TYPES OF PLANNING

Planning may be categorised into several types on the basis of certain variables. Here we will divide the function of planning into four categories on the basis of two variables i.e. the degree of comprehensiveness and time span. On the basis of the degree of comprehensiveness, planning is divided into strategic planning and tactical planning. On the basis of time span, we may divide planning into long-range planning and short-range planning. Let us have a brief idea of the four types of planning.

1. Strategic Planning: The term strategic planning refers to the process of determining the integrated organisation-wide courses of action to achieve the major objective of the organisation. The term has a military origin where it is used to describe the process of formulation of military campaigns to achieve military goals of defending the home territory and defeating the enemy forces. In military parlance, strategic planning covers such aspects as to how to attack the enemy and from how many fronts, the size and combination of ground forces, air forces and naval forces, the number of resources to be deployed, the timing of the various moves, the areas to be fortified and defended and so on. The term acquired great significance in non-military situations also. We often hear of strategies to achieve the goals of Five Year Plans at the national and regional levels, strategies for solving rural drinking water problems, strategies to reduce the growth rate of population and so on. In the context of business enterprises, strategic planning consists of the formulation of strategies which are in the nature of critical and intelligent courses of action to gain upper hand over competitive and other complex external forces in the environment. It involves tentative chalking out of the major measures and moves necessary to perceive and exploit opportunities and to tackle threats and constraints, in the light of distinctive strengths and inevitable weaknesses of the enterprises.

2. Tactical Planning : Tactical Planning refers to the process of formulating more specific, functional, sub-plans to implement the strategies of the enterprise. Tactical Planning is more limited in its scope and consists of detailed decisions and actions initiated at lower managerial levels to exploit situations as and when they arise and to cope with local, operational problems. It is sub-corporate wide in nature. Tactical plans take the form of small, successive steps or moves taken in a concerted manner. Tactical decisions are concerned with what and how activities are to be carried out, what performance criteria are to be established, how scarce resources are to be utilised efficiently and so on.

3. Long-range Planning: The term long-range planning refers to the process of formulating the long-range objectives of an organisation and of determining the ways and means of achieving such objectives. The term long-range indicates the extent of future time horizon, the fairly long period of time which can be visualised and verbalised into tentative objectives by the organisation. The duration and limit of long-range differs from enterprise to enterprise and from situation to situation. For some enterprises, 3 to 5 years is a fairly longtime horizon, while for others, 25 to 30 years and even beyond is the relevant planning time frame. The long-range planning period is determined keeping in view the nature of the enterprise’s business, its size and growth rate, the extent of variability of the environment, the time required for converting major decisions into tangible results and so on.

4. Short-range Planning: The term short-range planning refers to the process of formulating short-range objectives and of deciding on the courses of action or plans, to achieve them. Short-range planning is done for a time span of one year or less. In general, it is carried out within the framework of long-range planning, and for achieving long-range objectives, in a step-by-step manner. A short-range plan is an attempt to breakdown a long-range plan into compact and actionable programmes. Short-range planning is more action-oriented, more detailed, specific and quantitative. For example, if the long-range goal of an enterprise is to increase its sales volume by 50% during the course of next five years, it has to formulate its short-range plan for the next one year to bring about an increase of say 20% in its sales turnover. It has to formulate a detailed budget of short-range goals, targets of performance, activities, and resource requirements in a timebound manner. Short-range planning provides the basis for a coordinated performance of activities, allocation of resources, assignment of tasks and design of the appropriate plan, implementation and programme evaluation system. Long range plans are implemented by programming, budgeting and scheduling efforts and activities needed to achieve organisations goals.