Planning

So what exactly is involved in these various functions? Good question. Planning is something we all do on a regular basis. Think about how you plan your life. At some point, we may decide we are going to get a college education. Depending on how many degrees you want, it could take years to achieve that goal. Obtaining a college education would then be considered a long-range plan or goal. On the other hand, we also have to plan how we are going to utilize our financial resource: money. That process of deciding how much we will allocate to food, clothing, and other items throughout the month would represent a much shorter range plan.

When we put those two plans together, it is easy to see how one will impact the other. In our lives as well as in business, this flow is extremely important. In a business, top managers, such as the owners or a chief executive officer (CEO), must have vision.

Vision is the ability to see where the firm is going in the long run. The vision is the future toward which the company plans to move. Do you think Bill Gates envisioned today's Microsoft when he first started his company? Do you think he envisioned expanding overseas? Purchasing competitors? Diversifying into other products or services? These are all examples of long-range plans, which develop over time in response to the business’s vision. Once these long-range plans are determined, the other levels of management are responsible for making their plans. Their (short-term) plans must flow from the long-range plans and be designed to accomplish the objectives and goals that top management wants to achieve.