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SixSigma:TheBusinessCase
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Chapter1
Introduction
WelcometoLesson2.Beforeyougetthewrongidea,SixSigmaisn'tallaboutstatisticsandgraphs.Therearealsoafewwords.
Todaywe'lllookatthebusinesssideofSixSigma.Whileit'sgoodtodefineandimproveprocesses,it'sessentialtomakesurethatyouhave
customerstosatisfy.Therearenoguaranteesthatyoucanmeetallstakeholders'expectations.But,totheextentthatyouusethematerialin
today'slesson,you'llincreaseyourchances.
We'llstartbydiscussingstrategicplanningaconceptthatlooksatinternalstrengthsandweaknessesandexternalopportunitiesandthreats.
We'llmoveontotwomethodsofidentifyingcustomerrequirementsthevoiceofthecustomer(VOC)andqualityfunctiondeployment(QFD).
Next,we'llexplorebenchmarking,atechniquethathelpsyoudeterminehowyourcompanymatchesuptothecompetitionandindustry
standards.Finally,we'lllookatafewfinancialmodelstohelpyoukeeptrackofkeyobjectives.
Let'sgetstarted!

Chapter2
StrategicPlanning
Companiesthatendureovertimetypicallyusestrategicplanning.Theyreviewmarketconditionscustomerneedscompetitorstrengthsand
weaknessessocial,legal,political,andeconomicconditionslevelsoftechnologyandinternalresources.Theycreateastrategicplanthat
takesinformationfromtheenvironmentanddevelopsitintoamissionstatementandobjectives.Then,theyformactionplans.
Comingupwithastrategicplanistoughbecauseofallthevariablesthatneedtobemanaged.Furthermore,afterputtingforthagreatdealof
effort,afirmmayproduceaninitialstrategicplanonlytoneverupdateit.Sincethevariablesinfluencingyourstrategicplanchange,yourplan
mustbecomealiving,dynamicdocument.Foranyfirm,thestartingpointmustbetodefinewhoarethecustomers.Starttheinitialstrategic
planningprocesswiththefollowingquestions.Keepinmindthatforcompaniestosucceed,thequestionsneedtobeansweredclearlyand
completely.
1. Whoareourcurrentcustomers?
Youcan'tguessattheanswer.Youneedtoidentifyyourcurrentcustomersbyusingdata.
2. Whatvaluedowegiveourcustomers?
Thisquestionisverypowerful.Thebestwaytodefineitistounderstandthetotalexperiencecustomershavewithyourproductsand
services,andwithyourcompany.
3. Whowillbeourfuturecustomers?
Inourfastpacedworld,someonewhoisacustomertodaymaywantsomethingdifferentinthefuture.Also,youmayacquirenew
customerstomorrowthataren'tbuyingtoday.
4. Whatbusinessarewein?
Thisquestionmayseemobvious,butmanyfirmsoverlookit.Remember,thecustomerdefinesyourbusiness.Theclassicexampleis
therailroads.Railroadsbelievedthattheirbusinesswaspowerfullocomotiveenginespullingflatbed,box,andpassengercarsalong
steelrails.Butcustomersdefinedrailroadsastransportation.Becauseoftherailroadmanagement'snarrowviewpoint,theymissedout
onothertransportationopportunities,suchasusingplanesandtruckstohaulcargoandtransportpassengers.

