Corporate planning is a total system of planning which involves the determination of the objectives for the company as a whole and for each department of the it; formulation of strategies for the attainment of these objectives (all this being done against the background of SWOT analysis); conversion of strategies into tactical plans (or operational plans); implementation of tactical plans and a review of the progress of tactical plans against the corporate planning objectives.
Analysis of the above definition:
On the basis of the above definition, we can state the following main features of corporate planning:
(i) Corporate planning is a total system of planning, under which concept objectives are determined for the company as a whole and for each department of it. This means that under the concept of corporate planning, no department of company is allowed to have its own independent planning. All departmental plans are a part of corporate planning, in a unified structure.
(ii) To realize the objectives of corporate planning, strategy formulation is done. Strategy formulation is the core aspect of corporate planning. Success of corporate planning depends on the success of strategy formulation
(iii) Determination of objectives of corporate planning and strategy formulation – both are done against the background of SWOT analysis.
(iv) Strategies are translated (or converted) into tactical plans (or operational plans), which are detailed in nature.
(v) Tactical plans are put to action at the right time, as decided by management. This is the practical aspect of corporate planning.
(vi) Performance of tactical plans is judged in the light of the objectives of corporate planning; so that necessary modifications might be made in the corporate planning process and better corporate planning might be done in future.
(vii) Corporate planning has a long-term perspective; while operational plans have a short-term prospective.
David Hussey (Corporate Planning: Theory and Practice) defines corporate planning as follows:
“Corporate planning includes the setting of objectives, organizing the work, people and systems to enable those objectives to be achieved, motivating through the planning process and through the plans, measuring performance and so controlling progress of the plans and developing people through better decision-making, clearer objectives, more involvement, and awareness of progress.”
Process of Corporate Planning:
(i) Environmental Analysis and Diagnosis:
The first steps (which is, in fact, the background step), involved in corporate planning is environmental analysis and diagnosis. (A detailed account of this step is attempted subsequently, in the discussion about corporate planning).
(ii) Determination of Objectives:
All planning starts with a determination of the objectives for the plan; and corporate planning is no exception to this generality. In corporate planning, after environmental analysis and diagnosis, the planners determine objectives for the company as a whole and for each department of it; which become the beginning point of corporate planning.
All objectives of corporate planning must represent an integrated or coordinated system of objectives. In order to make corporate planning a realistic approach to attaining objectives; objective setting for corporate planning is done in the light of environmental analysis and diagnosis.
(iii) Strategy Formulation:
Strategy formulation is the core aspect of corporate planning. Strategy is, in fact, the weapon of the planner devised for attaining objectives of corporate planning. It is easier to set objectives; it is difficult to realize them. Strategies facilitate the attainment of objectives.
There is no doubt about it that success of strategies is the success of corporate planning; and vice-versa. Strategy formulation is also done in the light of environmental analysis and diagnosis.
(iv) Development of Tactical Plans:
Strategies are translated into action plans called tactical plans or operational plans. Tactical plans are necessary for implementation of strategies leading to the attainment of corporate planning objectives. For example, if the strategy of a company is to develop the skills and talents of manpower for realizing objectives; then designing of suitable training programmes would amount to making tactical plans.
Corporate planning and strategy formulation have a long-term perspective; while tactical plans have a short-term perspective, as the latter are to be implemented immediately, in the usual course of organisational life.
(v) Implementation of Tactical Plans:
Mere paper planning is no planning; unless and until it is put into practice. As such, tactical plans are put into a process of implementation, just at the right time, as decided by management. For implementation purposes, necessary communications are made to the operating staffing; who are also provided with necessary facilities to implement the tactical plans.
After the tactical plans have been put into practice; a review of progress is done i.e. an examination of what results are following from the implementation of the plan and what feedback action is necessary, for the betterment of the corporate planning process.