to realize the goals. 18 When people have vague goals, as in domain planning, they find it difficult to draw up detailed action plans and are therefore less likely to perform effectively. When studying the topic of motivation, you will learn about goal theory. Research suggests that goal planning results in higher levels of performance than does domain planning alone. 19

Step 3: Premising

In this step of the planning process, managers establish the premises, or assumptions, on which they will build their action statements. The quality and success of any plan depends on the quality of its underlying assumptions. Throughout the planning process, assumptions about future events must be brought to the surface, monitored, and updated. 20

Managers collect information by scanning their organization’s internal and external environments. They use this information to make assumptions about the likelihood of future events. As Kristin considers her four-year pursuit of her biochemistry major, she anticipates that in addition to her savings and funds supplied by her parents, she will need a full-time summer job for two summers in order to cover the cost of her undergraduate education. Thus, she includes finding full-time summer employment between her senior year of high school and her freshman year and between her freshman and sophomore years of college as part of her plan. The other two summers she will devote to an internship and finding postgraduate employment—much to mom and dad’s delight! Effective planning skills can be used throughout your life. The plan you develop to pay for and complete your education is an especially important one.

Step 4: Determining a Course of Action (Action Statements)

In this stage of the planning process, managers decide how to move from their current position toward their goal (or toward their domain). They develop an action statement that details what needs to be done, when, how, and by whom. The course of action determines how an organization will get from its current position to its desired future position. Choosing a course of action involves determining alternatives by drawing on research, experimentation, and experience; evaluating alternatives in light of how well each would help the organization reach its goals or approach its desired domain; and selecting a course of action after identifying and carefully considering the merits of each alternative.

Step 5: Formulating Supportive Plans

The planning process seldom stops with the adoption of a general plan. Managers often need to develop one or more supportive or derivative plans to bolster and explain their basic plan. Suppose an organization decides to switch from a 5-day, 40-hour workweek (5/40) to a 4-day, 40-hour workweek (4/40) in an attempt to reduce employee turnover. This major plan requires the creation of a number of supportive plans. Managers might need to develop personnel policies dealing with payment of daily overtime. New administrative plans will be needed for scheduling meetings, handling phone calls, and dealing with customers and suppliers.

Planning, Implementation, and Controlling

After managers have moved through the five steps of the planning process and have drawn up and implemented specific plans, they must monitor and maintain their plans. Through the controlling function (to be discussed in greater detail later in this chapter), managers observe ongoing human behavior and organizational activity, compare it to the outcome and action statements formulated during the planning process, and take corrective action if they observe unexpected and unwanted deviations. Thus, planning and controlling activities are closely interrelated (planning ➨ controlling ➨ planning . . .). Planning feeds controlling by establishing the standards against which behavior will be evaluated during the controlling process. Monitoring organizational behavior (the control activity) provides managers with input that helps them prepare for the upcoming planning period—it adds meaning to the awareness step of the planning process.

Influenced by total quality management (TQM) and the importance of achieving continuous improvement in the processes used, as well as the goods and services produced, organizations such as IBM-Rochester have linked their planning and controlling activities by adopting the Deming cycle (also known as the Shewhart cycle).

It has been noted on numerous occasions that many organizations that do plan fail to recognize the importance of continuous learning. Their plans are either placed on the shelf and collect dust or are created, implemented, and adhered to without a systematic review and modification process. Frequently, plans are implemented without first measuring where the organization currently stands so that future comparisons and evaluations of the plan’s effectiveness cannot be determined. The Deming cycle , shown in Exhibit 17.6 , helps managers assess the effects of planned action by integrating organizational learning into the planning process. The cycle consists of four key stages: (1) Plan—create the plan using the model discussed earlier. (2) Do—implement the plan. (3) Check—monitor the results of the planned course of action; organizational learning about the effectiveness of the plan occurs at this stage. (4) Act—act on what was learned, modify the plan, and return to the first stage in the cycle, and the cycle begins again as the organization strives for continuous learning and improvement.

Concept Check

• What are the five steps in the planning process?
• What is the difference between goal, domain, and hybrid planning?
• How are planning, implementation, and controlling related?

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Access for free at https://openstax.org/books/principles-management/pages/1-introduction

• Authors: David S. Bright, Anastasia H. Cortes
• Publisher/website: OpenStax
• Book title: Principles of Management
• Publication date: Mar 20, 2019
• Location: Houston, Texas
• Book URL: https://openstax.org/books/principles-management/pages/1-introduction
• Section URL: https://openstax.org/books/principles-management/pages/17-2-the-planning-process

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Strategic Planning Process: Why Is Strategic Planning Important for Organizations in 2024?

What to read next:

See how Quantive can help you achieve more of your strategy.

Playing chess without a strong opening is a guaranteed way to disadvantage yourself. Just like in chess, organizations without an adequate strategic planning process are unlikely to thrive and adapt long-term. 

The strategic planning process is essential for aligning your organization on key priorities, goals, and initiatives, making it crucial for organizational success.   

This article will empower you to craft and perfect your strategic planning process by exploring the following:  

• What is strategic planning
• Why strategic planning is important for your business  
• The seven steps of the strategic planning process   

Strategic planning frameworks

• Best practices supporting the strategic planning process  

By the end of this article, you’ll have the knowledge needed to perfect the key elements of strategic planning. Ready? Let’s begin.  

What is strategic planning?

Strategic planning charts your business's course toward success. Using your organization’s vision, mission statement , and values — with internal and external information — each step of the strategic planning process helps you craft long-term objectives and attain your goals with strategic management .  

The key elements of strategic planning includes a SWOT analysis, goal setting , stakeholder involvement, plus developing actionable strategies, approaches, and tactics aligned with primary objectives.  

In short, the strategic planning process bridges the gap between your organization’s current and desired state, providing a clear and actionable framework that answers:   Where are you now?   Where do you want to be?   How will you get there?

7 key elements of strategic planning 

The following strategic planning components work together to create cohesive strategic plans for your business goals. Let’s take a close look at each of these:  

• Vision : What your organization wants to achieve in the future, the long-term goal  
• Mission : The driving force behind why your company exists, who it serves, and how it creates value  
• Values : Fundamental beliefs guiding your company’s decision-making process  
• Goals : Measurable objectives in alignment with your business mission, vision, and values  
• Strategy : A long-term strategy map for achieving your objectives based on both internal and external factors  
• Approach : How you execute strategy and achieve objectives using actions and initiatives   
• Tactics : Granular short-term actions, programs, and activities  

Why is the strategic planning process important?

Just as a chess player needs a gameplan to reach checkmate, a company needs a solid strategic plan to achieve its goals.   

Without a strategic plan, your business will waste precious time, energy, and resources on endeavors that won’t get your company closer to where it needs to be.   

Your ideal plan should cover all key strategic planning areas, while allowing you to stay present by measuring success and course-correcting or redefining the strategic direction when necessary. Ultimately, enabling your company to stay future-proof through the creation of an always-on strategy that reflects your company's mission and vision.   

An always-on strategy involves continuous environmental scanning even after the strategic plan has been devised, ensuring readiness to adapt in response to quick, drastic changes in the environment.

Let’s dive deeper into the steps of the strategic planning process.  

What are the 7 stages of the strategic planning process?

You understand the overall value of implementing a strategic planning process — now let’s put it in practice. Here's our 7-step approach to strategic planning that ensures everyone is on the same page:  

• Clarify your vision, mission, and values  
• Conduct an environmental scan  
• Define strategic priorities  
• Develop goals and metrics  
• Derive a strategic plan  
• Write and communicate your strategic plan  
• Implement, monitor, and revise   

1. Clarify your vision, mission, and values 

The first step of the strategic planning process is understanding your organization’s core elements: vision, mission, and values. Clarifying these will align your strategic plan with your company’s definition of success. Once established, these are the foundation for the rest of the strategic planning process.   

Questions to ask:

• What do we aspire to achieve in the long term?
• What is our purpose or ultimate goal?
• What do we do to fulfill our vision?
• What key activities or services do we provide?
• What are our organization's ethics?
• What qualities or behaviors do we expect from employees?

Read more: What is Mission vs. Vision  

2. Conduct an environmental scan

Once everyone on the same page about vision, mission, and values, it's time to scan your internal and external environment. This involves a long-term SWOT analysis, evaluating your organization’s strengths, weaknesses, opportunities, and threats.  

Internal factors 

Internal strengths and weaknesses help you understand where your organization excels and what it could improve. Strengths and weaknesses awareness helps make more informed decisions with your capabilities and resource allocation in mind.  

External factors

Externally, opportunities and threats in the market help you understand the power of your industry’s customers, suppliers, and competitors. Additionally, consider how broader forces like technology, culture, politics, and regulation may impact your organization.   

• What are our organization's key strengths or competitive advantages?
• What areas or functions within our organization need improvement?
• What emerging trends or opportunities can we leverage?
• How do changes in technology, regulations, or consumer behavior impact us?

3. Define strategic priorities

Prioritization puts the “strategic” in strategic planning process. Your organization’s mission, vision, values, and environmental scan serve as a lens to identify top priorities. Limiting priorities ensures your organization intentionally allocates resources.  

These categories can help you rank your strategic priorities:  

• Critical : Urgent tasks whose failure to complete will have severe consequences — financial losses, reputation damage, or legal consequences  
• Important : Significant tasks which support organizational achievements and require timely completion  
• Desirable : Valuable tasks not essential in the short-term, but can contribute to long-term success and growth  
• How do these priorities align with our mission, vision, and values?
• Which tasks need to be completed quickly to ensure effective progress towards our desired outcomes?
• What resources and capabilities do we need to pursue these priorities effectively?

4. Develop goals and metrics

Next, you establish goals and metrics to reflect your strategic priorities. Purpose-driven, long-term, actionable strategic planning goals should flow down through the organization, with lower-level goals contributing to higher-level ones.  

One approach that can help you set and measure your aligned goals is objectives and key results (OKRs). OKRs consist of objectives, qualitative statements of what you want to achieve, and key results, 3-5 supporting metrics that track progress toward your objective.  

OKRs ensure alignment at every level of the organization, with tracking and accountability built into the framework to keep everyone engaged. With ambitious, intentional goals, OKRs can help you drive the strategic plan forward.  

• What metrics can we use to track progress toward each objective?
• How can we ensure that lower-level goals and metrics support and contribute to higher-level ones?
• How will we track and measure progress towards key results?
• How will we ensure accountability?

Get an in-depth look at OKRs with our Ultimate OKR Playbook

5. Derive a strategic plan

The next step of the strategic planning process gets down to the nitty-gritty “how” — developing a clear, practical strategic plan for bridging the gap between now and the future.   

To do this, you’ll need to brainstorm short- and long-term approaches to achieving the goals you’ve set, answering a couple of key questions along the way. You must evaluate ideas based on factors like:  

• Feasibility : How realistic and achievable is it?  
• Impact : How conducive is it to goal attainment?  
• Cost : Can we fund this approach, and is it worth the investment?  
• Alignment : Does it support our mission, vision, and values?  

From your approaches, you can devise a detailed action plan, which covers things like:  

• Timelines : When will we take each step, and what are the deadlines?  
• Milestones : What key achievements will ensure consistent progress?  
• Resource requirements : What’s needed to achieve each step?  
• Responsibilities : Who's accountable in each step?  
• Risks and challenges : What can affect our ability to execute our plan? How will we address these?  

With a detailed action plan like this, you can move from abstract goals to concrete steps, bringing you closer to achieving your strategic objectives.  

6. Write and communicate your strategic plan

Writing and communicating your strategic plan involves everyone, ensuring each team is on the same page. Here’s a clear, concise structure you can use to cover the most important strategic planning components:  

• Executive summary : Highlights and priorities in your strategic overview   
• Introduction : Background on your strategic plan  
• Connection : How your strategic plan aligns with your organization’s mission, vision, and values  
• Environmental scan : An overview of your SWOT analysis findings  
• Strategic priorities and goals : Informed short and long-term organizational goals  
• Strategic approach : An overview of your tactical plan   
• Resource needs : How you'll deploy technology, funding, and employees  
• Risk and challenges : How you’ll mitigate the unknowns if and when they arise  
• Implementation plan : A step-by-step resource deployment plan for achieving your strategy  
• Monitoring and evaluation : How you’ll keep your plan heading in the right direction  
• Conclusion : A summary of the strategic plan and everything it entails  
• What information or context do stakeholders need to understand the strategic plan?
• How can we emphasize the connection between the strategic plan and the overall purpose and direction of the organization?
• What initiatives or strategies will we implement to drive progress?
• How will we mitigate or address risks?
• What are the specific steps and actions we need to take to implement the strategic plan?
• Any additional information or next steps we need to communicate?

7. Implement, monitor, and revise performance 

Finally, it’s time to implement your strategic plan, making sure it's up to date, creating a persistent, always-on strategy that doesn't lag behind. As you get the ball rolling, keep a close eye on your timelines, milestones, and performance targets, and whether these align with your internal and external environment.   

Internally, indicators like completions, issues, and delays provide visibility into your process. If any bottlenecks, inefficiencies, or misalignment arises, take corrective action promptly — adjust the plan, reallocate resources, or provide additional training to employees.  

Externally, you should monitor changes such as customer preferences, competitive pressures, economic shifts , and regulatory changes. These impact the success of your strategic action plan and may require tweaks along the way.   

Remember, implementing a strategic plan isn’t a one-time task — continual strategic evaluations are essential for an Always-On Strategy. It involves extending beyond planning stages and contextualizing the strategy in real-time, allowing for swift adaptations to changing circumstances to ensure your plan remains relevant.

• Are there any bottlenecks, inefficiencies, or misalignments we need to address?
• Are we monitoring and analyzing external factors?
• Are we prepared to make necessary tweaks or adaptations along the way?
• Are we agile enough to promptly correct deviations from our strategic plan while maintaining an "always-on" strategy for continual adjustments?

You can use several frameworks to guide you through the strategic planning process. Some of the most influential ones include:

• Balanced scorecard (BSC) : Takes an overarching approach to strategic planning, covering financial, customer, internal processes, and learning and growth, aligning short-term operational tasks with long-term strategic goals.
• SWOT analysis : Highlights your business's internal strengths and weaknesses alongside external opportunities and threats to enable informed decisions about your strategic direction.
• OKRs : Structures goals as a set of measurable objectives and key results. They cascade down from top-level organizational objectives to lower-level team goals, ensuring alignment across the entire organization. Get an in-depth look at OKRs here . 
• Scenario planning : Involves envisioning and planning for various possible future scenarios, allowing you to prepare for a range of potential outcomes. It's particularly useful in volatile environments rife with uncertainties.
• Porter's five forces : Evaluates the competitive forces within your industry — rivalry among existing competitors, bargaining power of buyers and suppliers, threat of new entrants, and threat of substitutes — to shape strategies that position the organization for success.

Common problems with strategic planning and how to overcome them

While strategic planning provides a roadmap for business success, it's not immune to challenges. Recognizing and addressing these is crucial for effective strategy implementation. Let's explore common issues encountered in strategic planning and strategies to overcome them.

Want a quick recap? Watch our summary below

Static nature

Traditional strategic planning models often follow a linear, annual, and inflexible process that doesn't accommodate quick changes in the business landscape. Strategies formulated this way may quickly become outdated in today's fast-paced environment.

To overcome the rigidity of traditional strategic planning, your organization should integrate continuous environmental scanning processes. This includes monitoring market changes, competitor actions, and technological advancements, ensuring real-time insights inform strategic decision-making. Additionally, adopting agile methodologies allows for iterative planning, breaking down strategies into smaller, manageable components reviewed and adjusted regularly, ensuring adaptability in today's fast-paced landscape.

Disconnect between strategic plan and execution

There's often a significant gap between the strategic objectives and their actual implementation, leading to misalignment, confusion, and inefficiency within the organization.

