It is the task of developing a sequence of actions which will achieve a goal. Planning is an organization wide activity undertaken by senior management to set priorities, focus and allocate resources, strengthen operations, involve employees and stakeholders towards common goals, establish agreement around intended outcomes, assess and adjust the organization’s direction as per the external and internal environment. It results in setting goals, developing strategies and outlining tasks and schedules to accomplish the goals.
Planning is important management activity which clarifies and focuses the organization’s project. Planning results in a framework within which a business can develop and pursue business strategies over future. It also sets a benchmark against which actual performance can be measured and reviewed
Planning Need
Need of planning can be summarized from organizational perspective as
- Giving Direction – The objectives to achieve are defined in simple and clear format for the organization and all stakeholders. Hence, all the employees get a direction and all their efforts are focused towards a particular achievement. Thus, planning plays an crucial role in the attainment of the objectives of the organisation.
- Reducing Uncertainty – Planning is always done for future and due to planning possible changes in future is anticipated and various activities are planned in the best possible way. Thus, the risk of future uncertainties is minimized.
- Reduction of Overlapping and Wasteful Activities – In planning future activities are planned in order to achieve objectives with details of when, where, what and why of the goal to achieve being decided. This activity reduces any overlapping and wasteful activity which might had taken place in absence of planning.
- Increased Ideas Generation – As best alternative out of the many are selected during planning, hence, listing of all these different options are discovered and innovative ideas are used to tackle different problems so as to arrive at an optimum solution whilst achieving the set goal.
- Easy Decision Making – As future course of action has been charted out during planning and hence, it is easy for managers during execution of the plan to take the best suitable decisions. Further, any deviations during the course of execution of the plan are also done due to change in external environment.
- Standards Control Structure – Planning lists down the objectives to achieve and also details the execution steps to achieve it from various alternatives, it also results in establishment of control structure of who reports to whom and the responsibility hierarchy along with the standardization of procedures.
Planning Types
There are three types of plans which are
- A strategic plan is a high-level overview of the entire business, its vision, objectives, and value. This plan is the foundational basis of the organization and will dictate decisions in the long-term. The scope of the plan can be two, or more years.
- The tactical plan describes the tactics the organization plans to use to achieve the ambitions outlined in the strategic plan. It is a short range (i.e. with a scope of less than one year), low-level document that breaks down the broader mission statements into smaller, actionable chunks. If the strategic plan is a response to “What?” then, the tactical plan responds to “How?”. Creating tactical plans is usually handled by mid-level managers.
- The operational plan describes the day to day running of the company. The operational plan charts out a roadmap to achieve the tactical goals within a realistic timeframe. This plan is highly specific with an emphasis on short-term objectives. “Increase sales to 150 units/day”, or “hire 50 new employees” are both examples of operational plan objectives. Creating the operational plan is the responsibility of low-level managers and supervisors.
Strategic Plan
A strategic plan is a document used to communicate with the organization the organizations goals, the actions needed to achieve those goals and all of the other critical elements developed during the planning exercise.
Planning Process
There are many different frameworks and methodologies for strategic planning and management. While there is no absolute rules regarding the right framework, most follow a similar pattern and have common attributes. Many frameworks cycle through some variation on some very basic phases: 1) analysis or assessment, where an understanding of the current internal and external environments is developed, 2) strategy formulation, where high level strategy is developed and a basic organization level strategic plan is documented 3) strategy execution, where the high level plan is translated into more operational planning and action items, and 4) evaluation or management phase, where ongoing refinement and evaluation of performance, culture, communications, data reporting, and other strategic management issues occurs.
E-commerce Planning Need
A business plan or plan plays an crucial role for e-commerce companies due to
- Applying for funding – Business plan or plan for an e-commerce venture is essential for applying funds from banks, financial institutions, VCs (Venture Capitalists).
- Provides holistic view – Business plan helps e-commerce companies to see the bigger picture and chart a strategic course for future growth.
- Discovering new ideas – When growth plateaus, a business plan helps to think outside of the day-to-day grind of running of business and discovering new ways to market it or new products to sell to boost revenue
- Change in business direction – If the existing business is trending downward, a business plan helps to either change the business or cut losses.
Components of a Business Plan
Usually business plans consist of few key areas which includes
- Executive Summary – It is placed at start of the business plan and it summarizes the main highlights of the rest of the sections.
- Company Description – It gives an holistic overview of company, it’s offerings, targeted consumers and competitive advantages. It may also be thought of an elevator pitch to a investor.
- Market Analysis – It enlists research about the industry and target market.
- Operational Plan – This covers the day to day operations of business, from location and hours to inventory and accounting. It ensures that all of the vital processes required to run the business smoothly and efficiently, are running are covered.
- Organization & Management – It enlists the details of stakeholders and the main players in business – who owns it, who manages it, who does what etc.
- Products & Services – It explains the products and services offered by business.
- Financial Projections – It has analysis and figures for how much business will make over the next five years. It also has historical data of the company if present and predictions for future revenue.
- Funding Request – It defines the funding needs and it’s utilization plan covering pay back as well.
