4 Levels of Business Planning – Definitions & Free Essay Examples

Any business needs complex planning, including a strategic framework and prepared emergency contingency plans. Firms that neglect this process put at risk their success and survival. Usually, companies plan on 4 levels: strategic, tactical, operational, and contingency. Each refers to a different scale of organizational goals and strategies.

🔝 Top Examples of Planning in Business

1. Target Corporation and the Four Management Functions
2. Whole Foods Market Firm's Strategic Improvement

🎚️ 4 Levels of Planning a Company

The 4 levels of planning a company are:

Strategic planning	It considers the organization’s long-term issues and develops a plan for growth or change in a company function. For example, strategic planning is often applied when the firm wants to expand its business globally.
Tactical planning	Tactical planning is used to achieve the objectives established by strategic planning. It involves short-term goals and actions designed to produce specified results in a short period, usually up to 1 year. For instance, a company can apply tactical planning to its marketing strategy by determining the content to be developed, the target audience, and how to reach customers.
Operations planning	Operations planning involves day-to-day matters, including staffing levels and inventory quantities. It sets more detailed objectives with specific dates and work allocations. For example, operations planning can establish routine processes inside a department, such as taking inventory or filling out status reports.
Contingency planning	Contingency planning outlines the company’s responses to unforeseen circumstances or emergencies, such as extreme weather events that disturb corporate operations. For instance, a contingency plan can be used to back up all website data in case the company’s website is compromised.

Although these planning tactics take place at various levels, they all work toward the same end goal – the development and growth of the organization.

1. Strategic Planning

Strategic planning defines the organization’s mission, vision, and core values. Goals set by top-level management during strategic planning usually take 1 to 5 years to achieve.

For example, at this planning stage, a food company may decide that its vision will be “to become the #1 manufacturer of gluten-free snacks.” Its mission can be “to specialize in allergy-friendly gluten-free products and provide customers with high-quality snacks made of the best ingredients.” At all subsequent planning levels, the company will have to make decisions with its vision and mission in mind.

2. Tactical Planning

Tactical planning is conducted by middle management and involves setting mid-range goals. At this level, the organization establishes specific objectives with deadlines, creates budgets, and identifies resources necessary to achieve corporate aims.

For example, the company wants to recruit and develop a diverse group of new employees and retain them long-term. The tactical planning, in this case, will include the following:

• Investigate salary survey data to establish the compensation for new hires.
• Conduct exit interviews to determine why people are leaving.
• Create a recruitment budget.

3. Operational Planning

Operational planning deals with company’s day-to-day activities. It consists of single-use (e.g., one-time marketing campaign) and ongoing plans (e.g., rules and procedures that continuously regulate the company’s operations.)

Here is an example of operational planning. The company sets a specific goal: to grow internet sales by 15% over the next 2 quarters. Then it outlines how it plans to achieve this objective: by boosting its online marketing and social media presence. The company goes into further detail and plans to publish new posts twice a day on social media, launch a marketing campaign on Facebook, and create high-quality content for its blog once a week.

4. Contingency Planning

A contingency plan, like project risk management, assists the company in identifying and addressing hazards in its internal and external environment.

For example, the company wants to be prepared for environmental disasters like earthquakes. Its management must list the names and contact details of individuals in charge of responding to emergencies. Thus, the organization will be prepared to respond rapidly and avoid chaos. Additionally, the company can develop methods for educating the public on how to act in case of an earthquake and a timetable for emergency personnel.

📝 Levels of Business Planning – Example

Here is an example of 4 levels of planning for a smartphone manufacturing company:

1. Strategic planning. At this level, the company should identify its vision, mission, and strategic plan for 2-5 years. The firm’s vision can be to become the leading manufacturer of smartphones in the global market. The mission can be to employ the company’s competencies and technology to create the best products and services, thus contributing to a better society. To fulfill its mission and vision, the organization may set the goal of increasing its global market share by 15% over the next 5 years.
2. Tactical planning. The company creates a more detailed plan to achieve its strategic objectives. For example, it may decide to enter a new market, develop a new product, and increase investments in its marketing efforts. The organization should also consider the budget and resources needed to implement this plan.
3. Operational planning. At this stage, the firm decides what day-to-day activities will help it achieve its tactical and strategic goals. It may assign product managers to develop a new product by the end of the quarter. Further, the company can plan to launch an online marketing campaign to target customers in a new market.
4. Contingency planning. It is vital to ensure the safety and security of the company’s information systems. Management must establish a framework of actions to take in case of various security issues, such as DDoS attacks, computer viruses, phishing, etc. Additionally, the firm must create a list of key stakeholders’ names and contact information and discuss with them the implications of the data breach and the strategy to protect their investments.