Planning in Management: Strategic, Tactical, and Operational Plans

project managementPlanning is the part of management concerned with creating procedures, rules and guidelines for achieving a stated objective. Planning is carried out at both the macro and micro level. Managers need to create broad objectives and mission statements as well as look after the day to day running of the company.

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Below, we take a look at the three types of plans in management and how they are used within an organizational framework:

I. Strategic Plan

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, three, five, or even ten years.

Managers at every level will turn to the strategic plan to guide their decisions. It will also influence the culture within an organization and how it interacts with customers and the media. Thus, the strategic plan must be forward looking, robust but flexible, with a keen focus on accommodating future growth.

The crucial components of a strategic plan are:

1. Vision

Where does the organization want to be five years from now? How does it want to influence the world?

These are some of the questions you must ask when you delineate your organization’s vision. It’s okay if this vision is grandiose and idealistic. If there is any room to wax poetic within a plan, it is here. Holding ambitions to “make a dent in the Universe” (Apple/Steve Jobs) is acceptable, as is a more realistic vision to create the most “customer-centric company on Earth” (Amazon).

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2. Mission

The mission statement is a more realistic overview of the company’s aim and ambitions. Why does the company exist? What does it aim to achieve through its existence? A clothing company might want to “bring high street fashion to the masses”, while a non-profit might want to “eradicate polio”.

3. Values

“Inspire. Go above & beyond. Innovate. Exude passion. Stay humble. Make it fun”

These aren’t fragments from a motivational speech, but’s values. Like Fab, each organization has its own values. These values will guide managers and influence the kind of employees you hire. There is no template to follow when jotting down the values. You can write a 1,000 page essay, or something as simple as Google’s “Don’t be Evil” – it’s all up to you.

As you can see, there are really no rules to writing the perfect strategic plan. This is an open-ended, living document that grows with the organization. You can write whatever you want in it, as long as it dictates the future of your organization.

For inspiration, just search for the value/mission/vision statement of your favorite companies on Google. Or, consider taking this course on business planning for average people.

II. Tactical Plan

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?”, the tactical plan responds to “How?”.

Creating tactical plans is usually handled by mid-level managers.

The tactical plan is a very flexible document; it can hold anything and everything required to achieve the organization’s goals. That said, there are some components shared by most tactical plans:

1. Specific Goals with Fixed Deadlines

Suppose your organization’s aim is to become the largest shoe retailer in the city. The tactical plan will break down this broad ambition into smaller, actionable goals. The goal(s) should be highly specific and have fixed deadlines to spur action – expand to two stores within three months, grow at 25% per quarter, or increase revenues to $1mn within six months, and so on.

2. Budgets

The tactical plan should list budgetary requirements to achieve the aims specified in the strategic plan. This should include the budget for hiring personnel, marketing, sourcing, manufacturing, and running the day-to-day operations of the company. Listing the revenue outflow/inflow is also a recommended practice.

3. Resources

The tactical plan should list all the resources you can muster to achieve the organization’s aims. This should include human resources, IP, cash resources, etc. Again, being highly specific is encouraged.

4. Marketing, Funding, etc.

Finally, the tactical plan should list the organization’s immediate marketing, sourcing, funding, manufacturing, retailing, and PR strategy. Their scope should be aligned with the goals outlined above.

If you’re struggling to create a strong tactical plan, this course on drafting great business plans will point you in the right direction.

III. Operational Plan

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.

Operational plans can be either single use, or ongoing, as described below:

1. Single Use Plans

These plans are created for events/activities with a single occurrence. This can be a one-time sales program, a marketing campaign, a recruitment drive, etc. Single use plans tend to be highly specific.

2. Ongoing Plans

These plans can be used in multiple settings on an ongoing basis. Ongoing plans can be of different types, such as:

  • Policy: A policy is a general document that dictates how managers should approach a problem. It influences decision making at the micro level. Specific plans on hiring employees, terminating contractors, etc. are examples of policies.
  • Rule: Rules are specific regulations according to which an organization functions. The rules are meant to be hard coded and should be enforced stringently. “No smoking within premises”, or “Employees must report by 9 a.m.”, are two examples of rules.
  • Procedure: A procedure describes a step-by-step process to accomplish a particular objective. For example: most organizations have detailed guidelines on hiring and training employees, or sourcing raw materials. These guidelines can be called procedures.

Ongoing plans are created on an ad-hoc basis but can be repeated and changed as required.

Operational plans align the company’s strategic plan with the actual day to day running of the company. This is where the macro meets the micro. Running a successful company requires paying an equal attention to now just the broad objectives, but also how the objectives are being met on an everyday basis, hence the need for such intricate planning.

Struggling with operations management? This free course will lead you on the right path.