In the strategy formation stage of strategic planning, the executive management team and the board of directors develop strategies by following a three step approach:
First, they perform an internal analysis of the organization and an external analysis of competitors, current and prospective customers’ needs and evaluate the current economy and government regulations. A SWOT Analysis, which defines the strengths, weaknesses, opportunities, and threats of the organization, is a good way to illustrate this information.
Second, the management team needs to develop long-term strategies while considering the organization’s vision and mission statements. Then the management team needs to review their short-term corporate objectives that are aligned with the strategies.
Third, the executive management team needs to reach an agreement on the actions needed to achieve the strategies. The strategic plan needs to cover in detail the “who”, “what”, and “when” responsiblities for the selected actions.
