BUSINESS PLANNING
PLANNING – THE COMPONENTS
Strategic
Plan
Financial Goal
Customer Goal
Processes Goal
Learning & Growth
Analysis
ExternalPEST
Internal
Ratios
Risks
Budgets
Value Chain
TOWS or SWOT
Growth
Opportunities
Marketing & Sales,
Service Plan
Customer or Market
Targets
How Reach Them?
The Four P’s
Operations
Plan
(Processes)
Inbound Logistics
Operations
Outbound logistics
HR Plan
Financial
Plan
Forecasts
F/C Cash Flow
P & L
Budgets
3-5 Yrs
Strategic KPI’s Operational
KPI’SFinancial KPI’sMarketing
KPI’S
Business Plan
EXTERNAL ANALYSIS
Industry Profitability
Driving ForcesOutlined two key objectives
Explain how they are changing the industry
Key Success FactorsOutline the two most important factors
Explain why they are necessaryShow industry specificity
Industry Profile •Industry Definition •Size •Growth Rate •Stage in Life Cycle •Number of Companies •Customers (Number of Buyers) •Ease of Entry/Exit •Capital Requirements •Economies of Scale •Experience Curve
Competitor Profile & Strategic Groups
•Two Independent dimensions •Where and how competitors fit the dimensions •Outline Key Competitors or Groups in terms of: • Name • Products • Current Strategy • Strategic Intent • Other Strategic Information
Porter’s Five Forces •Threat of new Entrants •Buyer Power
•Who are they?•Supplier Power
•Who are they?•Substitute Power
•What are they?•Rivalry
TOISSUES
INTERNAL ANALYSIS
Strategic Profile •Company NameWhich Industry it operates in•Vision•Mission•Goals•Size•Structure•Business Segments•Products / Markets & Industries (Current NOT historical) •Corporate Level Strategy•Business Level Strategy
Financial Analysis•Profitability•Liquidity•Gearing Ratios
•Strategic Implications (THE SO WHAT!)•Any other relevant information•Overall financial situation
VRIO / Value Chain•Key SCA’s, •TCA’s•CD’s •Problems caused by these
•Justify why they are this type of CI
•Identify and justify any Core Competencies (Or lack of them)
ISSUESKey Internal and External Issues
Articulated why they are important to the organisationRanked in order of the overarching issue being your issue followed on with your other
issuesLINKED TO YOUR ANALYSIS
FROM EXTERNAL ANALYSIS
STRATEGY DEVELOPMENTPotential Strategies
•Develop and Outline 2 strategies•Explain how they solve the issues•Linked to the analysis
Decision Criteria•Explain key reasons for one strategy over another•Included a detailed appendix table on decision criteria which:
• Includes key decision criteria (Financial Outcomes; Solves Issues)
• Shows a points scale• Explains the points scale• Justifies why each strategy received its
respective score
Recommended Strategy•Outlined the Chosen Strategy•Explained What’s good about it•Discussed Financial Implications•LINKED TO ANALYSIS
Industry Analysis
Segments
Driving Forces
Key Success Factors
ISSUESInternal & External
Mission & Goals
Corporate and
Business Strategy
Culture
INPUTS FROM LINKING TO
VISION
Mission & Goals
Corporate and Business
Strategy
Culture
STRATEGY IMPLEMENTATION
Action Plan•Explained key steps regarding implementation•Given the financial cost/benefit of each stage•LINKED TO THE ANALYSIS•Included a detailed table in the appendix which gives sufficient information
• Who, What, When, Deliverables, Key time points, SMART goals. Project management.
Conclusion•Sum up the benefits that your strategy brings to the company
•SELL IT AND CONCLUDE
EXECUTIVE SUMMARY
Risk Assessment
Overall Implications
Any other models/headings/sectio
ns as appropriate PRESENTATION:Defence against any objectionsWhat questions may be raised
Final Report PublicationSignoff – Project start
7
REMEMBER
SO.....
SO WHAT.....
WHAT NOW......
