Planning

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For permission for building works, see Planning permission.
Planning is the process of thinking about the activities required to achieve a desired goal. It is the
first and foremost activity to achieve desired results. It involves the creation and maintenance of
a plan, such as psychological aspects that require conceptual skills. There are even a couple of tests
to measure someone’s capability of planning well. As such, planning is a fundamental property of
intelligent behavior. An important further meaning, often just called "planning" is the legal context of
permitted building developments.
Also, planning has a specific process and is necessary for multiple occupations (particularly in fields
such as management, business, etc.). In each field there are different types of plans that help
companies achieve efficiency and effectiveness. An important, albeit often ignored aspect of
planning, is the relationship it holds to forecasting. Forecasting can be described as predicting what
the future will look like, whereas planning predicts what the future should look like for multiple
scenarios. Planning combines forecasting with preparationof scenarios and how to react to them.
Planning is one of the most important project management and time management techniques.
Planning is preparing a sequence of action steps to achieve some specific goal. If a person does it
effectively, they can reduce much the necessary time and effort of achieving the goal. A plan is like a
map. When following a plan, a person can see how much they have progressed towards their project
goal and how far they are from their destination.

Business planning seems like it would be something that organizations do

well, given the near self-evident importance of the concept. Yet, that is not
necessarily the case. “In my experience leading dozens of business planning
workshops in countries all over the world, I’d say only about 10% to 15% of
teams I’ve encountered have an effective business planning process,”
according to author and business plan expert Tim Berry in Entrepreneur.

Organizations should develop a better understanding of how to approach

business planning. The following sections expand on the topic and the four
types of planning.

Why Plan?
“Planning is about managing resources and priorities in an organized way,”
Berry says. “Management is related to leadership, and it’s related to
productivity.”

If companies improve how they plan, managing and leadership will also
improve. The following steps can help businesses plan better.
  Devise a Plan: Write important details down and focus on strengths,
what matters, what people are most important to you and what you can
do for them. This will help you communicate your vision to your
employees.
 Define Success: How do you see your business in several years?
Define long-term goals and be specific. Establish milestones for certain
goals and who will achieve the goals. Look at what drives your
business; it may be presentations, conversions, page views or
something else. Then establish a review schedule and re-examine your
long-term goals as necessary.
 Put It in Motion: Track and analyze numbers to help you manage the
work behind the numbers. You’ll be better able to make changes — or
to develop new plans — that will help you manage better.

The 4 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.

etailing Types of Plans

Plans commit individuals, departments, organizations, and the resources of each to specific
actions for the future. Effectively designed organizational goals fit into a hierarchy so that the
achievement of goals at low levels permits the attainment of high‐level goals. This process is
called a means‐ends chain because low‐level goals lead to accomplishment of high‐level
goals.

Three major types of plans can help managers achieve their organization's goals:
strategic, tactical, and operational. Operational plans lead to the achievement of tactical
plans, which in turn lead to the attainment of strategic plans. In addition to these three
types of plans, managers should also develop a contingency plan in case their original
plans fail.

Operational plans
The specific results expected from departments, work groups, and individuals are
the operational goals. These goals are precise and measurable. “Process 150 sales
applications each week” or “Publish 20 books this quarter” are examples of operational
goals.

An operational plan is one that a manager uses to accomplish his or her job
responsibilities. Supervisors, team leaders, and facilitators develop operational plans to
support tactical plans (see the next section). Operational plans can be a single‐use plan
or an ongoing plan.

