Essential Elements of a Dynamic Corporate Plan

Table of contents, is a corporate plan the same as a business plan, why does my business need a corporate plan, trends in creating corporate plan sets, strategic trade-offs.

In the dynamic and rapidly changing business landscape, staying on top of everything and continuously generating innovative ideas and strategies to drive your company’s progress can be overwhelming. This is where the significance of a well-crafted corporate plan becomes evident. Considered the guiding roadmap for your organisation, a strategic corporate plan helps support your company’s objectives, goals and the necessary steps to achieve them.

A strategic corporate plan is a comprehensive and forward-looking document that lays out the goals, objectives and actionable steps a company needs to take to develop its vision .

It serves as a blueprint, guiding the firm through the complexities of today’s business environment. By outlining clear goals and providing a strategy for success, the corporate plan organises thoughts and fosters a sense of urgency to propel the company forward.

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Two fundamental planning approaches are often used when formulating a fair corporate plan: business and corporate planning. While they share the common objective of setting goals for a business, they serve distinct purposes. The development of a comprehensive corporate plan involves a systematic and in-depth assessment of the company’s current state, market conditions and long-term aim.

Business plan vs. corporate plan

Business plan.

It focuses on determining the “what” of your business. It involves formulating a comprehensive roadmap for your company’s present and future aspirations.

This initial planning phase is crucial for a thriving company, especially when launching a new business idea or introducing significant changes to your existing operations. Before delving into specific corporate strategies, you must establish a generalised business plan.

Key elements of a business plan:

  • Company mission : Clearly define your company’s mission and purpose.
  • SWOT analysis : Assess your company’s strengths and weaknesses to identify areas for development and improvement.
  • Goal-setting : Outline short-term and long-term goals related to growth, finances, and other aspects.

Corporate Plan

Corporate planning is the “how” phase that comes after you set your business corporate plan goals. This step involves devising strategies and tactics to support your company’s mission and achieve the defined goals.

It addresses the practical steps needed to make the vision a reality. Key aspects of a strategic corporate plan:

  • Alignment with a business plan : Ensure that the corporate plan aligns with the objectives and goals outlined in the business plan.
  • Resource utilisation: Plan how you will leverage your company’s strengths and mitigate weaknesses to meet targets.
  • Financial analysis: Use financial data, such as cash-flow statements and credit reports, to make informed decisions.
  • Operational efficiency: Implement measures to enhance operational effectiveness and optimise business processes.

Long-term goals

Corporate planning involves setting a strategic vision and charting a course of action to achieve it within a specific timeframe. By establishing long-term goals, businesses can remain focused on their objectives while effectively utilising their resources and fostering a collaborative work environment.

With TimeTrack’s’ Task Planner , businesses can break down their strategic vision into actionable tasks and assign them to relevant workforce or individuals. The tool helps set clear deadlines and track progress, enabling the organisation to stay on track, meet priorities and deliver on milestones in a timely manner.

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Statista’s 2021 research reveals that a significant 51% of companies are not expanding their workforce as part of their thriving corporate strategy to cope with the current environment. This statistic underscores the urgency for companies to adopt effective corporate strategies to protect and enhance their adaptability in an ever-changing and volatile market environment.

Better decision-making

Strategic workforce planning enables quality decision-making that aligns with the company’s mission statement, promoting fairness throughout the organisation. It encompasses various aspects, including required employee skills and necessary equipment, helping firms hire the right talent, allocate funds wisely and invest in promising opportunities for success.

TimeTrack’s Time Clock facilitates better decision-making by streamlining administrative processes related to time tracking, payroll and attendance. With automated time tracking , firms can increase transparency and eliminate manual errors to ensure fair and accurate employee compensation, contributing to a positive work environment and fostering employee satisfaction.

A measure of success

Corporate planning is vital for measuring a company’s success in achieving its objectives. Regular evaluations and adjustments are made to overcome obstacles and enhance work processes, ensuring optimal efficiency, fairness, quality and efficacy.

Business process transformation is an integral part of a plan that measures an organisation’s success. As the firm evaluates its progress toward achieving its objectives, it identifies areas that need improvement, development or optimisation.

Cost savings for sustainable development

Corporate planning provides the advantage of creating fair budgets that lead to significant savings and ultimately support sustainable development. Through efficient budgeting, organisations can help deliver financial resources to essential projects, eliminate unnecessary expenses, increase income and ensure transparency in fund allocation.

A well-crafted strategic corporate plan acts as a roadmap, keeping the company on track to deliver and accomplish its ultimate objective without getting distracted. The mission statement, an integral part of corporate planning, conveys the organisation’s roles and goals and aims to ensure that the company maintains its direction and evaluates performance to reach its goals.

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Creating a vision

Leaders must define the company’s objectives, mission and corporate values to establish a thriving corporate plan for the future. Involving key staff members in the visioning process ensures diverse perspectives and a well-rounded strategic mix. The central aim should look ahead for three to five years and serve as a blueprint for the organisation’s desired future position.

This process aims to create a clear direction for the company and align its actions with its overarching mission, prioritising fairness and inclusivity amongst all stakeholders. By setting clear aims, priorities and objectives, the company can stay focused on its long-term goals and make informed decisions that propel it toward success.

Resource allocation

Resource allocation is a critical aspect of strategic planning, involving both capital and support people. Efficient allocation requires careful consideration of critical factors for each type:

Capital resources

  • Develop risk-adjusted returns by allocating resources across businesses.
  • Analyse external opportunities, such as mergers and acquisitions, using capital resources.
  • Distribute capital resources between internal projects and external opportunities.

People-based resources

  • Position leaders and partners strategically to maximise their contribution and value.
  • Ensure a steady supply of talent across all business units.
  • Define core competencies and allocate resources accordingly.

Following these functions to support people and capital, resources ensure optimal utilisation across the organisation’s portfolio of services.

Setting functional objectives

The visioning aspects must be transformed into clear and actionable functional objectives. These objectives serve as guiding principles and priorities for employees at all levels and should be regularly reviewed to ensure success.

Incorporating a readiness plan is essential during the process of setting functional objectives. A well-prepared readiness plan ensures that transforming visioning aspects into clear, actionable objectives is smooth and effective. This plan involves identifying the necessary resources, training and support people at all levels of the organisation to align with the new objectives.

Organisational design

An effective organisational design supports multiple priorities within the organisation. This process involves aspects like quality reporting, delegation and structuring:

  • Develop centres of excellence.
  • Establish structures for governance.
  • Define reporting structures, such as top-down or matrix reporting.
  • Delegate authority appropriately.
  • Allocate responsibilities to balance exposure and return levels.
  • Integrate business units and eliminate redundancies through mergers.
  • Break down significant commitments and initiatives into smaller projects.
  • Determine decision-making processes (bottom-up or top-down).
  • Balance business unit autonomy with authority over decisions in partners.

Considering these aspects ensures delivering a well-structured workforce and efficient organisational design.

Portfolio management

Portfolio management evaluates the organisation’s business units, interactions and decisions to enter or exit specific businesses. Key aspects of portfolio management include:

  • Strategic planning for future opportunities and investments.
  • Market assessment to support competitive advantages and portfolio balance.
  • Decision-making on resource allocation among business units.
  • Develop diversified companies for risk management.
  • Determining the level of vertical integration.

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Strategic trade-offs serve three functions: creating incentives, generating cash and managing threats. Incentive structures play a vital role in managing risk and return levels. To deliver long-term success, it’s essential to separate risk management responsibilities from return generation.

High-risk strategies, such as true product differentiation or cost leadership, may lead to high returns. Successful execution and structured plans are essential for delivering these plays. Managing exposure effectively involves priorities like communication, transparency and autonomy for business units to develop and address comprehensive risk management strategies.

Organisations sometimes emulate other companies to mitigate threats and create viable opportunities, particularly in high-risk strategies like true product differentiation, which can lead to market leadership or collapse. These key aims guide decision-making and resource allocation, ensuring that the company optimises its potential for success while navigating potential challenges with informed and strategic approaches.

Corporate plan sets are a fundamental and integral activity that significantly contributes to develop an organisation’s goals through sustainable development.

At every level and department, clear and detailed strategies are implemented with the key aims in mind, and employees are assigned specific tasks and deadlines to follow. These tasks are executed under the guidance of leaders, partners, and mentors, ensuring successful completion for a thriving business, all while adhering to established guidelines. The organisation’s overarching aims serve as the driving force behind each strategic decision, creating a cohesive and purpose-driven work environment that propels the company toward its desired outcomes.

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What Is a Business Plan? Definition and Planning Essentials Explained

Posted february 21, 2022 by kody wirth.

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What is a business plan? It’s the roadmap for your business. The outline of your goals, objectives, and the steps you’ll take to get there. It describes the structure of your organization, how it operates, as well as the financial expectations and actual performance. 

A business plan can help you explore ideas, successfully start a business, manage operations, and pursue growth. In short, a business plan is a lot of different things. It’s more than just a stack of paper and can be one of your most effective tools as a business owner. 

Let’s explore the basics of business planning, the structure of a traditional plan, your planning options, and how you can use your plan to succeed. 

What is a business plan?

A business plan is a document that explains how your business operates. It summarizes your business structure, objectives, milestones, and financial performance. Again, it’s a guide that helps you, and anyone else, better understand how your business will succeed.  

Why do you need a business plan?

The primary purpose of a business plan is to help you understand the direction of your business and the steps it will take to get there. Having a solid business plan can help you grow up to 30% faster and according to our own 2021 Small Business research working on a business plan increases confidence regarding business health—even in the midst of a crisis. 

These benefits are directly connected to how writing a business plan makes you more informed and better prepares you for entrepreneurship. It helps you reduce risk and avoid pursuing potentially poor ideas. You’ll also be able to more easily uncover your business’s potential. By regularly returning to your plan you can understand what parts of your strategy are working and those that are not.

That just scratches the surface for why having a plan is valuable. Check out our full write-up for fifteen more reasons why you need a business plan .  

What can you do with your plan?

So what can you do with a business plan once you’ve created it? It can be all too easy to write a plan and just let it be. Here are just a few ways you can leverage your plan to benefit your business.

Test an idea

Writing a plan isn’t just for those that are ready to start a business. It’s just as valuable for those that have an idea and want to determine if it’s actually possible or not. By writing a plan to explore the validity of an idea, you are working through the process of understanding what it would take to be successful. 

The market and competitive research alone can tell you a lot about your idea. Is the marketplace too crowded? Is the solution you have in mind not really needed? Add in the exploration of milestones, potential expenses, and the sales needed to attain profitability and you can paint a pretty clear picture of the potential of your business.

Document your strategy and goals

For those starting or managing a business understanding where you’re going and how you’re going to get there are vital. Writing your plan helps you do that. It ensures that you are considering all aspects of your business, know what milestones you need to hit, and can effectively make adjustments if that doesn’t happen. 

With a plan in place, you’ll have an idea of where you want your business to go as well as how you’ve performed in the past. This alone better prepares you to take on challenges, review what you’ve done before, and make the right adjustments.

Pursue funding

Even if you do not intend to pursue funding right away, having a business plan will prepare you for it. It will ensure that you have all of the information necessary to submit a loan application and pitch to investors. So, rather than scrambling to gather documentation and write a cohesive plan once it’s relevant, you can instead keep your plan up-to-date and attempt to attain funding. Just add a use of funds report to your financial plan and you’ll be ready to go.

The benefits of having a plan don’t stop there. You can then use your business plan to help you manage the funding you receive. You’ll not only be able to easily track and forecast how you’ll use your funds but easily report on how it’s been used. 

Better manage your business

A solid business plan isn’t meant to be something you do once and forget about. Instead, it should be a useful tool that you can regularly use to analyze performance, make strategic decisions, and anticipate future scenarios. It’s a document that you should regularly update and adjust as you go to better fit the actual state of your business.

