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What are the various different types of Management Planning?
Managerial plans can generally be divided into 4 categories. Each of these is discussed below.
What is Strategic Planning?
A strategy is an orientation or manner for achieving a goal or objective. A strategic plan for an organization includes one’s competitive position, individual objectives to achieve, and tactics to execute to achieve those objectives.
Strategic planning can take place at every level of the organization – though the objectives and tactics to be executed will vary at each level. For example, an organizational strategy will incorporate actions of the entire organization. The strategic plan will attribute or assigned organizational objectives to lower-level departments or sub-units of the organization.
Strategic planning at the organizational level tends to be more important that strategic planning at lower levels. This is because higher-level strategy influences and guides the tactics used and operations carried out at lower levels. As such, higher-level planners focus more on strategy. Lower-level planners focus more on tactical and operational plans. These are discussed further below.
Because the organizational strategy requires the efforts of sub-units in executing the strategy, it is important that there is understanding and buy-in at all levels of the organization. The lower-level units will develop objectives that further the higher-level objectives of the organization. These unit-level objectives should effectively achieve the goals established by the organization.
The organizational strategic plan begins with the organization’s mission. It will generally look past short-term goals to include long-term goals and the company’s vision for the future.
The organizational mission necessarily accounts for the competitive landscape when establishing company-level goals. This generally means conducting an analysis of the company’s internal strengths and weaknesses and external threats and opportunities, known as a “SWOT analysis”.
The results of a SWOT analysis will help planners identify realistic, achievable goals. It will also allow for the development of objectives that will make it competitive in the industry or market.
Corporate-level strategies tend to be long-term. Lower-level strategies tend to be short-term and more susceptible to modification. Higher-level strategies tend to focus on goals and objectives. While lower-level plans tend to focus more on tactics and how to achieve unit-level objectives through operational activities.
What is Tactical Planning?
Tactics are methods of doing something. A tactical plan identifies and coordinates methods for achieving objectives handed down from higher-level organizations. As previously discussed, organizational sub-units are tasked with furthering the mission of the organization by working toward these objectives. That is, they are the means by which an organization implements its organizational-level strategies.
As such, managers of functional sub-units of the organization must focus on developing tactical plans. These plans tend to be unit specific. The higher-level strategies will assign specific objectives to the organizational sub-unit. The tactics identified are overarching methods or activities that can accomplish the identified objectives or meet organizational-level goals. They generally are for a shorter duration than organizational-level plans.
Of course, individual sub-units will take part in strategic planning as well. Remember, strategic plans set out goals and objectives. Individual operational units will have their own goals and objectives that are influenced by the overarching strategy of the unit.
Once tactical plans are developed, the next step is to develop operational plans to carry out the tactical plans.
What is Operational Planning
Operations is the routine execution of identified tasks. Operational plans organize tasks in furtherance of organization-wide strategies (work towards company objectives). Further, they provide a process for carrying out duties identified in the tactical plans. More specifically, operational planning concerns the organization of resources (human, physical, and intellectual) to execute the tactics identified within the tactical plan.
Operational plans are generally developed and carried out at the lower-levels of the organization. The functional sub-units develop their own methods and procedures for carrying out identified tasks. These plans identify available resources and apply them to identified tasks in a manner. The overall function being carried out is a tactic to achieve an objective.
The best way to envision this relationship is to see tactics as one of many methods of achieving an objective. Once you settle on a method or tactic, operations is how you organize your resources to carry out the tactic.
Operational planning is short-range (less than a year) planning that is designed to develop specific action steps that support the strategic and tactical plans.
These plans may be single-use or on-going. A single-use plan, as the name implies, is used for a single situation or activity that is not regularly repeated. An on-going plan becomes part of a routine or is taught as a process or procedure if a given situation arises.
Types of on-going plans include “Policies”, “Procedures”, and “Rules”. Policies are guidelines for dealing with a situation. Procedures concern the step-by-step process of addressing a situation. A Rule is an explicit statement of what can or cannot be done.
What is Contingency Planning?
A contingency plan is a form of tactical or operational plan that will only be used upon the occurrence of an event or general condition. That is, it lays out an alternative course of action based upon some future occurrence, condition, or circumstance.
A contingency plan is an effort by management to foresee and accommodate future realities. A tactical contingency plan may focus on unforeseen occurrences by identifying plans for accessing or withdrawing resources. An operational contingency plan will focus on how to allocate resources in various types of future scenarios.