Every successful project requires detailed attention to every step involved in it. A good management team will start with a pre-plan. Strategic planning requires clear identifications of objectives and goals, in line with the vision and mission statements of the company. One successful approach towards project planning and control is a seven step cycle. It involves all the components of a project plan from objectives, strategies, and control measures.
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- Seven Steps Approach to Planning and Control Cycles
Seven Steps Approach to Planning and Control Cycles
Below are the seven steps approach to planning and control cycles that you should know.
1. Identify the Objectives
Setting up clear and achievable objectives is the first step toward a successful planning and control cycle. These objectives or goals should be:
Specific, Measureable, Achievable, Relevant and Timely, or SMART in short
The other way of setting up the objectives is to quantify the targets, for example in short term 10% of Cost Reduction or 5% increase in sales. Long term objectives can be a % increase in EPS, a % increase in dividend yield, etc.
Benchmarking is set in this first step; it enables comparison of performance against competitors and also internal process improvements.
2. Identify Strategies
When we define objectives clearly, a strategic plan to achieve these objectives is then selected. The selection process of defined strategies will depend on the objectives set. Planning and control cycles involve a comprehensive analysis of external and internal factors for a company. Analyses of these factors will define the selection of strategy.
For any organization, the foremost analysis should be about the macroeconomic factors. These analyses will help find opportunities as well as identify threats. There are different approaches towards external analysis; some of them are as below:
This strategy examines the broad environment in which an organization operates. The factors examined in this strategy are, Political, Economic, Social, Technological, environmental, and legal. These are external and macroeconomic factor analyses which are often uncontrollable for any organization. Alternative strategy analyses for
the PESTEL model include Porter’s Five forces model, Porter’s Diamond model, scenario analysis, and forecasting.
For internal planning and control, there are different strategy options. These strategic models include Porter’s value chain model, Boston Consulting Group (the BCG) matrix, and product lifecycle analysis.
3. Evaluate Strategies
The strategy evaluation step in planning and control starts with financial performance measurement of the organization’s goals. These financial metrics can be any financial ratio such as Earnings per Share (EPS), Profit Margin ration, or dividend per share ratio. We can perform the evaluation of non-financial metrics by using SWOT analysis or GAP analysis.
4. Alternative Strategies
Once we completed the evaluation process, the management may decide on choosing for the alternative strategies. In this step, the management may decide for the strategic direction change about the product or business market positioning. The alternative strategic change can happen at different level, from organizational structure change to the product marketing mix, and the financial objectives modification.
5. Implementation of Strategic Plans
Once the management evaluates different strategy options and evaluates the changes that they require it’s time to implement the strategic plan. Clear communication of
objectives, roles definition, and scope of work for staff will ensure the successful implementation of the strategic plan.
6. Performance measurement and plan comparison
In the beginning, the organization sets clear objectives that define the critical success factors or CSF. We call the measure of these CSF’s through key performance indicators or KPIs as performance evaluation. The performance measurement can be in financial terms such as:
- Return on Investment
- Earnings per share
Performance measurement can also be done in regards to non-financial metrics such as economic value addition, customer perspective, and corporate social responsibility. The Balance Scorecard approach is ideal for long term strategic performance appraisals for internal business perspective, customer analysis, financial analysis, and innovation and learning perspective of the organization.
7. GAP analysis and divergence in plan
In the final stage of the planning and control cycle for any organization the strategic plan and control cycle is analyzed. The GAP analysis for the goals and objectives identified and achieved is analyzed. Any divergence from the plan is reported and corrective measures are taken.