Evaluation Of Formal Strategic Planning Business Essay

What is strategic planning. As in daily life when people have choices or plans to make, down to the simplest things as in, ‘what will we do this weekend?’, businesses need to form plans or strategies to know their way forward with a goal for the business to reach in order to maintain the success of the business and to achieve objectives.

All members within a group must know of the plans made in order to follow them with the desire to be successful within their environment for continued growth, success and also to move with the ever changing world in which we live. It is important for management to set out a game plan to continually strengthen the performance of their company. A strategic plan will state how a business should conduct themselves for a period of time in order to achieve these desired goals, this can be seen as a means to an end, looking forward to where changes need to be made and setting out a plan in order to reach that point using strategic methods. Jasparro R.J. (2006) states that strategic planning can help companies to ‘think and act strategically, develop effective strategies, clarify future directions, establish priorities, improve organisational performance, build teamwork and expertise, and deal effectively with a rapidly changing environment’.

This has proven difficult in recent years and the following report will go into more depth as to the reasons why certain conditions may impact Strategic Planning.

Nature of Formal Strategic Planning

To form a plan, a business will have to look at both the external and internal environments surrounding their specialist area. It is at this point a company will decide on their competences and look at what the company is best at doing. They may then look at how they can expand on their strengths and look at what their competitors are doing within the same area. They need to know what makes them special and stand out from the crowd, what makes customers turn first and foremost to them, then look at the options they have at that moment in time to maintain the momentum and the returning business. It is at this point in the planning stage that they may look at perhaps ‘not’ doing something which may be good for the company at a later date and maybe it is not the right time to make such changes yet. There should be a clear distinction between formulation and implementation. Formulation is in the planning process, implementation is carrying out the plans made using SWOT and PESTEL.

Five Forces Analysis is a technique for identifying the forces which affect the level of competition in an industry and scenario planning is a technique that builds various plausible views of possible futures for a business. The five forces framework takes into account the potential entrants to the market (threat of entry), buyers (buying power), suppliers (bargaining power), substitutes (threat of substitutes) all leading toward Competitive Rivalry as outlined below: