STRATEGIC PLANNING

Vision statements, Mission statements and values

Vision: Defines the desired or intended future state of an organization or enterprise in terms of its
fundamental objective and/or strategic direction. Vision is a long term view, sometimes describing how
the organization would like the world in which it operates to be. For example a charity working with the
poor might have a vision statement which read "A world without poverty"

Mission: Defines the fundamental purpose of an organization or an enterprise, succinctly describing

why it exists and what it does to achieve its Vision.

It is sometimes used to set out a 'picture' of the organization in the future. A mission statement
provides details of what is done and answers the question: "What do we do?" For example, the charity
might provide "job training for the homeless and unemployed"

Values: Beliefs that are shared among the stakeholders of an organization. Values drive an

organization's culture and priorities and provide a framework in which decisions are made. For
example, "Knowledge and skills are the keys to success" or "give a man bread and feed him for a day,
but teach him to farm and feed him for life". These example values may set the priorities of self
sufficiency over shelter.

Strategy: Strategy narrowly defined, means "the art of the general" (from Greek stratigos). A
combination of the ends (goals) for which the firm is striving and the means (policies) by which it is
seeking to get there.

Organizations sometimes summarize goals and objectives into a mission statement and/or a vision
statement. Others begin with a vision and mission and use them to formulate goals and objectives.

While the existence of a shared mission is extremely useful, many strategy specialists question the
requirement for a written mission statement. However, there are many models of strategic planning
that start with mission statements, so it is useful to examine them here.

 A Mission statement tells you the fundamental purpose of the organization. It defines the
customer and the critical processes. It informs you of the desired level of performance.

 A Vision statement outlines what the organization wants to be, or how it wants the world in
which it operates to be. It concentrates on the future. It is a source of inspiration. It provides clear
decision-making criteria.

An advantage of having a statement is that it creates value for those who get exposed to the
statement, and those prospects are managers, employees and sometimes even customers.

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Statements create a sense of direction and opportunity. They both are an essential part of the
strategy-making process.

Many people mistake the vision statement for the mission statement, and sometimes one is simply
used as a longer term version of the other. The Vision should describe why it is important to achieve
the Mission. A Vision statement defines the purpose or broader goal for being in existence or in the
business and can remain the same for decades if crafted well. A Mission statement is more specific to
what the enterprise can achieve itself. Vision should describe what will be achieved in the wider
sphere if the organization and others are successful in achieving their individual missions.

A mission statement can resemble a vision statement in a few companies, but that can be a grave
mistake. It can confuse people. The mission statement can galvanize the people to achieve defined
objectives, even if they are stretch objectives, provided it can be elucidated in SMART (Specific,
Measurable, Achievable, Relevant and Time-bound) terms. A mission statement provides a path to
realize the vision in line with its values. These statements have a direct bearing on the bottom line and
success of the organization.

Which comes first? The mission statement or the vision statement? That depends. If you have a new
start up business, new program or plan to reengineer your current services, then the vision will guide
the mission statement and the rest of the strategic plan. If you have an established business where
the mission is established, then many times, the mission guides the vision statement and the rest of
the strategic plan. Either way, you need to know your fundamental purpose - the mission, your current
situation in terms of internal resources and capabilities (strengths and/or weaknesses) and external
conditions (opportunities and/or threats), and where you want to go - the vision for the future. It's
important that you keep the end or desired result in sight from the start. [citation needed] .

Features of an effective vision statement include:

 Clarity and lack of ambiguity

 Vivid and clear picture
 Description of a bright future
 Memorable and engaging wording
 Realistic aspirations
 Alignment with organizational values and culture

To become really effective, an organizational vision statement must (the theory states) become
assimilated into the organization's culture. Leaders have the responsibility of communicating the
vision regularly, creating narratives that illustrate the vision, acting as role-models by embodying the
vision, creating short-term objectives compatible with the vision, and encouraging others to craft their
own personal vision compatible with the organization's overall vision. In addition, mission statements
need to be subjected to an internal assessment and an external assessment. The internal
assessment should focus on how members inside the organization interpret their mission statement.

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The external assessment — which includes all of the businesses stakeholders — is valuable since it
offers a different perspective. These discrepancies between these two assessments can give insight
on the organization's mission statement effectiveness.

Another approach to defining Vision and Mission is to pose two questions. Firstly, "What aspirations
does the organization have for the world in which it operates and has some influence over?", and
following on from this, "What can (and/or does) the organization do or contribute to fulfill those
aspirations?". The succinct answer to the first question provides the basis of the Vision Statement.
The answer to the second question determines the Mission Statement.

