The lecture provides definitions and models, used to describe defence capabilities. It presents in detail a methodology for capability planning, supporting decision making on long-term development of forces, management and support organisations in uncertainty. The methodology uses a taxonomy that adds to the operational capabilities of the armed forces capability groups for management, defence diplomacy, and agility. The lecture provides an example on the impact of resource constraints on capability levels. It outlines the principles of defining required defence capabilities in the context of allied and national security planning.