Before and after Phases of Strategic Planning

The purpose of this paper is to explain the things to be done before and after starting with the strategic planning work. Before beginning with strategic planning, businesses must have articulated their missions and visions, and identified their basic policies. For this reason, proper formulation of mission, vision and basic policies will play a determining role for the success of strategic plan. Strategic plan outlines the path between the current status of business and the desired status to achieve. It helps the business to establish its objectives, goals as well as the decisions to achieve these objectives and goals. It involves a long-term and prospective perspective. Strategic plan provides guidance for the preparation of functional plans and business budget in such a manner that they reflect the objectives, goals and grand strategies of the strategic plan during the implementation, as well as for basing resource allocation on priorities. In short, this paper helps businesses to define their integrated strategic plans with their vision and functional plans by offering them a comprehensive guideline.


Introduction
The purpose of this paper is to explain the things to be done before and after starting with the strategic planning work. Before beginning with strategic planning, businesses must have articulated their missions and visions, and identified their basic policies. For this reason, proper formulation of mission, vision and basic policies will play a determining role for the success of strategic plan (Figure 1).
Strategic plan outlines the path between the current status of business and the desired status to achieve. It helps the business to establish its objectives, goals as well as the decisions to achieve these objectives and goals. It involves a long-term and prospective perspective.
Strategic plan provides guidance for the preparation of functional plans and business budget in such a manner that they reflect the objectives, goals and grand strategies of the strategic plan during the implementation, as well as for basing resource allocation on priorities.
Functional plans help in implementation of strategic plans by organizing and activating specific subunits of the business (marketing, financing, production, etc.) to pursue the business strategy in daily activities. Greatest responsibilities are in the implementation or execution of a strategic plan. Thus, functional plans directly address such issues as the efficiency and effectiveness of production and marketing systems, the quality and extent of customer service, and the success of particular products in increasing their market share.
Three basic characteristics differentiate functional plans and business strategies, which are as follows: 1. Time horizon covered 2. Specification level 3. Participation in the development For functional plans, time horizon is usually short as for identifying and coordinating short-term actions undertaken in a year or less.  Shorter time horizon is critical to implementing a business strategy for two reasons. First, it focuses functional managers' attention on what needs to be done now to make the business strategy work. Second, the shorter time horizon allows functional managers to recognize current conditions and adjust to changing conditions in developing functional plans.
Functional plans are more specific than a business strategy to guide functional actions taken in key parts of the company to implement business strategy. Business strategy provides general direction. Functional plans give specific guidance to managers responsible for accomplishing annual objectives to ensure that managers know how to meet annual objectives.
Specific functional plans improve the willingness of operating managers to implement strategic decisions, when those decisions represent major changes in the current strategy of the firm.
Functional plans are delegated by the business-level managers to principal subordinates charged with running the operating areas of the business (Figure 2). Operating managers similarly establish annual objectives and operating plans that help accomplish business objectives and strategies.
The involvement of operating managers contributes to successful implementation. Most critical, active involvement increases commitment to the strategies developed.

Vision, Mission and Basic Policies
Mission, vision and basic policies are elements that form the corporate identity of a business. A business cannot be identified solely by its name, logo or workflow. The know-how, experience and expertise of the business and the corporate attitude it has developed create a specific corporate identity. One of the functions of strategic planning is to establish a stronger link between the corporate identity of the business and the products/services it offers.
While a significant portion of employees in a business have an idea about the identity of the unit in which they work, they hardly conceive a corporate identity that involves the whole business within the framework of mission, vision and basic policies. Strategic planning guides individuals through understanding this integrity in a disciplined manner.
As a result of the formulation of mission, vision and basic policies, the framework in which the business will reach the desired point will come out through establishment of strategic objectives and goals. For this reason, proper formulation of mission, vision and basic policies will play a determining role for the success of a strategic plan.

