17.2 The Planning Process
3 min read•june 25, 2024
Planning is a crucial management function that sets the direction for an organization. It involves developing awareness, setting goals, and creating strategies to achieve them. The planning process guides decision-making and resource allocation, ensuring the company stays on track.
takes a long-term view, using tools like and to inform decisions. Different approaches like goal, domain, and offer flexibility in strategy development. The integrates planning with implementation and learning, promoting continuous improvement.
The Planning Process
Steps of the planning process
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- Developing awareness
- Identify opportunities and threats in the external environment (market trends, competitor actions)
- Assess strengths and weaknesses within the organization (financial resources, employee skills)
- Conduct to gather comprehensive information about the business landscape
- Establishing goals
- Set specific, measurable, achievable, relevant, and time-bound (SMART) objectives for the organization
- Ensure goals align with the company's mission and vision statements
- Formulating the primary plan
- Develop strategies to achieve the established goals (, )
- Allocate resources (budget, personnel) and assign responsibilities to key individuals or teams
- Create to outline specific steps for strategy implementation
- Implementing the plan
- Put the primary plan into action by executing the strategies and tactics outlined
- Communicate the plan to all stakeholders (employees, investors, customers)
- Provide necessary training and support to ensure successful implementation
- Formulating supportive plans
- Create tactical and operational plans to support the primary plan (marketing campaigns, production schedules)
- Develop to address potential obstacles or changes in the business environment
Strategic Planning and Analysis
- Strategic planning involves long-term, high-level decision-making to achieve organizational goals
- Forecasting helps predict future trends and conditions to inform strategic planning
- Benchmarking compares organizational performance against industry leaders to identify areas for improvement
- are used to measure progress towards strategic objectives
Goal vs domain vs hybrid planning
- focuses on achieving specific, predetermined objectives within a set timeline
- Emphasizes measurable outcomes (increase sales by 10% within 6 months)
- May limit flexibility and adaptability to changing circumstances
- focuses on identifying and pursuing opportunities within a specific market or area of expertise
- Emphasizes building and maintaining a competitive advantage (becoming the leading provider of eco-friendly products)
- May lead to missed opportunities outside the defined domain
- Hybrid planning combines elements of both goal and domain planning approaches
- Seeks to achieve specific objectives while also exploring new opportunities (expanding into related product categories)
- Allows for greater flexibility and adaptability to changing circumstances in the business environment
Deming cycle for organizational learning
- The Deming cycle, also known as the PDCA (Plan-Do-Check-Act) cycle, consists of four iterative stages:
- Plan: Identify objectives, develop strategies, and allocate resources
- Do: Implement the plan and collect data on performance metrics
- Check: Analyze data, compare results to objectives, and identify areas for improvement
- Act: Make necessary adjustments to the plan based on the analysis and implement changes
- Integrates planning and implementation by ensuring plans are put into action and progress is monitored
- Allows for adjustments to be made based on actual performance data
- Integrates controlling and by providing a framework for monitoring and evaluating performance
- Encourages continuous improvement based on data-driven insights (identifying bottlenecks in the production process)
- The iterative nature of the Deming cycle promotes ongoing refinement of plans and processes
- Leads to increased efficiency and effectiveness over time as the organization learns and adapts
Key Terms to Review (21)
Action Plans: Action plans are detailed outlines that specify the concrete steps and resources needed to achieve a particular goal or implement a chosen strategy. They serve as a roadmap to guide the execution of plans and ensure effective implementation.
Benchmarking: Benchmarking is the process of comparing a company's performance, practices, or products to those of industry leaders or competitors in order to identify areas for improvement and drive organizational excellence. It is a strategic tool used to measure and evaluate an organization's processes and performance against best-in-class standards.
Contingency Plans: Contingency plans are alternative courses of action that organizations or individuals develop to prepare for potential problems or unexpected events that may disrupt their normal operations or plans. These plans are designed to provide a backup strategy or response to ensure continuity and minimize the impact of unforeseen circumstances.
