Strategic planning

Strategic planning or corporate planning is an activity undertaken by an organization through which it seeks to define its future direction and makes decisions such as resource allocation aimed at achieving its intended goals. "Strategy" has many definitions, but it generally involves setting major goals, determining actions to achieve these goals, setting a timeline, and mobilizing resources to execute the actions. A strategy describes how the ends (goals) will be achieved by the means (resources) in a given span of time. Often, strategic planning is long term and organizational action steps are established from two to five years in the future.^[1] Strategy can be planned ("intended") or can be observed as a pattern of activity ("emergent") as the organization adapts to its environment or competes in the market.

The senior leadership of an organization is generally tasked with determining strategy. It is executed by strategic planners or strategists, who involve many parties and research sources in their analysis of the organization and its relationship to the environment in which it competes.^[2]

Strategy includes processes of formulation and implementation; strategic planning helps coordinate both. However, strategic planning is analytical in nature (i.e., it involves "finding the dots"); strategy formation itself involves synthesis (i.e., "connecting the dots") via strategic thinking. As such, strategic planning occurs around the strategy formation activity.^[2]

History

Strategic planning became prominent in corporations during the 1960s and remains an important aspect of strategic management.

McKinsey & Company developed a capability maturity model in the 1970s to describe the sophistication of planning processes, with strategic management ranked the highest. The four stages include:

Financial planning, which is primarily about annual budgets and a functional focus, with limited regard for the environment;
Forecast-based planning, which includes multi-year financial plans and more robust capital allocation across business units;
Externally oriented planning, where a thorough situation analysis and competitive assessment is performed;
Strategic management, where widespread strategic thinking occurs and a well-defined strategic framework is used.

Stages 3 and 4 are strategic planning, while the first two stages are non-strategic, essentially financially-based. Each stage builds on the previous stages; that is, a stage 4 organization completes activities in all four categories.^[3]

In 1993, President Bill Clinton signed into law the Government Performance and Results Act, which required US federal agencies to develop strategic plans for how they would deliver high quality products and services to the American people.^[4]

In the business sector, McKinsey research undertaken and published in 2006 found that, although many companies had a formal strategic-planning process, the process was not being used for their "most important decisions".^[5]

For Michael C. Sekora, Project Socrates founder in the Reagan White House, during the Cold War the economically challenged Soviet Union was able to keep on western military capabilities by using technology-based planning while the U.S. was slowed by finance-based planning, until the Reagan administration launched the Socrates Project, which should be revived to keep up with China as an emerging superpower.^[6]

Process

Overview

Strategic planning is a process and thus has inputs, activities, outputs and outcomes. This process, like all processes, has constraints. It may be formal or informal and is typically iterative, with feedback loops throughout the process. Some elements of the process may be continuous and others may be executed as discrete projects with a definitive start and end during a period. Strategic planning provides inputs for strategic thinking: these are best seen as distinct but complementary activities.^[7] Strategic thinking guides the actual strategy formation. Typical strategic planning efforts include the evaluation of the organization's mission and strategic issues to strengthen current practices and determine the need for new programming.^[8] The end result is the organization's strategy, including a diagnosis of the environment and competitive situation, a guiding policy on what the organization intends to accomplish, and key initiatives or action plans for achieving the guiding policy.^[9]

Michael Porter wrote in 1980 that formulation of competitive strategy includes consideration of four key elements:

Company strengths and weaknesses;
Personal values of the key implementers (i.e., management and the board);
Industry opportunities and threats;
Broader societal expectations.^[10]

The first two elements relate to factors internal to the company (i.e., the internal environment), while the latter two relate to factors external to the company (i.e., the external environment).^[10] These elements are considered throughout the strategic planning process.

Inputs

Data is gathered from various sources, such as interviews with key executives, review of publicly available documents on the competition or market, primary research (e.g., visiting or observing competitor places of business or comparing prices), industry studies, reports of the organization's performance, etc. This may be part of a competitive intelligence program. Inputs are gathered to help establish a baseline, support an understanding of the competitive environment and its opportunities and risks. Other inputs include an understanding of the values of key stakeholders, such as the board, shareholders, and senior management. These values may be captured in an organization's vision and mission statements.