Vision
Vision symbolizes the future of a business. It is a strong expression of what the business wants to achieve in the long term. Vision is a connective element among the different units of a business. Therefore, it plays a much more important role in businesses that fulfill a multitude of functions.
Vision is an ambitious albeit attainable expression of the future the business wants for itself. This expression of future must also encourage employees and decision-makers to move forward. Together with statement of mission, vision forms the roof of the strategic planning process of the business:  It describes a future that is more different and better than today.  It gives hope to people that it can be achieved.  It is inspiring and encourages people to achieve the objective.  It must be communicated to the people within the organization as a set of goals.  Must be properly shaped.  Must be refined.  Must be achievable.  Helps to define goals.  Guides the generation of strategy.  Must be short, consistent, focused; however flexible.
A strong vision should have the following characteristics:  Idealist; it must be cordially developed and felt.  Original; it has a clear affiliation with the business.  Distinctive; it distinguishes the business from others.  Attractive; it attracts the attention of people both within and outside the business.
Understanding the vision of your business, you need to ask the following questions:  Does your business have a vision? What is that vision?  How do you communicate your vision to your clients / employees / vendors?  How do you measure your progress towards your vision?
For developing a vision, Wickham [3] stated that the following important questions are necessary to be asked:  What will be the source of the value to be created in the new world?  Who will be involved in this new world? (i.e. Who are the stakeholders?)  Why will those involved be better off than they are at present?  In what way will they gain (financially, socially, etc.?)  What new relationships will need to be developed?  What is the nature of the relationships that will be built?

Mission
Mission is the reason for being of a business; it clearly states what the business does, how and for whom it works. Mission forms the basis of strategic planning. As stated by Wickham [3], mission statement of a business is an umbrella concept that involves all products/services and activities offered by the business:  Codifies (i.e. gives form and communicates) vision  Encourages analysis of the venture  Defines the scope of the business (i.e what to achieve and how to achieve)  Provides a guide for setting objectives  Clarifies strategic options (i.e guidance on what paths might be taken)  Communication tool  Constant point of reference during periods of change  It does not involve time dimension  It is expressed in a brief, clear and striking fashion Points to consider while establishing a mission are stated by Wickham [3] as:  Product/service scope  Customer groups served  Benefits offered and customer needs served  Sources of sustainable competitive advantage  What the business aims to achieve (i.e. financial performance, market leader, significant player, etc.)

Definition of mission:
Wickham [3] stated that, as an example, the definition of mission could be "The {business} aims to use its {competitive advantage} to achieve/maintain {aspirations} in providing {product scope} which offers {benefits} to satisfy the {needs} of {customer scope}. In doing this the business will at all times strive to uphold {values}."  It must establish the direction of strategic planning by dwelling on the sanctions on groups with critical role in the performance of the business, such as clients, shareholders, employees and vendors.  It must identify how the business will differ in the future.  It must include the values that create the corporate identity of the business and define the social rationale for its long-term existence.  Uniformity of objectives must be ensured within the business, through the involvement of management.  It must express how clients perceive the business.  It must be in the form of a message to be conveyed within and/or outside the sector, reflecting the image, activities and objective of the business.

Examples of mission:
 Honda: "We are dedicated to supplying products of the highest quality, yet at a reasonable price for worldwide customer satisfaction."  Walmart: "Enable the middle class to buy the goods which upper class can buy."  Southwest: "Dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit."

Basic Policies
Basic policies are an expression of the basic values of a business. They express the values, management style and codes of conduct of the business. Examples of basic policies may include transparency, equality, participation, moral values and quality understanding.
Laying down the basic policies of a business is important for strategic planning, since policies forms the basis of the values and beliefs behind the vision and mission of a business as stated by Wheelen and Hunger [7]. These policies provide guidance for the decisions, choices and strategies of a business. Policies realized are strong instruments in changing business identity and motivating employees.
Policies may be written and formal or unwritten and informal. The positive reasons for informal, unwritten policies are usually associated with some strategic need for competitive secrecy. However, unwritten, informal policies may be contrary to the long-term success of a strategy.
A well-expressed statement of policies must be as follows:  It must set out basic values and beliefs in a clear and precise manner.  It must state the main idea relating to the conditions under which the employees will best perform their tasks.  It must support the system and processes that would enable the business to achieve its vision.
What should the definition of basic policies include?  What is the operational philosophy of the business?  What are the values, standards and ideals forming the basis of the operations of the business?  What are the values and beliefs adopted by the employees of the business?
Statement of policies concern three main areas:  People: Employees of the business and people outside the business.  Processes: Management, decision-making and service production processes of the business.  Performance: Expectations regarding the quality of services and/or products produced by the business.
Examples of statement of policies are as follows:  "Participation, transparency and equality are essential in the decision making process."  "We do not compromise on quality in the services we offer to our clients."

