Strategic planning is the process
of deciding on the programs
that, the organization will
undertake and the approximate
amount of resources that will be
allocated to each program over
the next several years.
Strategy Formulation Strategic Planning
Add new product line Understand the market needs
Analyse the market
Conduct feasibility study for new product line
Increase the profitability Increase sales
Reduce the costs
Expand market operations
Change the methods of production
Improve the customer relations Improve the quality
Increase after sale services
Improve the brand loyalty
Use customer friendly marketing methods
Improve the channels of distribution
Improve the company image Increase charitable spending
Improve employees morale
Merits of strategic
• Framework for budget
• A Management Development Tool
• mechanism to force managers to
think for long run
• Help in aligning managers towards
the long-term direction of the
• Framework for short-run actions
Limitations of strategic
• A form filling bureaucratic exercise
• it may consume the valuable time
of the executives who participate
in strategic planning.
• strategic planning is worse if the
task is assigned to a separate
needed for SP
• The business must be large enough. In
too small organisations, Strategic plan
need not be so elaborative and in written
form. An oral expression of strategic plan
• The management must consider it as
important for their business.
• The business must be relatively in
uncertainties to some extent. It is not
suitable for the businesses, which are in
either certainties or completely
Contents of Strategic
• the time period
• Approximate amount of
Who should make
• Functional Mangers?
• Corporate staff?
• Controller organization?
• Capital Investment Analysis
• Why NPV and IRR fail?
• Avoiding Manipulations
• Organization fro analysis
• Value Chain Analysis
• Linkage with suppliers
• Linkage with customers
• Process Linkage within the value
chain of the firm.
Applications of Activity Based
• Reviewing and updating strategic
plan from last year.
• Deciding on assumptions and
• First iteration of the new strategic
• Second iteration of the new
• Review and approval.