 Single‐use plans apply to activities that do not recur or repeat. A one‐time

occurrence, such as a special sales program, is a single‐use plan because it
deals with the who, what, where, how, and how much of an activity. A budget is
also a single‐use plan because it predicts sources and amounts of income and
how much they are used for a specific project.
 Continuing or ongoing plans are usually made once and retain their value over
a period of years while undergoing periodic revisions and updates. The following
are examples of ongoing plans:
 A policy provides a broad guideline for managers to follow when dealing with
important areas of decision making. Policies are general statements that explain
how a manager should attempt to handle routine management responsibilities.
Typical human resources policies, for example, address such matters as
employee hiring, terminations, performance appraisals, pay increases, and
discipline.
 A procedure is a set of step‐by‐step directions that explains how activities or
tasks are to be carried out. Most organizations have procedures for purchasing
supplies and equipment, for example. This procedure usually begins with a
supervisor completing a purchasing requisition. The requisition is then sent to the
next level of management for approval. The approved requisition is forwarded to
the purchasing department. Depending on the amount of the request, the
purchasing department may place an order, or they may need to secure
quotations and/or bids for several vendors before placing the order. By defining
the steps to be taken and the order in which they are to be done, procedures
provide a standardized way of responding to a repetitive problem.
 A rule is an explicit statement that tells an employee what he or she can and
cannot do. Rules are “do” and “don't” statements put into place to promote the
safety of employees and the uniform treatment and behavior of employees. For
example, rules about tardiness and absenteeism permit supervisors to make
discipline decisions rapidly and with a high degree of fairness.
Tactical plans

A tactical plan is concerned with what the lower level units within each division must
do, how they must do it, and who is in charge at each level. Tactics are the means
needed to activate a strategy and make it work.
Tactical plans are concerned with shorter time frames and narrower scopes than are
strategic plans. These plans usually span one year or less because they are considered
short‐term goals. Long‐term goals, on the other hand, can take several years or more to
accomplish. Normally, it is the middle manager's responsibility to take the broad
strategic plan and identify specific tactical actions.

A strategic plan is an outline of steps designed with the goals of the entire organization
as a whole in mind, rather than with the goals of specific divisions or departments.
Strategic planning begins with an organization's mission.

Strategic plans look ahead over the next two, three, five, or even more years to move
the organization from where it currently is to where it wants to be. Requiring multilevel
involvement, these plans demand harmony among all levels of management within the
organization. Top‐level management develops the directional objectives for the entire
organization, while lower levels of management develop compatible objectives and
plans to achieve them. Top management's strategic plan for the entire organization
becomes the framework and sets dimensions for the lower level planning.

Contingency plans

Intelligent and successful management depends upon a constant pursuit of adaptation,

flexibility, and mastery of changing conditions. Strong management requires a “keeping
all options open” approach at all times — that's where contingency planning comes in.

Contingency planning involves identifying alternative courses of action that can be

implemented if and when the original plan proves inadequate because of changing
circumstances.

Keep in mind that events beyond a manager's control may cause even the most
carefully prepared alternative future scenarios to go awry. Unexpected problems and
events frequently occur. When they do, managers may need to change their plans.
Anticipating change during the planning process is best in case things don't go as
expected. Management can then develop alternatives to the existing plan and ready
them for use when and if circumstances make these alternatives appropriate.

4 Types of Plan – Definition, Practice, Explained

with Examples
 4 types of plans that managers create
and apply to direct business operations, monitor and control organizational
activities for achieving set goals.
Types of Plans are;
1. Hierarchical plans,
2. Standing plans,
3. Single-use plans, and
4. Contingency plans.

1. Hierarchical Plans
These plans are drawn at three major hierarchical levels, namely, the
institutional, the managerial and the technical core.
The plans in these 3 levels are-

 Strategic
 Administrative and,
 Operational respectively.