Strategic Planning
Strategic planning outlines the path between the current status of the business and the desired status to attain. It requires the business to identify its objectives, goals and the decisions to enable achievement of these objectives and goals. It involves a long-term prospective perspective. Strategic plan provides guidance for the preparation of functional plans and business budget in such a manner that they reflect the objectives, goals and grand strategies of the strategic plan during the implementation phase, as well as for accountability and basing resource allocation on priorities:  It must be consistent with the mission and vision.  It consists of steps required to be taken so that the business can achieve its goals.  It needs to be reviewed constantly.  It must provide guidance for the organizational structure.
In this framework, strategic planning can be defined as follows:  It is the planning of results. It focuses on results, not inputs.  It is the planning of change. It tries to ensure that change occurs in the desired direction, and supports change. It is dynamic and orients the future. It needs to be reviewed regularly, and be adapted to evolving conditions.  It is realistic. It describes the desired and achievable future.  It is an instrument of quality management. It evaluates and shapes up, in a disciplined and systematic manner, how a business defines itself, what it does, and why it does these, and produces the basic decisions and actions guiding these processes.  It forms the basis for accountability. It lays the foundations for monitoring, evaluating and supervising how and to what extent the targeted results have been achieved.  It is a participatory approach. It is imperative that strategic planning process be fully supported by the highest level executive of the organization. Furthermore, strategic planning cannot be successful without the contribution, joint effort and support of related parties, other officials, administrators and staff members at any level.
On the other hand, strategic planning has the following properties:  It is not intended to respond to day-to-day needs. It is a long-term approach.  It is a flexible instrument that can be adapted to the different structures and needs of businesses.  It is not solely a document. Preparation of strategic plan is not sufficient for its realization. Ownership and activation are needed. What's essential is not the strategic plan document itself, but the strategic planning process.
 While resources are taken into consideration in strategic planning process, annual budget and resource demands should not shape strategic plans, but the strategic plan must guide functional plans and budget.  In summary, strategic planning helps a business answer the following four basic questions:  Where are we?  Where do we want to go?  How can we reach our target destination?  How can we monitor and evaluate our success?
Answers to the above questions make up the strategic planning process. The answer to the question "Where are we?" enables a status analysis involving a comprehensive review and evaluation of the internal and external environment in which the business operates.
The answer to the question "What do we want to achieve?" lays down the strategic objectives which represent the conceptual results towards which efforts and actions will be designed, as well as the goals which represent measurable results required to be achieved so that the objectives can be attained, in the light of the mission, which is a brief expression of the reason for being of the business; the vision, which is a conceptual, realistic and brief expression of the desired future; and the basic principles that guide the operations of the business.
The main strategies, which are the decisions to be used to achieve strategic objectives and goals, answer the question "How can we reach our target destination?" Finally, compilation of management information, monitoring for reporting of implementation plan, the evaluation of the extent to which the results achieved are consistent with the previously established mission, vision, basic policies, objectives and goals (i.e. performance evaluation) and the assessment process implying the review of the plan in the light of the results answer the question "How can we monitor and evaluate our success?"

Principles of Strategic Planning
Broadest participation must be ensured in strategic planning studies, and in this scope, employees from various units and levels of the business must be included in the planning process. Furthermore, the business will have the opportunity to know about itself as a whole by activating common mind, and as a by-product of this process, communication and motivation within the business will be strengthened. As necessary, views must be received from other organizations and groups in the field of the business, to allow for a comprehensive status analysis. As Butuner [4] stated, basic principles are as follows:  Each organization should  Consider its values, characteristics, structures and needs  Focus on contents rather than concepts  Develop its systematic of thinking  Introduce its definitions  Define its processes  A radical climate of thinking should be created through brainstorming.  A simple and mutual systematic of thinking must be adopted.  Assumptions must be analyzed.  It should be recognized that strategy development is a continuous process in nature.  It should be understood that strategies are open to development and changes, but the systematic of strategic thinking is lasting.  Participation must not be limited to senior management.

Status Analysis
The status analysis section is expected not to exceed three pages.  [11]) Internal analysis -business strengths and weaknesses: The phases of evolution experienced by the business from the past till today and the strengths and weaknesses caused by them on your business structure must be mentioned. This should consider such internal factors as labor force, technology, organization and management, operational matters, products and their market positions, financial characteristics, etc. (see more in Butuner [1]).

