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U/S; 7886 – Develop and Implement a Business Plan  Copy

U/S; 7886 - Develop and Implement a Business Plan 

 

Learning Unit1

US:7886, NQF LEVEL 5 WORTH 8 CREDITS

DEVELOP AND IMPLEMENT A BUSINESS PLAN

Unit Standard Purpose

South Africa is a diverse community and people across all fields and occupations are required to interact with different groups of people. This Unit Standard assumes a basic understanding of diversity and requires learners to apply that knowledge as they live and work together is a specific South African community. It requires learners to challenge their own attitudes and values and to apply solutions within a specific context. It will be especially useful for learners in local, regional and national government departments, business, civil society, education and counselling, management, Non-Governmental Organisations (NGOs), events management and travel and tourism.

Learning Assumed to be in Place

It is assumed that people starting to learn towards this standard are able to:

Communicate effectively (at least NQF level 4)

Apply the competencies described in unit standard titled “Develop and implement a business plan”.

 

 

SESSION 1

SO 1

DESCRIBE THE IMPORTANCE OF DEVELOPING AND IMPLEMENTING A THOROUGH BUSINESS PLAN IN THE ORGANISATION.

Learning Outcomes

(Assessment Criteria)

The importance of having a broad knowledge of legal and liability issues when developing a business plan is explained.

The reasons for why good communication and leadership skills are important when implementing a business plan in an organization or department are explained.

The importance of a business plan as a document that outlines the organization’s strategic intent is explained.

The organizational systems (such as accounting or distribution) that are required in a business plan are described.

The importance of having a broad knowledge of legal and liability issues when developing a business plan is explained.

 

  1. To raise money for your business

Potential investors or lenders want a written business plan before they give you money. A mere description of your business concept is not enough. Instead, ensure you have a thorough business and financial plan that demonstrates the likelihood of success and how much you will need for your business to take off.

  1. To make sound decisions

As an entrepreneur, having a business plan helps you to define and focus on your business ideas and business strategies. You not only concentrate on financial matters, but also on management issues, human resource planning, technology and creating value for your customer.

  1. To help you identify potential weaknesses

Having a business plan helps you to identify potential pitfalls in your idea. You can also share the plan with others who can give you their opinions and advice. Identify experts and professionals who are at a position to give you invaluable advice, and share your plan with them.

  1. To communicate your ideas with stakeholders

A business plan is a communication tool that you can use to secure investment capital from financial institutions or lenders. It can also be used to convince people to work for your enterprise, to secure credit from suppliers, and to attract potential customers.

Creating a business plan involves a lot of thought. You need to consider what you want to do, and use that as a starting point. It doesn’t need to be complicated. At its core, your plan should identify where you are now, where you want your business to go, and how you will get there.

 

The reasons for why good communication and leadership skills are important when implementing a business plan in an organization or department are explained.

 

Important Leadership Skills – Commitment, resolve and perseverance – driving every aspect of the organization toward a singular unified purpose.

Risk-taking – breaking conventions and developing new products and services to establish marketplace dominance (and possibly even create a unique market).

Planning – though a leader typically doesn’t get too involved in the details, he or she must orchestrate a high-level plan that drives everyone toward the unified goal.

Motivating – an effective leader must be able to encourage contributions from the entire organization, navigating the specific motivators of each individual or group to push the right buttons and inspire employees at every level to achieve not only their personal best but the best for the organization as a whole.

Communication skills that rely on active listening – far more than just being able to speak and write persuasively, leadership communication skills incite others to work toward the stated goal in line with the path the leader has chosen.

Possessing or obtaining the skills required to successfully achieve business goals – bringing a unique knowledge set to the table or acquiring it personally or through employees and other subordinates.

 

 

What Makes These Individual Skills So Important?

First, a distinction needs to be made: the difference between a leader and a manager. A leader is someone who does the right thing, whereas a manager does things right. Or to put it another way, management is an occupation, leadership is a calling.

As addressed in the list above, this calling demands a unique vision for success and the tools necessary to communicate and implement that vision. The leader must possess a set of clearly-defined convictions and the daring and skill to translate their vision into a reality. This is why many people believe, as seen in What Motivates True Leaders, that the most successful development of leadership skills takes place when the leader is geared toward the development of individuals or social constructs. This foundation creates a drive and a passion that many believe cannot be replicated or faked in situations where the leader is concerned solely with financial returns.

With effective leadership, all participants within the organization are confident someone they know is working towards the greater good, both on their behalf personally and that of the company, as well as the larger impact created by the specific product or service. And within this system, one of the most critical elements to success is a leader in whom they can place their trust. That’s because true leadership is about taking people to places they would not or could not go on their own. And achieving that level of loyalty and dedication is next to impossible without the genuine allegiance inspired by true leadership skills.

Effective Communication Important when implementing a business plan in an organisation

To lead others, you must demonstrate effective communication skills. Otherwise, a manager will lack the credibility to implement his employer’s objectives, and struggle to rally worker teams behind them. Managers who communicate well are also more likely to become good problem solvers, which is an essential skill to function well in an international workplace where diversity is increasingly the norm. Employees who show an aptitude for verbal and written communication are more likely to advance up the corporate ladder, as well. Effective communication between managers and employees is requisite for a well-functioning workplace.

 

Better Employee Relations

The best managers understand the need for building alliances and communicating throughout all levels of the organization. Effective communications skills are a must for breaking down barriers, which promotes the collaborative atmosphere that an organization needs to thrive. A typical employee’s engagement and interest in work varies from day to day. Astute managers accept this reality but can tailor their own communication style to motivate an employee to achieve the desired result.

Gains in Productivity

Whether they realize it or not, managers are the linchpin of a company’s productivity efforts. Managers must clearly articulate strategies and plans so that an employee team knows what to do, and how the company envisions them being carried out. At the same time, each team member should understand his role, and why his particular task is so important. If the manager can’t make that case, employees grow complacent and less interested in their work.

Impact of Globalization

Cross-cultural and linguistic work teams are increasingly common features in today’s globalized workplace. Managers must devise new communications strategies to interact with an increasingly multicultural, multinational workforce. Employees also may identify with several different national groups, which managers must consider when trying to communicate a company’s goals and objectives.

Multigenerational Relations

Conflicts are likely when employees from different generations find themselves working together. Good communications skills are a must for managers wanting to succeed in this environment. For example, the competitive drive of Baby Boomer employees born between 1946 and 1964 may not sit well with Generation X and Y peers, born in 1965 or later, who desire a less intense work life. Managers must avoid blanket stereotypes when trying to encourage the various groups to interact with each productively.

Problem Solving Skills

Effective communication and problem-solving skills go hand in hand. Employees who struggle on the job naturally look to managers for guidance to solve their problems. A manager who lacks discretion, however, is unlikely to gain the trust he needs to address co-worker conflicts, declining performance or substance abuse issues. Failure to address these situations, in turn, jeopardizes the organization’s productivity and ability to carry out its mission. 

The importance of a business plan as a document that outlines the organization’s strategic intent is explained.

 

Strategic planning is important to an organization because it provides a sense of direction and outlines measurable goals. Strategic planning is a tool that is useful for guiding day-to-day decisions and also for evaluating progress and changing approaches when moving forward. In order to make the most of strategic planning, your company should give careful thought to the strategic objectives it outlines, and then back up these goals with realistic, thoroughly researched, quantifiable benchmarks for evaluating results.

The Mission

Strategic planning starts with defining a company mission. A mission is important to an organization because it synthesizes and distills the overarching idea linking its practical strategies, enabling management and employees to align the specifics of their actions and decisions with a clearly defined vision and direction. Define your strategic mission in a way that is broad enough to guide both management and employees, and narrow enough to focus their efforts. “To help humanity,” is too broad a mission, even for a nonprofit. “To feed the hungry by connecting home gardeners with food banks,” is a mission that is both general and actionable.

