Types of Planning: Strategic, Tactical,

Operational & Contingency Planning

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Taught by
Sherri Hartzell
Sherri has taught college business and communication courses. She also holds three degrees including communications,
business, educational leadership/technology.
This lesson will explain the four types of planning used by managers, including strategic, tactical, operational
and contingency planning. Terms, such as single-use plans, continuing plans, policy, procedure and rule, will
also be defined.
Planning To Plan
Have you ever heard the saying 'Those who fail to plan, plan to fail'? While I can't speak to all facets of life,
this is certainly true in business. Managers find themselves planning for all sorts of things. So much so, that
planning is one of the four major functions of management. In doing so, a manager can be certain that he or
she is working toward some organization goal.
There are three main types of plans that a manager will use in his or her pursuit of company goals, which
include operational, tactical and strategic. If you think about these three types of plans as stepping stones,
you can see how their relationship to one another aids in the achievement of organizational goals. Operational
plans are necessary to attain tactical plans and tactical plans lead to the achievement of strategic plans. Then,
in true planning fashion, there are also plans to backup plans that fail. These are known as contingency plans.
To better understand how each type of plan is used by managers, let's take a look at an example from Nino's
Pizzeria and how Tommy, Martha and Frank carry out their planning responsibilities.
Strategic Plans
To best understand the relationship between the different types of plans, let's start at the top. Strategic
plans are designed with the entire organization in mind and begin with an organization's mission. Top-level
managers, such as CEOs or presidents, will design and execute strategic plans to paint a picture of the desired
future and long-term goals of the organization. Essentially, strategic plans look ahead to where the
organization wants to be in three, five, even ten years. Strategic plans, provided by top-level managers, serve
as the framework for lower-level planning.
Tommy is a top-level manager for Nino's Pizzeria. As a top-level manager, Tommy must use strategic
planning to ensure the long-term goals of the organization are reached. For Tommy, that means developing
long-term strategies for achieving growth, improving productivity and profitability, boostingreturn on
investments, improving customer service and finding ways to give back to the community in which it
operates.
For example, Tommy's strategic plans for achieving growth, improving productivity and profitability and
boosting return on investments are all part of the desired future of the pizzeria. Strategic plans also tend to
require multilevel involvement so that each level of the organization plays a significant role in achieving the
goals being strategically planned for. Top-level managers, such as Tommy, develop the organizational
objectives so that middle- and lower-level managers can create compatible plans aligned with those objectives.

Strategic planning is an organization's process of defining its strategy, or direction, and
making decisions on allocating its resources to pursue this strategy. It may also extend to control
mechanisms for guiding the implementation of the strategy. Strategic planning became
prominent in corporations during the 1960s and remains an important aspect of strategic
management. It is executed by strategic planners or strategists, who involve many parties and
research sources in their analysis of the organization and its relationship to the environment in
which it competes.
[1]

Strategy has many definitions, but generally involves setting goals, determining actions to
achieve the goals, and mobilizing resources to execute the actions. A strategy describes how the
ends (goals) will be achieved by the means (resources). The senior leadership of an organization
is generally tasked with determining strategy. Strategy can be planned (intended) or can be
observed as a pattern of activity (emergent) as the organization adapts to its environment or
competes.
Strategy includes processes of formulation and implementation; strategic planning helps
coordinate both. However, strategic planning is analytical in nature (i.e., it involves "finding the
dots"); strategy formation itself involves synthesis (i.e., "connecting the dots") viastrategic
thinking. As such, strategic planning occurs around the strategy formation activity

Overview[edit]
Strategic planning is a process and thus has inputs, activities, and outputs. It may be formal or
informal and is typically iterative, with feedback loops throughout the process. Some elements of
the process may be continuous and others may be executed as discrete projects with a definitive
start and end during a period. Strategic planning provides inputs for strategic thinking, which
guides the actual strategy formation. The end result is the organization's strategy, including a
diagnosis of the environment and competitive situation, a guiding policy on what the organization
intends to accomplish, and key initiatives or action plans for achieving the guiding policy.
[2]

Michael Porter wrote in 1980 that formulation of competitive strategy includes consideration of
four key elements:
1. Company strengths and weaknesses;
2. Personal values of the key implementers (i.e., management and the board);
3. Industry opportunities and threats; and
4. Broader societal expectations.
[3]

The first two elements relate to factors internal to the company (i.e., the internal environment),
while the latter two relate to factors external to the company (i.e., the external
environment).
[3]
These elements are considered throughout the strategic planning process.



