What Is Corporate Planning? Benefits, Types and Tips
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Planning is important to professionals and businesses because it provides direction for daily actions. Corporate planning is more focused on preparing courses of action for all the activities of a business. Understanding corporate planning can help you successfully manage a business or help you work more effectively. In this article, we explain what corporate planning is, the types of corporate planning and the stages involved in the creation of a corporate plan.
What is corporate planning?
Corporate planning is the process by which businesses create strategies for meeting business goals and achieving objectives. It involves strategy definition, strategy direction, decision-making and resource allocation. Corporate planning ensures that business operations are orderly and that the team works towards the same goals. It can also help you identify potential challenges in meeting goals, so you can provide methods to overcome them. Corporate planning is a continuous and dynamic process that lasts throughout the life of the business.
Types of corporate planning
The different types of corporate planning include:
Strategic planning overlaps with corporate planning in some areas, though there are still key differences. Strategic planning requires a close look at the company's missions, strengths and weaknesses. It defines the present state, the desired future and how to get there.
Corporate planning is much larger in scope than strategic planning. You can use it to guide a more complex company with many businesses and subsidiaries. The corporate plan has the same components as the strategic plan, though it pertains only to the broader company and any shared services used by the various units, such as marketing and human resources. It also considers the individual steps of the business. These include how to counteract challenges, train employees and achieve objectives.
Tactical planning involves defining goals and determining how to achieve them through actions and steps. It's the next step that a business takes after formulating a strategic plan. With it, you can break down the strategic plan into smaller goals and objectives. Generally, you can create a tactical plan to address a short-term goal. Completing the tactical plan may help you work to achieve medium or long-term goals.
An operational plan is a specific, detailed plan that outlines the details of the business' daily operations for a specific period, usually more than one year. It outlines the daily tasks and responsibilities of each employee and manager and the mode of operation of the tasks. Operational planning helps you allocate physical, financial and human resources, so you can reach short-term objectives that support a business' larger growth.
Contingency planning is the process by which organisations develop strategies that help ensure they respond to an event that could impact their operations. The purpose of a contingency plan is to ensure that a business resumes normal activities after a disruptive event, such as a natural disaster. Businesses also plan contingency plans around positive events, like an unexpected influx of cash.
Benefits of corporate planning
There are many benefits of corporate planning, including:
Provides clear objectives for the organisation
Corporate planning creates a sense of direction for professionals working at an organisation. It lets you take every action with certainty since there's a plan guiding every action. You can also understand easily when you're working towards business objectives.
Helps formulate better strategies using a logical approach
A strategy is an approach you take towards achieving a business goal or objective. For instance, if your objective is to make product a category leader in sales revenue by the year 2023, the strategy might be to persuade buyers that the product is the best in the market by investing in large advertisement campaigns for the product. Corporate planning helps you ease the process of formulating strategies since it follows a logical and methodical approach. It also eases the decision-making process.
Increases communication between employees and employers
Corporate planning eases the group participation process for planning decisions. This leads to a better understanding of the plans and the strategies, which ensures that employees perform the tasks better. It also ensures that you get feedback from your team. Understanding the areas where they need help increases efficiency and improves overall workplace culture.
Helps in the allocation of resources
Examples of organisational or corporate resources are time, equipment, money, human, infrastructure knowledge and information. Infrastructure knowledge may cover systems, procedures and functionality, while information may refer to the current trends, internal and external data. Corporate planning makes allocating these resources efficient, thus reducing waste, decreasing costs and increasing profitability.
Helps communicate the brand's message
When you clearly define your mission and vision statements, you're also defining the organisation's core values. This can clearly convey your brand message effectively. A corporate plan helps communicate your brand's message to creditors, shareholders, investors, customers and employees.
6 stages of corporate planning
The stages of corporate planning are as below:
1. Formulation of the company's vision and mission statements
A vision statement is a summary that highlights what the business may look like in the future. An example of a vision statement is, To provide innovative mobility solutions to individuals throughout the nation and the world.
A mission statement defines the purpose of a business within the industry and the world. It contains the organisation's main industry or target audience, key products or services and how it's different from its competitors. An example of a mission statement is, At our company, we are committed to helping low-income families find the resources they need to get healthcare loans with no credits checks and low-interest payments.
2. Setting corporate goals and objectives
While people use goals and objectives interchangeably, there are noteworthy differences between them. A goal is a short-term statement that defines the ambition of a business or a company over a specific period. An objective is an actionable and measurable step that moves you closer to your goal once it's complete.
A goal for an organisation can be general, but when you're setting goals for a department, it's important to be detailed and specific. For instance, while increasing profits could be a goal for the business, the individual department may need more related goals to boost profits, such as We will generate an additional $8,000 in revenue by September 15. Setting corporate goals and objectives can help you understand your future. This gives everyone a common purpose to work towards so that their daily activities are more focused.
3. Consideration of organisational strengths and weaknesses
After you've set goals and objectives, you may want to consider the organisation's strengths and weaknesses. The most common approach to this is the strengths, weaknesses, opportunities and threats (SWOT) analysis. To perform a SWOT analysis, list the corresponding characteristics in each category. You can then capitalise on the strengths and opportunities to counteract or neutralise the weaknesses and threats to the organisation. This allows you to determine the potential challenges to achieving business goals and the ways you can overcome them.
4. Integration between short-term and long-term plans
When making corporate plans, you can consider both the short-term and long-term goals of the business. Short-term goals are those you hope to achieve in a short period, usually six months to two years. Long-term goals have a longer duration, usually three to five years. Proper integration between the both of them eases the completion of your plans.
5. Implementation of the plan
Once you clearly understand your goals, you can then proceed to the implementation of the plan. At this stage, there's usually an action plan. An action plan contains the responsibilities you intend to undertake and the expected timeline for accomplishing each of them. It's important to monitor the plans while you're implementing them to avoid challenges that may arise. You can set up regular meetings to review progress on the action plans and the key performance indicators (KPIs), notice deviations, recognise successes and make corrections where necessary.
6. Evaluation of performance
Once you've implemented the plans, the next step is to evaluate how they performed. The purpose of this is to align your overall expectations with the actual contribution of your plans. This is important since it helps you measure progress and impact.
Tips for creating an effective corporate plan
Use the tips below to create effective corporate plans:
Publicise your plan
It takes the entire company to ensure the success of a corporate plan. Hence, it's important to ensure that every member of the company has access to the plan. You may also share it with board members and department leaders to maintain accountability and commitment.
Reduce annual plans to quarterly plans
You can reduce the plan to manageable priorities with deadlines. Increasing the frequency of plans makes it easier to measure their progress. If you encounter a challenge, you can also make corrections to the quarterly plans.
Create action plans
This helps you stay motivated and dedicated to your goals. Action plans can help you complete short-term goals in a reasonable amount of time. It also reduces the period for the completion of your overall goal.
Conduct regular meetings
This is important to review the progress of your KPIs and priorities. These meetings can also help you find solutions and you can make any adjustments where necessary.
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