Strategic planning outline

The preparatory phase of a business plan relies on planning. The first chapters of a business plan
include Analysis of the Current Situation and Marketing Plan Strategy and Objectives.

Analysis of the current situation - past year

 Business trends analysis

 Market analysis
 Competitive analysis
 Market segmentation
 Marketing-mix
 SWOT analysis
 Positioning - analyzing perceptions
 Sources of information

Marketing plan strategy & objectives - next year

 Marketing strategy
 Desired market segmentation
 Desired marketing-mix
 TOWS-based objectives as a result of the SWOT
 Position & perceptual gaps
 Yearly sales forecast

According to Arieu, "there is strategic consistency when the actions of an organisation are consistent
with the expectations of management, and these in turn are with the market and the context" (S.K.
Sharman in Human Resource Management: A Strategic Approach to Employment)

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Methodologies
There are many approaches to strategic planning but typically a three-step process may be used:

 Situation - evaluate the current situation and how it came about.

 Target - define goals and/or objectives (sometimes called ideal state)
 Path / Proposal - map a possible route to the goals/objectives

One alternative approach is called Draw-See-Think

 Draw - what is the ideal image or the desired end state?

 See - what is today's situation? What is the gap from ideal and why?
 Think - what specific actions must be taken to close the gap between today's situation and
the ideal state?
 Plan - what resources are required to execute the activities?

An alternative to the Draw-See-Think approach is called See-Think-Draw

 See - what is today's situation?

 Think - define goals/objectives
 Draw - map a route to achieving the goals/objectives

In other terms strategic planning can be as follows:

 Vision - Define the vision and set a mission statement with hierarchy of goals and objectives
 SWOT - Analysis conducted according to the desired goals
 Formulate - Formulate actions and processes to be taken to attain these goals
 Implement - Implementation of the agreed upon processes
 Control - Monitor and get feedback from implemented processes to fully control the operation

Goals, objectives and targets

Strategic planning is a very important business activity. It is also important in the public sector areas
such as education. It is practiced widely informally and formally. Strategic planning and decision
processes should end with objectives and a roadmap of ways to achieve them.

One of the core goals when drafting a strategic plan is to develop it in a way that is easily translatable
into action plans. Most strategic plans address high level initiatives and over-arching goals, but don’t
get articulated (translated) into day-to-day projects and tasks that will be required to achieve the plan.
Terminology or word choice, as well as the level a plan is written, are both examples of easy ways to
fail at translating your strategic plan in a way that makes sense and is executable to others. Often,

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plans are filled with conceptual terms which don’t tie into day-to-day realities for the staff expected to
carry out the plan.

The following terms have been used in strategic planning: desired end states, plans, policies, goals,
objectives, strategies, tactics and actions. Definitions vary, overlap and fail to achieve clarity. The
most common of these concepts are specific, time bound statements of intended future results and
general and continuing statements of intended future results, which most models refer to as either
goals or objectives (sometimes interchangeably).

One model of organizing objectives uses hierarchies. The items listed above may be organized in a
hierarchy of means and ends and numbered as follows: Top Rank Objective (TRO), Second Rank
Objective, Third Rank Objective, etc. From any rank, the objective in a lower rank answers to the
question "How?" and the objective in a higher rank answers to the question "Why?" The exception is
the Top Rank Objective (TRO): there is no answer to the "Why?" question. That is how the TRO is
defined.

People typically have several goals at the same time. "Goal congruency" refers to how well the goals
combine with each other. Does goal A appear compatible with goal B? Do they fit together to form a
unified strategy? "Goal hierarchy" consists of the nesting of one or more goals within other goal(s).

One approach recommends having short-term goals, medium-term goals, and long-term goals. In this
model, one can expect to attain short-term goals fairly easily: they stand just slightly above one's
reach. At the other extreme, long-term goals appear very difficult, almost impossible to
attain. Strategic management jargon sometimes refers to "Big Hairy Audacious Goals" (BHAGs) in
this context. Using one goal as a stepping-stone to the next involves goal sequencing. A person or
group starts by attaining the easy short-term goals, then steps up to the medium-term, then to the
long-term goals. Goal sequencing can create a "goal stairway". In an organizational setting, the
organization may co-ordinate goals so that they do not conflict with each other. The goals of one part
of the organization should mesh compatibly with those of other parts of the organization.