Tactical Plans
Now that you have a general idea for how organizational planning evolves, let's look at the next level of
planning, known as tactical planning. Tactical plans support strategic plans by translating them into specific
plans relevant to a distinct area of the organization. Tactical plans are concerned with the responsibility and
functionality of lower-level departments to fulfill their parts of the strategic plan.
For example, when Martha, the middle-level manager at Nino's, learns about Tommy's strategic plan for
increasing productivity, Martha immediately begins to think about possible tactical plans to ensure that
happens. Tactical planning for Martha might include things like testing a new process in making pizzas that
has been proven to shorten the amount of time it takes for prepping the pizza to be cooked or perhaps looking
into purchasing a better oven that can speed up the amount of time it takes to cook a pizza or even considering
ways to better map out delivery routes and drivers. As a tactical planner, Martha needs to create a set of
calculated actions that take a shorter amount of time and are narrower in scope than the strategic plan is but
still help to bring the organization closer to the long-term goal.

Tactical planning is focused on specific outcomes, a shorter time-frame, and stated steps. For the
local restaurant owner that wants to serve fresh food, tactical plans may include entering into
contracts with local growers to ensure adequate supplies of ingredients, modifying the menu as
seasons change to reflect the fresh food available, and developing policies that specify when
ingredients are too old to use.
Making Good Tactical Plans
Just like a strategic plan, tactical plans need to reflect the priorities of management and utilize the
strengths of the organization and the employees. Tactical plans must also have a clear and logical
link to the strategic plan. If management sets a strategic plan focused on increasing sales through
new customer acquisitions, but the sales team sets tactical plans focused on increasing customer
service on existing accounts, there is a disconnect between the tactical plans and the strategic goal.
Everyone Can Have Tactical Plans
The most successful companies are made up of people who are able to take the strategic plan of
the company and turn them into tactical plans that they can execute. If a large retailer sets the
strategic goal of gaining 10% market share in a key region, everyone in the company needs to
translate that goal into tactical plans and then execute.


Operational Plans
Operational plans sit at the bottom of the totem pole; they are the plans that are made by frontline, or low-
level, managers. All operational plans are focused on the specific procedures and processes that occur within
the lowest levels of the organization. Managers must plan the routine tasks of the department using a high
level of detail.
Frank, the frontline manager at Nino's Pizzeria, is responsible for operational planning. Operational planning
activities for Frank would include things like scheduling employees each week; assessing, ordering and
stocking inventory; creating a monthly budget; developing a promotional advertisement for the quarter to
increase the sales of a certain product (such as the Hawaiian pizza) or outlining an employee's performance
goals for the year.
Operational plans can be either single-use or ongoing plans. Single-use plans are those plans that are intended
to be used only once. They include activities that would not be repeated and often have an expiration. Creating
a monthly budget and developing a promotional advertisement for the quarter to increase the sales of a certain
product are examples of how Frank would utilize single-use planning.
Ongoing plans are those plans that are built to withstand the test of time. They are created with the intent to
be used several times and undergo changes when necessary. Outlining an employee's performance goals for
the year would be considered an ongoing plan that Frank must develop, assess and update, if necessary.
Ongoing plans are typically a policy, procedure or rule. Policies are general statements, or guidelines, that
aid a manager in understanding routine responsibilities of his or her role as a manager. Examples of policies
include things such as hiring, training, outlining and assessing performance appraisals and disciplining and
terminating subordinates. A procedure details the step-by-step process of carrying out a certain task, such as
assessing, ordering and stocking inventory. A rule provides managers and employees with specific and explicit
guidelines of behavior that is what they should and should not do as a member of the organization.
Contingency Plans



