Literature is reviewed relevant to the problem investigated. The findings of the literature review are presented in discussions related to formal strategic planning, and the links between strategic planning and organizational performance.
Formal strategic planning (FSP) is defined as "the process of determining the mission, major objectives, strategies, and policies that govern the acquisition and allocation of resources to achieve organizational aims" (Pearce, Freeman, and Robinson, 1987, p. 658). Strategic planning is a process which generates specific actions which are required to carry out a particular strategy. By definition, thus, the strategic planning process begins subsequent to the adoption of a strategy. The entire strategic process within an organization, however, is a set of highly interrelated components, which function within a dynamic environment. Thus, in the "real world", strategic planning will often precede strategy development, because of the cyclical character of the strategic process. The generally recognized elements of the strategic cycle are (1) organizational considerations, which are concerned primarily with the organizational structure, (2) resource requirements, (3) strategic control, which is concerned primarily with the organization's internal environment, (4) strategic planning, which is concerned primarily with the external environment of the organization, and (5) the development of strategy, which is the
end result of the combined effects of the other elements of the strategic cycle.
As the description of the strategic cycle indicates, strategic planning is closely associated with an organization's external environment. It is, thus, necessary for the strategic planner to (1) know of what the external environment of an organization consists, and (2) understand how an organization's external environment affects the strategic planning process.
In the late 1970s, Henry Mintzberg (1...