Doing so makes it easier to understand what’s working and what’s not. It helps you understand if you’re truly reaching your goals or if you need to make further adjustments. Having your plan in place makes that process quicker, more informative, and leaves you with far more time to actually spend running your business.

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What should your business plan include?

The content and structure of your business plan should include anything that will help you use it effectively. That being said, there are some key elements that you should cover and that investors will expect to see. 

Executive summary

The executive summary is a simple overview of your business and your overall plan. It should serve as a standalone document that provides enough detail for anyone—including yourself, team members, or investors—to fully understand your business strategy. Make sure to cover the problem you’re solving, a description of your product or service, your target market, organizational structure, a financial summary, and any necessary funding requirements.

This will be the first part of your plan but it’s easiest to write it after you’ve created your full plan.

Products & Services

When describing your products or services, you need to start by outlining the problem you’re solving and why what you offer is valuable. This is where you’ll also address current competition in the market and any competitive advantages your products or services bring to the table. Lastly, be sure to outline the steps or milestones that you’ll need to hit to successfully launch your business. If you’ve already hit some initial milestones, like taking pre-orders or early funding, be sure to include it here to further prove the validity of your business. 

Market analysis

A market analysis is a qualitative and quantitative assessment of the current market you’re entering or competing in. It helps you understand the overall state and potential of the industry, who your ideal customers are, the positioning of your competition, and how you intend to position your own business. This helps you better explore the long-term trends of the market, what challenges to expect, and how you will need to initially introduce and even price your products or services.

Check out our full guide for how to conduct a market analysis in just four easy steps .  

Marketing & sales

Here you detail how you intend to reach your target market. This includes your sales activities, general pricing plan, and the beginnings of your marketing strategy. If you have any branding elements, sample marketing campaigns, or messaging available—this is the place to add it. 

Additionally, it may be wise to include a SWOT analysis that demonstrates your business or specific product/service position. This will showcase how you intend to leverage sales and marketing channels to deal with competitive threats and take advantage of any opportunities.

Check out our full write-up to learn how to create a cohesive marketing strategy for your business. 

Organization & management

This section addresses the legal structure of your business, your current team, and any gaps that need to be filled. Depending on your business type and longevity, you’ll also need to include your location, ownership information, and business history. Basically, add any information that helps explain your organizational structure and how you operate. This section is particularly important for pitching to investors but should be included even if attempted funding is not in your immediate future.

Financial projections

Possibly the most important piece of your plan, your financials section is vital for showcasing the viability of your business. It also helps you establish a baseline to measure against and makes it easier to make ongoing strategic decisions as your business grows. This may seem complex on the surface, but it can be far easier than you think. 

Focus on building solid forecasts, keep your categories simple, and lean on assumptions. You can always return to this section to add more details and refine your financial statements as you operate. 

Here are the statements you should include in your financial plan:

  • Sales and revenue projections
  • Profit and loss statement
  • Cash flow statement
  • Balance sheet

The appendix is where you add additional detail, documentation, or extended notes that support the other sections of your plan. Don’t worry about adding this section at first and only add documentation that you think will be beneficial for anyone reading your plan.

Types of business plans explained

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. So, to get the most out of your plan, it’s best to find a format that suits your needs. Here are a few common business plan types worth considering. 

Traditional business plan

The tried-and-true traditional business plan is a formal document meant to be used for external purposes. Typically this is the type of plan you’ll need when applying for funding or pitching to investors. It can also be used when training or hiring employees, working with vendors, or any other situation where the full details of your business must be understood by another individual. 

This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix. We recommend only starting with this business plan format if you plan to immediately pursue funding and already have a solid handle on your business information. 

Business model canvas

The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea. 

The structure ditches a linear structure in favor of a cell-based template. It encourages you to build connections between every element of your business. It’s faster to write out and update, and much easier for you, your team, and anyone else to visualize your business operations. This is really best for those exploring their business idea for the first time, but keep in mind that it can be difficult to actually validate your idea this way as well as adapt it into a full plan.

One-page business plan

The true middle ground between the business model canvas and a traditional business plan is the one-page business plan. This format is a simplified version of the traditional plan that focuses on the core aspects of your business. It basically serves as a beefed-up pitch document and can be finished as quickly as the business model canvas.

By starting with a one-page plan, you give yourself a minimal document to build from. You’ll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan. This plan type is useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Now, the option that we here at LivePlan recommend is the Lean Plan . This is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance.

It holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27-minutes . However, it’s even easier to convert into a full plan thanks to how heavily it’s tied to your financials. The overall goal of Lean Planning isn’t to just produce documents that you use once and shelve. Instead, the Lean Planning process helps you build a healthier company that thrives in times of growth and stable through times of crisis.

It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

Try the LivePlan Method for Lean Business Planning

Now that you know the basics of business planning, it’s time to get started. Again we recommend leveraging a Lean Plan for a faster, easier, and far more useful planning process. 

To get familiar with the Lean Plan format, you can download our free Lean Plan template . However, if you want to elevate your ability to create and use your lean plan even further, you may want to explore LivePlan. 

It features step-by-step guidance that ensures you cover everything necessary while reducing the time spent on formatting and presenting. You’ll also gain access to financial forecasting tools that propel you through the process. Finally, it will transform your plan into a management tool that will help you easily compare your forecasts to your actual results. 

Check out how LivePlan streamlines Lean Planning by downloading our Kickstart Your Business ebook .

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Kody Wirth

Posted in Business Plan Writing

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What is Corporate Strategic Planning?

Corporate Strategic Planning is a companywide approach at the business unit and corporate level for developing strategic plans to achieve a longer-term vision. The process includes defining the corporate strategic goals and intentions at the top and cascading them through each level of the organization. Many organizations confuse the annual budgeting process with corporate planning. Corporate strategic planning should come first and annual budgeting should be driven by the strategy, not by prior year’s budget spend.

Why is Corporate Strategy Important?

A corporate strategy can focus every employee and resource in a company on the same objectives, and it aims to use them all efficiently. It gives every employee a set of guidelines they can use in their everyday work to move toward certain targets, which promote the vision and mission of the company. Corporate level planning can also improve efficiency within the organization and help identify unseen bottlenecks or pain-points.

The corporate strategy gives leaders and employees ideas to use for the improvement of distinctive activities (processes and operations) that create a competitive advantage. The strategy can also help executives to protect the company from entering into costly or irrelevant opportunities. What are the steps involved in strategic corporate planning? Corporate strategic planning begins by clarifying the vision and mission of the organization and the space the business chooses to compete in. Clarifying the organizations position will help you develop and effective strategic planning framework.

1) Competitive Analysis

A competitive analysis needs to be conducted, to understand the trends that could impact the success of your strategy. Common factors that could be analyzed include political, legal, social, environmental, technological. There may be other factors you may want to consider that are relevant to your business and industry.

2) Strategic Goals & Priorities

Once you have completed a competitive analysis, the corporate leadership team will set the overarching strategic goals and priorities for the organization.

Once the strategic goals and priorities are finalized, each business unit needs to define its strategic goals and plans on how it can contribute to the overall direction of the enterprise. That includes not only what is to be accomplished, but how it will be accomplished including high level plans, budgets, human resources, etc.

3) Communication

Once business unit plans and directions have been set, the information needs to be communicated and shared with leadership inside the business unit so that priorities and plans can be aligned and integrated within a single budget.

What is Strategic Business Planning?

At the corporate level, an enterprise develops a portfolio of businesses they choose to compete in. This is a high-level analysis of a business’s competitive and core capabilities, and how each business contributes to the overarching corporate goals. Supported by the corporate strategic business planning process, these businesses are then set up, sponsored, and supported as business units at the operating level.

What Are The Types of Corporate Strategy?

When looking at the types of corporate strategy, it is important to consider a positioning grid that looks at the source of competitive advantage as well as the space where the business competes (markets, geography, size, etc).

Strategy 1: Low Cost Strategy

This type of strategy is one in which your source of advantage is simply competing on cost and being the low-cost provider. With this strategy an organization must exploit all sources of cost advantage. This includes things such as:

  • Economies of scale
  • Cost of inputs
  • Operations excellence to help drive down costs
  • This type of strategy requires an organization to compete more broadly (markets, geography, size)

Strategy 2: Differentiated Strategy

In a Differentiated Strategy, the focus is on competing by being unique or distinctively different in your industry. A differentiated strategy provides a product or service in more of a niche market where customers see the importance of offerings and are willing to pay a premium price. While this strategy still has a broad focus on how and where it competes (markets, geography, size), it serves its customers in a differentiated way. Differentiation can include factors such as:

  • Technical superiority
  • Customization
  • Products or services that are difficult to copy
  • Customer Service

Strategy 3: Segmented Strategy

A segmented strategy is one in which you have clearly differentiated yourself from the competition. The space in which you compete has a narrow focus. You serve a distinct group of customers with specialized needs. In this space, there are few product or service substitutes that can be offered and while you may not have the volume of customers, profit margins tend to be higher because of the lack of substitutes. and there are few substitutes for your offerings. It is important for every organization to understand where on a strategic position grid it currently sits and where it may want to be — adapted from Michael Porter

What Is the Difference Between Corporate Strategy and Business Strategy?

Corporate strategy, in contrast, involves the plans that a larger enterprise must form when it is composed of multiple smaller businesses or entities. For example a business unit may need to examine factors unique to the industry or competitive landscape that is fundamentally different than its corporate parent.

As a large enterprise, company, or private equity group takes on more acquisitions, it must work with its respective businesses to craft a business strategy and plan that is unique to them and drive competitive advantage through their products, services, and market positioning.

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What is a Business Plan? Definition, Tips, and Templates

AJ Beltis

Published: June 07, 2023

In an era where more than 20% of small enterprises fail in their first year, having a clear, defined, and well-thought-out business plan is a crucial first step for setting up a business for long-term success.

Business plan graphic with business owner, lightbulb, and pens to symbolize coming up with ideas and writing a business plan.

Business plans are a required tool for all entrepreneurs, business owners, business acquirers, and even business school students. But … what exactly is a business plan?

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In this post, we'll explain what a business plan is, the reasons why you'd need one, identify different types of business plans, and what you should include in yours.

What is a business plan?

A business plan is a documented strategy for a business that highlights its goals and its plans for achieving them. It outlines a company's go-to-market plan, financial projections, market research, business purpose, and mission statement. Key staff who are responsible for achieving the goals may also be included in the business plan along with a timeline.

The business plan is an undeniably critical component to getting any company off the ground. It's key to securing financing, documenting your business model, outlining your financial projections, and turning that nugget of a business idea into a reality.

What is a business plan used for?

The purpose of a business plan is three-fold: It summarizes the organization’s strategy in order to execute it long term, secures financing from investors, and helps forecast future business demands.

Business Plan Template [ Download Now ]

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Working on your business plan? Try using our Business Plan Template . Pre-filled with the sections a great business plan needs, the template will give aspiring entrepreneurs a feel for what a business plan is, what should be in it, and how it can be used to establish and grow a business from the ground up.

Purposes of a Business Plan

Chances are, someone drafting a business plan will be doing so for one or more of the following reasons:

1. Securing financing from investors.

Since its contents revolve around how businesses succeed, break even, and turn a profit, a business plan is used as a tool for sourcing capital. This document is an entrepreneur's way of showing potential investors or lenders how their capital will be put to work and how it will help the business thrive.

All banks, investors, and venture capital firms will want to see a business plan before handing over their money, and investors typically expect a 10% ROI or more from the capital they invest in a business.

Therefore, these investors need to know if — and when — they'll be making their money back (and then some). Additionally, they'll want to read about the process and strategy for how the business will reach those financial goals, which is where the context provided by sales, marketing, and operations plans come into play.

2. Documenting a company's strategy and goals.

A business plan should leave no stone unturned.

Business plans can span dozens or even hundreds of pages, affording their drafters the opportunity to explain what a business' goals are and how the business will achieve them.

To show potential investors that they've addressed every question and thought through every possible scenario, entrepreneurs should thoroughly explain their marketing, sales, and operations strategies — from acquiring a physical location for the business to explaining a tactical approach for marketing penetration.