The Different Types of
Business Plans 30

Different situations call for different types of business plans. An effective business
plan will be customized for its intended use. Knowing these differences will help you
plan successfully for the future of your business.
For example, if youre developing a plan for internal use only, you may not need to
include all of the background details that you and your partners or employees
already know. On the other hand, it could be essential to include specific deadlines
or milestones, and the budgets allotted for meeting them, so the whole team is up
to speed. Similarly, a description of your management team will be very important
in a business plan that you present to investors, while your companys financial
history and forecasting is the most important information for a meeting at the bank.
Business plans go by many names: Strategic plans, operational plans, internal
plans, and many others. These are all plans you may need for your business at one
time or another.
Lets take a look at the types of business plans, and their differences.
In this article I will cover:
The Most Commonly Used Business Plan
The Streamlined Version for Startups
Internal Plans and Their Multiple Uses
The Standard Business Plan
The most standard business plan covers topics including the company overview, the
product or service you are selling, the target market and strategy of your company,
your implementation milestones and goals, management team, and financial
forecasting and analysis.
The financial analysis includes the companys projected sales, profit and loss
statement, balance sheet, cash flow statement, and potentially a few other tables
depending on its intended use. For example, a prospective investor might ask to see
the details of your personnel plan or your market analysis.
The cash flow statement is usually considered to be the most important part of your
financial planning and is a no-brainer for inclusion in the plan. Profitable or not, a
businesss plan must show that it has enough cash to remain operational.
A standard business plan will start with an executive summary describing the key
points of your plan, and end with appendices showing monthly projections for the
first year. Though it is presented at the beginning of the plan, a good tip is to write
your executive summary last. This way, youve been through the business plan
writing process already and you can confidently select the highlights of your plan to
showcase on the first page.
This is the standard outline that banks and investors will expect to see.
Startup Plans
A startup plan, also called a feasibility plan, is a very simple business plan that
typically includes the following sections: an executive summary, a company
overview, a mission statement, and a market analysis. Even if you dont have the
exact numbers yet, its always a smart idea to include a preliminary analysis of
costs, pricing, and probable expenses.
You can use this kind of a business plan to discuss your options with potential
partners and associates. This kind of no-frills plan is good for deciding whether or
not to proceed with an idea, to help gauge whether this is a business worth
pursuing. If you do decide to go into business, over time you can always go back to
your business plan and make necessary edits and additions. As your business grows,
you can flesh sections out and add details.
Internal Plans
Internal plans will reflect the needs of the members of your company. Since the
purpose of an internal plan is specific to the people directly involved with the
company, it will most likely be shorter and more concise than a fully detailed
standard plan that youd take to the bank. Internal plans are not intended for banks,
outside investors, or other third parties.
Types of Internal Plans:
An operations plan, also called an annual plan, is a type of internal plan. An
operations plan includes specific implementation milestones, project deadlines, and
responsibilities of team members and managers. This is the plan used for staying on
track to meet your goals as a business. Planning for your goals as a business allows
your company to assign priorities, focus on results and track your progress. Your
operations plan covers the inner workings of your business. It outlines the specifics
of who should be doing what, and when they should be doing it.
Of course, cash flow figures prominently here as well. For example, your milestones
will need to have sufficient funding for their implementation, and youll need to track
your progress so you know how much youre spending.
A growth or expansion plan focuses on a specific area of a business, or a subset
of the business. For example, a plan for the creation of a new product is a growth
plan. These plans could be internal plans or not, depending on whether they are
being linked to loan applications or new investment. An expansion plan requiring
new outside investment would include full company descriptions and background on
the management team, just the same as a standard plan for investors would. Loan
applications would require this much detail as well.
However, an internal plan used to set up the steps for growth or expansion that is
funded internally could skip these descriptions. It might not be necessary to include
detailed financial projections for the company overall, but it should at least include
detailed forecasts of sales and expenses for the new venture or product.
A strategic plan is another kind of internal plan. A strategic plan incorporates the
financial information and milestones of an operations plan, but focuses more on
setting company-wide priorities. As you build the strategy for your company and
decide how to implement it, you will want to examine your strengths and
weaknesses as a business. What does your company do well? As your company
grows, you want to play to your strengths. Strategy is often a matter of selecting
the right opportunities. Resources should be funneled strategically to the areas
where they will provide the biggest overall benefits.
Once you have an idea of your strategy, you must have a plan for implementing it.
This is where the milestones portion of the plan becomes key. To effectively execute
your strategies, its critical to assign responsibilities and have a schedule for
following through. The implementation tactics you use will actively move you in the
right direction towards achieving your goals.