Setting Goals

The nuts and bolts of the strategic planning process are expressed in measurable goals. Measurable goals set specific, concrete objectives expressed in terms of quantities and timelines. Measurable goals are important to an organization because they enable managers and employees to evaluate progress and pace developments. “To grow substantially during the next few years” is not a measurable goal, but “To increase sales by 30 percent during the upcoming year” provides a concrete objective to be achieved in a specific time frame.

Evaluating Progress

Strategic objectives are of necessity based on the best information you have at the time and your most realistic assessments of what your company can achieve. Organizations also benefit from building a stage into the strategic planning process that involves evaluating goals and progress after an elapsed period of time in light of the company’s success in achieving these goals and developments that have arisen in the interim. For example, if you plan to grow your hardware store business 20 percent during a specific year, but a formidable competitor opens a superstore down the road, you’ll probably redefine your objectives and evaluate progress in terms of preserving market share.     

The Strategic Planning Process

The process of strategic planning can be as important to an organization as the results. Strategic planning can be an especially valuable process when it includes employees in all departments and at all levels of responsibility thinking about how their activities and responsibilities fit into the larger picture, and about their potential contributions

 

The organizational systems (such as accounting or distribution) that are required in a business plan are described.

 

Business Organization

Having a solid plan for how your business will run is a key component of its smooth and successful operation. Of course, you need to surround yourself with good people, but you have to set things up to enable them to work well with each other and on their own.

It’s important to define the positions in the company, which job is responsible for what, and to whom everyone will report. Over time, the structure may grow and change and you can certainly keep tweaking it as you go along, but you need to have an initial plan.

If you’re applying for funding to start a business or expand one, you may not even have employees to fit all the roles in the organization. However, you can still list them in your plan for how the company will ideally operate once you have the ability to do so.

Obviously, for small businesses, the organization will be far more streamlined and less complicated than it is for larger ones, but your business plan still needs to demonstrate an understanding of how you’ll handle the work flow. At the very least, you’ll need to touch on sales and marketing, administration, and the production and distribution of your product or the execution of your service.

For larger companies, an organizational plan with well-thought-out procedures is even more important. This is the best way to make sure you’re not wasting time duplicating efforts or dealing with internal confusion about responsibilities. A smooth-running operation runs far more efficiently and cost-effectively than one flying by the seat of its pants, and this section of your business plan will be another indication that you know what you’re doing.

A large company is also likely to need additional operational categories such as human resources and possibly research and development.

One way to explain your organizational structure in the business plan is graphically. A simple diagram or flowchart can easily demonstrate levels of management and the positions within them, clearly illustrating who reports to whom, and how different divisions of the company (such as sales and marketing) relate to each other.

Here is where you can also talk about the other levels of employees in your company. Your lower-level staff will carry out the day-to-day work, so it’s important to recognize the types of people you’ll need, how many, what their qualifications should be, where you’ll find them, and what they’ll cost.

If the business will use outside consultants, freelancers, or independent contractors, mention it here as well. And talk about positions you’d want to add in the future if you’re successful enough to expand.

 Business Management

Now that we understand the structure of your business, we need to meet the people who’ll be running it. Who does what, and why are they on board? This section is important even for a single practitioner or sole proprietorship, as it will introduce you and your qualifications to the readers of your plan.

Ownership

Start at the top with the legal structure and ownership of the business. If you are incorporated, say so, and detail whether you are a C or S corporation. If you haven’t yet incorporated, make sure to discuss this with your attorney and tax advisor to figure out which way to go. Whether you’re in a partnership or are a sole owner, this is where to mention it.

List the names of the owners of the business, what percent of the company each of them owns, the form of ownership (common or preferred stock, general or limited partner), and what kind of involvement they’ll have with day-to-day operations; for example, if they’re an active or silent partner.

Management

Here’s where you’ll list the names and profiles of your management team, along with what their responsibilities are. Especially if you’re looking for funding, make sure to highlight the proven track record of these key employees. Lenders and investors will be keenly interested in their previous successes, particularly in how they relate to this current venture.

Include each person’s name and position, along with a short description of what the individual’s main duties will be. Detail his or her education, and any unique skills or experience, especially if they’re relevant to the job at hand. Mention previous employment and any industry awards or recognition related to it, along with involvement with charities or other non-profit organizations.

Think of this section as a resume-in-a-nutshell, recapping the highlights and achievements of the people you’ve chosen to surround yourself with. Actual detailed resumes for you and your management team should go in the plan’s appendix, and you can cross reference them here. You want your readers to feel like your top staff complements you and supplements your own particular skill set. You also want readers to understand why these people are so qualified to help make your business a success.

This section will spell out the compensation for management team members, such as salary, benefits and any profit-sharing you might be offering. If any of the team will be under contract or bound by non-compete agreements, you would mention that here, as well.

Board

If your company will have a Board of Directors, its members also need to be listed in the business plan. Introduce each person by name and the position they’ll hold on the board. Talk about how each might be involved with the business (in addition to board meetings.

Similarly to what you did for your management team, give each member’s background information, including education, experience, special skills, etc., along with any contributions they may already have had to the success of the business. Include the full resumes for your board members in the appendix.

Alternately, if you don’t have a Board of Directors, include information about an Advisory Board you’ve put together, or a panel of experts you’ve convened to help you along the way. Having either of these, by the way, is something your company might want to consider whether or not you’re putting together a business plan.

Learning Unit 2

 



SESSION 2

SO 2

PREPARE A BUSINESS PLAN, CONSULTING AND INCLUDING THE INPUTS OF ALL STAKEHOLDERS.

Learning Outcomes

(Assessment Criteria)

The reasons for why staff, management and stakeholders should be consulted when developing a business plan are explained.

Relevant staff, management and other stakeholders are consulted and their inputs are included in the development of the plan.

A business plan is prepared by using recognized business planning techniques.

The reasons for why staff, management and stakeholders should be consulted when developing a business plan are explained. 

 

A Companies around the world are rapidly moving towards meaningful consultation with stakeholders for a variety of reasons – and the benefits are worth the effort. The underlying driver is that collaboration between industry and stakeholders will lead to more sustainable development that takes into account societal and environmental needs and issues, along with those of the shareholders.

It’s crucial to have a thoroughly mapped-out stakeholder engagement policy in place, as stakeholders can have significant influence on company decisions. With that in mind, it’s essential to maintain their trust through consistent and transparent communication. This will certainly benefit the way your company operates, as well as its reputation.

In fact, even companies that have been slow to this process now realize how vital a consultation tool is to improving their overall performance. In far too many examples, we see how detrimental it can be not to engage in meaningful dialogue with stakeholders.

At the center of stakeholder engagement is a well-defined and measurable stakeholder engagement policy.

There may not be an exact formula for this practice, but there are several key benefits that arise from a properly executed engagement process. Some of these are as follows:

  1. Social responsibility

Identifying and engaging with stakeholders is key for socially responsible investors and result in improved relationships. With social responsibility at the core of their values, it’s vital that you keep this in mind and engage accordingly.

  1. Risk management

An active relationship with stakeholders that involves ongoing dialogue allows companies to anticipate any potential problems or issues. If an issue can be detected early, it can be mitigated perhaps before it even becomes a problem.

  1. Solution orientation

Dialogue also allows companies to be part of the solution in terms of any issues that may arise, and reduces the risk of negative exposure.

  1. Innovation

Sustainable business practices are increasingly in demand by consumers—being ahead of this trend is beneficial to public image and could potentially open new markets. By being ahead of the curve and generating a solid stakeholder engagement policy, your company will position itself as a thought leader and will have influence in your industry.