Strategic plan
The strategic plan generally involves planning at the top institutional level of
an organization. Strategic plans define the organization’s long-term vision and
how the organization intends to make its vision a reality.
In short, strategic planning is the determination of the basic long-term
objectives of an enterprise and the adoption of courses of action and
allocation of resources necessary to achieve these goals.
Strategies do not attempt to outline exactly how the enterprise is to
accomplish its objectives since this is the task of countless major and minor
supporting programs.
But they furnish a framework for guiding, linking and action.
Administrative or Intermediate plan
Administrative or intermediate planning is done at the level of middle
management.
It is cone to allocate organizational resources and coordinate internal
subdivisions of the organization. It is also a process of determining the
contributions that sub-units can make with allocated resources.
Operational plan
Finally, operational planning is the process of determining how specific tasks
can best be accomplished on time with available resources.
This is also done to cover the day-to-day operations of an organization. As
such, many operational plans are designed to govern the workings of the
organization’s technical core.
2. Standing Plans
Standing plans are drawn to cover issues that managers face repeatedly.
For example, managers may be facing the problem of late- coming quite
often.
Managers may, therefore, design a standing plan to be implemented
automatically each time an employee is late for work. Such a standing plan
may be called standard operating procedure (SOP).
Mission or purpose, strategies, policies, procedures, rules are some of the
most common standing plans.
Mission or purpose
Mission or purpose, often used interchangeably, identifies the basic task of an
organization for which it is created.
For example, the mission of a University is to impart higher education.
The mission of the garments factory is to produce and sell ready-made
garments and so on.
Strategy
The strategy is another type of broad-based standing plan which helps the
determination of the basic long-term objectives of an enterprise and adoption
of courses of action and allocation of resources necessary to achieve these
objectives.
Policies
Policies are, in most cases, standing plans. As a matter of fact, policies
provide guidelines for repetitive actions.
They define an area or provide limits within which decisions are to be made
and ensure that the decision will be consistent with, and contribute to, an
objective.
Policies are types of plans that allow decision-makers some discretion to carry
out a plan.
Otherwise, there will be no difference between policies and rules.
Policies must allow for some discretion. Policies help decide issues before
they become problems and make it unnecessary to analyze the same
situation every time it comes up.
It permits managers to delegate authority and still maintain control over
subordinates about the matter.
There are many types of policies.
Instances are found in the policies of hiring only university-trained engineers,
promotion from within, encouraging an employee suggestion system for
improved organizational performance, setting competitive prices etc.
Some policies could originate from customary and general ways of behavior in
an organization.
Some of them are put in place through verbal statements or in writing.
For example, there might be a policy in an organization that “except for token
gifts of very nominal value or advertising value, no employee shall accept any
gift from any supplier.”
Such formal policies are usually written down in company manuals or
regulations for employees.
The policy is a means of encouraging discretion and initiative but within limits.
The amount of discretion usually depends on the policy and the position and
authority occupied in the organization.
Since policies are general in nature, they provide guidelines as to how the
employees will carry out their jobs.
While policies provide managers with some flexibility in approaching various
organizational problems, this generality again makes policies rather vague.
Control becomes difficult when people start interpreting policy meaning and
purpose differently.
Rules
Rules Like policies, rules, too, are standing plans that guide action. Rules
spell out specifically what employees are supposed to do or not to do.
For example, the no-smoking campaign launched by some organizations is
supported by some organizational rules. As opposed to policies, rules do not
permit the exercise of individual discretion.
Instead, rules specify what actions will be taken (or not taken) and what
behavior is permitted or not. Policies, on the other hand, tell people how to
think about decisions to be made about actions.
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.
3. Single-use Plans
Single-use plans are prepared for single or unique situations or problems and
are normally discarded or replaced after one use.
Generally, four types of single-use plans are used. These are—

1. objectives/goals,
2. programs,
3. projects,
4. budgets.

Objectives or Goals
Objectives or goals, often used interchangeably, are the ends toward which
activity is aimed.
They represent not only the end point of planning but also the end toward
which all other managerial functions are aimed.
In fact, objectives are set in relation to a particular time period and thus the
same objective is not repeated year after year, month after month or day after
day.
Objectives or goals are divided into 3 types.
Programs
Programs are plans of action followed in proper sequence according to
objectives, policies, and procedures.
Thus a program lays down the major steps to be taken to achieve an objective
and sets an approximate time frame for its fulfillment.
Programs are usually supported by budgets.
A program may be a major or a minor one or long, medium or short-term one.
Since it is not used in the same form once its task is over it belongs to single-
use plan category.
Projects
A project is a particular job that needs to be done in connection with a general
program. So a single step in a program is set up as a project.
A project has a distinct object and clear-cut termination.
“Projects have the same characteristics as programs but are generally
narrower in scope and less complex. Projects are frequently created to
support or complement a program.”
Budgets
A budget is a statement of expected results expressed in numerical terms.” It
is sometimes called the enumerated program and most commonly expressed
in terms of money i.e. Rupee, Euro, Dollar etc.
They may also be expressed in terms of any measurable unit like an hour,
metric ton etc.
It covers a particular period of time, and once the period is over, a new budget
comes into being. It not only a planning tool but also works as a controlling
tool.
4. Contingency Plans
As we already know, the process of planning is based on certain assumptions
about what is likely to occur in the environment of an organization.
Contingency plans are made to deal with situations that might crop up if these
assumptions turn out to be wrong.
Thus contingency planning is the development of alternative courses of action
to be taken if events disrupt a planned course of action.
A contingency plan allows management to act immediately if such unforeseen
events as strikes, boycotts, natural disasters or major economic changes
render existing plans inoperable or unsuitable
ter reading this article you will learn about:- 1. Meaning of
Planning 2. Types of Planning 3. Components 4. Advantages
5. Limitations.
Meaning of Planning:
Planning is very important for successfulness and the effective
performance of an organisation not only for organisations but also for
individuals. It is the most basic of all the managerial functions. It
involves selecting missions and objectives and the actions to achieve
them. Therefore every organisation gives a greater emphasis on
planning.
Planning as a process involves the determination of future course of
action, that is why an action, what action, how to take action, and
when to take action. These are related with different aspects of
planning process.

