Types Of Planning

Types of Plans

Planning can be classified in different ways based on different criteria:

1. Duration/Time Dimension

Some plans are in effect for short periods, whereas others stretch over decades. An important component of any plan is the planning horizon—i.e., the length of time the plan specifies for activities to be implemented or the time that elapses between the formulation and the execution of a planned activity. Based on this, three planning horizons can be identified:

i) Short-Range Plans:

Plans that cover a period of one year or less (p < 1 year).
Examples: Annual sales plans, revenue forecasts, production schedules, material requirements, and operating expense budgets.

ii) Intermediate-Range Plans:

Plans that cover a period between one and five years (p < 5 years).
Examples: Development of new products, modernization of facilities.

iii) Long-Range Plans:

Plans that cover five or more years.
Example: Long-term leases on production or warehouse facilities.

2. Types of Plans Based on Scope or Breadth

Planning can also be classified based on the scope or breadth of the activities represented.

A) Strategic Plans:

• These plans are comprehensive in scope and reflect the long-term direction and needs of the organization.
• Strategic or top management plans include the development of overall company objectives.
• They are primarily concerned with solving long-term problems associated with external environmental influences.
• Strategic plans establish the mission of the organization.
• Strategic planning involves the analysis of market conditions, customer needs, competitive strengths and weaknesses, socio-political, legal, and economic conditions, technological developments, and resource availability. This analysis helps identify specific opportunities or threats facing the organization.

Strategic plans include:

1. Mission/Purpose
   Every organized operation has—or should have—a purpose or mission.
   • In every social system, enterprises have a basic function or task assigned by society. This is their mission.
   • Example: The purpose of a business is generally the production and distribution of goods and services.
2. Objectives/Goals
   These are the ends toward which activities are directed.
   • Objectives are desired future results.
   • They represent not only the end of planning but also the focus of organizing, staffing, leading, and controlling.
   • While enterprise goals are the basic plan of the firm, individual departments may also have their own objectives.
3. Strategies
   Derived from the Greek word estrategos, meaning “general.”
   • Definition:
     i) General programs of action and resource deployment to attain comprehensive objectives.
     ii) Programs outlining organizational objectives, resource usage, and policies governing acquisition, utilization, and disposal of resources.
     iii) Determination of basic long-term objectives and actions needed to achieve these goals.
   • Strategies concern the direction in which human and material resources will be applied to increase the chance of achieving selected objectives.
   • Strategy defines how the organization responds to its environment over time, linking internal resources to external challenges and risks.

B) Operational/Tactical Plans:

These plans are used to implement strategic plans. They are more limited in scope and address the specific activities and resources required to implement strategic goals.

• Tactical plans deal more with resource allocation and scheduling of actual work activities rather than the selection of strategies.

Based on Their Use Dimension, Plans Can Be Classified Into:

i) Single-Use Plans

Plans created for one-time projects or activities.

ii) Standing Plans

Plans designed for repeated use over time. These include:

• Policies: General guidelines for decision-making.
• Procedures/Standard Operating Procedures (SOPs): Detailed step-by-step instructions to achieve specific outcomes.
• Rules & Regulations: Explicit statements that must be followed.

Additional Planning Tools:

• Programs:
  A comprehensive plan that includes the future use of various resources in an integrated pattern and outlines a sequence of required actions and time schedules to achieve specific objectives.
  Includes:
  i) Major steps to reach an objective
  ii) Responsible units or individuals
  iii) Order and timing of each step
• Budgets:
  A budget is a statement of expected results or allocated resources for specific activities, expressed in numerical or quantitative terms.
  • It serves as a primary control device for organizational activities.
  • Budgets are single-use plans that specify the allocation of financial resources within a given time period.
  • Budgets may be expressed in terms of financial resources, labor hours, units of output, machine hours, etc.
  • They help control activities by setting limits on expenditures.

Flexible Plans:

1. Variable Plans:
   These plans state figures in ranges to account for environmental uncertainty.
   Example: Time to complete a phase might be “three months ± one week.”
2. Alternative Plans:
   These plans involve setting up two or more separate plans to deal with environmental uncertainties. The most suitable plan is chosen based on prevailing circumstances.
3. Supplementary Plans:
   These allow for additional resources if needed later. While the basic plan may set a spending limit, supplementary plans permit appeals for extra resources if required. They reduce the rigidity of the original plan.

Regional/Geographical Planning:

Organizations operating in diverse regions may formulate different plans tailored to each region or territory. These localized plans collectively contribute to achieving overall organizational objectives.