Strategic Planning in Economic Development

Introduction

Strategic planning is considered as the ongoing process through which an economy or organization determines its directions in making decisions which incorporate even resource distribution to pursue the said direction. Strategic planning includes several elements of business analysis techniques that are essential in evaluating the intended course of economic development.

Economic development on the other hand is the ability of a community’s population to revamp its standards of living from a low income economy to a high earning economy. This is achieved through an unending process where the policies laid down by the nation are economically, politically and socially relevant in attaining growth of the people. Strategic planning is mandatory for any organization or community which is striving to achieve economic development as without strategic planning it would be equally hard to accomplish the mission.

Discussion

The essence of strategic planning

Research has shown that strategic planning is the most formal way through which an organization or community can forecast its future course. Hence for the planners to attain these goals, they have to carry out several analytical tests on the organization or community such as the PEST analysis which entails looking at the political, economic, social and technological factors. There is the SWOT analysis where the strength, weakness, opportunities and threats are evaluated when laying down the strategy while the STEER analysis looks at the socio-cultural factors, technological, economic, ecological and regulatory factors (Bakrsdale and Lund, 2006).

Before analyzing these factors it is important to cut a clear view of the organization’s or community’s’ past, present and future missions. This also applies to the goals, vision and objectives for the period during which the strategic plans are been laid out. To aid the planers during this stage are three specific questions which bring out the past, present and future expectations. These include asking each individual where the community or organization is at the moment. This triggers a series of questions such as what is expected or the way forward after identifying the current position.

The other question is the expectations for the future such as financial performance and employee output for an organization while the community could be looking into increased accessibility to education levels or health care for all. The last question is the moves which are efficient in moving the organization to the next level. This calls for singling out pathways which enable the organization and community to succeed as they move into the future (United Nations Human Settlements Program and EcoPlan International 2006).

Business strategic planners strive to ensure that their product sells more than that of the major rivals. However, in communities, strategic management committees do not look at the prospects of creating an edge from other communities but they lay emphasis on the common good. As a way of getting more informed on ways of moving into a bright future the team has to lay down the ideas and objectives in a strategic. There is a disclaimer though on strategic planning such that the plan on its own cannot move an organization or community to economic development. The participants have to work entirely hard guided by the strategic plan to execute the strategies outlined on the plan to attain the intended economic development (Stimson, Stough and Roberts, 2006).

The strategic plan therefore acts as a cornerstone in the community or organization hence sees it through hard times when problems or issues keep on cropping up. The plan is therefore a must for any focused community or organization that is aimed at attaining better operation grounds (Dimitriou and Thompson, 2007).

Economic development and economic growth

Before looking at the role of strategic planning in economic development, it is vital to understand the difference between economic growth and economic development which often pose a challenge to many in definition.  Economic development is the social or technological progress which is attributed to alteration in the way through which goods and services are produced. It is different from economic growth which refers to the increase in production quantitatively and it does not necessarily incorporate development (Todaro and Smith, 2009).

Similarly, while economic growth is measured as the rate of change in the gross domestic product per year, economic development is said to be the overall beneficial changes which are seen as indicators of well-being. Though the organization or community may not have increased its productivity in terms of quantity, improvement in literacy level, poverty rate and increased life expectancy are used to show economic development in a community. An organization that has made moves in economic development has elements such as leisure, social justice and freedom for its employees.

Consequently, overall environmental quality where pollution is eliminated or reduced is used to depict economic development in that community or organization. In a national scale, the ability of a country to provide adequate health and education facilities for its citizens scores highly in the economic development scale (Blair and Michael, 2009).

Key players in economic development

Economic development is a form of economics on its own but on a social level such that society plays a key role in attainment of the goal. Each organization or community thus appoints a group of professionals who provide leadership in policy making and administering of policies, programs and projects that are inclined towards economic development. The other role played by these professionals is to look for new economic opportunities while at the same time maintaining the existing wealth and status of the society’s well-being (Blair, 2009).

Though in yester years communities were not known to compete amongst themselves, a new trend has been realized as a result of globalization where competition to outdo other communities, organizations and nations has been the in thing. This is made possible by availability of economic incentives from individual governments such as availing investment capital, donation of land and tax incentives.  One of the most common way through which communities have been able to outdo others is through creation of jobs hence making the members of the community independent. Independence among community members is a key factor in attainment of social well-being (United Nations Human Settlements Program, 2006).

