Characteristics and classification of plans

Classification on the Basis of Time:

There is no definite basis for classifying plans as long-term, medium-term and short-term. It depends on
the nature of business, nature of product and adaptability of organisation to external environment,
market demand, production cycle etc. For a firm producing heavy goods which do not change frequently,
period of 10 years may be intermediate or short-term but for a firm producing seasonal goods, period of
even one year may be long-term.

The period should, however, justify the time and resources committed to the plans. The period should
enable the organisation to fulfill its commitments to the decisions. The decisions should have positive
impact on the future outcomes.

1. Long-term Plans:

These plans are normally made for a minimum period of 5 years. They relate to goals and usually cover
all functional areas of the business. Future being uncertain, these plans foresee environmental changes
(by applying techniques of forecasting) so that organisations can accept them when they occur. They
relate to investment in fixed assets which generate returns over a long-period of time. They aim to
achieve strategic goals of the organisation over a long time period.

2. Medium-term Plans:

These plans normally relate to a period of one to 5 years. They are the supporting plans that help to
achieve long-term plans. Plans made to analyse the impact of advertisement campaign on expansion of
business into new markets are medium-term plans. These plans usually relate to tactical goals.

3. Short-term Plans:

These plans are normally prepared for a period of one year, though in some cases, these may even relate
to a period of less than one year. They look into immediate future of the company. They are usually
made for specific functional areas. Plans made to retain or promote sales, to train workers (so that
labour turnover rate is reduced) are short- term plans. They relate to operational goals of the enterprise.

The classification of plans according to time and their relationship with goals of the enterprise is
depicted as follows:

These plans are not independent of each other. A successful organisation coordinates all these plans.
Short-term plans contribute to medium-term plans which further contribute to long-term plans.

Classification on the Basis of Levels

1. Strategic Plans:
Strategic plans are made to achieve the overall organisational goals. They achieve strategic goals through
effective allocation of resources over different functional/ product areas. They match the organisational
strengths and weaknesses with the environmental opportunities and threats. They are comprehensive
and general in nature. They are made for all functional areas of business. They are made by the top-level
managers in consultation with board members and middle- level managers and generally relate to a
period of more than 5 years

The questions most commonly answered through strategic plans are:

(a) What are the ways in which overall goals can be achieved?

(b) How to allocate resources over different areas of the enterprise?

(c) How to respond to the external environment?

(d) How to coordinate the firm’s internal strengths and weaknesses with its external environment?

Strategic plans are usually made to plan the growth rate, diversification plans, change the product line
etc.

2. Tactical Plans:

Tactical plans are the means to support and implement strategic plans. They are made to achieve tactical
goals of the organisation. They are related to departmental goals of the enterprise. These plans are
made by middle-level managers in consultation with lower-level managers and normally relate to
intermediate period of 1 to 5 years. While strategic plans are general in nature, these plans are more
specific and precise.

The important questions answered through tactical plans are:

(a) How to deal with changes in competitors’ policies?

(b) How to deal with changes in the demand for products?

(c) How to increase company’s share in the market?

3. Operational Plans:

Operational plans support the tactical plans. They are made to achieve operational goals of the
enterprise. These plans are highly specific and determine what different sections of the organisation
need to perform. While resources are allocated in strategic plans, their efficient use to achieve overall
organisational goals is ensured by operational plans.

These plans are made by lower-level managers in consultation with middle-level managers and relate to
short periods of time of less than one year, say some weeks, months or even days. Different single-use
and standing plans are made in operational planning to achieve the overall organisation goals. Plans to
meet the delivery schedules, adjust the production schedules, budget the costs etc. are the common
activities performed in operational planning.

Normative

Andreas Faludi (1973) defines normative planning as a type of planning whose objectives and goals are
themselves, in turn, the objects of rational choices. However, the most widely used definition of
normative planning was coined by John Friedmann (1987, 1996), who suggested that in a social system,
normative planning is primarily concerned with the ends of action.

Friedmann further suggests that the goals of normative planning are same as those of the social system
in which normative planning is to be implemented.

Normative planning helps one to make choices about ends while being aware of existing knowledge
(Watson 2002). Often the ends of actions are designed by politics rather than by planning. Normative
guidance in planning is not new, however. Several authors (Howe and Kauffman 1979; Batley 1984, 1991;
Wachs 1985; Howe 1990, 1994) have articulated their thoughts on normative values in planning. Louis
Albrechts (2006) postulates that normative planning should be used to frame an actor- and space-
oriented picture for the planner and should be executed in a fair and respectful manner.

He presents five normative viewpoint characteristics: selective planning, relational-annex-inclusive

planning, integrative planning, visioning, and action-oriented planning.

Types of Plans

Operational Planning

“Operational plans are about how things need to happen,” motivational leadership speaker Mack Story
said at LinkedIn. “Guidelines of how to accomplish the mission are set.”

This type of planning typically describes the day-to-day running of the company. Operational plans are
often described as single use plans or ongoing plans. Single use plans are created for events and
activities with a single occurrence (such as a single marketing campaign). Ongoing plans include policies
for approaching problems, rules for specific regulations and procedures for a step-by-step process for
accomplishing particular objectives.