To bridge the gap, ensure accountability, alignment, and feedback-driven processes across the business. Linking team roles and responsibilities to lower-level objectives can fosters alignment and accountability, whereas aligning these with overarching strategic objectives ensure coherence in execution. To ensure goals are optimized on an ongoing basis, implement a feedback mechanism that continuously evaluates progress against goals, enabling regular adjustments based on market feedback and internal insights.

Lack of real-time insights

Traditional planning models rely on historical data and periodic reviews, which might not capture real-time changes or emerging trends accurately. This can result in misaligned strategies unsuitable for the current business landscape.

Leverage advanced analytics tools and AI-driven technologies. Invest in technologies that offer real-time tracking and reporting of key performance indicators, with dashboards and monitoring systems that provide up-to-date insights. These allow you to gather, process, and interpret real-time data for proactive decision-making that aligns with the current business landscape. 

Failure to close the feedback loop

The absence of a feedback loop between strategy formulation, execution, and evaluation can impact learning and improvement. Companies might therefore struggle to refine their strategies based on real-time performance insights.

Establish a structured feedback loop encompassing strategy formulation, execution, and evaluation stages. Encourage employees to actively contribute insights on strategy execution, fostering a culture of continuous improvement and adaptation.

Best practices during the strategic planning process

Navigating strategic planning goes beyond overcoming challenges. A successful strategic plan requires you to embrace a set of guiding best practices, helping you navigate the development and implementation of your strategic planning process.   

1. Keep the planning process flexible

With ever-changing business environments, a one-and-done approach to strategic planning is insufficient. Your strategic plan needs to be adaptable to ensure its relevancy and its ability to weather the effects of changing circumstances.  

2. Pull together a diverse group of stakeholders

By including voices from across the organization, you can account for varying thoughts, perspectives, and experiences at each step of the strategic planning process, ensuring cross-functional alignment .  

3. Document the process

Continuous documentation of the strategic management process is crucial in capturing and communicating the key elements of strategic planning. This keeps everyone on the same page and your strategic plan up-to-date and relevant.  

4. Make data-driven decisions

Root your decisions in evidence and facts rather than assumptions or opinions. This cultivates accurate insights, improves prioritization, and reduces biased (flawed) decisions.  

5. Align your company culture with the strategic plan 

Your strategic plan can only be successful if everyone is on board with it — company culture supports what you’re trying to achieve. Behaviors, rules, and attitudes optimize the execution of your strategic plan.  

6. Leverage AI 

Using AI in strategic planning supports the development of an always-on strategy — amplifying strategic agility, conducting comprehensive environmental scans, and expediting planning phases. It can streamline operations, facilitate data-driven decision-making, and provide transparent insights into progress to drive accountability, engagement, and alignment with the strategic plan.

The strategic planning process in a nutshell

Careful strategy mapping is crucial for any organization looking to achieve its long-term goals while staying true to its mission, vision, and values. The seven steps in the strategic planning process outlined in this article provide a solid framework your organization can follow — from clarifying your organization’s purpose and developing a strategic plan, to implementing, monitoring, and revising performance. These steps will help your company meet goal measurements and create an always-on strategy that's rooted in the present. 

It’s important to remember that strategic planning is not a one-time event. To stay effective and relevant, you must continuously monitor and adapt your strategy in response to changing circumstances. This ongoing process of improvement keeps your organization competitive and demonstrates your commitment to achieving your goals.  

Quantive empowers modern organizations to turn their ambitions into reality through strategic agility. It's where strategy, teams, and data come together to drive effective decision-making, streamline execution, and maximize performance.     

As your company navigates today’s competitive landscape, you need an Always-On Strategy to continuously bridge the gap between current and desired business outcomes. Quantive brings together the technology, expertise, and passion to transform your strategy and playbooks from a static formulation to a feedback-driven engine for growth.     

Whether you’re a fast-growing scale-up, a mid-market business looking to conquer, or a large enterprise looking for innovation, Quantive keeps you ahead – every step of the way. For more information, visit www.quantive.com .  

Additional resources

How top companies are closing the strategy execution gap, strategy execution in 4 steps: keys to successful strategy, strategy development faq: definition, components, & benefits, 7 pitfalls in strategy development & how to avoid them, subscribe for our newsletter.

Strategic Planning

The art of formulating business strategies, implementing them, and evaluating their impact based on organizational objectives

What is Strategic Planning?

Strategic planning is the art of creating specific business strategies, implementing them, and evaluating the results of executing the plan, in regard to a company’s overall long-term goals or desires. It is a concept that focuses on integrating various departments (such as accounting and finance, marketing, and human resources) within a company to accomplish its strategic goals. The term strategic planning is essentially synonymous with strategic management.

The concept of strategic planning originally became popular in the 1950s and 1960s, and enjoyed favor in the corporate world up until the 1980s, when it somewhat fell out of favor. However, enthusiasm for strategic business planning was revived in the 1990s and strategic planning remains relevant in modern business.

CFI’s Course on Corporate & Business Strategy is an elective course for the FMVA Program.

Strategic Planning Process

The strategic planning process requires considerable thought and planning on the part of a company’s upper-level management. Before settling on a plan of action and then determining how to strategically implement it, executives may consider many possible options. In the end, a company’s management will, hopefully, settle on a strategy that is most likely to produce positive results (usually defined as improving the company’s bottom line) and that can be executed in a cost-efficient manner with a high likelihood of success, while avoiding undue financial risk.

The development and execution of strategic planning are typically viewed as consisting of being performed in three critical steps:

1. Strategy Formulation

In the process of formulating a strategy, a company will first assess its current situation by performing an internal and external audit. The purpose of this is to help identify the organization’s strengths and weaknesses, as well as opportunities and threats ( SWOT Analysis ). As a result of the analysis, managers decide on which plans or markets they should focus on or abandon, how to best allocate the company’s resources, and whether to take actions such as expanding operations through a joint venture or merger.

Business strategies have long-term effects on organizational success. Only upper management executives are usually authorized to assign the resources necessary for their implementation.

2. Strategy Implementation

After a strategy is formulated, the company needs to establish specific targets or goals related to putting the strategy into action, and allocate resources for the strategy’s execution. The success of the implementation stage is often determined by how good a job upper management does in regard to clearly communicating the chosen strategy throughout the company and getting all of its employees to “buy into” the desire to put the strategy into action.

Effective strategy implementation involves developing a solid structure, or framework, for implementing the strategy, maximizing the utilization of relevant resources, and redirecting marketing efforts in line with the strategy’s goals and objectives.

3. Strategy Evaluation

Any savvy business person knows that success today does not guarantee success tomorrow. As such, it is important for managers to evaluate the performance of a chosen strategy after the implementation phase.

Strategy evaluation involves three crucial activities: reviewing the internal and external factors affecting the implementation of the strategy, measuring performance, and taking corrective steps to make the strategy more effective. For example, after implementing a strategy to improve customer service, a company may discover that it needs to adopt a new customer relationship management (CRM) software program in order to attain the desired improvements in customer relations.

All three steps in strategic planning occur within three hierarchical levels: upper management, middle management, and operational levels. Thus, it is imperative to foster communication and interaction among employees and managers at all levels, so as to help the firm to operate as a more functional and effective team.

Benefits of Strategic Planning

The volatility of the business environment causes many firms to adopt reactive strategies rather than proactive ones. However, reactive strategies are typically only viable for the short-term, even though they may require spending a significant amount of resources and time to execute. Strategic planning helps firms prepare proactively and address issues with a more long-term view. They enable a company to initiate influence instead of just responding to situations.

Among the primary benefits derived from strategic planning are the following:

1. Helps formulate better strategies using a logical, systematic approach

This is often the most important benefit. Some studies show that the strategic planning process itself makes a significant contribution to improving a company’s overall performance, regardless of the success of a specific strategy.

2. Enhanced communication between employers and employees

Communication is crucial to the success of the strategic planning process. It is initiated through participation and dialogue among the managers and employees, which shows their commitment to achieving organizational goals.

Strategic planning also helps managers and employees show commitment to the organization’s goals. This is because they know what the company is doing and the reasons behind it. Strategic planning makes organizational goals and objectives real, and employees can more readily understand the relationship between their performance, the company’s success, and compensation. As a result, both employees and managers tend to become more innovative and creative, which fosters further growth of the company.

3. Empowers individuals working in the organization

The increased dialogue and communication across all stages of the process strengthens employees’ sense of effectiveness and importance in the company’s overall success. For this reason, it is important for companies to decentralize the strategic planning process by involving lower-level managers and employees throughout the organization. A good example is that of the Walt Disney Co., which dissolved its separate strategic planning department, in favor of assigning the planning roles to individual Disney business divisions.

An increasing number of companies use strategic planning to formulate and implement effective decisions. While planning requires a significant amount of time, effort, and money, a well-thought-out strategic plan efficiently fosters company growth, goal achievement, and employee satisfaction.

Additional Resources

Thank you for reading CFI’s guide to Strategic Planning. To keep learning and advancing your career, the additional CFI resources below will be useful:

• Broad Factors Analysis
• Scalability
• Systems Thinking
• See all management & strategy resources
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Business Planning Process: Everything You Need to Know

The business planning process should envision your business's immediate and long-term goals. 3 min read updated on September 19, 2022

Why Is it Important to Develop a Business Plan?

A business plan will serve as a guide for management to run the company. Planning will help avoid problems that can arise from cash shortages, inability to meet customer deadlines, or too few employees. Before planning for the future, companies need to look honestly and critically at the current state of their business by assessing where the company's strengths lie and what needs improvement.

How to Begin the Business Planning Process

To start the business planning process, ask yourself where your business is currently and where you want it to go. A clear vision is the starting point of the business planning process. From there, the process breaks down into more detailed steps.

Develop a Pitch

Start the business planning process with a pitch , which gives a simple outline of your business strategy.

Your pitch should include:

• Your main proposition
• A summary of the problem you are solving
• Your solution to this problem
• Description of who your target customer is
• An overview of who your company's competitors are

Research Your Market and Products

When you have defined your vision, begin researching products and your target market to help you better understand your business and your potential customer base.

Create a Company Bio

Create a company bio to include in your business plan that highlights your company's core mission and values. Answer the question, "Why did you start your business?" Include bios of personnel underlining their experience and expertise, and how they collaborate as a team to run the business.

When you've built a strong identity, you can incorporate this same text into funding applications, materials that you distribute about your company, and your company's website.

Outline Your Business Model

The basic business model should be laid out in four to five paragraphs that clearly explain how your business operates on a daily basis.

This section should outline the following:

• Your products or services
• A profile of who your customer is
• How your business plans to make profits

Create a Basic Marketing Plan

Include a section in your plan document outlining how your company will market itself to bring in new clients or customers. The first strategy that entrepreneurs use is typically paid advertising. However, in this day and age you should consider exploring other strategies, like referrals, word-of-mouth, mailings, and email blasts.

Prepare Your Business's Financial Projections

A section outlining your financial projects is an integral part of your business plan. Keep these projections fairly conservative, especially in your company's first fiscal year. Consider how you expect revenues to pay for company costs and allow for room for growth in the future. Base all financial projections on concrete assumptions, using data to support your projections.

Draft a Document

With your financial projections in place, it's time to actually draft your business plan. After having conducted the research, the drafting process should be fairly easy to fill in.

Set Goals, Track Progress, and Make Adjustments

Assign different tasks and responsibilities to keep track of and manage progress, and to create accountability among your staff.

A monthly review of your progress and strategy is crucial to checking in on your business's progress, tracking your goals and changing directions should things not go as planned.

Develop Your Executive Summary

Often, investors will ask for an executive summary rather than your detailed business plan to get a feel for what your company has to offer.

It's best to write your executive summary last since you'll be able to highlight the essential details of your business plan and exclude the minutiae.

Edit and Proof Your Final Document

To make sure that your plan is straightforward and easy to understand, proofread, and edit your final document. For this step, also hire a professional copy editor to check formatting, proof, and edit your document.

Keep the design of your document professional to give a good visual first impression to potential investors and employees.

Finally, refine the pitch you created at the beginning of the business planning process before presenting to investors.

If you need help with your business planning process, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Hire the top business lawyers and save up to 60% on legal fees

Content Approved by UpCounsel

• Creating a Business Plan
• Sample of a Good Business Plan
• IT Company Business Plan
• Business Plan Format: Everything you Need to Know
• Parts of Business Plan and Definition
• Startup Business Plan Presentation Template
• Business Plan Contents Page
• Service Business Plan
• How to Make a Business Plan Format
• Business Plan

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Strategic planning: Read this before it's that time again

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What is strategic planning?

What is strategic plan management?

Benefits of robust strategic planning and management

10 steps in the strategic planning process.

Plans are worthless, but planning is everything. - Dwight D. Eisenhower

It’s that time again. 

Every three to five years, most larger organizations periodically plan for the future. Many times strategic planning documents are shelved and forgotten until the next cycle begins. On the other hand, many smaller and newer organizations, propelled by urgency, may not devote the necessary time and energy to the strategic planning process. 

Only 63% of businesses plan more than a year out. They fail to see that — contrary to Alice in Wonderland’s Cheshire cat — “any way” does not take you there. 

For all organizations, a more rigorous annual planning process is critical for driving future success, profitability, value, and impact.

John Kotter, a former professor at Harvard Business School and noted expert on innovation says, “ Strategy should be viewed as a dynamic force that constantly seeks opportunities, identifies initiatives that will capitalize on them, and completes those initiatives swiftly and efficiently.”

There’s hardly a better case that can be made for dynamic planning than in the tech industry, where mergers and acquisitions are accelerating exponentially. Companies need to be nimble enough to navigate rapid change . In this case, planning should occur quarterly.

Strategic planning is an ongoing process by which an organization sets its forward course by bringing all of its stakeholders together to examine current realities and define its vision for the future.

It examines its strengths and weaknesses, resources available, and opportunities. Strategic planning seeks to anticipate future industry trends .  During the process, the organization creates a vision, articulates its purpose, and sets strategic goals that are long-term and forward-focused. 

Those strategic goals inform operational goals and incremental milestones that need to be reached. The operational plan has clear objectives and supporting initiatives tied to metrics to which everyone is accountable . The plan should be agile enough to allow for recalibrating when necessary and redistributing resources based on internal and external forces.

The output of the planning process is a document that is shared across the enterprise. 

Strategic planning for individuals

Strategic planning isn’t just for companies. At BetterUp, strategic planning is one of the skills that we identify, track, and develop within the Whole Person Model . For individuals, strategic planning is the ability to think through ways to achieve desired outcomes. Just as strategic planning helps organizations realize their goals for the future, it helps individuals grow and achieve goals in a unified direction. 

Working backward from the desired outcome, effective strategic planning consists of coming up with the steps we need to take today in order to get where we want to be tomorrow. 

While no plan is infallible, people who develop this skill are good at checking to make sure that their actions are in alignment with the outcomes that they want to see in the future. Even when things don’t go according to plan, their long-term goals act as a “North star” to get them back on course. In addition, envisioning desired future states and figuring out how to turn them into reality enhances an individual’s sense of personal meaning and motivation. 

Whether we’re talking about strategic planning for the company or the individual, strategic plans can go awry in a variety of ways including: 

• Unrealistic goals and too many priorities
• Poor communication
• Using the wrong measures
• Lack of leadership

The extent to which that document is shelved until the next planning cycle or becomes a dynamic map of the future depends on the people responsible for overseeing the execution of the plan.

What is strategic plan management? 

"Most people think of strategy as an event, but that’s not the way the world works," according to Harvard Business School Professor Clayton Christensen. "When we run into unanticipated opportunities and threats, we have to respond. Sometimes we respond successfully; sometimes we don’t. But most strategies develop through this process. More often than not, the strategy that leads to success emerges through a process that works 24/7 in almost every industry."

