This is long term planning covering a period of five years or more. It is usually drawn up by senior management and it outlines how the long-term goals of the firm are to be achieved e.g. the firm may decide to expand its successful business model into the UK market.
This is short-term planning which breaks the strategic plan into shorter more manageable periods. It deals with the ‘now’ part of the plan. It is usually drawn up by middle management e.g. the firm might attempt to target a new group of customers next year.
This is backup planning to cope with emergencies/ unforeseen events and unexpected circumstances. Contingency plans benefit firms by preventing disruptions to business and thereby preventing loss of profits and possible business collapse e.g. A firm may have alternative suppliers of paper available for its traditional print books.
Benefits of planning
- It improves coordination. It links all the various people in the organisation towards achieving the firm’s goals. This helps to prevent the duplication of tasks and reduces levels of conflict.
- It includes the views of all employees and plans have been agreed. It is the best method available of achieving objectives. As employees are included at the planning stage, they will stick to the plan.
- It pinpoints underlying problems. As a plan maps out the firm’s future it forecasts future events and helps the firm to pinpoint problems e.g. cash flow problems, stock shortages
NOTE THE LENGTH OF THE ANSWER FOR 40 Marks