Planning is the most important function of every manager. It involves deciding in advance what is to be done and where, how, and by whom it is to be done. Various types of plans are:
Strategic Plans: These are detailed action steps laid out to achieve strategic goals. These have a time horizon of 5 years and above. These plans often include their mission and goals as these are the basis for action steps. These plans address issues such as response to changed conditions, resource allocation, and efforts required to achieve strategic goals.
Environmental Assessment: Achieving strategic goals may be influenced by technological factors, the legal-political environment, socio-cultural and international environments. Managers must also understand the influences of customers, competitors, and suppliers on their goals and plans.
Organizational Assessment: Organisational resources and capabilities include financial, physical, human, and other assets for the production of goods and services. To assess the competitive implications of resources and capabilities relative to other environments, organizations must question four major factors. These are critical to organizational ability to build competitive advantage using internal resources and capabilities.
1. Value. A resource adds value to the extent that it can capitalize on opportunities or nullify a competitor with better products or services.
2. Rareness. A resource is rare to the extent that it is uncommon among competitors. Knowledge of local conditions and access to these resources gives a company a competitive advantage over a company without this knowledge and access.
3. Degree of limit ability. A resource or capability that is hard for competitors to duplicate or substitute has a low limit ability. If you are the first with innovative products then you can maintain your competitive advantage such as what Apple Corp has been doing over the years.
4. Organisation. A firm must maximize the use of its resources and capabilities in order to keep a competitive advantage.
5. Sustaining competitive advantage needs valuable, rare, and difficult to imitate resources and capabilities. This is called a distinctive competence.
Tactical Plans: These focus on intermediate time frames, usually one to five years. They are more specific and concrete than strategic plans and they outline the major steps towards tactical goals. Middle managers consult with lower-level managers in developing them, before making commitments to top-level managers.
Operational Plans: These support tactical-plan implementation and operational-goal achievement. These plans involve time frames of up to a year, such as months, weeks, or even days. Lower-level managers consult with middle managers to develop these plans. Unless operational goals are achieved, tactical and strategic plans will fail and goals at those levels will not be achieved.