Activities

The essence of formulating competitive strategy is relating a company to its environment.

Michael Porter^[10]

Strategic planning activities include meetings and other communication among the organization's leaders and personnel to develop a common understanding regarding the competitive environment and what the organization's response to that environment should be. A variety of strategic planning tools may be completed as part of strategic planning activities.

The organization's leaders may have a series of questions they want to be answered in formulating the strategy and gathering inputs.^[2]^[11]

Outputs

The output of strategic planning includes documentation and communication describing the organization's strategy and how it should be implemented, sometimes referred to as the strategic plan.^[12] The strategy may include a diagnosis of the competitive situation, a guiding policy for achieving the organization's goals, and specific action plans to be implemented.^[9] A strategic plan may cover multiple years and be updated periodically.

The organization may use a variety of methods of measuring and monitoring progress towards the strategic objectives and measures established, such as a balanced scorecard or strategy map. Organizations may also plan their financial statements (i.e., balance sheets, income statements, and cash flows) for several years when developing their strategic plan, as part of the goal-setting activity. The term operational budget is often used to describe the expected financial performance of an organization for the upcoming year. Capital budgets very often form the backbone of a strategic plan, especially as it increasingly relates to Information and Communications Technology (ICT).

Outcomes

While the planning process produces outputs, strategy implementation or execution of the strategic plan produces outcomes. These outcomes will invariably differ from the strategic goals. How close they are to the strategic goals and vision will determine the success or failure of the strategic plan. Unintended outcomes might also be an issue. They need to be attended to and understood for strategy development and execution to be a true learning process.

Tools and approaches

2011 video explaining the strategic plan of the Wikimedia Foundation

Analytical tools

A variety of analytical tools and techniques are used in strategic planning.^[2] These were developed by companies and management consulting firms to help provide a framework for strategic planning. Such tools include:

PEST analysis, which covers the remote external environment elements such as political, economic, social and technological (PESTLE adds legal/regulatory and ecological/environmental);
Scenario planning, which was originally used in the military and recently used by large corporations to analyze future scenarios.
Porter five forces analysis, which addresses industry attractiveness and rivalry through the bargaining power of buyers and suppliers and the threat of substitute products and new market entrants;
SWOT analysis, which addresses internal strengths and weaknesses relative to the external opportunities and threats;
Growth-share matrix, which involves portfolio decisions about which businesses to retain or divest; and
Balanced scorecards and strategy maps, which creates a systematic framework for measuring and controlling strategy.
Responsive evaluation, which uses a constructivist evaluation approach to identify the outcomes of objectives, which then supports future strategic planning exercises.
VRIO Framework, which determines the competitive advantage of a product or a service through evaluating four elements such as value, rarity, imitability and organization.^[13]

Specific contexts

Strategic planning can be used in project management with a focus on the development of a standard repeatable methodology adding to the likelihood of achieving project objectives. This requires a lot of thinking process and interaction among stakeholders. Strategic planning in Project Management provides an organization the framework and consistency of action. In addition, it ensures communication of overall goals and understanding roles of teams or individual to achieve them. The commitment of top management must be evident throughout the process to reduce resistance to change, ensure acceptance, and avoid common pitfalls. Strategic planning does not guarantee success but will help improve likelihood of success of an organization.^[14]

The application of strategic planning is also a significant focus within educational institutions, which use it as a tool to navigate complex environments and enhance institutional performance. A 2025 systematic literature review by Endo et al. found that well-defined strategic plans are linked to higher academic performance, improved resource allocation, and greater stakeholder engagement.^[15] Despite its recognized benefits, the review notes that implementation often faces significant challenges, including "limited resources, resistance to change, and the complexity of aligning diverse stakeholder interests." The success of strategic planning in education is therefore highly dependent on factors such as effective leadership, robust stakeholder engagement, and the use of analytical tools to ensure that strategic plans are both realistic and impactful.^[15]

Strategic planning vs. financial planning

Simply extending financial statement projections into the future without consideration of the competitive environment is a form of financial planning or budgeting, not strategic planning. In business, the term "financial plan" is often used to describe the expected financial performance of an organization for future periods. The term "budget" is used for a financial plan for the upcoming year. A "forecast" is typically a combination of actual performance year-to-date plus expected performance for the remainder of the year, so is generally compared against plan or budget and prior performance. The financial plans accompanying a strategic plan may include three–five years of projected performance.

