chapter  6
26 Pages

The Planning Process

Overview The planning process requires a multitiered structure that matches the strategic management process discussed in Part Two. Most large organisations have a corporate philosophy and culture that has a significant impact on how they plan. Some businesses develop very conservative plans that they intend to exceed while others set extremely stretching targets that they will do well to get near to. Neither planning style is right or wrong, but they each have important implications for the tailoring of their associated planning processes. Gap analysis and contingency planning are useful planning techniques, but

they need to be very carefully put into practice. The business should decide which of the four potential ways of filling the gap between extrapolated current performance and the desired objectives builds on its existing core competences. Contingency plans should be developed for those unlikely external events that could have dramatic implications for the organisation. The focus of strategic planning should be on the most important, most likely external business environment. The planning process should be fully linked with the control process and the

performance measurement system, with all of them being consistent with the business objectives and strategies. Organisational structures should be designed to be consistent with competitive strategies and, if strategies are changed significantly, the structures should be reviewed to make sure that they are still appropriate. Corporate planning of the portfolio of businesses comprising the group should

only be done at the very top of the organisation, while detailed competitive strategy planning can only be effectively done at the very bottom of the organisation. Therefore all other levels of the organisation should help to make the drawing together of the myriad of small business unit plans easier; this suggests that a structure based around commonality of strategic thrust and competitive environment may be value adding. The planning process will inevitably be partly top-down (i.e. targets driven

out from the centre) and partly bottom-up (i.e. issues and opportunities proposed from the business units). The dominant element has implications for the size of, and the information needed by, the corporate centre. The planning process

should be an integrated part of the ongoing strategic management of the organisation, and not seen as a ‘one-off’ annual event that distracts managerial attention away from running the business. One increasingly popular way of achieving this is the use of rolling forecasts

that force the business regularly to update its view of the future. By making the planning process more continuous and integrated within the normal management role, the emphasis on the annual plan is reduced, and planning becomes seen as what it must be, a critical line management responsibility.