Question

Describe the different strategic objectives we use during the strategic planning process?

Answer 1

The traditional methods of planning including “forecast based” and “budget-based” planning may prove to be insufficient for corporations in the highly volatile and competitive business environments of modern times. Strategic planning is based on an assessment of both internal as well as external factors and situations affecting a firm and defines the objectives clearly. Strategic planning differs from financial planning in that the former relates to the position of a company in a market and includes measures like reputation management and market share management among others. Financial planning, on the other hand, includes the methods for growth of revenues and achievement of sales target, among other financial goals.

Strategic planning emphasizes the bigger goals and accomplishments that an organization wishes to achieve, and which have a definite impact on the sustainability of a firm, by connecting them to the actionable plans. The big-picture goals called as “strategic objectives” may relate to the fulfillment of the mission of a company, and in most cases may relate to some performance (for instance increasing stability through diversification, launching a new product, decreasing delivery time for a given product for customer happiness and others).

Therefore, strategic planning creates a fine balance between the vision and mission of a firm. We can take an example of Disney here. The vision of Disney is to make people and customers happy while its mission is to focus on entertainment. A strategic plan (for instance opening of a new theme and fun park for increasing visibility) forwarded by the company will try to create a balance and will provide the actionable courses through which the practical (for instance greater visibility and market base expansion) and the visionary (for instance increasing customer happiness) objectives can be met.

An environmental scan that includes the analysis of internal as well as external macro-environment factors affecting a company provides to it important information regarding its strength, weaknesses, opportunities, and threats. Porter's five forces analysis, SWOT analysis, as well as PESTLE (political, economic, socio-cultural, technological, legal, and environmental) analysis brings to fore the hidden information and facts about all the relevant developments and aspects of the various factors affecting the business environment in which a company operates. The objectives for strategic planning emanate out of this analysis. For instance, a SWOT analysis may reveal the competitive advantages a firm has, and it may implement a strategic plan to exploit these advantages to an even greater extent. An external analysis, for instance in areas related to the legal environment of a firm, may provide information regarding the best course of market entry in a new market.

A strategic objective is hence a need for a business, which may also have long-term dimensions to it. In the end, however, a strategic objective is clearly defined in measurable and quantifiable terms. For instance, a strategic objective can be to reduce the delivery times to ensure customer satisfaction and to reduce costs associated with operations. A strategic objective must be met for a strategy to succeed.

The three types of business strategies may have different kinds of objectives. For instance, a business strategy creates the framework through which the company will approach the marketplace to participate and to win. An operational strategy will provide for the translation of a business strategy into a credible, actionable, and cohesive implementation plan. Transformational strategies are used lesser as they include a wholesale and complete transformation of a business organization.

Once the direction of activities is decided, resources and manpower are committed for its fulfillment, and priorities are set. Organizations also use many different methods for monitoring and measuring progress for the fulfillment of the strategic plans, and the attainment of strategic objectives. Some of these methods include “strategic map” and “scorecard” among others.