Criticism

Strategic planning vs. strategic thinking

Strategic planning has been criticized for attempting to systematize strategic thinking and strategy formation, which Henry Mintzberg argues are inherently creative activities involving synthesis or "connecting the dots" which cannot be systematized. Mintzberg argues that strategic planning can help coordinate planning efforts and measure progress on strategic goals, but that it occurs "around" the strategy formation process rather than within it. It functions remote from the "front lines" or contact with the competitive environment (i.e., in business, facing the customer where the effect of competition is most clearly evident) may not be effective at supporting strategy efforts.^[2]

Evidence on strategic planning's impact

While much criticism surrounds strategic planning, evidence suggests that it does work. In a 2019 meta-analysis including data from almost 9,000 public and private organizations, strategic planning is found to have a positive impact on organizational performance. Strategic planning is particularly potent in enhancing an organization's capacity to achieve its goals (i.e., effectiveness). However, the study argues that just having a plan is not enough. For strategic planning to work, it needs to include some formality (i.e., including an analysis of the internal and external environment and the stipulation of strategies, goals and plans based on these analyses), comprehensiveness (i.e., producing many strategic options before selecting the course to follow) and careful stakeholder management (i.e., thinking carefully about whom to involve during the different steps of the strategic planning process, how, when and why).^[16]

Strategic plans as tools to communicate and control

Henry Mintzberg in the article "The Fall and Rise of Strategic Planning" (1994),^[17] argued that the lesson that should be accepted is that managers will never be able to take charge of strategic planning through a formalized process. Therefore, he underscored the role of plans as tools to communicate and control. It ensures that there is coordination wherein everyone in the organization is moving in the same direction. The plans are the prime media communicating the management's strategic intentions, thereby promoting a common direction instead of individual discretion. It is also the tool to secure the support of the organization's external sphere, such as financiers, suppliers or government agencies, who are helping achieve the organization's plans and goals.^[17]

The strategic plan genre of communication

Cornut et al (2012) ^[18] studied the particular features of the strategic plan genre of communication by examining a corpus of strategic plans from public and non-profit organizations. They defined strategic plans as the "key material manifestation" of organizations' strategies and argued that, even though strategic plans are specific to an organization, there is a generic quality that draws on shared institutional understanding on the substance, form and communicative purposes of the strategic plan. Hence, they posit that strategic plan is a genre of organizational communication (Bhatia, 2004; Yates and Orlikowski, 1992 as cited in Cornut et al., 2012).^[18] In this sense, genre is defined as the "conventionalized discursive actions in which participating individuals or institutions have shared perceptions of communicative purposes as well as those of constraints operating their construction, interpretation and conditions of use" (Bhatia, 2004: 87; see also Frow, 2005; Swales, 1990 as cited in Cornut et al., 2012).^[18]

The authors compared the corpus of strategic plans with nine other corpora. This included annual reports from the public sector and nongovernment organizations, research articles, project plans, executive speeches, State of the Union addresses, horoscopes, religious sermons, business magazine articles and annual reports for-profit corporations included in the Standard & Poor's 500 largest companies (S&P 500).

The authors used textual analysis, including content analysis and corpus linguistics. Content analysis was used to identify themes and concepts, such as values and cognition; while corpus linguistics was used to identify naturally occurring texts and patterns (Biber et al., 1998 as cited in Cornut et al., 2012).^[18]

Taking a stance

The strategic plans showed significantly less self-reference than all other corpora, with the exemption of project plans and S&P 500 annual reports. The results indicated that strategic plans have more moderate verbs of deontic value. This was interpreted as an indication that "commands and commitments are not overtly hedged, but neither are they particularly strong".

