There are basically three levels of planning associated with the different managerial levels these are:
1. Strategic Planning:
Strategic planning is the process of determining overall objectives of the organization and the policies and strategies adopted to achieve those objectives. It is a process by which an organization makes decisions and takes actions that affect its long term performance. Top management of the organization is involved in strategic planning, which is long range and has a major impact on the organization.
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A strategic plan usually covers a time period of upto ten years and involves a major commitment of resources. It deals with the total assessment of the organization’s capabilities, its strengths and its weaknesses and an objective and analytical evaluation of the dynamic environment.
The planning also determines the direction the company will be taking from where it is and where it wants to be. For example, strategic planning formed the basis of Motorola’s decision to move away from the consumer market and concentrate on industrial products.
Similarly, Levi Strauss Company, which was primarily involved in production of blue denim jeans expanded to include women’s and children’s clothing, fashion oriented clothing and shoes.
2. Tactical Planning:
While strategic planning focuses on where the organization will be in the future, tactical planning, also known as “intermediate planning” emphasizes on how it will be done. Such planning generally covers a shorter period of time, usually between one and two years and involves middle management such as functional managers, department heads, product line managers and so on.
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They also have the task of polishing the top management’s strategic plans. The middle management will have a critical look at the resources available and they will determine the most effective and efficient mix of human, financial and material factors in order to achieve the organizational objectives in the most efficient manner. They refine the broad strategic plans into more workable and realistic plans.
3. Operational Planning:
Operational plans are the responsibility of lower level management and involve unit supervisors, foremen and so on. These are short range plans covering a time span of about one week to one year. These plans are more specific and they determine how a specific job is to be completed in the best possible way.
Most operational plans are divided into functional areas such as production, finance, marketing, personnel and so on. For example, production plans would require an analysis and decisions covering inventory levels of raw materials as well as finished product, flexibility of current production facilities, plans for coping with changing production technology, and so on. These plans are relatively stable and are linked with the planning objectives of the middle management and top management.