These explanations should ultimately lead to a business' break-even point supported by a sales forecast and financial projections, with the business plan writer being able to speak to the why behind anything outlined in the plan.

corporate plan business def

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Everyone's got a great idea for a company — until they put pen to paper and realize that it's not exactly feasible.

A business plan is an aspiring entrepreneur's way to prove that a business idea is actually worth pursuing.

As entrepreneurs document their go-to-market process, capital needs, and expected return on investment, entrepreneurs likely come across a few hiccups that will make them second guess their strategies and metrics — and that's exactly what the business plan is for.

It ensures an entrepreneur's ducks are in a row before bringing their business idea to the world and reassures the readers that whoever wrote the plan is serious about the idea, having put hours into thinking of the business idea, fleshing out growth tactics, and calculating financial projections.

4. Getting an A in your business class.

Speaking from personal experience, there's a chance you're here to get business plan ideas for your Business 101 class project.

If that's the case, might we suggest checking out this post on How to Write a Business Plan — providing a section-by-section guide on creating your plan?

What does a business plan need to include?

  • Business Plan Subtitle
  • Executive Summary
  • Company Description
  • The Business Opportunity
  • Competitive Analysis
  • Target Market
  • Marketing Plan
  • Financial Summary
  • Funding Requirements

1. Business Plan Subtitle

Every great business plan starts with a captivating title and subtitle. You’ll want to make it clear that the document is, in fact, a business plan, but the subtitle can help tell the story of your business in just a short sentence.

2. Executive Summary

Although this is the last part of the business plan that you’ll write, it’s the first section (and maybe the only section) that stakeholders will read. The executive summary of a business plan sets the stage for the rest of the document. It includes your company’s mission or vision statement, value proposition, and long-term goals.

3. Company Description

This brief part of your business plan will detail your business name, years in operation, key offerings, and positioning statement. You might even add core values or a short history of the company. The company description’s role in a business plan is to introduce your business to the reader in a compelling and concise way.

4. The Business Opportunity

The business opportunity should convince investors that your organization meets the needs of the market in a way that no other company can. This section explains the specific problem your business solves within the marketplace and how it solves them. It will include your value proposition as well as some high-level information about your target market.

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5. Competitive Analysis

Just about every industry has more than one player in the market. Even if your business owns the majority of the market share in your industry or your business concept is the first of its kind, you still have competition. In the competitive analysis section, you’ll take an objective look at the industry landscape to determine where your business fits. A SWOT analysis is an organized way to format this section.

6. Target Market

Who are the core customers of your business and why? The target market portion of your business plan outlines this in detail. The target market should explain the demographics, psychographics, behavioristics, and geographics of the ideal customer.

7. Marketing Plan

Marketing is expansive, and it’ll be tempting to cover every type of marketing possible, but a brief overview of how you’ll market your unique value proposition to your target audience, followed by a tactical plan will suffice.

Think broadly and narrow down from there: Will you focus on a slow-and-steady play where you make an upfront investment in organic customer acquisition? Or will you generate lots of quick customers using a pay-to-play advertising strategy? This kind of information should guide the marketing plan section of your business plan.

8. Financial Summary

Money doesn’t grow on trees and even the most digital, sustainable businesses have expenses. Outlining a financial summary of where your business is currently and where you’d like it to be in the future will substantiate this section. Consider including any monetary information that will give potential investors a glimpse into the financial health of your business. Assets, liabilities, expenses, debt, investments, revenue, and more are all useful adds here.

So, you’ve outlined some great goals, the business opportunity is valid, and the industry is ready for what you have to offer. Who’s responsible for turning all this high-level talk into results? The "team" section of your business plan answers that question by providing an overview of the roles responsible for each goal. Don’t worry if you don’t have every team member on board yet, knowing what roles to hire for is helpful as you seek funding from investors.

10. Funding Requirements

Remember that one of the goals of a business plan is to secure funding from investors, so you’ll need to include funding requirements you’d like them to fulfill. The amount your business needs, for what reasons, and for how long will meet the requirement for this section.

Types of Business Plans

  • Startup Business Plan
  • Feasibility Business Plan
  • Internal Business Plan
  • Strategic Business Plan
  • Business Acquisition Plan
  • Business Repositioning Plan
  • Expansion or Growth Business Plan

There’s no one size fits all business plan as there are several types of businesses in the market today. From startups with just one founder to historic household names that need to stay competitive, every type of business needs a business plan that’s tailored to its needs. Below are a few of the most common types of business plans.

For even more examples, check out these sample business plans to help you write your own .

1. Startup Business Plan

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As one of the most common types of business plans, a startup business plan is for new business ideas. This plan lays the foundation for the eventual success of a business.

The biggest challenge with the startup business plan is that it’s written completely from scratch. Startup business plans often reference existing industry data. They also explain unique business strategies and go-to-market plans.

Because startup business plans expand on an original idea, the contents will vary by the top priority goals.

For example, say a startup is looking for funding. If capital is a priority, this business plan might focus more on financial projections than marketing or company culture.

2. Feasibility Business Plan

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This type of business plan focuses on a single essential aspect of the business — the product or service. It may be part of a startup business plan or a standalone plan for an existing organization. This comprehensive plan may include:

  • A detailed product description
  • Market analysis
  • Technology needs
  • Production needs
  • Financial sources
  • Production operations

According to CBInsights research, 35% of startups fail because of a lack of market need. Another 10% fail because of mistimed products.

Some businesses will complete a feasibility study to explore ideas and narrow product plans to the best choice. They conduct these studies before completing the feasibility business plan. Then the feasibility plan centers on that one product or service.

3. Internal Business Plan

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Internal business plans help leaders communicate company goals, strategy, and performance. This helps the business align and work toward objectives more effectively.

Besides the typical elements in a startup business plan, an internal business plan may also include:

  • Department-specific budgets
  • Target demographic analysis
  • Market size and share of voice analysis
  • Action plans
  • Sustainability plans

Most external-facing business plans focus on raising capital and support for a business. But an internal business plan helps keep the business mission consistent in the face of change.

4. Strategic Business Plan

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Strategic business plans focus on long-term objectives for your business. They usually cover the first three to five years of operations. This is different from the typical startup business plan which focuses on the first one to three years. The audience for this plan is also primarily internal stakeholders.

These types of business plans may include:

  • Relevant data and analysis
  • Assessments of company resources
  • Vision and mission statements

It's important to remember that, while many businesses create a strategic plan before launching, some business owners just jump in. So, this business plan can add value by outlining how your business plans to reach specific goals. This type of planning can also help a business anticipate future challenges.

5. Business Acquisition Plan

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Investors use business plans to acquire existing businesses, too — not just new businesses.

A business acquisition plan may include costs, schedules, or management requirements. This data will come from an acquisition strategy.

A business plan for an existing company will explain:

  • How an acquisition will change its operating model
  • What will stay the same under new ownership
  • Why things will change or stay the same
  • Acquisition planning documentation
  • Timelines for acquisition

Additionally, the business plan should speak to the current state of the business and why it's up for sale.

For example, if someone is purchasing a failing business, the business plan should explain why the business is being purchased. It should also include:

  • What the new owner will do to turn the business around
  • Historic business metrics
  • Sales projections after the acquisition
  • Justification for those projections

6. Business Repositioning Plan

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When a business wants to avoid acquisition, reposition its brand, or try something new, CEOs or owners will develop a business repositioning plan.

This plan will:

  • Acknowledge the current state of the company.
  • State a vision for the future of the company.
  • Explain why the business needs to reposition itself.
  • Outline a process for how the company will adjust.

Companies planning for a business reposition often do so — proactively or retroactively — due to a shift in market trends and customer needs.

For example, shoe brand AllBirds plans to refocus its brand on core customers and shift its go-to-market strategy. These decisions are a reaction to lackluster sales following product changes and other missteps.

7. Expansion or Growth Business Plan

When your business is ready to expand, a growth business plan creates a useful structure for reaching specific targets.

For example, a successful business expanding into another location can use a growth business plan. This is because it may also mean the business needs to focus on a new target market or generate more capital.

This type of plan usually covers the next year or two of growth. It often references current sales, revenue, and successes. It may also include:

  • SWOT analysis
  • Growth opportunity studies
  • Financial goals and plans
  • Marketing plans
  • Capability planning

These types of business plans will vary by business, but they can help businesses quickly rally around new priorities to drive growth.

Getting Started With Your Business Plan

At the end of the day, a business plan is simply an explanation of a business idea and why it will be successful. The more detail and thought you put into it, the more successful your plan — and the business it outlines — will be.

When writing your business plan, you’ll benefit from extensive research, feedback from your team or board of directors, and a solid template to organize your thoughts. If you need one of these, download HubSpot's Free Business Plan Template below to get started.

Editor's note: This post was originally published in August 2020 and has been updated for comprehensiveness.

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Definition of Corporate Planning

by Chelsea Levinson

Published on 7 Jun 2018

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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Corporate Planning Definition – Strategy, Importance, Objectives and Elements

March 30, 2021 | By Hitesh Bhasin | Filed Under: Management

Corporate planning is a type of strategic planning , responsible for mapping out a course of strategies and their implementations to empower top- management . It optimizes exposure, reach, leads, sales, profits, credibility, loyalty, sustainability , and opportunities of a business .

With the help of corporate strategic planning, a business can efficiently channelize corporate management by leveraging its resources with better acumen than the other market players.

Businesses of any size should incorporate such strategic planning, as it offers-

  • Clarity & Direction
  • Efficient use of resources
  • A way of measuring progress
  • Optimized decision-making
  • Better coordination in business activities
  • Effective allocation of responsibilities
  • Motivation and guidance to members
  • Analysis Strengths and weaknesses along with opportunities and threats via SWOT analysis , etc.

All in all, corporate planning empowers any kind of business to accomplish its business goals in a more effective and organized manner.

Table of Contents

Corporate Planning Definition

Corporate Planning is defined as forming long-term goals and objectives within the organization’s strengths and weaknesses in the existing and prospective environment.

This is done to ensure the achievement of their plans by combining their short-term and long-term objectives or bringing amendments in the structural working in the organization’s composition.

In the words of David E. Hussey, writer of the book- Corporate Planning: Theory and Practice-

Corporate planning includes the setting of objectives, organizing the work, people and systems to enable those objectives to be achieved, motivating through the planning process and through the plans, measuring performance and so controlling progress of the plans and developing people through better decision-making, clearer objectives, more involvement, and awareness of progress.

What is Corporate Planning Strategy?

Corporate Planning is a strategic process applied by several business organizations to form a roadmap to grow in the market, enhance profits, gain industrial exposure, and strengthen brand identity.

It is a vital tool that successful business organizations use to leverage their existing resources better and more analytically than competitors.

It is the determination of business goals, formulation of diverse strategies for attaining objectives, transforming the goals into tactical plans, implementing and reviewing it to find out the progress of strategies, and finding out loopholes.

Different factors around which corporate planning is channelized via effective SWOT analysis and process of corporate management are-

  • Creation of long-range corporate goals and objectives.
  • Analysis of Macro and Micro Environments .
  • Analysis of Strengths and weaknesses of the business
  • Coordination between short term and long term business plans
  • Structural changes in the business
  • Implementation of the strategic plan as per business goals
  • Adept use of scarce financial resources.
  • Right evaluation of performance as well as feedback for purposeful corporate planning

Importance of Strategic Corporate Planning

Long-term goals

In the current modern era, corporate planning holds a crucial position in a business organization, be it large-sized, medium, or even a new entrant.

The importance of corporate planning can be justified because some companies even hire departmental corporate managers to check the industry’s current scenario and the current status of the organization in the market.

Some of the points that describe the need and importance of corporate planning are mentioned below:

1. Long-term goals

Corporate Planning broadly focuses on long-term goals and sets a blueprint to achieve them in a stipulated period. Long-term goals help an organization keep its core focus on maintaining its efforts, workforce, and efforts on a pre-decided target .

