Strategy according to Business Dictionary is a plan crafted to reach a goal or solution to a problem. Strategic planning takes the form of defining the organisation overall direction and allocating its resources and capabilities to achieve its mid to long-term gaols. A simple example would be the act of traveling by car from city A to city B. The resources required would be a car, map, money, food and drinks. The strategic objective would be reaching city B safely at set time with the lowest cost and effort. The strategic planning take place before the trip start detailing the main route to take and an alternative route. The plan should include when and where to stop for fuel, food and rest. The organisation should do similar planning for its mid and long-term strategic objective.
The strategy is a mid to long-term plan for the organisation use to set path to the targeted future position. Without the set plan, the organisation may drift from its intended future target. When the target is driving from city A to city B then the resources and budget are scheduled for that distance and travel time. But if we decide to stop for sightseeing or shopping then we delay the arrival time for city B and we may consume the set budget for the trip. We may reach city B after stopping for shopping but we will be late (maybe too late) and we will be under budgeted to do what we intend to do when we reach there.
The strategy will discuss the enablers and barriers that effluence the organisation effort to achieve its strategic objectives. The strategic objectives are set to fulfil the organisation vision and mission. The strategic objectives are translated to a value proposition that is delivered as product or service to the customer. The value proposition is supported by key activities, resources, business partners and a network of logistics to acquire the resources and deliver the product or service to the customer. Revenue is generated from sales and consumed by expenses from logistics and operations. The plan is to achieve the organisational vision by meeting the customers needs at the least cost and with the highest sales margin.
Strategic plan should have:
- Executive Summary is the most important part of the strategy document because most of the influential people will read this part first. The summary should contain the skeleton of the strategy and attract the reader to read the rest of the strategy or just approve it without further reading. The summary should be written after the strategy was written.
- Company Mission: the mission statement describes what the business is seeking to achieve. For inner decision-making, the mission statement guides employees to pick the right decisions and judgements which are in line with helping the company realise its mission. For external parties, like investors, partners, and customers, the mission statement inspires them to take the actions you desire.
- Enablers and Barriers: The rationale to include a SWOT analysis in the strategic plan is to allow you to ascertain the greatest opportunities to pursue reaching the growth targets. SWOT analysis will identify the organisation strengths to decide which strength to develop further in the near future. Additionally, it makes it possible to identify which strengths to develop in the near future to enhance your company. SWOT analysis helps the strategist to spot the internal weaknesses and plan how to overcome them (training, outsourcing, hire new employees, etc).
- Strategic Objectives are long-term organisational targets that help convert a mission statement into more particular strategies and jobs from an extensive vision. Strategic goals are often developed as part of a two- to four-year strategy that sets out the particular expectations which will enable the business or organisation to reach its more broadly based mission or vision statement and identifies key strengths and weaknesses. Operational goals, on the other hand, are weekly, daily or monthly job standards that implement strategic goals that are bigger. As with strategic goals, operational goals should be special and quantifiable, though their focus is more narrow.
- Key Performance Indicators (KPIs) are quantifiable measurements, agreed to ahead, that represent an organisation’s critical success factors. Whatever KPI are chosen, they must represent the aims of the organisation, indispensable to its success, and must be quantifiable. If there is a Key Performance Indicator going to be of any worth, there must be a method to precisely define and quantify it. “Create More Repeat Customers” is worthless as a KPI without some means to differentiate between new and repeat customers.
- Target Customers are those who most likely to purchase from you. Be specific and avoid to be general in hopes of obtaining a bigger share of the marketplace. Understand the problem which you solve for the customer. Begin to list all the various kinds of clients that suffer from the problems you fixing. Once completed, you can begin to develop an image of these clients. Group your target customers by place, industry sector, gender, age, etc.
- Industry Analysis. The business analysis does not need to be a complete report on what’s going on in the market. The organization should conduct an analysistoensure the market size is growing (if not, you might want to diversify), and tohelpidentify new opportunities to grow. The best model for industry analysis is Michael Port’ “Five Forces” model:
- Supplier Power. An evaluation of how simple it’s for providers to drive costs up. That is driven by the: singularity of the product or service; amount of suppliers; relative size and strength of the supplier; and price of changing from one supplier to another.
- Buyers power. An evaluation of how simple it’s to drive costs down. If your organisation has only few strong buyers then they will frequently bargain the price.
- Rival Power. The number of rivals and their ability mussel their way in the industry. Market attractiveness will be affected by the number of competitors and their ability to offer services and undifferentiated products.
- Risk of substitution. The industry attractiveness is affected by the availability of similar products or services that the customer can switch to.
- Risk of new entry: Lucrative markets attract new entrants unless the organisation has strong barrier to entry like patents or economy of scale.
- Marketing Plan. Marketing takes cash, time, and tons of groundwork. A powerful marketing plan will make sure that advertising spending is done prudently and appropriately. A marketing plan contains everything from understanding the target market and how the organisation would want to reach that market. A marketing plan might comprise the demand for the service or product and the market competition. The main components of the plan are a description of the products or services (including special features), advertising budget, description of the business place, pricing strategy, and market segmentation.
- Team. The team section of your strategic plan ensures you have the human resources to reach the goals. Here you should list your team members that are present and identify the types of people you have to hire in the following year to achieve your aims.
- Financial Projections. The closing section of your strategic plan is the financial projections. The fiscal projections help the organisation discover the opportunities to pursue. The fiscal projections will map out the goals such as how many new customers the organisation must attract in the following month, and at what price point, to achieve next month’s aim.