Read more: http://articles.bplans.com/the-different-types-of-business-
plans/#ixzz38J2aFgFE



Business plans guide owners, management and investors as businesses start up and grow through stages of
success. A business owner or prospective business owner writes a business plan to clarify each aspect of his
business. A business plan includes objectives to anticipate and prepare for growth. Savvy business owners write
a business plan to guide management and to promote investment capital. Types of business plans include, but
are not limited to, start-up, internal, strategic, feasibility, operations and growth plans.
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Start-Up
Detail the steps to start a new business with a start-up business plan. Include sections describing the company,
the product or service your business will supply, market evaluations and your projected management team.
Provide a financial analysis with spreadsheets describing financial areas including, but not limited to, income,
profit and cash flow projections.
Internal
Internal business plans target an audience within the business. Write an internal business plan to evaluate a
proposed project. Describe the companys current state, including operational costs and profitability. Calculate
if and how the business will repay any capital needed for the project. Provide information about project
marketing, hiring and tech costs. Include a market analysis illustrating target demographics, market size and the
markets positive effect on the company income.
Related Reading: Small Business Planning Guide
Strategic
A strategic business plan provides a detailed map of a companys goals and how it will achieve them, laying out
a foundational plan for the entire company. According to the website, Clean Washington Center, a strategic
business plan includes five elements: business vision, mission statement, definition of critical success factors,
strategies for achieving objectives and an implementation schedule. A strategic business plan brings all levels of
the business into the big picture, inspiring employees to work together to create a successful culmination to the
companys goals.
Feasibility
A feasibility business plan answers two primary questions about a proposed business venture. According to the
University of Colorado Leeds School of Business, feasibility plans attempt to determine who, if anyone, will
purchase the service or product a company wants to sell, and if the venture can turn a profit. Feasibility business
plans include, but are not limited to, sections describing the need for the product or service, target demographics
and required capital. A feasibility plan ends with recommendations for going forward.
Operations Business Plans
Operations plans are internal plans that consist of elements related to company operations. An operations plan,
according to BPlans.com, specifies implementation markers and deadlines for the coming year. The operations
plan outlines employees responsibilities.
Growth
Growth plans or expansion plans are in-depth descriptions of proposed growth and are written for internal or
external purposes. According to BPlans.com, if company growth requires investment, a growth plan may
include complete descriptions of the company, its management and officers. The plan must provide all company
details to satisfy potential investors. If a growth plan needs no capital, the authors may forego obvious company
descriptions, but will include financial sales and expense projections.