Corporate Planning keeps the employees engaged in their respective tasks with deadlines and ensures effectiveness and efficiency . It also brings harmony, peace, and cooperation among the employees and supervisors in a firm as they all smoothly work towards a common objective.

A strategic business plan helps a business organization provide a focal point not to get deviated or distracted from its end goal. The first and foremost step of corporate planning involves devising a mission statement that tells the world its roles and objectives.

Formulation of a mission statement aids the firm stick to its focus, do all the requisite tasks, assign responsibilities to the employees, and evaluate their work to achieve that final destination.

3. Better Decisions

Developing a strategic plan helps a company make better decisions that are beneficial and helpful in attaining the mission statement. A corporate plan should be structured to spell all the information in the organization’s interest, like the skills required with the employees, machinery or equipment required, etc.

Forming a roadmap to achieve the final goal helps the business people hire the best personnel for their form, arrange funds according to the tasks, and further invest in the most viable propositions.

4. A Measure of Success

Corporate planning also acts as a yardstick to determine an organization’s success in achieving its goals. A firm shall periodically analyze its work to check its progress and make further amendments like replacing personnel, hiring more employees, arranging more funds, upgrading the machinery, etc.

Finding, evaluating, and analyzing the loopholes periodically that block the ways of achieving the mission statement helps in the upgradation of the work and ensure efficiency and effectiveness of the tasks devised. The touchstone function of corporate planning works best in the organizations that devise plans that allow for changes in attaining the tasks.

5. Saves money

The extra benefit associated with corporate planning is that it forms budgets that help save substantial sums. Budgeting allows a firm to allocate its financial resources to the projects that require it the most by cutting out unimportant expenses.

Having a detailed budget tells how much cash is earned, spent, or lent. This wipes out confusion regarding the amount of money allocated to different projects.

Objectives of Corporate planning in Management

Following are the basic objectives of corporate plans:

1. Setting a strategy

The fundamental objective of framing a corporate plan is setting a business strategy . At this stage, companies should look at the opportunities and analyze the threats in the market. For this, they can make a SWOT analysis and select viable propositions for investing their funds.

2. Planning the operations

Once a firm knows its mission statement, it can use these objectives and find ways of attaining them. The sole purpose of corporate planning is to help a firm plan and prepare a list of resources it requires to deliver to achieve its goals.

3. Monitoring and Control

There should be measurable indicators present in a strategic plan to evaluate the progress of the work rate vis-à-vis the initial plans. It mainly includes financial theory related to accounts, the value of output, etc.

Establishing and forming well-devised instruments to devise annual reports is a crux to a successful corporate plan. Since the market environment constantly changes with events happening in the economy, a company regularly needs to review its plans, policies, and even rules and regulations associated with the operations.

Elements of Successful Corporate Plan

Gathering information

There are six elements in a successful corporate plan:

1. Gathering information

Having all the information related to the firm, industry, and competitors are the primary step towards a well-defined corporate plan. Either a business is big or small, it should be aware of the happenings in the market in its sectors, find out opportunities, grab them at the right moment and beware of the threats.

2. Set the objectives of the plan

Having a well-devised mission statement helps a firm stick to its focus of achieving it and keeps all the strategic work smooth in operations. Setting objectives helps form a clear mind about the work done, and the purpose of doing the work makes it fascinating.

3. Devise strategies to meet goals

Having a blueprint helps in effectively achieving the objectives. Forming strategies define the work to be done by the employees. Managers and leaders mainly devise strategies considering the funds available, personnel in the organization, and the deadline to achieve the requisite target. It brings efficiency to the operations of a business.

4. Implementing the plan

The next step is to implement the plans effectively. It involves the execution of the assigned tasks by the personnel within the guidelines and deadlines set. It involves the execution of the assigned tasks by the personnel within the guidelines and deadlines set.

5. Monitor plan performance

An organization should monitor its work by forming progress reports, finding the drawbacks, and work on them immediately.

6. Evaluate the effectiveness of the plan

In the end, a firm should see if the corporate strategy devised by it is competitive or up to the market standards. A plan should be challenging to achieve. A plan that is easy to achieve may not be a viable option in the existing scenario. This may require the organization to reset its plans and considering the market standards.

What to include in a Strategic Corporate Plan?

1. vision statement.

The vision statement of a business talks about business goals that it is supposed to achieve. While planning your corporate strategy , it is important to focus on your vision statement. You should also plan as per your short as well as long term goals. Your goals should be backed for your strategic planning, plus your goals should also be SMART.

2. Mission statement

Next thing upon which you should pay heed while making corporate planning is a mission statement. It tells you how you are going to achieve your vision statement. It will let you know what you are planning to offer, the target market , and the USP of your company. It will offer an elevator pitch to your corporate planning just in a few lines.

3. Resources and scope

Your corporate planning should also pay attention to things that you have in your organization such as your systems, structures, employees, products, accounting, assets, divisions, programs, finance, etc that play a key role in accomplishing your goals. You need to map the current structural existence of your organization to have a proper view of things incorporated and associated with your organization.

4. Objectives

You should also include different business objectives and the ways you are going to measure success in your corporate planning strategy. Here, your objectives need to be measurable, strategic, realistic, achievable, and time-driven. Including vague objectives in your corporate planning statement is of no use here. Different types of objectives might include financial objectives, customer objectives, internal objectives, learning , and growth objectives.

5. Strategies

Finally, you should include strategies that will help you accomplish your business objectives. Such strategic planning can be for launching any new product , or decreasing labour costs by a certain percentage, but your strategies have to directly address the associated objectives. You should also chalk out a proper plan for implementing those strategies.

Here is a video by Marketing91 on Corporate Planning.

Corporate planning vs. Business Planning

Business planning involves strategies that a business uses and applies to attain its goals and objectives. Corporate planning consists of strategies that the employees follow to meet the objectives of an organization. The following points highlight the difference between corporate planning and business planning:

1. Interdependency

A business plan may exist without a corporate plan, but its strategies are linked with corporate plans. Without business planning, the goals and objectives of a firm would be ambiguous. Thus, both business plans and corporate plans are complementary to each other.

A planning process aids a business to succeed in the market and suggests new directions and amendments as per the industry’s short as well as long-range requirements. Thus, there can be several diversified effects on business and corporate plans.

3. Considerations

Corporate planning reviews each step of the working of an organization devised for achieving the mission statement. However, a business plan focuses on the organization’s overall goals, objectives, and progress. To evaluate the tasks, a business should consider several factors such as progress rate, personnel performance, requisite funds for further operations, and many more.

Corporate Planning Jobs in an Organization

Corporate Planning Jobs in an Organization

Corporate Planning jobs fall under the broader career category of Chief Executives. Corporate planners are responsible for determining and formulating policies and strategies to offer an overall direction for the companies as per the guidelines suggested by the board of directors .

Strategy planning in such jobs revolves around planning, directing, and coordinating different activities at the top-most level of management by taking the services of staff managers and subordinate executives. Corporate planner jobs are also understood as strategic planner jobs.

Common corporate planning jobs are-

  • Communicating with Supervisors, Peers, or Subordinates
  • Getting Information from all relevant sources
  • Communicating with Persons Outside Organization
  • Directing, Guiding, and Motivating Subordinates
  • Developing and Building Teams
  • Establishing and Maintaining Interpersonal Relationships
  • Developing Objectives and Strategies
  • Monitoring and Controlling Resources
  • Analyzing Data or Information
  • Judging the Qualities of Things, People, and Services
  • Resolving Conflicts and Negotiating with Others
  • Evaluating Information to Determine Compliance with Standards
  • Identifying Objects, Actions, and Events
  • Interacting With Computers
  • Organizing, Planning, and Prioritizing Work
  • Interpreting the Meaning of Information for Others
  • Updating and Using Relevant Knowledge
  • Compiling, categorizing, coding, calculating, auditing, tabulating, or verifying information or data
  • Coordinating the Work and Activities of Others
  • Coaching and Developing Others
  • Thinking Creatively
  • Staffing Organizational Units
  • Selling or Influencing Others
  • Monitor Processes, Materials, or Surroundings
  • Provide Consultation and Advice to Others
  • Estimating the Quantifiable Characteristics of Products, Events, or Information
  • Scheduling Work and Activities
  • Performing Administrative Activities
  • Training and Teaching Others
  • Performing for or Working Directly with the Public
  • Documenting/Recording Information

Wrapping Up!

The corporate planning process is an activity that involves a series of steps to be followed to achieve the end goal. Specifically, it involves a process that personnel in an organization does to achieve the mission statement.

The process to attain the end goal involves strategies at each level or department with clear and detailed tasks assigned to them within stipulated deadlines. The employees then execute the tasks assigned by their leaders and mentors following some guidelines.

Then managers and leaders analyze the work, make amendments to that, and suggest further improvement guidelines. The organization then check the viability of its plan in terms of its difficulty, market standards, and check whether it is practically achievable or not. Further changes to plans are made after evaluating previous plans to upgrade the formation of plans.

On the concluding note, we hope you would have understood what corporate planning is and how crucial it is for an effective business plan to get favorable outcomes.

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What Is a Business?

Understanding a business, the bottom line, what is a business understanding different types and company sizes.

Read about types of businesses, how to start one, and how to get a business loan

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

corporate plan business def

The term business refers to an organization or enterprising entity engaged in commercial, industrial, or professional activities. The purpose of a business is to organize some sort of economic production of goods or services. Businesses can be for-profit entities or non-profit organizations fulfilling a charitable mission or furthering a social cause. Businesses range in scale and scope from sole proprietorships to large, international corporations.

The term business also refers to the efforts and activities undertaken by individuals to produce and sell goods and services for profit.

Key Takeaways

  • A business is defined as an organization or enterprising entity engaged in commercial, industrial, or professional activities.
  • Businesses can be for-profit entities or non-profit organizations.
  • Business types range from limited liability companies to sole proprietorships, corporations, and partnerships.
  • Some businesses run as small operations in a single industry while others are large operations that spread across many industries around the world.
  • Apple and Walmart are two examples of well-known, successful businesses.

Alex Dos Diaz / Investopedia

The term business often refers to an entity that operates for commercial, industrial, or professional reasons. The concept begins with an idea and a name, and extensive market research may be required to determine how feasible it is to turn the idea into a business.

Businesses often require business plans before operations begin. A business plan is a formal document that outlines the company's goals and objectives and lists the strategies and plans to achieve these goals and objectives. Business plans are essential when you want to borrow capital to begin operations.

Determining the legal structure of the business is an important factor to consider, since business owners may need to secure permits and licenses and follow registration requirements to begin legal operations. Corporations are considered to be juridical persons in many countries, meaning that the business can own property, take on debt , and be sued in court.

A good name is often one of the most valuable assets of a business, so it's important that business owners choose their name wisely.

Most businesses operate to generate a profit , commonly called for-profit. However, some businesses that have a goal to advance a certain cause without profit are referred to as not-for-profit or nonprofit. These entities may operate as charities , arts, culture, educational, and recreational enterprises, political and advocacy groups, or social services organizations.

Business activities often include the sale and purchase of goods and services. Business activity can take place anywhere, whether that's in a physical storefront, online, or on the roadside. Anyone who conducts business activity with financial earnings must report this income to the Internal Revenue Service (IRS) .

A company often defines its business by the industry in which it operates. For example, the real estate business, advertising business, or mattress production business are examples of industries. Business is a term often used to indicate transactions regarding an underlying product or service. For example, ExxonMobil conducts its business by providing oil.