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Thus, Terry has defined planning in terms of future course of action

i.e., “planning is the selection and relating of facts and making and
using of assumptions regarding the future in the visualisation and
formalisation of proposed activities believed necessary to achieve
desired result.”

McFarland has defined Planning as “a concept of executive action

that embodies the skills of anticipating, influencing and
controlling the nature and direction of change.”
Peter Drucker defined as “planning is the continuous process of
making present entrepreneurial decisions systematically and with best
possible knowledge their futurity, organizing systematically the efforts
needed to carry out these decisions and measuring the results of these
decisions against the expectation through organised systematic
feedback.”

In the words of Koontz and O’Donnell, “planning is deciding in

advance what to do, how to do it, when to do it, and who is to
do it. Planning bridges the gap from where we are to here we
want to go.”
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According to Theo Haimann, “planning is the function that determines

in advance what should be done. It consists of selecting the enterprise
objectives polices, programmes, procedures and other means of
achieving these objectives.”

Types of Planning:
The process of planning may be classified into different
categories on the following basis:
(i) Nature of Planning:
a. Formal planning.

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b. Informal planning.

(ii) Duration of planning:

a. Short term planning.

b. Long term planning.

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(iii) Levels of Management:

a. Strategic planning.

b. Intermediate planning.

c. Operational planning.

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(iv) Use:
a. Standing plans

b. Single-use plans.

(i) Nature of Planning:

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a. Formal Planning:
Planning is formal when it is reduced to writing. When the numbers of
actions are large it is good to have a formal plan since it will help
adequate control.

The term formal means official and recognised. Any planning can be
done officially to be followed or implemented. Formal planning is aims
to determine and objectives of planning. It is the action that determine
in advance what should be done.

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Advantages:
1. Proper Cooperation among employees,

2. Unity of Action,

3. Economy,

4. Proper coordination and control,

5. Choosing the right objectives, and

6. Future plan.

b. Informal Planning:
An informal plan is one, which is not in writing, but it is conceived in
the mind of the manager. Informal planning will be effective when the
number of actions is less and actions have to be taken in short period.

(ii) Duration of Planning:

a. Short term Planning:
Short term planning is the planning which covers less than two years.
It must be formulated in a manner consistent with long-term plans. It
is considered as tactical planning. Short-term plans are concerned
with immediate future; it takes into account the available resources
only and is concerned with the current operations of the business.

These may include plans concerning inventory planning and control,

employee training, work methods etc.

Advantages:
1. It can be easily adjustable.

2. Changes can be made and incorporated.

3. Easy to Gauge.

4. Only little resources required.

Disadvantages:
1. Very short period-left over things will be more.

2. Difficult to mobiles the resources.

3. Communication cycle will not be completed.

b. Long-Term Planning:
Long-term planning usually converse a period of more than five years,
mostly between five and fifteen years. It deals with broader
technological and competitive aspects of the organisation as well as
allocation of resources over a relatively long time period. Long-term
planning is considered as strategic planning.

Short-term planning covers the period of one year while long term
planning covers 5-15 years. In between there may be medium-term
plans. Usually, medium term plans are focusing on between two and
five years. These may include plan for purchase of materials,
production, labour, overhead expenses and so on.

Advantages:
1. Sufficient time to plan and implement.

2. Effective control.

3. Adjustment and changes may be made gradually.

4. Periodic evaluation is possible.

5. Thrust areas can be identified easily.

6. Weakness can be spotted and rectified then and there.

Disadvantages:
1. Prediction is difficult.