There may be a gap in the
market. BUT, is there a
market in the gap
PEST
Political Economic Social Technical
Sometimes PESTLE (PEST + Legal and Environment)
SWOT
Strengths Weaknesses Opportunities Threats
StrengthsThings that are
good now, maintain them, build on
them and use as leverage
WeaknessesThings that are
bad now, remedy, change or stop them.
OpportunitiesThings that are good
for the future, prioritize them,
capture them, build on them and
optimize
ThreatsThings that are
bad for the future, put in plans to
manage them or counter them
POSITIVE/ HELPFULto achieving the goal
NEGATIVE/ HARMFULto achieving the goal
INTER
NA
L O
rig
infa
cts/
fact
ors
of
the
org
aniz
ati
on
EX
TER
NA
L O
rig
infa
cts/
fact
ors
of
the
envir
onm
ent
NOTE
A PEST analysis most commonly measures a
market; A SWOT analysis measures
a business unit, a proposition or idea.
THE MARKETING MIX (4 PS)
Success in the marketplace depends upon the best combination of the following elements:
The Marketing Mix
Product Price Place (distribution)
Promotion
ObjectivesFeatures/optionsRange/styles/
sizesQualityService LevelGuarantee/
WarrantyBranding Packaging
ObjectivesStrategies/
policiesCostsDiscountsAllowancesGeographical
considerations
Credit facilities
ObjectivesChannels
chosenExtent of
coverageWholesalingRetailingTransportationLocation
ObjectivesBudgetAdvertisingSales promotionPublic relationsPersonal sellingDirect
marketing
BOUNDARY SCANNING
3. The marketing oriented phase:
Research •Customers needs and wants
Develop•The product or service•Matching customer needs and wants
Provide •The product or service they want
BOUNDARY SCANNING
What are my competitors doing What is the Market doing What is happening overseas What will the impact be here Economy
National Global
THE DIFFERENT TYPES OF MARKETS
The three main categories are:
1. Consumer 2. Organisational or business 3. International
SEGMENTING WHO ARE MY CUSTOMERS?
When dividing a large market into sub-markets several segmentation methods may be utilised
Segmentation ExampleAn antique shop may deliberately locate in an up-market suburb thus segmenting
geographically (location) psycho graphically (lifestyle) and behaviourally– informing customers when new
pieces of Royal Doulton become available
THE SEGMENTATION PROCESS
Ways of segmenting an organisational market by:
Geographics – same as consumer markets
Account characteristics – size, loyalty, credit rating
Buying behaviour – purchase formality and criteria, factors of importance
Product usage – assist firms operation, used in production process
WHERE DO I FIND IT ALL?
http://www.stats.govt.nz/tools_and_services/tools/business-toolbox.aspx
UNDERSTANDING CONSUMER BEHAVIOUR
THE USE OF PROMOTIONAL TOOLS – ‘PUBLIC RELATIONS’
Public relations tools – “used to create good will and understanding”
Publicity: news worthy items about the organisation and is not paid for (remember the definition of advertising)
Sponsorship: can be leveraged to be seen as a supporter of a worthy cause (environmental, social responsibility)
Prepared material: newsletters, house magazine, financial reports
Trade shows: variety of expos/fairs to promote image Hospitality events: Entertaining the Media or trade
evenings Media training/grooming/speech-writing:
promoting the right executive approach
THE MARKETING PLAN- CONTROL AND EVALUATION
The evaluation and control aspects of the Marketing plan should include critical key performance indicators (KPI’s) to measure and monitor the marketing plan
Target Market
Surveying Customers Conducting Market Research
Analysing Sales Figures
The Marketing Mix
Product KPI’sProduction spot checks for efficiencyQuality control check on product
Promotion KPI’sAdvertisingChecking advertising proofs on timeMonitoring sales after advertising
Sales PromotionMonitoring sales during and after promotion
Personal SellingNoting individual staff sales
Price KPI’sChecking competitors price Noting Competitor advertising
Place KPI’sShopping at competitors storesCounting in store customer foot traffic
CHANNEL LENGTH TYPES (HOW DO I GET TO MARKET)
Producer Consumer
Producer Retailer Consumer
Producer Wholesaler Retailer Consumer
Producer Agent Wholesaler Retailer Consumer
Types of distribution channels for the consumer market
PRICING CONSIDERATIONS
A number of factors influence the selection of a price
Influences On PriceSelection
Organisational
Market Place
Firms overall Objectives Marketing CostsProduction CostsDistribution CostsPromotional Costs
Total Costs
Marketing Objectives
Competitors pricing strategy Market Supply and Demand
Legal regulatory requirements Level of value to customer
THE INFLUENCE OF COST AND MARKETPLACE FACTORS ON PRICE
Consumer perception: Price may indicate degree of quality?
