Three Levels of Organizational Planning

Instructor: Sean Kennedy

Sean has 8 years experience as a supervisor and has an MBA with a concentration in marketing.

Are you wondering, 'How do I go about devising a new strategy for the next year?' In this lesson, we will discuss the three levels of organization planning and how to follow through with organizational planning in large organizations.

Imagine you own a large company, and you decide to keep the same strategy year after year. Do you think you will continue to see growth? Your answer should be absolutely not. You must always try to look at possible opportunities for growth and ways to make your business better each year. Staying the same would not allow you to keep up with other companies because customer preferences change. As you develop your strategies, you will plan on three levels: corporate, business (or division), and department (or functional).

Corporate Planning

Corporate planning is when higher-up management and owners review their current strategy to determine their long-time goals. They communicate directly with the owners or stockholders. Corporate planning deals with the company as whole, including all of its divisions and departments. In your company, you must look at how managers and employees are working within the company. You have to determine what goals you want to accomplish, whether generating more revenue or having more effective customer service. Corporate planning takes a long-term view and determines the company's policies and procedures. At this level, you would assign resources to each business unit.

Business/Division Planning

Business (or division) planning has to do with staying competitive by creating useful products and staying competitive with other goods or services. It deals with only one business, compared to the corporate level which deals with all parts of the company. Staying competitive with other competitors is a vital part of business planning. At this level, you can determine consumers' needs and how to adjust the plan to make sure the business or division meets your customers' needs. Usually, your company would have one or two managers who are in control of the planning to help bring in profits.

In business planning, you also want to determine opportunities for growth, but it is usually based on the product or service and not the company as a whole. At this level, you want to make sure you meet the goals of corporate. Also at this level, you want to ensure each department performs well, and you determine which departments are successful and which departments may need assistance.

Department/Functional Planning

Department (or functional) planning is concerned with marketing, production, human resources, etc. It makes sure experts are in each of the different departments. Each department is responsible to uphold what is needed to make the company successful. It is vital that each department follows the overall objectives of corporate and business initiatives.

Each department may act on their own in terms of what type of job they have to perform, but they need to make sure they are meeting the company's goals. For instance, the marketing team will have to create a campaign to help promote the company, whereas production helps make the actual product. They are two different departments, but they come together to help develop a good product or service.

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