IB Business and

Management
Unit 1.6
Organizational Planning Tools
Pg. 95-102
What is meant by this quote?

 The rich man plans for tomorrow, the poor

man for today.
~ Chinese proverb

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1. An overview
 What is at the heart of business and management?
– Decision-making.
 What does decision-making involve?
– Making choices between competing alternative.
 Make the right decision = business will thrive.

 Make the wrong decision = may fail.

 There are three levels of decision-making in an organization:

– Operational decisions: routine, day-to-day, junior management.
 Deal with workers, customers
– Tactical decisions: regular, short-term, middle management.
 Deal with pricing strategies, hiring of staff.
– Strategic decisions: high-level, long term, senior management.
 Sets overall direction of the firm, new markets to enter, location of
business, staff salaries etc. …
 2a. Business Plans
 What is a business plan?
– A report explaining how a new business will achieve its aims and
objectives.
 Do you remember the difference between AIMS and OBJECTIVES?
 The business plan is a planning tool.
– Requires you to plan the marketing, financial, and human resources of
a business.
 What is the main aim of a business plan?
– To gain financial backing from banks or venture capitalists (lenders).
 Why would financiers want to see your business plan?
– It shows that you have thoroughly researched the business opportunity
and provided reasons to support the venture.
– Will help lenders judge the success rate and ability to repay loans.
– Will help them see the cash flow of the business.
– Will allow them to see how the working capital is being managed.
– Will allow investors to assess the risks and opportunities of the venture.
 2b. Business Plans
 There are many ways to write a business plan, a typical one will include the
following (see pg. 97):
– The Business
– The product
– The market
– The finance
– The personnel
– The marketing.
 Also, business plans SHOULD have a section devoted to a SWOT analysis.
 It MUST also contain a contingency plan.
– This will outline what the entrepreneur will do in case something goes wrong
with the business.
 A business plan should be no more than 5-6 pages in length.
 An executive summary should be included at the beginning of the plan.
– This will highlight the main information in the report, key points, and conclusions.
 An overview of the business.
3a. SWOT Analysis
 What does a SWOT Analysis represent?
– Strength-Weakness-Opportunities-Threats
 What does it assess?
– The current and future situation of a product, brand, company,
proposal or decision.
– It assesses both internal and external factors (see pg. 98).
 See table 1.6a pg.100
 How can a SWOT analysis be an extremely useful tool for
investigating all sorts of business situations?
– It can provide a good framework for:
 Evaluating business proposals
 Assessing opportunities
 Strategic planning
 Competitor analysis
 Reviewing strategy
 Risk assessment (see pg. 99)
 3b. Advantages and Limitations of
 Limitations:
 Advantages:
– Simple, quick and easy to use.
– Used for a wide range of
decisions.
– Determines an organization’s
position in the marketplace.
– Encourages foresight and
proactive thinking.
– Helps reduce risk of decision
making.
– Very objective and logical.
– some argue that it is very
simplistic and does not provide
detailed analysis.
– Model is static, whereas the
market is not.
– Is ONLY useful if decision-
makers are willing to act upon
the weaknesses.
– It is not used by itself…will be
used with other strategic tools,
such as PEST.
 4a. Decision-making Frameworks

 Remember ALL businesses have to make decisions in order to

achieve their objectives.
 They will decides on:
– What to produce?
– How to produce it?
– Whom to produce it for?
 A decision-making framework is need to answer these many
questions.
– SO, what is a decision-making framework?
 It is a systematic process of dealing with business problems,
concerns, or issues in order to make the best decision.
 4b. Decision-making Frameworks

 A decision-making model will have the following seven steps:

1. Identify the problem.
2. Gather data and information.
3. Analyze the data to produce options.
4. Assess the consequences of each options (costs).
5. Select the best option.
6. Communicate this decision to staff.
7. Review and evaluate outcome; lessons learnt.
 Very IDEAL, yes?
– Identify the problem.
– Define the problem.
– Explore the possible solutions.
– Action to tackle the problem.
– Look back to review the progress and level of success.
 4c. Decision-making Frameworks

 There are several models or frameworks that you can use to limit
the risk involved in decision-making.
 Here are a list of commonly used ones (see pg. 101-102.)
– Cost Benefit Analysis (CBA).
– Six Thinking Hats.
– Forced Field Analysis.
– Pareto Analysis.
– The 5 Why’s.