What Is the Meaning of Corporate Planning?

From a company's perspective, corporate planning involves formulating long term business goals so that the strategic planning of an enterprise may be developed and acted upon. The corporate planning term that was popular in the 1960s has since been referred to as strategic management

Primary Focus

Corporate and strategic planning focuses on efficiently and effectively achieving optimal performance from all business divisions, with actionable information provided to executive management in order to foster accountability and business growth.

Process

The process of gathering data to prepare detailed action plans addresses a corporate organization's goals and objectives so that an actionable plan may be developed, usually by senior management.

Information Considered

The resources of a business, company or organization is considered along with the environment in which it is operating. Statistical data including budget formulation and performance management is used in connection with business analysis and forecasting.

Planning

A plan is developed using the determined information and resources including targets and milestones that corporate planning executives and managers may use to reach company goals and objectives.

Significance

As a formal and structured approach, corporate planning can be instrumental in achieving strategic corporate goals and objectives for any kind of business organization.

What Are the Benefits of Corporate Planning?

Businesses need plans for all its operations and at all times of their functioning to be successful. A plan is required at the time of inception of the business to find ways and means to procure funds and utilize them well. A plan is required to place manpower at the most optimum positions and derive results from them.

A corporate plan is used to see whether or not the organizations assets and resources are being employed in the best possible manner. Corporate planning comes under the purview of long-term planning, i.e., a corporate plan drawn today is useful anywhere

between three to five years in the future. Several benefits accrue to the organization that has a good corporate plan in place.

Choice of best method

The process of corporate planning, as with any other mode of planning, involves evaluating various available alternate routes and then fixing on the one that is the most feasible and viable. The management examines all the scenarios and then zeros on the method that is most advantageous. The intent is to find the option that maximizes the company's sales and profits and minimizes costs, risks and losses.

Analysis of environments

A well-formulated corporate plan enables the organization to understand the environments in which it is presently operating. The management conducts internal scans such as SWOT (strengths, weaknesses, opportunities and threats) and external scans as PEST (political, economic, social and technological) to gauge the same. The corporate planning helps the organization to achieve its vision and mission faster. The management motivates its employees into being more productive, and produces at cheaper rates or produces more at the same rates. The marketing and distribution channels of the products are also augmented.

Integration process

A major plus of corporate planning is that the organization is able to integrate and correlate all its strategic functions. Several functional departments exist in every organization such as, the IT, finance, marketing, HR, production and systems. A corporate plan lets all the departments know what is expected of them. All the departments then combine their efforts and work toward achieving organizational ends and objectives.

Types of Corporate Planning

Planning is a prerequisite for any business to thrive and grow. Plans ultimately provide the organization with a sense of direction. On the basis of appropriate planning, the proprietor(s) decide on the line of business they must get into, the technologies they would use and the levels of production. There are several types of corporate planning generally used in a company

Initiation Plans

These are also known as "Start-up Plans" and are drawn by the entrepreneur whenever he is about to venture into the business. He makes a synopsis of what he intends to do, what are his goals and aspirations for the company. This plan helps him evaluate the viability of the intended business. Once he decides to go ahead with the business, he details out what the products he would manufacture, his finances and his team of employees. He details his intended sales and profit projections for the next year.

Strategic Plans

Once the business has commenced, the management makes strategic plans. These plans help the company apportion their resources most optimally. The plans evaluate the pros and cons of choosing one method of allocation over another. The company sets attainable goals and targets for itself. Later, its performance is gauged on the basis of these targets.

Growth Plans

These plans are made whenever the organization has an idea of diversifying into newer territories of trade. These plans help the organization evaluate its strategies, finances and resources and targets before the start of the new venture.

Financial Plans

As the name suggests, these plans are made to analyze how best the organization must utilize its money. These plans help the organization decide on whether they must procure loans from the market or issue additional equity to raise money. Also, the company is able to evaluate what all investments it must make today for maximum profitability.

Human Resource Plans

These plans help the company allocate its manpower in the most ideal manner. The company contrasts the skills required for the job and the proficiencies of its employees. It is then able to distribute the manpower most perfectly.

Internal Plans

These plans are specific to each department in the organization. These are also called departmental plans. The departmental sets targets and timelines for each of her subordinates.