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Planning

Types of Planning
The plans employed by various levels of management can be classified in a
number of ways:
1. Operational, tactical and strategic planning
2. Proactive and Reactive Planning
3. Formal Vs Informal Planning
4. Functional and Corporate planning
1. (a) Operational Planning
Operational plans are short range plans. They are usually made in a specific and
detailed manner. They provide content and form to long range plans. Operational
planning is usually done at lower levels. Its primary concern is efficiency (doing things
right) rather than effectiveness (doing the right things). Operational planning is concerned
with day to day operations and the focus is on short-run operating periods, that is, usually
a year or a season. Operational planning involves gathering information, evaluating
alternatives, and choosing the most effective courses of action. Usually the functional
aspects of the production of goods and services are covered in operational plans. Market
plans, production plans and financial plans are typical examples of operational planning.
(b) Tactical or Coordinative (Intermediate) Planning
Tactical plans are less detailed than the short range plans. They are concerned
with implementing strategic plan by coordinating the work of different departments in the
organization. They try to integrate various organizational units and ensure commitment to
strategic plans. Based on the results obtained by implementing short range plans, a mid-
term review is undertaken.
Coordinative planning, thus, helps in shifting the gears whenever pitfalls occur
while implementing the short range or long range plans.
(c) Strategic Planning (Long-range Planning)
The determination of how the organizational objectives will be achieved is
referred to as long range strategic planning. Strategic planning, generally speaking,
covers a time frame extending five years or more into the future.
 In India, companies in cement, petroleum, paper, petrochemical industries plan
for a period of five years whereas tyre, chemicals and textiles plan for three years. Before
the strategic planning process commences, management must define specifically what the
plan is expected to achieve and how it will be translated into action.
2. Proactive vs. Reactive Planning
Proactive planning fills the holes created by unforeseen events, it forces managers
to be dynamic, active and creative. Through proactive planning managers take the
initiative, attempt to shape the future and create a more desirable environment. It helps
managers in commanding the future rather than being commanded by it.
In reactive planning we do not give consideration to what we desire the future to
be like and as a result the future of the organization is left to the vagarious of social
sciences.
3. Formal vs. Informal Planning
A formal plan can be defined as a written, documented plan developed through an
identifiable process. When planners do not record their thoughts but carry them around in
their minds, informal plans result in. In informal planning managers do not plan for
contingencies and there is no provision for unanticipated situations. They merely wait for
the lightning to strike. Formal planning is hard mental work and it forces managers to
observe the rule ‘look before you leap’ strictly. Informal planning promotes unhealthy
tendencies like carelessness, and result in ineffective and inefficient employee
performance.

