• Differentiate between different types of planning
• Understand what a SWOT analysis is
• Understand why planning is important

Planning

Planning is a process of thinking about and organizing the activities needed to achieve a desired goal. By now you are familiar with the most comprehensive of all organizational planning: the business plan. The business plan provides the foundation for ongoing planning activities, but as the business grows and develops, it’s the manager’s responsibility to make adjustments and take the plans to the next level. A business without solid strategic, operational, and contingency plans will have a hard time meeting its organizational goals—unless it intends to survive by luck alone.

The Foundation of Planning

When managers begin to plan, they need to strategize based on something—an idea, an opportunity, or a dream. The company vision and mission statements create the foundation for planning by summarizing a company’s business strategy in a form that can be communicated and understood easily by stakeholders.

• Vision Statement: A vision statement gives employees something to rally behind, and for those businesses that choose to make their vision statement public, it lets the world know where the company is going. Ikea, the Swedish multinational group of companies that designs and sells ready-to-assemble furniture, is driven by its corporate vision. This is the IKEA vision: “To create a better everyday life for the many people.”
  
• Mission Statement: A mission statement outlines how the business will turn its vision into reality and becomes the foundation for establishing specific goals and objectives. Ikea’s mission is “to offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.” It is this mission that will enable them to realize the vision of “better everyday life.”
  

The vision statement and mission statement are often confused, and many companies use the terms interchangeably. However, they each have a different purpose. The vision statement describes where the organization wants to be in the future; the mission statement describes what the organization needs to do now to achieve the vision. The vision and mission statements must support each other, but the mission statement is more specific. It defines how the organization will be different from other organizations in its industry. Here are some examples:

Organization	Vision Statement	Mission Statement
LinkedIn	Create economic opportunity for every member of the global workforce.[1]	Connect the world’s professionals to make them more productive and successful.[2]
IKEA	To create a better everyday life for the many people.[3]	To offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.[4]
ASPCA	[T]he United States is a humane community in which all animals are treated with respect and kindness.[5]	[T]o provide effective means for the prevention of cruelty to animals throughout the United States.[6]

 

Notice that each of these examples indicates where the organization will compete (what industry it is in) and how it will compete (what it will do to be different from other organizations). The mission statement conveys to stakeholders why the organization exists. It explains how it creates value for the market or the larger community.

Until a business has determined what its mission is, planning cannot begin. Furthermore, one plan cannot possibly encompass everything necessary to achieve the organization’s mission, so managers are tasked with developing sets of plans that, together, guide the organization’s activities. 

Strategic Plans

Strategic plans translate the company mission into a set of long-term goals and short-term objectives. In the process of determining a company’s strategic plan, top-level managers set out to answer the following questions:

1. 1. Where are we now?
   2. Where do we want to be?
   3. How do we get there?

Tactical Plans  

Tactical plans translate high-level (broad) strategic plans into specific plans for actions that need to be taken up and down the layers of an organization. They are short-range plans (usually spanning less than one year) that emphasize the current operations of various parts of the organization. As a company refines or alters its strategic plans, the tactics must also be adjusted to execute the strategy effectively.

A tactical plan answers the following questions:

1. What is to be done?
2. Who is going to do it?
3. How is it to be done?

Operational Plans

Operational plans establish detailed standards that guide the implementation of tactical plans and establish the activities and budgets for each part of the organization. Operational plans may go so far as to set schedules and standards for the day-to-day operations of the business and name responsible supervisors, employees, or departments.

Contingency Plans

Unforeseen events or disasters can be especially harmful to a business. For example, a fire, an earthquake, a widespread illness, or a flood may make it impossible to continue normal business operations. A contingency plan lays out the course of action a business will take in response to possible future events.

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