TOPIC: STRATEGIC PLANNING
1. A plan is a detailed outline of steps to achieve a specific goal. A strategic plan is a big-
picture guide that outlines long-term goals and the best ways to reach them, considering the
broader vision and mission of an organization.
2 a. Statement of Purpose: Clearly define the reason for the strategic plan, outlining
the organization's core purpose and what it aims to achieve.
b. Actions to Take: Specify the steps and activities that need to be carried out to
implement the strategic plan effectively.
c. Resources to Use: Identify the necessary tools, funds, personnel, and other
resources required to support and execute the plan.
d. Goals to Meet: Clearly state the measurable objectives and outcomes the
organization seeks to accomplish through the strategic plan.
e. Time Schedules to Follow: Establish timelines and deadlines for each phase of the
plan to ensure progress is made within specified timeframes.
f. Assumptions Made: Highlight any underlying assumptions or factors that the plan
relies on, making them explicit for better understanding and evaluation.
3. a. Comparison to the Prior Year Plan: Present a concise overview comparing the
current strategic plan with the previous year's, highlighting key differences, achievements,
and areas of improvement.
b. Major Planning Assumptions: Clearly articulate the fundamental assumptions
underlying the strategic plan to provide the board with a foundation for understanding the
context and potential risks.
c. Growth Strategy: Outline the proposed approach for expanding the organization,
whether through market penetration, product development, diversification, or other
strategic initiatives.
d. Business Goals: Clearly communicate the specific and measurable objectives the
organization aims to achieve, providing a roadmap for the board to assess progress.
e. SWOT Analysis & Profit Plans for Existing Business: Share insights into the
organization's strengths, weaknesses, opportunities, and threats, along with profit plans for
the existing business, offering a comprehensive view of the current state and future outlook.
f. Programs and Strategies for New Business Development: Detail the planned
initiatives and strategies for venturing into new business areas, ensuring the board is
informed about efforts to expand and diversify.
g. Financial Summaries: Provide summarized financial information, highlighting
major factors, trends, and return on assets, enabling the board to assess the financial health
and performance of the organization.
4. a. Strategic Plan: In the strategic planning process, consider the organization's long-
term vision, set clear goals, identify key strategies to achieve them, analyze the external
environment, and determine the allocation of resources to ensure alignment with the
overall mission and vision.
b. Development Plan: When creating a development plan, focus on enhancing the
skills and capabilities of individuals within the organization. This involves assessing current
competencies, setting training and development goals, and implementing strategies to
cultivate talent, ensuring a skilled and adaptable workforce.
c. Operations Plan: In the operations planning phase, delve into the day-to-day
activities and processes that drive the organization. This includes outlining specific tasks,
defining responsibilities, establishing workflows, and optimizing efficiency to ensure that
daily operations support the broader strategic goals outlined in the strategic plan.
5. The company's planning cycle is a recurring process where it sets goals, makes
strategic decisions, and evaluates performance over a specific period. To initiate this
planning, companies typically consider processes such as environmental analysis, goal
setting, strategy development, resource allocation, implementation, monitoring progress,
and making adjustments as needed to ensure continuous improvement and adaptability to
changing circumstances.
6. a. External Environment:
Economic: Assess how economic conditions, such as inflation rates and employment
levels, might impact the company's operations, demand for products, and overall financial
stability.
Technical: Consider technological advancements and changes, evaluating how they
might affect the company's competitiveness, efficiency, and ability to innovate.
Political: Examine political factors like government policies and stability, assessing
potential impacts on regulations, trade, and overall business operations.
Social: Analyze societal trends, cultural shifts, and demographic changes to
understand consumer behavior, preferences, and potential shifts in market demand.
b. Internal Environment:
Company Strengths and Weaknesses: Identify and evaluate internal factors that
contribute to the company's competitive advantage (strengths) or pose challenges
(weaknesses), such as skilled workforce, unique capabilities, or operational inefficiencies.
Status of Each Product in Each Market Segment: Assess the performance of each
product in various market segments, considering factors like sales trends, customer
satisfaction, and market share to inform strategic decisions and resource allocation.
7.The CEO plays a crucial role in planning by setting the overall vision, goals, and strategic
direction of the company, making key decisions, and ensuring alignment among various
departments to drive the organization toward long-term success.
8. a. Corporate Mission:
Role in Early Phases: The controller helps define the financial implications of the
corporate mission by assessing the resources needed and estimating potential costs and
revenue.
