The Business Definition of Intermediate Planning
Planning is a business function managers use to outline specific goals, objectives and business operations for future years. Intermediate planning is generally seen as plans that fall under the next one to five years. These plans help business owners and managers assess certain aspects of their company and make decision to increase production output or operational profits. Intermediate plans also allow owners and managers to forecast future changes in the economic market.
Economic changes occur because of government policies and regulations, consumer preference, availability of economic resources and number of competitors in the marketplace. Businesses use intermediate planning as an attempt to forecast these upcoming changes and adjust operations accordingly. Government regulation is a common factor that drives intermediate planning. Owners and managers must plan for tax liabilities and the addition of new regulation on their industry, which can force the business to change its business practices.
Financing is the external funds a company uses to pay for business operations. Companies typically use external financing to save operational capital for daily expenditures. Companies can use short-term or long-term financing, such as credit lines and assets loans, respectively. Owners and managers obtain financing using intermediate plans to ensure they have sufficient funds for future years. These financing plans act as a hedge against the possibility of tight credit or unfavorable economic conditions that can decrease financial opportunities.
Manufacturing and production companies often use intermediate plans for re-tooling because they typically have large production processes. For example, automotive manufacturers commonly re-tool operations to produce new vehicles. A company producing SUVs may need a three to five year plan for changing operations to produce sedan-style automobiles. Because these changes can be an arduous process, an intermediate plan is needed.
Intermediate planning is often unique or specific to each company. These plans focus on different aspects of the company depending on the need for a plan. Owners and manager may also work with outside companies to create relationships to help them accomplish their intermediate plans. This can also create a competitive advantage if the company gets exclusive use of economic resources in the business environment.
Business planning is not typically something that is set in stone. Owners and managers should be ready to make changes depending on other factors in the business environment. Intermediate plans can also focus on the wrong type of changes, leading to potential problems in future business operations. Different perceptions by operational managers can also create difficulties for intermediate planning because this can delay the implementation of the plan.