Strategic business management is the ongoing process by which an organization creates and sustains a successful roadmap that moves the company in the direction it needs to move, year after year, for long-term success. It spans from research and formulation to execution, evaluation, and adjustment. Given the pace of change, strategic management is more relevant and important than ever for assigning measurable goals and action steps

Many organizations fail because they don’t have the strategic management team at the table right from the beginning of the planning process. A strategic plan is only as good as its ability to be executed and sustained. 

A strategic management initiative might be driven by an internal group — many companies have an internal strategy team — or an outside consulting firm. Ultimately company leaders need to own executing and sustaining the strategy. 

Strategic management teams

In this Harvard Business Review article, Ron Carucci from consulting firm Navalent reports that 61% of executives in a 10-year longitudinal study felt they were not prepared for the strategic challenges they faced upon being appointed to senior leadership roles. Lack of commitment to the plan is also a contributing factor. In addition, leaders attending to quarterly targets, crisis management , and reconciling budgets often consider the execution of a long-term strategy a low priority.

A dedicated strategic management team works with those senior leaders and managers throughout the organization to communicate, coordinate and evaluate progress against goals. They tie strategic objectives to day-to-day operational metrics throughout the enterprise. 

A good strategic management group can assist in creating a culture of empowerment and learning . It holds regular meetings with employees. It sets a clear agenda and expectations to make the strategic plan real and compelling to the organization through concrete objectives, results, and timelines. 

Strategy development is a lot of work, but the benefits are lasting. After all, as the saying goes, "If you fail to plan, you plan to fail." Taking the time for review and planning activities has the following benefits:

• Organizations and people are set up to succeed
• Increased likelihood of staying on track
• Decreased likelihood of being distracted or derailed
• Progress through the plan is communicated throughout the organization
• Metrics facilitate course correction
• Budgets enterprise-wide are based on strategy
• Cross-organization alignment
• Robust employee performance and compensation plans
• Commitment to learning and training
• A robust strategic planning process gets everyone involved and invested in the organizations
• Employees inform management about what’s working or not working at the operational level
• Innovation is encouraged and rewarded
• Increased productivity

1. Define mission and vision  

Begin by articulating the organization's vision for the future. Ask, "What would success look like in five years?" Create a mission statement describing organizational values and how you intend to reach the vision. What values inform and determine mission, vision, and purpose?

Purpose-driven strategic goals articulate the “why” of what the corporation is doing. It connects the vision statement to specific objectives, drawing a line between the larger goals and the work that teams and individuals do.

2. Conduct a comprehensive assessment  

This stage includes identifying an organization’s strategic position.

Gathering data from internal and external environments and respective stakeholders takes place at this time. Involving employees and customers in the research.

The task is to gather market data through research. One of the most critical components of this stage is a comprehensive SWOT analysis that involves gathering people and bringing perspectives from all stakeholders to determine:

• W eaknesses
• O pportunities

Strengths and weaknesses  — In this stage, planners identify the company’s assets that contribute to its current competitive advantage and/or the likelihood of a significant increase in the organization’s market share in the future. It should be an objective assessment rather than an inflated perspective of its strengths. 

An accurate assessment of weaknesses requires looking outward at external forces that can reveal new opportunities as well as threats. Consider the massive shift in multiple industries whose strategy has been disrupted by the COVID-19 pandemic. While it was disastrous to the airline and restaurant industries’ business models , tech companies were able to seize the opportunity and address the demands of remote work. 

Michael Porter’s book Competetive Strategy: Techniques for Analyzing Industries and Competitors claims that there are five forces at work in an industry that influence that industry’s ability to develop a competitive strategy. Since the book was published in 1979, organizations have turned to Porter’s theory to create their strategic framework. 

Here are the 5 forces (and key questions) that determine the competitive strategy for most industries.

• Competitive rivalry : When considering the strengths of an organization’s competitors it’s important to ask: How do our products/services hold up to our competition? If the rivalry is intense, companies need to consider what capacity they have to gain leverage through price cuts or bold marketing strategies. If there is little competition, the organization has a substantial gain in the market.
• Supplier power: How might suppliers influence strategy? For example, what if suppliers raised their prices? To what extent would a company need a particular supplier for our product(s)? Is it possible to switch suppliers in a way that is more cost effective and efficient? The number of suppliers that exist will determine your ability to keep costs low.
• Buyer power: To what extent do buyers have the ability to shop around right into the hands of your competitors? How much power does your customer base have in determining price? A small number of well-informed buyers shifts the power in their direction while a large pool may give you the strategic advantage
• Threat of substitution:  What is the threat of a company’s buyer substituting your services/products from the competition? What if the buyer figures out another way to access the services/products that it offers?
• Threat of new entry:  How easy is it for newcomers to enter the organization’s market?

3. Forecast  

Considering the factors above, determine the company’s value through financial forecasting . While almost certainly to become a moving target influenced by the five forces, a forecast can assign initial anticipated measurable results expected in the plan or ROI: profits/cost of investment.

4. Set the organizational direction of the business

The above research and assessment will help an organization to set goals and priorities. Too often an organization’s strategic plan is too broad and over-ambitious. Planners need to ask, ”What kind of impact are we seeking to have, and in what time frame?” They need to drill down to objectives that will have the most impact. 

5. Create strategic objectives

This next phase of operational planning consists of creating strategic objectives and initiatives. Kaplan and Norton posit in their balanced scorecard methodology that there are four perspectives for consideration in identifying the conditions for success. They are interrelated and must be evaluated simultaneously.

• Financial : Such considerations as growing shareholder value, increasing revenue, managing cost, profitability, or financial stability inform strategic initiatives. 
• Customer-satisfaction:  Objectives can be determined by identifying targets related to one or some of the following: value for the cost, best service, increased market share, or providing customers with solutions.
• Internal processes such as operational processes and efficiencies, investment in innovation, investment in total quality and performance management , cost reduction, improvement of workplace safety, or streamlining processes.
• Learning and growth: Organizations must ask: Are initiatives in place in terms of human capital and learning and growth to sustain change? Objectives may include employee retention, productivity, building high-performing teams, or creating a pipeline for future leaders .

6. Align with key stakeholders

It’s a team effort. The success of the plan is in direct proportion to the organization’s commitment to inform and engage the entire workforce in strategy execution. People will only be committed to strategy implementation when they're connected to the organization's goals. With everyone pulling in the same direction, cross-functional decision-making becomes easier and more aligned.

7. Begin strategy mapping

A strategy map is a powerful tool for illustrating the cause-effect of those perspectives and connecting them to between 12 and 18 strategic objectives. Since most people are visual learners, the map provides an easy-to-understand diagram for everyone in the organization creating shared knowledge at all levels.

8. Determine strategic initiatives

Following the development of strategic objectives, strategic initiatives are determined. These are the actions the organization will take to reach those objectives. They may relate initiatives related to factors such as scope, budget, raising brand awareness, product development, and employee training.

9. Benchmark performance measures and analysis

Strategic initiatives inform SMART goals to which metrics are assigned to evaluate performance. These measures cascade from senior management to management to front-line workers. At this stage, the task is to create goals that are specific, measurable, attainable, relevant, and time-based informing the operational plan.

Benchmarks are established against so that performance can be measures, and a time frame is created. Key performance indicators (KPI’s) are assigned based on organizational goals. These indicators align workers’ performance and productivity with long-term strategic objectives. 

10. Performance evaluation

Assessment of whether the plan has been successful . It measures activities and progress toward objectives and allows for the creation of improved plans and objectives in order to improve overall performance . 

Think of strategic planning as a circular process beginning and ending with evaluation. Adjust a  plan as necessary. The pace at which review of the plan is necessary may be once a year for many organizations or quarterly for organizations in rapidly evolving industries. 

Prioritizing the strategic planning process

The strategic planning meeting may have a reputation for being just another to-do, but it might be time to take a second look. With the right action plan and a little strategic thinking, you can reinvigorate your business environment and start planning for success.

It's that time to get excited about the future again.

Understand Yourself Better:

Big 5 Personality Test

Meredith Betz, M.S.Ed, M.S.O.D.

Meredith Betz is a Betterup Fellow Coach. As an organizational consultant and Executive Coach, Meredith's work focuses on leaders, teams, and the dynamics in the systems in which they live and work. She helps people become more influential and exhibit executive presence. Meredith is a certified Conscious Business Coach who helps leaders to exercise empathy and lead in a way that is consistent with their values. She gives them the tools to communicate and negotiate effectively with their stakeholders. Meredith recently co-wrote a memoir with a 103-year-old Estonian man who lived through the Nazi and Soviet occupations of Estonia in the 1940s. It was a profound experience. A seminal book for her is Man's Search for Meaning by Viktor Frankl, an Austrian Holocaust survivor and psychiatrist.

The only guide you’ll ever need for career planning

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The 5 steps of the strategic planning process

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Starting a project without a strategy is like trying to bake a cake without a recipe — you might have all the ingredients you need, but without a plan for how to combine them, or a vision for what the finished product will look like, you’re likely to end up with a mess. This is especially true when working with a team — it’s crucial to have a shared plan that can serve as a map on the pathway to success.

Creating a strategic plan not only provides a useful document for the future, but also helps you define what you have right now, and think through and outline all of the steps and considerations you’ll need to succeed.

What is strategic planning?

While there is no single approach to creating a strategic plan, most approaches can be boiled down to five overarching steps:

• Define your vision
• Assess where you are
• Determine your priorities and objectives
• Define responsibilities
• Measure and evaluate results

Each step requires close collaboration as you build a shared vision, strategy for implementation, and system for understanding performance.

Related: Learn how to hold an effective strategic planning meeting

Why do I need a strategic plan?

Building a strategic plan is the best way to ensure that your whole team is on the same page, from the initial vision and the metrics for success to evaluating outcomes and adjusting (if necessary) for the future. Even if you’re an expert baker, working with a team to bake a cake means having a collaborative approach and clearly defined steps so that the result reflects the strategic goals you laid out at the beginning.

The benefits of strategic planning also permeate into the general efficiency and productivity of your organization as a whole. They include: 

• Greater attention to potential biases or flaws, improving decision-making 
• Clear direction and focus, motivating and engaging employees
• Better resource management, improving project outcomes 
• Improved employee performance, increasing profitability
• Enhanced communication and collaboration, fostering team efficiency 

Next, let’s dive into how to build and structure your strategic plan, complete with templates and assets to help you along the way.

Before you begin: Pick a brainstorming method

There are many brainstorming methods you can use to come up with, outline, and rank your priorities. When it comes to strategy planning, it’s important to get everyone’s thoughts and ideas out before committing to any one strategy. With the right facilitation , brainstorming helps make this process fair and transparent for everyone involved.  

First, decide if you want to run a real-time rapid ideation session or a structured brainstorming . In a rapid ideation session, you encourage sharing half-baked or silly ideas, typically within a set time frame. The key is to just get out all your ideas quickly and then edit the best ones. Examples of rapid ideation methods include round robin , brainwriting , mind mapping , and crazy eights . 

In a structured brainstorming session, you allow for more time to prepare and edit your thoughts before getting together to share and discuss those more polished ideas. This might involve brainstorming methods that entail unconventional ways of thinking, such as reverse brainstorming or rolestorming . 

Using a platform like Mural, you can easily capture and organize your team’s ideas through sticky notes, diagrams, text, or even images and videos. These features allow you to build actionable next steps immediately (and in the same place) through color coding and tagging. 

Whichever method you choose, the ideal outcome is that you avoid groupthink by giving everyone a voice and a say. Once you’ve reached a consensus on your top priorities, add specific objectives tied to each of those priorities.

Related: Brainstorming and ideation template

1. Define your vision

Whether it’s for your business as a whole, or a specific initiative, successful strategic planning involves alignment with a vision for success. You can think of it as a project-specific mission statement or a north star to guide employees toward fulfilling organizational goals. 

To create a vision statement that explicitly states the ideal results of your project or company transformation, follow these four key steps: 

• Engage and involve the entire team . Inclusivity like this helps bring diverse perspectives to the table. 
• Align the vision with your core values and purpose . This will make it familiar and easy to follow through. 
• Stay grounded . The vision should be ambitious enough to motivate and inspire yet grounded enough to be achievable and relevant.
• Think long-term flexibility . Consider future trends and how your vision can be flexible in the face of challenges or opportunities. 

For example, say your vision is to revolutionize customer success by streamlining and optimizing your process for handling support tickets. It’s important to have a strategy map that allows stakeholders (like the support team, marketing team, and engineering team) to know the overall objective and understand the roles they will play in realizing the goals. 

This can be done in real time or asynchronously , whether in person, hybrid, or remote. By leveraging a shared digital space , everyone has a voice in the process and room to add their thoughts, comments, and feedback. 

Related: Vision board template

2. Assess where you are

The next step in creating a strategic plan is to conduct an assessment of where you stand in terms of your own initiatives, as well as the greater marketplace. Start by conducting a resource assessment. Figure out which financial, human, and/or technological resources you have available and if there are any limitations. You can do this using a SWOT analysis.

What is SWOT analysis?

SWOT analysis is an exercise where you define:

• Strengths: What are your unique strengths for this initiative or this product? In what ways are you a leader?
• Weaknesses: What weaknesses can you identify in your offering? How does your product compare to others in the marketplace?
• Opportunities: Are there areas for improvement that'd help differentiate your business?
• Threats: Beyond weaknesses, are there existing potential threats to your idea that could limit or prevent its success? How can those be anticipated?

For example, say you have an eco-friendly tech company and your vision is to launch a new service in the next year. Here’s what the SWOT analysis might look like: 

• Strengths : Strong brand reputation, loyal customer base, and a talented team focused on innovation
• Weaknesses : Limited bandwidth to work on new projects, which might impact the scope of its strategy formulation 
• Opportunities : How to leverage and experiment with existing customers when goal-setting
• Threats : Factors in the external environment out of its control, like the state of the economy and supply chain shortages

This SWOT analysis will guide the company in setting strategic objectives and formulating a robust plan to navigate the challenges it might face. 

Related: SWOT analysis template

3. Determine your priorities and objectives

Once you've identified your organization’s mission and current standing, start a preliminary plan document that outlines your priorities and their corresponding objectives. Priorities and objectives should be set based on what is achievable with your available resources. The SMART framework is a great way to ensure you set effective goals . It looks like this:  

• Specific: Set clear objectives, leaving no room for ambiguity about the desired outcomes.
• Measurable : Choose quantifiable criteria to make it easier to track progress.
• Achievable : Ensure it is realistic and attainable within the constraints of your resources and environment.
• Relevant : Develop objectives that are relevant to the direction your organization seeks to move.
• Time-bound : Set a clear timeline for achieving each objective to maintain a sense of urgency and focus.

For instance, going back to the eco-friendly tech company, the SMART goals might be: 

• Specific : Target residential customers and small businesses to increase the sales of its solar-powered device line by 25%. 
• Measurable : Track monthly sales and monitor customer feedback and reviews. 
• Achievable : Allocate more resources to the marketing, sales, and customer service departments. 
• Relevant : Supports the company's growth goals in a growing market of eco-conscious consumers. 
• Time-bound : Conduct quarterly reviews and achieve this 25% increase in sales over the next 12 months.

With strategic objectives like this, you’ll be ready to put the work into action. 

Related: Project kickoff template

4. Define tactics and responsibilities

In this stage, individuals or units within your team can get granular about how to achieve your goals and who'll be accountable for each step. For example, the senior leadership team might be in charge of assigning specific tasks to their team members, while human resources works on recruiting new talent. 

It’s important to note that everyone’s responsibilities may shift over time as you launch and gather initial data about your project. For this reason, it’s key to define responsibilities with clear short-term metrics for success. This way, you can make sure that your plan is adaptable to changing circumstances. 

One of the more common ways to define tactics and metrics is to use the OKR (Objectives and Key Results) method. By outlining your OKRs, you’ll know exactly what key performance indicators (KPIs) to track and have a framework for analyzing the results once you begin to accumulate relevant data. 