Animportantpartofstrategicplanningisanenvironmentalanalysis.Let'sexaminethedifferentelements.
EnvironmentalElements
Therolethatyourorganizationplayswithenvironmentelementsisvital.Youneedtoplayaninfluential,notareactiverole.Also,youmust
identifycriticalsuccessfactors(CSFs).Thesedeterminehowyoucanbeadominantforceinthemarketsthatyouparticipatein.You
discoverCSFswhenyouanalyzeyourenvironment.ApopulartoolfordoingthisanalysisisSWOT.Itstandsforstrengths,weaknesses,
opportunities,andthreats.Ratherthanuseahugenumberofwordstodescribeenvironmentalanalysis,SWOThasbecomeanindustry
convention.TheSandWapplytoyourinternalelements,andtheOandTtoyourexternalelements.
Let'stakeafewmomentsandlearnmoreaboutSWOT.We'llstartwiththeexternalelements:
1. Technology.
Technologycontinuestogrowbyleapsandbounds.Changesintechnologycreatenewindustriesandmakesothersobsolete.The
emergenceofcellulartelephonesandthedeclineofothercommunicationmethodsisanexample.Fromastrategicplanning
perspective,youneedtodeterminehowtechnologywillaffecttheformofyourproducts,howitwillinfluencematerialsyoubuy,howit
willchangeyourprocesses,andhowitwillprovideavenuestonewopportunities.
Ofalltheexternalelements,technologyisthemostcritical.Ifyouunderestimateitsimpact,you'llpayahighpriceasyoutrytoplay
catchup.
Technologyfollowsapatternstartingwithinvention(somethingbrandnew),movingtoinnovation(commercializinganinvention),and
endingwithdiffusion(customeracceptance).
2. Socialandculturalelements.
Ascomparedtotechnology,socialandculturalelementsareeasiertopredict.Theyareevolutionary(changinggradually)asopposed
torevolutionary(happeningallofasudden).Changesinthefamilyunitareanexample.Soispopulationshiftsingeographicareas.
Themainissuestomanagesocialandculturalelementsaretoidentifytheexistenceofthevariousculturalandsocialforces,identify
howtheseforcesinteract,andprojecttheirdegreeofinfluence.Beawarethatsocialandculturalforcesplayasignificantroleonlegal
andpoliticalelements.
3. Economics.
Whenstudyingeconomics,macroeconomicsisagoodplacetostart.Keyareastolookataregrossdomesticproduct(GDP),levelsof
industrialproduction,employmentlevels,andpersonalincome.Theseareasaffectmicroeconomics,whichtendtobemoremeaningful
forbusinesses.Microeconomicsincludessupplyanddemand,settingprices,theuseoflaborandmoney,andforfirmswith
internationaloperations,exportsandimportsaswellasdegreesofprotectionism.
4. Legalandpoliticalelements.
Theroleofgovernmentinbusinesshasalwaysbeenahottopic.Inadditiontoknowingaboutlawsthataffectyourcompany,youalso
needtounderstandhowofficialsinterpretlaws.Economicandculturalconditionsplayaroleinthisarea.Itiscommontoseelaws
passedordecisionsmadebecauseofsomethingtakingplaceintheeconomyorinsociety.Tosuccessfullymanagetheimpactofyour
legalandpoliticalenvironment,youneedtoappealtoandinfluenceconsumersandofficials.Theseindividualscanbecomeeffective
lobbyist.Youalsoneedtoknowtherelevantlawsandhowtheyareapplied.
5. Competition.
Whensurveyingthecompetition,theprimaryareastoconsiderarethenumberandsizeofcompetitorsandthewaysfirmscompetein
termsofprice,product,place,andpromotion.
Let'sshiftgearsandreviewinternalenvironmentalelements.
It'sonethingtoidentifyprospectsandthreatsintheexternalenvironment,butanotherthingtobepreparedtoseizeopportunitiesandprotect
againstinternalthreats.Companiesthathaveacompetitiveadvantagemaintainefficiencyandexcellenceincustomerservice,market
productsthatarewelldesignedandperformasexpected,displayleadershipinproductinnovation,moveproductsefficiently,maintainproduct
availabilityandselection,andprovidevalueforthemoney.
Let'sexploreafewwaystoseeifyourcompanyhastherightstuff.
1. Attributemeasurements.
Usethisapproachtoseeifadesiredfeatureispresent.Forexample,ifyourcompanyemphasizeshighquality,allemployeesshould
knowwhatrepresentsquality.

