Strategic plan of any enterprise is a picture of the desired position of the organization. Strategic plan gives a root path that how the organization will achieve the desired place or position in the given industry. Three major components of strategic plan include formulation, implementation and evaluation of strategy carries that information and plan which provides a direction towards the organizational objectives.
1. Strategy Formulation
Strategy formulation process starts with the situation analysis of the organization. Situation analysis is an important part of strategic plan as it gives an overview of the existing position of the organization. Situation analysis includes the analysis of internal and external environment of the organization. Different strategic tools can be used to evaluate this situation i.e. SWOT analysis, PEST Analysis etc. This also includes the evaluation of current mission and vision of the organization. Vision statement clarifies that what an organization want to become and on the other hand mission statements shows that what business the organization operates. Mission contains the products and services, its markets and its employee management policy. The assessment of external factors of the organization involves the listing down of finite list of factors which are a potential threat or opportunities for the organization in the external environment. By finite list is meant that not all the factors are focused. The priority is given to those factors which have high level of impact or form which high returns can be gained. The internal audit is also done in the situation analysis where the internal strengths and weaknesses of the organization are listed down.
After the clear understanding of the organization’s current situation the real work begins where the strategies are formulated. The best practice is to involve the employees in this process as the employees from all levels will share their views and a better strategic decision will be expected. Here the strategies are developed to capitalize the opportunities available which were assessed in the external audit and minimize the threat of the factors. On the other side the strengths of the organizations require such strategies which further enhance them and the weaknesses are tried to be overcome.
The next step in the strategy formulation stage is setting the long term objectives. Long term objectives are those which are associated with the sales and market share growth, it can be the growth of assets; it can be attaining any award from the government body etc. This is a very important phase as the long term goals and objectives show a direction to the whole organization. Long term objectives are set after a through consideration of external and internal strengths, weaknesses, opportunities and threats to the organization. The available resources and the expected resources are listed and based on those resources the long term but achievable, measureable and realistic objectives are set with proper timelines.
The final stage of strategy formulation process is the evaluation and selection of appropriate strategies to meet the long term objectives. In this the alternative strategies are also identified an evaluated and a contingency planning is also done. For instance in case of any external change which is beyond the change of organization such as change in legislations or change in market conditions then that contingency plan can be used. The existing strategies of the organization are the initial point for strategy evaluation.
2. Strategy Implementation
The next step in a strategic plan includes the strategy implementation. Developing an effective strategy does not ensures that the strategic plan will be successful. It was in the old times when the strategic planning was done only at the level of stagy formulation stage. Experiences of different organizations and further studies revealed that strategy formulation does not ensure the success of strategic plan. Implementation is another important part of the strategic plan. In the implementation phase the process of shifting the responsibilities to the middle and lower level of management is developed. As in the strategy formulation stage it was mentioned that to involve the employees of all the levels is important, so if any organization has done this during the strategy formulation them the strategy implementation process will be lot more easier. This is because the middle and lower level staff will have a clearer view of the strategies developed and they would be in a better position to implement those strategies in real practice.
3. Strategy Evaluation and Control
After the implementation of strategic plan it is important like all other plans and project to evaluate the progress of that plan. Implementation phase end with the start of evaluation process. This is a continuous process until the strategic aims and objectives are not met. There are many organizations who have strategic aims and objectives that shows continuity and a continuous process is required for that for instance one of the strategic objectives of the company is to provide the value to the customer. This is an objective which shows continuity as the fast food chain is aimed to provide the customer value to their money so for that strategy evaluation is required. This process ensures that the implemented strategies are progressing towards the achievement of organizational aims and objectives or not. In this process the required results or outcomes are compared with the actual results and if there is any kind of difference then with the change in strategies of taking appropriate steps that difference is tried to be eliminated or at least minimized.