Therefore, in order to attain the required economic development goals, various groups must be incorporated in the equal distribution or resources to create more wealth which is paramount in boosting the standards of living. The community members play a big role, as well as, the employees of an organization. Similarly, the government and economists are included as human factors which the natural ecosystem is relevant in determining the nature of development projects which can be initiated in the area. However, these participants cannot execute the said responsibility without having prepared a strategic plan which is the map and compass for the entire process (Blair, 2009).

Strategic planning process in economic development  

Organization and sponsorship of the program

The organization of the strategic planning team is made up of the community members, local government representatives and professionals in the field of economics. However, there are other key players in the same scope such as civic organizations and other sectors of the economy. The advantage of including variety of individuals is to develop opinions on the specific needs of the community and organization from various perspectives. The other factor which should be considered when selecting the strategic planning team is creating a balance between gender, age, race and geographical location. This assures all citizens that their needs will be presented adequately. Consequently, by involving the pubic and private sector, the community’s or organization’s vision is met due to the balanced presentation on both sides (The Corporation for Enterprise Development, 1999).

The planning committee is supposed to look into the past performance of the organization or community and in so doing study the background information which makes up the history of the plan. The background information is essential in developing the mission and vision of the project whether it is overall enhancement of the community or the program will entail promotion of education levels first before commencing on other programs. This committee is expected to seek for funding from the government which is considered as the most significant donor of resources while other companies could incorporate the community’s needs as part of their social corporate responsibility thus donations are obtained (Todaro, 2009).

Analyzing the environment for strategic planning in economic development

Strategic planning especially in the rural community economic development programs entails a formidable understanding of the Political, Economic, Social, and Technological environment. Similarly, it is important to determine the SWOT analysis which will point out possible pathways to the desired goals. These concepts are essential in any economic development project regardless of the nature as even an organization aiming at initiating economic development programs has undertake the same procedures (Stimson, 2006).

The PEST analysis

The political environment

 The political environment is determined by the role being played by the government towards promoting the living standards of the citizens, as well as, the promotion of business activities within its jurisdiction. The stability of a government in the past is a better perception of stability in future though not always the case. Similarly, a heated political environment at the present or in the past is an indicator that the same instability may occur in future. Thus when preparing the strategic plan, it is important to take not of the political atmosphere for a designated period of time in the past. A strategic plan for economic development that does not have provisions for political instability in future is bound to fail. There are also various regulations which may change such as adoption of a new constitution or laws prohibiting inter-community competition as economic development projects (Bakrsdale, 2006).

Consequently, change in constitution may have adverse effects on the changes in tax or incentive development. This includes government regulations that restrict donations or tax exemption to certain organizations. This is disadvantageous to an already ongoing strategic planning session as the committee members will be forced to solicit for funds in their own ways. The strategic planners could be working on using the incentives and taxes as extra sources of funds such that freezing the same may lead to creation of new problems as the attention will now shift into strategies of wooing the government.

The other equally important aspect of political environment is the effect of civil and ethnic wars on the overall economic development programs. Communities or organizations which have been faced by such wars are less likely to revamp their economic status as fast as those who have never been subjected to a similar harsh political environment. The confidence of the strategic planners may be dampened upon learning that they might have to face a similar challenge which beyond their capability. A history of political stability on the other hand is more likely to boost implementation of the strategic plan (The Corporation for Enterprise Development, 1999).

The economic environment

The economic environment is signified as portraying the trends exhibited by business activities in the organization or community environs. This is analyzed in a number of ways that are all dependent on the financial status of the community. It entails analyzing the level of employment or unemployment that is depicted by the working population in the locality. The working population refers to the grown ups who are physically fit to execute roles in formal or informal employment. Low levels of employment are more likely to hamper strategic planning actions and measures as there will be fewer avenues in which to pass on the mission. Similarly, it would be difficult to develop a strategic plan that will meet the needs of the entire unemployed population. Hence more business oriented programs such as supporting self-employment or opening up new businesses in the vicinity of the community (Deaton, 2010).