Formal planning Informal Planning

 Rational  Emotional
 Systematic  Disorganized
 Regular Intervals  Sporadic episodes
 Future improvements  Past evaluation
 Hard document  Memory
4. Corporate Planning vs. Functional Planning
Functional planning is segmental in nature. Coordination problems often arise if
production, finance, marketing, manufacturing departments prepare their separate plans
without a unified focus. Further, functional planning promotes ‘components’ mentality in
executives; they fail to see the big picture and the impact of external forces on various
activities of the departments.
Types of plans
Plans can be classified in a number of ways, on the basis of the organization level,
the frequency of use and their time frame.
Plans based on Organization level
Just as organizations define goal at different levels, they also establish plans at
different levels such as Strategic, Tactical or Operational.
Strategic Plans
Strategic plans are general plans that indicate the resource allocation, and
priorities and action necessary for achieving strategic goals. These plans establish overall
objectives for organizations, analyse the various environmental factors that affect
organizations. They are developed by top management and tend to cover an extended
period of time – usually three years or more. Managers who are involved in developing
strategic plans work in an environment of uncertainty and are required to make
assumptions about future threats and opportunities. To develop such plans, they require
large amount of information, especially with regard to the future of the external
environment.
Tactical plans
They aim at achieving tactical or short-term goals and are developed by middle-
level managers. These plans help support the implementation of strategic plans. Tactical
plans especially indicate the actions that major and sub-departments and sub-units should
take to execute a strategic plan. Such plans are more concerned with actually getting
things done than with deciding what to do.
Operational plans
They are stated in specific, quantitative terms and serve as the department
manager’s guide to day-to-day operations. Operational plans are developed by lower-
level managers. These plans generally consider time frames of less than a year, such as
few months, weeks, or even a few days. Lower level managers who develop operational
plans work in an environment of relative certainty. Hence, the amount of risk involved in
making operational plans is lesser. The information needed for operational planning can
be obtained almost completely from within the organization. Unless operational goals are
achieved, tactical and strategic plans will not be achieved. Therefore operational plans are
necessary for the success of tactical and strategic plans.
Plans base on Frequency of use
Based on the extent of use, plans can be of two types: single-use plans and
standing plans.
1. Single-use plans
A single-use plan is aimed at achieving a specific goal and is designed to deal
with a unique, non-recurring situation. Once the goal has been achieved, the plan ceases
to exist. A single use plan is a one-time plan and is created in response to non-
programmed decisions (non- program decisions are specific solutions to a typical or non-
routine problems) of managers.
The major types of single use plans are programs, budgets and projects.
Programs
Programs are large scale single use plans that coordinate a complex set of
activities to achieve important non-recurring goals. Programs spell out clearly the steps to
be taken, the resources to be used, and the time period with in which the task is to be
achieved. Program serves as useful guides for day to day operations. They are action
based and result oriented management approaches that facilitate the smooth and efficient
functioning of organizations.
Budgets
A budget outlines the expected results of a given future period in numerical terms.
It is a plan of action or blue print designed to achieve a specific goal. A budget may be
expressed either in financial terms or in terms of units of products, labour hours machine
hours or any other numerically measurable term. Budget indicates the financial resources
necessary for supporting the various activities included in a program.
Projects
A project is similar to a program, but is smaller in scale and less complex. A
project may be a self contained, single use plan. A project helps in the precise allocation
of duties and effective control and easy implementation of the plan.
2. Standing plans
Standing plans refer to specific actions which have been developed for dealing
with recurring situations. These are developed in response to programmed decisions of
managers (Programmed decisions refer to solutions to routine problems and are arrived at
by following rules, procedures or habits). The three main types of standing plans are
policies, procedures and rules.
Polices
It specifies the broad parameters with in which organization members are
expected to operate in pursuit of organizational goals. Policies do not specify what
actions should be taken, but provide general boundaries for action. These are generally
flexible and broad in their scope.
Procedures
It is a chronological sequence of steps to be undertaken to achieve an objective.
These are guides to action that specify in detail the manner in which activities are to be
performed. Well established and formally laid down procedures are often called as
standard operating procedures (SOPs)
Rules
A rule is a statement that spells out what should or should not be done in a
particular situation. Rules are rigid and definite plans that do not allow for deviation.
They regulate the day to day conduct of affairs by providing detailed instructions.
However, rules help ensure that employees behave in a desired manner and make their
actions predictable.
Plans Based on Time Frame
It can be classified into three types- Long term plans, intermediate term plans and
short term plans.
 Long-term plans
These are the strategic plans of an organization and have a time frame exceeding
five years. A long term plan is derived from the vision developed for the organization by
its founders. It involves setting up of broad objectives and establishing procedures for
achieving these objectives
Intermediate term plans
These plans generally cover time periods ranging from one to five years. It
defines the organizations activities and provides direction for middle management. When
a firm’s long-term plans are not very clear due to high levels of uncertainty, the focus of
planning activity shifts to intermediate-term plans because they are made for a shorter
duration of time and therefore their outcomes are certain and predictable.
Short term plans
These plans generally cover time periods up to one year. They provide lower level
managers with guidelines for carrying out the day to day activities of an organization.
They guide a manager by stating what he has to do; how, where and when he has to do it;
and the resources available for performing the specified task. It does help managers make
better use of man power and other resources in the immediate future.

Hierarchy of plans

Plans

Single-use Plans Standing Plans

Programs Budgets Projects Policies Procedures Rules