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Strategic Business Planning

Strategic Business Planning

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Published by Martin Vika

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Categories:Business/Law
Published by: Martin Vika on Jun 14, 2012
Copyright:Attribution Non-commercial

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 ==== ====Find a plan from our easy A2Z listing...http://lnk.co/I1NYN ==== ====To many managers, the term "business planning" is a buzzword to describe what 30 years agowas conceived as the financial budget, and therefore the restricted realm of the accountant. Toothers it may represent a document required to obtain an overdraft or a loan from their bankers. Abusiness plan may prove to be the most important document that may be compiled in anybusiness. This paper aims to eliminate such taboos and simplify what the strategic businessplanning process is all about, and how its benefits could be maximised by the management of abusiness. THE TERM "STRATEGIC BUSINESS PLANNING" When we speak about a strategic business plan, the message to be conveyed is about thestrategies and tactics to be adopted by an organisation to reach its missions and goals. An integralpart of the plan is financial in nature, but the strategic business plan is no plan at all if it does notaddress marketing, human resources, ICT and all other resources needed to integrate and fusethe organisational efforts to achieve targets, in terms of maximisation of profits. Thus, an effectivebusiness plan should serve FOUR underlying purposes: oIt is a tool for management to convey both within and outside the organisation the goals for thebusiness plan period; oIt provides the strategic framework for holistically managing the business; oIt allows the identification of objectives and how the attainment of these objectives could beachieved and, most importantly, closely monitored oBy demonstrating that proper controls and achievement of objectives are happening, it providesan effective means of attracting new capital to finance the business objectives. WHAT IS REQUIRED?Many have compared the marketing of a strategic business plan to a candidate's CV, whenapplying for a job. What must be ensured is that the plan is not just figures and numbers, but alsoshows a good understanding of all those essential determinants in reaching the stated targets.Thus, we should first and foremost ask ourselves questions such as: Who are we? What do we do? Who are our customers and what are their expectations?
 
 What and where will our business be in one, two, three, five years? What are we doing NOW to get where we want to be? How should we get there? Do we have the resources in terms of machines, people, finances, technology and so on? Do we need to obtain external financing and what type/extent is convenient to us? We could keep going on asking questions as much as we would like our plan to be detailed.Probably the answers to some would need more effort in terms of time and resources than others.The most important factors which determine this preliminary stage of planning is to ensure that weare asking ourselves the right questions, that they are leading our business in the direction wewant it to go. On the other hand, a manager must be aware of asking too many questions that leadnowhere. The objective of this process is to enable the manager to grasp what the target is andthen plan on how to achieve that target. EFFECTIVENESS AND FLEXIBILITY What are the nuts and bolts of an effective and sound strategic business plan that truly deliversthe business targets? The mission, objectives and overall strategy must be determined. Particularattention must be focused on the implementation and evaluation stages that follow the setting ofobjectives and strategies. It is here that a business will succeed or fail. Experience has shown thatat times, a business plan needs to be radically changed after one year, to conform with the ever-changing and volatile business environment. Do not be surprised! This is a healthy experience. Asevery manager knows, rigidly sticking to a particular plan, where the business encloses itself in acocoon, can bring about those looming black clouds of ensuing business failure. Exhibit Apresents the Critical Success Factors (CSFs) of good strategic business planning, whilst Exhibit Billustrates the benefits accruing from a properly organised plan that distinguishes one businessfrom another. These benefits ensure that the organisation is homogeneously geared and gluedtowards the ultimate objective of maximising profits. THE ESSENTIALS We must remember that even the best of business plans, which takes many hours to compile, willonly take a few minutes of the reader's time. Perhaps, a cursory glance at the executive summaryand the conclusion will be the main determinants for the success or otherwise of the plan. It is truethat great business ideas backed by superior management techniques will probably succeedwithout any written presentation. But, that minute possibility of failure necessitates extra effort forthat slight edge over the chances of success. In plain words, this means that a strategic businessplan MUST itself be planned! Exhibit C provides a practical guide, showing the essentialrequirements for the success of a strategic business plan. Managers must put themselves in theshoes of those who will read the strategic business plan and who will then subsequently take thedecision, be it the board of directors, the bank manager or a creditor. Thus, what the reader wantsor does not want to know, determines the structure and flow of the plan. 
 
THE PLANNING TEAM Before embarking on writing the plan, the business must ensure that it is written by someone or ateam to whom it really matters, because of the enthusiasm and commitment that they put into it.Besides, such a team would in all probability be in possession of a substantial amount ofinformation to determine the goals, targets and resources needed by the organisation. Ofparamount importance is perhaps the message to be conveyed to the compilers of the plan. Theteam has to clearly and effectively show that it satisfies the following criteria: oIt has the necessary experience in compiling good plans. The various disciplines in theorganisation have to come together, thus ensuring a holistic approach.. It can realise successfully the targets set, meaning that the compilers of the plan should alsopossibly be or include those same managers who will actually implement and monitor the plan'sperformance; oIt has already done what is being proposed - this means there is enough competence andexperience to link to past plans, in terms of objectives and achievements; . It fully understands allthe risks and pitfalls. Contingency planning is an integral part of a strategic business plan, whererealistic risks are carefully planned for; o It can relate the business plan to current and anticipated resource levels. Generally, eachorganisation has an element, large or small, of un utilised resources. The strategic business planis the tool that identifies and effectively uses such dormant resources. BUSINESS PLANNING TOOLS Once the team has been identified and given the necessary powers and responsibilities, whatremains is the identification and provision of the necessary tools to produce the strategic businessplan. Each and every organisation should choose its tools for good planning, considering suchissues as structures, staff competencies, organisational cultures, current resources, etc. However,the following list of commonly-used tools is neither exhaustive nor binding, but is an extremelyefficient checklist, which is a valuable form of reference: oClear and concise planning forms and guidelines oA set of planning definitions .Internal and external surveys .Financial modelling packages 'Organisation-wide availability and sharing of information .Identification of standards to assess whether the targets are achieved .Training programmes for planning staff .Task force/Focus groups Of course, the adoption of such tools depends on the size of the business. For example, in the

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