LESSON 6 :Corporate Planning Definition – Strategy, Importance, Objectives and Elements Corporate planning is a type of strategic planning, responsible for mapping out a course of strategies and their implementations to empower top-management. It optimizes exposure, reach, leads, sales, profits, credibility, loyalty, sustainability, and opportunities of a business. With the help of corporate strategic planning, a business can efficiently channelize corporate management by leveraging its resources with better acumen than the other market players. Businesses of any size should incorporate such strategic planning, as it offers- • Clarity & Direction • Efficient use of resources • A way of measuring progress • Optimized decision-making • Better coordination in business activities • Effective allocation of responsibilities • Motivation and guidance to members • Analysis Strengths and weaknesses along with opportunities and threats via SWOT analysis, etc. All in all, corporate planning empowers any kind of business to accomplish its business goals in a more effective and organized manner. Corporate Planning Definition Corporate Planning is defined as forming long-term goals and objectives within the organization’s strengths and weaknesses in the existing and prospective environment. This is done to ensure the achievement of their plans by combining their short-term and long-term objectives or bringing amendments in the structural working in the organization’s composition. In the words of David E. Hussey, writer of the book- Corporate Planning: Theory and Practice- Corporate planning includes the setting of objectives, organizing the work, people and systems to enable those objectives to be achieved, motivating through the planning process and through the plans, measuring performance and so controlling progress of the plans and developing people through better decision-making, clearer objectives, more involvement, and awareness of progress. What is Corporate Planning Strategy? Corporate Planning is a strategic process applied by several business organizations to form a roadmap to grow in the market, enhance profits, gain industrial exposure, and strengthen brand identity. It is a vital tool that successful business organizations use to leverage their existing resources better and more analytically than competitors. It is the determination of business goals, formulation of diverse strategies for attaining objectives, transforming the goals into tactical plans, implementing and reviewing it to find out the progress of strategies, and finding out loopholes. Different factors around which corporate planning is channelized via effective SWOT analysis and process of corporate management are- • Creation of long-range corporate goals and objectives. • Analysis of Macro and Micro Environments. • Analysis of Strengths and weaknesses of the business • Coordination between short term and long term business plans • Structural changes in the business • Implementation of the strategic plan as per business goals • Adept use of scarce financial resources. • Right evaluation of performance as well as feedback for purposeful corporate planning Importance of Strategic Corporate Planning In the current modern era, corporate planning holds a crucial position in a business organization, be it large-sized, medium, or even a new entrant. The importance of corporate planning can be justified because some companies even hire departmental corporate managers to check the industry’s current scenario and the current status of the organization in the market. Some of the points that describe the need and importance of corporate planning are mentioned below: 1. Long-term goals Corporate Planning broadly focuses on long-term goals and sets a blueprint to achieve them in a stipulated period. Long-term goals help an organization keep its core focus on maintaining its efforts, workforce, and efforts on a pre-decided target. Corporate Planning keeps the employees engaged in their respective tasks with deadlines and ensures effectiveness and efficiency. It also brings harmony, peace, and cooperation among the employees and supervisors in a firm as they all smoothly work towards a common objective. 2. Focus A strategic business plan helps a business organization provide a focal point not to get deviated or distracted from its end goal. The first and foremost step of corporate planning involves devising a mission statement that tells the world its roles and objectives. Formulation of a mission statement aids the firm stick to its focus, do all the requisite tasks, assign responsibilities to the employees, and evaluate their work to achieve that final destination. 3. Better Decisions Developing a strategic plan helps a company make better decisions that are beneficial and helpful in attaining the mission statement. A corporate plan should be structured to spell all the information in the organization’s interest, like the skills required with the employees, machinery or equipment required, etc. Forming a roadmap to achieve the final goal helps the business people hire the best personnel for their form, arrange funds according to the tasks, and further invest in the most viable propositions. 4. A Measure of Success Corporate planning also acts as a yardstick to determine an organization’s success in achieving its goals. A firm shall periodically analyze its work to check its progress and make further amendments like replacing personnel, hiring more employees, arranging more funds, upgrading the machinery, etc. Finding, evaluating, and analyzing the loopholes periodically that block the ways of achieving the mission statement helps in the upgradation of the work and ensure efficiency and effectiveness of the tasks devised. The touchstone function of corporate planning works best in the organizations that devise plans that allow for changes in attaining the tasks. 5. Saves money The extra benefit associated with corporate planning is that it forms budgets that help save substantial sums. Budgeting allows a firm to allocate its financial resources to the projects that require it the most by cutting out unimportant expenses. Having a detailed budget tells how much cash is earned, spent, or lent. This wipes out confusion regarding the amount of money allocated to different projects. Objectives of corporate planning in Management Following are the basic objectives of corporate plans: 1. Setting a strategy The fundamental objective of framing a corporate plan is setting a business strategy. At this stage, companies should look at the opportunities and analyze the threats in the market. For this, they can make a SWOT analysis and select viable propositions for investing their funds. 