  1. Proven results

Measurable results and testimonials can not only lead to good exposure for your company, but you’ll also be able to present to your stakeholders how you’ve engaged with them and the good that has come out of it.

  1. Positive exposure

Practicing sustainable business often leads to praise from stakeholders (who have often changed their perspective on the proponent of a project and the company), which can lead to enhanced employee morale.

Some of the barriers to stakeholder engagement include lack of skill, strategy, focus and/or process. To avoid some of these common pitfalls, a well-defined stakeholder consultation process is key. It’s not sufficient simply to have a policy in place—you must back it up with a process unique to your business.

In order to be effective, a consultation process should be a number of things:

Issue-based: well-defined parameters addressing specific questions. Ensure that all bases are covered and that all issues are addressed.

Pro-active: have solutions in place for potential issues that may arise.

Results oriented: includes a learning component for both sides in order to achieve tangible results.

Measurable to the company: based on internal targets and the goals of the stakeholders.

Some common tools used to begin the consultation planning process include drawing a stakeholder map, identifying key issues, and defining engagement objectives. Once the stakeholder consultation process has been defined, it is vital to track all aspects of the process, including communication, discussion, input on specific projects, etc. 

The Roles of Stakeholders in the Planning Process

Business owners must consider stakeholders in any major company decision or development project. In most cases, stakeholders are those who have a vested interest in what a company does but aren’t the actual decision makers. For example, a local city council and its representatives are stakeholders in a new real estate development, even though they are not part of the company developing the land. Stakeholders’ roles vary, depending upon the business circumstances or project type.

Brainstorming Ideas

Stakeholders brought into any decision or project development from the get-go are able to help provide ideas and help create potential solutions. Often, stakeholders come from varying backgrounds, and so they look at issues from differing perspectives. This enables opposing viewpoints to get expressed and discussed. Having stakeholders able to play the devil’s advocate means that ideas are flushed out beyond the sizzle of the initial idea.

Problem-Solving Resources

Engaged stakeholders stay involved in the process. This increases the overall chance of project success through final execution. Smart project leaders keep stakeholders informed of project updates, as well as newsletters and any information regarding progress. Stakeholders are informed when significant issues arise. Issues may pertain to funding, budget concerns, legal issues or to regulatory obstacles.

When stakeholders are engaged, positive communication goes both ways. For example, by keeping the city council apprised of a community development, and also by addressing residents concerns, the project manager is able to diffuse a potentially adverse stance. Should a major petition against the development arise, the project is more likely to get information sooner than later, if it has been forthcoming with the council.

Employees as Stakeholders

A business owner might not think about employees as stakeholders because employees get paid to do a job. However, giving employees a clear plan with set goals and resources to succeed builds engagement. Employees have many reasons for a project to succeed — pride, job security, potential promotion and prestige. Survey the employees and gather input on the project idea and on any potential issues perceived from the inside. When a business leader trusts his people to take charge of a project’s success, he is able to capitalize upon a loyal, enthusiastic team willing to go the extra mile.

Preventing Unforeseen Problems

It is natural to want a project to come together without a hitch; that is seldom the reality, however, especially as projects become grander in scope. Business leaders can mitigate many problems by utilizing stakeholders, thereby preventing potential issues. For example, a pet shop looking to sell pets could garner a lot of benefit from partnering with local animal rescue shelters to advocate for animal adoption and responsible animal ownership. The rescue organization is a stakeholder, because it has great influence on the community of animal lovers, so it is imperative to have an advocate, rather than an adversary.

Relevant staff, management and other stakeholders are consulted and their inputs are included in the development of the plan.

 

Business Solutions Consulting (BSC) is a start-up consulting firm focused on serving the comprehensive needs of businesses in the full range of the business cycle. With a core staff of experienced professionals and a team approach to most consulting projects, BSC will be able to offer a more balanced quality service than many of its competitors.

The Company

Business Solutions Consulting is a team of six business consultants. Each consultant specializes in a particular discipline, including finance, sales and marketing, technology, management, operations, and human resources.

BSC offers a list of services for business owners to choose from, depending on their particular business needs. This includes; business and marketing plan preparation, financial search and procurement, IT consulting services, management development, human resources advising,  and etc.

BSC will have a focus on start-up businesses, preferably in the earlier stages of operation. Small and mid-sized businesses make up a sizable majority of U.S. and international markets. BSC prefers to establish a relationship with a younger operation and continue to nurture that relationship over the long term.

BSC will be established as an Oregon based LLC with two principal partners, each of whom owns a 50% share in the company. Mr. Andrew B. Christiansen has extensive experience in business planning and finance, including CFO positions with ABC Conglomerate and DEF International.

The Market

The business consulting industry is very fragmented. Several large multinational companies dominate the industry while many smaller (and often more specialized) firms occupy their market niches. Major management consulting companies, such as McKinsey, Bain, and Boston Consulting Group, have established their dominant position by providing services to the leading companies in various industries. Consulting practices of the major accounting firms (a.k.a. the Big Five) have established worldwide presence and sell their packaged services to companies of different sizes and industries. At the same time, numerous firms and individual business consultants prosper in the market niches that bigger players consider unprofitable to enter.

Start-up companies are the target market of this firm. BSC intends to stay on the pulse of new business activity within the local area. Additionally, business contacts, referrals from among the group, and Internet marketing efforts will be made in pursuit of new clients. Start-up companies are attractive because owners often lack the broad range of knowledge and expertise required to launch a new business. There is a serious need in the marketplace, and certainly a significant demand for, these types of start-up consulting services.

Competitors in the forefront of the marketplace typically offer many of the services that BSC has. These services include information-based consulting, integration and management services. Services are designed to increase clients’ operations effectiveness through reduced cost, improved customer service, enhanced quality of current product lines and services, and a more rapid introduction of new products and services. Competitors also offer industry-specific expertise to objectively evaluate, select, develop, implement, and manage information systems, networks, and applications.

Consulting firms BSC is competing with include regional and specialty consulting firms, as well as the consulting groups of international accounting forms such as KPMG LLP, Ernst & Young LLP, Deloitte & Touche LLP, PricewaterhouseCoopers LLP, and Andersen Consulting. In its management and IT consulting services, BSC competes with information system vendors such as HBO & Company, Inc.

Stakeholder Consultation

Stakeholder consultation involves the development of constructive, productive relationships over the long term.  It results in a relationship of mutual benefit; it enables us to identify trends and emerging challenges which are currently or will in the future impact on the organisation.  Listening to stakeholder concerns and feedback is a valuable source of information that can be used to improve project design and outcomes, and help a corporation to identify and control external risks.  It can also form the basis for future collaboration and partnerships.

Consultation enables us to identify and monitor trends, challenges and perceptions over time with specific groups of stakeholders.  It therefore helps us to:

  • Identify and track needs and expectations
  • Identify and track perceptions and attitudes
  • Provide feedback on specific planned developments
  • Evaluate implementations and actions
  • Establish the brand values and positioning of the corporation as seen by others

The internal and external stakeholder contribution can be vital to the effective allocation of resources, the success of individual developments, and the longer-term success and direction of the corporation.

Consultation usually takes on two forms:

  • Consultation on specific developments, projects, ventures
  • Ongoing consultation to track and monitor stakeholder perceptions within the broader operating environment

Specific project-based consultation is widely used for both commercial and social projects.  In the public sector, it is often termed “public engagement” or “public consultation”, and is usually related to local service developments within specific communities, and policy development at all levels.

In the commercial sphere, it is commonly used for development of new products and services.  A company may consult with its customers to establish future needs and ensure these are incorporated into the development of new products and services.  Customers are also likely to present relative perceptions i.e. in the competitive market providing valuable input about competitor activity.  In addition, this can be followed up by feedback on prototypes, blueprints, etc. before the final products are presented to market.

