Types of Plan: Strategy, Policy, Rules, Budgets, Methods with Examples

The compilation of these Planning Notes makes students exam preparation simpler and organised.

Types of Plan

Planning is one of the most important and the first functions of management. It is an activity that managers of all levels have to perform. So according to the level of management, the type of plan will differ. Let us see the different types of plan in management.

Types of Plan

Planning is a pervasive function of management, it is extensive in its scope. So all managers across all levels participate in planning. However, the plans made by the top-level manager will differ from the ones that lower managers make.

Plans also differ from what they seek to achieve and what methods will be used to achieve them. So let us look at the types of plans that managers deal with.

Types of Plan

This is the first step in planning the action plan of the organization. Objectives are the basics of every company and the desired objective/result that the company plans on achieving, so they are the endpoint of every planning activity.

For example one of the objectives of an organization could be to increase sales by 20%. So the manager will plan all activities of the organization with this end objective in mind. While framing the objectives of the organization some points should be kept in mind.

  • Objectives should be framed for a single activity in mind.
  • They should be result-oriented. The objective must not frame any actions
  • Objectives should not be vague, they should be quantitative and measurable.
  • They should not be unrealistic. Objectives must be achievable.

This obviously is the next type of plan, the next step that follows objectives. A strategy is a complete and all-inclusive plan for achieving said objectives. A strategy is a plan that has three specific dimensions

  • Establishing long-term objectives
  • Selecting a specific course of action
  • allocating the necessary resources needed for the plan

Forming strategy is generally reserved for the top level of management. It actually defines all future decisions and the company’s long-term scope and general direction.

Policies are generic statements, which are basically a guide to channel energies towards a particular strategy. It is an organization’s general way of understanding, interpreting, and implementing strategies. Like for example, most companies have a return policy or recruitment policy or pricing policy, etc.

Policies are made across all levels of management, from major policies at the top-most level to minor policies. The managers need to form policies to help the employees navigate a situation with predetermined decisions. They also help employees to make decisions in unexpected situations.

Procedures are the next type of plan. They are a stepwise guide for the routine to carry out the activities. These stepwise sequences are to be followed by all the employees so the activities can be fulfilled in an organized manner.

The procedures are described in chronological order. So when the employees follow the instructions in order and complete, the success of the activity is pretty much guaranteed.

Take for example the procedure of admission of a student to a college. The procedure starts with filling out an application form. It will be followed by a collection of documents and sorting the applications accordingly.

Rules are very specific statements that define an action or non-action. Also, rules allow for no flexibility at all, they are final. All employees of the organization must compulsorily follow and implement the rules. Not following rules can have severe consequences.

Rules create an environment of discipline in the organization. They guide the actions and the behaviour of all the employees of the organization. The rule of “no smoking” is one such example.

Programmes are an in-depth statement that outlines a company’s policies, rules, objectives, procedures, etc. These programmes are important in the implementation of all types of plans. They create a link between the company’s objectives, procedures, and rules.

Primary programmes are made at the top level of management. To support the primary program all managers will make other programs at the middle and lower levels of management.

Methods prescribe the ways in which specific tasks of a procedure must be performed. Also, methods are very specific and detailed instructions on how the employees must perform every task of the planned procedure. So managers form methods to formalize routine jobs.

Methods are very important types of plans for an organization. They help in the following ways

  • Give clear instructions to the employees, removes any confusion
  • Ensures uniformity in the actions of the employees
  • Standardizes the routine jobs
  • Acts as an overall guide for the employees and the managers

A budget is a statement of expected results the managers expect from the company. Budgets are also a quantitative statement, so they are expressed in numerical terms. A budget quantifies the forecast or future of the organization.

There are many types of budgets that managers make. There is the obvious financial budget, that forecasts the profit of the company. Then there are operational budgets generally prepared by lower-level managers. Cash budgets monitor the cash inflows and outflows of the company.


Controlling is regarded as the mental process resulting in the selection of action among alternative scenarios. True or False?
The statement is False.
The activity that chooses the best option among alternative scenarios is known as decision making.