2. Full of uncertainties.

3. Objectives and Targets may not be achieved in full.

4. More resources required.

(iii) Levels of Management:

a. Strategic Planning:
The strategic planning is the process of determining overall objectives
of the organisation and the policies and strategies adopted to achieve
those objective. It is conducted by the top management, which include
chief executive officer, president, vice-presidents, General Manger etc.
It is a long range planning and may cover a time period of up to 10
years.

It basically deals with the total assessment of the organisation’s

capabilities, its strengths and its weaknesses and an objective
evaluation of the dynamic environment. The planning also determines
the direction the company will be taking in achieving these goals.

b. Intermediate Planning:
Intermediate planning cover time frames of about 6 months to 2 years
and is contemplated by middle management, which includes
functional managers, department heads and product line mangers.
They also have the task of polishing the top managements strategic
plans.

The middle management will have a critical look at the resources

available and they will determine the most effective and efficient mix
of human, financial and material factors. They refine the broad
strategic plans into more workable and realistic plans.
c. Operational Planning:
Operational planning deals with only current activities. It keeps the
business running. These plans are the responsibility of the lower
management and are conducted by unit supervisors, foremen etc.
These are short-range plans covering a time span from one week to
one year.

These are more specific and they determine how a specific job is to be
completed in the best possible way. Most operational plans .ire divided
into functional areas such as production, finance, marketing,
personnel etc.

Thus even though planning at all levels is important, since all levels
are integrated into one, the strategic planning requires closer
observation since it establishes the direction of the organisation.

(iv) Use:
a. Standing Plan:
Standing plan is one, which is designed to be used over and over again.
Objectives, policies procedures, methods, rules and strategies are
included in standing plans. Its nature is mechanical. It helps
executives to reduce their workload. Standing plan is also called
routine plan. Standing or routine plan is generally long range.

b. Single Use Plan:

Single use plan is one, which sets a course of action for a particular set
of circumstances and is used up once the particular goal is achieved.
They may include programme, budgets, projects and schedules. It is
also called specific planning. Single use plan is short range.

Components of Planning/Planning Techniques:

Planning consists of several individual plans or components of
planning, which are usually bound together.

(i) Forecasting.

(ii) Objectives.

(iii) Policies.

(iv) Programmes.
(v) Strategies.

(vi) Schedules.

(vii) Procedures.

(viii) Rules, and

(ix) Budgets.

i. Forecasting:
Forecasting becomes an integral part of the planning process. It is a
prediction of future events and conditions. It, therefore, includes both
the assessment of the future and the provision for it. It helps to reduce
the uncertainties that surround management, decision making.

ii. Objectives:
Objectives are the ends toward which activity is aimed— they are the
results to be achieved. They represent not only the end point of
planning but also the end toward which organising, staffing, leading
and controlling are aimed.

Organisation can grow without any difficulty if it has well-defined

objectives. These objectives should be clearly defined and
communicated throughout the organisation. Such objectives must be
realistic.

iii. Policies:
Koonte and O’Donnell defines “policies are general statements
or undertakings which guide or channel thinking in
decision-making of subordinates.” So, policies act as guides to
thinking and action of subordinates in the organisations. It should be
clearly prescribed and understandable by all.
iv. Programmes:
It refers to the course of action of work to be carried out in proper
sequence for the purpose of achieving specific objectives.
v. Strategies:
Konnoz and Heinz Weihrich defined strategies as “a general
programme of action and deployment of resources to attain
comprehensive objectives” or ” the determination of the basic
long-term objectives of an enterprise “and the adoption of courses of
action and allocation of resources necessary to achieve these goals. It
is specific type of plan for achieving organisational goals.
vi. Schedules:
Fixing a time sequence for every operation is known as schedules.
Normally it forms part of programming a part of action plan.

vii. Procedures:
Procedures are plans that establish a required method of handling
future activities. They are guides to action, rather than to thinking and
they detail the exact manner in which certain activities must be
accomplished. They are chronological sequences of required actions.

viii. Rules:
Rules spell out specific required actions or non-actions, following no
direction. They are usually the simplest type of plan.

ix. Budgets:
A budget is a statement of expected results expressed in numerical
term. It may be referred to as a numberised programme. A budget may
be expressed either in financial terms or in terms of labour-hours,
units of product, machine hours, or any other numerically measurable
term. It helps the organisation to control the action by comparing
budgetary and actual results.

