Strategic planning is an essential process for any business that wants to stay competitive and grow. It involves defining the current situation, setting goals for the future, and finding a way to bridge the gap between the two. Strategic plans can be drawn up for any period of time, although the most common time frames are 12 months, three and five years. There are three main types of strategic plans: business-focused, SWOT analysis, and PEST model.
Each of these strategies has its own advantages and limitations. A business-focused strategic plan focuses on the competitive aspects of the organization, creating competitive advantages and growth opportunities. It outlines how the company works and is cost-effective since anyone familiar with the organization can lead it. However, it may not be adequate for complex and multifaceted planning, and inaccurate information can be generated due to preconceived notions. The SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis is a useful tool for understanding the external market in which a company operates. It generates a new perspective and actionable data about the company.
The main limitation is that it only examines external factors and does not take into account any internal variables. The PEST (Political, Economic, Social and Technological) model is particularly useful when trying to enter a foreign market. It helps companies study and understand the external market in which they operate. A major limitation is that it only looks at external factors and does not consider any internal variables. The VRIO (Value, Rarity, Imitability, Organization) framework helps companies understand their competitive potential and plan accordingly. By analyzing the four components and asking questions, tangible solutions tend to emerge rather than intangible suggestions.
The drawbacks of this framework are that smaller companies may have difficulty using it and that it only focuses on internal factors. The three levels of strategy are corporate-level strategy, business-level strategy, and functional-level strategy. At the corporate level of strategy, decisions are made about which businesses to enter or exit. Business-level strategies should be developed by the heads of the business units and other middle managers of each unit. At the functional level of strategy, decisions are made about how to best use resources to achieve objectives. Tactical plans support strategic plans by translating them into specific plans relevant to a different area of the organization.
It is important to be aware of the situation you are in as a company so that you can develop your strategy in a way that adapts to your organization and grows with it.