2. Effectivenessmeasurements.
Let'scontinuewiththequalityexample.Employeesmayknowwhatrepresentsquality,butdotheypassonknowndefects?Ifso,this
isaloweffectivenessmeasurement.

3. Efficiencymeasurements.
Inadditiontomeetingobjectives,it'simportanttomeetthemwithminimaleffortandcost.Whenemployeesevaluatequality,canthey
doiteasily?
Applythesemeasurementstotopmanagement,yourproductlines,researchanddevelopment(R&D),marketing,operations,information
technology,financialmanagement,organizationstructure,andcompanyculture(values).
Nowthatyouhaveagoodhandleonstrategicplanning,let'sdiveinandexploretwomethodsthatcaptureandsatisfycustomerdemand.

Chapter3
TheVoiceoftheCustomerandQualityFunctionDeployment
Thevoiceofthecustomer(VOC),contrarytowhatsomepeoplemaythink,isnotaboutacomplainingiratecustomer.TheVOCdescribes
customerneeds,wants,andprioritiesthatyoumustmeettostayinbusiness.Itisn'teasytolistentoandunderstandtheVOC.Customer
voicesaredifferent.Youhavediversevoicesinconsumer,industrial,andgovernmentmarkets.Voicesalsovarybyage,sex,ethnicity,and
geographiclocation.Also,whenyouselltoacompany,youhearthevoiceofabuyer,auser,andaninfluencer(amanager,forinstance).
Progressivecompanieswantcustomerstodrivetheproductorservicedevelopmentprocess.Whenyouunderstandtheseexpectations,your
deliverables(outputs)satisfycurrentcustomerrequirementsandcreateaframeworktoanticipatefuturecustomerneeds.
IfyouwanttoheartheVOC,howdoyougoaboutit?Aswediscussed,thetechniquesvarydependingonproducts,services,location,
expectations,andresources.But,ingeneral,youneedtodothefollowing:
1. Identifythecustomerbase(s).
Breakuppotentialcustomersintogroupsthatareofinteresttoyou.
2. CapturetheVOC.
Usecustomerfeedback(complaints),focusgroups,customervisits,andmarketresearch.

3. Collectandorganizedata.
Useprogressiveandefficientmethods.

4. Analyzedata.
Useobjectiveprocessimprovementtools.

5. Formulateconclusions.
Runtwoorthreetrialstovalidateyourbeliefs.

6. Actonconclusions.
Communicateknowledgeandinformationtotherightindividualsinyourorganization(marketing,productdevelopment,etc.).
Traditionally,marketinghashadtheresponsibilityofdefiningcustomerneedsandproductrequirements.ThistendstoisolateR&Dandother
companypersonnelfromthecustomerandfromgainingafirsthandunderstandingofcustomerneeds.Asaresult,thecustomer'srealneeds
canbecomesomewhatunclearforothercompanypersonnel.Fortunately,qualityfunctiondeployment(QFD)providesawaytoclarifythe

VOC.
Productdevelopmentpersonnelneedtobedirectlyinvolvedinunderstandingcustomerneeds.Thismayinvolvevisitingormeetingwith
customers,observingcustomersusingormaintainingproducts,orparticipatinginfocusgroups.Anotherwaytoachievethisisbyworking
directlywithcustomersinateamsetting.Thisdirectinvolvementprovidesabetterunderstandingofcustomerneeds,thecustomer
environment,andproductuse.
TheintentofQFDistomakesurethatcustomerrequirementsarecleareachstepofthewayandthatanorganizationmeetsthemwiththe
desiredlevelofquality.It'satooltofoolprooftheproductdesignanddevelopmentprocess.WithoutQFD,asalespersonmaynotdefinewhat
acustomertrulywants.Andevenifheorshegetsitright,therestofthecompanymaynotcompletelyunderstandwhattheyneedtodoto
satisfythecustomer.
Makingaproductisnotanovernightevent.It'scomesfromasequenceofinterrelatedevents.QFD'sgoalistoconvertcustomer
expectationsintotechnicalrequirementsforeachstageofproductorservicedevelopmentandproduction.Thismeansthatwhenproduction
receivesinformationfromR&D,itiscrystalclear.
QFDcameontothesceneinJapaninthelate1960s.MitsubishiandBridgestoneTireweretwoearlypioneers.ThefirstbookinEnglishdidn't
comeoutuntil1994.ThecenterpieceofQFDisitsfamousHouseofQuality.Itincludescustomerexpectations,acompetitiveanalysis,
engineeringplans,correlations,technicalcomparisons,andtradeoffs.
Let'stakeapeekatatypicalHouseofQuality.

