Strategic Planning

Every business needs strategic planning. The technique provides the direction for everyday tasks and helps in making informed decisions. It also outlines goals that can be measured and acts as a tool for monitoring progress and making appropriate changes wherever required. Strategic planning involves careful and detailed outlining of achievable and measurable goals and back up these objectives with realistic benchmarks for efficient evaluation.

Strategic planning must align with the company objectives and incorporate the management, employees and all those concerned with the organization.

The process involves:

  • Setting clear and quantifiable goals. For instance, instead of saying ‘we aim to grow our sales tremendously,’ ‘we aim to enhance our sales by 40 percent this year’ is precise and focused. This also motivates the employees and provides the direction.
  • Measuring the progress against the benchmarks.
  • Taking corrective actions if deviations are found.

Importance of strategic planning:

  • It sets the priorities and focuses all the energy and resources toward achieving the objectives while trying to gain a competitive advantage.
  • It enables organizations to predict scenarios and be proactive. This helps in staying ahead of the rivals in the industry.
  • It shows the path where the entire organization should travel as a coordinated team. The objectives are planned to sync with the company mission and vision that further boosts the growth.
  • It is possible to gain better insight into the consumer segments and market trends through committed strategic planning.
  • It provides a strong foundation and foresight to cope with ever-changing business environments.

Balanced Scorecard and its role in strategic planning

Balanced Scorecard (BSC) is a management tool to measure the performances of the employees of an organization. It is used by the management people that generally outline the strategic objectives. BSC facilitates strategic planning, aids in benefits realization management, portfolio management and provides performance metrics for easy evaluation.

Balanced scorecard evaluates the following priorities or aspects that are vital to any business:

Financial

  • Increase in revenue percent for the year (or for a more extended period)
  • Organization’s gross profit goals
  • Reduction in the net expenses

Customer

  • Enhance the customer base
  • Introduce new products in the existing and new markets
  • Retain current customers; increase loyalty
  • Set standards for customer service
  • Identify future needs/expectations of customers

Internal priorities

  • Improve internal administrative processes
  • Adopt innovative and the latest technology to attain efficiency
  • Utilize all the available resources
  • Maintain supplier relationships; improve public relations
  • Better the organizational structure

Employee priorities

  • Hire people that are fit for the roles
  • Motivate and align incentives with employee performance
  • Make employees understand company strategies
  • Follow employee best practices
  • Focus on HR development, labor relations, and training

A balanced scorecard defines what is significant for the organization, identifies the gaps in planning and provides a cost-effective solution to a dedicated and accountable, classic strategic planning.

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