Types of Planning

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 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.
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 in nature and is short-term.
 
 

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