Fig2.1.HouseofQuality

Assumethatmynephewdesignsanewskateboardwithenoughstabilityevenfortheoldfolks.ItellhimaboutQFDandtheHouseofQuality
andhedecidestouseittodefinehisrequirements.
Thewhatsectionidentifiesspecificcustomerrequirementssuchasappearance,weight,anddurability.Thehowsectionidentifiesthe
technicalrequirementsthatmynephewwillusetofulfillthecustomer'swhats.Thehowscouldincludestrengthofthematerial,qualityofthe
wheels,paint,stains,anddecals.TherelationshipofthehowsandwhatsarerecordedinthecenteroftheHouseofQualityusingarating
system.Forexample,thecombinationofacustomer'sperceptionofappearanceandthepaint,stains,anddecalswouldproducearating.
Inthecompetitiveevaluationsectionontherightsideofthediagram,customersratehowwellmynephewandcompetitor'sskateboardsmeet
theirneeds.Thecorrelationmatrixintheroofofthehouseidentifiesandratestherelationshipsbetweenthedifferenthowvariables.For
example,strengthofthematerialandqualityofthewheelshasastrongrelationship,butstrengthofthematerialanddecalshaveno
relationship.
Thetargetvalueandcompetitiveevaluationatthebottomsectionofthehouseidentifiestechnicalmeasurementsandatechnicalcomparison
withcompetitors.
OnceyoucompletetheHouseofQuality,youcanseeeverythingthatyouneedtoknowononesheetofpaper.Thisiswhatmanagement
reallywants.
Onceyouunderstandcustomerneedsandyourcapabilities,youneedtofindouthowyourorganizationmatchesupwithothercompanies.
Youcandothisbyusingbenchmarking.Afteryoufindouthowyourate,youneedtokeepscore(financiallythatis)byusingafinancial
model.

