Monday, February 20, 2012

Writing a Corporate Business Plan

Writing a corporate business plan is of course a very different proposition from that of creating a business plan for a start-up. The aims of the plan certainly will be different and hence the details included will also be so.

The start-up business plan is of course much more likely to focus on the initial strategies of bringing the product or service to the market, the team behind it, core marketing strategies and of course the financial forecasts giving both investors and the entrepreneurs behind the business a good idea of what is to come.
Communication, integration, change, organization, implementation, participation, commitment, accountability, goals, strategy, objectives, control, feedback, resources, results, and coordination–– they  are   important factors in moving an organization from where it is to where it should be in the future?

Conceptual Framework
 One of the fundamental characteristics of today's organizational environment is change. Much has been written on this fact. Today's change has been called discontinuous, rapidly accelerating, and pervasive. The "futurists" describe what changes the future will bring, while some other thinkers tell us how change is affecting us physically, psychologically, socially, and organizationally. It is undeniable that the fact and necessity of change should be a major consideration in the management of virtually any organization or project. Furthermore, it is absolutely critical for managers to be competent in introducing, responding to, or coping with fluctuations in the environment.

2 The concept of integrated corporate planning aids the manager or management team in defining what the environment holds and how to navigate through that environment in order to achieve the changes that are desirable for long-term success of the organization. In the parlance of this article, these desirable changes are the goals (long-term) and objectives (intermediate to short-term) that are used to guide operations.

A corporate planning model
 There are a great many descriptions of corporate planning methodology, and each is suited to the professional and academic preferences of its author. Regardless of the model selected, the corporate planning process can be employed successfully if it is applied in full awareness of the situations in which the organization exists. Regardless of how successfully it was applied elsewhere, the implementation of a patent model without careful consideration of the environment and the management systems, command practices, and culture of the unit will lead to a marginal process (at best) or an outright square-filling exercise (at worst). Hence, the model to be described here cannot be taken part-and-parcel and put into practice without tailoring it to the idiosyncrasies of the organization wishing to improve results.

The essence of the corporate planning process consists of the elements shown below. Most of these elements are developed sequentially, but some of the early steps are accomplished concurrently. Most organizations will find that the flow of events shown should be used only as guidance and that continual iteration and skipping forward or back is the best way to develop a workable, effective plan.3 For the purpose here, it is assumed that planners have a clear understanding of the unit's mission; if not, this process is unlikely to produce meaningful results. Step by step, the planning process includes:

THE CORPORATE  PLANNING  PROCESS

STEP  1
 -Assess  the  previous  period's  plans.
 -----------------------------------------------------------------------------------------
 STEP  2
 -Analyze / review  customers / constituents satisfactions.
 -------------------------------------------------------------------------------------------
 STEP  3
 -Assess  the  internal  organization  situation [SWOT ]
 [strengths-weaknesses-opportunities-threats]
 -Assess  the  external   environment  [ PEST ]
 [political - economic-social-teconology ]
 --------------------------------------------------------------------------------------------
 STEP  4
 -set  strategic  directions  for  the  company
 -------------------------------------------------------------------------------
 STEP  5
 -determine / identify  SWOT  for  each  units
 *marketing
 *sales
*manufacturing
 *supply  chain
 *finance
 etc  etc
 -----------------------------------------------------------------------------------------------
 STEP  6
 -determine  the  requirements  for  performance  levels.
 --------------------------------------------------------------------------------------------------
 STEP  7
 -identify   and  evaluate  objectives/   strategies
 ----------------------------------------------------------------------------------------------------
 STEP  8
 -choose  strategies/objectives/goals   for  the  next  period.
 -----------------------------------------------------------------------------------------------------
 STEP  9
 -create  corporate  plan
 ---------------------------------------------------------------------------------------
 STEP  10
 -development  of  operating  plan/ for  units
 *marketing
 *sales
*manufacturing
 *supply  chain
 *finance
 etc  etc
 ----------------------------------------------------------------------------------
 STEP  11
 -development  of  budget / for  units
 *marketing
 *sales
*manufacturing
 *supply  chain
 *finance
 etc  etc
 -----------------------------------------------------------------------------------------------
 STEP  12
 -development  of  implementation plan.
 ------------------------------------------------------------------------------------------------
 STEP  13
 -monitoring  system   for  the  corporate  plan.
 ------------------------------------------------------------------------------------------
 STEP  14
 -contingency  plans .
 ---------------------------------------------------------------------------
 STEP  15
 -Rewards ./ incentives  for  achievements.
 =================================================
 Assessing the previous period's plan to determine
(a) the progress of the organization against the plan,
(b) areas where problems were encountered and where special attention needs to be paid in the future, and
(c) planning material that is still current and appropriate. This analysis will result in continuity from one year's plan to the next.

