Strategic planning is the process by which an organization sets its goals, defines its path for achieving them, and allocates required resources accordingly. This process of creating a business strategy is important because it establishes agreement around the common goals of an enterprise and provides a shared framework for evaluating progress. Thus, beyond simply helping to guide the annual budget, strategic planning is an important leadership and management tool.
The strategic planning process can be broken down in a variety of ways, but generally has three phases: strategic analysis, strategy formulation, and strategy implementation. The analysis phase requires a capabilities analysis of the business as well as consideration of its competitive position within the industry structure it operates in. Formulation takes these insights as a basis for setting achievable goals and deciding on appropriate courses of action to achieve them.
Of course, the most challenging phase of strategic planning is implementation. As any manager knows, even the most careful planning process can never anticipate all the complexities the future holds - particularly considering the rapid changes occurring in our world today. Strategic management means knowing how to adapt to changing circumstances as the business moves forward while continuing to rely upon the goals set in the strategic planning process for guidance.