Most businesses follow a strategic planning process that starts at the top of the organization, and works its way down so that it can be implemented by the organization. This model has been proven as an effective means of growing a business, as it helps executives understand and explain exactly what the organization can and will do.

The strategic planning process consists of five planning processes that define and assess not only the organization, but also the external factors as well. Most successful strategic planning processes follow this diagram:

  1. Mission and Objectives
  2. Situation Analysis
  3. Strategy
  4. Implementation
  5. Evaluation and Control

Mission and Objectives
An organization’s mission statement describes the purpose of their enterprise, as well as the values of the company. The mission statement is the fundamental guidance within the organization that will help them define their goals, and define the strategic and financial objectives that will be used to measure their success.

Situation Analysis
This step in the strategic planning process analyzes both internal and external situations. The internal analysis requires the organization to determine what it is actually capable of doing, as well as what it cannot. The external analysis considers the opportunities available in the current environment.

Once an organization understand their own capabilities, they can use this information to determine their ability to focus on specific new opportunities that may become available, ensuring that time and money are not spent on opportunities that the organization really does not have the ability to handle.

The external analysis evaluates the current social, economic, technological, and political factors of a particular industry. This allows the organization to better understand the potential in their chosen area, and how to address the current needs of consumers.

After gaining a clear understanding of the internal and external environments, the organization must develop a strategy that will allow them to grow their business. Companies should focus on differentiation, focus, and cost leadership to develop their strategies.

This step in the strategic planning process describes the methods that will be used to implement the strategies. These methods generally describe how the organization will function in order to become successful.

Evaluation and Control
This is the ongoing process of evaluating the current implementation methods through performance standards. This allows organizations to determine the areas that are not functioning properly, helping to address potential issues affecting success.

Understanding the Strategic Planning Process