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Five Products of Strategic Planning

The overall goal of strategic planning is to produce a workable plan. Along the way, we will develop,
evaluate, and refine these five products:

1. Environmental issues and trends: Factors that may impact the organization and the way it
conducts business. Internal issues include staff, services, skills, resources, and needs.
External factors include such things as threats of outsourcing. A strategic planning committee
compiles an environmental scan, a body of information about the environment. Broad issues,
singled out as potentially having significant effect on the facilities planning and management
industry, are referred to as mega issues.
2. Needs Survey: Provides information from clients and peer institutions. The prioritized needs
and expectations resulting from the survey are crucial as a basis for setting objectives.
3. Mission Statement: Defines the organization’s fundamental reason for existence and
establishes the scope of its business.
4. General Objectives: Broadly describe the results of what the organization wants to achieve
in light of needs and relevant issues.
5. Strategies: Specific, measurable actions and directions designed to reach the objectives
established. Strategies are fulfilled through creation, continuation, change, or elimination of
programs.

The mission statement, general objectives, and strategies are the meat of the plan. The issues and
results of the needs survey are the input into the plan, and they provide the basic assumptions for
developing a realistic and feasible plan.

Keys to Successful Implementation

Suppose our organization thoroughly develops all five products of strategic planning, completes the
process, and comes up with a strategic plan. Everyone has the best intentions but when we get back
to our units, we are overwhelmed with daily details. Soon it's "business as usual," the plan sits on the
shelf, and before we know it, another year has passed. However, this need not happen.

The three major keys to successful strategic planning and implementation are commitment, credibility,
and communication.

Up-front commitment by the leaders must include an adherence to the full and thorough process of
strategic planning. There must also be a commitment to implementing the strategies recommended by
the strategic planning committee.

The leaders should implement programs and services and commit allocations to meet the objectives
of the strategic plan at a level that is "doable" for the organization and level of activity. As one person
has put it, "To commit to plan, is to commit to change."

A strategic planning committee researches, collects input, and makes recommendations. But, it is up
to member of the organization to implement the recommendations.

Credibility is created and maintained by following these three guidelines: representative participation,
adherence to the complete process, and clear documentation.

The strategic planning committee should have representatives from all areas of the organization and
adhere to the steps of the process. While the actual logistics of research and implementing the plan
can be tailored to the available resources, all five products should be carefully developed and
evaluated.

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The committee should document all of its research and activities to serve as the basis for the strategic
plan and its background materials. It will also serve as a clear record of the committee's activities
open for all to see and evaluate. There should be nothing exclusive or secret about strategic planning.
It should be open to all for review and input.

Input, feedback, and understanding are crucial at every step. A key concept to remember is that
strategic planning is a cooperative and participatory process. Everyone should have input and, ideally,
everyone should feel a sense of ownership over the final plan. Such personal commitment will
facilitate the implementation process.

It is important to explain the principles and goals of strategic planning to everyone in the organization.
We need to assure each person that although he or she may not be on the committee, everyone can
have input and evaluate the recommendations. It is up to the staff and committees to determine how
to fulfill each objective. The strategic planning committee makes general recommends on what they
think should be done. The leadership, operating committees, and staff determine how it will be done.

An additional aid to implement the strategic plan is to create an integrated system by which the
strategic plan becomes the "benchmark" (measuring stick) for progress in our organization. It then
becomes a system of accountability.

The best way to set up an integrated system is for the directors to accept the strategic plan and make
the mission statement part of the directives. The strategic plan can then become the context from
which programs and services flow.

Strategic planning is the key to assuring that our organization is prepared for the challenges of
tomorrow.

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Examples of a company's stakeholders

Stakeholders Examples of interests

Government taxation, VAT, legislation, low unemployment, truthful reporting

Employees rates of pay, job security, compensation, respect, truthful communication

Customers value, quality, customer care, ethical products

providers of products and services used in the end product for the customer, equitable
Suppliers
business opportunities

Creditors credit score, new contracts, liquidity

Community jobs, involvement, environmental protection, shares, truthful communication

Trade
quality, Staff protection, jobs
Unions

The Six Forces Model is a market opportunities analysis model, as an extension to Porter's Five

Forces Model and is more robust than a standard SWOT analysis.

The following forces are identified:

 Competition
 New entrants
 End users/Buyers
 Suppliers
 Substitutes
 Complementary products/ The government/ The public

SWOT analysis is a strategic planning method used to evaluate

the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture.

