Corporate planning is creating a strategy for meeting business goals and improving your business. A corporate plan is a roadmap that lays out your business’s plan of action. It is imperative to write down goals and plan for how they will be achieved. Without planning, business operations can be haphazard, and employees are rarely on the same page. When you focus on corporate planning, you set achievable goals and bring your business one step closer to success.
Corporate Planning Definition
Corporate planning is the act of creating a long-term plan to improve your business. A corporate plan examines a business’s internal capabilities and lays out strategies for how to use those capabilities to improve the company and meet goals. Think of a corporate plan as a roadmap laying out everything you need to do to achieve your future goals and reach new levels of success. The plan looks at each sector of a business and makes sure that all parts are aligned, working towards similar goals. Corporate planning is often looked at through a SWOT analysis (strengths, weaknesses, opportunities, threats). Further, it usually starts with broad goals and works its way towards a much more detailed analysis, laying out exactly how objectives will be reached. The following elements tend to be in a corporate plan:
- Vision statement: You company’s vision statement broadly defines what goals you are working to achieve. This statement is where you hone in on your business’s focus and what you want to accomplish over the next three-to-five years. Think big, but remember that you will have to create a strategic plan to back these goals up. So always make sure that your goals can be defined as SMART goals (strategic, measurable, achievable, realistic and time-based).
- Mission statement: A good mission statement lays out how you will achieve your vision statement in a few sentences. It should illustrate what you plan to offer or sell, the market you are in, and what makes your company unique. A mission statement is like an elevator pitch for your entire strategy. It effectively communicates who you are and what you want to do in a few lines.
- Resources and scope: Part of corporate planning is taking stock of everything you currently have going on in your organization. You'll look at your systems, products, employees, assets, programs, divisions, accounting, finance and anything else that is critical to meeting your vision. This part is almost like making a map of your current organization. It gives you a bird’s eye view of everything your company has going on, which helps you create a plan for moving towards the future.
- Objectives: Next, you need to lay out your business objectives and how you plan to measure success. This is a good time to hone in on that SMART planning to ensure that your objectives are strategic, measurable, achievable, realistic and time-based. A vague goal such as “improve brand reputation” is meaningless without a solid measure of success in place. A SMART goal would instead be “improve brand reputation by placing the product in five positive media stories by the end of Q1.”
- Strategies: Now, it’s time to illustrate the strategies you plan to use to meet the objectives of your company. These strategies could be anything from introducing new products to reducing labor costs by 25 percent, depending on the goal. Your strategies should directly address the objectives you have laid out in your corporate plan, and include a plan of action for how you will implement them. These are the nitty-gritty plan details.
Corporate Planning Examples
The needs of your corporate planning will vary depending on your business and industry. For example, for automotive giant GM, CEO Mary Barra’s corporate turnaround strategy included several objectives. The main ones included becoming a leader in product and technology, growing the Cadillac brand, continuing to grow the GM brand in China, continuing to improve GM’s finances and becoming more efficient from an operational standpoint. These objectives are, of course, tailored to GM’s specific needs as a company.
The following are a few examples of corporate planning objectives:
- Financial objectives: Presumably, you went into business to make money. Your corporate planning financial objectives are your money-oriented goals. These objectives can include growing shareholder value, increasing profits and generating more revenue, to name a few. However, not all financial objectives are about revenue and profits. There are also objectives on cutting costs, balancing budgets, maintaining proper budget ratios and more. Another financial objective example might be diversifying or creating new revenue streams. Your specific goals will depend on your company’s individual needs, but most corporate plans include at least a few financial objectives.
- Customer objectives: Your customer objectives center on what you plan to do for your customers. A customer-centered objective could be giving your consumers the best value for the price they pay. Or, you could aim to improve product reliability. Another customer objective is increasing your market share or offering the best possible customer service. These objectives will vary, but they all center around meeting customer demand.
- Internal objectives: It’s important to consider internal objectives when doing corporate planning. Internal objectives include three areas: innovation, operations and customer service. Innovation objectives might consist of improving a product or growing the percentage of sales of a particular product. Another innovation objective might be to invest x dollars in the innovation of products. Operations objectives focus on reducing waste, investing in quality, improving workplace safety and reducing errors in manufacturing, to name a few. Another potential operations objective is streamlining. Finally, customer service objectives center on improving customer service, retention and satisfaction.
