Types of Planning
By understanding the different types of planning in management, organizations can develop a comprehensive approach to achieving their goals and objectives successfully.
There may be several ways in which an organisation can undertake the planning process through the basic steps involved remain the same in each way.
The types of planning classification are not mutually exclusive but iterative. For example, strategic and tactical planning may be undertaken based on a proactive or reactive approach, or formal or informal basis. However, in each set of classifications, the emphasis put on the types of planning processes differs.
The purpose of this post is to provide a comprehensive overview of the five types of planning in management and emphasize their importance. By reading this post, you will gain a deeper understanding of the planning techniques used in management and how they can benefit the managers and the organization.
1) Coverage of Activities
i) Corporate Planning
Drucker has defined corporate planning as the continuous process of making present risk-taking decisions systematically and with the greatest knowledge of their futurity; organising systematically the efforts needed to carry out these decisions, and measuring the impacts of these decisions against the expectations through organised and systematic feedback.
ii) Functional Planning
The planning that is carried out ensures the smooth working of the organisation and takes into consideration the requirements of every department. The goal of functional planning is to promote standardised management practices for corporate functions in the department’s decentralised corporate management structure.
2) Importance of Contents
i) Strategic Planning
Strategic planning sets the long-term direction of the organisation in which it wants to proceed in future. Strategic planning is of prime importance for any organisation as it would specify the other decisions that need to be taken.
ii) Tactical Planning
Tactical planning is short-term planning which usually covers one year or so. It is aimed at sustaining the organisation in its production and distribution of current products or services to the existing markets.
iii) Operational Planning
Operational planning is an annual work plan. It describes short-term business strategies and how a strategic plan will be implemented during a given operational period. An operational plan is a basis for and justifies an annual operating budget request.
3) Time – Period Involved
i) Long-Term Planning
Long-term planning is strategic and involves more than one year extending to twenty years or so. However, the more common long-term period is 3 to 5 years The long-term plans usually encompass all the functional areas of the business and are affected by the existing and long-term framework of economic, social, and technological factors.
ii) Short-Term Planning
Short-term planning, also known as operational or tactical planning, usually covers one year. These are aimed at sustaining the organisation in its production and distribution of current products or services to the existing markets. These plans directly affect functional groups – marketing, production, finance, etc.
4) Approach Adopted
Depending on how the organisations would react towards the environmental dynamics the planning can be categorised into proactive and reactive.
i) Proactive Planning
It is based on the anticipation of the future outcomes and state of affairs that would affect the working of the organisation. Such planning has to be broad-based, highly flexible and creative by nature. The organisation that favours this kind of planning often anticipates the future and takes necessary steps before the occurrence of the events.
ii) Reactive Planning
As the name suggests this kind of planning is not in the anticipation of the future but becomes active only when the problem is confronted or has already occurred. This is simply a corrective action that is taken.
5) Degree of Formalisation
i) Formal Planning
Formal planning exists in the formal hierarchy of the organisation and is always carried out in the stepwise process. It is according to the predefined policies and the rules of the organisation. This type of planning is done on a large scale and is based on logical thinking.
ii) Informal Planning
Informal planning is usually carried out in very small organisations where the formal organisation structure may or may not exist. The planning is usually intuitive and short-term.
How the Types of Planning in Management Works
In the field of management, types of planning generally follow a specific order:
- Strategic planning,
- Tactical planning, and
- Operational planning
Strategic planning starts with top management, it involves setting long-term goals and objectives for an organization and developing strategies to achieve them.
Tactical planning, on the other hand, is used by middle management and focuses on translating goals and strategies into specific action plans for various departments or teams within an organization.
Operational planning focuses on daily activities and processes required to run a business, such as scheduling production runs or arranging logistics. If there are changes to be made after monitoring the progress, they are done at the level of operational planning
Effective types of planning at all levels require a deep understanding of an organization’s vision and mission statement; its internal strengths and weaknesses; external market challenges; financial constraints; and available resources. With appropriate planning in place, organizations are better positioned to successfully navigate uncertainty and achieve their goals in a fast-changing environment.
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