Types of Businesses

There are many ways to organize a business, and there are various legal and tax structures that correspond with each. Businesses are commonly classified and generally structured as:

  • Sole Proprietorship : As the name suggests, a sole proprietorship is owned and operated by a single person. There is no legal separation between the business and the owner, which means the tax and legal liabilities of the business are the responsibility of the owner.
  • Partnership : A partnership is a business relationship between two or more people who together conduct business. Each partner contributes resources and money to the business and shares in the profits and losses of the business. The shared profits and losses are recorded on each partner's tax return.
  • Corporation : A corporation is a business in which a group of people acts as a single entity. Owners are commonly referred to as shareholders who exchange consideration for the corporation's common stock . Incorporating a business releases owners of the financial liability of business obligations. A corporation comes with unfavorable taxation rules for the owners of the business.
  • Limited Liability Company (LLC) : This is a relatively new business structure and was first available in Wyoming in 1977 and in other states in the 1990s. A limited liability company combines the pass-through taxation benefits of a partnership with the limited liability benefits of a corporation.

Business Sizes

Small businesses.

Small owner-operated companies are called small businesses . Commonly managed by one person or a small group of people with less than 100 employees, these companies include family restaurants, home-based companies, clothing, books, and publishing companies, and small manufacturers. As of 2021, 33.2 million small businesses in the United States with 61.7 million employees were operating.

The Small Business Administration (SBA) uses the number of employees working at a company and its annual revenue to formally define a small business. For 229 industry sectors, from engineering and manufacturing to food service and real estate, the SBA sets sizing standards every five years.

Businesses that meet the standards of the SBA can qualify for loans, grants, and "small business set-asides," contracts where the federal government limits competition to help small businesses compete for and win federal contracts.

Mid-Sized Enterprises

There is no definitive specification in the U.S. to define a mid-sized or medium-sized company. However, when large U.S. cities such as Philadelphia, Baltimore, and Boston evaluate the landscape of operating businesses, a medium-sized company is defined as one with 100 to 249 employees or $10 million to less than $1 billion in annual gross sales .

Large Businesses

Large businesses commonly have 250 or more employees and garner more than $1 billion in gross receipts. They may issue corporate stock to finance operations as a publicly-traded company.

Large enterprises may be based in one country with international operations. They are often organized by departments, such as human resources, finance, marketing, sales, and research and development.

Unlike small and mid-sized enterprises, owned by a person or group of people, large organizations often separate their tax burden from their owners, who usually do not manage their companies but instead, an elected board of directors enacts most business decisions.

Examples of Well-Known Businesses

Apple ( AAPL ) is known for its innovative products, including its personal computers, smart devices, and music and video streaming services. Founded in 1977 by Steve Jobs and Steve Wozniak, Apple became the first publicly-traded company whose value hit $1 trillion. The company's stock ended the trading day at about $172 on May 23, 2023. Its market cap was almost $2.7 billion.

The company employs more than two million people, including 80,000 individuals who work as direct Apple employees. The remaining jobs include suppliers, manufacturers, and others who are supported through the Apple store . The company reported net sales of $394.33 billion for the 12 months ending Sept. 24, 2022.

Apple's key to success lies in its family of products and its ability to innovate. The company focuses on design and quality—two key elements that were a key part of Jobs' corporate vision. The products that Apple creates and markets can be used under the same operating system, which allows consumers to sync them together, thus lowering corporate costs. Apple's ability to create, develop, and market new products and services also put it ahead of its competition.

Walmart ( WMT ) is one of the world's largest retailers and operates as a multinational corporation . The company was founded in 1962 by Sam Walton in Arkansas. It has more than 10,500 locations in more than 20 different countries and employs over 2.1 million people.

The company went public in 1970 and trades on the New York Stock Exchange (NYSE) . Walmart stock traded above $148 with a market cap of $399.79 billion on May 23, 2023. The company earned $611.3 billion in revenue for the full year of 2022, which is an increase of 6.7% from the previous fiscal year .

Walmart's success can be attributed to several factors, including its brand name, pricing, diversification (especially with the addition of its online marketplace), efficient supply chain management , and its financial strength.

How Do You Start a Business?

There are several steps you need to hurdle to start a business . This includes conducting market research, developing a business plan, seeking capital or other forms of funding, choosing a location and business structure, picking the right name, submitting registration paperwork, obtaining tax documents (employer and taxpayer IDs), and pulling permits and licenses. It's also a good idea to set up a bank account with a financial institution to facilitate your everyday banking needs.

How Do You Launch an Online Business?

Starting an online business involves some of the same steps as a traditional business, with a few exceptions.

You still need to do your market research and develop a business plan before anything else. Once that's done, choose a name and structure for your business, then file any paperwork to register your organization.

Rather than finding a physical location, choose a platform and design your website. Before launching your business, you should find a way to build up your target market, whether that's through traditional marketing means or more creative ways like social media.

How Do You Come Up With a Business Name?

Your business name should fit the type of organization you plan to run and it should be catchy—something that people will gravitate toward and remember, not to mention associate with you as well as the products and services you plan to sell. Originality is key. And most importantly, it should be a name that isn't already in use by someone else. Go online and do a business name search to see if it's available or already registered.

How Do You Write a Business Plan?

Business plans are essential to running your business and can help you secure the funding you need to start your operations. You can choose between a traditional or lean plan.

A traditional business plan has a lot of details, including a summary of the company, how it plans to succeed, market information, management, products and services, marketing, and sales projections.

Lean formats are concise with very useful information such as partnership details, outlines of the business activities and customer relationships, cost structures, and revenue streams.

Templates are available online or you can design your own business plan.

How Do You Get a Business Loan?

Necessary funding for a business often comes via a loan. A traditional lender or a government-backed loan, such as those offered through the Small Business Administration are two options. Prospective lenders want to see business details, especially for new start-ups . Make sure you have your business plan ready, including outlines of costs and revenue streams, and ensure you have a good credit score. You may need to put down some collateral to secure the loan if you're approved.

Businesses are the backbone of an economy. They provide products and services that can be purchased by individuals and other companies.

Businesses range in size from small to large and operate in many different industries. Business structures also vary from sole partnerships to major corporations that provide shareholder equity to their owners.

When starting a business, do your research and develop a business plan. This allows you to raise the money you need to start your operation.

U.S. Small Business Administration. " 10 Steps To Start Your Business ."

Cornell Law School Legal Information Institute. " Corporations ."

U.S. Small Business Administration. " Choose Your Business Name ."

U.S. Chamber of Commerce. " Choosing the Right Nonprofit Type: Which Is Right for Your Business? "

Internal Revenue Service. " Tax Information for Businesses ."

Internal Revenue Service. " Sole Proprietorships ."

Cornell Law School Legal Information Institute. " Partnership ."

Wyoming LLC. " The Complete History of the LLC ."

Indeed. " Business Sizes ."

Small Business Administration. " 2022 Small. Business Profile ," Page 1.

Marketplace. " The SBA Is Changing Its Definition of Small Business ."

Small Business Administration. " Types of Contracts ."

OECD. " Enterprises by business size ."

Indeed. " Midsize Companies: What They Are and Why They’re Beneficial ."

CNBC. " Apple Hangs Onto Its Historic $1 Trillion Market Cap ."

Apple. " Two Million U.S. Jobs and Counting ."

Apple. " CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) ," Page 1.

Apple. " Apple Makes Business Better ."

Walmart. " Company Facts ."

Walmart. " Our Business ."

Walmart. " Walmart revenue up 7.3% globally with broad-based strength across segments ," Page 1.

U.S. Small Business Administration. " Write Your Business Plan ."

U.S. Small Business Administration. " Loans ."

corporate plan business def

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Strategy Capstone

Corporate Planning

Corporate planning is crucial to any professional’s or business’s success as it sets a vision for daily operations. With corporate planning, businesses prepare a detailed road map for all their activities. By understanding corporate planning, you can effectively lead and manage a business. This article delves into the nitty-gritty of corporate strategic planning, its varying types, and the stages involved in creating a comprehensive corporate plan.

Defining Corporate Planning

Corporate planning is a detail-oriented process aimed at helping businesses craft solid strategies to achieve their goals. Companies can thrive by mapping out a clear direction, making informed decisions, identifying obstacles, and efficiently allocating resources to support business activities. 

The corporate planning process also helps align teams with a shared mission and overcome challenges to achieve established objectives. It is an ongoing, dynamic, and continuous process that continually adapts to shifting business dynamics throughout the lifespan of a company.

Advantages and Disadvantages

Corporate planning consists of extensive future-oriented preparations that provide businesses with a better approach to handling various situations. 

However, like everything, there are advantages and disadvantages to the continuous corporate planning process that need to be considered. Below, let’s explore the advantages and disadvantages of corporate planning in detail:

Advantages:

Reduces Uncertainty: Running a business comes with constant uncertainties and risks . An excellent corporate plan goes beyond merely setting objectives. It helps the company by forecasting the value of risks in the future, thereby minimizing the risk of uncertainty and unplanned contingencies.

Unity: Corporate planning helps the employees understand their roles more explicitly. Employees who know what’s expected of them are less likely to engage in conflicts, leading to higher levels of unity within the organization.

Aids Growth: With employee cooperation and constant development of processes within the company’s scope, corporate strategy, and plan objectives are easier to implement, resulting in a higher success rate.

corporate plan business def

Disadvantages:

Rigidity: Following a strict set of rules as part of a plan can create an inflexible environment that can lower employees’ morale, which can ultimately interfere with productivity.

Time: Corporate planning can take quite some time before the company begins to see results. The process involves collecting data, devising a plan, implementing, monitoring, and evaluating.

Ambiguity: Although corporate planning provides a reference point for business decisions, it is based on predictions of a mutable future. As a result, the plan may only sometimes be foolproof, and unexpected situations can occur, leaving businesses caught off-guard.

The Different Types of Corporate Planning

Corporate planning is a vital aspect of any business, and it involves a variety of planning types, including:

Strategic Planning:

Strategic planning is a crucial process that requires closely examining a company’s missions, strengths, and weaknesses. Its goal is to define the company’s current status, determine where it wants to go, and how it can get there. Although strategic planning and corporate planning share some overlapping areas, corporate planning has a broader scope.

It is particularly useful in functional planning and guiding complex organizations with various subsidiaries and businesses. The corporate plan also includes the same critical components as the strategic plan, focusing on the broader company and any related services used by the departments, such as marketing and human resources. Corporate planning also considers tools for achieving individual business steps such as countering challenges, employee training, and objectives.

Tactical Planning: 

Tactical planning is the subsequent step businesses take after formulating a strategic plan. Tactical planning involves defining goals and determining the necessary steps and actions required to achieve them. With it, you can subdivide the strategic plan into smaller objectives and goals. It is a short-term planning process and strategy that can aid in working towards medium or long-term goals.

Operational Planning:

Operational planning is a specific, detailed plan that outlines the business activities’ day-to-day workings for a specific period, generally lasting more than a year. It specifies employees’ and managers’ daily responsibilities and tasks and the workflow. Operational planning is useful in allocating the available financial, physical, and human resources to reach short-term strategic objectives that support an organization’s growth.

Contingency Planning:

Contingency planning is the process of developing strategies that help businesses respond effectively to unexpected disruptive events. It is intended to ensure that the practices return to standard operating procedures after a disturbance or natural disaster. Contingency planning is an effective tool for handling both adverse and positive events, such as an unexpected financial boost that can impact the organization’s operations.

By incorporating these types of business planning, businesses can ensure success in the short term and achieve long-term growth.

Examples of Corporate Planning :

Audacity Corporation, a renowned studio, and live performance microphones manufacturer, wanted to ensure that their range of microphones for streamers and gamers were market leaders by the end of the financial year. 

Their CEO, Brendon, decided to study their competitors’ practices and strategies to achieve this target. They discovered that most of their competitors produced these microphones in-house, and their costs of raw materials were high.

To counter this, Audacity collaborated with companies in China and Taiwan to obtain raw materials at reduced prices and trained their employees to assemble the products more efficiently. As a result, their streaming and gaming microphones became the top-selling product in the market, with 20% more sales than their nearest competitor.

ExxonMobil, one of the largest oil and gas companies operating internationally, announced its corporate plans in 2022. One of their declarations was the plan to increase investments in emission reduction solutions. 