“If consumers believe extra benefits will be gained by paying more, and those benefits are important to them, then a higher price can be asked for”
ANALYSING COST AND MARKETPLACE FACTORS ON PRICE
Costs: Total costs are made up of fixed costs and variable costs. Fixed costs are those which in theory remain constant,
regardless of the level of production activity – rent, rates, insurance, salaries of administrators (overheads). Even when no production is taking place, these costs will continue.
Variable costs are those which vary according to the level of production and include direct labour and materials.
Not only should the above costs be taken into account when price setting, so also should R&D and set-up costs.
PRICING STRATEGIES, TECHNIQUES AND ADJUSTMENTS
Cost-related pricing techniques: Two basic methods can be used to
calculate a price on the basis of costs when setting a price:
1. Cost-plus method – most common in the retail sector entails adding a standard mark-up to the cost of goods to provide a profit margin.
Different categories will historically adopt different mark-ups – supermarkets will use 1%-2% for some lines while food service may use 100%-300%!
PRICING STRATEGIES, TECHNIQUES AND ADJUSTMENTS
Cost Plus Pricing Continued…Mark ups are determined by: The speed of stock turn overie fast turnover of stock and lower margins
supermarkets),slow turnover of stock and higher margins Product type ie cars vs clothes The cost pricing formula is:
Cost + Mark Up = Sales Price
PRICING STRATEGIES, TECHNIQUES AND ADJUSTMENTS
Break-even pricing:
Rossini Pasta produce a variety of convenience meals. These meals are sold for $8.00 each. Annual fixed costs (overheads) amount to $35,000 and variable costs (direct material and labour) are $3.50 per meal. The number of meals that need to be produced and sold to break-even, is calculated as follows:
Fixed costs Price – variable costs, therefore:
$35,000 = $35,000 = 7,778 meals($8.00 - $3.50) $4.50
BREAKEVEN – A QUICK ATTEMPT
FIXED COSTS Rent $ Machinery
Sewing Machines – Computers etc. Finance $ Depreciation $
TOTAL $ Power $ Phone $ Survival Income $ Admin
Marketing setup costs $ Printing costs $ Office Equipment $
TOTAL $
TOTAL FIXED COSTS $__________
VARIABLE COST
Fabric # of meters x cost per metre $(Include an allowance for wastage - offcuts etc. say 10%)
Labour Hours at $ per Hour $
Accessories / Ancillary Items Thread, Buttons, Trim, Lace $
Machine Wear Maintenance per month/max garments $
Packaging / Labelling $ Freight to Customer $_________
TOTAL VARIABLE COST $
BREAKEVEN CALCULATION
FIXED COST $ Variable Cost $ Sell Price (Excl GST) $ Margin per unit $
(Sell – Variable)
Unit Sales to Fixed = _______ = Break Even SELL
SO, Breakeven Units X Sell = required Turnover in $What if we drop the sales price by 20% or even 30% (i.e. End of season)
BUDGETED SALES
Prepare three budgets Worst Case scenario (Break even?) Best Case Scenario (The Dream Result!) Most likely (Mid point)
The “Most Likely” Budget is done after the worse and best case scenarios.