A process to assess a college's external environment and audit its internal environment in order to pursue options available to postsecondary education is described. Essentially the concept is one of matching opportunities in the external environment with institutional strengths as determined by an internal audit. Strategic planning must consider a critical analysis of forces, trends, and their effects, and must be firmly based on demographic, social, political, and economic data sets. Data are the foundation upon which to build the multi-year institution or system plan. Institutions pass through various stages of development and have different characteristics of organizational functioning. Stages of organizational development are identified as: emergence, growth, development, regeneration, and decline. Types of organizational functioning can be listed as hierarchical, Theory X; collegial, Theory Y; and political, collective bargaining. In addition, tools of strategic planning can be labeled as needs assessment, trend analysis, environmental scanning, and market analysis. The challenge to postsecondary institutions is to diagnose where they are with regard to the first two dimensions and develop elements of strategic planning appropriate for their context. The purpose of the external environment assessment is to formulate assumptions that guide the institutional decision-making process, particularly in the areas of goal setting and human resource development, and to identify strengths, weaknesses, opportunities, and threats in the external environment. It is recommended that management information systems include the integration of data on the external environment and internal operations of institutions, such as registration, scheduling, and student aid. (SW)