A strategic business plan is something that a business must formulate in order to clearly define its goals and facilitate a way of achieving those goals. This plan may be used as a reference for owners, managers and employees for internal operations, but it may also be used as a means of securing funding for business growth. Strategic business plans can vary substantially from business to business, but many businesses follow common models.
A common method of analyzing information to use in a strategic plan is the SWOT analysis, which stands for Strengths, Weaknesses, Opportunities and Threats. The strengths that a company has may be things like financial stability, proprietary technology, a high level of brand name recognition, streamlined supply chains, large distribution networks, strategic alliances and employee experience. Weaknesses can be things like shrinking market share, shrinking markets, low production capacity and high prices for raw materials. Opportunities can be changes in legislation that remove regulations or limitations, access to untapped markets and the potential for technological advancement. Threats can be shifts in consumer trends that cause a loss of interest in the company's products, environmental risks, such as natural disasters, impeding production and the possibility for political instability.
Another way of analyzing information in a strategic plan is through the PEST model, which stands for Political, Economic, Social and Technological. Issues to address in the political section include tax law, government regulations on employment, environmental regulations and general political stability. Economic issues to address would consist of history such as the inflation rate and interest rates in the country in which the company is doing business, as well as projections of general economic growth. Social issues to consider mostly deal with the tendency of consumers to increase or decrease consumption of the company's products, such as health consciousness, environmental consciousness and demographic trends such as target market age, birth rate, death rate and life expectancy. The technological section should deal with the company's technological development relative to that of the competition and the demands of the target market.
Another strategic planning model is the STEER model, which stands for Socio-cultural, Technological, Economic, Ecological and Regulatory. It is very similar to the PEST model, in that the socio-cultural aspect is very similar to the social aspect of the PEST model while the economic and technological aspects are the same. The main difference is the inclusion of the ecological and regulatory aspects of the model. While the PEST model addresses environmentally-driven conceptions of ecological issues in the social aspect of the plan, the STEER model gives an in-depth analysis of the reality of actual environmental issues separately. The regulatory aspect of the STEER model has aspects similar to those of the political aspect of the PEST model except that it focuses on the existing laws and not the possible developments of the political climate.
EPISTEL stands for Environmental, Political, Informatics, Social, Technological, Economic and Legal. This is the most complex model for strategic planning, and while it effectively organizes information by placing it into a larger number of categories, planners sometimes have problems working within its framework because some issues overlap. For instance, economic and social issues often overlap, as do issues dealing with technology and informatics.