UPI Study › Courses › Business Essentials › Free lessons › Lesson 5.3 Free with a free account
The Framework of Planning: Strategic, Tactical, Operational, and Contingency Approaches
Business Essentials · Chapter 5: Management Functions and Strategic PlanningSection 5.3 · lesson 26 of 10513 min · free with a free account
Free preview
Create a free account to keep watching
It takes a minute and costs nothing. Your free account unlocks all of Chapter 1 and 3 more lessons of Business Essentials.
Lesson complete
Earn the 3 college credits for Business Essentials
Enrolling adds a quiz after each lesson, the graded work and the official transcript. Recommended for credit by NCCRS.
Next lesson: Understanding SWOT Analysis →← The Four Core Functions of Management: Planning, Organizing, Leading, and ControllingNext lesson: Understanding SWOT Analysis →
In this lesson
Strategic, tactical, operational, and contingency approaches.
- Distinguish the four types of planning
- Describe the 7-stage strategic planning process
- Write an objective with all 6 components
- Trace a strategic objective down to action
Free study notes
Get this lesson's notes by email
The key points and 4 practice questions with answers, in your inbox. One email, free.
One email. Unsubscribe in one click.
Transcript
Everything said in the video, section by section (1,791 words). Read along, or search it.
Management Functions and Strategic Planning
The Framework of Planning
Planning sounds like a single activity. In practice it's several, and confusing them causes real failures. This section separates four types of planning, by horizon, scope, and who does the work. We'll walk through the strategic planning process, and the statements that sit underneath a strategy. We'll see what makes an objective usable, and how a strategic objective cascades down to daily action. And we'll look at why plans fail, including one test that exposes a plan as a mere announcement.
Levels Of Planning
Not One Activity, but Several
Section five point two introduced planning as the first of the four functions. But planning isn't one activity. It's several, distinguished by time horizon, by scope, and by who does it. Strategic planning sets the direction of the whole organization, over a long horizon. It decides where the organization will compete, and how. Tactical planning translates that direction into plans for departments or divisions, over a medium horizon. Operational planning covers the daily and weekly work of the front line. It specifies who does what, when, and with what. Those three should sound familiar. They match the top, middle, and frontline levels of management, from section five point one. There's also a fourth type, which works across all three. We'll come to it shortly.
Table 5.3.1
Four Planning Types Compared
Here are the four types, compared on five dimensions. Strategic planning looks several years ahead. A chain of bakeries, say, plans its markets for the next five years. Its scope is the whole organization. It's owned by top management, and it gives broad direction with few specifics. It's reviewed at set intervals, and whenever conditions change materially. Tactical planning runs one to two years. Think of a marketing department planning next year's campaigns. It covers a department or division, and it's owned by middle management. It sets targets, budgets, and schedules. It's reviewed quarterly, or as results require. Operational planning runs from days to months, like a shift supervisor planning this week's schedule. It covers a team or a single task. Its detail is high, with names, times, and quantities. And it's revised often, usually daily or weekly. Contingency planning is prepared in advance, for conditions that may not occur, like a supplier failure. It can sit at any level, owned by whoever owns the plan it protects. It holds just enough detail to act on quickly. Most planning failures are mismatches. A plan works only when its owner has the right horizon, scope, and detail.
Contingency Planning
Ready Before It Happens
Contingency planning is the fourth type, and it cuts across the other three. It's the preparation of a response to a condition that may not occur. Every contingency plan comes with a trigger, the specified event or measure that activates the response. Here's an example. A retailer plans for its main supplier failing to deliver. If deliveries are missed for three days, orders switch to a second supplier. The missed deliveries are the trigger. The switch is the response. Notice what this isn't. The purpose isn't to predict the supplier failure. It's to have thought through the response before the pressure of the moment. When the trigger fires, the manager acts, instead of starting to think.