Guidance on the sections of a strategic plan abound but there are few studies about the nature of language used for these documents. Cornut et al.'s (2012) ^[18] study showed that writers of strategic plans have a shared understanding of what is the appropriate language. Thus, the authors argued, a true strategist is one who is able to instantiate the genre strategic plan through appropriate application of language.^[18]

Strategic planning as communicative process

Spee et. al. (2011)^[19] explored the strategic planning as communicative process based on Ricoeur's concepts of decontextualization and recontextualization, they conceptualize strategic planning activities as being constituted through the iterative and recursive relationship of talk and text, this elaborate the construction of a strategic plan as a communicative process. This study looks at the way that texts within the planning process, such as PowerPoint presentations, planning documents and targets that are part of a strategic plan, are constructed in preparation, through a series of communicative interface. Throughout the process, strategy documents were essential in detaining the developing strategy as they were constantly revised up until an ultimate plan was accepted.

A book edited by Mandeville-Gamble (2015) sees the roles of managers as important in terms of communicating the strategic vision of the organization.^[20] Many of the authors in the book by Mandeville-Gamble agree that a strategic plan is merely an unrealized vision unless it is widely shared and sparks the willingness to change within individuals in the organization. Similarly, Goodman in 2017^[21] emphasized that the advent of the internet and social media has become one of the most important vehicle to which corporate strategic plan can be distributed to an organizations internal and external stakeholders. This distribution of knowledge allows for staff of organization to access and share the institutional thinking this able to reformulate it in their own words.

Strategic planning through control mechanisms

Strategic planning through control mechanisms (mostly by the way of a communication program) is set in the hopes of coming to desired outcomes that reflect company or organizational goals. As further supplement to this idea, controls can also be realized in both measurable and intangible controls, specifically output controls, behavioural controls, and clan controls. By way of simple definition, output controls work toward to tangible and quantifiable results; behavioural controls are geared toward behaviours of people in an organization; and clan controls are dependent and are executed while keeping in mind norms, traditions, and organizational culture. All these three are implemented in order to keep systems and strategies running and focused toward desired results (n.d.).

Strategic planning, learning organizations, and communication

Strategic planning is both the impetus for and result of critical thinking, optimization, and motivation for the growth and development of organizations. The core disciplines, which are inherent in systems thinking, personal and organizational mastery, mental models, building a shared vision, and team learning. In a time of machine learning and data analytics, these core disciplines remain to be relevant in so far as having human resource and human interest become the driving force behind organizations.

Moreover, it cannot be denied that communication plays a role in the realization of learning organizations and strategic planning. In a study by Barker and Camarata (1998),^[22] the authors noted that there are theories that could explain the invaluable role of communication, and these are from Rational Choice Theory to Social Exchange Theory where costs, rewards, and outcomes are valued in maintaining communication and thus relationships to serve the ends of an organization and its members. Thus, while many organizations and companies try their best to become learning organizations and exercise strategic planning, without communication, relationships fail and the core disciplines are never truly met (Barker & Camarata, 1998).^[22]

