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A strategy is a plan of action designed to achieve a specific goal. Strategy is all about gaining (or being prepared to gain) a position of advantage over adversaries, or best exploiting emerging possibilities. As there is always an element of uncertainty about the future, strategy is more about a set of options ("strategic choices") than a fixed plan.
Strategic planning is an organization's process of defining its overall strategy, or direction, and making decisions on allocating its resources to pursue this strategy. In order to determine the direction of the organization, it is necessary to understand its current position and the possible avenues through which it can pursue a particular course of action. Generally, strategic planning deals with three key questions:
"What do we do? "
"For whom do we do it? "
"How do we excel? "
[J. Scott Armstrong (1986). "The Value of Formal Planning for Strategic Decisions: A Reply". Strategic Management Journal 7: 183–185. ]
In many organizations, this is viewed as a process for determining where an organization is going over the next year or—more typically—3 to 5 years (long term), although some extend their vision to 20 years.
The key components of strategic planning include an understanding of the firm's vision, mission, values, and strategies. (Often a "Vision Statement" and a "Mission Statement" may encapsulate the vision and mission. )
Vision outlines what the organization wants to be, or how it wants the world in which it operates to be (an "idealized" view of the world). It is a long-term view and concentrates on the future. For example, a charity working with the poor might have a vision statement that reads "A World without Poverty. "
Mission defines the fundamental purpose of an organization or an enterprise, succinctly describing why it exists and what it does to achieve its vision. For example, the charity above might have a mission statement as "providing jobs for the homeless and unemployed. "
Values are beliefs that are shared among the stakeholders of an organization, for example, "Knowledge and skills are the keys to success" or "give a man a fish, you feed him for a day; teach a man to fish, you feed him for a lifetime. " These example maxims may set the priorities of self-sufficiency over shelter.
Strategy is a plan of action designed to achieve a specific goal.
Organizations sometimes summarize goals and objectives into a mission statement and/or a vision statement. Others begin with a vision and mission and use them to formulate goals and objectives. Many people mistake the vision statement for the mission statement, and sometimes one is simply used as a longer term version of the other. The combination of these factors constitute the overall strategy.