Strategic Planning in the Small Business

Unit 4

HO 4-3

Hierarchy of Planning

Components

1. Distinctive Competency
   
   
   • What are the special
     attributes of the firm that provide
     a
   
   
   
   

meaningful, competitive

edge over its business

rivals.

2.

Vision - Based on a clear

understanding of the firms internal

and external situation,

and

an accurate appraisal

of its distinctive competencies

the planning team is ready

to prepare

a vision

statement for the firm.

A vision

statement is a fairly detailed

description of what the

planning team believes the

firm can

become and/or the type of

organization that would like

their firm to become.

3. Mission
   Statement - A brief statement
   which describes the purpose
   or reason for the

firms existence.

It addresses four fundamental

concepts, i.e. The

target population

served, the products and/or

services provided, the primary

geographic boundary

served,

and the

basic philosophy of the firm.

4. Strategic
   Posture - Based on
   a thorough understanding
   and appreciation of the firms

mission the team is ready

to put together a statement

on how the business will

achieve

its

overall mission and gain

a competitive advantage.

Some of the more common

postures

include the following: Single

Product/Market, Niche,

Expansive Growth,

Developmental

Growth, Product

Innovation and Diversification.

5.

Goals - Once the strategic

posture is understood the

team is ready to prepare goal(s)

statements.

A goal statement is a

specific priority the firm

has established over the

course

of its planning horizon.

For example...

GI (Goal 1)- To increase

the overall profitability

of the firm by 20 percent

by

12/31/94.

6. Key Result Areas
   
   
   • For each goal statement
     the team must identify specific
     issues the
   
   
   
   

firm must

address in order to achieve

the goal. These issues are

called Key Result Areas

(KRA).

For example...

G1 (Goal 1) - To

increase the overall profitability

of the firm by 20 percent

by

12/31/94.

KRA

1: Sales to current customers

(market penetration)

7. Objectives -
   For each KRA the team should
   develop one or more objectives
   to address

the KRA. An

objective is a end result

of planned activity. They state

what is to be

accomplished

by when. They should

be measurable and quantifiable.

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