Types of Plans

How do Strategic and Tactical Planning Differ?

Plans that apply to the entire organization, that establish the organization’s overall objectives, and that seek to position the organization in terms of its environment are strategic plans. Strategic plans drive the organization’s efforts to achieve its goals. As these plans filter down in the organization, they serve as a basis for the tactical plans. Tactical plans (sometimes referred to as operational plans) specify the details of how the overall objectives are to be achieved. Strategic and tactical plans differ in three primary ways – their time frame, scope, and whether they include a known set of organizational objectives. Tactical plans tend to cover shorter periods of time. For instance an organization’s monthly, weekly and day to day plans are almost all tactical. On the other hand, strategic plans tend to cover an extended time period – usually five years or more. They also cover broader area and deal less with specifies. Finally, strategic plans include the formulation of objectives whereas tactical plans assume the existence of objectives Tactical plans describe how those objectives will be attained.

In what time frame do plans exist?

Financial analysts traditionally describe investment returns as short and long term. The short term covers less than one year. Any time frame beyond five years is classified as long term. Managers have adopted the same terminology for plans. For clarity we will emphasize short term plans and long term plans in this discussion.

The difference between short and long term plans is important given the length off future commitments and the degree of viability organizations face. For example, the more an organization’s current affect future commitments, the longer the time frame that management should use. That is, plans should extend of enough to carry through those commitments that are made today. Planning over too long or too short a period is in efficient. With respect to the degree of variability, the greater the uncertainty, the more plans should be of the short term variety. That is, if rapid or important technological social, economic, legal, or other changes are taking place, well defined and precisely chartered routes are more likely to hinder an organization’s performance than to aid it. Shorter term plan allow for more flexibility.

Strategic plans: Plans that are organizations wide establish overall objectives, and position an organization in terms of its environment.

Tactical plans: Plans that specify he details of how a organization’s overall objectives are to be achieved

Short term plans: Plans that cover less than one year

Long term plans: Plans that cover more than one year

Specific plans: Plans that have clearly defined objectives and leave no room for misinterpretation.

Directional plans: Flexible plans that set out general guidelines

What is the difference between specific and directional plans?

It appears intuitively correct that specific plans are always preferable to directional, or loosely guided, plans. Specific plans have clearly defined objective. They eliminate ambiguity and reduce problems that come from misunderstanding. For example a manager who seeks to increase her firm’s sales by 10 percent over a given 12 month period might establish specific procedures, budget allocations and schedules of activities to reach that objective. These actions represent specific plans.

However specific plans are not without drawbacks. They require clarity and a predictability that often does not exist. When uncertainty is high and management must maintain flexibility in order to respond top unexpected changes, directional plans may be preferable. Both directional and specific plans lead you from point A to point B. If you encounter a detour on Sussex Road, however the specific plans might create confusion. Directional plans on the other hand identify general guidelines. They provide focus but not lock managers into specific objective or specific courses of action. A specific plan might aim to cut cost by 10 percent and increase revenues by 8 percent in the next six months; a directional plan might aim at improving corporate profits between 6 and 12 percent during the next six months. The flexibility inherent in directional plans is obvious. This advantage must be weighed against the loss in clarity provided by specific plans.