Abbreviated as PLNG by AbbreviationFinder, planning is a business management tool that consists of designing the paths to reach a goal, anticipating possible scenarios.
Planning is a process of making early decisions. Through planning, the manager already knows what he will need to do before an action is necessary. This is because, when creating the structure and designing the plan for the application of his ideas, he will have already studied and selected alternative paths based on simulations of the future, being prepared to overcome adversities and to seize opportunities.
Planning, however, should not be seen as a static process. It also presupposes an ongoing process of reassessing decisions.
The goal of planning is to allow the manager to implement more assertive and studied decisions, predicting and minimizing factors that can have a negative impact on achieving the objective and better taking advantage of the factors that facilitate this process.
Management theories identify four administrative functions: planning, organizing, directing and controlling. Therefore, we can say that planning is a fundamental step in management.
Levels of business planning
It is possible to identify three types of business planning, which differ according to the hierarchical level they mobilize: strategic planning, tactical planning and operational planning. In practice, the last two levels of planning turn out to be developments of the first.
What is strategic planning?
The concept of strategic planning is related to the achievement of the company’s long-term goals. So, by definition, it involves the entire organization. Its elaboration is made by those who are at the top of the hierarchy and, therefore, have a more global view.
These managers are also better able to monitor what is happening in the external environment, which is where are the factors over which the organization has no control, such as competition and changes in the economy and the market.
What is tactical planning?
Tactical planning aims to achieve the tactical objectives defined in strategic planning. It is developed in a specific functional area and aiming at a specific result. That is, it does not cover the company as a whole.
Tactical planning is related to the intermediate levels of the company’s hierarchy and has a shorter duration than strategic planning. Instead of the long term, tactical planning has a medium-term horizon.
What is operational planning?
Just like tactical planning, operational planning is the result of developments in strategic planning. It involves lower levels of the organization and works in the short term.
The focus of operational planning is the routine activities of the company. Identifying the tasks that must be performed and the resources required for each of these activities is the function of operational planning. Their targets are therefore more palpable and measurable.
Step-by-step instructions for strategic planning
We can identify a series of steps that allow the manager to apply strategic planning in his company.
External analysis
This first step consists of identifying which environmental factors influence the organization’s performance. It allows to design future scenarios of the conjuncture, to which the company may have to adapt.
Internal analysis
The main objective of this stage is to know the strengths and weaknesses of the company to know how it is located within its market. For this, it is possible to use tools such as benchmarking and SWOT analysis.
Definition of mission, vision and values
The establishment of the company’s mission, vision and values is the guide to know where it is going. Only after having this clear is it possible to determine your strategic objectives. Ideally, the definition of the mission, vision and values should consider the analysis made in the previous steps.
Defining strategic objectives
The strategic objectives are the broader ones, which directly dialogue with the company’s mission. For example, in the case of a company whose mission is to provide the well-being of its employees, one of its strategic objectives could be, for example, to reduce the turnover of its human resources to a certain level.
Defining tactical objectives
To define tactical objectives, it is necessary to break down strategic objectives, identifying the sectors of the company that are involved in achieving each broader goal. The tactical objectives will be designed with a specific focus on each of these sectors.
If the company has set a strategic objective to reduce labor turnover by 20%, for example, it must now study how each sector will have to collaborate for this, defining the intermediate goals to be achieved by them.
Thus, the Human Resources sector may receive as a goal to expand the channels of dialogue with employees, while the financial department may be in charge of implementing a plan that allows an increase in salaries without compromising the company’s accounts.
Definition of operational objectives
Operational objectives correspond to the practical application of tactical objectives. They generally correspond to specific tasks or operations. They are the steps in the action plan to achieve the goals for each sector.
Continuing with the example above, an operational objective linked to the goal of expanding the dialogue channels with employees could be, for example, applying a questionnaire to find out what their main complaints are.
Implementation, monitoring and control
Once the objectives and strategies are defined, it is time to ensure that they get off the ground. For this, it is necessary to monitor its implementation, which can be done through the adoption of control indicators.
To have these indicators, it is important that the company’s planning translates into a budget. In it, goals become projections – for example, sales growth or cost cap.
Confronting the projections outlined in the budget with the results that are being achieved by the company is one of the ways to assess whether it is on the right path or whether it is necessary to make any adjustments.
Other types of planning
Planning can also be used in other contexts within the organization. In all cases, the concept also presupposes the determination of objectives and ways to achieve them.
The concept of aggregate planning is related to production control. It is a model for defining strategies to reconcile demand and the company’s productive capacity. Aggregate planning takes into account the resources available to decide whether to increase or decrease production.
The financial planning works with the projection of revenue and expenditure, will show whether the money will be available to the corporation and the best way to invest, and avoid pitfalls that lead to its debt. But the tax planning aims to make the company can pay less taxes without breaking the law.
The concept of planning can also be applied thinking about marketing and sales strategies, human resources management and project development, etc.