References

^ Daft, Richard (2008). Management (8th ed.). Singapore: South-Western. p. 214. ISBN 978-981-4232-42-5.
^ ^a ^b ^c ^d ^e Mintzberg, Henry; Quinn, James B. (1996). The Strategy Process: Concepts, Contexts, Cases. Prentice Hall. ISBN 978-0-13-234030-4.
^ Kiechel, Walter (2010). The Lords of Strategy. Harvard Business Press. ISBN 978-1-59139-782-3.
^ Federal Consortium Benchmarking Study Team (National Performance Review), Serving the American Public, published in February 1997, accessed on 18 March 2025
^ The McKinsey Quarterly, Improving Strategic Planning: A McKinsey Survey, published in 2006, accessed on 30 October 2024
^ Michael C. Sekora (Feb 2, 2018). "Opinion: The Cold War Budget Tool That Could Save The Pentagon". Aviation Week & Space Technology.
^ Uni Futures Network, Rethinking Strategic Planning, archived 24 March 2007, accessed on 23 March 2025
^ Ingram, Richard (2015). Ten basic responsibilities of nonprofit boards (third ed.). Washington D.C.: BoardSource. p. 42. ISBN 978-1-58686-148-3.
^ ^a ^b Rumelt, Richard P. (2011). Good Strategy / Bad Strategy. Crown Business. ISBN 978-0-307-88623-1.
^ ^a ^b ^c Porter, Michael E. (1980). Competitive Strategy. Free Press. ISBN 978-0-684-84148-9.
^ Drucker, Peter (1954). The Practice of Management. Harper & Row. ISBN 978-0-06-091316-8. {{cite book}}: ISBN / Date incompatibility (help)
^ Mintzberg, H., Ahlstrand, B., & Lampel, J. (1999). "Strategy Safari: A Guided Tour through The Wilds of Strategic Management", *Work Study*, Vol. 48 No. 2. doi:10.1108/ws.1999.07948bae.002
^ Ferreira, João J. M.; Fernandes, Cristina I.; Ferreira, Fernando A. F. (2022-02-01). "What makes organizations unique? Looking inside the box". Journal of Business Research. 139: 664–674. doi:10.1016/j.jbusres.2021.10.017. hdl:10071/30538. ISSN 0148-2963. S2CID 239371863.
^ Kerzner, Harold (2001). Strategic Planning for Project Management Using a Project Management Maturity Model. United States of America: John Wiley & Sons. pp. 15–40. ISBN 0-471-40039-4.
^ ^a ^b Endo, Semail; Busari, Abdul Halim; Ibrahim, Dayang Kartini Abang (2025). "Exploring the relationship between strategic planning and educational performance: a systematic literature review". International Journal of Evaluation and Research in Education (IJERE). 14 (2): 926–937. doi:10.11591/ijere.v14i2.31810.
^ George, Bert; Walker, Richard; Monster, Joost (15 October 2019). "Does Strategic Planning Improve Organizational Performance? A Meta-Analysis". Public Administration Review. 79 (6): 810–819. doi:10.1111/puar.13104. hdl:1854/LU-8637323.
^ ^a ^b Mintzberg, Henry (1994-01-01). "The Fall and Rise of Strategic Planning". Harvard Business Review. ISSN 0017-8012. Retrieved 2022-04-10.
^ ^a ^b ^c ^d ^e ^f Cornut, Francis; Giroux, Hélène; Langley, Ann (2012). "The strategic plan as a genre". Discourse & Communication. 6 (1): 21–54. doi:10.1177/1750481311432521. ISSN 1750-4813. S2CID 144698238.
^ Andreas Paul Spee; Paula A. Jarzabkowski (2011). "Strategic planning as communicative process" (PDF). Organization Studies. 32 (9): 1217–1245. doi:10.1177/0170840611411387. S2CID 145209631.
^ Lutz, James (2016-09-08). "Practical strategies for academic library managers: Leading with vision through all levels". Technical Services Quarterly. 33 (4): 474–475. doi:10.1080/07317131.2016.1203671. ISSN 0731-7131. S2CID 64391685.
^ Goodman, Michael B. (2017-06-27), "Communicating Strategic Change", Social Media and Crisis Communication, Routledge, pp. 41–56, doi:10.4324/9781315749068-4, ISBN 978-1-315-74906-8, retrieved 2022-04-10
^ ^a ^b Barker, R. T.; Camarata, M. R. (1998-10-01). "The Role of Communication in Creating and Maintaining a Learning Organization: Preconditions, Indicators, and Disciplines". Journal of Business Communication. 35 (4): 443–467. doi:10.1177/002194369803500402. ISSN 0021-9436. S2CID 144340049.