One source of energy is human energy which is often associated with the younger generation that is able to carry out manual tasks with much ease. A population that is made up of more very young or very old poses a big challenge to the strategic planning team and more so if there are no commercial sources of energy such as oil to run machinery. If for instance the strategic plan was aimed at promoting greenhouse agricultural activities, where machines are rarely used, it would cost the planners more to hire human capital from neighboring communities (Anand & Ravallion, 1993).

The amount of energy available is essentially critical as most businesses that are likely to be opened are powered by energy. Therefore, it would be necessary as fewer funds will be required to open a new plant in the confines of the community. Generally it would be harder to import power first then the business but for communities with adequate energy supply either renewable or non-renewable, the ease of opening the new business will make strategic planning much easier (Burkhart and Reuss, 1993).

The amount of disposable income which the community members have to spare also counts a lot in the strategic planning process of economic environment analysis. This is because it creates adequate preview into the amount of money in circulation and the nature of investments that are common among the citizens. Such information is important in determining the projects which will garner more attention from the natives, as well as, extending support to their implementation and running (Lucas, 1988).

The socio-cultural environment

This is a unique attribute of each community or organization as each has it own social life and definitive cultural values. The cultural values include nature of business or economic development project that is being developed through the strategic planning process. For instance it would be unacceptable to introduce pork farming in the Arab world as most Arabs are Muslims and they do not touch leave alone trade in pork products. Thus in as much as the pork market could be promising or the climate could be favorable to pigs, the cultural values do not support such ventures. Therefore, the strategic planning committee has to engage in rigorous cultural-based research to evaluate the ethical or non-ethical values of the community (Anand & Sen, 2000).

The social environment also incorporates the lifestyle and fashion trends of the community members. A community that keeps up with the dynamic fashion trends is more likely to adopt the strategic planning projects and goals than one that does not pay much attention to the fashion trends. Similarly, the lifestyle of the community members plays a significant role in analyzing the degree of change to development of better living standards. Flexible communities are very much inclined to embracing change especially when their future life is predicted as bright and uplifted (Deaton, 2010).

The demographics are also important as the birth rate of the community determines the future of the community in terms of the productive population. A community that has a high birth rate or a sex ratio that has more women and women shows that the more children will be born. In such a case there is a better prospect for the community as there will be an adequate supply of workforce after the current generation retires. The total income earned by this working population is also essential in determining the poverty levels of the community. This is vital as the nature of strategic planning projects in the economic development process will be delivered in a way that the community members will be wholly incorporated inside.

The technological environment 

Technology is the concept of adopting efficient equipment and devices that make work easier, as well as, ensuring that better results are obtained for various undertakings. Despite the fact that the current industrialized world has ensured that various elements of technology have been incorporated into the daily lives of individuals, there are some communities that have never adopted any technological knowledge in this day and century. Such are the communities with very high poverty levels such that educational institutions where avenues of technology are developed are no longer a priority (Burkhart, 1993).

The strategic planning team for economic development programs should evaluate the degree to which the community has adopted modern technology and how it is used to make life easier. In this regard it is important to determine the portion of population that is literate as there is a mutual relationship between technology and literacy levels. A population that has been exposed to technology is much easier to incorporate as active members of the project as minimal training will be required prior to implementation. The other technological analysis which should be conducted is the degree of establishing and developing community-based projects aimed at promoting technology use. In this modern day era where globalization has made it easier to share information and advice with individuals in all corners of the world, technology will come in handy when seeking sponsorship from international donors.

Technology enables the community members to track developmental processes of projects in their communities thus making them active participants in running the enterprise. Similarly, the strategic planning team for the economic development projects will find it much easier when they establish that they will be dealing with technologically literate community members. The advantages of such high levels of literacy are that costs will be saved as the locals will be assimilated by the projects comfortably. Therefore, there will be cases of having to hire technicians from outside. The locals will benefit at all levels of the economic development program as indicated in the strategic plan (Anand, 2000).

Resources and capabilities as part of the environment analysis

Resources refer to the human, tangible and intangible resources which are owned by the community or organization. The tangible resources in an organization refer to the financial statements while in a community; a river flowing in the middle of the locality is a tangible resource. In addition to cutting down on the estimated costs during strategic planning, the tangible resources can be sources of economic development if used as per the strategic plan. A community that has a river can engage in commercial farming throughout the year as there will be water to irrigate their farms. Thus they will only need funds to buy the irrigation equipment. On the other hand a community that does not have any source of water may not include farming as the first choice in their economic development strategic plan as they have additional expenses (Dimitriou, 2007).

