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Strategic Business Plan


By Anonymous - Posted on 08 January 2012

As per APICS dictionary “it is a statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow (source and application of funds) statement”.

A business plan is usually stated in terms of dollars and grouped by product family. The business plan is then translated into synchronized tactical functional plans through the production planning process (or the sales and operations planning process). Although frequently stated in different terms (dollars versus units), these tactical plans should agree with each other and with the business plan. It’s a document consisting of the business details (organization, strategy, and financing tactics) prepared by an entrepreneur to plan for a new business.

The business plan sets the overall activities for the business & addresses specific issues & concerns that typically relate to:
a) The nature of the firm which includes type of business, nature of the enterprise.
b) The locations & facilities of the enterprise, such as the use of the global supply chains, strategic alliances with partners, production facilities & distribution channels.
c) The type of organization & the skills of the people required.
d) Levels of processing technology, such as the processing of material resources into components, the assembly of components into finished products & the distribution of products to a customer.
e) The type & nature of capital resources required, such as short term bridging loans, long term debt financing & venture capital or market capitalization from & initial purchase offering.
f) The interest of primary stakeholders, such as members of an association, customers of a commercial enterprise, suppliers to a corporation, donors to a political organization, community groups to a government body & associates in retail organization.

 

The Market Definition in business plan should include:
a) The location of customers & the nature of their relationship with the supplying organization i.e. is the customer a direct customer, an indirect customer, a consumer of a product or service, or an influencer of a potential consumer.
b) Information about projected market growth rates & demographic information about future customers.
c) Impact of social changes including changing needs of customers.
d) Global & regional economic considerations & business conditions as they affect customer needs

The business environment definition should include:
a) Information about current & future potential competitors, including benchmarked information wherever possible.
b) Projections of business growth, including environmental threats & opportunities.
c) Information on the availability of financial resources & sources of funding required.
d) Information on potential & emerging technologies & their impact on business performance.

Key Business Goals:
a) Projected business growth.
b) Targeted profitability.
c) Anticipated return on investment.
d) Desired market share.
e) Shareholder value.
f) Company Value.
g) Customer Service.

Business Stakeholders: Business stakeholders include all those groups affected by the operations of the organization like the community, the management team, the business owners and shareholders, the members of an association, the workers, the customers & the suppliers of the organization. All these business stakeholders must be considered in the development of the
business plan.

Benchmarking: As per the APICS dictionary “It is the process of measuring the company’s products, services, costs, and practices”. Two types of benchmarking exist—competitive, a comparison against your industry best, and process, a comparison of a process to the best-inclass. During the development of the business plan may aspects of operational performance must
be compared with the performance of other organizations. Benchmarking can be done in many ways but these normally include reciprocal site visits & mutual exchange of specific information bet’n 2 organizations. It is recommended to compare an organization’s performance with others that have clearly demonstrated that they are the best in class for that particular process.

Strategic Data Sources for Business Plan:
a) Many companies deploy a process called environmental scanning that basically provides input from the marketplace about trends occurring within global communities where the organization is operating or seeking to penetrate. It provides information about demographics, likely changes in regulation, market growth potential, general economic conditions, current market players, potential competitors, current customer preferences & satisfaction levels with current suppliers & more.

b) Also an organization needs to review it’s current capabilities such as the skills of the workforce, the core competencies of the organization, that available resources & the application of information technology for competitive advantage.

c) Financial targets that are set by the executive team which includes projected earning levels, business growth, market penetration, cash flow generation, ROI targets & product volume targets.

d) Strategic goals set by executive team which includes desired levels of customer service, planned quality improvements, cost reduction goals, lead time reduction & productivity improvements.

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