Chapter4
BenchmarkingandReturnonInvestmentMethods
Benchmarkingisanoutstandingmanagementtechniquethatemergedduringthelatterpartofthetwentiethcentury.Itisacontinuousprocess
thatmeasuresacompany'sproduct,process,service,ortechnologyagainstcompetitorsorhighlyrespected,noncompetingorganizations.
Withoutbenchmarking,acompany'sstrategiesareblindguesses.Withit,you'reabletodetermineastandardofexcellenceandpursueitwith
intensity.Benchmarkingtakesyoubeyondaconventionalcompetitiveanalysis(sometimescalledreverseengineering)whereyoudissecta
competitor'sproducttogatherinsightsintoitscostsortechnology.
Benchmarkingcanhelpyouassessgapsinoverallmarket,cost,orfinancialperformance.Itsgreateststrengthisfocusingyourattentionon
distinctivecompetencies(thethingsthatsetssuccessfulorganizationsapartfromtherestofthepack).
Irecommendyouusethisapproachtomakethemostofbenchmarking:
1. Establishandquantifystandardsbywhichtomeasureyouroperationsuchasontimedelivery,customerreturns,andleadtime
reductions.
2. Prepareaquestionnaireforuseduringvisitstopotentialbenchmarkcompanies.
3. Practicebenchmarkingwithotherdivisionsofyourowncompanybeforeyoubenchmarktargetedorganizations.Thiswillhelpyourefine
yourbenchmarkingprocess.
4. Carefullyassesspotentialbenchmarkcompanies,basedonpublicsourcesofinformation,tradejournals,professionalsocieties,
consultants,academia,suppliersandcustomersofthebenchmarkcompany.
5. Visitsthreetosix(dependingontimeandresources)leadingcompanies.Obtaininformationnotonlyfromthemanagementofthese
companies,butalsofromlowerlevelsoftheirorganization.
6. Recordgapsbetweenthebenchmarkcompanyandyourorganizationforeachstandardandidentifythereasonsforthegap.
7. Takeactionstoclosethegap.
8. Reviewandupdateyourbenchmarkingprocessperiodicallytoimproveit.
It'sessentialthatyoucalculatehowsuccessfulyourbusinessprocessesare.Fivepopularfinancialmethodstodothisareaveragerateof
return(ARR),paybackperiod,discountedcashflow(DCF),netpresentvalue(NPV),andinternalrateofreturn(IRR).(Interestingly,the
paybackperioddoesn'thaveanacronym.)
1. Averagerateofreturn(ARR).
Theaveragerateofreturnmethodcomparesyouraverageannualnetprofit(afterincometax)resultingfromaninvestmentwithyour
averageinvestment.TheformulaforARRis
netannualsavingsaverageinvestment
Theaverageinvestmentistheinitialinvestmentdividedbytwo.Ifwespent$5,000foranewpieceofequipmentandsaved$1,000our
firstyear,ourARRis
($1,000($50002))=0.40or40%
ThemainbenefitofARRisitssimplicity.ManyfirmsuseARRtocomparetheanticipatedreturnfromaproposalwithaminimum
desiredreturn.Iftheproposal'sreturnislessthandesired,itisrejected.Ifit'sgreaterthandesired,amoreindepthanalysis,using
otherinvestmenttechniques,mightthenbeused.ThemajordisadvantageofARRisthatitisbasedonnetprofitratherthanoncash
flow.
2. Paybackperiod.
ThepaybackperiodmethodovercomesthecashflowshortcomingoftheARR.Thepaybackmethodmeasurestheinitialinvestment
withtheannualcashinflows.
Theformulais
initialinvestmentnetannualcashsavings
Thepaybackperiodmethodisconcernedwiththetimeperiodsforrecoveryofexpenditures.Ifa$10,000outlayresultsin$2,500
annualincreasedprofitability,thepaybackperiodisfouryears.

Thepaybackperiodmethod,althoughsimple,doesnotreallymeasurethemeritsofinvestments.Itonlymeasuresthespeedbywhich
theinvestmentcostmightberecovered.Ithasauseinevaluatinganumberofproposalssothatonlythosethatfallwithina
predeterminedpaybackperiodwillbeconsideredforfurtherevaluationusingotherinvestmenttechniques.However,boththepayback
periodandtheARRmethodsstillsufferfromacommonfault:theybothignorethetimevalueofcashflows,ortheconceptthatmoney
nowisworthmorethanthesameamountofmoneyatsometimeinthefuture.
3. Discountedcashflow(DCF).
Theconceptofdiscountedcashflow(DCF)canprobablybestbeunderstoodbylookingfirstatanexampleofcompoundinterest.What
wouldhappento$100investedata10%compoundinterestrateforfouryears?Attheendoffouryears,theinvestmentwouldbeworth
$146.41.Here'showitworks:
Year1:Jan1$100
Year1:Dec31,110(100+10%interest)
Year2:Dec31,121(110+10%interest)
Year3:Dec31,133.10(121+10%interest)
Year4:Dec31,146.41(133.10+10%interest)
Discountingissimplythereverseofcompoundinginterest.Inotherwords,ata10%interestrate,whatis$146.41fouryearsfromnow
worthtoday?Wecanworkoutthesolutionmanuallyorwithacalculator,butit'smucheasiertouseatableofdiscountedcashflow
factors.Youcanfindthistableinthebackofanyaccountingorfinancetextbook.I'vereproducedaportionofthediscountedcashflow
tableforustouse.
Year

