Formal Strategic Planning Strengths & Weaknesses

Are you looking for an explanation of formal strategic planning? Read this article to learn the definition of this process, its strengths and weaknesses, and how to conduct it.

🔝 Top-5 Formal Strategic Planning Examples

1. DHL – Dubai Company: Strategic Management
2. XYZ Company: Start in China
3. Managerial Changes as a Result of Careful Planning
4. The Georges Hotel's Strategic Human Resource Pyramid
5. The Coca-Cola Company: Strategic Plan Evaluation

🔤 Formal Strategic Planning: Definition

Every company deals with creating, implementing, and evaluating business strategies. These processes are called formal strategic planning. Further, we will discuss its meaning and explain its strengths and weaknesses.

What Is a Formal Strategic Planning Strategy?

A formal strategic planning strategy is a structured process of developing a plan to achieve corporate goals. It involves analyzing the organization’s internal and external environment, defining a clear mission and vision, setting SMART goals, developing strategies, allocating resources, implementing plans, and evaluating outcomes.

What Is a Formal Strategic Planning Process?

Formal strategic planning is a complex process comprising several steps. They include determining the firm’s strategic position, setting priorities, and developing, executing, and revising a business plan. Below, we will discuss all these stages in more detail.

👣 Formal Strategic Planning Process: Steps

Every business has a unique approach to strategic planning. Still, it involves 5 common steps:

Assess the current situation	Companies thoroughly analyze their internal and external environment to identify strengths, weaknesses, threats, and opportunities (SWOT analysis). It helps them understand where they currently stand and what they should do to achieve their long-term goals.
Define the objectives	An organization creates clear and concise statements of its mission, vision, and values. They will guide decision-making and strategy development. Further, it sets specific, measurable, achievable, relevant, and time-bound (SMART) goals. Formulating objectives with this framework allows the organization to focus on achieving its top priorities.
Develop a plan	A company creates a set of strategic initiatives, action plans, and timelines to achieve its goals. This step helps ensure the organization has a clear roadmap for reaching success.
Implement and evaluate the plan	A firm executes the strategic plan by assigning responsibilities and monitoring progress. It creates KPI dashboards to track progress and communicate duties among team members. In addition, managers agree on check-in points and regular progress revisions.
Review and revise the plan	An organization might reevaluate its priorities and change its strategic plan. This step also involves evaluating the strategy’s effectiveness with feedback and making necessary revisions to improve outcomes. It helps the organization to improve and adapt to changing circumstances continuously.

⚖️ Formal Strategic Planning Process: Strengths & Weaknesses

Formal strategic planning is a great tool to define an organization’s direction and decide on allocating its resources. While there are benefits to formal strategic planning, there are also some limitations and drawbacks. Below, we will describe the main strengths and weaknesses of this approach.

Formal Strategic Planning Strengths

1. Clarity of goals. This process enables an organization to define its objectives and priorities. This clarity helps align the organization’s activities with its vision and mission and gives it a competitive advantage.
2. Better decision-making. Formal strategic planning systematically analyzes an organization’s internal and external environment. This analysis helps identify opportunities, threats, strengths, and weaknesses. A company can also spot trends that shape its operating environment. This information can be used to make better-informed decisions.
3. Enhanced communication. Knowing a company’s strategic goals helps employees better perform their tasks. It boosts participation and dialogue among managers and workers.
4. Employee empowerment. With improved communication, employees can take on more responsibilities that align with the company’s goals. It strengthens workers’ sense of worthiness and effectiveness.
5. Improved resource allocation. Formal strategic planning helps organizations allocate resources to the most promising opportunities. Identifying the organization’s strategic goals makes it easier to determine which initiatives to pursue and prioritize.

Formal Strategic Planning Weaknesses

1. Time requirement. This process needs a significant investment of time and resources. Organizations may find it challenging to balance the need for strategic planning with other operational demands.
2. Inflexibility. The formal strategic planning process can lead to a rigid decision-making approach. Once a plan has been established, it can be challenging to change the course, even when new information becomes available.
3. Strategic execution failures. Creating a plan requires the cooperation of top management. However, the accuracy of its implementation depends on the whole company. It increases the chances of misunderstanding and incorrect interpretation of the company’s objectives.
4. Overemphasis on data. The formal strategic planning process can be too data-driven. It might exclude other valuable inputs such as intuition, creativity, and insight from stakeholders outside the planning team.
5. Unrealistic assumptions. The formal strategic planning process may assume an unfeasible level of predictability in the external environment. It leads to plans that do not account for significant and unexpected changes in the business environment.