The use of formal business planning has increased significantly over the past few decades. The increase in the use of formal long-range plans reflects a number of significant factors:
• Competitors engage in long-range planning.
• Global economic expansion is a long-range effort.
• Taxing authorities and investors require more detailed reports about future prospects and annual performance.
• Investors assess risk/reward according to long-range plans and expectations.
• Availability of computers and sophisticated mathematical models add to the potential and precision of long-range planning.
• Expenditures for research and development increased dramatically, resulting in the need for longer planning horizons and huge investments in capital equipment.
• Steady economic growth has made longer-term planning more realistic.