Strategic Planning: Internal and External Factors Analysis

Strategic Management

• Strategic management involves identifying internal and external factors that are important to achieving an objective, aligning internal resources with external opportunities and threats, and focusing on strengths and weaknesses (internal) and opportunities and threats (external).

SWOT Analysis

• A SWOT analysis is a simple tool that enables analysis of external and internal issues affecting an organization, consisting of:
  • Strengths (a resource or capability that the organization has)
  • Weaknesses (the lack of a resource or capability that the organization does not have)
  • Opportunities (favourable situations in the external environment)
  • Threats (unfavourable situations in the external environment)

External Environment

• The external environment includes everything at a global, country, and industry level that might affect the attainment of goals.
• External forces can be divided into six broad categories:
  • Political
  • Economic
  • Social
  • Technological
  • Environmental
  • Legal (PESTLE)

Internal Analysis

• Internal analysis tools, such as the Seven S's, can analyze strengths and weaknesses.
• Internal audit identifies and evaluates an organization's strengths and weaknesses.

Strategic Management Process

• The strategic management process involves:
  • Environmental analysis
  • Strategy formulation
  • Implementation
  • Evaluation
• The process is dynamic and continuous, with changes in one component potentially leading to changes in another or all other components.

Strategy Formulation

• Planning involves developing a vision, a mission, and value statements.
• Three important questions must be asked when formulating a strategic plan:
  • Where are we now?
  • Where do we want to go?
  • How are we going to get there?
• The vision of an organization helps to provide inspiration to its employees.
• The mission statement helps to measure whether the strategic plan aligns with the overall goals of the organization.

Strategic Goals and Objectives

• Strategic long-term goals and the accompanying short-term objectives should meet the SMART criteria:
  • Specific
  • Measurable
  • Achievable (acceptable)
  • Realistic
  • Time-bound

Implementation and Evaluation

• Implementing a strategy affects the organization from top to bottom.
• The results of strategic analysis in the public service must be interpreted with caution to ensure that it is not unduly influenced by presumptions or pressures in the department to confirm a particular strategic assumption.