Advantages of Planning:
1. Primacy of Planning:
Even though there are other managerial functions such as organising,
staffing, directing and controlling which helps to achieve the
organisational goals, planning precedes all other managerial
functions. It establishes objectives necessary for all group effort.

2. Helping to Management:
Since the planning is a future course of action, mangers are able to
define their objectives and get direction. Also it creates a unity of
purpose.

3. Effective Utilisation of Resources:

Proper planning helps to proper and effective utilisation of resources.
Resources are identified for optimum utility through planning. So
waste or minimum waste of resources will not result and thereby idle
time for workers and downtime for machines will be reduced. This will
lead to result in minimum cost of operations.

4. Minimum Cost:
Planning helps to minimise cost by providing greater utilisation of the
available resources. All kinds of wastage of men, materials, money and
machines are prevented with the help of planning.

5. To help in Motivation:
All employees of the organisation can feel that we have taken this plan,
if the plans are communicated to them. In this case the sense of
belonging of employees increases and therefore they will be highly
motivated.

6. To Offset Uncertainty and Change:

There may be continuous change in the environment and organisation
has to work in accelerating change. This change is reflected in both
tangible and intangible forms. Tangible changes are in the form of
changes in technology, market forces, and government regulations.

Intangible changes reflect in changes in attitudes, values, cultures etc.

In order to cope up with the requirements of such changes,
organisation must role ahead for its future course of action, which is
basically provided by planning process. Planning does not stop
changes in the environment, but gears the organisation to take
suitable actions so that it is successful in achieving its objectives.

7. Help in Coordination:
Proper planning is made by unifying all areas on departments of the
organisation. It wills leads to coordinate and harmony among the
departments is achieved.

8. Facilities Control:
Planning provides performance standards and standards for
measuring the progress of the organisations. Therefore management
can compare the actual performance with the standards. Manager can
control action by looking at different if any deviation.

9. Facilitates Decision-making:
Planning provides a framework for decision-making. Since the
planning provides for feedback, periodic evaluation, and indication for
any deviation, corrective action can be taken which leads to better
decision-making.

10. Encourage Innovation and Creativity:

It brings about rationality in managerial approach and improvement
in executive thinking. D. F. Hussey said that, “A good planning
process will provide avenues for individual participation
will throw up more ideas about the company and its
environment, will encourage an atmosphere of frankness
and corporate self-criticism and will stimulate managers to
achieve more.”
11. Improves Competitive Strength:
Since the operations are planned in advance, company can take its
action concretely. It improves the competitive strength of the
organisation.

Limitations of Planning:
1. Corporate Planning is not Integrated into the Total
Management System:
The top management fails to identify and associate properly the
formal planning with the central concept of the organisation’s mission.

2. There is a Lack of Understanding of the Different Steps of

the Planning Process:
The management may not be knowledgeable or skilled in
understanding all steps of the planning requirements.

3. Non-Availability of Correct Information and Data:

Planning is made by having information and data available. Generally
correct information and data not available.

4. Management at Different Levels in the Organisation has

not Properly Contributed to Planning Activities:
Generally all strategic planning are made and conducted at top
management. So sometimes middle level and lower level of
management, which are closer to the operation, may not understand
all aspects of planning. This will affect their fullest contribution.

5. Costly or Uneconomical:
Planning is expensive. The cost of planning should not be in excess of
its contribution and managerial judgement is necessary to balance the
expenses of preparing the plans against the benefits derived from
them.

6. The management is not always willing to cancel or modify your

plans.

