The planning process is comprised of two key parts—strategic planning and operational planning. Strategic planning establishes an organization’s long-term vision, objectives and strategies required to achieve the objectives. Operational planning is the execution phase. It outlines a framework for implementing the strategies and achieving the objectives. Strategic Plan The strategic plan covers a three to five year time frame. Annual reviews are conducted to assess if the plan is on track and if changes are required. An analysis of strengths, weaknesses, opportunities and threats provides a starting point.
The strategic plan identifies the performance measures used to monitor progress towards achieving the objectives. Strategic plans are developed by senior management although departments can develop their own strategic plans under the umbrella of the corporate-level plan. Operational Plan Operational planning covers a one year time frame. It outlines the actions required to implement each strategy. It identifies the resources needed, responsibilities and time frames for implementing actions. Operational plans govern day-to-day business and lay the foundation for preparing the annual budget. Personal objectives are defined at this level.
The strategic plan lays the foundation for the operational plan. However, operational planning identifies strengths and weaknesses in the organization that, in turn, influence strategic direction. Neither process is developed in isolation from the other. The strategic objectives drive the programs and projects at the operational level. Without this linkage, projects cannot secure resources. Performance measures are identified at the strategic level and implemented at the operational level. Each functional area, such as customer service or manufacturing, requires an operational plan to outline actions that will achieve the desired results.
A changing environment can render strategies obsolete. Organizations need to monitor the environment and revisit strategies as circumstances change. For example, a new competitor entering the market necessitates a strategic review to reflect this new threat. Organizations might feel that long-term planning is not appropriate in rapidly changing environments. Nevertheless, an organization will benefit by having a vision and strategic direction by identifying and capitalizing on opportunities. In some cases, the planning cycle may be shortened to allow for rapid response. Organizations can get bogged down in day-to-day operations.
As long as sales are going well and a company is making money, management might not feel the need to change direction. The problem with operating in the here and now is that a company is not capitalizing on opportunities and will miss out on future growth. Strategic planning and successful execution keep an organization on its feet, enabling it to establish a leadership position in the market. Executives can lose touch with employees and may not have a hand on the pulse of the organization. If the strategic plan is developed in isolation, the operational level managers might not buy into the process, and the execution phase will not succeed.
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