5 steps to create a strategic plan that will support your business vision
In this article:
What is strategic planning in business: definition of the strategic plan, who creates a strategic plan, the main goal of a strategic plan;
Strategic plan vs Business plan;
Benefits of strategic planning;
The strategic planning process: 5 steps to create a strategic plan that will support your business vision.
1. What is strategic planning in business?
Strategic planning is an organizational management activity. The company’s CEO and senior leadership team are tasked with creating a strategic plan, it’s one of their responsibilities.
The goal of a strategic plan is to provide you with a roadmap to align the organization’s functional activities to achieve set goals and determine the direction in which you want to take your business.
The plan outlines what (resources), how (specific tools, activities, platforms etc) and why (the reasons behind your choice of a specific resource or tool) the company will use to achieve its goals.
The main goal of your strategic plan is differentiation
The main goal of the strategic plan you create for your business is to define how your business differentiates itself from the competition.
What activities is your business performing that are different from the activities performed by your competitors?. Or what activities that are similar to your competitors’ you perform differently?
Harvard professor and author of Porter’s 5 Forces Michael Porter defines strategy as “performing different activities from others or performing similar activities in a different manner.”
Nikki Reed’s jewellery – a case study on business differentiation
Twilight series actress Nikki Reed designs beautiful jewellery. Her collections include 14-18 karat gold pieces. As opposed to other jewellery designers, her collections are made from e-waste.
Nikki’s business goal is to produce jewellery that is ethically made, sustainable and chemical-free. To achieve her goal, she partnered with computer technology company Dell.
According to the latest stats, it is estimated that our smartphones contain more than $60 million in gold and/or silver which are thrown away every year. Dell has developed a process for extracting gold from old computer motherboards that is 99% more environmentally friendly than extracting gold from the earth.
That’s how Nikki Reed differentiates her business from competitors: by using gold responsibly extracted from recovered technology to make beautiful jewellery. See her collections.
2. Strategic plan vs Business plan
A strategic plan is for established businesses looking to grow by providing them with focus, direction and action. Whereas a business plan is for businesses starting out and provides the entrepreneur with a structure for his ideas defining the business.
A strategic plan generally covers a period of 3 to 5+ years, whereas a business plan is normally no more than one year.
3. Benefits of strategic planning
No matter how much you wished your business had no competition on the market, your competitors are not going away just because you wish them to.
What you could do, after a thorough analysis of your business, the market and your competition is to devise a strategy that would help your business achieve its goals by doing things differently.
By having a strategic plan in place the top management conveys trust to the company’s employees.
A clear path to achieving set business goals means the team is more likely to enjoy an increased level of focus, determination and creativity.
Success is more easily achievable when everyone knows what to do and how to do it.
4. The strategic planning process
Before going into the strategic planning process, the CEO and top management have to be clear on the company’s vision, mission and organizational goals and objectives.
The CEO or founder is responsible for creating the vision and formulating the mission. The business vision states why you do it while the business mission states what your company does to achieve its vision.
The vision statement provides a snapshot of what the world would look like as a result of the company’s services. The mission statement is the roadmap for the company’s vision statement.
Let’s look at the vision and mission statements of a number of companies whose products and services you might use on a daily basis.
Vision – To provide access to the world’s information in one click.
Mission – Our mission is to organize the world’s information and make it universally accessible and useful.
Vision – We aim to be Earth’s most customer-centric company.
Mission – Our mission is to continually raise the bar of the customer experience by using the internet and technology to help consumers find, discover and buy anything, and empower businesses and content creators to maximize their success.
Vision – Salesforce is the world’s #1 customer relationship management (CRM) platform.
Mission – We bring companies and customers together. We help your marketing, sales, commerce, service and IT teams work as one from anywhere — so you can keep your customers happy everywhere.
Vision – TikTok is the leading destination for short-form mobile video.
Mission – Our mission is to inspire creativity and bring joy.
5 steps to create a strategic plan that will support your business vision
A company’s vision and mission are not set in stone. Your business may transform as a result of technological developments or customer behaviour changes. For this reason, it is important to revisit the company’s vision and mission and amend them if necessary.
- Market analysis
- Review and update
- Evaluation and measurement
Step 1 – Market analysis
Before anything else, it is important to get updated on the current status of your business.
Perform a SWOT analysis to see if there are changes in your company’s strengths, weaknesses, opportunities and threats?
Are there new threats looming over the business ushered in by the pandemic?
Can you turn a new threat into an opportunity?
How is the pandemic affecting your bottom line?