Competitive Advantages, Success Factors and
Weaknesses (see more in Pearce and Robinson [2])

Scenarios & Opportunities
Positive and negative scenarios for industry: The potential positive and negative scenarios for your industry for the next 5 years must be mentioned, taking into consideration the major developments in your respective industry worldwide and in nation (see more in Butuner [1]).
Business opportunities and threats (see more in Rasiel [9]).

Strategic Objectives, Main Goals, Grand Strategies
The goals intended to be achieved during the next 5 years must be mentioned for each year, taking into consideration the following headings: Strategic objectives Main goals:  Financial and marketing goals:  Which countries to be in  Regional concentration  Planned strategic partnerships  Alliances, merging and acquisitions, etc  Market goals  Financial goals, etc  Operational goals:  Technological improvements  Organization, etc Grand strategies (see more in Pearce and Robinson [2]) Business risks: The key risks anticipated for the term of strategic plan must be reviewed in this section. Quantitative and qualitative risks must be indicated. For example, a sensitivity analysis must be conducted, taking into consideration the probability that basic assumptions and parameters do not come about as expected, and the measures considered to be taken in this regard must be indicated (see more in Butuner [4]).

Functional Plans
A functional plan is the short-term plan for a key functional area within a company. Such plans clarify grand strategy by providing more specific details about how key functional areas are to be managed in the near future.
Functional plans help in implementation of grand strategy by organizing and activating specific subunits of the company (marketing, financing, production, etc.) to pursue the business strategy in daily activities. They must be consistent with long-term objectives and grand strategy.
It is the responsibility of functional level managers to develop annual objectives and short-term plans in such areas as production, operations, and research and development; finance and accounting; marketing; and human relations ( Figure 3).
However, their greatest responsibilities are in the implementation or execution of a company's strategic plan. While corporate and business-level managers center their planning concerns on doing the right things, managers at the functional level must stress doing things right. Thus, they directly address such issues as the efficiency and effectiveness of production and marketing systems, the quality and extent of customer service, and the success of particular products and services in increasing their market share. Basic characteristics are as follows:  Formal and written plans  Ties up business staff  Must be justified as an investment  Use different formats for different audiences  Focus on ends rather than means  Should cover contingency plans  Should challenge assumptions

Marketing Plan
The role of marketing function is to profitably bring about the sale of products in target markets for the purpose of achieving the business's goals and being consistent with the grand strategy and other functional plans. Effective marketing strategies guide marketing managers in determining who will sell what, where, to whom, in what quantity, and how as stated by Kotler [6].
Background to the market is as follows:  How the market is defined?  Size of the market  What is the total value of their sales?  Major market sectors and niches  Overall growth rate  What shares of them are likely to be gained?  How competitive will it be against existing products?  Key trends in consumer behavior and buying habits  Technological developments in the product, service deliveries, and operations  Over what period can the opportunity be exploited?  How long will customers be interested?
Competitors and competitive conditions are as follows as stated by Wickham [3]:  Key competitors with their strengths and weaknesses  How long before competitors move in?  Competitor's strategy and likely reaction to the business  Basis of competition in the market  Importance of price, product differentiation and branding  Benefits to be gained from positioning Definition of target market is as follows as stated by Wickham [3]:  The way in which market is split up into different sectors.  Dimensions of the market important for characterizing the sectors  Market sectors that will be prioritized for targeting. features, product lines, packaging, accessories, warranty, quality, and new product development:  What products will it compete with?  How it will be differentiated from competitors in terms of features, quality, price, etc?  Which products contribute most to profitability?  What is the product image we seek to project?  What consumer needs does the product seek to meet?
Price: Directly influences demand and supply, profitability, consumer perception, and regulatory responses. The approach to pricing strategy may be cost oriented, market oriented, or competition oriented. With a cost oriented approach, pricing decisions center on total cost and usually involve an acceptable markup or target price ranges. Pricing is based on consumer demand when the approach is market oriented. With the third approach, pricing decisions center on those of the firm's competitors.  What is the unit cost likely to be?  How much will customers pay for the product?  Are we primarily competing on price?  Are pricing policies standard nationally or is there regional control?  What price segments are we targeting (high, medium, low, etc.)?
Place: The functional plan for the place component identifies where, when, and by whom the product are to be offered for sale. The primary concern here is the channels(s) of distribution-the combination of marketing institutions through which the products flow to the final user to ensure consistency with the total marketing effort.  Intermediaries (wholesalers, distributors, retailers) and strategies for them.  What level of market coverage is necessary?  Are there priority geographic areas?  What are the channel objectives, structure, and management?  Should the marketing managers change their degree of reliance on distributors, sales reps, and direct selling?  What sales organization do we want?  Is the sales force organized around territory, market or product?
Promotion: Defines how the firm will communicate with the target market. Functional plan for the promotion component should provide marketing managers with basic guides for the use and mix of advertising, personal selling, sales promotion, and media selection. It must be consistent with other marketing strategy components and, due to cost requirements, closely integrated with financial plan.  Is the sales force organized around territory, market or product?  Sales and price promotions  Public relations activity  What are key promotion priorities and approaches?
 Which advertising/communication priorities and approaches are linked to different products, markets and territories? Networking.