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It involves specifying the objective of the business venture or project and identifying the internal and
external factors that are favorable and unfavorable to achieve that objective. The technique is credited
to Albert Humphrey, who led a convention at Stanford University in the 1960s and 1970s using data
from Fortune 500 companies.

A SWOT analysis must first start with defining a desired end state or objective. A SWOT analysis may
be incorporated into the strategic planning model. Strategic Planning has been the subject of much
research.[citation needed]

 Strengths: characteristics of the business or team that give it an advantage over others in
the industry.
 Weaknesses: are characteristics that place the firm at a disadvantage relative to others.
 Opportunities: external chances to make greater sales or profits in the environment.
 Threats: external elements in the environment that could cause trouble for the business.

Identification of SWOTs is essential because subsequent steps in the process of planning for
achievement of the selected objective may be derived from the SWOTs.

First, the decision makers have to determine whether the objective is attainable, given the
SWOTs. If the objective is NOT attainable a different objective must be selected and the process
repeated.

Another way of utilizing SWOT is matching and converting.

Matching is used to find competitive advantages by matching the strengths to opportunities.

Converting is to apply conversion strategies to convert weaknesses or threats into strengths or

opportunities.

An example of conversion strategy is to find new markets.

If the threats or weaknesses cannot be converted a company should try to minimize or avoid them.

SWOT analysis may limit the strategies considered in the evaluation. J. Scott Armstrong notes that
"people who use SWOT might conclude that they have done an adequate job of planning and ignore
such sensible things as defining the firm's objectives or calculating ROI for alternate
strategies." [2] Findings from Menon et al. (1999) [3] and Hill and Westbrook (1997) [4] have shown that
SWOT may harm performance. As an alternative to SWOT, Armstrong describes a 5-step approach
alternative that leads to better corporate performance.

The aim of any SWOT analysis is to identify the key internal and external factors that are important to
achieving the objective. These come from within the company's unique value chain. SWOT analysis
groups key pieces of information into two main categories:

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  Internal factors – The strengths and weaknesses internal to the organization.
 External factors – The opportunities and threats presented by the external environment to
the organization. -

The internal factors may be viewed as strengths or weaknesses depending upon their impact on
the organization's objectives. What may represent strengths with respect to one objective may
be weaknesses for another objective. The factors may include all of the 4P's; as well as
personnel, finance, manufacturing capabilities, and so on. The external factors may include
macroeconomic matters, technological change, legislation, and socio-cultural changes, as well
as changes in the marketplace or competitive position. The results are often presented in the
form of a matrix.

SWOT analysis is just one method of categorization and has its own weaknesses. For example,
it may tend to persuade companies to compile lists rather than think about what is actually
important in achieving objectives. It also presents the resulting lists uncritically and without clear
prioritization so that, for example, weak opportunities may appear to balance strong threats.

It is prudent not to eliminate too quickly any candidate SWOT entry. The importance of individual
SWOTs will be revealed by the value of the strategies it generates. A SWOT item that produces
valuable strategies is important. A SWOT item that generates no strategies is not important.

Corporate planning
As part of the development of strategies and plans to enable the organization to achieve its
objectives, then that organization will use a systematic/rigorous process known as corporate planning.
SWOT alongside PEST/PESTLE can be used as a basis for the analysis of business and
environmental factors.[7]

 Set objectives – defining what the organization is going to do

 Environmental scanning
 Internal appraisals of the organization's SWOT, this needs to include an assessment
of the present situation as well as a portfolio of products/services and an analysis of
the product/service life cycle
 Analysis of existing strategies, this should determine relevance from the results of an
internal/external appraisal. This may include gap analysis which will look at environmental
factors
 Strategic Issues defined – key factors in the development of a corporate plan which
needs to be addressed by the organization
 Develop new/revised strategies – revised analysis of strategic issues may mean the
objectives need to change

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  Establish critical success factors – the achievement of objectives and strategy
implementation
 Preparation of operational, resource, projects plans for strategy implementation
 Monitoring results – mapping against plans, taking corrective action which may mean
amending objectives/strategies.

PEST analysis
PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a
framework of macro-environmental factors used in the environmental scanningcomponent of strategic
management. Some analysts added Legal and rearranged the mnemonic to SLEPT;
[1]
 inserting Environmental factors expanded it to PESTEL or PESTLE, which is popular in the United
Kingdom.[2] The model has recently been further extended to STEEPLE and STEEPLED, adding
education and demographic factors. It is a part of the external analysis when conducting a strategic
analysis or doing market research, and gives an overview of the different macroenvironmental factors
that the company has to take into consideration. It is a useful strategic tool for understanding market
growth or decline, business position, potential and direction for operations.
Composition

 Political factors, are how and to what degree a government intervenes in the economy.