The intangible resources are visual and cannot be touched such as reputation. The strategic plan for an organization with a questionable reputation may face challenges especially in sponsorship and government support than one that has maintained a reputable image. This makes it even easier to prepare a strategic plan for an organization with a good reputation as prospects of attaining economic development are brighter.

Human resources include the labor force and the degree of productivity they can yield given a chance. This includes the sex ratio, age groups, literacy levels and physical condition. A community made up of sickly adults who ate malnourished will not be as effective in the strategic planning process towards economic development as a community made up of healthy adults (Stimson, 2006).

Capabilities refer to the aspect of a community or organization to combine the resources and ability to attain economic development. The capacity to rightfully carry out the assigned task while incorporating various needs of the community or organization is used to refer to capabilities. Various stages of the strategic planning require unique capabilities of the individual or project such that it would be easier to provide only a certain proportion of the entire tasks rater than having to avail the entire task from external sources (Mansell and Wehn, 1998).

The SWOT analysis during strategic planning in economic development

After carrying out the PEST analysis which provides an overview of the external and internal factors that may promote or dampen the success of the strategic planning process in economic development, the SWOT analysis is conducted.

Strength

The strength of the organization or community is given by the character traits which are essential in creating an advantage over the other organizations or communities. Such includes evaluating the elements of the environment analysis which are beneficial to the strategic planning process of the economic development goals. Presence of stable political atmosphere at the time of implementing the economic development goals demonstrates better prospects for the entire process. Similarly, presence of government incentives and maximum support which includes advice, as well as, exemption from taxes in the initial years of establishment creates adequate strengths for the strategic plan (Blakely and Leigh, 2009).

There are also certain strengths which are garnered in the strategic planning process such as the wealth of knowledge generated from the diversity of community members. By providing different opinions on the economic development that is most suitable for the community or organization they ensure that only the most relevant project is implemented. Communities which have adequate portions of the entire population being literate have an added advantage as they can utilize the local knowledge that is possessed by the locals.

Literate communities are more likely to embrace projects that are beneficial in the long-term as they can foresee the future while populations that have lower education levels will not support long-term projects as they would short-term ones. As the strategic planning process in economic development will be concerned with the long term well-being of the people, it is more likely to receive support from the literate category of the population (United Nations Human Settlements Program, 2006).

The other strength is in the availability of plenty of disposable income although the community has not adopted profitable means of investing. This is strength as with a new program to enhance economic development, the locals will have sufficient avenues of investing especially if appropriate measures are undertaken to educate them on the most profitable way to invest their money rather than spend all of it entertaining themselves.

Consequently, presence of natural resources such as a river, fertile soils and alternating seasons shows that a wide range of agricultural activities could be introduced commercially in this community. The other resource that is visible is the higher percentage of young people in the community such that the workforce will not be hired from other communities or organizations (Anand, 1993).

Weaknesses

Various weaknesses are evident in this community especially in terms of technology use as the capacity to effectively use a computer among other modern day technology such as equipment that enhances productivity. This is a weakness as the strategic planning team has to spare some time to educate the community members on ways of using modern technology to make their work more efficient. Similarly, the neighboring communities have also initiated similar strategic planning in economic development hence the team will have to work extra hard to excel or be at per with the others. This is termed as rivalry and though it will ensure that everyone will work hard to attain the laid strategic plan, sponsors and the government may be biased in donations (Lucas, 1988).

This community for which the strategic plan for economic development is made has all along imagined that the government should provide all necessities, as well as, improve their lifestyles without having to ask them to work for it. Hence the strategic plan will come as a shock as community members will be expected to work harder to make this mission of economic development a success. Therefore, making these people change their perception and engage them into activities that will result in economic development is quite challenging (Mansell, 1998).

Opportunities

There are many chances through which the people of this community can maximize on their economic development as the agricultural sector has not yet being exploited fully. Consequently, by taking advantage of the newly devised farm machinery, the community is bound to gain abundantly from this strategic planning program. The sector is also relevant in long-term projects such as this one especially the fact that the growing population of community members makes it even profitable as the locals are assured of an adequate supply of food. The other opportunity is seen in the increased corporate social responsibility for projects that make the beneficiaries self-reliant. Such has been the move by key sponsors who are more than wiling to support community/organizational economic development programs that enhance the living standards of participants (Burkhart, 1993).

