17.3 Types of Plans

Organizational plans come in various types, each serving a unique purpose. From hierarchical plans that outline long-term strategies to frequency-of-use plans that guide daily operations, these structures help businesses stay on track. Understanding the different categories allows managers to choose the right approach for their specific needs.

Strategic plans, tactical plans, and operational plans form the backbone of organizational planning. Standing plans provide ongoing guidance, while single-use plans tackle specific projects. Time-frame and organizational scope plans further refine the planning process. Contingency plans prepare businesses for unexpected challenges, ensuring they're ready for anything.

Types of Organizational Plans

Categories of organizational plans

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• Hierarchical plans (planning hierarchy)
  • Strategic plans develop long-term, broad plans that define the organization's mission, vision, and overall direction
  • Tactical plans create mid-term plans that outline specific strategies and actions to achieve strategic goals
  • Operational plans detail short-term plans that specify day-to-day activities and tasks to implement tactical plans
• Frequency-of-use plans
  • Standing plans provide ongoing guidance for recurring situations or tasks
    • Policies offer general guidelines for decision-making and behavior (dress code)
    • Procedures give step-by-step instructions for specific tasks or processes (customer complaint handling)
    • Rules set strict, specific guidelines that must be followed (safety regulations)
  • Single-use plans are created for a specific purpose or project
    • Programs develop comprehensive plans for a specific project or initiative (new product launch)
    • Budgets allocate financial resources for a specific time period (marketing campaign)
• Time-frame plans
  • Long-term plans extend beyond three years, such as strategic plans
  • Mid-term plans cover one to three years, such as tactical plans
  • Short-term plans cover less than one year, such as operational plans
• Organizational scope plans
  • Corporate-level plans encompass the entire organization and its overall direction
  • Business-unit plans focus on a particular division, department, or product line
  • Functional-level plans target a specific functional area, such as marketing or human resources
• Contingency plans develop alternative strategies to address potential changes or unforeseen circumstances (natural disasters, economic downturns)
  • These plans often require environmental scanning to identify potential threats and opportunities

Components of strategic plans

• Mission statement
  • Defines the organization's purpose, values, and primary stakeholders
  • Provides a foundation for decision-making and goal-setting
  • Example: "To inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time" (Starbucks)
• Long-term vision
  • Describes the desired future state of the organization
  • Provides a clear, inspiring direction for the organization to work towards
  • Example: "To become the world's most loved, most flown, and most profitable airline" (Southwest Airlines)
• Operational strategies
  • Outlines the specific actions and initiatives required to achieve the organization's mission and vision
  • Includes resource allocation, competitive positioning, and key performance indicators
  • Example: Expanding into new geographic markets, developing innovative products, or improving operational efficiency
• SMART objectives
  • Specific, Measurable, Achievable, Relevant, and Time-bound goals that support the overall strategy

Standing vs single-use plans

• Standing plans are used for recurring situations or tasks and provide consistent guidance and standardization
  • Policies offer general guidelines for decision-making and behavior
    • Example: A company's dress code policy ensures professional appearance
  • Procedures give step-by-step instructions for specific tasks or processes
    • Example: A procedure for handling customer complaints ensures consistent and effective resolution
  • Rules set strict, specific guidelines that must be followed
    • Example: Safety rules in a manufacturing facility prevent accidents and injuries
• Single-use plans are tailored to the specific needs and goals of a one-time project or initiative
  • Programs develop comprehensive plans for a specific project or initiative
    • Example: A program to launch a new product line coordinates marketing, production, and distribution efforts
  • Budgets allocate financial resources for a specific time period
    • Example: A budget for a marketing campaign ensures efficient use of funds to achieve desired outcomes
  • Other examples: A plan for expanding into a new market (international expansion) or a project to implement a new software system (ERP implementation)

Plan Development and Execution

• Goal-setting: Establishing clear objectives aligned with the organization's mission and vision
• Plan implementation: Executing the strategies and actions outlined in the plan
• Plan evaluation: Assessing the effectiveness of the plan and making necessary adjustments
• Plan flexibility: Adapting plans as needed to respond to changing circumstances or new information