2. Planning the operations Once a firm knows its mission statement, it can use these objectives and find ways of attaining them. The sole purpose of corporate planning is to help a firm plan and prepare a list of resources it requires to deliver to achieve its goals. 3. Monitoring and Control There should be measurable indicators present in a strategic plan to evaluate the progress of the work rate vis-à-vis the initial plans. It mainly includes financial theory related to accounts, the value of output, etc. 4. Review Establishing and forming well-devised instruments to devise annual reports is a crux to a successful corporate plan. Since the market environment constantly changes with events happening in the economy, a company regularly needs to review its plans, policies, and even rules and regulations associated with the operations. Elements of Successful Corporate Plan There are six elements in a successful corporate plan: 1. Gathering information Having all the information related to the firm, industry, and competitors are the primary step towards a well-defined corporate plan. Either a business is big or small, it should be aware of the happenings in the market in its sectors, find out opportunities, grab them at the right moment and beware of the threats. 2. Set the objectives of the plan Having a well-devised mission statement helps a firm stick to its focus of achieving it and keeps all the strategic work smooth in operations. Setting objectives helps form a clear mind about the work done, and the purpose of doing the work makes it fascinating. 3. Devise strategies to meet goals Having a blueprint helps in effectively achieving the objectives. Forming strategies define the work to be done by the employees. Managers and leaders mainly devise strategies considering the funds available, personnel in the organization, and the deadline to achieve the requisite target. It brings efficiency to the operations of a business. 4. Implementing the plan The next step is to implement the plans effectively. It involves the execution of the assigned tasks by the personnel within the guidelines and deadlines set. It involves the execution of the assigned tasks by the personnel within the guidelines and deadlines set. 5. Monitor plan performance An organization should monitor its work by forming progress reports, finding the drawbacks, and work on them immediately. 6. Evaluate the effectiveness of the plan In the end, a firm should see if the corporate strategy devised by it is competitive or up to the market standards. A plan should be challenging to achieve. A plan that is easy to achieve may not be a viable option in the existing scenario. This may require the organization to reset its plans and considering the market standards. What to include in a Strategic Corporate Plan? 1. Vision statement The vision statement of a business talks about business goals that it is supposed to achieve. While planning your corporate strategy, it is important to focus on your vision statement. You should also plan as per your short as well as long term goals. Your goals should be backed for your strategic planning, plus your goals should also be SMART. 2. Mission statement Next thing upon which you should pay heed while making corporate planning is a mission statement. It tells you how you are going to achieve your vision statement. It will let you know what you are planning to offer, the target market, and the USP of your company. It will offer an elevator pitch to your corporate planning just in a few lines. 3. Resources and scope Your corporate planning should also pay attention to things that you have in your organization such as your systems, structures, employees, products, accounting, assets, divisions, programs, finance, etc that play a key role in accomplishing your goals. You need to map the current structural existence of your organization to have a proper view of things incorporated and associated with your organization. 4. Objectives You should also include different business objectives and the ways you are going to measure success in your corporate planning strategy. Here, your objectives need to be measurable, strategic, realistic, achievable, and time-driven. Including vague objectives in your corporate planning statement is of no use here. Different types of objectives might include financial objectives, customer objectives, internal objectives, learning, and growth objectives. 5. Strategies Finally, you should include strategies that will help you accomplish your business objectives. Such strategic planning can be for launching any new product, or decreasing labour costs by a certain percentage, but your strategies have to directly address the associated objectives. You should also chalk out a proper plan for implementing those strategies. Corporate planning vs. Business Planning Business planning involves strategies that a business uses and applies to attain its goals and objectives. Corporate planning consists of strategies that the employees follow to meet the objectives of an organization. The following points highlight the difference between corporate planning and business planning: 1. Interdependency A business plan may exist without a corporate plan, but its strategies are linked with corporate plans. Without business planning, the goals and objectives of a firm would be ambiguous. Thus, both business plans and corporate plans are complementary to each other. 2. Effects A planning process aids a business to succeed in the market and suggests new directions and amendments as per the industry’s short as well as long-range requirements. Thus, there can be several diversified effects on business and corporate plans. 3. Considerations Corporate planning reviews each step of the working of an organization devised for achieving the mission statement. However, a business plan focuses on the organization’s overall goals, objectives, and progress. To evaluate the tasks, a business should consider several factors such as progress rate, personnel performance, requisite funds for further operations, and many more. .