The process of corporate strategic planning is reviewed. The essential ingredients of corporate strategic planning are identified and theories of corporate strategic planning are evaluated critically.
The Strategic Planning Concept and Process
Strategic planning 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. Strategic planning is a process which generates specific actions which are required to carry out a particular strategy (Thompson & Strickland, 1996).
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 so-called real world, strategic planning will often precede strategy development, because of the cyclical character of the strategic process (Hax & Majluf, 1996).
There are five generally recognized elements of the strategic cycle. These elements are as follows: (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 (Rowe, Mason, & Dickel, 1990).
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 affe...