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Just like the name suggests, strategic planning for a business refers to the various steps that an organization can undertake in order to improve its overall marketability. The strategic planning process involves steps to identify areas in which the business is deficient, areas in which it has advantages, factors in its internal and external environment it can capitalize on for success, and how to combine the results of its analysis for greater productivity and profit. Two popular methods are used for strategic planning; they include the Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis and the Political, Economic, Social, and Technological (PEST) analysis.
The SWOT analysis is a method for evaluation of the progress of a company with the aim of discovering areas that need concentration. The information gathered from conducting a SWOT analysis can be utilized for in the strategic planning of a business. Each organization is different and as such, the strengths identified in different companies vary. An example is the location and the size of a company. What one company sees as a disadvantage might be an advantage for another company. A small company might view its small size as a strength, because this helps in making decisions faster. A bigger competitor might view the size of a smaller company as a minus, because the company does not have access to the same resources as the smaller one.
Other aspects of the SWOT analysis that can be used for strategic business planning include the weaknesses, threats and opportunities available to the company. The threats might include things like stronger competitors, emergent technology that the company has not embraced, negative government policies, and internal sabotage. Opportunities could include tax breaks, government incentives to produce, a boon in the economy, and cheap labor costs. These things factors enable the owner of the business to formulate effective strategic business planning.
PEST analysis is similar to the SWOT analysis as a means for strategic business planning. It also lists different factors that can be used to formulate the business plan. The PEST analysis includes the economic, political, social and technological factors in relation to the business. Another method that may be used to formulate a strategic business planning is the formulation of an effective business motto or value statement that will serve as a foundation on which the business plan will be built.