Ongoing consultation is adopted to ensure buy-in from stakeholders and to ensure the corporation is not moving away from the expectations and needs of those who have an interest in its affairs.  It is often related to company or brand positioning, competitive positioning, company mission or direction.  It can be a metric in the evaluation of the trajectory towards a particular goal, or the anticipation of reactions towards a change in a corporation’s direction or branding.  As such, it is used widely in both the public and private sector.  Political affiliations use it as a barometer of support.  In all cases, it is a way of mitigating risk, especially if the corporation is dependent upon its stakeholders to provide funding.  For example, a University with significant funding from its Alumni may engage in a regular programme of tracking stakeholder perceptions to ensure it does not jeopardise its position, and to anticipate communications required about any change in policy or position.  This type of stakeholder consultation can also have a good PR spin-off as it affords the opportunity to present new positions or remind of existing positions.

Benefits Of Consultation

Whatever the reason for conducting stakeholder research, there are some clear benefits for the organization:

  • Firstly, decision making will be more informed and in tune with those who the actions will affect.
  • Secondly, there will be greater satisfaction from stakeholders with the outcome. Through the engagement process, those who decisions will affect will feel they have inputted into the final outcome and that everyone’s views have been taken into account. Depending on the method of consultation, they will also understand that their perspective may not be shared by all and that there is a need for compromise.
  • This in turn will lead to a greater chance of a successful implementation of the initiative. Stakeholders will feel ownership of the venture, and are therefore more likely to want the venture to succeed.

Finally, consulting with people who will be affected by a development is an example of best practice.  It represents good governance and transparency, demonstrates a desire to engage in meaningful two-way communication, and recognises the important contribution stakeholders at all levels can make to future changes which will directly or indirectly affect them.

The Consultation Process

A corporation’s consultation process is an opportunity for stakeholders to get information as well as give feedback.  Stakeholders can use the opportunity to educate the corporation about the local context in which a project will take place, to raise issues and concerns, ask questions, and potentially help shape the project by making suggestions for the corporation to consider and respond to.  Therefore, a planned process for consultation needs to be in place, commencing with clear objectives about what is to be achieved.

The process generally involves five steps to successful execution.  It can be ongoing and iterative, a one-off consultation related to a specific discrete issue, or a series of consultations related to a particular project.  Either way, the process will generally involve four steps (the 4 Ps), as shown in Figure 1.

Figure 1:  The Consultation Process

In the “planning” stage, the aims and objectives need to be clarified, along with identification of the usefulness of the process, i.e. the likelihood that stakeholder views will be incorporated into strategic planning.  The availability of resources to carry out the process will need to be established and a method of consultation designed that is reflective of this.  Consideration will need to be given as to whether any pre-release information is required e.g. about a project design, brief, plans, strategic positions, etc.

After establishing the aims and objectives, the actual process of consultation will need to be planned, i.e.:

  • Who are the key stakeholder groups?
  • How accessible are they?
  • Are there any hard-to-reach groups?
  • How can their co-operation and engagement be gained?
  • What is the best method of consulting with the groups?
  • What do they need to see beforehand?
  • How can this be disseminated?
  • Will any pre-consultation be required to prepare stakeholders for the exercise?

The method of consultation will need to be identified, balancing the resources available and the level of feedback required.

The “process” stage is the “doing” stage; this involves carrying out the consultation.  Good planning will ensure this stage runs smoothly.  Considerations in this stage mainly centre on developing effective relationships with stakeholders and facilitating open and honest sharing of views, and accurate recording of the process and the data.

The next stage, “presentation“, is concerned with the analysis and the reporting of the data.  The data will need to be analysed and reporting prepared for the relevant audiences i.e. back to the corporation, to policy makers, etc. but also feedback to those who have engaged in the process and taken part.  The form of reporting will need to take into account audiences and ensure the highest possibility of actions as a result of the consultation.

The final stage relates to actions as a result of the consultation; the “promise“. Part of the process of engaging with stakeholders is the investment in a longer-term relationship of mutual benefit and trust.  Without demonstrable use of stakeholder feedback in resultant action, this can be damaged.  The final stage, therefore, has an element of PR contained within it; communications about resultant actions need to be carefully considered to reach stakeholder audiences.

Methods Of Stakeholder Consultation

Consultation with stakeholders involves using methods commonly employed by market and academic researchers.  Key issues of consideration when deciding on the methods are whether the consultation requires depth or breadth of knowledge (or a combination of the two).

The former calls for largely qualitative research approaches.  These are approaches which use open styles of discussion and debate.  It is the facilitator’s job to tease out views and perceptions which are truly held by the stakeholder.  The focus group, individual depth interviews, and observation are the most common methods used.

If breadth is required, approaches reaching larger numbers of people and using more standardised measurement tools are required i.e. quantitative methods such as surveys, short street interviews, e-surveys, etc.  These methods will reach wider audiences but are restricted to largely closed questions and rating scales.  The data is numerical and statistical analysis is used to demonstrate the generalist viewpoint.  Some methods straddle these two poles and have the ability to gain both depth and breadth, such as the large public meeting and online open debate consultation tools now available to us through the digital media.

Figure 2:  Approaches to Consultation

Each of these methods has its strengths and its weaknesses.  The method – or combination of methods – selected should be reflective of the aims of the consultation process.  The chart below demonstrates where the strengths of the common approaches lie.

Figure 3:  Strengths of Commonly Used Methods of Stakeholder Consultation

Attribute

Surveys

Focus groups and individual meetings

Public meetings

Quality/depth of feedback

 X 

Speed of execution

X  

Level of engagement with stakeholder

 X 

Relationship building

 XX

Opportunity for idea sharing, consensus building

 XX

Ability to show something e.g. plans, branding, etc.

 XX

Measurement of attitudes

X X

Cost

X X

A business plan is prepared by using recognized business planning techniques.

 

Tools for Business Planning

Business planning is a very important activity for any business, large or small. It can be an intense activity and may often feel overwhelming, especially for those who do not have significant experience in this area. Fortunately, you can use a variety of tools to expedite the process and help ensure a successful outcome.

Brainstorming

Brainstorming is a business communication tool that can be used in a variety of settings, but has special relevance for the business planning process, says Lin Grensing-Pophal, author of “The Complete Idiot’s Guide to Strategic Planning.” At many stages in business planning, brainstorming can be used to get ideas on the table, to draw out quieter members and to help ensure that no stone is left unturned in terms of the options and opportunities that businesses have available to them. Importantly, brainstorming should be an open exercise with all ideas welcomed and none edited or critiqued. The idea is to generate a list that can later be reviewed and prioritized. The first step, though, is simply getting those ideas on paper or on a computer.

Mind-mapping

Mind-mapping is a visual idea-generating tool that can be used to stimulate ideas that stem from a single concept. The single concept is written in the center of a piece of paper or on a whiteboard and related ideas are generated that tie to the original idea. Each of these is literally connected to the central idea by lines, like spokes from a while. Then the second tier of items is considered and more ideas are added at the third level and so on, until a web-like structure appears with a myriad of ideas that are increasingly more narrowly defined and specific. Mind-mapping is a good way to encourage creative, out-of-the-box thinking.

SWOT analysis

The SWOT analysis is a mainstay of business planning. It is a focused brainstorming activity used to identify a company’s strengths, weaknesses, opportunities and threats. An important input to the SWOT analysis is a situation analysis, which involves gathered data internal, such as employee data, sales data, operational data, and external, such as industry data, economic data, to the organization to ensure that the items generated are grounded in fact and reality. The SWOT analysis becomes an input for the development of goals, objectives, strategies and tactics.

