L21 Long Range Planning

Long Range Planning/Strategic Planning LRP is the first step in Management Control System. Is first step of strategy implementation. It leads to development of basic broad frame-work for control. TOP mgt. – Formulation of Strategy Middle mgt.– Implementation of Strategy 10/17/08

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Long Range Planning/Strategic Planning Strategy • Strategies are general programs of actions and allocation of resources to attain the overall objective of the Company. • The programs and resources of the Company used to attain the Company’s Goal. • It is determination of basic long term goal of Company and devising adequate course of action and allocation of resources to achieve that goal. 10/17/08

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Long Range Planning/Strategic Planning Strategic Planning • “a process of preparing a formal statement of specific plan of how to attain certain objective” • “a process of deciding on the activities and programs that a business organization will undertake and approximate amount of resources that will, be allocated to each program over the next several years.”

10/17/08

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Strategic Planning – Advantages •1. Provides framework for setting operational budgets. •2. Helps in management education and development. Invokes thinking about strategies and their implementation. •3. Cultivates long term thinking. •4. Brings alignment in Corporate and Operations strategies.

10/17/08

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Strategic Planning – Disadvantages •1. Top managements support is essential •2. May lead to a mere mechanical process of setting budgets year after year. •3. May overemphasize staff function than line function. •4. Consumes time and money especially in small organizations. •5. Needs constant/frequent revisions.

10/17/08

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Strategic Planning – Process •1. Update the strategic plans from last year. •2. Decide on the assumptions and guidelines and accordingly update SP.(growth rate, GDP, RM prices, Cyclical movements) •3. First Iteration of SP – first cut of SP by BU managers, incorporate more effective & efficient propositions than current plan, if any •4. Analysis of SP – (by Planning Staff at Corporate level.) to verify consistency of individual plans with corporate objectives. If there is GAP - improvement in BU’s plan or Acquisitions or Review Corporate Obj. •5. Second Iteration of SP – Analysis may suggest revision of any of the BU plans but may lead in revising the assumptions/guidelines and thereby it will affect the aggregate SP-all BU plans •6. Final Review and Approval – by CEO & BOD 10/17/08

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Strategic PlanningLeads to  Budgeting Budgeting –

Fixed, Flexible Capital Budgeting

Thanks…………..

10/17/08

[email protected]; VIM Pune

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