Medium-term planning: characteristics, key points

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The task of planning is considered one of the most acute. This process can be divided into the following components: strategic planning, medium-term and short-term (operational) planning. The first type deals with the definition of large-scale goals and objectives that the enterprise faces. Also at this stage, methods for achieving these goals and solving problems are determined. But the medium-term is aimed at planning certain measures to implement the strategy.

What tasks are solved during planning

First of all, a production and financial plan is created. This is the basis of the strategic planning process. At this stage, the possibility of implementing planned production indicators based on financial viability is determined. In other words, to startplans should be matched with available resources. It is also necessary to rationally evaluate all the possibilities, thanks to which it will be possible to adjust the planned indicators if, for example, the situation on the market changes. The result of all the work done should be a plan for a year or a year and a half, which is accepted for execution and determines the volume of production, sales, payment terms, and so on. Without such intermediate work, it is impossible to achieve the final goal, therefore this type of planning is considered an integral part of ongoing processes.

Medium-term planning feature

With such planning and making major decisions, there is an urgent need to assess the impact of the plan being developed on the efficiency of the enterprise. To do this, you will have to thoroughly study the entire system of work, from buyers and production to financial resources. The result of the analysis of alternatives is the identification of ways to improve the efficiency of the enterprise.

Implementation of the plan

The tasks that are solved in the course of medium-term planning always require an integrated approach. It should be noted that an enterprise or organization is considered as an economic unit, nevertheless, an integrated approach in any case involves the analysis of not only internal relationships, but also the environment that surrounds the object of study. Only after describing the financial model can one begin to plan the financial and economic activities of the structure. For this you need to take careon the preparation of the income statement, cash flow statement, balance sheet and possible additional forms. As a result, we get an enterprise model as a medium-term financial planning tool.

How to create an enterprise model

There are actually a lot of ways. The most commonly used options are:

• The first way is a simplified model, the task of which is to situationally analyze the financial plan. The most important advantages of this method are the relative ease of implementation, visibility and transparency of the system. Simply put, you can immediately trace all the internal and external relationships. The main drawback is the possible calculation error. Also important is the rather lengthy procedure for collecting and preparing the initial data. But despite all the shortcomings, this method is often used by managers just because it is the fastest.
• The second way is a complex model. In this case, we can talk about a system based on the online submission of initial data. It becomes quite obvious that an integrated approach is based on prescribed algorithms for converting primary information. Such a model clearly wins against the background of a simplified approach. First, we can note the rapid preparation of initial data, automatic monitoring of the implementation of the set plan, and minimization of errors in calculations. But the system was not without drawbacks. First of all, these are significant costs in situational analysis. They are expressed in the fact that models for medium-term financial planning, which are based on integration into the information system, to some extent have a certain degree of freedom, but this freedom is limited. For example, accounting for deferred payments, production failures, and the like, that is, all these cases are pre-registered. But what to do with new ideas that, in their implementation, change the organizational structure and already configured business processes? There is only one way out. This is a remodeling of the model. And here you will need enough resources and time.

The result is this: a comprehensive model is an ideal option for creating a production and financial plan, which is the basis for the activities of the enterprise, as well as monitoring the implementation of this plan. But for situational analysis, it is best to use simplified approaches.

Mid-term planning. Highlights

First of all, it should be noted that this type of planning is based on a long-term strategy. The main goal is to achieve the most efficient overall balance between load and demand. While the essence of short-term planning is to set goals and objectives that must be completed in the near future.

Where planning begins

First of all, we should pay attention to the search for all kinds of methods for the competent use of production capacity. Moreover, the period of use of resources should be higher thansix months. And we should not forget about taking into account possible fluctuations in demand in a changing market. This function is assigned to operational managers. Usually these are the heads of the central services of the organization, whose activity is to solve tactical problems. Planning is aimed at identifying the order of achievement of strategic goals. We are talking about specific stages in the implementation of the process of medium-term strategic planning. This takes into account the prospects for the development of market conditions, the expected dynamics of consumer demand. The existing potential in the field of resources also plays an important role. Within the enterprise, medium-term planning is expressed in the form of programs.

Problems and methods of planning

First of all, this is the identification of prerequisites for the implementation of programs that are aimed at the next stage - long-term planning. In order to bring the plan into execution, many aspects of planning should be taken into account: financial, economic, technical and technological. The medium-term planning method takes into account the capabilities of all departments based on its own assessment. That is why it can be considered very reliable. The only drawback is the duplication of the same information, as well as its repetition at various levels: territorial, product, functional.

What is the result?

The main medium-term planning tool is a business plan. The ultimate goal of this program is to increase capital and increase competitiveness. A business plan is somethingan average between strategic planning, designed for the long term, a marketing plan, which is usually signed for a year, and current planning. The average term of a standard business plan is 5 years. The ultimate goals of the strategy depend on its implementation.