Published by: sadikshya
Published date: 31 May 2021
Formulation of strategic planning is an analytical process of selection of the best suitable course of action to meet the organizational objectives. It is one of the steps of the strategic management process. The strategic plan allows an organization to examine its resources, provides a financial plan, and establishes the most appropriate action plan for increasing profits.
This involves establishing the long-term goals of an organization. Strategic decisions can be taken once the organizational objectives are determined. Thus, the strategy is a wider term which believes in the manner of deployment of resources so as to achieve the objectives.
The next step is to evaluate the general economic and industrial environment in which the organization operates. This includes a review of the organization’s competitive position. This involves SWOT analysis, meaning identifying the company’s strengths and weaknesses and keeping vigilance over competitors’ actions to understand opportunities and threats.
After analyzing the external environment, managers need to identify opportunities that can be capitalized and threats that an organization may face. Opportunity is the positive trends whereas threats are the negative trend and challenges to the organization.
All conditions and forces within the organization affecting business operations are internal environments. The components of the internal environment can be controlled by the management. It consists of owners or shareholders, the board of directors, resources, and organization.
5. Identifying strengths and weaknesses
Analysis of internal environment facilities in identifying the strengths and weaknesses of an organization. In the formulation of the strategic plan, it is necessary to identify the strengths to capitalize and weakness to overcome them.
This is the final step of strategy formulation. It involves an evaluation of the alternatives and selection of the best strategy amongst them to be the strategy of the organization. The strategy formulation process is an integral part of strategic management, as it helps in framing effective strategies for the organization, to survive and grow in the dynamic business environment.