Corporate planning is a term describing an approach or a style of management, an attitude of mind, which uses a systematic and integrated approach to all aspects of a company’s activities. The idea is to treat the company as a corporate whole instead of a collection of departments. Treat a company on a long-term basis instead of a short-term one. The company is studied with precise definitions of its objectives functioning in its past, present and future environment.
Corporate planning is defined by Drucker as “a continuous process of making entrepreneurial decisions systematically and with the best possible knowledge of their futurity, organizing systematically the effort needed to carry out these decisions and measuring the results against expectations through organized systematic feedback.. “
In a study of hundreds of international companies, the reasons these companies introduced corporate planning were;
• effective diversification;
• rational allocation of resources;
• improved coordination and anticipation of technological change;
• increased profitability and the rate of growth.
Although annual profits are important, they are short-term factors in corporate plans. Manpower and new product development are examples of factors influencing the survival of the organization in the long term. Better results are obtained by companies adopting corporate planning methods. In reality the adoption of a style of management suitable to work in an atmosphere of change is the key to successful application of corporate planning.
Management systems and practices in all types of companies like banks, local governments and industries need to be revised to give more weight to strategic considerations. Competition may not be so much in products or markets, but through conflict with government and pressure groups in society in relation to matters such as pollution, safety and welfare.
Corporate plans are therefore needed to cope with social and political change. This needs careful thought in setting social objectives, policies and plans to ensure the gain of social and political acceptance of the company’s ideas. The idea behind this is the strategic problem of adapting the organization to its environment and this will usually mean fundamental changes in management and the organizational structure.
The whole of the industry of which the company is part of should be examined like the supply and demand factors, possible future trends and new opportunities, threats or problems. A comparison should be made between the company’s performance and that of its competitors. Trends in economic and political areas should be taken into consideration like government controls on mergers. Certain key factors should then be identified which appear likely to improve the company’s position.
The final assessment would cover specific areas and their problems and opportunities:
• research and development necessary for the need for new products and product improvements;
• human resources necessary to ensure the availability of staff in line with the desired quantity and quality;
• sales and marketing which reflect the relevance of sales policies, share of market, suitability of quality, design and price of products, marketing mix;
• production which is needed to ensure …