They have decided to invest $17 billion by 2027 in this domain to achieve this objective. This investment will enable them to gain a competitive advantage over their contemporaries in the market and help them tackle climate change and carbon emissions in the long run.

The Benefits of Corporate Planning

Providing clear objectives.

Not only does corporate planning provide a sense of direction for professionals within an organization and corporate management, but it also ensures that every action taken has a purpose. Executing tasks with a clear plan can help achieve business objectives efficiently.

Formulating Better Strategies

In the context of business, a strategy is an approach taken to achieve a specific goal or objective. For example, if the objective is to make a product the category leader in sales revenue by the year 2023, a potential strategy could be to persuade buyers that the product is superior to other options on the market by investing in large advertising campaigns. Corporate planning is integral to helping an organization create operational plans and execute strategies in a logical and methodical manner, easing the decision-making process.

Increasing Communication

Corporate planning allows group participation in scenario planning, improving communication between employees and employers. Active involvement ensures that tasks are executed efficiently, and everyone remains on the same page.

Allocating Resources Efficiently

In the context of business, a strategy is an approach taken to achieve a specific goal or objective. For example, if the objective is to make a product the category leader in sales revenue by the year 2023, a potential strategy could be to persuade buyers that the product is superior to other options on the market by investing in large advertising campaigns. Corporate planning is integral to helping an organization create and execute strategies in a logical and methodical manner, easing the decision-making process.

Communicating Brand Messaging

A well-defined corporate plan can help communicate a brand’s message to key stakeholders like shareholders, investors, creditors, customers, and employees. By aligning mission and vision statements, core values are clearly established, helping to convey the brand message cohesively.

By implementing corporate planning, organizations can enjoy these benefits and ultimately operate with enhanced efficiency and productivity.

corporate plan business def

The Six Stages of Corporate Planning

Start with a vision and mission statement.

A vision statement showcases future expectations for a company, such as a goal to offer innovative mobility solutions on a global scale.

On the other hand, a mission statement outlines the organization’s purpose, including target audience, product offerings, and distinguishing factors from competitors. For instance, our company is dedicated to facilitating low-interest healthcare loans to those with poor credit, specifically for low-income households.

Establish Clear-Cut Goals and Objectives

Although people sometimes use the terms interchangeably, goals and objectives have significant distinctions. Fundamentally, a goal defines the aspiration of a company or business over a specific period, while an objective is a measurable and actionable step that propels you toward your goal.

While general goals may suffice for organizations, departments need detailed and specific ones to achieve targets. 

For example, a business objective to boost profits would require more specific departmental goals, such as, “We will generate an additional $8,000 in revenue by November 15.” You can create a shared future vision by setting company goals and objectives. This allows everyone to work together towards common goals, making their daily activities more purposeful.

Identify your Organization’s Strengths and Weaknesses

Once you’ve established your business goals and objectives, analyzing the organization’s strengths and weaknesses is a good idea. The most commonly adopted approach for this is the SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis.

To perform a SWOT analysis, list the characteristics corresponding to each category. Based on this evaluation, you can capitalize on the strengths identified and leverage your opportunities to counter or neutralize the weaknesses and potential threats to the organization. 

This kind of analysis will enable you to determine any potential challenges impeding the business goals and help you develop strategies to overcome them. In summary, incorporating a SWOT analysis into your business strategy is an effective way to better understand the organization’s internal and external environment, helping you achieve business growth and success.

Consider Short-term and Long-term Goals

Short-term goals are ones you can achieve in the near future, usually between six months and two years. Long-term goals require more time, usually three to five years. By integrating these two types of goals, you can achieve your goals with ease.

Implement the Plan

After clearly understanding your goals, the next step is to proceed with the plan’s implementation. At this stage, an action plan is usually created with specific responsibilities and an expected timeline for achieving each objective. Regular meetings should be set up to monitor this plan effectively to review progress on the action plans and key performance indicators (KPIs). It’s important to note that during implementation, setbacks or challenges may arise, which is why regular check-ins are necessary. These reviews also allow for recognizing successes and making any necessary corrections.

Evaluate Performance

After implementing all plans, the subsequent critical step involves evaluating their performance. Its purpose is to align your overall expectations with the actual contributions of your plans. Evaluating plan performance is necessary because it helps you measure progress and surface possible areas of weakness. Therefore, to ensure continual improvement towards your goals and maximize impact, evaluating implemented plans’ outcomes is a must.

Corporate Planning Tips :

Share your plan broadly.

For a corporate plan to succeed, the entire company’s involvement is crucial. It’s essential to guarantee that every team member is given access to the business plan and encouraged to participate. Additionally, sharing the plan with board members and department leaders can ensure accountability and commitment and help maintain a clear pathway to achieve the plan’s objectives.

Divide Yearly Plans into Quarters

To simplify a plan, break it down into manageable priorities with deadlines. You can assess the plan’s progress more easily by increasing the frequency of check-ins. If you encounter a challenge, you can make necessary changes to the quarterly plans to keep yourself on track.

Utilize Action Plans

Action plans keep you motivated and on target toward achieving your goals. They help you complete short-term goals in a reasonable amount of time, keeping you moving toward your final objective.

Hold Regular Meetings

Regular check-ins to revise your goals and key performance indicators (KPIs) are crucial. Make necessary adjustments to your corporate plan, find solutions, and achieve your KPIs promptly and efficiently.

To learn more about corporate planning, corporate visions, and more, contact Strategy Capstone !

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What Is Business Strategy & Why Is It Important?

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  • 20 Oct 2022

Every business leader wants their organization to succeed. Turning a profit and satisfying stakeholders are worthy objectives but aren’t feasible without an effective business strategy.

To attain success, leaders must hone their skills and set clear business goals by crafting a strategy that creates value for the firm, customers, suppliers, and employees. Here's an overview of business strategy and why it's essential to your company’s success.

Access your free e-book today.

What’s a Business Strategy?

Business strategy is the strategic initiatives a company pursues to create value for the organization and its stakeholders and gain a competitive advantage in the market. This strategy is crucial to a company's success and is needed before any goods or services are produced or delivered.

According to Harvard Business School Online's Business Strategy course, an effective strategy is built around three key questions:

  • How can my business create value for customers?
  • How can my business create value for employees?
  • How can my business create value by collaborating with suppliers?

Many promising business initiatives don’t come to fruition because the company failed to build its strategy around value creation. Creativity is important in business , but a company won't last without prioritizing value.

The Importance of Business Strategy

A business strategy is foundational to a company's success. It helps leaders set organizational goals and gives companies a competitive edge. It determines various business factors, including:

  • Price: How to price goods and services based on customer satisfaction and cost of raw materials
  • Suppliers: Whether to source materials sustainably and from which suppliers
  • Employee recruitment: How to attract and maintain talent
  • Resource allocation: How to allocate resources effectively

Without a clear business strategy, a company can't create value and is unlikely to succeed.

Creating Value

To craft a successful business strategy, it's necessary to obtain a thorough understanding of value creation. In the online course Business Strategy , Harvard Business School Professor Felix Oberholzer-Gee explains that, at its core, value represents a difference. For example, the difference between a customer's willingness to pay for a good or service and its price represents the value the business has created for the customer. This difference can be visualized with a tool known as the value stick.

The value stick has four components, representing the value a strategy can bring different stakeholders.

The value stick framework

  • Willingness to pay (WTP) : The maximum amount a customer is willing to pay for a company's goods or services
  • Price : The actual price of the goods or services
  • Cost : The cost of the raw materials required to produce the goods or services
  • Willingness to sell (WTS) : The lowest amount suppliers are willing to receive for raw materials, or the minimum employees are willing to earn for their work

The difference between each component represents the value created for each stakeholder. A business strategy seeks to widen these gaps, increasing the value created by the firm’s endeavors.

Increasing Customer Delight

The difference between a customer's WTP and the price is known as customer delight . An effective business strategy creates value for customers by raising their WTP or decreasing the price of the company’s goods or services. The larger the difference between the two, the more value is created for customers.

A company might focus on increasing WTP with its marketing strategy. Effective market research can help a company set its pricing strategy by determining target customers' WTP and finding ways to increase it. For example, a business might differentiate itself and increase customer loyalty by incorporating sustainability into its business strategy. By aligning its values with its target audiences', an organization can effectively raise consumers' WTP.

Increasing Firm Margin

The value created for the firm is the difference between the price of an item and its cost to produce. This difference is known as the firm’s margin and represents the strategy's financial success. One metric used to quantify this margin is return on invested capital (ROIC) . This metric compares a business's operating income with the capital necessary to generate it. The formula for ROIC is:

Return on Invested Capital = Net Operating Cost After Tax (NOCAT) / Invested Capital (IC)

ROIC tells investors how successful a company is at turning its investments into profit. By raising WTP, a company can risk increasing prices, thereby increasing firm margin. Business leaders can also increase this metric by decreasing their costs. For example, sustainability initiatives—in addition to raising WTP—can lower production costs by using fewer or more sustainable resources. By focusing on the triple bottom line , a firm can simultaneously increase customer delight and margin.

Increasing Supplier Surplus & Employee Satisfaction

By decreasing suppliers' WTS, or increasing costs, a company can create value for suppliers—or supplier surplus . Since increasing costs isn't sustainable, an effective business strategy seeks to create value for suppliers by decreasing WTS. How a company accomplishes this varies. For example, a brick-and-mortar company might partner with vendors to showcase its products in exchange for a discount. Suppliers may also be willing to offer a discount in exchange for a long-term contract.

In addition to supplier WTS, companies are also responsible for creating value for another key stakeholder: its employees. The difference between employee compensation and the minimum they're willing to receive is employee satisfaction . There are several ways companies can increase this difference, including:

  • Increasing compensation: While most companies hesitate to raise salaries, some have found success in doing so. For example, Dan Price, CEO of Gravity Payments, increased his company's minimum wage to $80,000 per year and enjoyed substantial growth and publicity as a result.
  • Increasing benefits: Companies can also decrease WTS by making working conditions more desirable to prospective employees. Some offer remote or hybrid working opportunities to give employees more flexibility. Several have also started offering four-day work weeks , often experiencing increased productivity as a result.

There are several ways to increase supplier surplus and employee satisfaction without hurting the company's bottom line. Unfortunately, most managers only devote seven percent of their time to developing employees and engaging stakeholders. Yet, a successful strategy creates value for every stakeholder—both internal and external.

Business Strategy | Simplify Strategy to Make the Greatest Business Impact | Learn More

Strategy Implementation

Crafting a business strategy is just the first step in the process. Implementation takes a strategy from formulation to execution . Successful implementation includes the following steps :

  • Establish clear goals and key performance indicators (KPIs)
  • Set expectations and ensure employees are aware of their roles and responsibilities
  • Delegate work and allocate resources effectively
  • Put the plan into action and continuously monitor its progress
  • Adjust your plan as necessary
  • Ensure your team has what they need to succeed and agrees on the desired outcome
  • Evaluate the results of the plan

Throughout the process, it's important to remember to adjust your plan throughout its execution but to avoid second-guessing your decisions. Striking this balance is challenging, but crucial to a business strategy's success.

How to Formulate a Successful Business Strategy | Access Your Free E-Book | Download Now

Learn More About Creating a Successful Business Strategy

Business strategy constantly evolves with changing consumer expectations and market conditions. For this reason, business leaders should continuously educate themselves on creating and executing an effective strategy.

One of the best ways to stay up-to-date on best practices is to take an online course, such as HBS Online's Business Strategy program. The course will provide guidance on creating a value-driven strategy for your business.

Do you want to learn how to craft an effective business strategy and create value for your company's stakeholders? Explore our online course Business Strategy , or other strategy courses , to develop your strategic planning skills. To determine which strategy course is right for you, download our free flowchart .

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Corporate Planning & Strategy

Last updated 22 Mar 2021

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A revision presentation providing business students with an overview of the role of planning in business strategy.

It highlights the key parts to the strategic planning process and considers the main business benefits of effective planning.