Next, apply PORTER’s 5 Forces framework to your industry to evaluate how the pandemic is influencing the drivers of profitability and competition in your market. Get your team together and discuss what valuable insights you can take away from this analysis. How could these insights help you come up with a specific and unique way in which to delight your customers today?
PESTEL is another great tool that you can use to understand the impact of macro-environmental factors on your business. The PESTEL acronym stands for Political, Economical, Social, Technological, Environmental and Legal.
How are these factors that you cannot influence, affecting your business?
Once you have drawn relevant insights from your company and business market analysis, you can move to step 2 of the strategic plan: development.
Step 2 – Development
Sit down together with your team and write the strategic plan.
Include the following:
- Company description
- Mission, vision and value statements
- Strengths, weaknesses, opportunities and threats
- Describe the current drivers of profitability and competition (PORTER’s 5 Forces)
- Describe how the macro-environmental factors impact your business (PESTEL)
- Prioritize your objectives
- Determine your strategic position (ie: at least one way in which your business will differentiate itself from the competition)
- Describe in great detail how you are going to leverage your newly developed strategy to achieve your business goals (means of communication, resources, budget etc)
- Include an execution timeline and how you are going to measure success
- Review and revise the plan.
Step 3 – Implementation
Now that you have the strategic plan on paper it’s time to execute it.
But before that, you need to communicate your plan to the employees that are going to implement it.
Choose the best way to do that. Is it a lengthy email? Or an all-hands meeting?
Prepare yourself to answer questions and convey your vision as clearly as possible.
You might also need to provide inspiration and motivation.
Step 4 – Review and Update
Determine when to review the strategic plan over the course of the implementation and go back to the plan to update it if necessary: 3 months? 6 months?
Step 5 – Evaluation and measurement
Once the strategic plan has been executed, it’s time for evaluation and measurement.
Extract the results and measure them against your set projections.
Calculate the KPIs and ROI.
Did the strategic plan help your business to achieve its set objectives?
Join the Conversation
We’d love to hear what you have to say.
Porter’s Five Forces analysis of the IT industry
Porter’s Five Forces is a business framework that helps entrepreneurs shape their strategy to drive profitability. The framework is a holistic way of looking at any industry and understanding the structural underlining drivers of profitability and competition.
Learn more about Porter’s Five Forces.
Looking to increase your company’s profitability? Join our masterclass!
The IT industry in 2021
According to the research consultancy IDC, the technology industry is expected to reach $5 trillion in 2021 which represents 4.2% growth, signalling a return to the trend line that the industry was on prior to the pandemic.
The three major industry groups within the IT sector:
- software and services: companies that provide internet services, software and IT services, search engines or social networks, software for business or consumer use (Google, eBay, Facebook, Accenture, PayPal, Adobe, Microsoft and Electronic Arts (EA);
- technology hardware and equipment: companies that produce routers, telephones and switchboards, computers, printers and cell phones (Apple, HP, Dell, Motorola, Cisco Systems, SanDisk and Western Digital);
- semiconductors and semiconductor equipment: companies that produce semiconductor equipment (Intel, Microchip Technology, Nvidia, QUALCOMM and Texas Instruments).
4 IT industry trends according to CompTIA, a leading tech association
The Cloud-first mentality
With flexibility and resilience as the guiding principles for future success, organizations will adopt a cloud-first mentality when it comes to building or upgrading IT infrastructure.
Technology as a driver for business objectives
Businesses are placing much more emphasis on strategic IT as opposed to the tactical mindset of previous decades. This means that technology is a driver for business objectives rather than simply playing a supporting role.
Increased need for cybersecurity solutions
The complexity of new IT solutions creates a world of new opportunities. Unfortunately, it also creates a nasty problem for cybersecurity. (…) As companies become more comfortable with a zero-trust framework, they will also gain an appreciation for the new investments they have to make, the new processes they have to build, and the new skills they need to acquire.
Regulation is not avoidable
Whether it’s the debate over breaking up the largest tech companies, establishing clear legal ramifications and penalties for the exposure of sensitive user data, or figuring out how to thwart foreign countries from using social media to meddle in elections, the topic of regulation is front and center. […] the government is taking a closer look at all types of tech companies in an effort to rein in abuse and potential harm to the public – and assign accountability. [..] Regulation is not avoidable in the tech industry anymore.
Porter’s Five Forces Analysis of the IT industry
BUYERS – How much influence do buyers have on the IT industry?