Planning Techniques for Business

Business planning is an important activity for any company, regardless of its size, geography or industry. While the business planning process may sometimes be intimidating, even those with limited experience in this area can use a variety of business planning techniques. Using these techniques effectively can help to ensure that the plan will be implemented and desired results achieved.

SWOT Analysis

A critical component of business plans, whether for the entire organization or for a single function–marketing or HR, for instance–is a SWOT analysis. The SWOT analysis stands for strengths, weaknesses, opportunities and threats. It involves a brainstorming process whereby planning participants identify all of the relevant factors that they are facing internally (strengths and opportunities) and externally (weaknesses and threats). The final list is then reviewed and prioritized to identify the top items under each category. These then became inputs to the development of goals, objectives, strategies and tactics.

Nominal Ranking

Nominal ranking is a process used to prioritize a long list of items, such as a SWOT analysis. Participants are given a certain number of votes that they can use and they can use these votes for any item on the list, placing numerous votes for a single item if they wish. Often participants are given “sticky dots” to place on flip charts where the list items have been gathered. Once all participants have voted, the total number of votes for each item are tallied and the highest-rating items are identified.

Team Facilitation

The facilitator of a planning effort plays a critical role and is responsible for ensuring that the process flows smoothly from beginning to end, that all individuals involved have an opportunity for input, that conflicts are addressed and that the work of the team–the creation of a plan–is accomplished. Team facilitation techniques include active listening, reflection, positive reinforcement and sometimes constructive feedback. All teams go through a series of predictable steps–forming, storming, norming and performing–that require different facilitation skills.

Planning is a critical business responsibility that is often overlooked, particularly by smaller companies with limited time and personnel resources. However, the reason for this oversight is often the result of management’s lack of planning techniques. Learning useful planning methods and factors eliminates this knowledge gap. Business planning is just as critical as having a map when traveling to an unfamiliar location. Without it you may never reach your destination.

Primary Planning Types

Business planning types come in various flavors depending on the company size and industry. However, there are three basic plans that apply to all businesses, large or small. Business, strategic and marketing plans are important to every for-profit and nonprofit organization. Understanding the goals and components of each offers businesses the tools to create effective plans using the most basic or sophisticated techniques.

Business Plans

Typically used for starting up or financing a company, business plans are the cornerstone of the planning function. Components of a business plan include an executive summary, market analysis, product/service descriptions and financial/operations projections for a minimum of three to five years. In start-up situations that need initial financing, creators should paint a vivid, yet conservative, picture of the founders and the rationale for believing the business will succeed. When seeking growth-financing, management should highlight past company performance and carefully project the impact of the new funding on improving net income. Always include debt service, which is the amount needed to repay the new loan, in income and expense projections.

Strategic Plan

Strategic plans should be created by business owners and/or senior management only. Unlike business plans, which are based on historical data and future projections, strategic plans are more conceptual. These plans should include defining your organizational goals, identifying your available options to achieve your objectives and considering new short-term opportunities you believe will exist to improve your business’s results. You may want to incorporate specific industry trends into your planned strategy. Strategic plans are not long-term creations, but should address taking advantage of available opportunities in the next 12 to 24 months.

Marketing Plans

All the fabulous business and strategic plans ever devised will fail if you don’t market and sell your product or service. A solid marketing plan will help you achieve gross income and sales goals. A SWOT (strengths, weaknesses, opportunities, and threats) analysis is an effective technique for creating a winning marketing plan. SWOT is also useful in strategic plan creation as a foundation technique. You can also combine a SWOT analysis with the four P’s–product, price, publicity, and place–of effective marketing. Even if you have invented the “better mousetrap”, you need a superior marketing plan to get results. These techniques will give you the ammunition you need. 

Universal Techniques

To make business planning come alive and succeed there are three simple practices that must be always be employed. First, set realistic, measurable goals. Second, understand and communicate with your customer base. Third, attract and retain the best employees your company can afford. Without these three components, your business planning, however sophisticated, risks failure on a massive scale. Using these three simple techniques, your business plans should deliver the results you want.

Things to include in a business plan

Executive summary

This is an overview of your business and your plans. It comes first in your plan and is ideally only one to two pages. Most people write it last, though.

Opportunity

This section answers these questions: What are you actually selling and how are you solving a problem (or “need”) for your market? Who is your target market and competition?

Execution

How are you going to take your opportunity and turn it into a business? This section will cover your marketing and sales plan, operations, and how you’re going to measure success.

Team and company

Investors look for great teams in addition to great ideas. Use this chapter to describe your current team and who you need to hire. You will also provide a quick overview of your legal structure, location, and history if you’re already up and running.

Financial plan

Your business plan isn’t complete without a financial forecast. We’ll tell you what to include in your financial plan.

Appendix

If you need more space for product images or additional information, use the appendix for those details.

 

Learning Unit 3

 



SESSION 3

SO 3

IMPLEMENT THE BUSINESS PLAN IN ACCORDANCE WITH ORGANIZATIONAL PROCEDURES.

Learning Outcomes

(Assessment Criteria)

The objectives and content of the plan are communicated in a timely manner to staff, management and stakeholders.

Actions detailed in the plan are implemented in a cost efficient manner according to schedule and budgets.

The business plan is managed in a manner that promotes staff commitment to targets and service quality.

The objectives and content of the plan are communicated in a timely manner to staff, management and stakeholders.

Actions detailed in the plan are implemented in a cost efficient manner according to schedule and budgets.

 

The concept of having a solid business that simply makes money and is sustainable seems to be lost. However, even the most realistic well-thought-out business plan is just a stack of paper if it isn’t implemented. So how do you implement a business plan?

Your business plan has to be realistic

First and foremost you have to go back to the beginning. Is your business plan realistic and does it have clear goals, objectives and aims that suit your aspirations? Do not get sucked into following the mass opinion of what your plan should be like.

Although the list below is not exhaustive, your business plan should contain a clear outline of the following:

  • Business proposition – What is your product/service? Who are your clients? Who is your competition? How are you going to sell your product or service?
  • Management team – Who is your management team –directors, key personnel and any strategic partners and alliances you may have?
  • Marketing – How are you going to promote (marketing, including market research, and pricing) your product or service?
  • Staff – Who do you need to employ and what is your organisational structure?
  • Operations – More information about your office premises, and infrastructure needed, such as IT, website, telecoms, and similar.
  • Infrastructure – What is your trading entity, insurance needed, lawyers and accountants you will be using?
  • Finances – More information about your profit and loss forecasts, cash flow, finance needed, and investment opportunities.

Set out your objectives

Once you have your business plan you should set out your objectives, for example, in the recruitment industry, some of your objectives could include the following:

  • Secure office space, set up the company/infrastructure and start trading within three months.
  • Secure your first deal within two months of trading.
  • Make one business deal every month from there on for the first year.

Set tasks to reach your objectives

Once you have set out your objectives, consider what tasks need to be completed so you can achieve these.

Assign a person who is responsible for each step so that roles are clearly defined and there is accountability in completing the tasks. Avoid micromanaging people with detailed explanations of how to complete each task.

Some generic examples of this could be:

  • Setting up an established company – You
  • Finding an office – Office manager
  • Setting up internet, phones and computers – Office manager
  • Marketing collateral – Marketing manager
  • Recruitment – HR manager Securing new clients and business – Business development manager
  • Opening company bank account – You
  • Social media management – Marketing manager

Time allocation

Each task should be paired with an appropriate time frame for completion.

You should be aggressive, but reasonable with your time allocation in order to ensure, not just completion but competent work as well.

For assistance in framing this timescale, create your own Gantt chart – a helpful tool that shows how long it will take to complete different tasks and in what order the tasks should be finished.

