Long-Range Planning

Long-range planning focuses on forecasting the future. The objective of the forecast is to predict for some specified time in the future the size of demand for an organization' products and services and to determine where that demand will occur. Long-range planning developed in many organizations because operating budgets are difficult to prepare without some idea of future sales and the flow of funds. In addition, post–World War II economies were growing and demand for many products and services was accelerating. Long-range forecasts of demand allowed mangers to develop detailed marketing and distribution, facilities expansion, human resource, and financing growth plans for their organizations. Many hospitals have used long-range planning to determine facilities expansion. In the mid 1980s, as the health care industry became more volatile, long-range planning was replaced by strategic planning in most health care organizations.

Long-range planning is different from strategic planning in its underlying assumptions. Long-range planning assumes that the organization will continue to produce its present products and services; thus matching demand to production capacity is the critical issue. The assumption underlying strategic planning is that so much economic, social, political, technological, and competitive change is taking place that the organization must evaluate whether it should even be producing its present products and services, whether it should start producing different products and services, or whether it should be producing and marketing in a fundamentally different way.