Importance of Strategic Planning

Strategic planning offers the following benefits:

1. Financial Benefits:

Firms that make strategic plans have better sales, lower costs, higher EPS (earnings per share) and higher profits. Firms have financial benefits if they make strategic plans.

2. Guide to organizational activities:

Strategic planning guides members towards organizational goals. It unifies organizational activities and efforts towards the long- terms goals. It guides members to become what they want to become and do what they want to do.

3. Competitive advantage:

In the world of globalization, firms which have competitive advantage3 (capacity to deal with competitive forces) capture the market and excel in financial performance. This is possible if they foresee the future; future can be predicted through strategic planning. It enables managers to anticipate problems before they arise and solve them before they become worse.

4. Minimizes risk:

Strategic Planning provides information to assess risk and frame strategies to minimize risk and invest in sage business opportunities. Chances of making mistakes and choosing wrong objectives and strategies, thus, get reduced.

5. Beneficial for companies with long gestation gap:

The time gap between investment decisions and income generation from those investments is called gestation period. During theist period, changes in technological or political forces candy disrupt implementation of decisions and plans may, therefore, fail. Strategic planning discounts future and enables manages to face threats and opportunities.

6. Promotes motivation and innovation:

Strategic planning involves managers at top levels.. They are not only committed to objectives and strategies but also think of new ideas for implementation of strategies. This promotes motivation and innovation.

7. Optimum utilization of resources;

Strategic planning makes best use of resources to achieve maximum output.

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