Types of Plans
In the field of business and management, various types of plans are employed to guide organizations towards their goals and objectives. These plans serve as roadmaps for different levels of management, providing a clear direction and framework for decision making. A thorough understanding of the different types of plans enables effective strategic planning and successful execution.
Plans can be classified based on their nature and scope. Depending on these factors, plans can either be standing or of a repeated nature used repeatedly. In such scenarios, objectives, policies, procedures, rules, and strategies are developed, serving as guidelines for business activities. Conversely, when an organization adopts a single-use plan, it establishes programs and budgets.
Various types of plans are as follows:
- Standing or Repeated-Use Plans
- Single-use or Operating Plans
- Contingency Plans
1) Standing or Repeated-Use Plans
These plans are prepared by managers at different levels. They are planned for repeated use and are designed to deal with recurring problems. When a particular problem arises, a standing plan provides a ready guide to action. They form one of the important means for building predictable patterns of behaviour in business enterprises. When a group of people live or work together, they must be able to anticipate each other’s actions. This is specifically necessary for interdependent activities that require the ability to anticipate. Without this ability, it will hardly be possible for anyone to know what he should do.
All such problems are set at rest by such standing plans because they include all decisions that are aimed at some end. To fulfil the desired effects of standing plans, they should cover the following aspects of business management:
i) Missions or Purpose
This standing plan defines the basic intention of the organisation. It consists of the long-term vision of what the company seeks to do and why it exists. The mission, or purpose (the terms are often used interchangeably), identifies the basic goal or function or tasks of a company or agency or any part of it. Every kind of organised operation has, or at least should have if it is to be meaningful, a purpose or mission. In every social system, companies have a basic function or task assigned to them by society.
ii) Objectives or Goals
Effective management implies management by objectives. Objectives and goals are established to guide the activities of the company. So, all planning work must spell out in clear terms the goals to be realised from the proposed business activities.
They are the instruments formulated from the competitive standpoint by being fully informed somehow about the planning secrets of the competitors. They are a kind of business spying applied as the situation demands. So, the success of the plan needs to it should be strategy-oriented.
Planning also requires laying down policies for the easy realisation of the objectives of the business. Policies provide a standing answer to recurring problems and questions. They are basic guides to action.
v) Procedures and Methods
Procedures will indicate and outline a series of tasks for a specific course of action. The method is the manner of work performance and it follows the set procedure.
A rule specifies the required course of action in respect of a situation. It acts as a guide and is like a decision made by the management. This decision lays down what is to be done and what is not to be done in a certain situation.
2) Single-use or Operating Plans
Standing plans establish a structure of typical behaviour for the desired results. They are positively useful devices for managerial decision making. However, besides these standing plans, a manager can resort to single-use plans to decide in advance the action to be taken to meet a particular problem or a problem arising within a given period. Once the problem is over or time has passed, a new plan is devised for the next period or problem. This type of plan is called a single-use plan.
Single-use plans include the following aspects of planning:
Programs are precise plans of action followed in proper sequence by objectives, policies and procedures. Thus, a program lays down the principal steps to be undertaken to accomplish an objective and sets an approximate time for its fulfilment.
Budget estimates the men, money, materials and equipment, in numerical terms, required for the implementation of plans and programs. It covers a particular period and when the period is over, a new budget comes into being. The budget, thus, is the main instrument of a single-use plan.
A project is a particular work that needs to be done in connection with a general program. So, a single phase in a program is set up as a project. A project has a distinct object and a clear-cut termination. So, it is included in a single-use plan.
3) Contingency Plans
A contingency plan is an alternative plan that will be used if a likely foreseen risk event becomes a reality. The contingency plan represents actions that will lessen or mitigate the negative impact of the risk event. Like all other plans, the contingency plan answers the questions of the following:
- when, and
- How much action will take place?
The absence of a contingency plan, when a risk event occurs, can cause a manager to postpone or delay the decision to implement a remedy. This postponement can lead to acceptance & panic of the first remedy suggested. Such after the event decision-making under pressure can be potentially dangerous and expensive.
Contingency planning estimates alternative remedies for possible foreseen events before the risk event occurs and selects the best plan among alternatives. This early contingency planning enables a smooth transition to the remedy or workaround plan. The availability of a contingency plan can greatly increase the chances of project success.
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