Corporate Planning

Corporate planning is setting long-term objectives and goals within the organization’s scope to enable an
environment conducive to growth in terms of revenue and profit margins. It includes defining strategies,
decision-making, and allocating resources. The corporate planning strategy aids the whole team to work
in one direction- the organization’s goals.

A corporate planning cycle is a dynamic and continuous process throughout the organization’s life.
Through planning on a corporate level, hurdles that might hinder the growth towards the pre-determined
goals come to light, and the management can provide solutions to solve them. Moreover, it allows the
company to manage its resources more efficiently.

 Corporate planning is the process through which companies draw a map of their plan of action
that enables their growth in quantifiable terms.
 It is typically carried out through the top-level management of the company. It is a medium-term
goal that acts as the basis for macro-level planning, called strategic planning.
 To create a foolproof corporate plan, the organization must collect sufficient data about their
company and gain insights into their competitor’s business model.
 It is a continuous process that helps the organization grow continuously through constant
technological developments.

Corporate Planning Process Explained

Corporate planning is the process through which the organizations’ goals are set with a clearly defined
plan to achieve them. Then, it allows them to find opportunities and methods that facilitate the efficiency
of the whole process.

The planning process’s effectiveness depends on the data of the company’s strategies, the strengths,
weaknesses, and tactics of competitors, and the industry’s growth forecast. However, a wiser way to
begin the planning process is by identifying customer needs and finding a solution to meet those needs.

Once the solutions for customer needs are drawn, the company can set quantitative targets such as a
certain amount of increase in revenue, gross margin percentages, and productivity. Setting goals that can
be quantified is vital; otherwise, growth cannot be calculated in an absolute manner.

Since the area of development and means to measure the improvement are drawn at this point, the
company has to design action plans to reach the determined goals. This part of the process is particular
and guides the team with the workflow that will help the company achieve its goals and objectives.

Elements

As a corporate planning manager, it is essential to look at the developmental aspects of the company
from an outsider.- say, a competitor or customer. This helps in drawing a plan that considers a lot more
data points. A successful corporate plan has the six elements mentioned below:
#1 – Information

The first step towards creating a foolproof corporate plan is collecting information, regardless of whether
the data paints a good or bad picture of the company’s current status. Moreover, similar information
about competitors gives an even better view of the areas that can be improved to gain a more
significant market share.

#2 – Objectives & Strategies

Objectives refer to the overall outcome of the plan. On the other hand, strategies are specific steps taken
to reach organizational goals. For example, objectives could be an increase in sales by 25% or responding
to customer support issues within 2 hours. Making a product the market leader by the end of the
financial year through influencer and social media marketing could be an example of a strategy.

#3 – Devising a Plan of Action

Once the objectives and goals are devised, the company must articulate a step-by-step plan that helps its
employees gain significant insights into the plan’s intricacies. This part of the process could be fulfilled by
employee training, a new approach to production, or a change in marketing strategy.

#4 – Implementation

The action is taken toward the objectives and goals of the pillars of the organization’s growth story.
Irrespective of how well-planned a strategy is, it will deliver average results unless implemented or
executed to perfection. The implementation comes in different forms depending on the specifics of the
plan.

#5 – Monitoring

Once the implementation process is underway, the corporate planning manager monitors the progress or
decline in following the procedure. Since the plan is not a one-time action, it must be supervised and
monitored regularly.

#6 – Evaluation

After a certain period, the manager can check for differences after implementing the corporate planning
strategy. The check will provide the management insights into the progress, decline, or stagnancy toward
organizational goals.

Types

Since each organization is bound to have different plans based on its organizational framework,
management style, and product, naturally, they might want to implement a plan that fits their work style
better rather than opting for a generic method. Therefore, let us discuss different types of corporate
planning through the points below:
 #1 – Tactical Planning

A tactical plan is usually implemented after a strategic plan has been set in motion. A tactical plan is a
short-term goal to address immediate goals, which over time, contribute to the bigger plan. Typically, a
short-term goal helps tackle hindrances that prevent the company from achieving its medium or long-
term goals.

#2 – Contingency Planning

A contingency plan is when a company develops strategies that help them tackle an event from stopping
its operations. This strategy is carried out in an adverse scenario, such as a natural calamity or pandemic.
However, a contingency plan can also be initiated for positive events, such as a high inflow of unexpected
client funds.

#3 – Operational Planning

Operational planning is a form of action where the daily tasks of each employee and manager are
specified and monitored. It is usually planned for a period beyond one year. However, to reach short-term
objectives that aid the enormous growth of the business, operation planning is a wise choice as it
optimally allocates financial, physical, and human resources.

Advantages And Disadvantages

The extensive planning for the future allows businesses to tackle quite a few situations better. However,
they have their set of disadvantages too. Let us discuss the advantages and disadvantages of corporate
planning through the points below:

Advantages

 Reduces Uncertainty: Running a business is filled with constant uncertainties and risks. However,
an excellent corporate plan helps the company by forecasting risk value in the future, thereby reducing
the risk of uncertainty.
 Unity: A well-defined plan helps the employees to understand their roles in a better manner. In
addition, since all employees are clear on their roles, there is less conflict and higher levels of unity within
the organization.
 Aids Growth: With cooperation from employees and constant development of the processes
within the company’s scope, objectives, and strategies and easier to implement, a higher success rate can
be expected.

Disadvantages

 Rigidity: Following a set of rules as a part of the plan can become an inflexible environment. As a
result, it can lower the morale of employees.
 Time: From collecting data, devising a plan, implementing, monitoring, and evaluating, it can take
quite some time before the company begins to see results.
 Ambiguity: Since most of the planning is based on the prediction of the future, it cannot be
foolproof as situations opposite to the plan can occur, and businesses can be caught off-guard.
 Difference Between Corporate Planning And Strategic Planning

Let us understand the difference between corporate planning and strategic planning through the table
below:

Basis Corporate Planning Strategic planning

Time Short to medium-term plans. Long-term plans.

A corporate plan sets limits or actions within Strategic planning devices a plan for the
Objective
the organization. overall direction of the company.

Responding A corporate plan responds to the market Strategic planning selects the market segment
Factor segment in which the organization is placed. it wants to deal with.

A corporate plan is adopted to achieve the A corporate plan is drafted, keeping the
Interconnection
strategic objectives of the organization. intentions of the strategic objectives in mind.

Internal and external factors of the

Scope of Work Internal aspects of the company
organization

Difference Between Corporate Planning And Functional Planning

Let us understand the difference between corporate and functional planning through the points below:

Corporate Planning

 A corporate plan devises a plan for the whole organization to achieve overall growth
in revenue, profits, or a higher customer base.
 It is typically a top-level management that curates a corporate plan.
 It is a continuous process that is monitored and evaluated regularly.
 A corporate plan is to cater to the short to medium-term goals of the organization.
 This plan formulates objectives within the organization’s scope to derive better results outside the
organization through factors beyond the control of the organization and its managers.

Functional Planning

 Functional planning aims to ensure the standardization of management protocols at every level of
the organization.
 Quantifiable goals are set to measure growth, decline, or stagnancy after a given period.
 Managers of different departments are expected to look for gaps or inefficiencies in processes and
provide insights into developing them.
 An operational plan is usually for a period slightly above a year.
 While supervising the processes, managers must be able to explain the utilization of resources in
specific areas. In addition, the top management level is usually keen on ensuring cost efficiency is kept in
mind during the whole process.