Types of Planning Strategic, Tactical, Operational & Contingency Planning Video & Lesson.
Planning in Business Management
Importance of Planning
- The saying "those who fail to plan, plan to fail" highlights the critical role of planning in business management.
- Planning is one of the four major functions of management, ensuring that managers work towards organizational goals.
Types of Plans
- There are three main types of plans used by managers: operational, tactical, and strategic.
- Operational plans are essential for achieving tactical plans, which in turn lead to the accomplishment of strategic plans.
- Contingency plans are created as backups for when initial plans fail.
Strategic Planning
- Strategic plans focus on the entire organization and begin with its mission; they outline long-term goals (3 to 10 years).
- Top-level managers like CEOs create strategic plans that guide lower-level planning efforts.
- Tommy, a top-level manager at Nino's Pizzeria, uses strategic planning to ensure growth and improve productivity.
Tactical Planning
- Tactical planning translates strategic objectives into specific actions relevant to different areas within the organization.
- Middle-level managers like Martha develop tactical plans based on top-level strategies; these may include process improvements or resource acquisitions.
Operational Planning
- Operational plans are made by front-line managers and focus on specific procedures at the lowest levels of the organization.
- Frank, a front-line manager at Nino's Pizzeria, engages in operational planning activities such as employee scheduling and inventory management.
Types of Operational Plans
- Operational plans can be single-use or ongoing. Single-use plans address unique situations while ongoing plans adapt over time.
- Examples include creating a monthly budget (single-use plan), versus outlining annual performance goals (ongoing plan).
Policies and Procedures
- Policies provide general guidelines for routine responsibilities; examples include hiring practices and performance appraisals.
- Procedures detail step-by-step processes for tasks like inventory management. Rules offer explicit behavioral guidelines for employees.
Contingency Planning
Planning in Management
Understanding Contingency Planning
- Contingency planning is an alternative course of action that can be implemented when an original plan fails to produce the anticipated results. It may seem like extra work but is crucial, akin to having a reserve parachute while skydiving.
Types of Planning in Management
- There are three major types of planning: operational, tactical, and strategic. A fourth type, contingency planning, serves as a backup if initial plans do not succeed.
The Hierarchy of Planning
- Operational, tactical, and strategic planning can be viewed as stepping stones towards achieving greater organizational goals. Each type plays a specific role in the overall management process.
Strategic Plans and Organizational Goals
- Top managers create strategic plans that outline long-term goals for the organization, such as increasing productivity or profitability. These plans provide a framework for lower-level planning.
Tactical and Operational Plans Defined
- Tactical plans translate strategic objectives into specific actions relevant to distinct areas within the organization. They focus on departmental responsibilities to support overarching strategies.
- Operational plans are developed by frontline managers and detail specific procedures at the individual level. Examples include employee scheduling and inventory management.
Types of Operational Plans