For instance, if our eco-friendly tech company has a goal of increasing sales, one objective might be to expand market reach for its solar-powered products. The sales team lead would be in charge of developing an outreach strategy. The key result would be to successfully launch its products in two new regions by Q2. The KPI would be a 60% conversation rate in those targeted markets.  

Related: OKR planning template  

5. Manage, measure, and evaluate

Once your plan is set into motion, it’s important to actively manage (and measure) progress. Before launching your plan, settle on a management process that allows you to measure success or failure. In this way, everyone is aligned on progress and can come together to evaluate your strategy execution at regular intervals.

Determine the milestones at which you’ll come together and go over results — this can take place weekly, monthly, or quarterly, depending on the nature of the project.

One of the best ways to evaluate progress is through agile retrospectives (or retros) , which can be done in real time or asynchronously. During this process, gather and organize feedback about the key elements that played a role in your strategy. 

Related: Retrospective radar template

Retrospectives are typically divided into three parts:

• What went well.
• What didn’t go well.
• New opportunities for improvement.

This structure is also sometimes called the “ rose, thorn, bud ” framework. By using this approach, team members can collectively brainstorm and categorize their feedback, making the next steps clear and actionable. Creating an action plan during a post-mortem meeting is a crucial step in ensuring that lessons learned from past projects or events are effectively translated into tangible improvements. 

Another method for reviewing progress is the quarterly business review (QBR). Like the agile retrospective, it allows you to collect feedback and adjust accordingly. In the case of QBRs, however, we recommend dividing your feedback into four categories:

• Start (what new items should be launched?).
• Stop (what items need to be paused?).
• Continue (what is going well?).
• Change (what could be modified to perform better?).

Strategic planners know that planning activities continue even after a project is complete. There’s always room for improvement and an action plan waiting to be implemented. Using the above approaches, your team can make room for new ideas within the existing strategic framework in order to track better to your long-term goals.

Related: Quarterly business review template

Conclusions

The beauty of the strategic plan is that it can be applied from the campaign level all the way up to organizational vision. Using the strategic planning framework, you build buy-in , trust, and transparency by collaboratively creating a vision for success, and mapping out the steps together on the road to your goals.

Also, in so doing, you build in an ability to adapt effectively on the fly in response to data through measurement and evaluation, making your plan both flexible and resilient.

Related: 5 Tips for Holding Effective Post-mortems

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More Like this

4-phase guide to the strategic planning process, the strategic planning process in 4 steps, to guide you through the strategic planning process, we created this 4 step process you can use with your team. we’ll cover the basic definition of strategic planning, what core elements you should include, and actionable steps to build your strategic plan..

Free Strategic Planning Guide

What is Strategic Planning?

Strategic Planning is when a process where organizations define a bold vision and create a plan with objectives and goals to reach that future. A great strategic plan defines where your organization is going, how you’ll win, who must do what, and how you’ll review and adapt your strategy development.

A strategic plan or a business strategic plan should include the following:

• Your organization’s vision organization’s vision of the future.
• A clearly Articulated mission and values statement.
• A current state assessment that evaluates your competitive environment, new opportunities, and new threats.
• What strategic challenges you face.
• A growth strategy and outlined market share.
• Long-term strategic goals.
• An annual plan with SMART goals or OKRs to support your strategic goals.
• Clear measures, key performance indicators, and data analytics to measure progress.
• A clear strategic planning cycle, including how you’ll review, refresh, and recast your plan every quarter.

Overview of the Strategic Planning Process:

The strategic management process involves taking your organization on a journey from point A (where you are today) to point B (your vision of the future).

Part of that journey is the strategy built during strategic planning, and part of it is execution during the strategic management process. A good strategic plan dictates “how” you travel the selected road.

Effective execution ensures you are reviewing, refreshing, and recalibrating your strategy to reach your destination. The planning process should take no longer than 90 days. But, move at a pace that works best for you and your team and leverage this as a resource.

To kick this process off, we recommend 1-2 weeks (1-hour meeting with the Owner/CEO, Strategy Director, and Facilitator (if necessary) to discuss the information collected and direction for continued planning.)

Questions to Ask:

• Who is on your Planning Team? What senior leadership members and key stakeholders are included? Checkout these links you need help finding a strategic planning consultant , someone to facilitate strategic planning , or expert AI strategy consulting .
• Who will be the business process owner (Strategy Director) of planning in your organization?
• Fast forward 12 months from now, what do you want to see differently in your organization as a result of your strategic plan and implementation?
• Planning team members are informed of their roles and responsibilities.
• A strategic planning schedule is established.
• Existing planning information and secondary data collected.

Action Grid:

Step 1: Determine Organizational Readiness

Set up your plan for success – questions to ask:

• Are the conditions and criteria for successful planning in place at the current time? Can certain pitfalls be avoided?
• Is this the appropriate time for your organization to initiate a planning process? Yes or no? If no, where do you go from here?

Step 2: Develop Your Team & Schedule

Who is going to be on your planning team? You need to choose someone to oversee the strategy implementation (Chief Strategy Officer or Strategy Director) and strategic management of your plan? You need some of the key individuals and decision makers for this team. It should be a small group of approximately 12-15 people.

OnStrategy is the leader in strategic planning and performance management. Our cloud-based software and hands-on services closes the gap between strategy and execution. Learn more about OnStrategy here .

Step 3: Collect Current Data

All strategic plans are developed using the following information:

• The last strategic plan, even if it is not current
• Mission statement, vision statement, values statement
• Past or current Business plan
• Financial records for the last few years
• Marketing plan
• Other information, such as last year’s SWOT, sales figures and projections

Step 4: Review Collected Data

Review the data collected in the last action with your strategy director and facilitator.

• What trends do you see?
• Are there areas of obvious weakness or strengths?
• Have you been following a plan or have you just been going along with the market?

Conclusion: A successful strategic plan must be adaptable to changing conditions. Organizations benefit from having a flexible plan that can evolve, as assumptions and goals may need adjustments. Preparing to adapt or restart the planning process is crucial, so we recommend updating actions quarterly and refreshing your plan annually.

Strategic Planning Phase 1: Determine Your Strategic Position

Want more? Dive into the “ Evaluate Your Strategic Position ” How-To Guide.

Action Grid

Step 1: Identify Strategic Issues

Strategic issues are critical unknowns driving you to embark on a robust strategic planning process. These issues can be problems, opportunities, market shifts, or anything else that keeps you awake at night and begging for a solution or decision. The best strategic plans address your strategic issues head-on.

• How will we grow, stabilize, or retrench in order to sustain our organization into the future?
• How will we diversify our revenue to reduce our dependence on a major customer?
• What must we do to improve our cost structure and stay competitive?
• How and where must we innovate our products and services?

Step 2: Conduct an Environmental Scan

Conducting an environmental scan will help you understand your operating environment. An environmental scan is called a PEST analysis, an acronym for Political, Economic, Social, and Technological trends. Sometimes, it is helpful to include Ecological and Legal trends as well. All of these trends play a part in determining the overall business environment.

Step 3: Conduct a Competitive Analysis

The reason to do a competitive analysis is to assess the opportunities and threats that may occur from those organizations competing for the same business you are. You need to understand what your competitors are or aren’t offering your potential customers. Here are a few other key ways a competitive analysis fits into strategic planning:

• To help you assess whether your competitive advantage is really an advantage.
• To understand what your competitors’ current and future strategies are so you can plan accordingly.
• To provide information that will help you evaluate your strategic decisions against what your competitors may or may not be doing.

Learn more on how to conduct a competitive analysis here .

Step 4: Identify Opportunities and Threats

Opportunities are situations that exist but must be acted on if the business is to benefit from them.

What do you want to capitalize on?

• What new needs of customers could you meet?
• What are the economic trends that benefit you?
• What are the emerging political and social opportunities?
• What niches have your competitors missed?

Threats refer to external conditions or barriers preventing a company from reaching its objectives.

What do you need to mitigate? What external driving force do you need to anticipate?

Questions to Answer:

• What are the negative economic trends?
• What are the negative political and social trends?
• Where are competitors about to bite you?
• Where are you vulnerable?

Step 5: Identify Strengths and Weaknesses

Strengths refer to what your company does well.

What do you want to build on?

• What do you do well (in sales, marketing, operations, management)?
• What are your core competencies?
• What differentiates you from your competitors?
• Why do your customers buy from you?

Weaknesses refer to any limitations a company faces in developing or implementing a strategy.

What do you need to shore up?

• Where do you lack resources?
• What can you do better?
• Where are you losing money?
• In what areas do your competitors have an edge?

Step 6: Customer Segments

Customer segmentation defines the different groups of people or organizations a company aims to reach or serve.

• What needs or wants define your ideal customer?
• What characteristics describe your typical customer?
• Can you sort your customers into different profiles using their needs, wants and characteristics?
• Can you reach this segment through clear communication channels?

Step 7: Develop Your SWOT

A SWOT analysis is a quick way of examining your organization by looking at the internal strengths and weaknesses in relation to the external opportunities and threats. Creating a SWOT analysis lets you see all the important factors affecting your organization together in one place.

It’s easy to read, easy to communicate, and easy to create. Take the Strengths, Weaknesses, Opportunities, and Threats you developed earlier, review, prioritize, and combine like terms. The SWOT analysis helps you ask and answer the following questions: “How do you….”

• Build on your strengths
• Shore up your weaknesses
• Capitalize on your opportunities
• Manage your threats

Strategic Planning Process Phase 2: Developing Strategy

Want More? Deep Dive Into the “Developing Your Strategy” How-To Guide.

Step 1: Develop Your Mission Statement

The mission statement describes an organization’s purpose or reason for existing.

What is our purpose? Why do we exist? What do we do?

• What are your organization’s goals? What does your organization intend to accomplish?
• Why do you work here? Why is it special to work here?
• What would happen if we were not here?

Outcome: A short, concise, concrete statement that clearly defines the scope of the organization.

Step 2: discover your values.

Your values statement clarifies what your organization stands for, believes in and the behaviors you expect to see as a result. Check our the post on great what are core values and examples of core values .

How will we behave?

• What are the key non-negotiables that are critical to the company’s success?
• What guiding principles are core to how we operate in this organization?
• What behaviors do you expect to see?
• If the circumstances changed and penalized us for holding this core value, would we still keep it?

Outcome: Short list of 5-7 core values.

Step 3: casting your vision statement.

A Vision Statement defines your desired future state and directs where we are going as an organization.

Where are we going?

• What will our organization look like 5–10 years from now?
• What does success look like?
• What are we aspiring to achieve?
• What mountain are you climbing and why?

Outcome: A picture of the future.

Step 4: identify your competitive advantages.

A competitive advantage is a characteristic of an organization that allows it to meet its customer’s need(s) better than its competition can. It’s important to consider your competitive advantages when creating your competitive strategy.

What are we best at?

• What are your unique strengths?
• What are you best at in your market?
• Do your customers still value what is being delivered? Ask them.
• How do your value propositions stack up in the marketplace?

Outcome: A list of 2 or 3 items that honestly express the organization’s foundation for winning.

Step 5: crafting your organization-wide strategies.

Your competitive strategy is the general methods you intend to use to reach your vision. Regardless of the level, a strategy answers the question “how.”

How will we succeed?

• Broad: market scope; a relatively wide market emphasis.
• Narrow: limited to only one or few segments in the market
• Does your competitive position focus on lowest total cost or product/service differentiation or both?

Outcome: Establish the general, umbrella methods you intend to use to reach your vision.

Phase 3: Strategic Plan Development

Want More? Deep Dive Into the “Build Your Plan” How-To Guide.

Strategic Planning Process Step 1: Use Your SWOT to Set Priorities

If your team wants to take the next step in the SWOT analysis, apply the TOWS Strategic Alternatives Matrix to your strategy map to help you think about the options you could pursue. To do this, match external opportunities and threats with your internal strengths and weaknesses, as illustrated in the matrix below:

TOWS Strategic Alternatives Matrix

Evaluate the options you’ve generated, and identify the ones that give the greatest benefit, and that best achieve the mission and vision of your organization. Add these to the other strategic options that you’re considering.

Step 2: Define Long-Term Strategic Objectives

Long-Term Strategic Objectives are long-term, broad, continuous statements that holistically address all areas of your organization. What must we focus on to achieve our vision? Check out examples of strategic objectives here. What are the “big rocks”?

Questions to ask:

• What are our shareholders or stakeholders expectations for our financial performance or social outcomes?
• To reach our outcomes, what value must we provide to our customers? What is our value proposition?
• To provide value, what process must we excel at to deliver our products and services?
• To drive our processes, what skills, capabilities and organizational structure must we have?

Outcome: Framework for your plan – no more than 6. You can use the balanced scorecard framework, OKRs, or whatever methodology works best for you. Just don’t exceed 6 long-term objectives.

Step 3: Setting Organization-Wide Goals and Measures

Once you have formulated your strategic objectives, you should translate them into goals and measures that can be communicated to your strategic planning team (team of business leaders and/or team members).

You want to set goals that convert the strategic objectives into specific performance targets. Effective strategic goals clearly state what, when, how, and who, and they are specifically measurable. They should address what you must do in the short term (think 1-3 years) to achieve your strategic objectives.

Organization-wide goals are annual statements that are SMART – specific, measurable, attainable, responsible, and time-bound. These are outcome statements expressing a result to achieve the desired outcomes expected in the organization.

What is most important right now to reach our long-term objectives?

Outcome: clear outcomes for the current year..

Step 4: Select KPIs

Key Performance Indicators (KPI) are the key measures that will have the most impact in moving your organization forward. We recommend you guide your organization with measures that matter. See examples of KPIs here.

How will we measure our success?

Outcome: 5-7 measures that help you keep the pulse on your performance. When selecting your Key Performance Indicators (KPIs), ask, “What are the key performance measures we need to track to monitor if we are achieving our goals?” These KPIs include the key goals you want to measure that will have the most impact on moving your organization forward.

Step 5: Cascade Your Strategies to Operations

To move from big ideas to action, creating action items and to-dos for short-term goals is crucial. This involves translating strategy from the organizational level to individuals. Functional area managers and contributors play a role in developing short-term goals to support the organization.

Before taking action, decide whether to create plans directly derived from the strategic plan or sync existing operational, business, or account plans with organizational goals. Avoid the pitfall of managing multiple sets of goals and actions, as this shifts from strategic planning to annual planning.

Questions to Ask

• How are we going to get there at a functional level?
• Who must do what by when to accomplish and drive the organizational goals?
• What strategic questions still remain and need to be solved?

Department/functional goals, actions, measures and targets for the next 12-24 months

Step 6: Cascading Goals to Departments and Team Members

Now in your Departments / Teams, you need to create goals to support the organization-wide goals. These goals should still be SMART and are generally (short-term) something to be done in the next 12-18 months. Finally, you should develop an action plan for each goal.

Keep the acronym SMART in mind again when setting action items, and make sure they include start and end dates and have someone assigned their responsibility. Since these action items support your previously established goals, it may be helpful to consider action items your immediate plans on the way to achieving your (short-term) goals. In other words, identify all the actions that need to occur in the next 90 days and continue this same process every 90 days until the goal is achieved.

Examples of Cascading Goals:

Phase 4: Executing Strategy and Managing Performance

Want more? Dive Into the “Managing Performance” How-To Guide.

Step 1: Strategic Plan Implementation Schedule

Implementation is the process that turns strategies and plans into actions in order to accomplish strategic objectives and goals.

How will we use the plan as a management tool?

• Communication Schedule: How and when will you roll-out your plan to your staff? How frequently will you send out updates?
• Process Leader: Who is your strategy director?
• Structure: What are the dates for your strategy reviews (we recommend at least quarterly)?
• System & Reports: What are you expecting each staff member to come prepared with to those strategy review sessions?

Outcome: Syncing your plan into the “rhythm of your business.”

Once your resources are in place, you can set your implementation schedule. Use the following steps as your base implementation plan:

• Establish your performance management and reward system.
• Set up monthly and quarterly strategy meetings with established reporting procedures.
• Set up annual strategic review dates including new assessments and a large group meeting for an annual plan review.

