Strategic planning is a business management practice where managers determine the overarching goals of the company and how the company can achieve those goals. When launching a new venture, strategic planning often involves creating a business plan that outlines issues such as the target market of the business, how the business will provide value to the customer, costs of production, competitors, exit strategy and the perceived strengths and weaknesses of the business. Strategic planning can be advantageous in many ways.
One advantage of strategic planning is that it creates a definite direction and goal for the company. A part of strategic planning is often creating a mission statement that formally states the goals of the company. A mission statement gives managers and employees a clear sense of the purpose and ideals of the organization. A strong mission statement can potentially help attract investors and customers.
Strategic partners and investors are often an important part of launching and growing a business. Strategic partners are people or organizations that believe in your mission statement and are willing to share expertise or resources in a mutually beneficial relationship. Attracting investors and strategic partners often requires a strong business plan that clearly defines the goals, obstacles and potential of the company.
Assessing the Market and Competition
An important part of strategic planning is assessing the state of the target market and the presence of competition in the market. Failing to account for business trends and the current state of the market can be very costly. For example, an opening a Chinese restaurant in a part of town that already has several Chinese would probably be a less successful venture than opening the restaurant in a demographically similar area that has few Chinese restaurants.
Contingency planning is a part of strategic planning that involves creating a specific course of action that the company will pursue if certain contingencies occur. For instance, a business might decide to stop selling a certain product if it does not generate a certain amount of revenue within a given time frame. Contingency plans can cover a wide range of possibilities, such as pending legislation that might affect the business, death of managers, and the entry of new competitors into the market. Failing to account for contingencies may result in disorganization and poor decision making if such contingencies occur.
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