  • Corporate strategy
  • Corporate planning
  • Strategic planning

You might also like

Marketing planning (revision presentation), corporate objectives.

Study Notes

An Introduction to Business Strategy

Porters generic strategies (revision presentation).

corporate plan business def

Leadership: Tough Decisions to Turn Starbucks Around

29th January 2012

Business Planning for a New Business (Revision Presentation)

Analysing marketing data (revision presentation), revealed- jeff bezos -the man behind amazon.

19th March 2015

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Comparing Business Planning and Corporate Planning

The differences between business planning and corporate planning.

Both business planning and corporate planning involve defining goals for your business and creating plans to support those goals. While they may seem similar at first, each one is used for a specific purpose. It can help to think of business planning as the “what” of your business goals, while corporate planning is the “how”. Learn more about the purpose of each one below.

Business Planning: The “what”

Business planning is the “what” of your business. Your business plan should answer questions about what your business is now and where you see it going in the future.

Business planning involves creating preliminary documents, goals, and plans for your business. This may be necessary when you first have the idea for a business or when you’re changing or adding something to the core of your business. Before you can start getting into the specifics of corporate planning, you’ll need to create a more generalized business plan.

Your company’s business plan should include your company mission and your company strengths and weaknesses. You’ll want to define your short-term and long-term goals regarding growth, finances, and more.

Corporate Planning: The “how”

Successful corporate planning involves creating strategies to help you achieve those business goals you’ve defined in your business plan. Specifically, how are you going to support your company’s mission, and what steps will you and your employees need to take to reach those goals?

To get started in the corporate planning process, you’ll want to take a look into your company’s mission, strengths, and weaknesses. Gather any relevant information on your business’s finances and operations. Relevant documents may include cash-flow statements, credit reports, P&L statements, and up-to-date records of business transactions .

Once you’ve gathered all of the necessary information, you can set specific, measurable goals as part of your corporate plan. These may be goals regarding expansion, sales, employee performance, and more. Here are some sample goals to give you an idea of what to include in your corporate planning strategies:

Increase sales on x product by 30% during the fall quarter

Add 3 employees to x department in the next two months

Increase followers on social media by 100

Once your specific goals are defined, then you can devise specific strategies to help you reach those goals.

Business Planning or Corporate Planning: Which Do I Need?

Both business planning and corporate planning are essential to setting goals and achieving them. No matter the size of your business, these plans and strategies can serve as the framework for your business’s future. As your business grows and your goals evolve, you’ll also want to review your corporate plans to be sure they are aligned with your goals.

Our attorney and dedicated team can help you develop goals and strategic plans for your business through corporate planning. We’ll help you avoid any legal troubles while creating a plan for achieving your business goals. Our team is well versed in corporate law, and we would love to offer you our expertise. Click below for a free consultation to learn more about what we can do for your business.

Corporate Planning

corporate plan business def

Corporate Planning may be defined as the process of deciding long term goals and objectives within the ambit of organisation’s strength and weaknesses in the existing and prospective environmental setting to ensure their achievement either by integrating the short term and long term plans or by adopting such measures which may bring even structural changes in the composition of the organisation, after taking recourse to finan­cial resources.

Learn about:- 1. Introduction to Corporate Planning 2. Definitions of Corporate Planning 3. Characteristics 4. Scope 5. Need 6. Basic Premises 7. Factors for the Success of Corporate Planning

8. Major Practices 9. Process 10. Steps 11. Difference between Strategic Planning and Corporate Planning 12. Reasons which Lead to the Failure of Corporate Planning 13. Limitations.

Corporate Planning: Introduction, Definitions, Characteristics, Scope, Need, Process, Steps and Limitations

Corporate planning – introduction.

Corporate planning in a sense may be stated as Strategic Planning as described by a number of writers including Stenier. In spite of the difference in the concepts of long range planning and Corporate Planning. Stenier, Miner and Gray have used Corporate Planning and long range planning synonymously. Such conceptual similarity may not necessarily obliterate the conceptual difference between the two terms; we will maintain the difference for our analysis.

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D.E. Hussey while defining Corporate Planning stated that “Corporate long range planning, is not a technique, it is a complete way of running a business. Under it, the future implication of every decision is evaluated in advance of implementation. Standards of performance are set up beyond the time horizon of the annual budget. The company clearly defines what it is trying to achieve. A continued study is made of the environment in which the company operates so that the changing patterns are seen in advance and incorporated into the company’s decision process.”

According to Dr. Scott “Strategic Long range Planning is a systematic approach by a given company to making decisions about issues which are of fundamental and crucial importance to its continuing long term health and vitality. The fundamental and crucial importance of issues is derived from the fact that they provide an underlying and unifying basis for all other plans to be developed within the company, over a determinate period of time. Thus a long range strategy is designed to provide information about a company’s basic direction and purpose which will serve as a guide for all the operational activities of that company.”

Likewise, Professor Stoner states that “Strategic Planning is the process of selecting an organisation’s goals, determining the policies and strategic programmes necessary to achieve specific objectives enroute to the goals, and establishing the methods necessary to assume that the policies and strategic programmes are implemented.”

Stoner elaborates further the concept of strategic planning by making distinction with the operational planning. The distinction between the two may be summarised in a few words – “Whereas operational planning focusses on operating planning, problems such as present profit, present resources, environment, efficiency and even low risk, strategic planning focusses on long term survival and development. For this purpose, the emphasis shifts from present to future and from present operation to future growth and development. With the drift from present to future, there ought to be a change from the low risk to high risk.”

Peter Drucker defines corporate planning as a “continuous process of making entrepreneurial decisions systematically and with the least possible knowledge of their fraternity; organ­ising systematically, the effort needed to carry out these decisions; and measuring the results against expectations through organised systematic feedback.”

If we analyse this definition it will contain the following elements to constitute Corporate Planning or Strategic Planning:

1. Laying down long range corporate goals and objectives.

2. Macro and Micro Environments.

3. Strengths and weaknesses of the organisation.

4. Integration between short term and long term plans.

5. Structural changes in the organisation.

6. Implementation of the plan.

7. Optimal use of scarce financial resources.

8 Evaluation of performance.

9. Feedback to make corporate planning more effective and purposeful.

Long term goals and objectives pertain to the areas of production, marketing, quality and even cost of production. In the area of production, the company may specifically spell out its goals regarding the volume of production, addition of new products or product lines. This deci­sion may change the structure of the organisation. Similarly the marketing objectives may relate to market spread from domestic to international market.

To achieve the above goals and objectives, the organisation shall have to assess its strengths and weaknesses in relation to competitors and the market forces and other components of macro and micro environments.

After assessing the strengths and weaknesses in the prevailing and prospecting macro and micro en­vironments, the corporation shall have two options before it – One – it may resort to an expansion programme to cope with the growing commitments to the objectives laid down; for this purpose it will be required to push forward the existing plan of action which amounts to integrating short term plans with long term plans.

Two-the other option may be diversification or technological upgradation. In both the cases some structural changes may be needed in the composition of the organisation.

The objectives of strategic planning is to achieve the desired long term objective/ goals by making the optimal use of the scarce resources in men and material.

Evaluation of the plan implementation is necessary to know from the feedback if the execution has been confronted with any blockade in implementing of the plan. If the bottlenecks are experienced they may be removed by taking suitable measures to achieve the desired objective with efficiency, in the light of the feedback received.

Corporate Planning – Definitions

Corporate planning is a sophisticated planning tool. It has been introduced into the corporate world recently, first in USA and later in all advanced industrial countries. A humble beginning has been made in India also. For example, BHEL practices corporate planning vigorously. In simple words, corporate planning is the determination of the long-term goals of a company as a whole and then developing plans to achieve these goals giving due weightage to environmental changes. It is planning for overall organisational performance.

Hussey defines corporate planning as, “the formal process of developing objectives for the corporation and its component parts, evolving alternative strategies to achieve these and doing this against a background of systematic appraisal of internal strengths and weaknesses and external environmental changes, the process of translating strategy into detailed operational plans and seeing that these plans are carried out.”

This is a comprehensive definition of corporate planning which includes deterministic, motivational and directional elements of corporate planning.

In the words of Steiner, “Corporate planning is the process of determining the major objectives of an organisation and the policies and strategies that will govern the acquisition, use and disposition of resources to achieve these objectives.”

According to Drucker, “Corporate planning is the continuous process of making present entrepreneurial (risk-taking) decisions systematically and with the best possible knowledge of their futurity, organising systematically the efforts needed to carry out these decisions; and measuring the results of these decisions against the expectations through organised systematic feedback.”

As per Drucker’s view, “Corporate planning is not confined to taking strategic decisions in the light of future conditions but is also concerned with the implementation of these decisions in the best possible way and undertaking periodic review of these decisions in the light of new development.”

Corporate planning is quite comprehensive as it includes – (i) strategic planning, (ii) operational planning and (iii) project planning.

Corporate Planning – Top 6 Characteristics  

1. Corporate planning is a formal and systematic process.

2. It is a rational process. It requires imagination, foresight, reflective thinking, judgement and other mental facilities.

3. Corporate planning is a continuous process. It is a dynamic exercise that goes on throughout the company’s life.

4. Corporate planning has a long-term perspective.

5. Corporate planning provides an integrated framework within which each of the functional and departmental plans are tied together.

6. Corporate planning is basically concerned with the future impact of present decisions.

Corporate Planning – Scope

A corporation can be effective only if it can grapple successfully with the external environment (that is the society) in which it functions. Similarly, the corporation can function smoothly and efficiently only if it can deploy its material, manpower and methods in a way that they function with optimal efficiency.

Hence to be effective and efficient the corporation has to cope with external as well as internal environment. Hence corporate planning has two aspects, macro and micro; the former is concerned with the interaction with the external environment and the latter with the interaction with the internal environment. The scope of corporate planning in its macro (aggregative) and micro (functional) aspects has been discussed below-

Scope of Corporate Planning:

1. Aggregative (Macro) Aspects:

i. Economic- National Economic Projections — Technological Progress.

ii. Political- Policy towards private investment.

iii. Social- Social mores and attitudes towards pricing and income distribution.

iv. Regulatory- Government controls on imports and investment, repatriations and size of firms.

v. Competition- Relative growth rate of firms, future tax trends, government policy towards large-scale enterprise.

The need for and extent of corporate planning within any economy is governed basically by the factors.

Scope of Macro-Aspect of Corporate Planning:

1. Economic:

i. National Planning:

a. G.N.P. growth forecasts.

b. Inter sectoral plans.

c. Role of public and private sectors.

d. Monetary and fiscal policy.

e. Export prospects and balance of payments trends.

f. Credit policy.

g. Changes in price level.

ii. Demand:

a. Price policy.

b. Population growth rate.

c. Income-saving pattern.

d. Rate of urbanisation.

iii. Technological Planning:

a. State of indigenous technology.

b. Foreign collaboration and import of technology,

c. Facilities for research and development work.

iv. Availability of Resources:

a. Materials.

b. Manpower

c. Methods.

v. Infrastructure Facilities:

a. Transport.

c. Equivalent.

e. Finance.

2. Political:

i. Manifestoes of party in power and in opposition.

ii. Attitudes towards nationalization and the growth of public sector.

iii. Attitudes towards investors.

iv. Attitudes towards workers.

v. Interests of different pressure groups and lobbying.

vi. Donations to political parties.

i. Policies towards income distribution.

ii. Policies towards “Social pricing”.

iii. Attitudes towards consumption and savings.

iv. Attitude towards social responsibility of business.

v. Attitude towards environmental pollution.

4. Regulatory:

Government Regulations-

i. Industrial licensing.

ii. Foreign exchange.

iii. Capital and bonus issues.

iv. Competition policy.

v. Repatriation of capital/dividends.

vi. Tariff Commission.

