Long Term Strategic Plans

Strategic planning focuses on the long term view of the ability of the firm to create and maximise shareholder value and wealth.  The strategic direction embarked on by the firm seeks to position the firm with strategies to compete on cost or quality, or differentiation or in specialised niches. The objective is to gain competitive advantage by offering a combination of products, services, brands, trademarks that are both profitable and sustainable over the time horizon of the plan.

There are two approaches to strategic planning namely:

The ‘market based approach’ or the ‘market based view’ (MBV) to strategic planning,  commonly used by those companies with reasonable to strong balance sheets, where value creation is through growth or innovation and where the investment of Capex and Working Capital can be obtained one way or another. 

The market based view looks at the market opportunities that can be seized with the resources (financial, HR, licenses etc.) currently available, or with resources that the firm knows that it can muster. The market based approach is sometimes referred to as ‘strategic stretch’ where the firm stretches itself to achieve the resources it needs to ‘seize the day’.

The ‘resource based approach’ or ‘resource based view’ (RBV) is used by companies with mature products and/or services, where the product- service lifecycle has plateaued  or is declining, where competition is fierce,  or where there are many suppliers, or growth is hard to come by without innovation. The resource based approach is also used by companies that are trading under stress, or with cash flow management problems.

The planning approach for all such Long term strategic plans is to examine the external and internal environment, the specific needs of the industry sector in which the firm operates in, the competitive environment from within and outside the industry, the value chain of the firm, the internal environment including its business processes networks, alliances and the efficient management of its supply chain. The plan then makes a strategic appraisal of the company  using a SWOT analysis and use either the Market Based View or the Resource Based View to design the strategies of the company, the objectives to be met, the implementation methodology, a strategic financial plan and a supporting performance management plan.