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Operational Planning as a Essential Element in Strategic Planning Essay

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Introduction

Operational planning and management is an essential element in strategic planning. Various firms adopt different strategies in order to ensure that their operations are run in an effective and efficient manner.

Different firms adopt different planning strategies in order to achieve their specific goals and objectives in the short run and in the long run (Eli, 2006). The strategy that a firm may adopt may depend on its operations, size and culture.

This paper will therefore discuss strategic planning and other factors that contribute to successful planning. It shall focus on issues such as contingency planning, budgeting, employee monitoring, and performance indicators.

Strategic Planning

A strategic plan is a process adopted by the management of an entity to meet specific goals and objectives within a given time frame. It clearly defines the objectives of the entity and assesses the internal and external environment. Strategic planning takes place through a series of steps.

Development of visions, missions, goals and objectives are but some of the critical steps that are involved in the process of planning. To attain these objectives, the entity devises several procedures. An analysis of changes occurring in both the external and internal environment is critical in ensuring that a company attains its objectives.

After obtaining information from the environment scan, managers are required to match the strengths of the organization to opportunities. The process of matching the strengths with the opportunities is known as strategy formulation. This process ensures that the entity can develop a competitive advantage (Roberts and Neilson, 2003).

Once a company formulates a strategy, they have to implement it. The implementation process is carried out using budgets, organizational procedures and programs.

Strategic planning incorporates several aspects of the company to ensure that the company runs smoothly. Budgeting process is one of key processes that enhance the planning process.

Budgets as Tools for Planning

In most entities, budgeting is a key element in financial management (Roberts and Neilson, 2003). The use of a budget assists managers to plan and utilize the company resources effectively. Clear understanding of principles of budgeting ensures that managers can formulate a comprehensive financial plan.

Budgeting process is a microcosm element of strategic planning (Roberts and Neilson, 2003). Therefore, after yielding information from strategic planning, managers relate this information to the actual activities of the entity.

This process is recognized as the operational plan and management usually finds a need to value the plan. Companies incur operational costs when they start trading. It is these costs among other costs that appear in the budget. Budgets are usually prepared based on the plan of the organization.

Organizations use budgeting to monitor the cash flow of an entity. Cash flow forecast enables an entity to anticipate the inflows and outflows of cash. Information may be used to plan for future events. A budget maps out the resource flow in and out of the organization.

By watching how the resources flow, it is possible for management to make sound decisions about an entity. Managers use budgets as indicators of performance.

Performance of an entity is important in planning process. Budgets may be highly useful when identifying key performance indicators in an entity.

Role of Key Performance Indicators (KPI) in Planning

Organizations use key performance Indicators to enhance the process of planning. Key performance indicators are the financial and non-financial measures used by business entities to help in evaluating the success of a business.

The success of an entity is evaluated in relation to the long-term goals of the business. The main role of KPI is to give meaning to the objectives outlined by an entity. Therefore, key performance indicators give meaning to the strategic plan and objectives of an entity.

The KPIs identified must relate to the strategic plan of the entity. This is because many aspects of an entity can be measured to show how a company performs.

Before implementing KPIs, managers are required to consider several important factors. Implementation of KPIs requires an entity to consider several processes that affect the key elements of planning.

KPIs are important in assisting an entity to attain its goals as they have been set in the strategic plan. Therefore, when establishing KPIs, managers must recognize that proper governance is the key to incorporating KPIs into the strategic plan.

Moreover, managers need to understand that these performance indicators are what attract investors. In this light of events, KPIs do not need to be comprehensive but instead they should cover the particular areas of concern, especially areas that investors concentrate on.

To ensure that the KPIs set by an entity remain valid for an extended period of time, contingency planning is necessary. Contingency planning ensures that the organization prepares well for a variety of situations that may occur in the future.

Role of Contingency Planning

Contingency planning entails anticipating all the possible scenarios that may challenge a business entity and forming a comprehensive plan that may be used to avoid these challenges (Yuko and Karen, 2001). Instead of managers assuming that everything may be alright, they should identify contingencies and prepare for them.

Use of contingency planning ensures that firms are better placed to cope with future uncertainties in the market. When managers plan for contingencies, they are able to avoid the shock that may come with market disability or natural causes.

The use of contingency planning also reduces the risk of delays and indecision due to occurrence of an unusual event (Yuko and Karen, 2001). Unusual events in the market or within the organization may lead to the company halting its operations.

In cases where the company planned for contingencies, it may continue its operations and maintain its profitability. Firms with contingent plans tend to react rationally in unplanned situations.

When coming up with a contingent plan a firm should determine what reason behind the plan. Therefore preparation of a comprehensive, focused and practical plan require expertise and skills.

Managers as well as employees are required to take part when formulating a contingent plan. They should identify the key processes and operations then incorporate them in a contingent plan to ensure the long-term survival of a firm is secure.

Strategies Used to Monitor Employees

Employer need to monitor the activities of employees to ensure that they are performing their tasks. Employers use different methods to monitor employees. Some employers use computerized system to collect, store, and analyze employee activities (Mishra and Mathers, 1998).

In most cases employee monitoring is used in projecting the performance of the company. Good employee input and output may be assumed to cause good performance. Therefore, employers deem the act of monitoring employees as important.

Firms perform the process of monitoring employees using contracts. In this case, every employee is given a contract outlining his duties and responsibilities. At the end of the contract, an employee performance is evaluated against those set in a contract.

If he or she has a good performance then the employment contract may be renewed. Another strategy of monitoring employee is being actively involved in the activities they undertake.

From observing the processes used an employer can determine the level of competence. Managers use a variety of methods monitor employees. Each employer chooses the method that suits his or her entity.

Conclusion

Strategic planning, budgeting, employee monitoring, and performance indicators play an important role in operation planning. Companies should integrate all these elements in the operation plan to ensure that the company operations run smoothly.

In addition to these elements, companies should incorporate contingency planning in order to safeguard its interests from future challenges.

References

Eli, J L 2006, ‘The Importance of Strategic Planning’, Practical Decisions, Vol. 20 No. 1, pp. 1-3

Mishra, J M and Mathers, S 1998, ‘Employee Monitoring: Privacy in the Workplace?’, SAM Advanced Management Journal, Vol. 63 No.5, pp. 4-11

Roberts, K and Neilson, P 2000, The Strategy Focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment, Harvard Business School Press, Boston Mass.

Yuko, M and Karen, C S 2001, ‘Embracing Disaster With Contingency Planning’, Risk Management, Vol. 48 No. 5, pp.18-20.

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IvyPanda. "Operational Planning as a Essential Element in Strategic Planning." January 13, 2020. https://ivypanda.com/essays/operational-planning/.

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IvyPanda. 2020. "Operational Planning as a Essential Element in Strategic Planning." January 13, 2020. https://ivypanda.com/essays/operational-planning/.

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IvyPanda. (2020) 'Operational Planning as a Essential Element in Strategic Planning'. 13 January.

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