Strategic Business Planning – Definition, Output, Role
Successful development and growth of a business organization entails making right decisions that expand current operations and maximize use of available resources. Strategic business planning is a way to enable and ensure business development and growth through creating a realistic vision for the future of the organization. It is a foundation of company success in the future. In this short article we talk about the definition, role, and output of strategic business planning.
In simple terms, strategic business planning is a series of logical and creative steps to identify the long-term business objectives ranked by importance. It is a complex process of collecting information, analyzing input data and conducting internal and external assessments of available business resources. Often SWOT analysis (a kind of environmental analysis) is used as the major assessment tool to investigate the business environment and identify Strengths, Weaknesses, Opportunities and Threats of the chosen business model. The process plays a central role in ensuring a company’s financial and social development.
Strategic Business Planning is a high-level management process undertaken to identify and approve the framework, vision, long-term goals, directions, and objectives of a business company in order to ensure that this company is appropriately positioned considering its marketing capabilities, technological advantages and available resources. It serves as a foundation for the development of tactical plans and solutions to achieve desired entrepreneurial intentions and commercial benefits.
The process of strategic business planning is intended to accomplish the following key objectives:
- Provide a framework of tactical business decisions and approvals.
- Explain the business to people involved in business implementation order to inform and motivate.
- Stimulate change management and become a building block for further business planning and development.
- Assist business benchmarking & performance monitoring.
A business strategy is the specific output of the process. It is a formal business imitation document that states the long-term business intentions of a company and makes a foundation for developing implementation (tactical) plans. By using SWOT analysis decision makers can develop such a strategy, which consists of the following key elements (sections):
- Business Vision
- Mission Statement
- Business Values
- Objectives and Goals
A business strategy shouldn’t be confused with a business plan. While the strategy contains information required for making high-level business decisions and setting long-term goals without specifying any details on the implementation and tactics, the plan elaborates strategic decisions and provides a foundation for developing implementation plans and specifying tactical procedures.
Why strategic planning of business activities is so important? Why do businessmen and managers need to undertake this process in their business practice? There’re three key reasons that answer these questions and determine the role of the strategic business process:
- Correlate Expected Benefits and Produced Outcomes. As we already know, the process’s outcome is a comprehensive business strategy. By means of such a strategy, we can create a link between the benefits we expect to gain and the outcome actually produced by our business. Having a well-developed business strategy enables us to acquire the capability to gain the expected benefits from the produced outcomes.
- Fit Potential with Available Resources and the External World. Strategic planning of business activities allows determining the core competencies of a company and assessing business potential. Then by creating an effective business strategy document, the company gains an opportunity to best fit the business potential with available resources and to handle the challenges of the external world.
- Provide Competitive Advantages. The strategic business planning process serves as a foundation for developing a marketing plan dedicated to promoting products/services, attracting the target audience, increasing sales and strengthening a company’s competitiveness. Through developing a comprehensive business strategy template, the company can efficiently plan for marketing goals and acquire the capability to provide sustainable competitive advantages.
Business strategy in combination with corporate business policies is the framework for developing a business plan. While the strategy is a high-level plan of actions that are aligned with the long-term goals of a company, the business plan focuses on the tactical implementation of the strategic expectations. A business plan document specifies procedures, tasks and activities to achieve the goals in business practice.