7. In starting formal planning, too much is attempted at once.

8. Resistance to change by organisational members.

9. Lack of contingency plans.

Strategy Spotlight: 8 Tools & Techniques To Apply To Strategic

Analysis & Planning
Written by Richard Lannon
 Read 109893 times

 May 10, 2016

There are many definitions, tools, and techniques that can be applied to
strategy analysis. If you do an internet search you will find all sorts of
options available. The challenge is selecting the best approach, tools,
and techniques to use given the business problem or opportunity.
Another part of the challenge is understanding what strategy analysis means since
there can be many definitions. This can make it confusing. It is best to simply say that
strategy analysis is an approach to facilitating, researching, analyzing, and mapping an
organization’s abilities to achieve a future envisioned state based on present reality and
often with consideration of the organization's processes, technologies, business
development and people capabilities. Part of that whole process is the ability to bridge
gaps that exist between the strategic, tactical, and operational aspects of the
organization. This requires a look at the present state, the future state, risk and
financials and the creation of change requirements to achieve the desired outcomes.
Related Article: Strategy Spotlight: 8 Common Strategic Planning Mistakes You're
Making
Even though the definition of strategy analysis varies, there is common thinking on the
key planning requirements.
 Preparation for planning through the identification and review of information relevant for
strategy analysis
 Performing high-level environmental scan looking at the internal and external business
environment with consideration for mission, vision, stakeholders, structure, existing
plans, people profiles, and question responses.
 Applying a choice of different tools and techniques to analyze the present state of a
business environment and mapping out its future.

Some of the more common analysis tools and techniques include:

VMOST: This stands for Vision, Mission, Objectives, Strategy, and Tactical.
Success in an organization happens with top-down or bottom-up alignment. I was
recently reminded of is when working with a client who stated that their tactical is not
connected to the strategy. VMOST analysis is meant to help make that connection.
SWOT: The standard analysis tool, defined as Strengths, Weaknesses, Opportunities,
and Threats.
Strengths and weaknesses are internal to the organization, opportunities and threats
are external. SWOT requires you to be candid and provide an honest assessment of the
state of things. It forces you to create a dialogue with stakeholders to get different
viewpoints. Eventually, you focus in on the key issues.
PEST: This is a great tool to use in tandem with SWOT. The acronym stands for
Political, Economic, Social and Technology.
PEST reveals opportunities and threats better than SWOT, the direction of business
change, projects that will fail beyond your control, and country, region and market
issues through helping you create an objective view.
SOAR: This stands for Strengths, Opportunities, Aspirations, and Results. This is a
great tool if you have a strategic plan completed, and you need to focus on a specific
impact zone.
I used SOAR to help a business that needed to focus on their business development
requirements due to an external market change. The organization needed to discuss
how they would recapture lost sales by $1 million per month to ensure they maintained
their profitably. Given that they had already done everything they could to cut costs and
operate a lean business, the SOAR was critical in helping define the focus for the next
12 to 24 months.
Boston Matrix (product and service portfolio): This tool requires you to analyze your
business product or service and determine if it is a cash cow, sick dog, questionable, or
a flying star.
I have applied this tool to product and service reviews with to help make product
decisions with consideration for market share and market growth. But it has no
predictive value, does not consider the environment, and you need to be careful with
your assumptions. It does force discussions on your present offering and whether it
makes sense to maintain or enhance those offerings. For example, maybe you are
holding onto a business product that you love but is really a sick dog and maybe there is
a cash cow in your business that you are not optimizing. A decision has to be made.
Porter’s Five Forces: This tool helps you understand where your business power lies
in terms of present competitiveness and future positioning strength. It forces you to
analyze the bargaining power of suppliers and customers, the threats to new entrants
and substitutes, and competitive rivalry in your marketplace. Using this tool helps you
understand the balance of power and to identify areas of potential profitability.
According to Porter, this model should be used at the line of business level.
Maturity Models: There are many maturity models that can be applied to a business.
From the evolution model, the technology model, to the team model. The idea is that
every business or department goes through a maturity cycle. The standard cycle is
chaotic, reactive, proactive, service, and value. If you were looking at processes in a
department, you would look to see where that process is on the continuum. Then you
would determine where you need to be and what it would take to get to that point of
maturity. This is a simple explanation. When using a maturity model, it is important that
you have a clear problem definition and solution context.
Root Cause Analysis: This is important, as there are times in the strategy analysis
process you need to dig deeper into a problem. This is where RCA is used. The key is
that you need to identify and specify the problem correctly, analyze the root cause using
a systematic approach, verify the causes, and determine the corrective actions.
Implementation of the corrective action is extremely important.
There are many definitions, tools, and techniques that could be addressed. The ones
mentioned here are only the tip of the iceberg for strategy analysis and become a
foundational part of the strategy analysis toolkit. In a short blog, there is no way to
mention them all. But you could create a tool checklist that you could use in your next
planning and analysis engagement to help you and your team define the present, future,
risk and change state that you need to succeed.
Until next time, be your best, invest in the success of others and make your journey
count