Strategic Business Planning and an Audit Checklist
August 8, 2011
Definition, elements, usage of strategic planning
We’re pleased to announce that currently we’re working on creating new content about the business management audit. We plan to write a series of articles on this topic and combine them into a single guide. We hope our work will helpful for anyone involved in business management and audit. Below we present the first article of the series. Please keep track of the updates to read other articles of the series. Please use the subscription form at left side and RSS.
The audit of the business management environment starts with investigating the foundation of any organization – strategic planning. Business strategic planning identifies what goals the organization is supposed to achieve and determines how it should act to reach the destination.
Auditing strategic planning allows the auditor to get insight into the company’s top-level goals and expectations and then compare the current status of the goals with the plans. Below we present the definition and key elements of the strategic planning process and outline a list of questions for auditing the process.
What is Strategic Business Planning?
Strategic Business Planning is a consistent and continuously evolving process of determining a company’s long-term objectives and then developing or selecting the best approaches for achieving those objectives. The purpose of this process is to set the direction for the company’s future activities and operations and outline a plan of actions to move the company towards success. The process entails creation of a business plan that specifies a route map for leading the company in the desired direction.
The process of strategic planning is not statical but it dynamically develops to adjust the company to the changing environment. It provides a mechanism of planning long-term goals while ensuring that day-to-day operations and activities are aligned with the environment. Such a mechanism is aimed at addressing three key points which are the elements of strategic business planning. The elements are:
- Current State. Where is the business now?
- Direction. Where is it supposed to be?
- Change. What can be used to move the business towards the right duration?
The audit of business management in terms of strategic planning entails the investigation of these three points to determine the top-level goals to be reached by the company, the current state of the goals, and the use of resources, systems and tools available for the company.
A business plan is a form of using the strategic planning process for reaching the long-term goals through specifying rules and expectations for day-to-day operations and tactical decisions. A business plan determines how to accomplish the goals and move the company towards the desired direction.
A Business Plan is a formal document explaining the course of action and the key tasks to be completed to reach the top-level objectives of an organization and provide opportunities for further growth and development of the organization. The document is the outcome of the strategic planning giving a big-picture view of what activities are supposed to be performed to move the firm to success.
The plan identifies how the firm is expected to be positioned in the marketplace as effectively as possible. A thorough analysis of both the firm and the marketplace is required to develop the plan. Most telecommunications giantssaw an opening in the market and drafted an in-depth and accurate business plan which ultimately led to their success.
SWOT (Strengths, Weaknesses, Opportunities, and Threats) is a popular method of defining and analyzing the internal and external factors that are favorable and unfavorable to accomplishing some business goal. In this regard, the SWOT analysis can be used to determine the company’s strategic direction and create a business plan. Here’s a brief description of the analysis:
- Strengths – attributes of the company that help achieve the strategic goals (e.g. unique technology or knowledge, qualified workforce, favorable geographical position, etc.).
- Weaknesses – attributes that are obstructive or destructive to the company and its objectives.
- Opportunities – some external factors that are helpful in moving the business towards the right direction.
- Threats – some external factors that can mislead the company or be obstructive to achieving its strategic objectives.
The audit of the business management environment focuses on reviewing the SWOT model for the current business to determine if the business uses its strengths to exploit available opportunities while minimizing the negative impact of threats and weaknesses.
Strategic Planning Audit Checklist
Finally, auditing strategic business planning can be described as taking a series of steps to investigate the company’s top-level objectives, the business plan, and the SWOT model. Below we suggest a checklist of strategic business planning. You can use the checklist “as is”. If you think there’s something missing, please copy the current checklist to a new document and amend and revise it as you wish.
- Mission Statement. Is there a clearly written and unambiguous mission statement of your company? In other words, do you realize what type of business you’re in?
- Top-Level Objectives. Do you have a written statement of strategic objectives that are critical to the firm’s performance? Are they SMART (Specific, Measurable, Achievable, Relevant and Time-scaling?
- Target Market. Do you know where your products and services are meant to come to? Is there a written description of your company’s target market?
- Customers. Do you know who your customers are, what their characteristics are, and whether they want to purchase from you?
- Competitors. Do your have a thorough strategy to keep your firm ahead of the competition? Do you know what makes the firm competitive? In other words, what are strengths and weaknesses of the company? You should define the competitive edge and then identify possible ways for maintaining it through effective planning.
- Guiding Policies. Are there written policies and guidelines that the senior management as well as employees can use in strategic/tactical decision making and problem solving? Can you prove your workers follow the policies?
- Business Opportunities. Can you say there’s a strategy to identify and exploit potential opportunities? For example, there can be opportunities for increased sales and profits, developing new products, capturing new markets, others. Is your company ready to exploit such opportunities?
- Threats. Is there a clearly defined and approved plan of actions to address any issues or risks related to the business existence? Can you say your top-level personnel use the action plan to efficiently respond to threats and uncertainties?
- Forecasting. Do you intend to foresee and predict future activities of the company? Do you use forecasting as a method of strategic business planning? Do your managers use the method to avoid surprised and unforeseen changes in the working environment?