Do you know what are the best strategic planning tools that will help you put your business plan into action? There are several possible alternatives to be implemented that could contribute to your company’s performance. Planning is an essential activity for every business for several reasons. They help companies achieve their goals, reduce uncertainties, and implement better strategies.
This blog will help explain what strategic planning is and highlight what are the right tools for the job!
What is Strategic Planning?
Before explaining the strategic planning tools, it is necessary to highlight the meaning of this concept. During the planning phase, the ends and means for achieving the objectives are defined. Thus, there is a definition of objectives and strategies aimed to achieve the results.
Now you might be wondering, what is strategic planning? As the name suggests, it is the focus on the performance of the strategies to achieve the objectives.
In most cases, this planning stage is performed by the leaders and managers, since they have a better overview of the organization. It is necessary to know all the departments and external matters to identify strengths, weaknesses, threats, and opportunities. From this information, it becomes possible to think and develop good strategies.
It is also important to mention that this planning model is made for long term plans since it is related to the company’s objectives. From what is defined in this stage, you establish a course of action for each department and daily tasks to implement in order to optimize results.
What are the Strategic Planning Tools?
This is one of the most complex strategic planning tools because it helps to analyze internal and external factors that could interfere with the entire organization’s performance.
Internal factors might be worked out, such as the strengths and weaknesses of the company. External factors point to threats and opportunities that could interfere with the company’s performance, such as political situations, technology, economy, etc.
Porter’s 5 Forces
This tool establishes the most competitive factors for a specific field. They are:
- Competitive Rivalry: regarding the market’s competition;
- Supplier Power: follows the same logic as the previous phase and the greater this power, the more those suppliers will have control over prices;
- Buyer Power: it represents the level of rivalry between companies. As lower the demand and the bigger the number of companies, the higher is the power of the customers to bargain price. It also goes the other way around;
- Threat of Substitution: it refers to the possibility of the emergence of new products that might replace yours;
- Threat of New Entry: the emergence of new competitors might lead to a drop in the company’s market domain.
This tool helps the organization define its business model. It’s divided into four steps:
- How: defines what would be the activities and the main resources of the company;
- What: defines what the value proposition will be, establishing how your company will generate value in the market;
- Who: defines what would be your customer’s profile, creating and separating them by groups of similarities and defining how the customer relationship and communications will operate;
- How much: defines what would be the sources of income and cost structure.
The great benefit of this tool is that it provides a more flexible overview of the company. This way, it enhances your company’s creation, differentiation, and innovation in the market.
Strategic planning is a MUST HAVE practice because it helps managers to have a better overview of the business and, therefore, to establish effective strategies. There are several tools that could help you with this and it is worth studying this matter deeper to define which one will fit you better to help in the decision making process.
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