Operations Plan
Functional plans in operations must guide decisions regarding: (1) an optimum balance between investment input and production/operations output and (2) location, facilities design, and process planning on a short term basis as stated by Nickels and McHugh [5].
The facilities and equipment component of operations strategy involves decisions regarding plant location, size, equipment, replacement, and facilities utilization that should be consistent with grand strategy and other operating plans.
Functional plans for the planning and control component of operations provide guidelines for ongoing production operations. They are meant to encourage efficient organization of production/operations resources to match long-range, overall demand. Often this component dictates whether production/operations will be demand oriented, inventory oriented, or subcontracted oriented.
Operations plan must be coordinated with marketing plan if the firm is to succeed. Careful integration with financial plan components (such as capital budgeting and investment decisions) and the personnel function are also necessary.
Personnel management aids in accomplishing grand strategy by ensuring the development of managerial talent, and the development of competent, well-motivated employees. Functional plans in the personnel area are needed to guide decisions regarding compensation, labor relations, etc.

Financing Plan
Financing plans guide financial managers in long-term capital investment, use of debt financing, dividend allocation, and the business' leveraging posture as stated by Keown and Martin [8]. Financing plans designed to manage working capital and short term assets have a more immediate focus.
Long term financing plans usually guide capital acquisition in the sense that priorities change infrequently over time. Another financing plan of major importance is capital allocation. Growth-oriented main strategies generally require numerous major investments in facilities, projects, acquisitions, and/or people. This helps manage conflicting priorities among operating managers competing for capital resources. A clear financial strategy that sets capital allocation priorities is important for effective implementation.
Capital allocation strategy frequently includes another dimension level of capital expenditure delegated to operating managers. If a business is pursuing a rapid growth, flexibility in making capital expenditures at the operating level may enable timely responses to an evolving market. On the other hand, capital expenditures may be carefully controlled if retrenchment is the strategy.
Dividend management is an integral part of a business' internal financing. Lower dividends increase the internal funds available for growth, and internal financing reduces the need for external, often debt, financing.
Working capital requirement analysis is critical to the daily operation of the business, and capital requirements are directly influenced by seasonal and cyclical fluctuations, business size, and pattern of receipts and disbursements.
 How should investors be prepared for these eventualities?  How should future revenues be discounted?  Under what circumstances might investors wish to make an exit?  Will this be planned or in response to a crisis?

Finance:
 What is an acceptable cost of capital?  What is the desired proportion of short-term and long-term debt: preferred and common equity?  What balance is between internal and external funding?  What risk and ownership restrictions are appropriate?  What level of capital allocation can be made by operating managers without higher approval?  What are the priorities for capital allocation projects?  On what basis is final selection of projects to be made?  What portion of earnings should be made paid capital management out as dividends?  How important is dividend stability?  Are things other than cash flow requirements; minimum and maximum cash balances?  How liberal/conservative should credit policies be?  What limits, payment terms, and collection procedures are necessary?  What payment timing and procedure should be followed?

Conclusions
Before beginning with strategic planning, businesses must have articulated their missions and visions, and identified their basic policies.
Strategic plan outlines the path between the current status of business and the desired status to achieve. It helps the business to establish its objectives, goals as well as the decisions to achieve these objectives and goals. It involves a long-term and prospective perspective.
Strategic plan provides guidance for the preparation of functional plans and business budget in such a manner that they reflect the objectives, goals and grand strategies of the strategic plan during the implementation, as well as for basing resource allocation on priorities.
Accordingly, the purpose of this paper comes into picture and that is helping businesses to define their integrated strategic plans with their vision and functional plans by offering them a comprehensive guideline.