The key difference between short term planning and long term planning is that short term planning focuses on an immediate period, especially in reference to revenue and profitability, whereas long term planning focuses on achievements for projected future.
In the current business context, business owners plan their businesses in terms of short term, medium term and long term. Short-term planning usually engages in processes that show results within a year. Some organizations use medium-term plans with results that take several years to achieve. Long-term plans, on the other hand, consist of overall goals of the organization established four or five years in the future and usually are based on reaching the medium-term targets.
CONTENTS
1. Overview and Key Difference
2. What is Short Term Planning
3. What is Long Term Planning
4. Relationship Between Short Term Planning and Long Term Planning
5. Side by Side Comparison – Short Term Planning vs Long Term Planning in Tabular Form
6. Summary
What is Short Term Planning?
In most business situations, short term planning aims for an immediate period, which is less than a one-year time frame. Short term objectives drive towards short term expectations such as new product development, improving cash flow, etc. The vision of short-term planning is important to satisfy investors who want to see results or improving your company’s bottom line. As a result, the company can secure additional financing for longer-term goals.
However, organizations need to assure that short term planning facilitate long term achievements as well. For instance, the latest product launched should be able to secure the brand name of the company and should be consistent with the overall brand. Likewise, the strategies the company use to enhance cash flow should bring in additional revenue in ways which do not compromise the values of the organization and distract the entire mission.
Short term concerns like machine conditions, product complaints and skills of the employees may include solutions in short term planning. However, the corrective actions will have an impact on long term objectives as well.
What is Long Term Planning?
Long term planning focuses on achieving objectives which are set for the projected future. In most cases, companies want to solve problems permanently and to reach their overall targets.
Some consider the company’s strategic plan as long term planning. Long-term planning evaluates the threats the company may face in terms of social, economic and political situations, both locally and globally. Furthermore, long term planning focus on competitive situations like competitor behaviours, new products and possible changes of suppliers etc. It studies major capital expenditures such as purchasing equipment and facilities, implementing policies and procedures that strengthen the company’s profile to match top management’s ideas.
What is the Relationship Between Short Term Planning and Long Term Planning?
Planning is the most crucial part of a business. Basically, short term planning drives a company to find sustainable solutions, and in certain cases, short term planning will enable the company to handle drastic or unintended changes. However, sustainable solutions taken from short term concerns will lead the organization to achieve long term goals easily. In other words, short term goals are often stepping stones that contribute to achieving a long term goal.
What is the Difference Between Short Term Planning and Long Term Planning?
Short term planning is conducted for immediate or short term concern, and its outcome is expected in less than one year’s time. On the other hand, long term planning drives the company in a strategic direction where the stability of the company and long term goals are evaluated in the projected future. So, this is the key difference between short term planning and long term planning.
Generally, in short term planning, the company focuses on the prevailing situation of the business, especially in terms of internal issues. Some of these may include lack of training, customer complaints, high rejection rates, drastic management changes etc. Thus, the work out a mitigation plan where they can see the actions within a limited time span. However, in long term planning, the company focuses on both external and internal issue that might have an impact on the business. These external issues may involve political situation prevailing in the country, global economic changes etc. Therefore, we can consider this also as a major difference between short term planning and long term planning. Besides, short term goals are very straightforward, but long term goals are complex and much more tactical.
Summary – Short Term Planning vs Long Term Planning
The key difference between short term planning and long term planning is that the short term planning focuses on immediate actions, whereas long term planning focuses on the expected outcome for the projected future. Moreover, short term planning is often a stepping stone that contributes to achieving long term objectives.
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