Budgeting and the Strategic Planning Process
DEFINITION OF STRATEGIC PLANNING
Strategic planning is actually a simple, familiar concept. Webster’s New Collegiate Dictionary defines planning as the “devising of a method for making or doing something to attain an end.” Planning is thus a daily, almost unconscious activity for everyone. The unique aspect of strategic planning as currently applied in sophisticated business management stems from the connotations of the word “strategic”—that is, important, clever, and skillful.
As applied to business management, “strategic planning” is characterized by these attributes:
- It is directed at accomplishment of a specific, defined set of objectives.
- It examines alternate ways of doing the job and provides an estimate of resources required.
- It provides a benchmark to measure how much has been done.
Even in this sense, strategic planning per se is not new. Caesar, Hannibal, Napoleon, and all other great leaders were superb strategists. Andrew Carnegie and Henry Ford devised very effective strategic plans for their businesses based largely on brilliant intuition. The use of formal strategic planning systems in business management is a relatively recent phenomenon that has developed because an increasingly complex and rapidly changing environment has made decision making too difficult to rely solely on intuitive judgment. (Even intuitive geniuses such as Ford blundered when they failed to assess and react to environmental ...