PLANNING -is the process of setting goals and defining the actions required to achieve the goals. Planning begins with goals. Goals are derived from the vision and mission statements, but these statements describe what the organization wants to achieve, not necessarily what it can achieve. The organization is affected both by conditions in its external environment— competitors, laws, availability of resources, etc.—and its internal conditions—the skills and experience of its workforce, its equipment and resources, and the abilities of its management. Together, the vision and mission statements and the results of the situation analysis determine the goals of the organization. BENEFITS OF PLANNING Planning provides a guide for action. Plans can direct everyone’s actions toward desired outcomes. When actions are coordinated and focused on specific outcomes they are much more effective. Planning improves resource utilization. Resources are always scarce in organizations, and managers need to make sure the resources they have are used effectively. Planning helps managers determine where resources are most needed so they can be allocated where they will provide the most benefit. Plans provide motivation and commitment. People are not motivated when they do not have clear goals and do not know what is expected of them. Planning reduces uncertainty and indicates what everyone is expected to accomplish. People are more likely to work toward a goal they know and understand. Plans set performance standards. Planning defines desired outcomes as well as mileposts to define progress. These provide a standard for assessing when things are progressing and when they need correction. Planning allows flexibility. Through the goal-setting process, managers identify key resources in the organization as well as critical factors outside the organization that need to be monitored. When changes occur, managers are more likely to detect them and know how to deploy resources to respond. KINDS OF CORPORATE PLANS 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 - 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 - 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. TIME FRAMES FOR PLANNING Long Range Plans - Long-term plans usually take years to attain and sometimes even decades. However, it is up to each organization to decide the time span for their longrange goals. Managers must be very careful when planning long-range goals and take future environmental change into consideration. This is crucial in order to keep managers from planning too far ahead. Intermediate Plans - These plans usually cover a time span of one to five years and are less tentative and subject to change than long-range plans. They are set for middle and first line managers and they typically parallel tactical plans. Intermediate plans have become the central focus for planning activities of many organizations. Short-range plans - These plans have a time frame of one year or less. Therefore, they are of great importance in a managers day-today activities. Short-range plans have two components: action plans and reaction plans. Action plans are used to operational any other kind of plan. They coordinate the actual changes in organizations. Reaction plans in the other hand are developed to react to unforeseen circumstances. Any situation in which a manager is forced to react to an unforeseen environmental change would be considered a reaction plan. PERSON'S RESPONSIBLE FOR PLANNING CEO and Executive Team The CEO and executive team play a big role in setting the foundation of a strategic plan by creating guiding organizational principles, articulating the strategic areas of focus, and creating the long-term goals that guide the organization to create aligned goals and actions to achieve its vision of success. The executive team is responsible for: Mission, Vision, & Guiding Principles – These are the core foundational elements to your plan that tell your organization who you are, where you’re going, and how you’re going to operate. These principles encompass your organization’s ethos and help serve as the foundation to your long-term strategy to achieve your vision of success. These are updated every 5 years and reviewed by the executive team annually. Strategic Priorities – These are the long-term areas of strategic focus that are designed to achieve your vision of long-term success. These create the different pillars of your plan and articulate the focus for each area. These are updated every 5 years and reviewed by the executive team annually. Organization-Wide Goals and Performance Indicators – These are the long-term goals and performance indicators that begin to put action to paper to help achieve strategic priorities. These goals and actions have a lifespan of 3-5 years, but are reviewed and adapted annually. Managers/Department Leaders Managers and department leaders don’t have as much responsibility during the plan creation process, but drive your organization to create the annual department goals that support the organization’s goals and performance indicators. Managers and department leaders are responsible for: Annual Goals – Department leaders and managers create and execute the annual department goals that align and support the organization-wide goals and performance indicators. These goals are established annually. Individual Contributors Individual contributors are your soldiers on the ground tasked with helping drive your strategy from the ground up. They play an essential role in your day-to-day operations, but also in the creation and execution of your strategy. Individual contributors are responsible for: Supporting Action Items with Milestones – Individual contributors create the supporting action plans with milestones that drive the day-to-day focus on strategy. Each of these action plan milestones tally up to achieve your annual goals. These action plans are completed annually. PLANNING TOOLS Strategists have developed a large array of tools useful in the assessment of strategic planning, all of which provide unique insights into the feasibility and profitability of a given operational project. Identifying these tools, and selecting which are most appropriate for determining the effectiveness or efficiency of a project, is a central responsibility of a strategicmanagement team. Forecasting is the the most common strategic tool and it should be considered whenever projects are being designed. What is Forecasting? Forecasting refers to the practice of predicting what will happen in the future by taking into consideration events in the past and present. Basically, it is a decision-making tool that helps businesses cope with the impact of the future’s uncertainty by examining historical data and trends. It is a planning tool that enables businesses to chart their next moves and create budgets that will hopefully cover whatever uncertainties may occur. Forecasting Methods Businesses choose between two basic methods when they want to predict what can possibly happen in the future, namely, qualitative and quantitative methods. 