This research reviews the importance of strategic planning to companies. The research focuses where appropriate on the performance of CEOs of major corporations in relation to the success or failure of corporate planning.
Strategic Planning and Its Importance
Strategic planning is 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 that generates specific actions that are required to carry out a particular strategy (Thompson & Strickland, 2001).
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, 2001).
It is difficult to overstate the importance of strategic planning to companies, because the strategic plan leads the organization in the directions of either success or failure. The problematic issue, however, is the attempt to related strategic planning in a company to specific levels or trends in financial performance. Assessments of the relationship between strategic planning and financial performance tend to vary according to the focus of the research. Some studies define financial performance in a narrow context, while others are more inclusive. Some studies base their assessments on the use or non-use of strategic planning, while others are concerned with the formality of the planning process (Jayaraman, Khorana, Nelling, & Covin, 2000).
Although the strength of the links between strategic planning and performance remains a matter of some dispute, recent studies demonstrate that such links, i...