Threats

One evident natural threat is the effect of global warming on farming activities due to the restrictions posed by environmental lobbyist. This may lead to drying up of the river which will be used as a source of water during the dry spells to ensure continued supply of water. The other threat is on the greenhouse gases which are emitted by greenhouses where various species of crops are grown.  Hence use of greenhouses cannot be a long-term agricultural activity to prevent severe damage on the natural ecosystem.

Similarly, other rival communities may start similar economic development programs which will provide stiffer competition though we shall have established our market share by then (Blakely, 2009).

Identifying the key issues

After carrying out the PEST and SWOT analysis, the strategic planning team in economic development needs to identify the key issues affecting the community or organization in order to develop adequate goals and missions that are strategic enough to solve the issue.

From the analysis above, the community has plenty of potential in establishing a solid economic development plan. However, the community members have a poor perception on economic development such that they think the government will promote their living standards in the form of “manna from heaven” without any collaboration. This is a poor will as individuals with such a mindset may prove difficult when seeking their assistance in the economic development process. Therefore, the very first problem is in changing this notion by educating the community on the need to work hard to improve their lifestyles by collaborating with the government in the implementation of the strategic plan (Dimitriou, 2007).

The other issue is identifying the most appropriate project that will incorporate a larger percentage of the community member to reduce the high poverty and unemployment levels. Similarly, identifying the social problems that are present among the community members should be done so that when choosing the program for the strategic plan the most suitable is chosen. It would also be important to gather information on the cultural practices from the community which can be converted into commercial economic activities. In this case, a community with a history in farming will be more than willing to engage in commercial farming than altering the lives of hunters into cultivating cash crops (United Nations Human Settlements Program, 2006).

Economic development goals and recommended strategies

As stated earlier the overall economic development goals are aimed at boosting the lives of community members or concerned individuals. However, there are other specific goals such as ensuring that the community members are assured of constant supply of food and income which they can invest in other areas. Subsequently, there should be increased community-based education on the need to initiate grass root awareness programs that are aimed at enhancing the lives of the participants in al dimensions (Bakrsdale, 2006).

One of the recommended strategies is taking note of the importance of having all relevant participants in the strategic plan implementation. Such a recommendation is essential as everyone will feel important when playing their role in the economic development goals. The other recommended strategy is given a suitable time span which is no longer short or very long so as to ensure that the available resources are distributed evenly for the entire period (Mansell, 1998).

Formulating and implementing the action plan for the strategic plan

Having identified the issue, goals and recommendations, an action plan is formulated in line with the above aspects of the economic development process. Similarly, the strategic planning team has to seek for specific individuals who will play key roles for each strategy that is laid out. This action plan should be specific for each strategy, and the steps which will be involved in the processes are assigned in line with their capabilities. This delegatory capacity is vital as each group will be responsible for the assigned task thus ensuring that it is completed in time. In this regard the responsible team carries out the specific task while the community members will support the actions (Dimitriou, 2007).

Before implementing the action plan, each individual should be educated and made to understand what is required of them, as well as, the exact time frame during which the task should be implemented. Due to the challenges and natural catastrophes which may occur in the course of implementation, the strategic planning team should carry out close monitoring constantly. With all these steps laid out during strategic planning, economic development in communities or organizations is bound to be achieved within the set timeframe (Blakely, 2009).

Conclusion

In conclusion strategic planning is an essential part of economic development as it provides tools and guidelines through which various social organizations can attain economic freedom. Strategic planning as a tool should be flexible and precise to avoid out of the world goals that cannot be attained by community members thus the need to understand the essence of strategic planning in economic development. Similarly, before identifying the various economic development goals, it is crucial that the strategic planning team should carry out adequate background research based on SWOT and PEST analysis of the community or organization for which the strategic plan is prepared.

The problems affecting the community or issues which should be handled are evaluated as they will be used to determine the most appropriate goals and strategies for alleviating the problem. An action plan is then prepared which outlines the tasks and key players who should oversee the overall implementation of the strategic programs. The strategic plan and the action plan are complimentary elements in any successful program such as the economic development process.

References

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