Now you’re ready to start plan roll-out. Below are sample implementation schedules, which double for a full strategic management process timeline.

Step 2: Tracking Goals & Actions

Monthly strategy meetings don’t need to take a lot of time – 30 to 60 minutes should suffice. But it is important that key team members report on their progress toward the goals they are responsible for – including reporting on metrics in the scorecard they have been assigned.

By using the measurements already established, it’s easy to make course corrections if necessary. You should also commit to reviewing your Key Performance Indicators (KPIs) during these regular meetings. Need help comparing strategic planning software ? Check out our guide.

Effective Strategic Planning: Your Bi-Annual Checklist

Never lose sight of the fact that strategic plans are guidelines, not rules. Every six months or so, you should evaluate your strategy execution and strategic plan implementation by asking these key questions:

• Will your goals be achieved within the time frame of the plan? If not, why?
• Should the deadlines be modified? (Before you modify deadlines, figure out why you’re behind schedule.)
• Are your goals and action items still realistic?
• Should the organization’s focus be changed to put more emphasis on achieving your goals?
• Should your goals be changed? (Be careful about making these changes – know why efforts aren’t achieving the goals before changing the goals.)
• What can be gathered from an adaptation to improve future planning activities?

Why Track Your Goals?

• Ownership: Having a stake and responsibility in the plan makes you feel part of it and leads you to drive your goals forward.
• Culture: Successful plans tie tracking and updating goals into organizational culture.
• Implementation: If you don’t review and update your strategic goals, they are just good intentions
• Accountability: Accountability and high visibility help drive change. This means that each measure, objective, data source and initiative must have an owner.
• Empowerment: Changing goals from In Progress to Complete just feels good!

Step 3: Review & Adapt

Guidelines for your strategy review.

The most important part of this meeting is a 70/30 review. 30% is about reviewing performance, and 70% should be spent on making decisions to move the company’s strategy forward in the next quarter.

The best strategic planners spend about 60-90 minutes in the sessions. Holding meetings helps focus your goals on accomplishing top priorities and accelerating the organization’s growth. Although the meeting structure is relatively simple, it does require a high degree of discipline.

Strategy Review Session Questions:

Strategic planning frequently asked questions, read our frequently asked questions about strategic planning to learn how to build a great strategic plan..

Strategic planning is when organizations define a bold vision and create a plan with objectives and goals to reach that future. A great strategic plan defines where your organization is going, how you’ll win, who must do what, and how you’ll review and adapt your strategy..

Your strategic plan needs to include an assessment of your current state, a SWOT analysis, mission, vision, values, competitive advantages, growth strategy, growth enablers, a 3-year roadmap, and annual plan with strategic goals, OKRs, and KPIs.

A strategic planning process should take no longer than 90 days to complete from start to finish! Any longer could fatigue your organization and team.

There are four overarching phases to the strategic planning process that include: determining position, developing your strategy, building your plan, and managing performance. Each phase plays a unique but distinctly crucial role in the strategic planning process.

Prior to starting your strategic plan, you must go through this pre-planning process to determine your organization’s readiness by following these steps:

Ask yourself these questions: Are the conditions and criteria for successful planning in place now? Can we foresee any pitfalls that we can avoid? Is there an appropriate time for our organization to initiate this process?

Develop your team and schedule. Who will oversee the implementation as Chief Strategy Officer or Director? Do we have at least 12-15 other key individuals on our team?

Research and Collect Current Data. Find the following resources that your organization may have used in the past to assist you with your new plan: last strategic plan, mission, vision, and values statement, business plan, financial records, marketing plan, SWOT, sales figures, or projections.

Finally, review the data with your strategy director and facilitator and ask these questions: What trends do we see? Any obvious strengths or weaknesses? Have we been following a plan or just going along with the market?

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The Definitive Guide to Business Decision-Making

By Kate Eby | August 24, 2018

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Making decisions — both large and small — is critical to the success of a business. Decisions come from the need to solve a problem or the need for a potential opportunity. Gathering the right amount of information and input from key stakeholders is essential for making informed decisions. Following one of the few accepted processes to collect intel and objectively weigh the pros and cons of the data can help steer you away from making unsound decisions. In this article, you’ll learn about popular decision-making processes and how to apply them to your own business.

What Is the Decision-Making Process?

The decision-making process involves identifying a goal, getting the relevant and necessary information, and weighing the alternatives in order to make a decision. The concept sounds simple, yet many people overlook some of the critical stages and risks that occur when making decisions. Wherever possible, it’s important to make the best decisions under the circumstances.

There are at least four strong benefits to making good decisions:

1. Good decisions last longer. You will rarely need to revisit a decision that was made using a well thought out process, and it can sometimes last the entire lifespan of an organization.

2. Good decisions weigh internal and external factors. A decision-maker should consider a company holistically. A sound decision won’t have one part of the business succeed at the expense of another. Both internal and external factors can affect the decision and the company's road map.

3. Good decisions eliminate conflicts of interest. With transparency and stakeholder buy-in during the decision-making process, questions or concerns after the fact become far less likely. The benefits of this process keep the organization on track and focused, and reduce churn.

4. Good decisions actually work better overall. Good decisions actually get the decision-maker, department, and company closer to their goal, and solve the initial problem.

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What Is the Decision Making Process Model?

Following a formal process with specific steps can help businesses make more informed decisions (see more benefits to using a formal process ) and propel it forward. In fact, using a decision-making process tailored to the business world reaps enormous benefits that include the following:

• Less Second-Guessing: If you follow a formal business decision-making process, you can demonstrate you've already considered various other options.
• Translatable and Sharable Decisions and Progress: You can share the processes and steps upward to top management and the C suite, as well as downward into the ranks of those who'll be involved in executing the decision.
• Guide or Roadmap: Capturing the decision-making process in writing can be useful to show stakeholders an explanation of the steps and strategy behind it, as well as provide backup details.

The late Harvard business professor and author J. Richard Hackman wrote many books about effective business leadership, teamwork, and decision-making, including Leading Teams: Setting the Stage for Great Performances . Empowering teams to make their own decisions and following the processes that work for them, Hackman explains in his book, results in cohesion and strength. But in making strong decisions, he adds, “Teams taking in too much data to make decisions can result in an overload trap , which can result in a team metaphorically drowning in data.” Therefore, it’s critical to be strategic at every step of the process.

How to Improve the Decision-Making Process

It’s critical to build evaluation into the process. Ensure that at least one of the steps includes evaluation and revisiting the process and its outcome, especially for future use. Additionally, get sign-off from all stakeholders in advance (even for the steps in the process) and keep them in the loop. Capture metrics along the way that show successes, failures, the comparative benefits of options you’ve considered, and research into what competitors have done, to help support your responses and keep the process moving smoothly.

Types of Traditional Processes in Business Decision-Making

Before we examine the various stepped plans in decision-making, we will explore a few specific types of decision-making. There are also several different actual processes that can be used in decision-making that involve a number of steps. The most popular and well-used processes have five, six, seven, or eight steps.

The number of steps will vary, of course, if you break down tasks that could be contained in a single step into additional steps. Regardless of the process you choose, evaluation is the last step, and smart companies will take the time to do this. Over time, organizations using this evaluation step can gain critical efficiencies in time and focus. It also helps ensure institutional learning for the overall health and strength of the company. All of the processes described in the following sections are in use today.

What Is the Five-Step Process in Decision-Making?

Many organizations follow the five-step process when making decisions. As you compare the following processes with the varying numbers of steps, you’ll see that some, like this one, combine activities, while others list them as separate steps. Here are the five steps in this process:

• Identify the end goal.
• Gather all your information needed to inform your decision.
• Evaluate all the risks and consequences.
• Make the decision and execute it.
• Evaluate the decision after the fact.

What Is the Six-Step Process in Decision-Making?

The six-step process focuses more on up-front research and information-gathering. This method front-loads the process with data that can make the rest of the process run smoothly. Here are the six steps in this process:

• Gather all the necessary information, and identify all the alternatives (without selecting one yet).
• Compare all these alternatives against the relevant criteria.
• Make the decision.
• Execute the decision.

What Is the Ethical Decision-Making Process?

The ethical decision-making process is a process that stipulates that any and all decisions must include evaluating and selecting options that are consistent with ethical concerns. This means making the most ethical choices, regardless of the impact to the bottom line. Ethical decision-making also means eliminating any options that are not consistent with ethical values from the beginning.

According to the University of California San Diego , which cites the Josephson Institute of Ethics , ethical decision-making involves the 3 Cs:

• Commitment: Never wavering from choosing or doing the ethical thing, whether it costs more or not.
• Consciousness: Infusing your team and project members with enough awareness to own the ability to act ethically every day with moral certainty.
• Competency: The ongoing process of evaluating information as you go and weighing options that allow you to continually make the right ethical decisions. As conditions in the world change, having a strong competency to evaluate these changes is mission-critical to staying the course in being ethical.

How to Make a Decision Using the Analytic Hierarchy Process

The analytic hierarchy process ensures that you are using specific criteria and rating those criteria, instead of simply comparing alternatives you've used in the past. The process involves creating an actual hierarchy of sub-issues, which you then evaluate and examine. Then, you measure these sub-issues against each other and assign each a relative value on the hierarchy. In short, alternative solutions are examined, and then weighed against each other.

While some businesses use the analytic hierarchy process, it is often used in academic or policy-related scenarios. In this method, a decision is made with the most important issues considered or weighted more heavily, and higher on the hierarchy, than others.

What Is the Rational Decision-Making Process?

As its name implies, rational decision-making relies strictly on data, measurable steps, and calculated values. This process focuses on minimizing costs and maximizing benefits to the organization. To use this process effectively, it’s critical to factor in personal biases of those involved and solve for them. The five-step process is usually used in rational decision-making.

As opposed to ethical decision making, there's no subjective judgement about criteria and steps to reach a decision in rational decision-making. However, it's possible the same decision could be reached using both processes.

What Is the Managerial Decision-Making Process?

The phrase managerial decision-making process is similar to and sometimes used interchangeably with the more general term business decision-making . But in fact, managers may have more decisions per day, including those affecting employees, beyond the typical business decisions that need to be made in an organization. Managerial decision-making often follows the five-step process.

According to the educational group Management Study Guide, there are three main types of managerial decisions:

• Strategic: These kinds of decisions are typically made rarely. Not all levels of an organization are or need to be involved as the decision is being considered and decided. Examples of strategic managerial decisions include resource and investment, expansion or downsizing, mergers or acquisitions, investments, etc. These can take significant amounts of time and should not be rushed.
• Operational: These decisions also take time to be fully explored and made. Higher level ones may involve only the C-suite and/or directors, and can include decisions affecting output, company-wide policies, and culture. Lower-level decisions of this type affect daily operations, so are often handled by upper and middle management.
• Managerial: These are made by managers at every relevant level, from middle managers to the executive suite. They may cover issues like allocation of resources, the decisions to phase out or revise current products, the creation and introduction of new products, and the like. Every manager in an organization needs to be aligned and often involved in decisions at this level.

What Are the Best Practices in Any Business Decision-Making Process?

If you’re using a team to make a decision, it’s important to have the number of people involved. Hackman’s recommendation is to have about five people on a decision-making team. More than seven members, he writes, makes your decision-making group lose effectiveness.

Sometimes individuals need to make the decision, or perhaps just two C-level executives appoint themselves to make a decision. But Hackman’s study shows that overall, teams make 75 percent better decisions than individuals.

It’s also imperative to identify and fill the correct roles in your decision-making team. Otherwise you are guaranteeing frustration and churn. The Harvard Business Review suggests using the RAPID methodology (recommend, agree, perform, input, and decide). This option provides a high-level way to capture the flow of the step-by-step processes.

As a first step, send your team members out to do research and ask them to answer these questions:

• What are the most important goals for the decision?
• What are the top realistic choices?

Audit and combine the results with the team to collectively agree on the top choices or identify gaps. Be sure to communicate and build in time for feedback and questions all along your process. This ensures buy-in all through the process. Sometimes using a decision-making matrix can also help your team identify and weigh options.

Read “Make Up Your Mind: Free Downloadable Decision Matrix Templates” to earn more about using decision-making matrices.

5 Potential Pitfalls to Avoid when Using a Formal Decision-Making Process

Before embarking on a decision-making process, it’s useful to keep some potential pitfalls in mind. Following a process is important, but avoid following the process “out the window.” Here are five potential issues that could arise when using a formal decision-making process:

• Proceeding without Enough Information, or Relying on a Single Source: If you’re going to follow a formal process, you’ll need data. Document each step and get buy-in from your colleagues. Information is power, and gathering information from relevant but diverse sources is critical to being strategic.
• Gathering Too Much Information: Too much or irrelevant information can be overwhelming and confusing, and can lead decision makers astray from the issue that needs the decision, as well as how best to arrive at it.
• Placing Too Much Confidence in an Option that May Cause Bad Results: Try to identify a valid option or options as you hone in on a process and  decision. Gather enough data throughout the process so you can play out scenarios for each option.
• Solving for the Wrong Problem: Front-loading research can be critical if you don't understand what's causing the issue. For example, if your production output has been slipping, don't assume that you need more staff, or more factory hours, or any one thing, unless and until you can identify the true reason for the slowdown.
• Being Too Rigid with or Wedded to the Process: It’s possible to follow a decision-making process so strictly that the organic nature of a business, staff, and their needs are sidelined or ignored. Even when you are strategically and confidently following a business decision-making process, you and your team need to have the ability to pivot if needed.

Examples of Decision-Making Processes Successes

In a sense, a company’s entire history is a reflection of making decisions. Some of the top companies in the world have turned a failure into a success by focusing on the last crucial step in all decision-making processes: evaluating the decision after the fact.

One example of this is Coca-Cola in 1985. Business and leadership expert John Addison writes that the company decided to address the changing soda marketplace by launching “new Coke.” Unfortunately, the rebrand failed miserably within three months, which forced the company to reintroduce the original Coca-Cola. The big takeaway: Reversing direction isn’t a sign of failure; rather, it’s evidence of a leader’s commitment to keeping the company’s health a top priority. What’s more, it shows how important it is to revisit and evaluate decisions.

Companies often use data to try a pilot or program, and if it doesn’t work, they might revisit the decision and change course. In other cases, large companies are constantly assessing data to find actionable paths. These three companies found success by making decisions based on data and stakeholder reviews:

• According to Harvard Business Review , Google created a people analytics department to help the company make HR decisions using data, including deciding if managers make a difference in their teams’ performance. The department used performance reviews and employee surveys to answer this question. The company learned that a laser focus on performance did not indicate the best or happiest teams; instead, managers with strong people skills had the best-performing groups — as well as employees who were happier and stayed longer at the company.
• When Amazon was still a startup, its data gatherers noticed that customers who bought a certain book or CD or DVD also were more inclined to buy another product. Perhaps these related products were by the same author or artist, or maybe the movies starred the same actors or had similar subject matter. Or, maybe they were just hot titles the customer wanted. Editors at this time had been taking on the role of “trusted adviser,” making recommendations based on purchases through emails and other human-created collateral, but the company thought that an automated tool could augment what the human editors could suggest. Ultimately, Amazon decided to use that data to create its first, rudimentary personalization tool. By presenting customers with products that other customers also bought, the company realized a significant spike in sales.
• Southwest Airlines famously studied its customer data to determine the perks and upgrades that would appeal to its regular flyers. Offering those perks and upgrades resulted in a boost in ridership and fierce loyalty among its customers.

These are examples of successes that relied on strong decision making, but of course, not all decisions succeed. Continually assessing and revisiting decisions is a sign of a mature company; otherwise, decisions could result in public failure. In the next section, we’ll look at some examples of failed decision making.

