Strategic planning. Strategic planning is a process that involves the review of market conditions. Developing a Statement: Key Elements

Strategic planning

Strategic planning is a process that involves the review of market conditions; customer needs; competitive strengths and weakness; sociopolitical, legal, and economic conditions; technological developments; and the availability of resources that lead to the specific opportunities or threats facing the organization.

The output of the strategic process is a strategic plan. There are four components to such plans: mission

The organisation's environment supplies the resources that sustain the organisation, whether it is a business, a college or university, or a government agency. In exchange for these resources, the organisation must supply the environment with goods and services at an acceptable price and quality.

Developing a Statement: Key Elements

In developing a mission statement, management must take into account three key elements: the organization's history, its distinctive competencies, and its environment.

1.   History. Every organization, large or small, profit or nonprofit, has a history of objectives, accomplishments, mistakes, and policies. In formulating a mission, the critical characteristics and events of the past must be considered. It would not make sense for McDolad's to become a chain of gourmet restaurants or for Yale University to become a community college, even if such moves were opportunities for growth in the future.

2.   Distinctive competencies. While an organization may be able to do many things, it should seek to do what it can do best. Distinctive competencies are the things that an organization does well — so well, in fact, that they offer an advantage over similar organizations.

Procter & Gamble probably could enter the oil business, but such a decision certainly would not take an advantage of its major distinctive competence: knowledge of the market for low-priced, repetitively purchased consumer products. No matter how appealing an opportunity may be, the organization must have the competencies to capitalize on it. An opportunity without the competence to exploit it is not really an opportunity for the organization. It is an illusion.

3.  Environment. The organization's environment dictates the opportunities, constraints, and threats that must be identified before a mission statement is developed. For example, technological developments in the communications field (e.g., long-range picture transmission, closed-circuit television, and the television phone) may have a negative impact on business travel and certainly should be considered in the mission statement of a large motel chain and an airline.

Characteristics of a Mission Statement

Needless to say, writing a useful and effective mission statement is extremely difficult. It is not likely for an organization to spend a year or two developing a useful mission. When completed, an effective mission statement focuses on markets rather than products; it is also achievable, motivating, and specific.

1. Market rather than product focus: The customers or clients of an organization are critical in determining its mission. Traditionally, many organizations defined their business by what they made ("our business is glass") and, in many cases, named the organization after the product or products. Often such an organization has found that when products and technologies become obsolete, its mission is no longer relevant and its name may no longer describe what it does. Thus, a more enduring way of defining the mission is needed. In recent years, a key feature of mission statements has been external rather than internal focus. In other words, the mission statement should focus on the broad class of needs that the organization is seeking to satisfy (external focus), not on the physical product or service that the organization is offering at present .This has been clearly stated by Peter Drucker:

A business is not defined by the company's name, statutes, or articles of incorporation. It is defined by the want the customer satisfies when he buys a product or service. To satisfy the customer is the mission and purpose of every business. The question: What is our business?" can, therefore, be answered only by looking at the business from the outside, from the point of view of customer and market.

While Drucker was referring to business organisations, the same necessity exists for both non-profit and government organisations. They need to state the mission in terms of serving a particular group of clients or customers and/ or meeting a particular class of need.