Strategic Planning

“Strategic plans are all about why things need to happen,” Story said. “It’s big picture, long-term
thinking. It starts at the highest level with defining a mission and casting a vision.”

Strategic planning includes a high-level overview of the entire business. It’s the foundational basis of the
organization and will dictate long-term decisions. The scope of strategic planning can be anywhere from
the next two years to the next 10 years. Important components of a strategic plan are vision, mission and
values.
Tactical Planning

“Tactical plans are about what is going to happen,” Story said. “Basically at the tactical level, there are
many focused, specific, and short-term plans, where the actual work is being done, that support the
high-level strategic plans.”

Tactical planning supports strategic planning. It includes tactics that the organization plans to use to
achieve what’s outlined in the strategic plan. Often, the scope is less than one year and breaks down the
strategic plan into actionable chunks. Tactical planning is different from operational planning in that
tactical plans ask specific questions about what needs to happen to accomplish a strategic goal;
operational plans ask how the organization will generally do something to accomplish the company’s
mission.

Contingency Planning

Contingency plans are made when something unexpected happens or when something needs to be
changed. Business experts sometimes refer to these plans as a special type of planning.

Contingency planning can be helpful in circumstances that call for a change. Although managers should
anticipate changes when engaged in any of the primary types of planning, contingency planning is
essential in moments when changes can’t be foreseen. As the business world becomes more
complicated, contingency planning becomes more important to engage in and understand

Business planning

6 Types of Business Plans

Business plans guide owners, management and investors as businesses start up and grow through stages
of success. A business owner or prospective business owner writes a business plan to clarify each aspect
of his business. A business plan includes objectives to anticipate and prepare for growth.

1 Start-Up Business Plans

Detail the steps to start a new business with a start-up business plan. Include sections describing the
company, the product or service your business will supply, market evaluations and your projected
management team

2 Internal Business Plans

Internal business plans target an audience within the business. Write an internal business plan to
evaluate a proposed project. Describe the company’s current state, including operational costs and
profitability.

3 Strategic Business Plans

provides a detailed map of a company’s goals and how it will achieve them, laying out a foundational
plan for the entire company.
4 Feasibility Business Plans

answers two primary questions about a proposed business venture. It attempt to determine who, if
anyone, will purchase the service or product a company wants to sell, and if the venture can turn a
profit.

5 Operations Business Plans

are internal plans that consist of elements related to company operations. An operations plan,
implementation markers and deadlines for the coming year. The operations plan outlines employees’
responsibilities.

6 Growth Business Plans

Growth plans or expansion plans are in-depth descriptions of proposed growth and are written for
internal or external purposes. if company growth requires investment, a growth plan may include
complete descriptions of the company, its management and officers.

Origin planning

Methods

Many different methods for planning exist, each with their own benefits and drawbacks in different
situations. No one technique will be suitable for every situation

Strategic Planning

Aims to ensure employees and other stakeholders are all working towards a common goal and their
energy, focus and resources are all aligned towards this. Agreements are made about the direction the
organisation wants to move in and how every contributor can ensure this happens.

Action Planning

Unlike strategic planning, this type of planning is far more focused on day-to-day activities. Individual,
team or project activities are organised and set out in a timetable manner.

Operational Planning

This type of planning aligns different functions of the business, for example HR or marketing, with the
overall goals and objectives of an organisation. This includes planning levels of resources, processes,
where people are needed and department budgets. This is important for each individual department but
also overall integration within the business, ensuring every area of a strategy is covered and no two
departments are working on the same project.

Assumption-based Planning (ABP)

All plans make assumptions about the future and identifying these assumptions are crucial to any plan.
In the scenario of any assumption not occurring the organisation must have plans for how to react to
this. Once these assumptions have been identified it is then important to identify which will have the
biggest impact on the business if they were to fail. ‘Signposts’ can then be set up to monitor any
potential issues and actions can be taken to manage the assumptions made. Finally, hedging actions can
be taken to prepare for the instance where assumptions fail. As the business environment becomes
more unpredictable and volatile ABP has become more crucial to strategies.

Contingency Planning

This type of planning involves preparing for the worst case scenario to occur. All strategies have the
potential to fail when they are affected by internal or external factors.

Procedures

Procedures Like rules, procedures are standing plans that provide guidance for action rather than
speculation.

They are plans that establish a required method of handling future activities.

Procedures establish customary ways for handling certain activities like hiring a clerk, promoting
employees, obtaining a loan from a bank.

The major characteristic of a procedure is that it represents a chronological sequencing of events.

It specifies a series of steps that must be taken to accomplish a task. Specified series of steps that are
required to be taken for admission into the MBA program of AUB is an example of the procedure.

Sources

http://www.businessmanagementideas.com/management/planning-management/classification-of-
plans-in-an-organisation-4-classes/4767

https://online.alvernia.edu/types-of-planning/

https://smallbusiness.chron.com/6-types-business-plans-2591.html

Bhuiyan Monwar Alam Department of Geography and Planning, The University of Toledo, Toledo, OH
43606 USA, PDF.

https://www.accipio.com/eleadership/mod/wiki/view.php?id=1639

https://iedunote.com/planning-types