Progress and review

You or a member of your management team needs to be in charge of monitoring each task’s progress and the completion percentage of each objective.

When delays occur, try to get to the root of the problem. Did the person responsible drop the ball? Did he or she have too many responsibilities to handle? Did a third party, such as a supplier or the bank, fail to hold up its end of a deal?

While the above steps may seem like overkill, the early days of a start-up are critically important – it’s a time when good management patterns are set and also probably a lean era when revenue has yet to start rolling in.

The more efficiently you start implementing your business plan, the more likely it is that you will survive this early period.

Keep a tab on your finances

Are you hitting your targets? If not, why not? Implement changes to tackle this.

Have a regular review with your accountant to manage income, costs and any tax liabilities. It is so important to keep disciplined, focused and motivated by cash flow, even more so in the early stages of your business.

Join a trade association or networking group

Business plans are always dynamic. Make sure you join a networking group so you can keep up to date with on the ground market knowledge, connections, and legal and financial updates.

You may need to react and change accordingly. Don’t get totally blinkered into your business plan, you always have to see what is going on around you.

Regularly review your business plan

Compare budgeted numbers to actual figures of doing business.

Determine whether you can keep operating as you are or whether you need to make changes, such as reducing costs, raising prices or increasing marketing.

The business plan is managed in a manner that promotes staff commitment to targets and service quality.

 

Ways to Improve Quality

Whether you sell a product or a service, these five steps will help you ensure that you are constantly improving the way you do business–to the delight of your customers.

Every business owner likes to think that he or she has a commitment to quality. If that were truly the case, of course, no product would ever disappoint, and no service would result in a complaint. So how can you improve quality at your company? Here are 5 steps you can take to put you on the right path.

Make a commitment.   

Constancy of purpose means that quality decisions are not situational. End of month quality is the same as beginning of month. It means that the long term benefit of the organization is not sacrificed to hit quarterly targets.

So are you ready to commit? If you are, you should tell your staff—and then think about how you will handle the first conflict between your stated objective and a pressing deadline or an attractive short cut.

Track mistakes.

If you are going to commit to quality, first you must define exactly what quality is. For manufacturers, this process involves statistical quality control, the process of setting a product’s specifications and then sampling a small number of units from the production line to see how closely they measure up to those specs. Standards are set and, if too much deviation occurs (or if quality appears to be trending in the wrong direction), the manufacturing process is altered.

Tracking quality is admittedly more difficult in a service business, and efforts by groups such as the International Organization for Standardization (known as ISO) to create meaningful benchmarks beyond manufacturing have had mixed results.

One way to gauge customer satisfaction (and, by extension, the quality of your service) is by tracking what is called a net promoter score.

Invest in training.

An old saw of the quality movement is that any business with a quality control department is doomed to poor performance, for it has demonstrated to every other employee that quality is not his or her chief concern. Instead, quality experts recommend that businesses train workers at all levels to look for ways to improve quality and to ameliorate problems.

Training takes on several dimensions. For starters, you should set up a new-employee initiation program that trains workers to focus on quality issues from their first day on the job. Different CEOs have different perspectives on how best to do this.

Whether you hand train duties to your employees, take them on personally, or some combination of the two approaches, it’s important that you provide workers with a history of the company through the lens of quality. Let them know what problems you have had in the past, how you corrected these problems, and where your company stands with respect to its quality goals today. You should also go over your definition of quality in detail, and show them how you measure quality (see the previous section.) Finally, train workers to see the connection between their actions and, more broadly, their work ethic, and the company’s overall performance. By tying individual behavior to an overall system of work, and then showing where that system can, on occasion break down, you will be giving workers the information they need to be good stewards of your business.

Organize quality circles.

Your staff members may roll their eyes at the introduction of such a dated technique, but organizing employees into quality circles can be an effective way to identify and address problems. Simply put, quality circles are groups of employees who are encouraged to assess processes and recommend improvements, all with the goal of promoting quality, efficiency, and productivity. The concept was developed by Deming in post-war Japan, and made its way to the United States in the late 1970s. At one point, half of all large corporations had adopted quality circles, but then interest in them faded.

That’s a shame. Quality circles, by any other name, are teams of workers who are given the authority and responsibility for making a business better. To succeed, experts say that participation in a quality circle should be voluntary; circles should draw members from all corners of a company; and the circle should set its own agenda (rather than pursuing a company owner’s agenda.)

Once you have invited workers to join a quality circle, provide them with adequate resources to pursue their analysis, and schedule a time in the future at which they may present their findings. It is important that you act on their recommendations, even if the group’s conclusion is not necessarily one you would have drawn yourself. Remember, the purpose of the exercise is less to solve a particular problem than it is to engage workers in the process of finding and addressing concerns. Moreover, you should be tracking customer complaints or product defects on a regular basis, so if the circle’s recommendations do not produce the desired result, you’ll know it, and be able to act.

Have the right attitude.

Too many people turn the quest to improve quality into something oppressive. No less an authority than Deming rejected the idea that the quality management had to be dreary and involve a lot of negativity. The prevailing system of management has crushed fun out of the workplace, Deming moaned in an interview in the 1990s.

This attitude is not necessarily easy to adopt and runs afoul of some of the basic management practices we take for granted. For example, Deming was not a fan of performance reviews, as the writer John Case has explained. [I]f your evaluations are fair, you will determine that half your workers (by definition) are below average, and you will tell them so. Result: half the work force is instantly discouraged and demoralized, and any sense of common purpose is undermined.”

Rather than pointing out inadequacy wherever it might be found, Deming believe that the job of managers was to frame the pursuit of quality as an interesting, noble, and worthwhile goal. If you are to truly improve quality at your business, whether you manufacture products, distribute goods, or perform a service for your clients, your first step (and also the hardest) is to resist the temptation to dwell on your company’s flaws and instead rally your team around the cause of rooting them out.

Learning Unit 4

 



SESSION 4

SO 4

REVIEW AND MONITOR THE IMPLEMENTATION OF THE BUSINESS PLAN AND ADAPT THE PLAN ACCORDINGLY.

Learning Outcomes

(Assessment Criteria)

The business plan is reviewed and the activities are monitored on an ongoing basis using the evaluation methods detailed in the plan.

Environmental changes that might impact on the success of the plan are identified and the plan is adapted accordingly.

Agreed changes to the plan are implemented immediately.

Contingency plans are implemented to meet challenges or problems that may arise.

Possible suggestions of adapting service performance for a small or large business environment are described.

The business plan is reviewed and the activities are monitored on an ongoing basis using the evaluation methods detailed in the plan.

 

Implement the plan and monitor progress

Once you have reviewed your enterprise, developed your goals and objectives and settled on the best strategies to pursue, you need to turn your attention to actually implementing and monitoring your activities as you move through the changes you need to make to achieve your goals.

Guidelines to implementing and monitoring a change

Ensure that all family and staff members know what is to be implemented and by when. In a successful farming business, it is important to:

  • ensure each member of the business knows their roles and job responsibilities.
  • develop a set of clear ground rules to reduce the risk of personal conflict.
  • discuss and agree on expectations pertaining to key areas of the business.
  • create a written agreement that has regular review dates set in advance.
  • hold regular business meetings to ensure all people in the business spend part of their time and energy working on the business, and not just in the business.

The implementation of any enterprise transition plan should be part of the annual operating plan for your farm. Aim to achieve the change from current practice to new enterprise strategies in as short a time as possible. At the same time, ensure that cash flow maintains business equity and liquidity within the set limits. Develop a process that tests, prioritises and sequences the best-bet options to maximise return on investment of time and capital and annual business profit.

A successful transition plan should control then improve enterprise cash flow.