Deming Cycle: The Deming Cycle, also known as the Plan-Do-Check-Act (PDCA) cycle, is a four-step iterative process for continual improvement in business processes and product quality. It provides a structured approach to identifying problems, implementing solutions, and continuously refining and optimizing operations.
Domain Planning: Domain planning is a strategic process that involves defining and organizing the specific areas or topics that an organization will focus on to achieve its goals and objectives. It encompasses the identification, prioritization, and allocation of resources within an organization\u2019s sphere of influence or control.
Environmental Scanning: Environmental scanning is the process of gathering and analyzing information about events, trends, and relationships in an organization's external environment. It involves continuously monitoring the organization's external environment to identify potential opportunities and threats that may affect its current and future plans and strategies.
Forecasting: Forecasting is the process of making predictions or estimations about future events, trends, or conditions based on available data and analysis. It is a critical component of the planning process, as it helps organizations and individuals make informed decisions and prepare for potential scenarios.
Goal Planning: Goal planning is the process of identifying specific, measurable, achievable, relevant, and time-bound (SMART) objectives that an individual or organization aims to accomplish. It involves defining desired outcomes, establishing action steps, and allocating resources to ensure the successful attainment of those goals.
Hybrid Planning: Hybrid planning is an approach to the planning process that combines elements of both top-down and bottom-up planning methodologies. It seeks to leverage the strengths of each approach to create a more comprehensive and effective planning framework.
Key Performance Indicators (KPIs): Key Performance Indicators (KPIs) are quantifiable metrics used to evaluate the success or progress of an organization, department, or individual in achieving specific goals and objectives. They provide a framework for measuring and monitoring performance against predetermined targets.
Market Penetration: Market penetration refers to a company's strategy to increase its share of a particular market by selling more of its existing products or services to its current customer base or to new customers within the same market. It is a measure of how much a company has been able to capture a specific market with its existing products or services.
Mission Statement: A mission statement is a concise declaration that outlines an organization's fundamental purpose, values, and goals. It serves as a guiding principle that informs strategic decision-making and shapes the overall direction of the business or entity.
Operational Planning: Operational planning is the process of developing specific, actionable plans to achieve an organization's short-term goals and objectives. It focuses on the day-to-day activities and resources required to execute the strategic plan effectively.
Organizational Learning: Organizational learning is the process by which an organization acquires, shares, and utilizes knowledge to adapt to changing internal and external environments, improve performance, and ensure long-term success. It involves the collective ability of an organization to learn, adapt, and continuously improve its processes, strategies, and capabilities.
PDCA Cycle: The PDCA (Plan-Do-Check-Act) cycle is a four-step iterative management method used in business for the control and continuous improvement of processes and products. It is a fundamental concept in quality management and is widely applied in various industries and organizations to systematically identify, analyze, and solve problems.
Product Development: Product development is the process of creating a new product or improving an existing one to meet the needs and preferences of customers. It involves a series of steps, from idea generation to market launch, that aim to bring a successful product to the market.
SMART Objectives: SMART objectives are a framework for setting effective and measurable goals. The acronym SMART stands for Specific, Measurable, Achievable, Relevant, and Time-bound. This approach helps individuals and organizations create clear, actionable, and meaningful objectives that can be effectively planned, executed, and evaluated.
Strategic Planning: Strategic planning is the process of defining an organization's long-term vision, mission, and objectives, and developing a comprehensive plan to achieve those goals. It involves analyzing the organization's internal strengths and weaknesses, as well as its external environment, to make informed decisions about the best course of action for the business.
SWOT Analysis: SWOT analysis is a strategic planning framework used to evaluate the Strengths, Weaknesses, Opportunities, and Threats of an organization or a project. It provides a structured approach to assess the internal and external factors that can impact an entity's performance and guide decision-making.
Tactical Planning: Tactical planning is the process of developing specific, short-term actions and strategies to achieve an organization's objectives. It focuses on the immediate steps required to implement a strategic plan and ensure its successful execution.
Vision Statement: A vision statement is a concise and aspirational description of the future state an organization aims to achieve. It serves as a guiding light, inspiring and motivating employees, stakeholders, and the broader community to work towards a common, long-term goal.