Is there a large number of buyers relative to the number of IT companies? YES / NO
The IT industry is expected to reach $5 trillion in 2021 which represents 4.2% growth compared to last year. Digital transformation and technology have contributed to this growth.
Are buyers both B2C and B2B? YES / NO
The IT industry caters to the needs of individuals and enterprises. According to this December 2020 report, the number of smartphone users in the world today is 3.5 billion, which translates to 44.69% of the world’s population. In 2019, there were over 2 billion computers in the world, including servers, desktops, and laptops. Although at home, we may prefer our smartphone, in the workplace, we do our work on PCs.
Do buyers face significant costs in switching suppliers? YES / NO
Do buyers need a lot of important information with regards to using the products? YES / NO
Does the product or service drive the buyer’s performance? YES / NO
Are buyers able to manufacture the product/service in-house? YES / NO
Are buyers highly sensitive to price? YES / NO
Are products unique to some degree? YES / NO
SUPPLIERS – How much influence do suppliers have on the IT industry?
Are inputs (material, labour, services) standard rather than differentiated? YES / NO
Can companies switch suppliers quickly and easily? YES / NO
Do suppliers find it difficult to enter the IT industry? YES / NO
Is there a large number of current suppliers in the IT industry? YES / NO
Is the IT industry important to the suppliers? YES / NO
Is the supplier’s product indispensable to IT companies? YES / NO
Microsoft has 13,000 U.S. suppliers. If you’ve made the list, it’s a great accomplishment. But keep in mind that every couple of years, Microsoft goes out to market and does a request for proposal or RFP. This means that depending on its current needs, Microsoft will look for fresh suppliers with innovative products or services.
Is an IT company important as a customer to the supplier? YES / NO
Becoming a supplier for Microsoft means taking a slice of a $14.5 billion-worth budget pie that the software giant spends every year.
Microsoft is one of the leading IT companies in the world. Working with Microsoft is an accomplishment for any software supplier. But not every supplier can become a partner for Microsoft. The software giant has rigorous standards and high expectations for its partners. And once they’ve made to the list, it’s not over. Each supplier must undergo an annual review, receiving ratings of 1 to 5 for delivery, innovation, organizational health, quality, service supply-chain management and value.
NEW ENTRANTS – Is the threat posed by new entrants high or low?
Are economies of scale important? YES / NO
Economies of scale is achieved when costs are lowered and production is increased. This happens because costs are spread over a larger number of goods.
Are economies of scope important? YES/NO
Economies of scope is a concept which states that the unit cost to produce a product will decline as the variety of products increases. Namely diversity of products lowers the costs of producing them. Apple has the manufacturing capacity to design, manufacture and launch other products besides smartphones.
Would a new entrant be competing with established brands? YES / NO
Any newcomer to, let’s say, the semiconductor industry would go against the market leaders Intel or AMD. They would need to spend significant amounts of money on advertising and promotions to attract customers.
Is a large amount of up-front capital required to enter the market? YES / NO
New entrants in the semiconductor industry must develop strong research & development departments and large amounts of capital in order to compete with the patents of established companies.
Are profit margins in this market currently high? YES / NO
A 2019 McKinsey report shows that profits in the semiconductor industry have been growing strong in recent years.
Are switching costs for customers high? YES / NO
Embedded switching costs make it difficult and costly for customers to move from one brand to another.
Are there other barriers to entry: patents, regulatory requirements, experienced workers etc? YES / NO
Is a new entrant expecting strong competition from the existing players? YES / NO
SUBSTITUTES – Is the threat posed by substitutes high or low?
Are there available substitutes? YES / NO
Do customers incur costs in switching to substitutes? YES / NO
Do available substitutes have performance limitations? YES / NO
Do available substitutes have high prices? YES / NO
Are customers likely to go for substitutes? YES / NO
Is it easy to replace one product with a substitute? YES / NO
EXISTING COMPETITORS – What advantages do competitors have?
Are there many similar competitors in the IT market? YES / NO
Are market shares equally distributed among competitors? YES / NO
Are costs high? YES / NO
Are the products being sold commodities, making it difficult to add value and have a high-margin? YES / NO
Are exit barriers high? YES / NO
Products on offer are highly complex and require significant customer-producer interaction. YES / NO
Is the industry growing rapidly? YES / NO
The IT industry is changing rapidly due to fast-evolving technology.
According to Porter’s Five Forces business framework, the IT industry landscape has the following features:
High bargaining power of buyers
Low threat of new entrants
Low bargaining power of suppliers
Low threat of substitutes