STRATEGIC PLANNING FOR THE GROWING BUSINESS

STRATEGIC PLANNING FOR THE GROWING BUSINESS

Scott R. Safranski, Ph.D.
Associate Professor of Management
Associate Dean, School of Business Administration

Ik-Whan Kwon, Ph.D.
Department of Management and Decision Sciences
St. Louis UniversitySt. Louis, Missouri


Emerging Business Series _________________________________________________________________
Copyright 1991, Scott R. Safranski and Ik-Whan Kwon. "How to Write a Business Plan." Copyright 1990, Linda Pinson and Jerry Kinnett.

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TABLE OF CONTENTS


INTRODUCTION

THE BUSINESS ENVIRONMENT

PROACTIVE VERSUS REACTIVE MANAGEMENT

THE NEED OF A STRATEGIC PLAN

DEVELOPING A STRATEGIC PLAN
Mission Statement
Your Firm's Philosophy
Your Firm's Goals
Objectives to Achieve Goals
Environmental and Industry Analysis
Information Needs
Internal Business Analysis
Finalizing a Plan

THE BUSINESS PLAN

IMPLEMENTING THE STRATEGY

SUMMARY

REFERENCES

APPENDIXES
A. Self-Assessment Questionnaire
B. How to Write a Business Plan
C. Information Resources

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INTRODUCTION

To many people, strategic planning is something meant only for big businesses, but it is equally applicable to small businesses.Strategic planning is matching the strengths of your business to available opportunities. To do this effectively, you need to collect, screen and analyze information about the business environment. You also need to have a clear understanding of your business -- its strengths and weaknesses -- and develop a clear mission, goals and objectives. Acquiring this understanding often involves more work than expected. You must realistically assess the business you are convinced you know well. Familiarity can breed contempt for thorough analysis; you cannot properly evaluate your firm's strengths or shortcomings.

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THE BUSINESS ENVIRONMENT

Strategic planning focuses largely on managing interaction with environmental forces, which include competitors, government, suppliers, customers, various interest groups and other factors that affect your business and its prospects. Your ability as a small business owner-manager to deal with these groups will vary widely depending on the group and on the timing. For example, you may enjoy greater influence with your local government than with the federal government. In addition, you may be able to get more of what you want from a supplier than from a competitor (although size, distance, and the percentage of the supplier's business you represent and your record of dependability as a customer can affect this relationship). How you manage these and other relationships is one of the decisions you will make during the strategic planning process.

Because of major changes in the business environment, your familiarity with strategic planning and your ability to implement it is critical. At one time, business owner-managers assessed the environment on a continuum that ran between very stable and very unstable. Businesses, such as the producers of automobiles, furniture and other consumer goods, operated in a relatively stable and predictable world. This also was true of many service firms, such as banks and savings and loans. Typically, the environment included competition that was limited to a stable group of competitors, loyal customers and a relatively slow transfer of information. Many small businesses could thrive in this environment. Other small investors entered fields such as xerography, computers and computer component production, software design and chemical research. Some of these grew rapidly, becoming names with which we all are familiar: Xerox, IBM, Apple and Microsoft. However, many more failed.

Today, experts agree that more businesses face an unstable business environment. Improvements in information processing and telecommunications have made major changes in most industries. Along with this, improvements in transportation and the growth of foreign economies (specifically in Europe and Asia) have created a global marketplace and redefined certain industries. In addition, as consumers are exposed to more choices, loyalty has become less important than it once was; a slightly better deal or a temporary shortage of stock can easily result in the loss of customers. Competitors also can change rapidly, with new ones appearing from out of nowhere (often this means the other side of the globe). With the instability of the global market, it is important that you make strategic planning part of your overall business strategy.