Business Plans & SWOT + PEST + Porter's

8/22/2019 Business Plans & SWOT + PEST + Porter's

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1. BUSINESS PLANNING is the establishment of objectives and theformulation, evaluation and selection of policies, strategies, tactics andaction required to achieve them.

2. THE BUSINESS PLAN is a predetermined response to the externalevents that will impact the direction of a business.

3. BUSINESS STRATEGIES are the long term plans that are needed toreach those targets

4. A companys strategy is a pattern of decisions and actions that are

taken to achieve its aims and objectives.


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Planning is everything: the plan is nothing-US general Eisenhower

A business plan is a document, where as planning is the process of preparing a course ofaction to achieve objectives.

The Importance of Planning

It forces managers to look ahead, rather than being obsessed with day-to-day problems.It forces managers to identify strengths, weaknesses, opportunities and threats (SWOT).

It provides a focus and sense of direction.

Coordinating activities.

Motivating

It establishes criteria by which performance can be judged.It facilitates delegation.

It reduces the gap between objectives and performance.

It forces managers to be realistic in terms of the objectives they set.

It identifies inefficiencies and unnecessary duplication of effort.


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STRATEGIC

Deciding on objectives of the organization, changes in these

objectives, resources used to attain objectives, and policies to

govern the acquisition and disposition of these resources.

TACTICALEnsuring that the resources are obtained and used effectively and

efficiently in the accomplishment of the organizations objectives.

OPERATIONALEnsuring that specific tasks are carried out effectively and

efficiently


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1. Business plans are particularly associated with new start-up businesses.

2. It is not only a requisite for seeking finance from investors, but also anessential document for describing aims and objectives and enablingmeasurement of progress towards achieving them.

Business Plans provide the means to: Appraise the present and future of the business.

Work out short and long-term objectives.

Establish framework for action to achieve these objectives.

The busin ess plan is a working do cum ent that helps the owner to mon i torcurrent op erat ions , plan the future of the busin ess and evaluate

act ions necessary for the success of the business.


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The Business Plan is a statement of:

The current situationA situational Audit.

Where the business is goingObjectives. How will it get thereStrategy.

The financial implications of the proposed activities.

The viability of the proposal.

Constraints and expected difficulties.


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SummaryThe introduces the business plan. It should clearly and concisely state the

nature of the business, the amount of external finance it seeks and the

purpose of the application.

A Description the businessDetails should be given of:

The history of the business (if its an existing business) or reasons for

starting up the business.

Legal form or organization. The capital structure.

The key personnel (qualifications, experience, responsibility)


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The Product or ServiceThe product or service should be described and comparisons made with rival

products. The position in the market should be located and its uniqueselling points (USP) should be emphasized.

Reference should also be made to the ways in which the product is likely to bedeveloped in the future.

The Market

This section should be based on market research data and trends in the marketshould be identified. The target customer (or target groups of customers)should be described. Market shares, the degree of competition and futurethreats should be included in the assessment.


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The Marketing PlanThe marketing plan will detail strategies in relation to:

Pricing policies.

Advertising and other forms of promotion.

Selling and distribution.

Product development and product launch.

Manufacturing and Operations Plan

This section of the business plan deals with the production of goods (or the

means of providing services). Details of location, production facilities,techniques and capital equipment are given as part of the business plan.


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Financial InformationThe nature of financial information included in this section of the plan depends on

whether the firm is an existing business or a start up business.

In the case of the former, it is essential to include actual balance sheets, profit and lossaccounts and cash statements from the recent past.

For both start up and existing business it will be necessary to include the followinginformation:

Budgets for main functional areas.

Cash flow forecasts.

Costing and break even analysis.

Budgeted trading and profit and loss account. Budgeted balance sheet

Total borrowing requirements.

Security for the loan and proposal for repayment


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The process of reviewing exist plans and identifying new opportunities and the risks

associated with them is termed strategic analysis.

Managers need to constantly analyse the strategies their businesses are following,

and alternative plans that could be adopted in order to:

Review progress according to the original plan. Assess other opportunities that could be exploited.

Identify the risks associated with alternative strategies.


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This involves looking at the internal strengths and weaknesses of a

business and the opportunities and threats.

STRENGHTS:These are things that the business and its staff do

which: They are effective at.

They are well known for.

Make money

Generate business and reputation Lead to confidence in the market.

Cause customers to come back for repeat business.

Cause other businesses to try t learn from them.