Monitor and evaluate

Monitoring and evaluation of progress are the basis for continuous improvement in a beef enterprise. Monitoring provides an extremely important check on the accuracy of the inputs and predictions from the analyses used to set the enterprise strategic direction. They are also necessary to ensure that the plan is being implemented as intended and that changes in enterprise productivity and profitability align with predetermined targets after accounting for variations in pasture growth, market prices and variable costs.

Monitor the productivity and profitability of your business regularly

There is generally a strong association between ongoing monitoring and feedback and the successful implementation of a plan. Continual monitoring of physical resources, livestock performance and financial outcomes provides you with confidence that the strategies are either on-track or need revision. The system must alert you to weaknesses in the enterprise operation and allow you to take the necessary corrective changes based on accurate information. This helps to reduce the risk and uncertainty about whether changes made to your beef enterprise are actually working.

Monitor physical resources, animal performance and financial outcomes to check enterprise strategies are on-track

Undertake sufficient monitoring to effectively update your short-, medium- and long-term objectives from the results of the previous year. It also makes sense to review the strategic direction periodically in relation to changes that have occurred in technology advances, genetic progress, pasture species and your own business and family goals.

Check the accuracy of inputs and predictions.

Benchmark your beef enterprise

Monitoring change to the business is achieved by benchmarking the performance of your enterprise. Benchmarking is not only important to evaluate how the business compares with industry, but when your business is undergoing change, benchmarking the performance is a critical aspect to evaluate success and also to identify ongoing aspects that can be further improved.

Manage the risks

Risks associated with implementing a new strategic direction in the beef enterprise can be managed by carrying out the procedures in this module with attention to those parts that are relevant to your farming business.

The main risks of transition are failure to gain a higher enterprise profit from the restructure. To ensure success:

  • management needs to have the knowledge and skills to manage change
  • implementing the transition plan in a logical sequence leads to greater productivity
  • investments must be scheduled in the highest order of rate of return on investment
  • enterprise changes are planned to control cost and maximize returns.

Other risks include one or a combination of the following:

  • not knowing the accuracy of the analysis or predictions used
  • not having an accurate way of knowing whether planned actions or tactics are meeting targets
  • lack of objective feedback to build confidence in change
  • implementation of the planned changes is not successful
  • over time, changes in the overall business environment, or in your own business or family goals, mean that the initial directions set are no longer the most appropriate.

Manage risks and take the appropriate corrective actions

When tracking progress, potential corrective actions include:

  • identifying the reason for being off-track and taking the appropriate action when outside the limits you set
  • rigorous checking that implementation is not at fault
  • revising the analysis using updated values when change is implemented correctly
  • re-examining the original analyses when the original projections are not on-track. Using your own information can add confidence to the review
  • re-examining the strategy every five years, or in the event of a new opportunity.

A worst-case scenario is when the farm business is destabilized during the transition phase by declining beef enterprise cash flow. This contributes to reduced equity and liquidity so that business commitments may not be met. The options for corrective actions include:

  • complete or re-calculate partial budgets, beef business and enterprise budgets and cash flows to establish discounted rates of return and implement projects in order of decreasing return.
  • stop or limit progress on those changes with relatively low discounted rates of return and re-direct investment to business areas with the highest rate of return and highest likelihood of success.
  • delay or advance implementation of the rate of change as cash flow and time constraints increase or decrease.

What to measure and when

When changes to an enterprise are made, it is important to monitor both physical and financial indicators to allow a thorough comparison with targets. For a start, compare actual management change compared to budgeted changes on your monthly (or weekly) management calendar.

Cash flow budgets should be analyzed, comparing actual to budgeted performance at least monthly in addition to an annual review.  Annual profit and loss should be reviewed as should the farm balance sheet. This information can be used to perform an annual benchmarking review.

Monitor key performance indicators for your beef business

Measuring the cost of production is a useful process. More specific business and enterprise benchmarks can be obtained from benchmarking services that are available within regions and across regions.

Monitor key physical and financial key performance indicators that impact on your beef enterprise, remembering that:

  • Lag indicators can only be seen after the event and are more closely related to the ultimate measure of performance and return on assets (RoA). Examples of these include return on assets, cost of production and equity change.
  • Lead indicators can be used in real time or before the event, with the aim being to track progress and reduce the impact of unforeseen events. These will be related to return on assets to varying degrees. Examples include stocking rate, pasture utilization, weaning rate and percentage of carcasses meeting market specifications.

 

Environmental changes that might impact on the success of the plan are identified and the plan is adapted accordingly.

Agreed changes to the plan are implemented immediately.

Contingency plans are implemented to meet challenges or problems that may arise.

 

Business Environmental Factors Influence Strategy

Writing a business strategy is an essential aspect of starting and running a business. Without a clear strategy, it is difficult to set meaningful goals and objectives. In determining your business strategy, a logical analysis of the environment in which you operate will both inform and influence the outcome. This analysis — commonly called PESTLE, for political, economic, sociological, technological, legal and environmental — paves the way for identifying opportunities and threats, and effective business planning.

Political and Legal Factors

Political factors include how regulations and policies imposed by your national or local government might affect the way you conduct your business. For example, import and export tariffs may make it difficult or uneconomical to do business with certain countries. At a local government level, there may be restrictions on the kind of businesses permissible in certain locations, while in certain sectors of the economy, lobbying may be more or less prevalent.

Economic Factors

The strength and performance of the local, national and international economy can all impact a business, presenting both opportunities and threats. Different types of taxation and other duties can also hit your bottom line hard, so a deep understanding of the fiscal environment is essential in order to prepare viable financial forecasts.

Sociological Factors

Sociological attitudes and profiles are constantly changing. Developing a demographic profile of your consumer base will help you understand what motivates them. Keeping abreast of issues such as gender bias, ethnic origin and religion, as well as being conscious of social norms and lifestyle expectations, can help you with your marketing strategy.

Technological Factors

The only thing permanent about technology is change. With advances in technology developing at a seemingly unstoppable rate, keeping up-to-date with changes could help you develop a market advantage in the face of competition. Technological change is most evident in how we communicate, with smartphones and tablet computers becoming commonplace. As a business owner, you should look at ways to harness technological potential to identify and service new and emerging markets.

Legal Factors

Businesses across the world operate in a web of legal obligations and restrictions. Some of these relate to internal obligations such as those dealing with health and safety, while others have a wider impact on matters as diverse as waste and environmental management, import and export restrictions and or consumer protection laws. As part of your PESTLE analysis, you should develop a broad knowledge of all legislation that impacts your business to minimize the risk of non-compliance leading to litigation.

Environmental Factors

Environmental concerns have become important in recent years, with the wider impact of doing business increasingly recognized by consumers as a factor in their buyer behavior. Responsible business owners should look for ways to minimize the environmental impact of their operations. For example, many businesses are looking for ways to lower the impact of their energy consumption. The positive effect of a responsible environmental attitude is that it may attract new customers who prefer to purchase more ethically derived products.

Environmental Factors in Strategic Planning

For any business to grow and prosper, managers of the business must be able to anticipate, recognise and deal with change in the internal and external environment. Change is a certainty, and for this reason business managers must actively engage in a process that identifies change and modifies business activity to take best advantage of change. That process is strategic planning.

The following diagram provides examples of factors that are agents of change and need to be considered in the strategic planning process. Explanation of these factors is found below.

Internal and External Environment

All businesses have an internal and external environment. The internal environment is very much associated with the human resource of the business or organization, and the manner in which people undertake work in accordance with the mission of the organization. To some extent, the internal environment is controllable and changeable through planning and management processes.

The external environment, on the other hand is not controllable. The managers of a business have no control over business competitors, or changes to law, or general economic conditions. However the managers of a business or organization do have some measure of control as to how the business reacts to changes in its external environment.

