Types of plans

The essentials

Plans can be classified by how often they are used. Single-use plans are made for a one-time event or project that is not likely to be repeated, such as a programme or a budget for a particular event. Standing plans are used again and again for repetitive situations, such as policies, procedures, methods and rules.

Key points

• Objectives: the end results that the organisation wants to achieve; for example, earning a 10% return on investment.
• Strategy: a comprehensive plan for achieving objectives, considering the business environment; it covers long-term direction, the resources needed and the courses of action.
• Policy: a general statement that guides thinking and decision-making, such as a policy of recruiting only graduates or a policy of selling on cash only.
• Procedure: the exact chronological sequence of steps for carrying out a routine activity, such as the steps for processing a purchase order.
• Method: the prescribed way in which one step of a task is to be performed; it aims at the best way of doing that step.
• Rule: a specific statement that tells what is to be done or not done, with no scope for discretion; violation may lead to a penalty. Example: 'No smoking in the factory'.
• Programme: a detailed statement about a project, covering objectives, policies, procedures, rules, tasks and resources required.
• Budget: a statement of expected results expressed in numerical terms, for example a sales budget.

Exam tips

• A policy allows discretion; a rule allows none.
• Procedure is a sequence of steps; method is the way of doing one step.

Common mistakes

• Calling a budget only a financial statement. It is also a control device and can be in units, hours or money.
• Mixing up strategy and policy. Strategy is the overall plan of action against the environment; policy is a general guideline for decisions.