The above classification is not mutually exclusive but iterative in nature. 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 type of emphasis put in the planning process differs.
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 to ensure the smooth working of the organisation taking into consideration the requirements of each and 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 or short-term planning 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 of strategic nature 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.