The strategic planning process has three stages (Johnson, Scholes and Whittington): strategic analysis (where are we now?), strategic choice (where do we want to be, and how?) and implementation (making it happen). Gap analysis links analysis to choice by showing how far current plans fall short of objectives.
The three stages
| Stage | What happens | Tools |
|---|---|---|
| 1. Strategic analysis | Assess the environment, capabilities and stakeholders; set objectives; find the gap | PESTEL, five forces, value chain, VRIO, SWOT, gap analysis |
| 2. Strategic choice | Generate options and choose how to compete and grow | Generic strategies, strategy clock, Ansoff, methods of growth, suitability-acceptability-feasibility |
| 3. Implementation | Turn strategy into plans, resources, structure and change | McKinsey 7S, Kotter, project management, KPIs |
Gap analysis
Gap analysis compares where the organisation wants to be with where it will be if nothing changes. For example, if the target is revenue of £10m in three years but the forecast on current plans is £7m, strategy must close a £3m gap.
Advantages and disadvantages
Advantages
- Improves fit with the environment
- Best use of scarce resources
- Clear direction and accountability
- Can create competitive advantage
Limitations
- Time-consuming and costly
- Can reduce flexibility
- May be overtaken by crises
- Risk of bureaucracy
Strategic planning in ACCA SBL
Strategy is syllabus area C, and the three stages give you a structure for many answers. Typical tasks ask you to evaluate an organisation's planning approach. Be balanced: a formal plan suits a stable, regulated organisation, but a fast-moving one also needs room for emergent strategy. Poor planning can lead to strategic drift.
FAQs
What are the stages of the strategic planning process?
Johnson, Scholes and Whittington describe three: strategic analysis (where are we now?), strategic choice (where do we want to be and how?) and strategy implementation (making it happen).
What is gap analysis?
Comparing the organisation's objectives with the results it expects if it carries on as now. The difference is the gap that new strategies must close.
What are the advantages of strategic planning?
Better fit with the environment, better use of scarce resources, clear direction and accountability, and potential competitive advantage.
What are the disadvantages of strategic planning?
It takes time and money, can make the organisation inflexible, may be overtaken by crises, and can become bureaucratic.
What is the difference between planned and emergent strategy?
Planned (deliberate) strategy is set out in advance by managers. Emergent strategy develops from patterns of decisions over time, as Henry Mintzberg argued. Most organisations use a mix.