PLANNING ACTIVITIES UNDERTAKEN BY A FIRM

1. STRATEGIC PLANNING ACTIVITIES

These are longer-term in nature, involve top-level executives and more global in
their effect on the firm. These consists of:
a. Establishing the overall identity of the company
b. Deciding on the strategic alternatives the company will follow
c. Deciding the tactics and weapons which the company will emphasize
These strategic planning can be carried out at many levels in a firm and is
applicable at the:
a. Business unit level
b. Product level
c. Corporate level for the multi-business firm
2. OPERATIONAL PLANNING ACTIVITIES
These require establishing major policies and planning activities which are longer
term and broader in effect. Operational planning activity (for example, planning for major
facility additions) and policy formulation (for example, establishing whether the firm will
continue to market through manufac-turing representatives or initiate its own sales force)
are usually carried out within a broader strategic framework. These are also referred to
as long-range planning and more recently, are viewed as planning activities of strategic
nature.

3. BUDGETARY PLANNING ACTIVITIES

These include establishing budgets, schedules, and departmental policies. These
activities involve shorter-term focus and lower level managers. These are applicable at all
levels of an organization’s management.

RELATIONSHIPS AMONG THEM:

The planning activities can be
initiated from the top—top-down planning or
from the bottom—bottom-up planning.
The strategic planning is not a one-year
budget. Even then, the one-year budget should
reflect the strategic plan. Nor is the strategic plan
that gives a five-year forecast. Again, the five-
year forecast (of sales, profits, production
capacity, budgets, sales, and marketing, etc.)
should reflect the strategic plan.
These forecasts and long-range budgets are operational plans. In other words, the
operational plans, especially long-range plans, emanate from the overall strategic plan.
 To be more specific and detailed, the relationships between the strategic planning,
operational planning and budgetary planning can be illustrated in a diagram below. The focus of
the planning and the time perspectives will, of course, differ.

The strategic planning provides direction for an organization’s mission, objectives, and strategies,
facilitating the development of plans for each of the organization’s functional areas. A complete strategic
plan guides each area in the direction that the organization wishes to go and allows each area to develop
objectives, strategies, policies and programs and budgets consistent with those goals.
The diagram above indicates clearly that all plans should be derived from the strategic plan while
at the same time contributing to the achievement of the strategic plan.
The operating managers in an organization are not expected directly to be involved in the
development of a firm’s strategic plan.
However, they can be involved in the strategic planning process in two ways:
a. They usually influence the process by providing inputs in the form of information and
suggestions relating to their own areas of responsibility; and
b. They must be made aware of planning as well as results of their own areas of responsibility.