Strategic planning is an essential process for organizations to stay competitive and achieve their goals. To effectively navigate the complexities of strategic planning, it is crucial to have the right tools in place. For some the array of tools can be confusing. Questions arise such as which tools should I use? Which ones are appropriate for which situations? Should I use them separately or in unison? In this section, we will explore some of the best practice strategic planning tools that can enhance your strategic planning portfolio.
One widely used tool is the SWOT matrix, which stands for Strengths, Weaknesses, Opportunities, and Threats. This tool helps organizations assess their internal strengths and weaknesses as well as external opportunities and threats. The SWOT matrix provides a comprehensive overview of the current situation and serves as a foundation for developing forward looking strategies.
Another valuable complementary tool the TOWS matrix, which builds upon the SWOT analysis. It seeks to address criticisms of the SWOT Analysis regarding its inability to show relationships between the various categories. While the SWOT Analysis identifies Strengths, Weaknesses, Opportunities, and Threats, it does not show or make any links between them.
The TOWS matrix on the other hand seeks to identify links between the various elements identified in the SWOT analysis.
Internal strengths and weaknesses are compared to external opportunities and threats. Every link between the four individual factors can influence and impact each other and contribute to the overall strategic plan.
It takes the identified strengths, weaknesses, opportunities, and threats from the SWOT analysis and helps generate specific strategies by matching internal strengths with external opportunities (SO strategies), internal weaknesses with external opportunities (WO strategies), internal strengths with external threats (ST strategies), and internal weaknesses with external threats (WT strategies).
In addition to these matrices, another effective tool is PEST analysis. PEST stands for Political, Economic, Social, and Technological factors. No business or organisation operates in a vacuum. This tool allows organizations to analyze the macro-environmental factors that may impact their business operations. By understanding these factors, organizations can identify potential risks or opportunities and adjust their strategies accordingly.
Lastly, we have the SPACE matrix which stands for Strategic Position and ACtion Evaluation matrix. It is used to determine what type of strategy a company should undertake. The SPACE matrix consists of four quadrants where each quadrant suggests a different type or a nature of strategy: The two-dimension SPACE matrix axes are:
Internal strategic dimensions derived from Financial strength (FS) and Competitive advantage (CA)
The other axis is used to plot External strategic dimensions based on Environmental stability (ES) and Industry strength (IS)
By plotting these dimensions on a graph, organizations can identify which quadrant their current position, relative to competitors, they occupy and determine appropriate actions moving forward. The two-dimension matrix suggests one of four strategies based on the four quadrants of the matrix. These are (a) aggressive, (b) conservative, (c) defensive and (d) competitive.
While each of these tools can be used individually depending on specific needs or situations faced by an organization during strategic planning processes; collectively they provide a comprehensive framework for analyzing internal capabilities as well as external factors influencing the business environment.
When deciding which tools to add to your strategic planning portfolio, it is essential to consider the specific needs and goals of your organization. By incorporating these best practice tools into your strategic planning processes, you can enhance decision-making, identify new opportunities, and effectively navigate the ever-changing business landscape.
Templates for all the tools discussed here are available in our The Business Tools Store Strategic Planning section.