1. Qualitative Method Otherwise known as the judgmental method, qualitative forecasting offers subjective results, as it is comprised of personal judgments by experts or forecasters. Forecasts are often biased because they are based on the expert’s knowledge, intuition, and experience, and rarely on data, making the process non-mathematical. One example is when a person forecasts the outcome of a finals game in the NBA, which, of course, is based more on personal motivation and interest. The weakness of such a method is that it can be inaccurate. 2. Quantitative method The quantitative method of forecasting is a mathematical process, making it consistent and objective. It steers away from basing the results on opinion and intuition, instead utilizing large amounts of data and figures that are interpreted. Features of Forecasting Here are some of the features of making a forecast: 1. Involves future events - Forecasts are created to predict the future, making them important for planning. 2. Based on past and present events - Forecasts are based on opinions, intuition, guesses, as well as on facts, figures, and other relevant data. All of the factors that go into creating a forecast reflect to some extent what happened with the business in the past and what is considered likely to occur in the future. 3. Uses forecasting techniques - Most businesses use the quantitative method, particularly in planning and budgeting. The Process of Forecasting Forecasters need to follow a careful process in order to yield accurate results. Here are some steps in the process: 1. Develop the basis of forecasting The first step in the process is developing the basis of the investigation of the company’s condition and identifying where the business is currently positioned in the market. 2. Estimate the future operations of the business Based on the investigation conducted during the first step, the second part of forecasting involves estimating the future conditions of the industry where the business operates and projecting and analyzing how the company will fare. 3. Regulate the forecast This involves looking at different forecasts in the past and comparing them with the actual things that happened with the business. The differences in previous results and current forecasts are analyzed, and the reasons for the deviations are considered. 4. Review the process Every step is checked, and refinements and modifications are made. Sources of Data for Forecasting 1. Primary sources Information from primary sources takes time to gather because it is first-hand information, also considered the most reliable and trustworthy sort of information. The forecaster himself does the collection, and may do so through things such as interviews, questionnaires, and focus groups. 2. Secondary sources Secondary sources supply information that has been collected and published by other entities. An example of this type of information might be industry reports. As this information has already been compiled and analyzed, it makes the process quicker. STRENGTH AND WEAKNESSES OF PLANNING TOOL CHALLENGES IN THE PLANNING PROCESS A.) Lack of Leadership Being a leader is about more than a title following your name. It requires developing a strategy and then expressing the vision in a clear way, so the entire team understands the goal. When a vision is clearly laid out, business leaders must inspire team members to join the program for the new vision and implement new strategies. when leaders do all this well, they still need to be constant motivators, project managers and evaluators of the strategy's implementation. Without motivation, new strategies fall behind as workers return to their habitual ways of doing things. B.) Excessive Distractions Prevent Effective Planning Too many distractions present a significant barrier to effective planning. It could be that a leader is trying to implement too many things at once, and the team is confused about the priorities. Another way that a distraction prevents effective planning implementation occurs when a leader attempts to roll out a new program during a peak business season. Your team can't focus on new strategies and processes if they are working overtime taking care of clients. As the leader, understand that timing the implementation of new strategy carefully is as important as the strategy itself. C.) Lack of Systems Having the right systems in place to support a new strategy is important for success. Systems could include hardware or software systems or could be something as simple as the fulfillment process chain of events. Leaders need to look at the resources in place before implementing a new strategy. For example, a new customer-retention management program might help the team become more efficient from the sale through the delivery of goods. However, if the computer systems haven't been upgraded, the new program could overload the computers and cause crashes and freezes. Team members can't be productive while using a system that isn't working correctly. D.) Limited Manpower to Complete Tasks Some strategies require a bigger labor force. Without it, seeing a new strategy implemented effectively has potential problems. For example, a new lead-generation plan could do a great job of flooding your sales team with leads. However, if the sales team doesn't have the capacity to follow up with all the leads, the strategy wastes money and burns prospects. Additionally, the new influx of orders needs a fulfillment team capable of handling the new orders. Make sure you have the right people in place to execute new strategies effectively. E.) Inadequate Resources and Funding You may have a great plan but don't have the resources to execute it properly. A lack of resources can impact marketing, talent acquisition and new distribution programs. Bootstrapping new changes can strain the team as it implements something that isn't ready to go. When you don't have the funding, segment the strategy and roll it out in phases that meet budget limitations. F.) Impractical Business Planning Some ideas are just not practical. Don't be stubborn about the execution of a new strategy. A strategy is a concept that is fleshed out during implementation. Business leaders must be flexible to see what is working and what isn't working in the strategy and make adjustments accordingly. Just because something seems like a good idea on paper doesn't mean it will translate into practice without any glitches. References: https://bizfluent.com/info-7736288-types-corporate-planning.html https://sites.google.com/site/bus25001planning/home/time-frames-forplanning?fbclid=IwAR3T1FhYe1UJq7WZ9aB3u51cef7dSra60lubvwvqr2_KIsG07RK3Ak8qc4 8 https://corporatefinanceinstitute.com/resources/knowledge/finance/forecasting/?fbclid=IwAR3y Z3Sv-g5A8A7XO9l3gNrj0BTJl7HdcMqWo6vBtuFcXYIs2G-687nRAss https://smallbusiness.chron.com/six-barriers-effective-planning-45281.html https://onstrategyhq.com/resources/whos-responsible-for-what-how-to-structure-your-strategicplan/ https://courses.lumenlearning.com/wm-principlesofmanagement/chapter/reading-pros-and-consofplanning/?fbclid=IwAR0RztCqB8dHixui1VQHCnh7GzquVQs8iMsldX3kxenO49FXWoIUThM 2EZM
