When you ask someone to explain what the strategy is, the answer most certainly will be describing a plan, a kind of consciously and deliberately designed sequence of actions, the guiding line (or series of lines), which is followed in a particular situation. According to this approach, the strategy has two essential characteristics: it is created, previously, prior to action that is developed consciously and with the definite purpose. Many different definitions of the most diverse areas only support this view. For example: in the military, the strategy has to do with the preparation of the plan of military action, with projects of individual campaigns and the decisions taken on the basis of personal ties; in game theory, the strategy is a complex plan, a plan that determines the player’s choice in any probability of the situation; in management, strategy is a unified, comprehensive, holistic plan to ensure fulfilment of the main tasks of the company.
Strategic planning is one of the functions of strategic management, which is the process of selecting the organization’s goals and ways to achieve them. Strategic planning provides the basis for all managerial decisions. Functions of the organization, motivation and control are oriented at the strategic plans development. Not taking advantage of the strategic planning, the organizations and individuals will be deprived of a clear way to assess the goals and direction of the corporate enterprise. The strategic planning process provides managers with a framework of actions.
Strategic planning system allows shareholders and management of the company to determine the direction and pace of business development, to outline the global market trends, understand the organizational and structural changes needed for the company to make it competitive, understand company’s advantages and tools that are needed for its successful development. Strategic planning process consists of several steps: definition of the mission and goals of the organization, strategy selection process and strategy implementation.
The objective function of the strategic planning begins with establishing the company’s mission, which expresses the philosophy and the meaning of its existence. Mission refers to the conceptual intention to move in a certain direction. Usually it details the status of the company, describes the basic principles of its operation, the real intentions of the management and defines the characteristics of the most important economic enterprise. Mission is focused on the future, and shows what will be sent to the efforts of the organization, which values will then be prioritized. The mission should not depend on the current state of the enterprise; it should not affect the financial problems, etc. The mission is not taken to indicate a profit, as the main goal of the organization, although profit is the most important factor of the enterprise.
Goals refer to the certain specification of the organization’s missionin a form of accessible control of the process of their implementation. The main characteristics of strategic planning goals are: clear focus on a certain period of time, specific and measurable goals setting, consistency and coherence with other missions and resources, targeting and accountability. According to the based mission and goals of the organization’s existence, development strategy and policy of the organization are designed.
Strategy is a long-term direction for the qualitative determination of the organization relating to the scope, means and forms of its activity, the system of relationships within the organization, as well as the position of the organization in the environment, leading the organization to its goals. The strategy selection process is based on: the competitive position of the company in this strategic area of business; prospects of the most strategic areas of management; in some cases, with the technology available to the firm. Evaluation of the chosen strategy is aimed to answer the question: will this definite strategy implementation help to meet chosen goals? If the strategy is consistent with the goals of the enterprise, its further evaluation is conducted in the following areas: conformity of the chosen strategy and the requirements of the environment; compliance strategy chosen for potential opportunities of the company; acceptability of inherent risk in the strategy.
Implementation of the strategy is a critical process, as it is done in order to obtain successful results in the company from achieving its goals. Implementation of the strategy is done through the development of programs, budgets, and procedures that can be considered as medium and short-term implementation plans. The main components of the successful implementation of the strategy are: objectives of the strategy and plans are communicated to employees in order to reach an understanding on their part of what the organization aims to, and involved in the implementation of the strategy; guide provides timely receipt of all the necessary resources to implement the strategy, forms the implementation plan in the form of targets; in the process of implementation of the strategy on each level of management it carries out its tasks and performs the functions assigned to it.
Therefore, in order to develop effective and efficient strategy that will help to improve company’s development, at first, top management have to set the mission of the company and then on its basis develop goals, which implementation will help company to be more successful and profitable. Then manager should select the strategy that would be the most suitable for the company and its environment and that will help to meet the company’s goals. Effective strategy implementation is a crucial moment for the managers and whole enterprise.
According to the above information, it becomes clear that the main difference of the plan and strategy is in understanding that plan is one of the components of the strategy. Therefore, strategy is not only about planning, but also about these plans’ implementation.