9%

10%

11%

12%

0.9174

0.9091

0.9009

0.8929

0.8417

0.8264

0.8116

0.7972

0.7722

0.7513

0.7312

0.7118

0.7084

0.6830

0.6587

0.6355

0.6499

0.6209

0.5935

0.5674

Thesefactorstelluswhatanyamountofmoneyattheendoffouryearsfromnow,atacertaininterest(discount)rate,isworthtoday.
Ifwefind10%andfouryears,weseethat$1dollarinfouryearsisworthonly68.3%ofthatamounttoday.Wecanprovethisby
takingthe$146.41amountattheendofyearfouranddiscountingitbacktothepresent:$146.410.683=$99.99803or$100.00.We
knowthat$100istherightanswerbecauseitistheamountwestartedwithintheillustrationofcompoundinginterest.
Whenyouhaveaseriesofannualcashflows,simplyapplytherelatedannualdiscountfactorforthatyeartothecashinflowforthat
sameyear.Forexample,acashinflowof$1,000ayearforeachofthenextthreeyears,usinga10%factor,willproducethefollowing
totaldiscountedcashflow:
Year1:Factor:0.9093,Amount:$1,000,Total:$909.10
Year2:Factor:0.8264,Amount:$1,000,Total:$826.40
Year3:Factor:0.7513,Amount:$1,000,Total:$751.30
Totalforallthreeyears:$909.10+$826.40+$751.30=$2,486.80
4. Netpresentvalue(NPV).
YoucanusetheDCFmethodwiththenetpresentvalue(NPV)methodtoevaluateinvestmentproposals.Let'sassumethatwewantto
buyamachinefor$5,000thatwillyieldthenetcashflowsforeachofthenextfiveyears:
Year1:$500loss
Year2:$1,900gain
Year3:$1,700gain
Year4:$1,900gain

Year5:$2,900gain(assumestradeinof$1,000forthemachine)
Ifweapplythediscountfactorsfromthetableandwestickwith10%,wefindthepresentvalueforthefuturecashflows:
Year1:($500).9091=($455)
Year2:$1,900.8264=$1,570
Year3:$1,700.7513=$1,277
Year4:$1,900.6830=$1,298
Year5:$2,900.6209=$1,801
Total:$5,491
Wethencomparethesediscountedcashflowagainsttheoriginalinvestmentof$5,000andseethatweare$491ahead.Whenyou
wanttocomparealternativeinvestmentchoices,NPVisagoodchoice.
5. Internalrateofreturn(IRR).
TheNPVmethodusesaspecificdiscountratetodetermineifproposalsresultinanetpresentvaluegreaterthanzero.Thosethatdo
notarerejected.
Theinternalrateofreturn(IRR)methodalsousesthediscountedcashflowconcept.However,thismethoddeterminestheinterest
(discount)ratethatwillmakethetotaldiscountedcashinflowsequaltotheinitialinvestment.Forexample,let'ssaythatyouwantto
expandaretailmusicstoreandleaseabuildingnexttoyourstoretoincreasesales.Youperformastudyandfindthatitwillcost
$200,000tolease,renovateandequipthebuildingbasedonafiveyearlease.Basedonallrevenuesandcosts,youdeterminethe
followinggrosscashflowsforeachofthenextfiveyears:
Year1:$36,000
Year2:$40,000
Year3:$44,000
Year4:$50,000
Year5:$60,000
Total:$230,000
Inadditiontothetotalof$230,000cashflowsoverthefiveyears,youalsoestimatethatyoucansellequipmentandfixturesfor
$20,000attheendoftheleaseperiod.Yourtotalcashrecoveryistherefore$230,000+$20,000=$250,000,whichis$50,000more
thanyourinvestmentof$200,000.
Thislooksfavorable,butifyoudiscounttheannualflowsoverfiveyearsbacktotheirnetpresentvalue,yougetadifferentpicture.
Yourequirea12%rateofreturnonyourmoneybecauseabusinessassociateguaranteesthisrateifyouinvestyourmoneywithher.
Using12%asadiscountrateandthefactorsfromthetable,let'slookatyourdiscountedcashflows.
Year1:$36,000.8929=$32,144
Year2:$40,000.7972=$31,888
Year3:$44,000.7118=$31,319
Year4:$50,000.6355=$31,775
Year5:$60,000.5674=$34,044
Year5:$20,000.5674=$11,348(tradein)
Total:$172,518
Youcanseethatthisamountislessthanthe$200,000.Thismeansthatyouwon'trealizea12%annualcompoundedgainsoyou
decideagainstexpandingyourstore.