Examples of Decision-Making Process Failures

The failure of companies to adapt, change, or compete effectively probably can’t be tied to one bad decision or process failure. Still, in not rigorously gathering data, weighing options, and evaluating decisions, organizations can doom themselves. Here are some examples of companies that failed to use, or learn from, their decision-making processes:

• Blockbuster and Borders: Both of these once-successful brick-and-mortar companies   used data to reaffirm their own preconceptions instead of evaluating data objectively. Instead of adapting to the challenges and opportunities of the internet, their web properties and physical locations ultimately failed.
• Kodak: For decades this company was synonymous with photography in all its forms. But it didn’t fearlessly look at the changing landscape of digital photography. Even when it acquired Ofoto, it failed to maximize and monetize the opportunity. The company arrived late and quietly to the online photo gallery space with Kodak Gallery, which was subsequently acquired by Shutterfly.
• Newspapers: It’s hard to see a whole industry collapse because of bad decision-making and denial, but this is what began to happen in the late 1990s to newspapers. While some organizations, like the New York Times and Washington Post, have adapted to digital media, most city newspapers are struggling. Clinging to old business models never helped any business make strong, forward-looking decisions.

Team Building Exercises to Improve Decision-Making

If you’re ready to get your team energized to focus on making its decision, team-building exercises are a great place to start. These exercises help team members get to know and understand each other, which helps them get on the same page more quickly and ultimately improve their decisions. Here are some resources that can help you find the right team-building exercises for your decision-making group:

• Activities recommended by business experts
• More top activities recommended by business leaders
• Top team-building questions
• Top 20 team-building activities

The Decision-Making Processes in Non-Business Fields

In non-business fields, decision-making can involve more or fewer factors, with different kinds of weight assigned to each step. Here is a quick overview of some other types of decision-making processes:

• Consumer Decision-Making Processes: It’s important for marketers to recognize the steps consumers typically use to make a purchase decision. They include the following:
• Identify need. (I need a new winter coat.)
• Gather research and information. (What are the newest styles and warmest types of winter coats?)
• Evaluate the research. (So do I really need a new winter coat, or can I layer up with what I already have? If I need a new one, which one is best for my needs?)
• Buy the item.
• Evaluate the decision. (Was this winter coat a good decision? Am I happy I made it, and would I recommend this coat to other people, or buy it again for myself?)
• Military and Governmental Decision-Making Processes: For those in the military and other types of government roles, decision-making can be a matter of life and death. Therefore, the protocol for making military operations decisions is detailed and strict. 
• Education Decision-Making Processes: Many schools and school districts embrace shared decision-making , a process that involves members of the community, parents, students and former students, teachers, and anyone else invested in the success of a school or district. 

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Business Planning

Written by True Tamplin, BSc, CEPF®

Reviewed by subject matter experts.

Updated on June 08, 2023

Are You Retirement Ready?

Table of contents, what is business planning.

Business planning is a crucial process that involves creating a roadmap for an organization to achieve its long-term objectives. It is the foundation of every successful business and provides a framework for decision-making, resource allocation, and measuring progress towards goals.

Business planning involves identifying the current state of the organization, determining where it wants to go, and developing a strategy to get there.

It includes analyzing the market, identifying target customers, determining a competitive advantage, setting financial goals, and establishing operational plans.

The business plan serves as a reference point for all stakeholders , including investors, employees, and partners, and helps to ensure that everyone is aligned and working towards the same objectives.

Importance of Business Planning

Business planning plays a critical role in the success of any organization, as it helps to establish a clear direction and purpose for the business. It allows the organization to identify its goals and objectives, develop strategies and tactics to achieve them, and establish a framework of necessary resources and operational procedures to ensure success.

Additionally, a well-crafted business plan can serve as a reference point for decision-making, ensuring that all actions taken by the organization are aligned with its long-term objectives.

It can also facilitate communication and collaboration among team members, ensuring that everyone is working towards a common goal.

Furthermore, a business plan is often required when seeking funding or investment from external sources, as it demonstrates the organization's potential for growth and profitability. Overall, business planning is essential for any organization looking to succeed and thrive in a competitive market.

Business Planning Process

Step 1: defining your business purpose and goals.

Begin by clarifying your business's purpose, mission, and long-term goals. These elements should align with the organization's core values and guide every aspect of the planning process.

Step 2: Conducting Market Research and Analysis

Thorough market research and analysis are crucial to understanding the industry landscape, identifying target customers, and gauging the competition. This information will inform your business strategy and help you find your niche in the market.

Step 3: Creating a Business Model and Strategy

Based on the insights from your market research, develop a business model that outlines how your organization will create, deliver, and capture value. This will inform the overall business strategy, including identifying target markets, value propositions, and competitive advantages.

Step 4: Developing a Marketing Plan

A marketing plan details how your organization will promote its products or services to target customers. This includes defining marketing objectives, tactics, channels, budgets, and performance metrics to measure success.

Step 5: Establishing Operational and Financial Plans

The operational plan outlines the day-to-day activities, resources, and processes required to run your business. The financial plan projects revenue, expenses, and cash flow, providing a basis for assessing the organization's financial health and long-term viability.

Step 6: Reviewing and Revising the Business Plan

Regularly review and update your business plan to ensure it remains relevant and reflects the organization's current situation and goals. This iterative process enables proactive adjustments to strategies and tactics in response to changing market conditions and business realities.

Components of a Business Plan

Executive summary.

The executive summary provides a high-level overview of your business plan, touching on the company's mission, objectives, strategies, and key financial projections.

It is critical to make this section concise and engaging, as it is often the first section that potential investors or partners will read.

Company Description

The company description offers a detailed overview of your organization, including its history, mission, values, and legal structure. It also outlines the company's goals and objectives and explains how the business addresses a market need or problem.

Products or Services

Describe the products or services your company offers, emphasizing their unique features, benefits, and competitive advantages. Detail the development process, lifecycle, and intellectual property rights, if applicable.

Market Analysis

The market analysis section delves into the industry, target market, and competition. It should demonstrate a thorough understanding of market trends, growth potential, customer demographics, and competitive landscape.

Marketing and Sales Strategy

Outline your organization's approach to promoting and selling its products or services. This includes marketing channels, sales tactics, pricing strategies, and customer relationship management .

Management and Organization

This section provides an overview of your company's management team, including their backgrounds, roles, and responsibilities. It also outlines the organizational structure and any advisory or support services employed by the company.

Operational Plan

The operational plan describes the day-to-day operations of your business, including facilities, equipment, technology, and personnel requirements. It also covers supply chain management, production processes, and quality control measures.

Financial Plan

The financial plan is a crucial component of your business plan, providing a comprehensive view of your organization's financial health and projections.

This section should include income statements , balance sheets , cash flow statements , and break-even analysis for at least three to five years. Be sure to provide clear assumptions and justifications for your projections.

Appendices and Supporting Documents

The appendices and supporting documents section contains any additional materials that support or complement the information provided in the main body of the business plan. This may include resumes of key team members, patents , licenses, contracts, or market research data.

Benefits of Business Planning

Helps secure funding and investment.

A well-crafted business plan demonstrates to potential investors and lenders that your organization is well-organized, has a clear vision, and is financially viable. It increases your chances of securing the funding needed for growth and expansion.

Provides a Roadmap for Growth and Success

A business plan serves as a roadmap that guides your organization's growth and development. It helps you set realistic goals, identify opportunities, and anticipate challenges, enabling you to make informed decisions and allocate resources effectively.

Enables Effective Decision-Making

Having a comprehensive business plan enables you and your management team to make well-informed decisions, based on a clear understanding of the organization's goals, strategies, and financial situation.

Facilitates Communication and Collaboration

A business plan serves as a communication tool that fosters collaboration and alignment among team members, ensuring that everyone is working towards the same objectives and understands the organization's strategic direction.

Business planning should not be a one-time activity; instead, it should be an ongoing process that is continually reviewed and updated to reflect changing market conditions, business realities, and organizational goals.

This dynamic approach to planning ensures that your organization remains agile, responsive, and primed for success.

As the business landscape continues to evolve, organizations must embrace new technologies, methodologies, and tools to stay competitive.

The future of business planning will involve leveraging data-driven insights, artificial intelligence, and predictive analytics to create more accurate and adaptive plans that can quickly respond to a rapidly changing environment.

By staying ahead of the curve, businesses can not only survive but thrive in the coming years.

Business Planning FAQs

What is business planning, and why is it important.

Business planning is the process of setting goals, outlining strategies, and creating a roadmap for your company's future. It's important because it helps you identify opportunities and risks, allocate resources effectively, and stay on track to achieve your goals.

What are the key components of a business plan?

A business plan typically includes an executive summary, company description, market analysis, organization and management structure, product or service line, marketing and sales strategies, and financial projections.

How often should I update my business plan?

It is a good idea to review and update your business plan annually, or whenever there's a significant change in your industry or market conditions.

What are the benefits of business planning?

Effective business planning can help you anticipate challenges, identify opportunities for growth, improve decision-making, secure financing, and stay ahead of competitors.

Do I need a business plan if I am not seeking funding?

Yes, even if you're not seeking funding, a business plan can be a valuable tool for setting goals, developing strategies, and keeping your team aligned and focused on achieving your objectives.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide , a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University , where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon , Nasdaq and Forbes .

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Business Planning Process

Need help writing a business plan hire our professional business plan writers now.

Business planning is the collection of steps necessary for business success. 

Your business planning uses your business plan as a reference document. A business plan helps you stay the course. A business plan also increases your chances of getting investment , funding, debts, etc. 

Every business executives meeting is a part of business planning as they discuss the business’s current situation and make a plan on how to improve that situation. 

Three Types of Business Planning Necessary for Long-term Business Success

Business success is a moving target and your business plan will need to change as the business circumstances change. A business plan will need to change for different goals too. 

Hit the moving target of business financial success with these three business planning tools. 

Sales Forecasting Plan 

The sales forecast gives an estimate of the good and product sales for a certain time and the estimated revenues. 

Sales forecasts tend to change with industry trends, changes in the economy, and changes in customer buying preferences. 

Cash Flow Analysis Plan 

If we can say it in one line, ‘never run out of cash’. 

Plan on how you will maintain business cash flow. Having large orders in line is not enough. If you have to spare resources for that project, you may run out of cash by the time you can invoice for that project. 

Make a schedule of refreshing cash flow projections and have a contingency plan for any cash shortages with a business financing or debt. 

Business Contingency Plan 

A business contingency plan is how you’ll handle crises and disasters like fire, flood, or building collapse. 

Your contingency plan protects you, your customers, and your employees against a disaster. It will also help you resume operations after a crisis as soon as possible 

6 Step Business Planning Process

• Do Research For Your Business Idea
• Develop Business Strategy
• Forecast Financials
• Create a Business Plan
• Revise Business Plan
• Create a Business Plan Presentation

In the following sections, we provide more detail on each key step.  

Access our free business plan examples now!

Do research for your business idea .

Your research for verifying your business idea starts with the target market research . 

For example, you are planning on starting a florist business. Start with doing a local survey and see how many florist shops are there in your locality.

Check how many new florist shops were opened or closed in the last year. You’ll understand some dynamics of your target market with only this data. 

Do you plan to go beyond the block and create a florist shop that will attract customers from every nook and corner of the city? Look into the products your competition offers and work on creating innovation. 

You can use market surveys, customer feedback, reviews, industry reports, or any credible source of information available for your industry. 

Further, document your research. You can use online tools like Google Docs, Dropbox Paper, Evernote, etc. This research will help you draft your business plan and will serve as the bases of your business strategy.

Pro Tip: Here is step by step guide on how to find the right business idea .

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Develop Business Strategy 

What is business strategy? Here is how Harvard Business Review defines it.

“A business strategy is a set of guiding principles that, when communicated and adopted in the organization, generates a desired pattern of decision making”.

A simpler definition of business strategy can be that this is the way you should allocate resources to achieve your business goals. 

When developing a business strategy, consider your short-term goals and long-term goals. Your strategy will be different for each. 

To separate business strategy from business planning, a strategy is a direction, planning is the collection of steps you will take to move in that direction. Stay the course but you can change how you walk. 

Since this is your pre-launch phase, you can look into different business strategies and pick the most suitable one for your business. 

Forecast Financials 

Your business financial forecast includes the expected investments or expenses and expected revenues. 

The crux of a financial forecast for your business plan is to give a simple, straightforward financial growth plan. 

One big hallmark of your business growth is making breakeven. When your business is making a break-even, you have made progress. 

Here is how you can calculate breakeven . 

Put forecast numbers in your business financial model and prepare an income statement that will help you determine how much funding you’ll need in the first year to survive. 

Your projected financial statements give insight into business operations and performance. You can measure business performance for a quarter, a year, or any period you want. You can also see the details of assets and liabilities and business financial position. 

Create a Business Plan 

You have the knowledge and data to write a business plan . You have also created projected financial statements. Now is the time to draft your business plan. 

Start drafting your business plan from business overview to appendix (write an executive summary at the end). You have everything already, now you just have to put the pieces together. 

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Revise Business Plan 

When you have written your business plan, make sure to proofread and revise it for any grammatical or factual errors. 

Also, revising a business plan gives you a chance to go over your business idea and its execution once again. You may come up with a new idea or a new way to do something. 

If you can, ask someone you trust with business experience to review your business plan. Many times, their insights are valuable and can help you improve your plan. 

Create a Business Plan Presentation 

Half of the work in securing funding for your business idea is a killer presentation. 

Simple ideas stick to our minds. Follow the K.I.S.S principle (K.I.S.S is ‘keep it simple, stupid).

One part of the business plan presentation is the graphics work. If your document or slides are designed by a professional designer, you’ll have a better shot at success. 

Use these five tips for improving your business plan presentation. 

• Know your audience and their backgrounds and tailor your presentation to that
• Keep your presentation simple, strip it to the most essential details only 
• Address weaknesses openly and give your contingency plan for them
• Know and verify numbers 
• Research your competitors to show you understand the market 

Recommended: If you want to design a cover page for a business plan by yourself you can follow business plan cover page . It has professional cover page examples to simply download and use. However, If you want to design it by a professional business plan designer then here is our business plan template design service. You can also hire our business plan writing services .

The business planning process is a systematic approach to developing a strategic plan for a business. It involves analyzing the current business environment, setting goals and objectives, identifying strategies, creating an action plan, and regularly reviewing and adjusting the plan as needed.

The business planning process is important because it provides a roadmap for the business’s success. It helps business owners and managers align their efforts, make informed decisions, identify potential risks and opportunities, and allocate resources effectively to achieve their goals.

The key steps in the business planning process typically include conducting a situational analysis, setting SMART goals and objectives, conducting market research, developing strategies, creating an action plan, implementing the plan, and regularly monitoring and evaluating progress.

The duration of the business planning process can vary depending on the size and complexity of the business and the scope of the plan. It can range from a few weeks for a simple plan to several months for a more comprehensive strategic plan.

Ideally, the business planning process should involve key stakeholders such as business owners, managers, department heads, and relevant employees. It can also be beneficial to seek external expertise or involve consultants, industry experts, or advisors to gain valuable insights and perspectives.

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Planning in Management: Definitions, Importance, Characteristics, Process

• Post last modified: 10 August 2023
• Reading time: 35 mins read
• Post category: Management

What is Planning?

Planning is the primary function of management that involves formulating a future course of action for accomplishing a specific purpose. Planning enables managers to decide what task to do, how to do the task, when to do the task and by whom the task has to be done.

