Types of Plans in Business Management

Types of Plans in Business Management

Planning is a management process, concerned with defining goals for company’s future direction and determining on the missions and resources to achieve those targets. Based on what the plans seeks to achieve and the method which the plan would like to adopt, plans can be classified as different types — Objectives, Strategy, Policy, Procedure, Method, Rule, Programme, Budget.

Objectives: The first step in planning is setting objectives. Objectives, therefore, can be said to be the desired future position that the management would like to reach. Objectives are very basic to the organization and they are defined as ends which the management seeks to achieve by its operations.

Strategy: A strategy provides the broad contours of an organization’s business. It will also refer to future decisions defining the organizations direction and scope in the long run. Thus, we can say a strategy is a comprehensive plan for accomplishing an organization objectives. This comprehensive plan will include three dimensions,

  • determining long term objectives,
  • adopting a particular course of action, and
  • allocating resources necessary to achieve the objective.

Policy: Policies are general statements that guide thinking or channelize energies towards a particular direction. Policies provide a basis for interpreting strategy which is usually stated in general terms. They are guides to managerial action and decisions in the implementation of strategy.

Procedure: Procedures are routine steps on how to carry out activities. They detail the exact manner in which any work is to be performed. They are specified in a chronological order.

Method: Methods provide the prescribed ways or manner in which a task has to be performed considering the objective. It deals with a task comprising one step of a procedure and specifies how this step is to be performed. The Methods may vary from task to task. Selection of proper method saves time, money and effort and increases efficiency.

Rule: Rules are specific statements that inform what is to be done. They do not allow for any flexibility or discretion. It reflects a managerial decision that a certain action must or must not be taken.

Programme: Programmes are detailed statements about a project which outlines the objectives, policies, procedures, rules, tasks, human and physical resources required and the budget to implement any course of action.

Budget: A budget is a statement of expected results expressed in numerical terms. It is a plan which quantifies future facts and figures. For example, a sales budget may forecast the sales of different products in each area for a particular month. A budget may also be prepared to show the number of workers required in the factory at peak production times.