Strategic planning is a process that helps a company decide what market opportunities to pursue and how to do so over the next three to five years. It results in the creation of a strategic plan.
The strategic planning process should take into account:
- External forces–the market factors that will make it more difficult for a company to turn a profit
- Internal forces–a company’s internal capabilities, which stem from its organizational structure, processes and resources
- Organizational culture–a company’s beliefs, values and attitudes, which are influenced by managerial preferences
In taking a long-term perspective a company is not limited by its current capabilities and can instead make decisions based on new knowhow it realistically expects to develop over the life of the strategic plan. Any goals that depend on these new capabilities are called “stretch goals” because they reach beyond the company’s current state.
Successful strategic planning requires a company to anticipate how the market will change and to make proactive changes well in advance, rather than having change thrust upon it by competitive forces.