Table of Content

• 1 What is Planning?
• 2 Definitions of Planning
• 3.1 Forms Goals
• 3.2 Remains as a Continuous Process
• 3.3 Gives Direction
• 3.4 Tackles Uncertainty
• 3.5 Minimises Duplication and Wasteful Activities
• 3.6 Supports and Promotes Innovative Ideas
• 3.7 Facilitates Decision Making
• 3.8 Sets Standards for Controlling Function
• 3.9 Facilitates Coordination
• 4.1 Continuous Process
• 4.2 Intellectual Process
• 4.3 Futuristic Approach
• 4.4 Flexible process
• 4.5 Primary Function of Management
• 4.6 Assists Decision Making
• 4.7 Goal-oriented Approach
• 4.8 Pervasive
• 5.1 Setting Organisational Objectives
• 5.2 Examining Business Environment
• 5.3 Assessing Available Alternatives and Selecting the Most Appropriate Alternative
• 5.4 Formulating secondary plans
• 5.5 Ensuring cooperation and participation
• 5.6 Following up
• 6.1 Time-consuming
• 6.2 Expensive
• 6.3 Gap Between Targets and Results
• 6.4 Resistance Towards Change
• 6.5 Paperwork
• 6.6 Reason of Frustration
• 6.7 Problem of Over-target
• 7.1 Strategic plans
• 7.2 Tactical plans
• 7.3 Operational plans
• 7.4 Contingency plans
• 8.1 What is Planning?
• 8.2 What are the Features of Planning?
• 8.3 What is the Process of Planning?
• 8.4 What is the Importance of Planning in Management?
• 9 Management Topics

To be more precise planning lays a foundation for establishing a mission statement, defining organisational goals and determining resources needed to achieve organisational goals. On the other hand, in a narrow sense, planning is the tactic to complete a specific task.

Definitions of Planning

By going through the definitions of planning we will be able to understand its concept therefore some definitions are as follows:

Planning is the continuous process of making present entrepreneurial decisions systematically and with best possible knowledge their futurity, organising systematically the ef- forts needed to carry out these decisions and measuring the results of these decisions against the expectation through organised systematic feedback. Peter Drucker

Planning is deciding in advance what to do, how to do and who is to do it. Planning bridges the gap between where we are, where we want to go. It makes possible things to occur, which would not otherwise occur. Koontz and O’Donnell

Importance of Planning in Management

The importance of planning in management is explained in the following points:

Forms Goals

Remains as a continuous process, gives direction, tackles uncertainty, minimises duplication and wasteful activities, supports and promotes innovative ideas, facilitates decision making, sets standards for controlling function, facilitates coordination.

Planning is a goal-oriented process that helps in determining what each individual in an organisation has to achieve at the end and executing work accordingly. In addition, the planning function enhances the efficiency of other managerial functions.

Planning in any organisation is a never-ending function. This is because every organisation operates in a dynamic business environment which is subject to frequent changes. As new changes become known, revisions and amendments are made to plans.

Planning channelises the efforts of people in an organisation in the best possible manner to attain the desired results. For example, during the planning process, plans are laid for each department of the organisation, which helps people at all levels to know exactly what work they have to perform so that organisational goals can be achieved without any hindrances.

Planning is helpful in making predictions with the available amount of information. This helps organisations/businesses tackle an uncertain future. Planning assists in finding a better way to achieve goals by anticipating a future risk or chances of occurrence of future risks.

As mentioned earlier, planning helps individuals at all levels to know what they exactly need to do. This helps in preventing the duplication of work, authority, responsibility, etc. As a result, wastage of resources and efforts is minimised.

Nowadays, organisations operate in an environment of cut-throat competition. Customers always demand something new or unique. If an organisation fails to fulfil customers’ demands, customers can easily switch to competitors.

Planning enables managers to think out of the box, generate new ideas and provide something unique to customers with less cost and more efficiency, thereby satisfying customers.

Planning as a guide plays an important role in making efficient and accurate decisions. For instance, the production department of an organisation needs to choose between two vendors who supply raw materials at the same cost and of the same quality level.

However, the two vendors differ in delivery time. In this case, the decision of choosing the vendor will be made as per the planned number of days.

Planning and controlling are inter-related functions of management. Planning sets goals for the organisation and controlling ensures their accomplishment within the decided time period. In addition, controlling direct the course of planning by highlighting the areas where planning is required.

The planning function helps management in aligning department-wise activities of the organisation. The plans made by one department are understood and supported by another department.

Overall planning that is done by top management facilitates departments to coordinate and plan accordingly to achieve organisational goals.

Characteristics of Planning

The characteristics of the planning function are explained as follows:

Continuous Process

Intellectual process, futuristic approach, flexible process, primary function of management, assists decision making, goal-oriented approach.

Planning is done for a specific period of time and plans are reformed at the end of that specific period as per the new requirements and changing conditions. Planning goes on, till the existence of an organisation, as issues and problems keep cropping up, and plans are needed to tackle the problems effectively.

Planning requires creative thinking to visualise the future situation and frame plans accordingly. It is the outcome of managers’ thinking process based on their experience and knowledge.

Planning is conducted to achieve future organisational goals while efficiently utilising organisational re- sources. This is done by predicting future situations and making forecasts.

Planning involves a flexible approach. Since the future is uncertain and unpredictable, changes in the business environment take place in the form of competition, government policies, customer demand, etc. Thus, there is always room for flexibility in planning to incorporate future changes.

Planning is done prior to all other functions of management, i.e., organising, staffing, directing, controlling, coordinating, reporting and budgeting. It is the first, foremost and base managerial function of any organisation. The effectiveness of a management’s plan determines the competence of the management’s activity for the planned time period.

Planning comprises decision making because it is an activity of making choices from the available alternatives for performing tasks. Hence, planning comprehends decision making as its indispensable part.

Planning emphasises defining the aims, objectives and goals of the organisation. It also involves the identification of alternative courses of action to decide on a suitable action plan, which should be undertaken for the attainment of goals.

Planning is regarded as pervasive because it is present in all the segments of an organisation. It is required at all levels of management. The scope of planning differs at different levels of management and departments.

Process of Planning

The process of planning involves a number of steps in chronological order which are given below:

Setting Organisational Objectives

Examining business environment, assessing available alternatives and selecting the most appropriate alternative, formulating secondary plans, ensuring cooperation and participation, following up.

The planning process begins with the first step of establishing organisational objectives. It involves identifying organisational goals to be achieved by examining internal and external business conditions. For this, the answers to be given for the following questions:

• What is to be achieved?
• What actions are to be taken?
• Who is to perform it?
• How is it to be undertaken?
• What should be the time frame?

The next step in the planning process is to examine internal and external factors that influence the business environment.

The internal factors include strengths and weaknesses (for example, the efficiency of available resources) of the organisation, while external factors involve threats and opportunities (for example, overall economic and industrial environment and competitive position of the organisation).

The next step in the planning process is to evaluate all available alternatives and then select the best alternative. Generally, an alternative is evaluated against risks associated, costs involved, upcoming benefits, etc.

The successful accomplishment of organisational objectives is confirmed by formulating secondary or alternative plans. These plans are derived for various activities, units, departments, etc., and indicate a sequence in which various tasks are to be performed and the time schedule for per- forming those tasks.

In this step, employees at middle and lower levels of management are encouraged to participate in the successful accomplishment of organisational goals. Suggestions were given by operating personnel to help the management rectify shortcomings in plans and set things right at the start of the planning process and at the time of its implementation.

The last step in the planning process is to provide the scope of follow-up for determining the value of plans made and implemented. This step involves a continuous review of plans for ensuring their relevance and effectiveness.

Reviewing plans on a continuous basis helps the organisation develop sound plans for the future and avoid mistakes that took place while implementing the previous plans.

Limitations of Planning

In spite of several advantages, the planning function also has certain limitations. We have here listed the key limitations of planning :

Time-consuming

Gap between targets and results, resistance towards change, reason of frustration, problem of over-target.

Planning turns out to be a time-consuming activity as it requires data collection, data analysis, forecasting, etc., for selecting the best future course of action.

Planning requires expertise and the collection of authentic data, which incurs a lot of costs for the organisation. For instance, companies like IBM need to do a lot of planning prior to starting any new venture. For this, such companies also spend a lot on research and pay highly to experts to get their advice.

Planning is done by top-level management and implemented by middle and lower-level management. This creates a gap between the plan set and actual results achieved as different employees may have different perceptions of accomplishing plans.

Planning often requires changes due to the dynamic business environment. However, as a natural human tendency, employees are always reluctant to accept changes and may not provide their full cooperation.

Planning involves paperwork as plans cannot be finalised in one go. The plans are reworked again and again and after getting a final plan, subordinates give the copies of the plan to the top-level management in the form of a report or a proposal to get the plans finalised for implementation.

Sometimes, planned targets are not achieved by managers and employees irrespective of their best efforts. Such failures frustrate them and cause a low level of motivation in them.

Planning sometimes makes the top-level management fix targets that are unachievable and causes problems of over-expectation from employees.

Types of Plans

Plans bind individuals, resources, departments and organisations to achieve specific goals in the future. Plans help design organisational goals effectively which fits into the hierarchy from top to lower level of management. In an organisation, there are different types of plans made.

Some important types of plans are explained as follows:

Strategic plans

Tactical plans, operational plans, contingency plans.

Strategic plans are a framework for an organisation. These plans contain the mission of an organisation and outline goals to be achieved. Strategic plans aim to turn the vision of an organisation into reality. Thus, strategic plans are long-term and forward-looking in nature and accommodate future growth and expansion of an organisation. These plans are generally developed by top management and are implemented by middle and lower management.

For instance, Varun works as a top-level manager for Dino’s PizzaSizz. As a top-level manager, he has to make use of strategic planning to ensure that the long-term goals of the organisation are attained. Varun in consultation with other top-level managers developed strategic plans for achieving growth, increasing productivity and profitability and boosting return on investments, as all these are parts of the desired future of the pizzeria.

Varun and other top-level managers developed organisational objectives through strategic plans so that middle- and lower-level managers can create compatible plans aligned with those objectives. Varun also involved other level personnels because strategic plans require multilevel involvement.

Tactical plans are developed by middle-level management for a span of generally less than three years. These plans contain instructions for lower-level management on what should be done, how should be done and by whom should be done. In addition, tactical plans define tactics which managers adopt for achieving objectives mentioned in the strategic plan. Tactical plans also provide information on resources to be employed and work distribution among the sublevels within each department.

For instance, when Mira, the middle-level manager at Dino’s PizzaSizz, learns about Varun’s strategic plan for improving productivity, Mira im- mediately began to think about possible tactical plans. Tactical planning for Mira included things like testing a new process in making pizzas in a shorter amount of time or perhaps looking into purchasing a better oven that can speed up cooking pizza or even exploring ways to better map out the delivery routes and drivers.

As a tactical planner, Mira required to form a set of calculated actions that takes a shorter amount of time and is narrower in scope than the strategic plan but still help to bring the organisation closer to its long-term goal.

An operational plan is developed by the supervisors, team leaders and facilitators for supporting tactical plans. It governs the day-to-day operations of an organisation/business. Operational plans can be of two types, namely single use plans (for example, budget) and ongoing plans.

For instance, Ravi, the frontline manager at Dino’s PizzaSizz, has the responsibility of operational planning. Scheduling employees each week, creating a monthly budget, developing a promotional advertisement for the quarter to increase the sales of a certain product or outlining an employee’s performance goals for the year and doing an assessment, ordering and stocking inventory are the operation plans Ravi need to make and get executed.

A continuing or ongoing plan is the one which is made once and its value is retained over a period of years. The plan undergoes periodic revisions and updates. Following are examples of on-going plans:

• Policy : A policy is a broad guideline followed by managers to deal with the important aspects and areas of decision making. Policies are referred to as those general statements which explain how managers should handle their routine management responsibilities. For example, a typical human resources policy of an organisation addresses the matters related to the hiring of employees, terminations of non-performing employees, performance appraisals as an important culture, pay increases and discipline of employees.
• Procedure : A procedure is a standard set of directions that provides stepwise instructions of carrying out activities or tasks for achieving and attaining the organisational objectives. For example, typically, organisations have procedures/processes to purchase supplies and equipment. The procedure of purchasing supplies and equipment generally starts with a supervisor who completes the purchase requisition. After that, the requisition is then sent for approval to the next level of management. As the requisition gets approved, it is forwarded to the purchasing department. The amount of the purchase requisition is considered by the purchasing department either to place an order or to secure quotations bids from several vendors before placing the order.
• Rule : A rule is a statement that explicitly guides employees for what they can and cannot do. Rules promote the safety of employees by placing the ‘do’ and ‘don’t’ statements. It also directs for the uniform treatment and the behaviour of employees in an organisation/business. For example, the rules of absenteeism and unpunctuality allow supervisors to make discipline related to fair decisions quickly.

A successful organisation depends upon the fact that how intelligently, flexibly and constantly its management chases, adapts and masters the changing conditions. A strong management entails to ‘keep all options open’ approach at all times. This is where contingency planning comes into the organisation.

In contingency planning, an alternate plan is identified, analysed and implemented so that in case the original plan proves insufficient, the backup is ready to be used. The factors which are beyond managers’ control are kept in mind and the alternative future scenarios are prepared carefully.

When unanticipated problems and events occur, managers may need to change their plans. It is best to anticipate the changes during the planning process as things don’t always go as expected. Management should develop alternatives to the existing plan and keep them ready for use when unexpected circumstances occur.

Planning is the primary function of management that involves formulating a future course of action for accomplishing a specific purpose.

What are the Features of Planning?

The Features of the planning function are as follows: 1. Planning is a Continuous Process 2. Planning is Intellectual Process 3. Planning is a Futuristic Approach 4. Planning is a Flexible process 5. Planning is the Primary Function of Management 6. Planning Assists in Decision Making 7. Planning is Goal-oriented Approach 8. Planning is Pervasive

What is the Process of Planning?

The process of planning involves a number of steps in chronological order which are given below: 1. Setting Organisational Objectives 2. Examining the Business Environment 3. Assessing Available Alternatives and Selecting the Most Appropriate Alternative 4. Formulating secondary plans 5. Ensuring cooperation and participation 6. Following up

What is the Importance of Planning in Management?

The importance of planning in management is explained in the following points: 1. Planning Forms Goals in Management 2. Planning Gives Directions in Management towards Achieving Organisational Goals 3. Planning Tackles Uncertainties of future 4. Planning assists in finding a better way to achieve goals 5. Planning Minimises Duplication and Wasteful Activities 6. Planning Supports and Promotes Innovative Ideas in Management 7. Planning Facilitates Decision Making 8. Planning Sets Standards for Controlling Function 9. Planning helps management to Build Coordination

Management Topics

• What is Management ?
• Who Is a Manager ?
• Marketing CIs Management an Art or Science
• Classical Management Approach
• Planning in Management
• Decision Making in Management
• Organising in Management
• What is Organisation Structure ?
• What is Departmentation ?
• What is Span of Control ?
• What is Authority ?
• What is Staffing ?
• What is Human Resource Planning ?
• What is Job Analysis ?
• What is Recruitment ?
• Modern and Others Schools of Management Thought
• What is Selection ?
• What is Coordination ?
• What is Controlling ?
• What is Leadership ?
• What is Organisational Change ?
• Motivation in Management
• Motivation Theories
• Maslow’s Hierarchy of Needs
• Herzberg Two Factor Theory
• Mcclelland’s Needs Theory of Motivation

Business Ethics

( Click on Topic to Read )

• What is Ethics?
• What is Business Ethics?
• Values, Norms, Beliefs and Standards in Business Ethics
• Indian Ethos in Management
• Ethical Issues in Marketing
• Ethical Issues in HRM
• Ethical Issues in IT
• Ethical Issues in Production and Operations Management
• Ethical Issues in Finance and Accounting
• What is Corporate Governance?
• What is Ownership Concentration?
• What is Ownership Composition?
• Types of Companies in India
• Internal Corporate Governance
• External Corporate Governance
• Corporate Governance in India
• What is Enterprise Risk Management (ERM)?
• What is Assessment of Risk?
• What is Risk Register?
• Risk Management Committee

Corporate social responsibility (CSR)

• Theories of CSR
• Arguments Against CSR
• Business Case for CSR
• Importance of CSR in India
• Drivers of Corporate Social Responsibility
• Developing a CSR Strategy
• Implement CSR Commitments
• CSR Marketplace
• CSR at Workplace
• Environmental CSR
• CSR with Communities and in Supply Chain
• Community Interventions
• CSR Monitoring
• CSR Reporting
• Voluntary Codes in CSR
• What is Corporate Ethics?

