Essential elements of strategic planning
Generally the following five elements are considered very essential regarding strategic planning. They are
1. Identify problems and opportunities that exist
Success of a company is characterized by a good environment for the emergence of new thoughts and ideas. A company should look for new opportunities and identify various problems. They represent some of the most favorable products of good strategic planning.
2. Fix your target
Setting targets can not be considered independent of identifying opportunities. If the target is to achieve a turnover of 15% per year, financial planning is essential to set apart as much resources as necessary to generate ideas in contrast to the situation in which the target is to prevent growth. Some even agree that head of administration should set targets and just leave the process to their subordinates.
3. Design a procedure
Design a procedure to find all possible solutions to problems, or ways that the company can continue to find solutions to problems. Suppose a company decides to venture into energy industry, they have to decide what kind of products they need to offer, ways to promote them, how to compete with their competitors.
For example you may be thinking about different alternatives such as the, solar energy, wind, water, organic substances, and then decide Solar energy industry as most suitable business model for you.
4. Select the best solution
Assume that there are always solutions to all the problems, and that the objectives of the company are well defined. The power to choose the best solution even with well-defined goals, is a very difficult task.
5. Control procedures
Having some control procedures to ensure that results were obtained with the best possible solution. The way we performed control stage will depend on the preferences and style of management.
The above mentioned elements do not reveal anything about the procedures in which these are to be implemented. But they are broad enough to cover the essential features of financial decisions.
For example if the goal is to have a reasonable growth and with little risk, the amount of risk that is adjudged as acceptable for the owners of the company, will greatly affect the amount of debt that is to be used to finance the corporation.