Planning is the part of management concerned with creating procedures,
rules and guidelines for achieving a stated objective. Planning is carried
out at both the macro and micro level. Managers need to create broad
objectives and mission statements as well as look after the day to day
running of the company.
**Check out business courses on Udemy**
Below, we take a look at the three types of plans in management and how
they are used within an organizational framework:
I. Strategic Plan
A strategic plan is a high-level overview of the entire business, its vision,
objectives, and value. This plan is the foundational basis of the
organization and will dictate decisions in the long-term. The scope of the
plan can be two, three, five, or even ten years.
Managers at every level will turn to the strategic plan to guide their
decisions. It will also influence the culture within an organization and how
it interacts with customers and the media. Thus, the strategic plan must
be forward looking, robust but flexible, with a keen focus on
accommodating future growth.
The crucial components of a strategic plan are:
1. Vision
Where does the organization want to be five years from now? How does it
want to influence the world?
These are some of the questions you must ask when you delineate your
organizations vision. Its okay if this vision is grandiose and idealistic. If
there is any room to wax poetic within a plan, it is here. Holding
ambitions to make a dent in the Universe (Apple/Steve Jobs) is
acceptable, as is a more realistic vision to create the most customer-
centric company on Earth (Amazon).
Get a birds eye view of management with this introduction to
management course!
2. Mission
The mission statement is a more realistic overview of the companys aim
and ambitions. Why does the company exist? What does it aim to achieve
through its existence? A clothing company might want to bring high
street fashion to the masses, while a non-profit might want to eradicate
polio.
3. Values
Inspire. Go above & beyond. Innovate. Exude passion. Stay humble.
Make it fun
These arent fragments from a motivational speech, but Fab.coms values.
Like Fab, each organization has its own values. These values will guide
managers and influence the kind of employees you hire. There is no
template to follow when jotting down the values. You can write a 1,000
page essay, or something as simple as Googles Dont be Evil its all up
to you.
As you can see, there are really no rules to writing the perfect strategic
plan. This is an open-ended, living document that grows with the
organization. You can write whatever you want in it, as long as it dictates
the future of your organization.
For inspiration, just search for the value/mission/vision statement of your
favorite companies on Google. Or, consider taking this course on business
planning for average people.
II. Tactical Plan
The tactical plan describes the tactics the organization plans to use to
achieve the ambitions outlined in the strategic plan. It is a short range (i.e.
with a scope of less than one year), low-level document that breaks down
the broader mission statements into smaller, actionable chunks. If the
strategic plan is a response to What?, the tactical plan responds to
How?.
Creating tactical plans is usually handled by mid-level managers.
The tactical plan is a very flexible document; it can hold anything and
everything required to achieve the organizations goals. That said, there
are some components shared by most tactical plans:
1. Specific Goals with Fixed Deadlines
Suppose your organizations aim is to become the largest shoe retailer in
the city. The tactical plan will break down this broad ambition into
smaller, actionable goals. The goal(s) should be highly specific and have
fixed deadlines to spur action expand to two stores within three months,
grow at 25% per quarter, or increase revenues to $1mn within six months,
and so on.
2. Budgets
The tactical plan should list budgetary requirements to achieve the aims
specified in the strategic plan. This should include the budget for hiring
personnel, marketing, sourcing, manufacturing, and running the day-to-
day operations of the company. Listing the revenue outflow/inflow is also
a recommended practice.
3. Resources
The tactical plan should list all the resources you can muster to achieve
the organizations aims. This should include human resources, IP, cash
resources, etc. Again, being highly specific is encouraged.
4. Marketing, Funding, etc.
Finally, the tactical plan should list the organizations immediate
marketing, sourcing, funding, manufacturing, retailing, and PR strategy.
Their scope should be aligned with the goals outlined above.
If youre struggling to create a strong tactical plan, this course on drafting
great business plans will point you in the right direction.
III. Operational Plan
The operational plan describes the day to day running of the company.
The operational plan charts out a roadmap to achieve the tactical goals
within a realistic timeframe. This plan is highly specific with an emphasis
on short-term objectives. Increase sales to 150 units/day, or hire 50
new employees are both examples of operational plan objectives.
Creating the operational plan is the responsibility of low-level managers
and supervisors.
Operational plans can be either single use, or ongoing, as described below:
1. Single Use Plans
These plans are created for events/activities with a single occurrence. This
can be a one-time sales program, a marketing campaign, a recruitment
drive, etc. Single use plans tend to be highly specific.
2. Ongoing Plans
These plans can be used in multiple settings on an ongoing basis. Ongoing
plans can be of different types, such as:
Policy: A policy is a general document that dictates how managers
should approach a problem. It influences decision making at the
micro level. Specific plans on hiring employees, terminating
contractors, etc. are examples of policies.
Rule: Rules are specific regulations according to which an
organization functions. The rules are meant to be hard coded and
should be enforced stringently. No smoking within premises, or
Employees must report by 9 a.m., are two examples of rules.
Procedure: A procedure describes a step-by-step process to
accomplish a particular objective. For example: most organizations
have detailed guidelines on hiring and training employees, or
sourcing raw materials. These guidelines can be called procedures.
Ongoing plans are created on an ad-hoc basis but can be repeated and
changed as required.
Operational plans align the companys strategic plan with the actual day to
day running of the company. This is where the macro meets the micro.
Running a successful company requires paying an equal attention to now
just the broad objectives, but also how the objectives are being met on an
everyday basis, hence the need for such intricate planning.
Operational planning is the process of planning strategic goals and objectives to tactical goals
and objectives. It describes milestones, conditions for success and explains how, or what portion
of, a strategic plan will be put into operation during a given operational period, in the case of
commercial application, a fiscal year or another given budgetary term. An operational plan is the
basis for, and justification of an annual operating budget request. Therefore, a five-year strategic
plan would typically require five operational plans funded by five operating budgets.
Operational plans should establish the activities and budgets for each part of the organization for
the next 1 3 years. They link the strategic plan with the activities the organization will deliver
and the resources required to deliver them.
An operational plan draws directly from agency and program strategic plans to describe agency
and program missions and goals, program objectives, and program activities. Like a strategic
plan, an operational plan addresses four questions:
Where are we now?
Where do we want to be?
How do we get there?
How do we measure our progress?
The operations plan is both the first and the last step in preparing an operating budget request.
As the first step, the operations plan provides a plan for resource allocation; as the last step, the
OP may be modified to reflect policy decisions or financial changes made during the budget
development process.
Operational plans should be prepared by the people who will be involved in implementation.
There is often a need for significant cross-departmental dialogue as plans created by one part of
the organisation inevitably have implications for other parts.
Operational plans should contain:
clear objectives
activities to be delivered
quality standards
desired outcomes
staffing and resource requirements
implementation timetables
a process for monitoring progress