The Strategic Planning Process
Seven Stages
The strategic planning process has seven stages. Environmental assessment comes first. It examines the external forces described in chapter one. Those are the economic, technological, competitive, and societal conditions the organization faces. Internal assessment looks inward, at the organization's own resources and capabilities. Mission and vision review asks whether the existing statements of purpose still fit. Issue identification selects the few questions on which the organization's future depends. Formulation chooses a strategy to address them. Implementation planning turns the strategy into tactical and operational plans, with owners and resources. And evaluation checks whether the strategy is working, and feeds the answer back. That last stage is simply the control function from section five point two, applied to the plan itself. One tool, SWOT analysis, supports the assessment and issue identification stages. It's the subject of section five point four.
Beneath The Strategy
Mission, Vision, Values, and Strategy
Three statements sit underneath a strategy. A mission states the organization's present purpose, what it does, and for whom. A vision states the future the organization intends to reach. Values state the behavior that is, and isn't, acceptable in pursuing the mission. They constrain how objectives get met. Each statement can be tested, by asking whether it does any work. Take a mission that promises excellent service at fair prices. It would fit any competitor equally well. It excludes nothing, so it can't guide a single decision. Strategy itself is the choice of where an organization will compete, and how it will win there. And it's defined as much by what it excludes as by what it pursues. A strategy that chases every customer, every product, and every region isn't a choice at all. Here's a practical test. If a strategy can't be used to say no to some tempting opportunity, it hasn't made a choice. Section one point three and chapter twelve give strategy its content. This section is about planning it.
From Strategy To Objectives
Six Components of a Usable Objective
Strategy has to become objectives before anyone can act on it. An objective is a specific result that the organization, or a unit, intends to achieve, derived from the strategy. A usable objective has six components. The outcome sought. The measure by which it'll be judged. And the target to be reached. Then the baseline, the starting point from which change is measured. The timeframe, meaning when it must be achieved. And the owner, the person accountable for it. Leave out any one, and the objective quietly stops working. Section five point seven develops objectives further, including their use in managing performance.
Repairing Objectives
Four Defective Objectives, Rewritten
Four defective objectives show how one missing component undermines the whole. The figures are illustrative. Improve customer service has no measure, no target, and no timeframe. So no one can ever say whether it's been met. Rewritten, it says raise the share of inquiries answered within one working day, from seventy percent to ninety percent. That's by the end of the second quarter, owned by the customer service manager. Grow sales by twenty percent has no baseline, and no timeframe. Rewritten, it says grow outdoor range sales from two million dollars to two point four million dollars. And that's within the next fiscal year. Be more efficient has no measure. Rewritten, it says cut the average time to prepare an order from twenty-five minutes to twenty, by September thirtieth. And the team should launch the new product has no owner. Rewritten, it names the product manager who is accountable. Notice that the rewrites aren't more ambitious. They're simply checkable.
Figure 5.3.1
The Cascade, and Where It Breaks
A strategic objective has no effect until it's translated downward. That translation is called the cascade. A strategic objective becomes tactical plans in departments, and then operational actions by teams and individuals. Each level specifies what the level above it requires. This example follows a fictional outdoor retailer, Kestrel Outfitters, with illustrative figures. One strategic objective cascades into two tactical plans, and then into four operational actions. Three of those actions have an owner, a budget, and a tool. The fourth is renegotiating the carrier contract, in the fulfillment branch. It has no owner, no authority, and no budget. And it's the action the delivery-time target depends on. So the cascade breaks right there. Everything above it looks complete. Yet the objective won't be met, because one required action was assigned to no one. The way to find a break like this is to trace each objective down to a named owner, with resources.
Kinds Of Plans
Standing Plans, Single-Use Plans, and the Resource Test
Plans can also be classified by how often they're used. A single-use plan is developed for a specific situation that isn't expected to recur, like a project, or a one-year budget. A standing plan is developed for situations that recur, and it stays in force until it's changed. Standing plans take three forms. A policy is a general guide to decision making. For example, suppliers must be approved before orders are placed. A procedure is a sequence of steps for a recurring situation, like how a refund gets processed. A rule is a specific requirement, with no discretion. A ban on smoking in a warehouse is a rule. Now a test that applies to any plan. It's called the resource test. It asks whether the plan comes with a change in where money and people go. If it doesn't, it's an announcement, not a plan. The organization will keep doing what its resources are already committed to. Suppose a strategic objective needs a new capability, but next year's budget and staffing match last year's. Then either the objective isn't serious, or the plan is incomplete.
