What is Strategic Planning?

Strategic planning has been defined (Stoner) as the formalized, long range planning process used to define and achieve organizational goals.
It involves:

•    Defining the organisational mission
•    Analyzing the situation (internal and external environments)
•    Selecting organisation’s goals and objectives
•    Determining the policies and strategic programs necessary to achieve goals and objectives
•    Establishing the methods necessary to assure that the policies and strategic programs are implemented and
•    Matching the selected strategies with the identified opportunities and threats in the external environment.
    
Strategic planning has the following characteristics:

•    deals with fundamentals of basic problems by providing answers to such questions as "what is our business?", "what business ought we to be in" "who are our customers and who should they be?"
•    provides a basis for more detailed planning and for day to day managerial decisions.
•    involves a longer time frame than other form of planning
•    it is a top level activity - top management must be actively involved as they are the ones with the information necessary for strategic decisions.
•    it helps to integrate and unify the actions of the organization over time.
•    it provides guidance and boundaries for operational planning

Note    

Students must differentiate between strategic planning and operational planning (Operational plan is done at low levels and its main focus is current operations and efficiency).

Summarized the main differences between the two are:

•    Operational planning's objective is present profits while strategic planning's objective is on future profits.
•    Operational planning mainly focuses on operation problems while strategic focuses on longer term survival and development.
•    Operational planning faces present resources environmental constraints while strategic is concerned with future resources environmental constraints.
•    Operational planning deals with information relating to present business while strategic deals with information relating to future opportunities.
•    For operational planning rewards are mainly current efficiency and stability but for strategic they are the development of future potential.
•    Organization in operational planning is traditionally bureaucratic while with strategic planning, it is mainly flexible/entrepreneurial.
•    Leadership for operational planning is traditionally conservative but for strategic planning leadership is sensitive to radical change.
•    In operational planning problem solving is mainly reactive, relying on past experience and situation analysis while with strategic planning problem solving is flexible always trying to anticipate new approaches. In a nutshell operational planning is low risk while strategic planning is high risk.