What Is the Planning Process? - Steps & Concept

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  • 0:00 What Is The Planning Process?
  • 0:25 How Does The Process Work?
  • 4:30 Lesson Summary
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Lesson Transcript
Instructor: Carol Woods

Carol has taught college Finance, Accounting, Management and Business courses and has a MBA in Finance.

What is the planning process, and why would you need one? In this lesson, we'll learn what it is, what it does, the types of plans you might need to develop, and the steps in the process.

What Is the Planning Process?

The planning process is the steps a company takes to develop budgets to guide its future activities. The documents developed may include:

  • Strategic plans (long-range, high-level company goals)
  • Tactical plans (shorter-term, specific plans to work toward goals in the strategic plan)
  • Operating plans (detailed plans for a specific department to implement)
  • Project plans (plans to implement projects such as launching new products or building a new plant)

How Does the Process Work?

Although the specific steps differ slightly from company to company and depend on which type of plan you're developing, there are general steps that should be taken in order to ensure a good result. The steps in the planning process are:

  • Develop objectives
  • Develop tasks to meet those objectives
  • Determine resources needed to implement tasks
  • Create a timeline
  • Determine tracking and assessment method
  • Finalize plan
  • Distribute to all involved in the process

We're going to follow Mark, a department manager in a large company, as he develops a tactical budget for his sales department for the next year.

Step One: Develop Objectives

The first step in the planning process is to determine what you want to accomplish during the planning period. A long-range strategic plan might focus on specific market share achievements five years in the future, while a department-level operating plan might target implementation of a new method of tracking sales orders in the next quarter.

Mark is focused on annual objectives for his sales department, and so he begins by establishing sales goals for his team for the next year, and also defines a project he'd like to implement that automates the sales order process.

Step Two: Develop Tasks to Meet Those Objectives

The next step is to come up with a list of required tasks to meet the objectives defined. In our example, Mark determines the sales per month required to meet the sales goal he is targeting, and also lists out a few main tasks relating to the automation process - including selection of the tool and training for the team on its use.

Step Three: Determine Resources Needed to Implement Tasks

Next, resources to implement the objectives need to be determined. In this case, 'resources' includes both the people needed to implement the plan and the supplies or other resources needed to support those people. For the sales department, this might include the salespeople, a sales administrator, various supplies such as brochures, and funds for an advertising campaign to increase the number of prospects in the sales team funnel.

Step Four: Create a Timeline

The timing of resources now needs to be determined. For example, Mark anticipates the marketing campaign will start at the beginning of the year, and this will increase the number of prospects for the sales team for the second half of the year. Based on this, he shows the marketing campaign resources being spent in the first two months of the year, and the need for hiring of an additional salesperson near the end of the second quarter.

Step Five: Determine Tracking and Assessment Method

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