Internal Environment Factors

Table 1 below identifies important aspects of the internal environment that can significantly impact on the well-being of a business or organization. Generally the strategic planning process will examine the strengths and weaknesses of the organization (see SWOT analysis), and it is likely that significant discussion will center on the relative strength of internal environment factors.

Table 1: Factors in the internal environment and their affect on the business/organization

Factor

Influence on the organization

Human Resource

The knowledge, experience and capability of an organization’s workforce is a determining factor of success. For this reason, organizations pay particular attention to the recruitment of staff and also to engage in the training of staff and volunteers to build the organization’s capability. In pursuing both recruitment and training strategies, an organization is often limited by its financial strength. Nevertheless, training of staff is an essential aspect of good business management, and even in difficult financial circumstances is an achievable strategy.

Organizational Culture

The culture within the organization is a very important factor in business success. The attitudes of staff and volunteers, and their ability to “go the extra mile” makes a very significant difference. Negative attitudes can severely impact on the organization’s ability to implement strategies for development despite however thorough the planning processes. Positive attitudes of staff and volunteers will not only make the management task easier but also will be noticed and appreciated by customers of the business or members of organization.

Organization Structure

Businesses and organizations may be impeded by their structure, constitution and/or forms of governance. Organization structure is essentially the way that the work needed to carry out the mission of the organization is divided among its workforce. (see more about organisation structure

In a non-profit organization, the organization will include the management board or committee (i.e. PresidentSecretaryTreasurer and Ordinary Committee Members), the salaried staff of the organization and all the volunteers that have roles as coordinators of various business functions (e.g. Event Coordinator, Promotions Coordinator and Coaching Coordinator).When an organization is a for-profit business that operates in a very competitive environment, its organisation structure may help or hinder the ability of the organization to react to change. For example, when the organization structure has many levels of management, decision making can be slow as information is carried up and down the hierarchy. For this reason, “flatter” organization structures are often preferred i.e. people who work “at the coal face” and one level of management above. Volunteers are normal part of the non-profit organization but not the profit-business. Although it is often hard to find volunteers, the organization structure of the non-profit organization can be very flexible by appointing volunteers as needed.

Management

The capability of the management team and the leadership styles employed by managers will also have a major impact on the morale of staff (and volunteers in a non-profit organization) and organization culture. More contemporary forms of management involve workers in decision making processes and trusting that, although managers and workers have different viewpoints, they largely benefit by working together to achieve the business objectives.

Assets

The internal environment of the organization can be made richer or poorer by its assets. For example, the organization’s premises can be pleasant and uplifting, or demure and depressing. The availability of equipment is another asset that can significantly impact on the internal environment. If equipment is in short supply or not of the expected standard, then staff may be hindered in the performance of their duties, or if equipment is used by customers then customer satisfaction will fall.

Financial Strength

Financial strength is a factor in its own right that influences the internal environment of the organization. Despite however good other internal factors may be, it is very difficult for an organization that is too short of cash to implement strategies within the strategic plan. If the organization struggles financially this can impact on staff morale as budgets need to be excessively tight.

External Environment Factors

Table 2 below identifies important aspects of the external environment in which the business operates. The business cannot control these aspects but can respond to change if needed. The main problem for business managers is to be able to respond early to change in the external environment, and this depends on how soon any change is identified. Some external environmental factors such as economic conditions are reported daily in the media and managers have a wealth of information on which to develop strategic plans. However, some external factors may be difficult to identify, particularly of the pace of change is very slow or is hidden from view.

Table 2: Factors in the external environment and their affect on the business/organization

Factor

Influence on the organization

Economic conditions

Prevailing economic conditions of the nation will have an effect on the spending patterns of citizens. Increases in interest rates and/or a high level of unemployment will depress consumption of non-essential goods and services. For example. when people experience financial hardship, they will spend much less on sport and recreation, holidays, new cars and luxury goods. Economic conditions are global as well as national, and when there is a global financial crisis as in 2007, changes in the external environment can be dramatic.

Market(competition)

The strength of business competition is a constantly changing factor in the external business environment. Not only will competitors come and go, but they will also change marketing strategies, product lines and prices. Often such changes are not heralded and business managers must be alert as to what competitors are doing.

Technology

Technological change has been rapid in the last 50 years and is a factor in the external environment that constantly exerts pressure on the business or organisation. If businesses do not adapt sufficiently quickly to technological change, they risk losing market share. It’s not just that technological change affects the design of products, but even the delivery of services can change.

Climatechange

Climate change is an insidious threat because the pace of change may be recognisable only if considered on a decade-by-decade basis. The effect of climate change will not fall equally on all nations and all businesses. Businesses that depend directly on a good supply of water e.g. agriculture, field sports will be adversely effected if climate change results in reduced rainfall. However the flow on affects of drought will eventually work their way through to all businesses in the effected community.

Legal

Taxation is one of most obvious changes in law through legislation. Sometimes taxation changes occur overnight with little warning and sometimes there is plenty of time for the business to prepare. Other law changes that commonly affect business include Workplace Health and Safety, Industrial Relations, Consumer Protection and Environmental Law,

Media

The media is undergoing rapid and significant change. The main driver of this change is technology and the rise of the internet. Newspapers once carried many pages of job adverts but now this business is conducted by online recruitment companies such as Seek.

Political

Like law, changes in government policy can be well notified and discussed, or without warning. As an example of how government policy has an effect, is that many organisations depend on government financial assistance. When there is a change of government, such funding assistance can disappear in a short space of time.

Demographic

There is constant change in the make-up of the population. Some of these changes include an increasing proportion of elderly citizens, increasing number of two-income families, the age at which people marry is increasing, increasing ethnic diversity, suburbs which were once dominated by young families now have few. These demographic changes can have a significant effect locally. For example, a sport club which once prospered can begin to decline as the local area has less and less children.

Possible suggestions of adapting service performance for a small or large business environment are described.

 

A business plan is a comprehensive document that outlines key elements of how you operate your business. The plan typically includes an assessment of your market and your competition, your operating budget breakdown, and your short and long-term business goals. While many business owners write a marketing plan to obtain business loans, the plan can be a useful tool for monitoring and controlling ongoing operations.

Create Plan Review Dates

Business plans should be reviewed on a regular basis, especially if a business is expanding quickly, experiencing cash flow problems, adding new products or services or reaching into new markets. Align your review dates with the short-term and long-term goals outlined in the original business plan and conduct a comparative analysis. Depending on your business, this could be a monthly, quarterly or annual review.

Develop a Tracking System

If your business plan contains measurable goals, develop a tracking system to assess where you stand regularly. For example, if the plan calls for earning a certain amount of revenue per month, track revenue on a daily or weekly budget to monitor and control the process. This approach allows you to tweak the system if your numbers are far off the mark. Monitor key elements frequently. Key elements of the business plan include research on your market and competition as well as revenue projections. Each of these elements is subject to rapid change, and you should remain aware of where you stand with regard to these issues.

Coordinate Business and Marketing Plans

Business and marketing plans overlap in several ways, so reviewing both documents simultaneously on a regular basis helps you monitor and control the goals and measurements of each plan. If an element of one plan changes dramatically, evaluate the impact it has on the other plan. For example, if your marketing plan calls for you to launch a major media campaign, but your business plan’s revenue projections are weak, revise each to stay on track.

Make Changes When Necessary

A business plan is not an unchangeable document. Consider it a fluid plan that can be tweaked and updated as your business changes and grows. Don’t cling to elements of your plan that are outdated or no longer useful. For example, if part of your five-year plan includes moving to a larger facility, but you find after five years that your small facility works just fine, revise and update the business plan. Continually revise your plan so that you are always looking ahead in one, three and five-year increments, basing future projections on past performance.

 

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