4.6 Strategic Planning and Decision Making

What is strategic planning?

Strategic planning is the process of defining a business's long-term goals and determining the actions needed to achieve them. It involves analyzing internal strengths/weaknesses and external opportunities/threats (SWOT analysis), setting a mission and vision, and creating a roadmap that guides resource allocation and decision making over time.

Levels of strategy

Corporate-level strategy decides what industries/markets a business competes in overall. Business-level strategy determines how a company competes within a specific market (e.g., cost leadership or differentiation). Functional-level strategy guides day-to-day decisions in departments like marketing, finance, and operations, all aligned with the higher-level goals.

Decision-making models

Good strategic decisions follow a process: identify the problem, gather information, generate alternatives, evaluate options, choose and implement, then monitor results. Data-driven decision making uses facts and metrics rather than guesswork, reducing risk. Managers must balance short-term needs with long-term strategic goals when making choices.

Key terms

Strategic planning

The process of defining long-term goals and determining actions needed to achieve them.

SWOT analysis

A tool analyzing Strengths, Weaknesses, Opportunities, and Threats to guide strategy.

Corporate-level strategy

Decisions about which industries or markets a company competes in overall.

Business-level strategy

How a company competes within a specific market, e.g., cost leadership or differentiation.

Data-driven decision making

Making choices based on facts and metrics rather than guesswork, reducing risk.

Try an AP-style question

In a SWOT analysis, which are internal factors?

1. Opportunities and threats
2. Opportunities and strengths
3. Threats and weaknesses
4. Strengths and weaknesses