In the five-step strategic planning process, which step comes second?

In the five-step strategic planning process, which step comes second?

• A. Develop an understanding of the existing business
• B. Analyze alternatives
• C. Develop a strategic plan
• D. Identify new business opportunities

Answer: (D)

The step being tested is about outlining growth directions after you’ve taken stock of where the business currently stands. Once you have a clear understanding of the existing business—the capabilities, markets, performance, and constraints—the next move is to look outward and identify new business opportunities that could be pursued. This creates a concrete set of potential avenues to evaluate, rather than guessing at what might be possible. Identifying opportunities early ensures you filter options through what the organization can actually achieve and what aligns with its goals and strengths. It sets up the later steps—analyzing the options for feasibility, risk, and fit, and then developing a concrete strategic plan—on solid footing. Without this outward opportunity identification, subsequent analysis and planning would be less focused and more speculative.

The step being tested is about outlining growth directions after you’ve taken stock of where the business currently stands. Once you have a clear understanding of the existing business—the capabilities, markets, performance, and constraints—the next move is to look outward and identify new business opportunities that could be pursued. This creates a concrete set of potential avenues to evaluate, rather than guessing at what might be possible.

Identifying opportunities early ensures you filter options through what the organization can actually achieve and what aligns with its goals and strengths. It sets up the later steps—analyzing the options for feasibility, risk, and fit, and then developing a concrete strategic plan—on solid footing. Without this outward opportunity identification, subsequent analysis and planning would be less focused and more speculative.