Example: If a company's mission is to become a leader in sustainable technology, the
controller would analyze the financial requirements for research and development,
production, and marketing initiatives supporting this mission.
b. Corporate Long-Range Objective:
Role in Early Phases: The controller collaborates in setting financial targets aligned with long-
range objectives, ensuring realistic and measurable financial goals are integrated into the
strategic plan.
Example: If a long-range objective is to expand market share by 20%, the controller
works on financial projections to support this growth, considering investment needs and
expected returns.
c. Developing Strategies:
Role in Early Phases: The controller aids in assessing the financial feasibility of various
strategic options, helping to choose strategies that align with the company's financial
capacity and objectives.
Example: When considering a strategy to enter new international markets, the
controller analyzes the financial risks and requirements, providing input on potential costs,
revenue projections, and necessary investments.
9. Lead Time for Product Development:
Guide in Selecting Planning Time Span: Consider the duration it takes to develop
new products from conception to market-ready, ensuring the planning period allows for
adequate lead time.
Example: If a company typically takes two years to develop and launch a new
product, the planning horizon should cover at least that timeframe.
b. Life Span of the Product:
Guide in Selecting Planning Time Span: Align the planning period with the expected
life span of the product to account for factors like market saturation, technological
advancements, and changing consumer preferences.
Example: If a product is anticipated to remain relevant for five years, the planning
horizon should extend beyond that period.
c. Market Development Time:
Guide in Selecting Planning Time Span: Factor in the time required to enter new
markets or expand existing ones, ensuring the planning horizon considers the challenges and
opportunities associated with market development.
Example: If entering a new international market typically takes three years, the
planning period should encompass this duration.
d. Development Time for Raw Materials and Components:
Guide in Selecting Planning Time Span: Take into account the lead time for sourcing
and developing raw materials and components essential for the production process.
Example: If it takes six months to secure a stable supply of a critical raw material, the
planning horizon should cover at least that timeframe.
e. Time for Construction of Physical Facilities:
Guide in Selecting Planning Time Span: Consider the time required for constructing
new facilities or expanding existing ones to support the company's growth.
Example: If building a new manufacturing plant typically takes two years, the
planning period should extend to accommodate this construction timeline.
f. Payout Period for Capital Investment:
Guide in Selecting Planning Time Span: Align the planning horizon with the expected
payout period for major capital investments, ensuring a realistic assessment of returns over
time.
Example: If a significant investment is expected to have a payback period of five
years, the planning period should cover at least that duration.
10. a. Suitable: Long-term objectives must align with the business mission and be
appropriate for the organization's purpose and values.
b. Feasible: Objectives should be realistically achievable within the organization's
capabilities and available resources.
c. Compatible: Objectives need to be consistent with each other and not conflict,
ensuring a cohesive and integrated approach to achieving the overall mission.
d. Measurable: Objectives should be quantifiable to provide clear criteria for success
and enable tracking progress over time.
e. Flexible: Long-term objectives should allow for adaptation to changing
circumstances, ensuring the organization can adjust strategies in response to evolving
internal and external factors.
f. Motivating: Objectives should inspire and energize employees, stakeholders, and
the organization as a whole, fostering commitment and enthusiasm toward achieving the
desired outcomes.
11. a. Use Past Performance:
Determining Points of Reference: Evaluate the organization's historical performance
as a benchmark, considering achievements and shortcomings to set realistic long-term
objectives.
Example: If the company achieved a 5% annual revenue growth in the past, using
this as a reference point when setting future growth objectives.
b. Adjust Past Performance for the Impact of Expected Forces:
Determining Points of Reference: Consider external factors that may impact future
performance, such as economic changes or technological advancements, and adjust past
performance accordingly.
Example: If a company historically grew at 3%, but a new market trend is expected
to positively impact sales, adjusting the reference point to account for this potential
increase.
c. Analyze Competitors:
Determining Points of Reference: Assess the performance of industry competitors to
establish realistic benchmarks and objectives.
Example: If competitors consistently achieve a 10% profit margin, using this as a
reference point when setting the company's own profit margin objectives.
d. Employ Environmental, Situational, and Strategic Analyses:
Determining Points of Reference: Conduct thorough analyses of the business
environment, current situations, and strategic considerations to identify relevant points of
reference for setting objectives.
Example: If a company is entering a new market, analyzing the environmental
factors, situational challenges, and strategic opportunities can guide the establishment of
realistic objectives for market penetration.