- Learning and growth objectives: Every organization needs learning and growth objectives when corporate planning. Learning and growth objectives are those that involve employees, your company culture and your business’s organizational capacity. One possible example of a learning and growth objective is boosting company culture, increasing employee retention and improving productivity.
Why You Need Corporate Planning
Every business needs to do corporate planning. Creating a strategic plan gives your company direction and actionable goals to see through. Without a plan, how will you know your priorities or where to place your resources? A business with a plan achieves better results than one that does not have any direction.
The first reason you need corporate planning is because it provides clear objectives for your organization. You wouldn’t leave for a road trip without mapping out your route. Similarly, it’s not advisable to run a business without mapping out your route. Corporate planning puts on paper your focus, and allows you to move forward with purpose. If your business is operating without a plan, you will not be able to achieve your goals. Goals must be written down and broken into parts to be efficiently achieved. Further, they must have clear timelines and deliverables. Corporate planning helps you create a roadmap for success by asking you to answer three crucial questions:
- What is the purpose of this business? (Mission)
- Where do we want to go and what do we hope to achieve? (Vision)
- How will we achieve our objectives? (Plan)
Another reason you need corporate planning is because it can help align your organization and its values. A corporate plan does more than simply keep your employees on a timeline for success. It also defines who you are as a company, and what you stand for. Likewise, when employees get a say in the direction of a business and its objectives, your company culture will improve. Planning for the future brings everyone to the table, promotes the exchange of ideas and creates effective solutions to organizational problems. Making and sticking to a plan ensures that everyone in the organization is on the same page. Small business owners especially will find that strategic planning is a great way to get feedback from employees and improve overall culture.
Finally, a corporate plan helps communicate your brand’s message to employees, shareholders, creditors, partners, investors and customers. Taking the time to hone your vision and mission statements is extremely important for messaging, which is essentially communicating what you are and what you want to be as a company. When your purpose as a company is boiled down to its bare bones and made widely available, the message sticks. Everyone immediately knows what your brand stands for and who it hopes to serve. A solid, clear corporate plan can be used to attract investors, customers and employees.
How to Do Corporate Planning
There are no hard-and-fast rules for how to do corporate planning. Each company has unique needs when it comes to planning for the future. However, there are a few tips to keep in mind for corporate planning success. First, gather input from employees from all different divisions of the company to go into the plan. You can do this through an open forum or employee meetings.
Next, a crucially important step is to bring the right people together to write the plan. Even if you involve many people in the brainstorming process, only a few should be involved in the actual writing process. Wording can become arduous when too many people are involved. For the first draft of the plan, it’s important not to obsess over every word. That will come later as you revise drafts and bring in more players, such as your board members. At first, only concern yourself with getting the main ideas and objectives written down.
After writing your first draft, show your employees, the board of directors and senior management as soon as possible. They will all have valuable insight and feedback as to how you should move forward. Ultimately, your corporate planning draft should include:
- Executive summary: This is the quick version of what your corporate plan includes. An executive summary should concisely cover your brand values, mission, vision, objectives and key strategies.
- Signature page: This page will include board member signatures, stating that they agree with and are committed to your goals and vision.
- Company description: Include your company’s biography, including its history, products and any significant achievements.
- Mission, vision and value statements: These statements outline who your company is, what you do and where you plan to go in the future. This is where you communicate your most important priorities.
- Strategic analysis of your company: This is the section that covers a SWOT analysis (strengths, weaknesses, opportunities, threats) of your company and its divisions. The strategic analysis also lays out issues you plan to address in the coming months and years.
- Strategies and tactics: In this section, lay out your strategies and how exactly you plan to accomplish them.
- Action plan: Your action plan lays out the responsibilities you plan to take on, as well as a timeline for accomplishing them.
- Budget and operations plans: Of course, to accomplish your company’s goals, you will need to have money in the budget. Lay out the financials and your specific plan for operations.
- Monitoring and evaluation: How do you plan to evaluate if your goals are being met? This section illustrates how you will measure progress for your objectives.
- Communication of the plan: A description of how you will communicate your corporate plan to employees, stakeholders, customers and any other important parties.
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- GM: GM Outlines Strategic Plan
- The Balance: 7 Elements of a Strategic Plan