The planning process is the first basic managerial function that organizations must address. With an understanding of the environmental context, managers develop a number of different types of goals and plans. Organizations establish several different kinds of goals which serve a variety of purposes. The major types of plans are strategic, tactical, and operational.

A strategy is a comprehensive plan for accomplishing the organization's goals. Strategic management is a comprehensive and ongoing process aimed at formulating and implementing effective strategies. Effective strategies address three organizational issues: distinctive competence, scope, and resource deployment. Most large companies have both business-level and corporate-level strategies.

SWOT analysis considers an organization's strengths, weaknesses, opportunities, and threats. Using SWOT analysis, an organization chooses strategies that support its mission and (1) exploit its opportunities and strengths, (2) neutralize its threats, and (3) avoid its weaknesses.

A business-level strategy is the plan an organization uses to conduct business in a particular industry or market. Porter suggests that businesses may formulate a differentiation strategy, an overall cost leadership strategy, or a focus strategy at this level. Business-level strategies may also take into account the stages in the product life cycle.

A corporate-level strategy is the plan an organization uses to manage its operations across several businesses. A firm that does not diversify is implementing a single-product strategy. An organization pursues a strategy of related diversification when it operates a set of businesses that are somehow linked. An organization pursues a strategy of unrelated diversification when it operates a set of businesses that are not logically associated with one another. Organizations usually manage diversification through portfolio management techniques. The BCG matrix classifies an organization's diversified businesses as dogs, cash cows, question marks, or stars according to market share and market growth rate. The GE Business Screen classifies businesses as winners, losers, question marks, average businesses, or profit producers according to industry attractiveness and competitive position.

After plans have been developed, the manager must address how they will be achieved. This often involves tactical and operational plans. Tactical plans are at the middle of the organization and have an intermediate time horizon and moderate scope. Tactical plans are developed to implement specific parts of a strategic plan. They must flow from strategy, specify resource and time issues, and commit human resources. Tactical plans must be effectively executed.

Operational plans are at the lower levels of the organization, have a shorter time horizon, and are narrower in scope. Operational plans are derived from a tactical plan and are aimed at achieving one or more operational goals. Two major types of operational plans are single-use and standing plans. Single-use plans are designed to carry out a course of action that is not likely to be repeated in the future. Programs and projects are examples of single-use plans. Standing plans are designed to carry out a course of action that is likely to be repeated several times. Policies, standard operating procedures, and rules and regulations are all standing plans. Contingency planning is another important form of operational planning.