Chapter5
Conclusion.
Lesson2illustratesthediversityofSixSigma.Initsultimateform,SixSigmahelpsanorganizationidentifycustomersandthenimplement
methodstosatisfythem.
Todayyoulearnedhowstrategicplanninghelpsafirmmeetitsgoals.YoudiscoveredtheSWOTacronymandhowitaddressesstrengths,
weaknesses,opportunities,andthreats.YoufoundoutthattheVOCandQFDareexcellentmethodstocaptureandmeetcustomer
requirements.Youlearnedhowbenchmarkingusescomparisonstohelpimproveyourcompanyprocessesandyouencounteredfivefinancial
methodstoevaluateinvestmentsandratesofreturn.
I'llseeyouinLesson3wherewe'lldiscusstheDcomponentofDMAIC:define.Takecare!

SupplementaryMaterial
SWOTAnalysis:UnderstandingStrengths,Weaknesses,Opportunities,andThreats
http://www.mindtools.com/swot.html
PleaserefertothisresourcefortheessentialsofmakingupaSWOTanalysis.Ithaseverythingyouneedtoknow.

QFDInstitute:QualityFunctionDeployment
http://www.qfdi.org
ThisistheofficialsiteforQFD.I'msurethatyou'llfindafewthingsofinteresthere.

CalculatingtheReturnOnYourInvestment
http://www.ehow.com/how_5000839_actualroireturninvestment.html
RefertothisWebsitetolearnmoreaboutthecomponentsoffinancialanalysisandreturnoninvestment.

FAQs
Q:Howdoesabusinessplanrelatetoastrategicplanandwhatareitsmajorsections?
A:Abusinessplanissimilartoastrategicplan.Themaindifferenceisthatabusinessplanisusuallyintendedforusebysomeoneoutsideof
yourorganizationsuchasabanker.Abusinessplanincludesmanyoftheelementsofastrategicplanincludingmethodofoperation,
requiredresources,sourcesandusesoffunds,andenvironmentalanalysis,thatarepresentedinasummarizedversion.

Assignment
Tohelpyouretaininformationfromthecourse,Isuggestthatyoucreateanotebookoranonlinedocumentanduseittorecordtheanswersto
theassignmentquestions.Thiswillhelpyourememberwhat'simportantandapplyvitalconcepts.Whenyouanswerthequestions,please
useyourowncompanyasareferenceoronethatyouknowabout.
Let'sstartwiththesetwoquestions.
1. Pleasespeakwithsomeoneatyourorganizationtodeterminehowheorsheidentifiesandmanagesexternalenvironmentalelements.
2. Whichoftheexternalelementsthatyouidentifiedinquestion1arethemostcritical?

Backtotop
Copyright19972015Allrightsreserved.Thematerialonthissitecannotbereproducedorredistributedunlessyouhaveobtainedpriorwrittenpermission
fromCengageLearning.

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