An Example of a Tactical Marketing Plan
Assume for a moment your company sells insurance products in a large metropolitan area. The tactical
marketing plan for your insurance company must outline, step by step, each marketing component needed to
meet the goals and vision of your company's strategic plan.
For example, if you decide one of the best ways to reach your target consumer is TV advertising, then the
tactical plan needs to carefully spell out the specifics of the TV campaign. Steps in developing this plan include,
but are not restricted to, deciding on an appropriate message; arranging for the production of the commercial;
deciding what channels to air the commercial on and when; and following up with potential customers who
respond to the campaign.



Definition
An Operational Plan can be defined as a plan prepared by a component of an organization that
clearly defines actions it will take to support the strategic objectives and plans of upper
management. However, to fully understand Operational Plans, we should first look at the overall
planning process within a business. The following diagram shows three levels of planning.
Type of
Plan Created By Scope Includes Level of Detail
Strategic
Plan
Top
Management Entire organization
Mission of the company,
future goals and ambitions
Very broad and
general
Tactical
Plan
Mid-level
Management
Single area of the
business as a whole
(e.g. a division of the
company)
Specific actions to support
or work towards the
Strategic Plan
Specific actions
and ideas, but
not very detailed
Operational
Plan
Low-level
Management
A unit within a single
area of the business
(e.g. a department
within a division)
Specific plans for low level
and day-to-day activities
and processes that will
support and enable the
Tactical Plan
Extremely
detailed (who,
what, where and
when)
Let's summarize the characteristics of an Operational Plan. First, it assumes that upper
management has prepared both a Strategic Plan and a Tactical Plan. This means that lower
management should have a clear sense of what they are trying to achieve. They just have to come
up with a detailed plan to make it happen! Second, the Operational Plan is limited to only one part of
the organization. For example, a large corporation (Strategic Plan) has a manufacturing division
(Tactical Plan) that produces products A, B, and C. Each product is manufactured in a separate
plant run by a plant manager who prepares a separate Operational Plan. Operational Plans can be
subdivided into two categories. Single-use plans address only the current period or a specific
problem. An example would be a plan to cut costs during the next year. Ongoing plans carry
forward to future periods and are changed as necessary. An example would be a long-term plan to
retrain workers instead of layoffs.
Example
Congratulations, you have just been appointed plant manager for product C! The division manager
(your new boss) has just informed you that part of the corporate Strategic Plan is to increase the
return to shareholders over the next five years. The division manager's Tactical Plan to support the
corporate goal has three parts. First, he wants to cut costs by ten percent over the next year. Next,
he also wants to avoid layoffs and to increase production by three percent. He asks you to prepare
an Operational Plan for your plant that will show him what you will do to help him achieve these
goals. He wants to know very specifically what actions you will take, when these actions will occur,
and who will perform them. He also wants to know if you will require any additional financial
resources or manpower to implement your plan.