5. Competitive:

i. Relative, growth rate of firms.

ii. Government policy towards large business houses.

iii. Tax policies.

iv. Competition for market and market structure.

v. Competition for control of scarce resources like materials, managerial manpower and finance.

vi. Competition from public and cooperative sectors

From the above discussion it is obvious that data on wide variety of topics and aspects has to be collected for coping with the external environment. This process of scanning the external environment is usually denoted by the term “monitoring of the environment”.

There is of course substantial inter-dependency among these various aspects, namely, economic, political, social regulatory and competitive. However, for a moment we may ignore this interdependency and consider the need for and scale of planning which are positive functions of all these factors.

The intensity of impact of each one of these factors varies from country-to-country, from industry-to-industry, from sector-to-sector, from unit-to-unit and, from time-to-time for the same unit. Hence, there is a real need to monitor the environment regularly and continuously.

In particular, one may note the distinctive differences in the developed and developing economics in this respect. In the developed economics, there is stiff competition for a share of the market and relatively less competition for resources. Whereas in developing countries there is not much likelihood of customer based competition.

Instead there is a stiff competition for claims on resources, especially materials, managerial manpower and finance. Further, in developed countries the corporations are giant-sized while government regulation is minimal. On the contrary, in developing countries the corporations are relatively smaller in size but government control and regulations are relatively large and oppressive.

2. Functional (Micro) Aspects:

i. Marketing- New products, new markets, etc.

ii. Production- Technical problems, research.

iii. Materials- Quality, availability.

iv. Finance- Capital structure, sources, viability.

v. Manpower- Managerial, labour force projections, and development.

In addition it is necessary to note that the size of the corporation, the business in which it is engaged and the goals that it has set for itself are crucial factors which affect its planning whether macro or micro.

The second aspect of corporate planning is the “micro” to functional aspect. In broad terms the functional aspects of corporate planning embrace marketing, production and materials procurement, finance and personnel and manpower planning?

corporate plan business def

This is a custom roadmap created in Aha! Roadmaps — showing business goals and initiatives, success metrics, and progress towards completion.

Business roadmaps can help organizations of all sizes scale and innovate. Regardless of industry or market, these are essential tools that help everyone in the organization understand key objectives, communicate status, and take action. This guide offers definitions and best practices to help you learn about what goes into creating a business roadmap. The details of your own roadmap will differ based on the unique facets of your company, but there are universal elements that can be applied to any business.

Explore sections in this guide:

What is the purpose of a business roadmap?

Business plan vs. business roadmap: what is the difference, what to include on a business roadmap, how to build a business roadmap, who uses a business roadmap, types of business roadmaps, get started with a business roadmap template.

A business roadmap helps you visualize exactly what is needed to transform a company’s vision into reality and when. You can lay out what will happen in a given month, quarter, or year — or whatever timeline you prefer to visualize when you will achieve your goals. A business roadmap is flexible by nature. It can be as detailed or abstract as you need it to be, depending on the phase of business maturity and the size of your team.

  • Roadmapping: Your starter guide
  • How to build a brilliant roadmap

You may be wondering about the differences between business roadmaps and business plans. If you already have a defined business plan, why do you need another planning tool? To make things more confusing, some people even refer to your business plan as a type of roadmap.

While there are some areas of overlap between a business plan and a business roadmap, there are critical distinctions. Let's take a closer look at each tool and what makes them different.

A business plan is a foundational and detailed document that is generally created at the outset of any company. It is essential to running a business and is especially useful for new companies. More established businesses benefit from updating their business plan or creating a new one when expanding into new markets or developing offerings that fundamentally change how the business operates.

Now let's focus on a business roadmap. A business roadmap is a visualization of specific aspects of your business plan in a given time frame. It contains active and upcoming work at a high-level and is a helpful way to gauge how well the company is tracking towards achieving its business plan.

Broadly speaking, your business roadmap should include the most important strategic plans across the company. This includes goals, initiatives, and major themes of work from cross-functional teams. Since you will likely need to adjust your roadmap over time, be sure everything you add to it deserves to be there. The more you add to your roadmap, the more difficult it can be to change course when new opportunities arise.

You may find that you create a few roadmaps concurrently. For example, you might create a long-term roadmap that covers all aspects of business planning over the next three to five or even 10 years. This could include high-level forecasts for revenue, marketing and sales, staffing, and operations — as well as new products or services you plan to develop.

Then you could have a shorter-term business roadmap, either a year or six months at a time. This roadmap might include corporate-level goals and initiatives, as well as those of specific functions. You want to show how the entire company will work against overall business objectives.

To truly benefit from this adaptive style of planning, it is helpful to have all teams working within a shared strategic planning tool like Aha! Roadmaps . Since the planning data is updated in real time, every roadmap that the team sees will automatically show progress as it happens. This aligns the organization around what you will achieve and provides clarity into how you will work together to do it.

Creating a business roadmap should be part of your strategic planning process. Most successful companies follow a goal-first approach to roadmapping.

Set goals — Establish what you want to achieve, from revenue to hiring.

Gather information — Seek input from organizational leaders and research your market.

Organize into themes — Identify patterns in your inputs.

Prioritize initiatives — Use those themes to define initiatives, making sure each supports a specific goal.

Add time frames — Forecast resourcing and evaluate when each initiative would need to be completed.

Review and revise — Evaluate your progress against the roadmap often so you can spot challenges and adjust as needed.

Business roadmaps process flowchart — Aha!

These are the key steps for creating a compelling business roadmap.

Anyone with a vested interest in your company’s success will benefit from having access to some version of your business roadmap. Since a business roadmap visualizes the company’s goals and objectives, think of it as a blueprint that all stakeholders can rally around and follow. Here are some of the types of people and teams who can use a business roadmap:

Angel investors

Business owners

Consultants

Entrepreneurs

Marketing teams

Product managers

Sales teams

Startup founders

Venture capitalists

Each functional group should have their own roadmap — from product management to marketing and IT . There may be times when you need different types of business roadmaps or different views for different audiences. Unlike a startup roadmap, these are geared towards more established companies. Here are a couple examples:

Business development roadmap A business development roadmap outlines strategic expansion efforts. This would include things like new partnerships, sales channels, or market shifts.

Business intelligence roadmap A business intelligence roadmap focuses on tracking and planning all business operations . This would include strategic efforts to affect performance, such as change management, process improvement, or adopting new technologies.

  • What is the role of a product operations manager?

Objectives and key results (OKR) templates

Templates help you repeat success, standardize work, and save time. Define your strategic planning process and create a format for your business roadmap that works for your company. Then templatize it. Standardizing your business roadmap template will help reduce inefficiencies. When people do not have to guess at how to do their planning, they can spend more time on strategic thinking.

Related: Business model templates

Take a look at this roadmap template that comes in Aha! Notebooks — a digital notebook and whiteboard tool for product teams. You can easily customize this template for use as a business roadmap by adding the relevant goals, initiatives, milestones, and dependencies. This is a simple, lightweight way to get started with business roadmapping. For more robust functionality, Aha! Roadmaps can help you connect your visual plans to actual work.

Product roadmap	 large

Start using this template now

Set brilliant strategy, prioritize features, and share visual plans with Aha! Roadmaps — a purpose-built product development tool. Get started with a free 30-day trial.

Additional resources

Business roadmaps vs. product roadmaps

Vision vs. mission vs. strategy

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What is Corporate Social Responsability (CSR)?

Executive factsheet.

Corporate Social Responsibility (CSR) is commonly defined as a business model in which companies integrate social and environmental concerns in their business operations and interactions with their stakeholders instead of only considering economic profits. CSR became mainstream in the 2000s. The UN Global Compact and the Global Reporting Initiative cover the main international standards of CSR. 

Download the PDF: What is CSR?

What is CSR?

Broadly speaking, Corporate Social Responsibility (CSR) is an umbrella term referring to business practices that: 

  • Are carried out for social or environmental purposes ; 
  • Are voluntary as  not prescribed by law . 

In addition, many definitions of CSR distinguish it from philanthropy , emphasizing that CSR is generally related to the firm’s core business and contributing to its profitability. CSR, so understood, can be conceptualized as a set of practices integrating social, environmental and profit-related considerations.

The ISO 26000 norm, one of the most widely adopted CSR standards, explicitly links CSR with Sustainable Development , by defining it as “the responsibility of an organization for the impacts of its activities on society and environment, through transparent and ethical behavior that contributes to sustainable development […].”

CSR, simultaneously pursuing social, environmental, and  financial objectives

CSR 3 cercles

When did CSR emerge?

The concept of CSR has a long history. Its intellectual roots can be traced back to at least the 1950s and 1960s, when economists like Howard R. Bowen* and William C. Frederick** undertook an in-depth reflection on the social responsibilities of business firms and their executives. This was in response to moral questions arising from the professionalization of management and the emergence of unprecedentedly large corporations. 

CSR became mainstream through the 2000s . Evidence for this can be seen in the evolution of CSR reporting rates: While in the late 2000s, merely one of three of the world’s 250 largest companies by revenue published a CSR report, the CSR reporting rate is plateauing at levels consistently above 90% since the early 2010s. 

KPMG survey

Source: The KPMG Survey of Corporate Responsibility Reporting 2017.  

What standards govern CSR activities?

While CSR practices are voluntary, firms are not left without guidance when they engage in CSR: They can draw on a series of standards and guidelines, some of which have become a global benchmark over the years, such as: 

  • The United Nations Global Compact , call to  companies to voluntarily align their strategies and operations with universal principles on human rights, labor, environment and anti-corruption. Since its initiation in 2000, the number of signatories has steadily grown from 44 to about 10,000 in 2019 (of which around 14% are publicly listed).***
  • The guidelines of the Global Reporting Initiative , which currently constitute the most popular CSR reporting framework. About three quarters of the highest-revenue companies use them in their CSR reporting.**** 

Other prominent international standards providing guidance for effective CSR management are the Integrated Reporting Initiative and Framework that was launched in 2011, the AA1000 Series of Standards, the ISO 26000 norm, and the SA8000 certification standard for socially acceptable practices at the workplace. 

What comes next?

CSR has been often criticized for being: 

  • kept too much at the periphery of firms’ core business; 
  • seen as a mere reparation for the negative externalities generated by the business; 
  • conceived of as a constraint rather than as a driver for innovation. 

Accordingly, several scholars have suggested more ambitious approaches. M. Porter and M. Kramer , for instance, propose the Creating Shared Value (CSV) approach, that views social and environmental challenges as business opportunities and possible sources of innovation. (1) Other authors, like W. Visser , call for a CSR 2.0 approach that attempts to tackle the root causes of today’s problems through innovative business models and a deep transformation of firms’ practices. (2)  

In view of multinational companies’ power and ability to influence public policy, several first-rank CSR scholars recently called for expanding our understanding of CSR to include what they call a “ Corporate Political Responsibility ” (CPR). (3) They argue that firms should communicate more transparently about how they advocate for socially and environmentally beneficial public policies, e.g., through donations, lobbying activities, and CEO activism. Corporations should be assessed on their political actions, and the coherence with their business and CSR activity. 

* Bowen, H. R. (1953). Social responsibilities of the businessman. New York, Harper & Brothers ** Frederick, W. C. (1960). The growing concern over business responsibility. California Management Review, 2(4), 54-61. *** Source: United Nations Global Compact website **** Source: The KPMG Survey of Corporate Responsibility Reporting 2017. 

References: 

1-  Porter, M. E., and Kramer, M. R. (2011). Creating Shared Value. Harvard Business Review, Vol. 89(1), 2-17.  

2-  Visser, W.(2011). The age of responsibility : CSR 2.0 and the New DNA of business, Journal of Business Systems, Governance and Ethics, 5, 7-22

3-  Lyon, T. P., Delmas, M. A., Maxwell, J. W., Bansal, P., Chiroleu-Assouline, M., Crifo, P., Durand, R., Gond, J. P., King, A., Lenox, M., & Toffel, M. (2018). CSR needs CPR: Corporate Sustainability and Politics. California Management Review, 60(4), 5-24.

More about the Movement for Social*Business Impact

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