- Strategic Plans
- Tactical Plans
- Operational Plans
- Contingency plans
This is a plan that covers the entire organization as a single business portfolio. This is a broad plan developed by top-level managers to give an organization a general direction. The strategic plans address the issue of; where should the organization be 5-10 years from now. The top level/strategic managers will develop these plans by scanning the environment, determining the opportunities and threats and developing a strategic fit for the organization. Strategic plans are concerned with allocation of corporate resources. They are complex, involve a lot of uncertainties and integrate the various sub units of the organization. These plans are long-range in nature and they are influenced by the values of those in power. Strategic plans are concerned with positioning the firm in its environment.
- Tactical Plans/Business Plans/Competitive Plans
These have a moderate scope and they relate to various sub-units of the organization. Sub-units may be functional areas (marketing, finance, production, human resource etc), or Strategic Business Units. These plans are derived from the strategic plans. They are medium term in nature and they are developed by the tactical or middle level managers.
- Operational Plans
These have the narrowest focus and shortest time frame. They fall into two categories; i.e. standing plans and single use plans.
These are plans developed to handle routine /recurring situations. They include procedures, rules, policies etc.
2. Single Use Plans
These are plans set-up to handle events that happen only once e.g. Budgets, programs, and projects.
Involve identifying alternative courses of action in advance of implementation of a plan in order to overcome possible changes in environmental conditions which may affect goal achievement. Contingency plans therefore add an element of flexibility that assists managers in the anticipation of changes that may occur suddenly.
Time Frame for Planning
There are three levels of planning based on time frame;
Short range / annual planning
Refers to plans developed for implementation within a planning horizon of up to one year. They are mostly made by line managers and general employees of the organization. They focus on day to day activities of the organization. They help achieve annual objectives.
Medium term / intermediate planning
Intermediate plans generally involve a time perspective from one to five years and are designed to implement activities among middle or divisional level managers of the organization.
- Long range planning
Involves identfying the activities to be performed over an extended period of 5 years and above. While short range and intermediate planning deals with planning activities which are more specific, long range planning does not. Long range plans help organizations to remain focused and achieve their vision.
Elements of planning
Planning requires managers to make decisions on the following fundamental elements; objectives, actions/strategies/means, resources, implementation and evaluation.
Objectives specify the needs/expectations to be achieved by the organization. They specify the targets to be achieved e.g. 5% growth in profit within two years. Objectives are concrete and specific. Objectives must be SMART i.e. Specific, Measurable, Attainable, Realistic and Time bound.
Actions are the preferred means or strategies to achieve the set objectives e.g. the ideal course of action to realize a company’s objective of increasing profit by 5% in 2 years could be to expand existing business or diversify business through increased investment. It could however opt to increase its promotional campaigns (advertisement) to improve its existing product appeal to customers. Whichever course of action a company takes depends largely on its internal resource capability and available opportunities in the environment.
These may act as constraints on the courses of action. They include physical assets, raw materials, financial and human resources, time, technology and information. In practice resources are limited or scarce.
A plan to realize increased company’s profit through a business expansion strategy would require the manager to specify the kinds and amount of resources required, potential sources and allocation of the resources to be committed to the planned activities.
This involves the assignment and direction of personnel to carry out the planned activities. The plan should be well communicated to employees for effective implementation. Plans can be implemented using policies, procedures, programmes and rules.