Lean Six Sigma

• What is Six Sigma?
• What is Lean Six Sigma?
• Value and Waste in Lean Six Sigma
• Six Sigma Team
• MAIC Six Sigma
• Six Sigma in Supply Chains
• What is Binomial, Poisson, Normal Distribution?
• What is Sigma Level?
• What is DMAIC in Six Sigma?
• What is DMADV in Six Sigma?
• Six Sigma Project Charter
• Project Decomposition in Six Sigma
• Critical to Quality (CTQ) Six Sigma
• Process Mapping Six Sigma
• Flowchart and SIPOC
• Gage Repeatability and Reproducibility
• Statistical Diagram
• Lean Techniques for Optimisation Flow
• Failure Modes and Effects Analysis (FMEA)
• What is Process Audits?
• Six Sigma Implementation at Ford
• IBM Uses Six Sigma to Drive Behaviour Change
• Research Methodology
• What is Research?
• What is Hypothesis?
• Sampling Method
• Research Methods
• Data Collection in Research
• Methods of Collecting Data
• Application of Business Research
• Levels of Measurement
• What is Sampling?
• Hypothesis Testing
• Research Report
• What is Management?
• What is Controlling?
• What is Coordination?
• What is Staffing?
• Organization Structure
• What is Departmentation?
• Span of Control
• What is Authority?
• Centralization vs Decentralization
• Organizing in Management
• Schools of Management Thought
• Is Management an Art or Science?
• Who is a Manager?

Operations Research

• What is Operations Research?
• Operation Research Models
• Linear Programming
• Linear Programming Graphic Solution
• Linear Programming Simplex Method
• Linear Programming Artificial Variable Technique
• Duality in Linear Programming
• Transportation Problem Initial Basic Feasible Solution
• Transportation Problem Finding Optimal Solution
• Project Network Analysis with Critical Path Method
• Project Network Analysis Methods
• Project Evaluation and Review Technique (PERT)
• Simulation in Operation Research
• Replacement Models in Operation Research

Operation Management

• What is Strategy?
• What is Operations Strategy?
• Operations Competitive Dimensions
• Operations Strategy Formulation Process
• What is Strategic Fit?
• Strategic Design Process
• Focused Operations Strategy
• Corporate Level Strategy
• Expansion Strategies
• Stability Strategies
• Retrenchment Strategies
• Competitive Advantage
• Strategic Choice and Strategic Alternatives
• What is Production Process?
• What is Process Technology?
• What is Process Improvement?
• Strategic Capacity Management
• Production and Logistics Strategy
• Taxonomy of Supply Chain Strategies
• Factors Considered in Supply Chain Planning
• Operational and Strategic Issues in Global Logistics
• Logistics Outsourcing Strategy
• What is Supply Chain Mapping?
• Supply Chain Process Restructuring
• Points of Differentiation
• Re-engineering Improvement in SCM
• What is Supply Chain Drivers?
• Supply Chain Operations Reference (SCOR) Model
• Customer Service and Cost Trade Off
• Internal and External Performance Measures
• Linking Supply Chain and Business Performance
• Netflix’s Niche Focused Strategy
• Disney and Pixar Merger
• Process Planning at Mcdonald’s

Service Operations Management

• What is Service?
• What is Service Operations Management?
• What is Service Design?
• Service Design Process
• Service Delivery
• What is Service Quality?
• Gap Model of Service Quality
• Juran Trilogy
• Service Performance Measurement
• Service Decoupling
• IT Service Operation
• Service Operations Management in Different Sector

Procurement Management

• What is Procurement Management?
• Procurement Negotiation
• Types of Requisition
• RFX in Procurement
• What is Purchasing Cycle?
• Vendor Managed Inventory
• Internal Conflict During Purchasing Operation
• Spend Analysis in Procurement
• Sourcing in Procurement
• Supplier Evaluation and Selection in Procurement
• Blacklisting of Suppliers in Procurement
• Total Cost of Ownership in Procurement
• Incoterms in Procurement
• Documents Used in International Procurement
• Transportation and Logistics Strategy
• What is Capital Equipment?
• Procurement Process of Capital Equipment
• Acquisition of Technology in Procurement
• What is E-Procurement?
• E-marketplace and Online Catalogues
• Fixed Price and Cost Reimbursement Contracts
• Contract Cancellation in Procurement
• Ethics in Procurement
• Legal Aspects of Procurement
• Global Sourcing in Procurement
• Intermediaries and Countertrade in Procurement

Strategic Management

• What is Strategic Management?
• What is Value Chain Analysis?
• Mission Statement
• Business Level Strategy
• What is SWOT Analysis?
• What is Competitive Advantage?
• What is Vision?
• What is Ansoff Matrix?
• Prahalad and Gary Hammel
• Strategic Management In Global Environment
• Competitor Analysis Framework
• Competitive Rivalry Analysis
• Competitive Dynamics
• What is Competitive Rivalry?
• Five Competitive Forces That Shape Strategy
• What is PESTLE Analysis?
• Fragmentation and Consolidation Of Industries
• What is Technology Life Cycle?
• What is Diversification Strategy?
• What is Corporate Restructuring Strategy?
• Resources and Capabilities of Organization
• Role of Leaders In Functional-Level Strategic Management
• Functional Structure In Functional Level Strategy Formulation
• Information And Control System
• What is Strategy Gap Analysis?
• Issues In Strategy Implementation
• Matrix Organizational Structure
• What is Strategic Management Process?

Supply Chain

• What is Supply Chain Management?
• Supply Chain Planning and Measuring Strategy Performance
• What is Warehousing?
• What is Packaging?
• What is Inventory Management?
• What is Material Handling?
• What is Order Picking?
• Receiving and Dispatch, Processes
• What is Warehouse Design?
• What is Warehousing Costs?

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Why Managers Should Involve Their Team in the Decision-Making Process

• 05 Mar 2020

Decision-making is a critical component of every manager’s day-to-day. Whether reshuffling the department’s budget, delegating tasks , or implementing a new strategy , the daily choices managers make have a direct impact on their organization’s success.

But that decision-making process isn’t always easy. In a survey by management consulting firm McKinsey , only 28 percent of executives touted the quality of their company’s strategic decisions, while 60 percent reported that bad decisions are about as frequent as good ones.

The Role of a Team in Decision-Making

One way to increase your likelihood of success is to include your team in the process. Research shows that diversity leads to better decision-making. By bringing people into the conversation with different disciplinary and cultural backgrounds, you can enhance creativity and gain a fresh perspective on the task or problem at hand.

“Map out the technical, political, and cultural underpinnings of the decision that needs to be made and then build your group accordingly,” says Harvard Business School Professor Len Schlesinger, who’s featured in the online course Management Essentials . “You’re looking for a broad array of experience. You want some newcomers who are going to provide a different point of view, as well as people who have profound knowledge and deep experience with the problem.”

Some managers might shy away from integrating their team into the process to avoid additional complexity or a potential clash of opinions. Yet the ideas that could come out of that dialogue are often far more valuable and critical to business success. Here’s a closer look at how successful team decision-making can benefit your organization.

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Benefits of Team Decision-Making

1. overcoming consensus.

Managers often defer to consensus, or the majority of opinion, to avoid conflict and foster group harmony. But Schlesinger argues that it’s not always the right choice.

“Consensus is likely to lead to a lower evaluation of the problem and a less creative solution,” Schlesinger says. “You need to be willing to engineer in conflict, which is often perceived as uncomfortable, but is essential to uncovering some of the hidden assumptions and data that leads people to make less-informed decisions.”

Schlesinger suggests one approach of establishing a process of devil’s advocacy and encouraging individuals to poke holes in arguments and problem framing. As a result, your team will likely conduct a more in-depth critical evaluation, which could lead to a greater number of alternative solutions.

“Managers often get to convergence too quickly, which is one of the most negative byproducts of the consensus-oriented model and why it’s only appropriate for the most simplistic decisions,” Schlesinger says. “Unless you’re intentional about trying to overcome consensus, you’re going to be stuck with it and then get a group together who’s going to manifest a decision-making process that’s essentially no better than what you would come up with by yourself.”

As a team leader, it’s critical to encourage diverse thoughts and opinions around the table to discover more innovative solutions.

2. Increasing Employee Engagement

By involving your team members in the decision-making process, you show that you trust and value their opinion, which is a key element of building employee engagement .

According to analytics and advisory firm Gallup , highly engaged employees produce substantially better outcomes, are more likely to stay at their organization, and experience less burn-out. They can’t reach that level, though, unless they feel invested in their work, are given opportunities to develop their strengths, and understand how their role contributes to the company’s overall success.

Every decision you’re asked to make is a moment for you to empower others on your team by leveraging their strengths, experiences, and expertise.

3. Enabling Collaboration and Communication

According to a Queens University of Charlotte study , nearly 75 percent of employers rate teamwork and collaboration as “very important,” yet 39 percent of employees say their organization doesn't collaborate enough. In a separate study , 86 percent of respondents attributed workplace failures to a lack of collaboration or ineffective communication.

By involving others in the decision-making process, you create an opportunity for colleagues to share ideas, learn from each other, and work toward a common goal. In turn, you foster collaboration and help break down organizational silos. You might even surface overlapping initiatives within the company, which could save the organization resources and employees from duplicating work.

Related : 7 Skills You Need to Effectively Manage Teams

4. Surfacing Your Own Blind Spots

Self-awareness is a vital management skill , and has proven to be what sets high performers apart in the workplace. It’s a core tenet of emotional intelligence and describes your ability to understand your strengths, weaknesses, and managerial tendencies.

While you might think you know your blind spots, research suggests otherwise. According to organizational psychologist Tasha Eurich , 95 percent of people think they’re self-aware, but only 10 to 15 percent actually are. Meaning, if you’re making every decision by yourself, there’s likely cultural, informational, or technical data you’re missing.

Involving your team in the decision-making process can help surface your blind spots and enable you to cultivate self-awareness in the process.

5. Getting Buy-In from the People Who Need to Implement

The people you include in the decision-making process should be those who need to implement the agreed-upon solution.

“Getting to the ‘right answer’ without anybody who is supporting it or having to execute it is just a recipe for failure,” Schlesinger says.

If, upfront, you assembled a team with an array of skills, experience levels, and backgrounds, established clear goals, and explored all viable solutions, you should reach a stage where you’re ready to not only make a decision but execute.

“In the general manager’s job, the quality of the decision is only one part of the equation,” Schlesinger says. “All of this is oriented toward trying to make sure that once a decision is made, you have the right groupings and support to implement.”

Related : 5 Tips to Becoming a Better Manager

Should You Always Involve Your Team in Decision-Making?

Managers might fear they’ll slow work down if they involve their team in every decision. When faced with the choice of involving your colleagues or going solo, you must determine whether there’s absolute clarity and enough widespread, shared data that the decision is on the cusp of obvious. Yet, even then, Schlesinger recommends bringing the issue to a group in a short meeting or touch base since these decisions likely affect every aspect of the organization.

“Even the most obvious of decisions analytically still have enormous consequences from an implementation perspective,” Schlesinger says. “I encourage people, for decisions that have reasonably significant organizational consequences, to recognize that the decision-making group has both analytical and executional responsibilities. Even if the analysis is obvious, the execution generally is not.”

What Are the Different Types of Decision-Making?

There are several important decisions leaders must make on a daily basis to maintain their organization’s success. As a manager, it’s important to find ways to involve your team in this critical decision-making process in some capacity, whether strategic, tactical, or operational.

• Strategic decision-making : Decisions that have a significant or long-term impact on the organization, such as department restructuring or acquiring a new client. Being transparent about bigger-picture decisions and long-term organizational goals is one way to show your team they have a say in the company’s future.
• Tactical decision-making: Topics of discussion that focus on the immediate steps your organization needs to take to achieve long-term goals, like hiring a new team member or intern. Since these are smaller actions that likely affect the team’s daily routine, their input is invaluable.
• Operational decision-making: Decisions that involve the team's high-volume, daily operational tasks. Team involvement is crucial because it encourages valuable ideas and possible solutions to make systems or processes run smoothly. Teams are likely to perform well when they’re involved in the day-to-day efficiency of the organization.

Improving the Decision-Making Process

Involving your team in the decision-making process can benefit your entire organization. The quality of the decisions made will improve because you’ll have the right mix of skills and expertise at the table, but you’ll also have the people in place who are prepared, and in sync on what, to implement.

Are you interested in further developing your managerial skills? Explore our eight-week online Management Essentials course , and discover how you can gain the tools and strategies to excel in decision-making, implementation, organizational learning, and change management.

This post was updated on June 6, 2022. It was originally published on March 5, 2020.

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Planning Process: All Steps of Process, Types of Plans, Objectives, Needs, Limitations

What is Planning Process?

For example, the planning process for a large organization may not be the same for a small organization.

Planning Process

Identification of opportunities.

The purpose of the identification of opportunities is to enable an organization to adapt to its environment. This is a preliminary stage where analysis of the environment is not done very elaborately but analysis relating to the determination of opportunities is carried out.

Establishing of Objectives

Organizational objectives should be laid down in all key result areas. Key result areas help an organization in achieving its objectives. Examples of key result areas for an organization may be profitability, productivity, public responsibility, and so on.

Determining Planning Premises

Plans are formulated based on both internal and external factors. Planning premises vary at different levels of planning. At the top levels, it is more external in nature. At the lower level, there is a change from external to internal.

Search for Alternatives

There are several ways through which an objective can be accomplished. The task of management is to search for these alternative ways.

Evaluation of Alternatives

At this stage, feasible alternatives are evaluated in order to see how each alternative contributes to the organizational objectives in light of its strength and constraints. Each alternative should be subjected to a close examination to determine its suitability.

Selection of an Alternative

Formulation of secondary plans, establishing sequence of activities, 8 types of plans.

The following study will help in understanding different types of plans :

This is the procedure of collecting money from all the debtors. There is a difference between policies and procedures. There can be two policies of the organization regarding the recovery of money from the debtors. (A) Tight collection policy, and (B) Lenient collection policy.

Budgets describe the desired results in numerical terms. A budget is that planning which provides detailers about estimated money, material time, and other resources for the achievement of pre-determined objectives of various departments.

Objectives of Planning

In a dynamic environment, planning helps in scanning environmental changes and forecasting the future. These are the following objectives of planning :

Achievement of Organizational Objectives

Fulfillment of organizational commitments.

Organizations have long-term and short-term commitments toward society, depending on their nature. A defense organization, for example, has long-run commitments while a retailer is more interested in short-term goals or responsibilities. These commitments or goals of the organization can be fulfilled through planning.

It Facilitates Decision Making

It provides stability to organizations, overall view of organization or coordination.

Optimum utilization of resources/efficiency of operations: Organizations work with limited resources. Planning allocates these resources over different objectives and functional areas (production, personnel, finance, and marketing) in the order of priority.

Development of Managers

Promotes innovation or creativity, basis for control, reduction of risk.

Risk is a situation where moderately reliable information is available about the future but it is incomplete. Uncertainty, on the other hand, is a situation where no information is available about the future.

Morale Boost Up

Facilitates delegation, need for planning.

These are the following reasons need for planning :

Essential for Modern Business

Related to performances.

Planning helps in setting goals for each function and for each employee. The concerns having formal planning have performed better as compared to those where planning is not taken up as a regular activity. Studies have provided that planning has been an instrument in improved performance.

Focus on Objectives

Proper allocation of resources, facilitates control, helpful in decision making, avoiding business failures.

Business failures may be due to wrong and unscientific planning. Bad planning may result in the wastage of human and physical resources. The enterprise may not be able to face competition from well-planned units.

Limitations of Planning

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