Analyzing customer/constituent satisfaction with the products and services received. Any problems or opportunities noted should be included in the plan.

Setting the strategic direction of the organization. This critical step, accomplished by the top manager, sets the tone for the planning process and gives all in the unit a good idea of where the boss is headed.

Assessing the unit's internal environment; that is, looking at its human, physical, and financial resources and then drawing conclusions based on the analysis. Included here should be an assessment of the unit's organizational culture, climate, and working conditions.

Assessing the unit's external environment, including economic and social factors, financial or budgetary constraints, political and environmental considerations, and community or government regulations. The focus should be on identifying challenges that will be presented from outside the unit.

Determining the kinds of goods/services that will be required of the unit during the planning period and the levels at which those products must be provided. This forecasting activity involves projecting future market or constituency needs as well as internal performance targets, such as return on investment, productivity increases, or improved responsiveness to customer desires. The thrust here is to respond to the environment based on the professed aims of top management.
Determining the unit's strengths, weaknesses, opportunities, and threats (S.W.O.T.) regarding the information collected and analyzed in the previous three steps. Essentially, this step involves synthesizing internal and external information with an eye toward identifying strengths that can be relied on to obtain or exceed required performance levels; weaknesses that must be addressed if performance is to be satisfactory; opportunities that may be exploited, perhaps by using one or more strengths, in order to move ahead at a quicker than normal pace; and threats that must be avoided by sound planning.

Identifying and evaluating strategic aims. These "goals" should relate directly to the S.W.O.T. factors and concern a range of outcomes which the unit could move toward in order to fulfill its mission. For example: "To increase market share of product XYZ" or "To improve human resource management." These are broad timeless statements that guide the further planning efforts of the unit. In this step, it is important to generate several alternative goals that might be pursued. The management team will then have a variety of paths to choose from in moving the unit ahead.
Choosing from the list of long-range goals those which will form a framework for this period's operational planning.
Preparing the "corporate plan." In essence, this step consists of documenting the planning process up to this point.
In its simplest form, the plan includes:
––The top manager's assessment of the unit and his/her enunciation of the very broad direction in which the unit should move.
 ––Analysis of the environment.
 ––Discussion of the unit's S.W.O.T. factors.
 ––Listing of the key goals.

A discussion of each of these goals should be included to provide guidance as to the nature of desired short-range accomplishments to support the long-range aims. The plan's value as a communication vehicle is substantial, but the real value to the organization comes from going through the process which resulted in selecting and then documenting the goals.
Developing operational plans to guide the implementation of the goals. These short- to intermediate-term objectives define the major results that must be accomplished for the unit to move incrementally closer to the goal. For example, "To achieve sales of 15,750 units of product XYZ by 31 December 2013" or "To complete implementation of the automated personnel management information system by 31 December 2013." These operational objectives are supported by detailed action plans that spell out how and by whom the objectives will be met.

Monitoring the implementation of the objectives through periodic reviews with the responsible individuals/offices.

Evaluating progress/results against the objectives to determine the extent to which movement toward the goal has been realized. If problems are noted, adjustments can be made to either the action steps or the schedule in order to get things back on track.
Appropriately recognizing or rewarding accomplishments that support the long-range direction of the firm/agency. This positive reinforcement for a job well done will lead to improved organizational effectiveness.

The importance of communication, flexibility, and control
 The entire process just described is based on communication. In fact, the process could not work at all without open communication up, down, and across the organization. The key to getting the information flowing is the participation of the people who will be responsible for executing the plan. Normally, the extent of participation in deciding on the unit's overall directions and corporate goals will not be great. That is the province of the top management team. However, once operational objectives are established and action plans developed, participation should be as wide as organizationally possible. Without participation in implementing the long-range aims that top management sets, the vital ingredient of corporate planning––commitment––is missing.

 Two other vital ingredients of a successful corporate planning system are flexibility and control. These issues will be discussed in future blogs as they very much deserve their own special place in the sun. Enjoy!

1 comment:

  1. Thanks, to provide excellent information to writing a corporate business plan. Definitely, writing business plan is different from start up a business. Here giving much essential steps of corporate business process. That's really helpful for our business. Business Market Research

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