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WEAKNESSES:These are the things that the business does badly, that it is

ineffective at or that it has a poor reputation for. It also includes the factors thatcause losses, hardships, disputes, grievances and complaints for a business.

OPPORTUNITIES:These are the directions that the business could profitably take

in the future because of its strengths or because of the elimination of its

weaknesses. This involves a consideration of the business environment fromthe widest and most creative standpoint.

THREATS:Threats to a business arise from the activities of competitors and from

failing to take opportunities or to build on successes. Threats also come from

complacency, a lack of rigour, and from falling profits.


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STRENGTHS

Current Products are market leadersin some countries in terms of sales andmarket share.

Brand loyalty to product and tocorporate identity.

Effective promotion

Excellent Distribution Network

Constant R&D leading to new ideas.

WEAKNESSES

Age of life cycle of certain products.

Restricted product range could causeproblems if sales suddenly fall.

OPPORTUNITIES

Expansion into new geographical areas.

Development of global brand andmarketing.

Possible growing demand for softbeverages.

Legislation on drinks driving mayencourage growth of soft drinks sale.

Expansion into new markets.

THREATS

Growing competition from supermarketown brands.

Increasing competition from competitorsbringing out new products.

Competition from alcoholic beveragesand non-alcoholic beverages.

Legislation on ingredients could forcechanges in production.


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STRENGTHS

Consistent quality and hygiene standards

Internationally known brand name.

Restaurants in most countries

WEAKNESSES

Limited menu range.

No variety of dcor or food choices indifferent countries.

Staff turnover high, especially among parttime staff.

OPPORTUNITIES

Potential growth in developing countriessuch as China.

Develop brand name into new ranges orproducts such as childrens clothing orhotels.

THREATS

Environmental concerns regarding waste,e.g., take away food containers.

Strength of competitors such as BurgerKing.

Changing consumer taste; e.g. decliningpopularity of meat products.


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This form of business analysis examines the external environment and theglobal factors that may affect a business. It can provide a quick and visualrepresentation of the external pressures facing a business, and theirpossible constraints on strategy.

It is usually divided into five external influences on a business.

P Political

E Economic

S Social

T Technological

GEnvironmental Factors


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POLITICAL:This is concerned with how political developments, regionally,

nationally and internationally of might affect a businesss strategy. It mightinclude a consideration legislation, political pressures and governmentattitude towards businesses.

EONOMIC:This involves the analysis of a wide variety of economic factorsand their effects on a business. They include:

Consumer activity confidence, spending patterns, willingness to spend. Economic Variables inflation, unemployment, trade, growth.

Government Policies fiscal, monetary, supply side, exchange rate.

Fixed and variable cost of business.

The effects of changes in products and labour markets.


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SOCIAL -What competitive advantage might a business gain by social changestaking place outside of the business? For example, falling birth rate, increased lifeexpectancy can lead to the development of products, particularly private pensions,private medical schemes. Pressure groups can also affect businesses, for example,the anti-smoking lobby has led to smoke free areas in restaurants, in hotels, and onaircrafts.

TECHNOLOGICALThe impact of technological advancement on businessstrategy. Businesses operate in a world of rapid technological changes. Organisationsneed to regularly review the impact of new technologies upon their activities. Forexample, some music companies have consider sales over the internet.

GREENEnvironmental factors that might affect a business. These would includeissues such as: Pollution

Methods of production.

How image and landscape are affected by the development of new factories


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Michael Porter developed a model that allows business to analyse competitive

forces in an industry in order to identify opportunities and threats. Theseinclude:

The risk of entry of new competitors

The degree of rivalry amongst established firms.

The bargaining power of buyers. The bargaining powers of suppliers.

The threat of substitute products.

Porter argue that the stronger each of these forces is, the less able abusiness is to raise prices and profits. For example, when cheap airlinessuch as EasyJet entered the market in the 1990s, established companiessuch as BA arguably had to offer lower priced services.


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Cost Analysis is essential to business strategy. A detailed knowledge of the costs of

machinery, workers and materials will be needed before a strategy can be chosen.

It provides exact cost incurred in manufacturing a product or providing a service.

It helps a business to calculate profit margins.

It help the business determines which products contributes to fixed costs.

Value Analysis: This is used to identify activities and areas of business that add value,

and to find out where value is lost. A business can concentrate on areas where value

is lost and attempt to reproduce or improve activities that add value.

Business Plans & SWOT + PEST + Porter's

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