Specifically, political factors include areas such as tax policy, labour law, environmental law,trade
restrictions, tariffs, and political stability. Political factors may also include goods and services
which the government wants to provide or be provided (merit goods) and those that the
government does not want to be provided (demerit goods or merit bads). Furthermore,
governments have great influence on the health, education, and infrastructure of a nation.

 Economic factors include economic growth, interest rates, exchange rates and the inflation

rate. These factors have major impacts on how businesses operate and make decisions. For
example, interest rates affect a firm's cost of capital and therefore to what extent a business
grows and expands. Exchange rates affect the costs of exporting goods and the supply and price
of imported goods in an economy

 Social factors include the cultural aspects and include health consciousness, population
growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors
affect the demand for a company's products and how that company operates. For example, an
aging population may imply a smaller and less-willing workforce (thus increasing the cost of

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 labor). Furthermore, companies may change various management strategies to adapt to these
social trends (such as recruiting older workers).

 Technological factors include technological aspects such as R&D activity, automation,

technology incentives and the rate of technological change. They can determine barriers to entry,
minimum efficient production level and influence outsourcing decisions. Furthermore,
technological shifts can affect costs, quality, and lead to innovation.

 Environmental factors include ecological and environmental aspects such as weather,

climate, and climate change, which may especially affect industries such as tourism, farming, and
insurance. Furthermore, growing awareness of the potential impacts of climate change is affecting
how companies operate and the products they offer, both creating new markets and diminishing
or destroying existing ones.

 Legal factors include discrimination law, consumer law, antitrust law, employment law,

and health and safety law. These factors can affect how a company operates, its costs, and the
demand for its products.

Rate of return
In finance, rate of return (ROR), also known as return on investment (ROI), rate of profit or
sometimes just return, is the ratio of money gained or lost (whether realized or unrealized) on

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an investment relative to the amount of money invested. The amount of money gained or lost may be
referred to as interest, profit/loss, gain/loss, or net income/loss. The money invested may be referred
to as the asset, capital, principal, or the cost basis of the investment. ROI is usually expressed as a
percentage.

Time value of money

Investments generate cash flow to the investor to compensate the investor for the time value of
money.

Except for rare periods of significant deflation where the opposite may be true, a dollar in cash is
worth less today than it was yesterday, and worth more today than it will be worth tomorrow. The main
factors that are used by investors to determine the rate of return at which they are willing to invest
money include:

 estimates of future inflation rates

 estimates regarding the risk of the investment (e.g. how likely it is that investors will receive
regular interest/dividend payments and the return of their full capital)
 whether or not the investors want the money available (“liquid”) for other uses.

The time value of money is reflected in the interest rates that banks offer for deposits, and also in the
interest rates that banks charge for loans such as home mortgages. The “risk-free” rate is the rate
on U.S. Treasury Bills, because this is the highest rate available without risking capital.

The rate of return which an investor expects from an investment is called the Discount Rate. Each
investment has a different discount rate, based on the cash flow expected in future from the
investment. The higher the risk, the higher the discount rate (rate of return) the investor will demand
from the investment.

Rate of Return and Return on Investment indicate cash flow from an investment to the investor over
a specified period of time, usually a year.

ROI is a measure of investment profitability, not a measure of investment size. While compound
interest and dividend reinvestment can increase the size of the investment (thus potentially yielding a
higher dollar return to the investor), Return on Investment is a percentage return based on capital
invested.

In general, the higher the investment risk, the greater the potential investment return, and the greater
the potential investment loss.

Critical success factor (CSF) is the term for an element that is necessary for an
organization or project to achieve its mission. It is a critical factor or activity required for ensuring the
success of a company or an organization. The term was initially used in the world of data analysis,
and business analysis. For example, a CSF for a successful Information Technology(IT) project is
user involvement.[1] "Critical success factors are those few things that must go well to ensure success

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for a manager or an organization, and, therefore, they represent those managerial or enterprise area,
that must be given special and continual attention to bring about high performance. CSFs include
issues vital to an organization's current operating activities and to its future success." [2]

Strategists should ask themselves 'Why would customers choose us?'. The answer is typically a
critical success factor.

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