Types of Planning

In this post, we will discuss planning and types of planning and their importance in the context of business and competitiveness. Let’s see how business use various types of planning to grow their productivity and manage various types of risks and challenges.

Planning is an essential business activity. Organizations that have an effective business planning process in place experience higher success in the short and the long term. However, the approach to planning differs from business to business and that’s why businesses in the same sector may experience different levels of success based on their approach to planning. Business leaders and managers need to develop a clear understanding of how to approach planning to experience higher success compared to competitors. However, many businesses do it wrong and that’s why they achieve limited success.

Business planning is about managing business resources and priorities in an organized manner. If a company improves its approach to planning, it also improves their management and leadership. To plan better, companies can take the following steps:

Create a plan:

When creating a plan, first note down the most important details with a focus on the strengths and what matters the most. You must also note which people are most important to you and what you can do for them. It will help you communicate your vision to your employees.  

Define success:

It is about the future of your business and where you want to see it in several years from now. You must first set long term goals. When setting goals try to be as specific as possible. You will also need to set milestones for some goals and decide who is going to achieve those goals. Focus on what drives your business. For example, you may need to look at conversions or how many people visiting your website, purchase from it. Following that you will need to establish a review schedule and review your long-term goals as required.

Put the plan in action

You must analyze the data to know what kind of efforts you need to put into making your business better. In this way, you will find it easier to make changes or develop new plans which might help you manage your business better.

Types of planning

Operational Planning

Operational planning mainly involves planning about how things must happen inside the organization. As the name suggests it is about planning the business operations. It involves setting guidelines about work that leads to the achievement of business objectives and mission.

Operational planning generally focuses on the day-to-day operations of a business. The operational plans are generally classified as single use or ongoing plans. Single use plans are the ones that are used once for an event or for a particular activity. For example, when business managers are planning for the next marketing campaign, it is a single use plan. When they will launch a new product, they will plan again. Ongoing plans are like policies, rules and procedures. They detail how certain objectives are to be achieved inside the organization or how particular issues and problems must be handled.  There are policies for handling problems, rules for specific activities and procedures to be followed to achieve certain objectives.

Strategic planning

Strategic planning as the name implies is about business strategy and the larger picture. Strategic plans are related to why things need to happen. It generally involves long term planning and envisioning a future for the business. Strategic planning begins at the highest level of management with a mission and vision. The vision, mission and organizational values are among some important components of strategic planning. As already mentioned, Strategic planning entails long term planning. It can be anywhere between a plan for next three years to a plan for next decade. Strategic planning also includes a high level overview of the business. It will dictate strategic decisions made by the management in the longer term. Most of it is carried out at the top level of management.

Tactical Planning

The role of tactical planning in an organization is to support strategic planning. If strategic planning is concerned with the larger picture, tactical planning is concerned with smaller sections of the larger picture. It involves planning and laying out the tactics the company plans to use to achieve the objectives of its strategic plan. Tactical plans according to Mack Story are concerned with what is going to happen. The tactical level plans include several focused, specific and short-term plans, supporting the higher level strategic plan.

Tactical planning is shorter term planning compared to Strategic planning or it breaks a strategic plan into smaller practicable chunks. The scope of tactical plans generally remains less than a year. Tactical planning is different from operational planning. While tactical planning asks specific questions about what must be done to accomplish a strategic goal, operational planning is concerned with doing things that help achieve the organizational mission.

Contingency planning:

Contingency planning is very different from the three types of planning discussed above. However, growing competition and increasing number of challenges in the industry have made it essential for businesses to understand and engage in contingency planning. Contingency plans are plans that deal with something unexpected or unforeseen risks. In several situations, when the company has decided a course of action, the outcome may be very different from expectations. In such situations, companies have to remain ready with contingency plans that will help with the situation. Contingency plans are also referred to as backup plans. Contingency planning can also be understood as an essential component of risk management. It becomes especially important in situations where the consequences of the company’s actions cannot be foreseen. However, an important thing to note is that contingency planning does not fall in the same category as the three other primary types of planning.

A few last words:

Planning is among the most critical business activities driving productivity, efficiency, and profitability. It is about managing and utilizing resources in an organized manner to achieve organizational objectives. While there are four types of planning, the first three are the primary types of planning which are related to the achievement of business objectives. The fourth type is considered a special type of planning whose focus is on managing unknown risks. Operational planning focuses on planning day to day operations in a manner that leads to superior productivity and profitability. Strategic planning is considered very important since the market position of the business in the longer term rests on it.

It is generally conducted at the highest levels of the management and includes the mission, vision, and organizational values. However, strategic planning is long terms planning and the plan may be created for the next three to ten years. So, strategic plans provide longer term guidance to the business. tactical planning on the other hand supports strategic planning and the achievement of the objectives of strategic plan using special tactics that break down the strategic plan into smaller practicable chunks making it easier to apply the plan and achieve the organizational objectives. The last type of planning is a special type of planning which falls within the ambit of risk management within organizations. They are known as backup plans since they can be applied when the primary plan fails.

Suggested Reading:
OBJECTIVES OF INVENTORY MANAGEMENT SYSTEM
ADVANTAGES AND LIMITATIONS OF INVENTORY MANAGEMENT SYSTEM