Why Plans Fail
Assumptions, Failures, and Rolling Plans
Every plan rests on planning assumptions, beliefs about the future that the plan depends on. Think of the level of demand, the cost of inputs, or whether staff will be available. The discipline is to write them down. Then, when reality diverges, the manager can see which assumption failed, and whether the plan must change. Plans fail for four recurring reasons. Unclear priorities, where everything is urgent, and nothing is chosen. Unfunded mandates, where objectives are set with no resources. Absent owners, where no one is accountable for an action. And no review rhythm, where a plan is written and never looked at again. In volatile conditions, an annual plan can be out of date within months. A rolling plan answers that. It's revised at regular intervals, and each revision extends the horizon forward. So the plan always looks a fixed period ahead, and absorbs what's been learned.
Case Vignette (Composite)
An Objective With No Resources Attached
We'll end with a case, a composite constructed for instruction, with illustrative figures. Nadia manages a customer service department of eight people, at a regional utility. In January, she's handed the year's strategic objective. Cut the average response time to customer inquiries by half. It comes with no change in her staffing or budget. Both are the same as the year before. Nadia separates what she can plan from what she must escalate. Within her existing resources, she can analyze where time is lost, and revise the scripts. She can also add a triage step, sending simple inquiries to a standard reply. Her estimate is that this would shorten response time somewhat, but not by half. Inquiry volume exceeds her team's capacity. That gap is a resource question, not a planning question. Better planning alone can't close it. So she writes a tactical plan for the improvements she controls, and escalates the rest to her director, in writing. She states the assumption plainly. Halving response time at current volume needs more staff, or fewer inquiries. Her trade-off is between appearing to accept the objective, and being honest about its cost. And she has no authority over the budget. Her reasoning is the resource test. An objective with no shift in resources is an announcement.
About Business Essentials at UPI Study
Business Essentials (Business 100) is a self-paced online course of 105 video lessons in 24 chapters, from the business environment, economics and global markets to ownership, management, leadership, operations, people, marketing, accounting, finance and banking. It carries a NCCRS credit recommendation for 3 semester credits.
Every lesson transcript is free on pages like this one, and the videos are free with a free UPI Study account. Enrolling adds a practice quiz after each lesson, the graded work and final exam that earn the credit, lifetime access, and an official transcript on completion. UPI Study has helped over 130,000 students with college credits. ACE and NCCRS have over 2,100 cooperating colleges that will consider accepting credits; the final decision is with the universities.
Enroll now → Course details Download the syllabus All Business courses Every course with PRO →
Why take it here
Why students take Business Essentials with UPI Study
Where the credit goes
Universities that work with NCCRS
Business Essentials carries a NCCRS credit recommendation. These universities work with NCCRS; some are UPI Study's signed partners. ACE and NCCRS have over 2,100 cooperating colleges that will consider accepting credits; the final decision is with the universities.
Thomas Edison State UniversitySigned partner
University of the PeopleSigned partner
Charter Oak State CollegeSigned partner
Strayer UniversitySigned partner
Columbia Southern UniversitySigned partner
Indiana TechSigned partner
Penn StateWorks with NCCRS
Southern New Hampshire UniversityWorks with NCCRS
SUNYWorks with NCCRS
+many more cooperating universitiesFind my college →Find my college → Not listed? Ask Athena in the corner of this page, or book a 15-minute call.
FAQ
Questions students ask us
About The Framework of Planning: Strategic, Tactical, Operational, and Contingency Approaches
What is the difference between strategic, tactical, and operational planning?
What is a contingency plan in business?
What should a well-written business objective include?
Why do strategic plans fail?
About the Business Essentials course
How many college credits is Business Essentials?
How much does Business Essentials cost and what is included?
Which universities accept UPI Study credits?
How long does Business Essentials take?
How are the exams done?
How do my credits reach my college?
Ready for the full course? Earn 3 credits in Business Essentials.
105 video lessons, a quiz after each one, and the graded work that earns the credit. Recommended for credit by NCCRS.
3 credits · NCCRSEnroll →