Methods of Planning

Types of planning/ Methods of Planning

1.    Corporate planning and Functional planning

Corporate planning

Planning at top level, which covers entire organizational activities.

Determine long term objectives of organization and generate plans to achieve these objectives.

Functional planning

            Planning for departments.

            Marketing plan for marketing department.

2.    Strategic planning and Operational planning

Strategic planning

It is the process of determination of basic long term objectives of an enterprise, the adoption of course of action and allocation of resources to achieve these goals.

Operational planning/ Tactical planning

It is the process of deciding the most effective use of resources allocated and to develop a control mechanism to assure effective implementation of the actions so that organizational objectives are achieved.

3.      Long term planning and Short term planning

               Short term planning

It involves deciding what your goals are for the short term (usually within the next year). These short term goals may include restructuring, hiring or short term profit targets. 

Long Term Planning

It  may involve an outlook for the future (in the next 5 to 10 years). This may involve a capital funding goal or company expansion goals. 

4.      Proactive planning and Reactive planning

Proactive planning

It involves designing suitable courses of action in anticipation of likely changes in the relevant environment. Use broad planning approaches, broad environmental scanning, reserve some resources to be used for the future.

They do not wait for environment to change, but take actions in advance of change.

Reliance industries and Hindustan Liver adopted this approach and their growth rate has been much faster than others.

Reactive planning

Organizations response comes after the environmental changes have taken place.

After changes takes place organization starts planning.

Organization looses opportunities to those who adopt proactive approach

5.      Formal and Informal Planning

               Formal Planning

               Well structured

               Large organizations create separate corporate planning cell with MBAs, Engineers etc

               Continuously monitor external environment.

               Informal planning

               Not well structured

               Smaller organizations , no separate cell, part of managers activities.

               No systematic evaluation of external environment.