Corporate planning is crucial to any professional’s or business’s success as it sets a vision for daily operations. With corporate planning, businesses prepare a detailed road map for all their activities. By understanding corporate planning, you can effectively lead and manage a business. This article delves into the nitty-gritty of corporate strategic planning, its varying types, and the stages involved in creating a comprehensive corporate plan.
Defining Corporate Planning
Corporate planning is a detail-oriented process aimed at helping businesses craft solid strategies to achieve their goals. Companies can thrive by mapping out a clear direction, making informed decisions, identifying obstacles, and efficiently allocating resources to support business activities.
The corporate planning process also helps align teams with a shared mission and overcome challenges to achieve established objectives. It is an ongoing, dynamic, and continuous process that continually adapts to shifting business dynamics throughout the lifespan of a company.
Advantages and Disadvantages
Corporate planning consists of extensive future-oriented preparations that provide businesses with a better approach to handling various situations.
However, like everything, there are advantages and disadvantages to the continuous corporate planning process that need to be considered. Below, let’s explore the advantages and disadvantages of corporate planning in detail:
Reduces Uncertainty: Running a business comes with constant uncertainties and risks. An excellent corporate plan goes beyond merely setting objectives. It helps the company by forecasting the value of risks in the future, thereby minimizing the risk of uncertainty and unplanned contingencies.
Unity: Corporate planning helps the employees understand their roles more explicitly. Employees who know what’s expected of them are less likely to engage in conflicts, leading to higher levels of unity within the organization.
Aids Growth: With employee cooperation and constant development of processes within the company’s scope, corporate strategy, and plan objectives are easier to implement, resulting in a higher success rate.
Rigidity: Following a strict set of rules as part of a plan can create an inflexible environment that can lower employees’ morale, which can ultimately interfere with productivity.
Time: Corporate planning can take quite some time before the company begins to see results. The process involves collecting data, devising a plan, implementing, monitoring, and evaluating.
Ambiguity: Although corporate planning provides a reference point for business decisions, it is based on predictions of a mutable future. As a result, the plan may only sometimes be foolproof, and unexpected situations can occur, leaving businesses caught off-guard.
The Different Types of Corporate Planning
Corporate planning is a vital aspect of any business, and it involves a variety of planning types, including:
Strategic planning is a crucial process that requires closely examining a company’s missions, strengths, and weaknesses. Its goal is to define the company’s current status, determine where it wants to go, and how it can get there. Although strategic planning and corporate planning share some overlapping areas, corporate planning has a broader scope.
It is particularly useful in functional planning and guiding complex organizations with various subsidiaries and businesses. The corporate plan also includes the same critical components as the strategic plan, focusing on the broader company and any related services used by the departments, such as marketing and human resources. Corporate planning also considers tools for achieving individual business steps such as countering challenges, employee training, and objectives.
Tactical planning is the subsequent step businesses take after formulating a strategic plan. Tactical planning involves defining goals and determining the necessary steps and actions required to achieve them. With it, you can subdivide the strategic plan into smaller objectives and goals. It is a short-term planning process and strategy that can aid in working towards medium or long-term goals.
Operational planning is a specific, detailed plan that outlines the business activities’ day-to-day workings for a specific period, generally lasting more than a year. It specifies employees’ and managers’ daily responsibilities and tasks and the workflow. Operational planning is useful in allocating the available financial, physical, and human resources to reach short-term strategic objectives that support an organization’s growth.
Contingency planning is the process of developing strategies that help businesses respond effectively to unexpected disruptive events. It is intended to ensure that the practices return to standard operating procedures after a disturbance or natural disaster. Contingency planning is an effective tool for handling both adverse and positive events, such as an unexpected financial boost that can impact the organization’s operations.
By incorporating these types of business planning, businesses can ensure success in the short term and achieve long-term growth.
Examples of Corporate Planning:
Audacity Corporation, a renowned studio, and live performance microphones manufacturer, wanted to ensure that their range of microphones for streamers and gamers were market leaders by the end of the financial year.
Their CEO, Brendon, decided to study their competitors’ practices and strategies to achieve this target. They discovered that most of their competitors produced these microphones in-house, and their costs of raw materials were high.
To counter this, Audacity collaborated with companies in China and Taiwan to obtain raw materials at reduced prices and trained their employees to assemble the products more efficiently. As a result, their streaming and gaming microphones became the top-selling product in the market, with 20% more sales than their nearest competitor.
ExxonMobil, one of the largest oil and gas companies operating internationally, announced its corporate plans in 2022. One of their declarations was the plan to increase investments in emission reduction solutions.
They have decided to invest $17 billion by 2027 in this domain to achieve this objective. This investment will enable them to gain a competitive advantage over their contemporaries in the market and help them tackle climate change and carbon emissions in the long run.
The Benefits of Corporate Planning
Providing Clear Objectives
Not only does corporate planning provide a sense of direction for professionals within an organization and corporate management, but it also ensures that every action taken has a purpose. Executing tasks with a clear plan can help achieve business objectives efficiently.