Authority control databases
International	FAST
National	United States Israel
Other	NARA Yale LUX

Factor	Description and Examples
Political	Government policies, regulations, and stability; e.g., trade tariffs imposed in 2018 affecting supply chains.^[48]
Economic	Growth rates, inflation, and exchange rates; e.g., GDP fluctuations post-2020 recession impacting consumer spending.^[49]
Social	Demographic trends and cultural shifts; e.g., aging populations in Europe driving demand for healthcare services by 2030.^[50]
Technological	Innovations and R&D; e.g., AI adoption rates surging 300% in manufacturing from 2022-2025.^[51]
Legal	Compliance requirements and labor laws; e.g., GDPR enforcement since 2018 increasing data privacy costs.^[52]
Environmental	Sustainability issues and climate impacts; e.g., carbon emission regulations projected to add 5-10% to operational costs by 2030.^[53]

Study	Year	Samples Analyzed	Effect Size	Key Context
George et al.	2020	31 studies (87 correlations)	0.229 (moderate)	Stronger for formal planning and effectiveness measures; cross-sector.^[96]
Hamann et al.	2022	183 samples	r = 0.198 (small-to-medium)	Elevated in manufacturing and large firms.^[97]

Aspect	Strategic Planning	Financial Planning	Operational Planning
Time Horizon	Long-term (3+ years)	Short- to medium-term (annual cycles)	Short-term (up to 1 year)
Primary Focus	Vision, goals, market positioning	Budgets, forecasts, financial viability	Tactics, processes, day-to-day execution
Key Outputs	Strategic goals and priorities	Financial models, budgets, KPIs	Action plans, schedules, resource schedules
Involved Levels	Executive leadership	Finance teams, often integrated with ops	Departmental managers
Measurement	High-level outcomes like market share	Metrics like ROI, cash flow	Efficiency indicators like cycle time

Aspect	Strategic Planning	Strategic Thinking	Agile Methods
Core Approach	Analytical decomposition and formalization	Synthetic, intuitive vision-building	Iterative empiricism and adaptation
Time Horizon	Long-term, fixed horizons (e.g., 3-5 years)	Ongoing, emergent	Short cycles (e.g., 2-4 week sprints)
Environment Suitability	Stable, predictable markets	Uncertain, complex dynamics	High volatility, rapid change
Strengths	Resource alignment, accountability metrics	Innovation, opportunity sensing	Flexibility, faster value delivery
Limitations	Rigidity, forecast errors in turbulence	Lack of structure, potential inconsistency	Scalability challenges in large organizations

History

Strategic planning

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Media Pages

Timelines

Articles

Notes collections

Notes

Notes

Days in Chronicle

Strategic planning

History

Process

Overview

Inputs

Activities

Outputs

Outcomes

Tools and approaches

Analytical tools

Specific contexts

Strategic planning vs. financial planning

Criticism

Strategic planning vs. strategic thinking

Evidence on strategic planning's impact

Strategic plans as tools to communicate and control

The strategic plan genre of communication

Taking a stance

Strategic planning as communicative process

Strategic planning through control mechanisms

Strategic planning, learning organizations, and communication

See also

References

Further reading

Strategic planning

History

Ancient and Military Origins

Early 20th-Century Industrial Foundations

Mid-20th-Century Formalization

Late 20th-Century Critiques and Revival

Definition and Core Principles

Fundamental Definition from First Principles

Essential Components and Causal Mechanisms

Strategic Planning Process

Inputs: Data Gathering and Environmental Scanning

Formulation: Goal Setting and Strategy Development

Implementation: Resource Allocation and Execution

Evaluation and Adaptation: Monitoring and Feedback Loops

Tools and Frameworks

Classical Analytical Tools

Contemporary and Technology-Integrated Frameworks

Empirical Evidence on Effectiveness

Studies Showing Positive Correlations with Performance

Evidence of Limitations and Contextual Dependencies

Criticisms and Limitations

Inherent Rigidity in Dynamic Environments

Execution Failures and Resource Misallocation

Overemphasis on Planning vs. Emergent Strategy

Applications Across Contexts

Corporate and Private Sector Use

Public Sector and Nonprofit Applications

Recent Developments

Integration of AI and Data Analytics

Adaptations to Post-2020 Uncertainties and Resilience

Comparisons with Related Approaches

Strategic Planning vs. Financial and Operational Planning

Strategic Planning vs. Strategic Thinking and Agile Methods

References

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