Advantages and Disadvantages of Strategic Planning

Students must note that not all strategic planning will be the same, rather it will vary between organizations. Different organizations will approach the process with different degrees of sophistication, thoroughness and commitment. Some organizations due to resource limitations may be unable to follow the formal process of strategy formulation. Other organizations may lack the necessary managerial commitment to implement a strategic plan. Managers who utilize the concepts of strategy development informally without implementing a formal process could still earn significant benefits from it.

Advantages:

•    It provides consistent guidelines for the organizations activities.
•    The planning process helps managers anticipate problems before they arise and to deal with them before they become too severe.
•    It helps managers make decisions as the careful analysis provided by strategic planning gives managers more of the information they need to make decisions.
•    It minimises the chance of mistakes and unpleasant surprises, because goals, objectives and strategies are subjected to careful scrutiny and analysis.

Disadvantages:

•    It requires considerable investment in time, money and people, for example it can take years for it to function smoothly.
•    It involves many start up costs, training of planners, hiring new people, market research, survey and expensive data processing.
•    Sometimes it tends to restrict the organization to the most rational and risk free option, as managers learn to develop only those strategies that can survive the detailed analysis of the formal planning process. This means attractive opportunities that are difficult to analyze may be overlooked.