Advantages and disadvantages of strategic planning

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What is strategic planning?

Strategic planning is very important as it charts the direction of an organisation. Organisations often engage in it in order to develop, implement and evaluate their strategies. Strategic planning refers to the decision-making and planning process that guides the long-term direction of an organisation (Plunkett & Attner, 1994). According to Martin (2014) strategic planning has three parts i.e. mission/vision statements, list of initiatives, and the conversion of the initiatives into financials. It is worth noting that, there are some advantages and disadvantages of strategic planning that managers should be aware of. This article addresses some of them.

Advantages and disadvantages of strategic planning

While strategic planning has a number of advantages, it in fact has some disadvantages too.  However, advantages usually outweigh disadvantages and therefore, organisations spend a considerable amount of time and money in strategic planning.

Advantages of strategic planning

No business is without risks. Therefore, organisations need to have some mechanisms in place to identify these risks. One of the most important advantages of strategic planning is that it helps organisations identify and manage risks.

Strategic planning forces managers to think. It can encourage creativity and initiative by tapping the ideas of the management team (BPP Learning Media, 2010). It may include both top-down and bottom-up approaches to engage employees in the strategic planning process.

While organisations have their aims and objectives, it may sometimes be necessary to bring about amendments. Aims and objectives may sometimes need clarity as well. Strategic planning clarifies aims and objectives of an organisation. It requires planners to define what they would like to achieve.

Managers entrusted with strategic planning need to inform the whole organisation of the aims and objectives, strategic changes, future plans etc. This dissemination of information helps them identify resistance to change and take remedial actions as necessary.

Organisations consist of different departments and carry out a number of tasks. Consequently, they need collaboration and cooperation across the spectrum.  However, managers in finance, marketing, operations, HRM etc. often compete rather than collaborate. So, what is the solution? One of the solutions is strategic planning as it facilitates collaboration among the managers.

Organisations need to allocate resources e.g. people, money, and land to implement strategic plans. Therefore, moving people from one team to another or moving facilities from one country to another may be necessary sometimes. This allocation of resources help organisations identifies right resources for right place which is a key to the success of strategic planning.

Disadvantages of strategic planning

Strategic plans often fail due to outside influences such as changes in the economic environment, competitor actions and/or technological change (BPP Learning Media, 2010). Macro-environmental factors may sometimes change extremely rapidly which may frustrate any strategic plans.

If organisations carry out strategic planning thoroughly, it becomes a costly, rigid, and time-consuming process. It may sometimes take five or more years to implement a strategic plan. Consequently, benefits of strategic planning may not be immediately visible.

Strategic planning is a very complex process. According to Plunkett & Attner (1994) it has six stages i.e. evaluating current mission, objectives and strategies, analysing the environments, reassessing mission and objectives, formulating strategies, implementing strategies, and monitoring and evaluating results. The article strategic planning process provides more insights into strategic planning.

To sum-up, advantages and disadvantages of strategic planning are very clear as outlined above. However, putting criticisms aside, strategic planning plays an important role in organisations. It helps organisations carry out a comprehensive assessment of its environments and develop and implement strategies in line with them.

We hope this article on the ‘Advantages and disadvantages of strategic planning’ has been useful. You may also like reading ‘Strategic alliance – definition and types of strategic alliance’ and ‘Difference between strategic risk and operational risk’. If you liked this article, feel free to share it by clicking on the icons below.

Last update: 28 September 2020

Further reading/references

BPP Learning Media (2010) Business Essentials: Business Strategy, 2nd edition, London: BPP Learning Media Ltd

Martin, R. (2014) The Big Lie of Strategic Planning, available at: https://hbr.org/2014/01/the-big-lie-of-strategic-planning (accessed 28 September 2020)

Plunkett, W. & Attner, R. (1994) Introduction to Management, 5th edition, USA: International Thomson Publishing

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Author: Joe David

Joe David has years of teaching experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality, and tourism management. He holds a Postgraduate Diploma in Management Studies and a Post Graduate Diploma in Marketing Management.