Formulating Better Strategies
In the context of business, a strategy is an approach taken to achieve a specific goal or objective. For example, if the objective is to make a product the category leader in sales revenue by the year 2023, a potential strategy could be to persuade buyers that the product is superior to other options on the market by investing in large advertising campaigns. Corporate planning is integral to helping an organization create operational plans and execute strategies in a logical and methodical manner, easing the decision-making process.
Corporate planning allows group participation in scenario planning, improving communication between employees and employers. Active involvement ensures that tasks are executed efficiently, and everyone remains on the same page.
Allocating Resources Efficiently
In the context of business, a strategy is an approach taken to achieve a specific goal or objective. For example, if the objective is to make a product the category leader in sales revenue by the year 2023, a potential strategy could be to persuade buyers that the product is superior to other options on the market by investing in large advertising campaigns. Corporate planning is integral to helping an organization create and execute strategies in a logical and methodical manner, easing the decision-making process.
Communicating Brand Messaging
A well-defined corporate plan can help communicate a brand’s message to key stakeholders like shareholders, investors, creditors, customers, and employees. By aligning mission and vision statements, core values are clearly established, helping to convey the brand message cohesively.
By implementing corporate planning, organizations can enjoy these benefits and ultimately operate with enhanced efficiency and productivity.
The Six Stages of Corporate Planning
Start with a Vision and Mission Statement
A vision statement showcases future expectations for a company, such as a goal to offer innovative mobility solutions on a global scale.
On the other hand, a mission statement outlines the organization’s purpose, including target audience, product offerings, and distinguishing factors from competitors. For instance, our company is dedicated to facilitating low-interest healthcare loans to those with poor credit, specifically for low-income households.
Establish Clear-Cut Goals and Objectives
Although people sometimes use the terms interchangeably, goals and objectives have significant distinctions. Fundamentally, a goal defines the aspiration of a company or business over a specific period, while an objective is a measurable and actionable step that propels you toward your goal.
While general goals may suffice for organizations, departments need detailed and specific ones to achieve targets.
For example, a business objective to boost profits would require more specific departmental goals, such as, “We will generate an additional $8,000 in revenue by November 15.” You can create a shared future vision by setting company goals and objectives. This allows everyone to work together towards common goals, making their daily activities more purposeful.
Identify your Organization’s Strengths and Weaknesses
Once you’ve established your business goals and objectives, analyzing the organization’s strengths and weaknesses is a good idea. The most commonly adopted approach for this is the SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis.
To perform a SWOT analysis, list the characteristics corresponding to each category. Based on this evaluation, you can capitalize on the strengths identified and leverage your opportunities to counter or neutralize the weaknesses and potential threats to the organization.
This kind of analysis will enable you to determine any potential challenges impeding the business goals and help you develop strategies to overcome them. In summary, incorporating a SWOT analysis into your business strategy is an effective way to better understand the organization’s internal and external environment, helping you achieve business growth and success.
Consider Short-term and Long-term Goals
Short-term goals are ones you can achieve in the near future, usually between six months and two years. Long-term goals require more time, usually three to five years. By integrating these two types of goals, you can achieve your goals with ease.
Implement the Plan
After clearly understanding your goals, the next step is to proceed with the plan’s implementation. At this stage, an action plan is usually created with specific responsibilities and an expected timeline for achieving each objective. Regular meetings should be set up to monitor this plan effectively to review progress on the action plans and key performance indicators (KPIs). It’s important to note that during implementation, setbacks or challenges may arise, which is why regular check-ins are necessary. These reviews also allow for recognizing successes and making any necessary corrections.
After implementing all plans, the subsequent critical step involves evaluating their performance. Its purpose is to align your overall expectations with the actual contributions of your plans. Evaluating plan performance is necessary because it helps you measure progress and surface possible areas of weakness. Therefore, to ensure continual improvement towards your goals and maximize impact, evaluating implemented plans’ outcomes is a must.
Corporate Planning Tips:
Share your Plan Broadly
For a corporate plan to succeed, the entire company’s involvement is crucial. It’s essential to guarantee that every team member is given access to the business plan and encouraged to participate. Additionally, sharing the plan with board members and department leaders can ensure accountability and commitment and help maintain a clear pathway to achieve the plan’s objectives.
Divide Yearly Plans into Quarters
To simplify a plan, break it down into manageable priorities with deadlines. You can assess the plan’s progress more easily by increasing the frequency of check-ins. If you encounter a challenge, you can make necessary changes to the quarterly plans to keep yourself on track.
Utilize Action Plans
Action plans keep you motivated and on target toward achieving your goals. They help you complete short-term goals in a reasonable amount of time, keeping you moving toward your final objective.
Hold Regular Meetings
Regular check-ins to revise your goals and key performance indicators (KPIs) are crucial. Make necessary adjustments to your corporate plan, find solutions, and achieve your KPIs promptly and efficiently.
To learn more about corporate planning, corporate visions, and more, contact Strategy Capstone!