Business Level Planning

7/30/2019 Business Level Planning

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Planning is the process of Setting objectives Determining what should be done to accomplish

them Implementing the plan Evaluating the results of the plan Planning helps management answer the following

questions: Where are we now? How did we get here? Where would we like to be? How do we get there? Are we on course to achieve our targets?


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Planning takes place at different levels of abusiness the main levels being:

Strategic plan Sets out the overall direction forthe business in broad scope

Business plan The actions that a business will take to compete

Operational plan Details how the overall objectives are to be

achieved. Specifies what senior managementexpects from specific departments or functions


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The Drucker Model is essentially a business model

for planning applied to address the unique features

of public sector organizations.

Drucker's definition of "strategic planning" is whatwe simply call Warrior's Rules.

Drucker describes strategy from a warrior's

perspective of "analytical thinking and commitment

of resources to action." He describes attempts atpredicting the future as "foolish," because it is of

little use to people who seek to "innovate and

change the ways in which people work and live."


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The Drucker Model focuses on results - keeping the

"bottom line" of changed lives as its key element of

organizational success. It seeks to establish clear

measures of commitment and competence and

targets performance standards as a measure of

success. The "business management" orientation of

the model is easy for many volunteer leaders to

grasp as it often relates to their business orientationin their professional lives.


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Threat of New Entry Customer loyalty, product differentiation, market

share, capacity, costs (startup, switching, etc),access to distribution channels, government-imposed barriers (regulations, licensing, tariffs,

etc.), patents, specialization of knowledge ortechnology Threat of Substitution New or improved technology, improved

efficiencies, product substitution, trade offs,

switching costs; customer preferences andmotivations; product differentiation; productcomparison


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Bargaining Power of Buyers Ease of switching, ability to substitute, buyer

concentration and negotiating/bargaining power,switching costs, customer loyalty; product substitution

Bargaining Power of Suppliers Supplier market share/dominance, product differentiation,

switching costs, buyer concentration andnegotiating/bargaining power; buyer ease of switching,product substitution

Competitive Rivalry Ease of product substitution, competitive marketplace,

industry concentration, pricing changes, market share,product differentiation, distribution channels, relationshipmanagement, exit barrier strategies.


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The product life cycle describes the salespattern of a product over time. Generally, thetime span begins with product introductionand ends with its obsolescence and

replacement.

Basic Stages in the Product Life Cycle Development Stage

Growth stage Maturity stage

Decline stage


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Introduction begins when the product is first made available forcommercial sale. During the introduction stage the product'ssales are relatively low and slow to accumulate because it takestime to roll the product into multiple geographic markets,convince wholesalers and retailers to stock and sell the product,and to generate sufficient levels of customer awareness, interest,and trial. Overall, demand generally remains low during this

stage. Growth Stage Eventually, as the product becomes more widely available and is

adopted by more and more consumers, sales begin to grow at anincreasing rate. It is at this point that the product has entered itsgrowth stage. Sales continue to grow at an accelerated rate untilthe market approaches saturation i.e. the pool of potentialcustomers for the product becomes depleted. As this saturationpoint is approached, the sales curve begins to tip over -- therate of sales growth tends to decelerate. At this point, theproduct transitions into its third stage -- maturity.


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Maturity Stage Sales continue to grow during the first part of the maturity stage,

although the growth rate is much slower than before. At somepoint during maturity, sales reach their peak. This peak will varyin duration, depending on the product category underconsideration. For some product categories, such asautomobiles, cigarettes, and refrigerators, sales may remain attheir peak for decades.

The maturity stage is usually the longest phase of the PLC. As aresult, most products at any point in time, are at maturity. Thismeans that most decisions made by marketing managers aredecisions relevant to managing mature products. This makes thematurity stage of the PLC among the most important for us to

consider from a managerial perspective. Decline Stage Eventually the product enters decline. The decline phase is

characterized by a steady deterioration in sales and profits. Thisstage culminates in the products withdrawal from the market.


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The 7-S framework of McKinsey is a ValueBased Management (VBM) model thatdescribes how one can holistically andeffectively organize a company. Together

these factors determine the way in which acorporation operates.


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Shared Values Shared values are commonly held beliefs, mindsets, and assumptions

that shape how an organization behaves ,its corporate culture. Sharedvalues are what engender trust. They are an interconnecting center ofthe 7Ss model. Values are the identity by which a company is knownthroughout its business areas, what the organization stands for andwhat it believes in, it central beliefs and attitudes. These values must beexplicitly stated as both corporate objectives and individual values.

Structure Structure is the organizational chart and associated information that

shows who reports to whom and how tasks are both divided up andintegrated. In other words, structures describe the hierarchy of authorityand accountability in an organization, the way the organization's unitsrelate to each other: centralized, functional divisions (top-down);decentralized (the trend in larger organizations); matrix, network,

holding, etc. These relationships are frequently diagrammed inorganizational charts. Most organizations use some mix of structures -pyramidal, matrix or networked ones - to accomplish their goals.


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Strategy Strategy are plans an organization formulates to reach identified goals,

and a set of decisions and actions aimed at gaining a sustainableadvantage over the competition.

Systems Systems define the flow of activities involved in the daily operation of

business, including its core processes and its support systems. They

refer to the procedures, processes and routines that are used to managethe organization and characterize how important work is to be done.Systems include:

Business System Business Process Management System (BPMS) Management information system Innovation system Performance management system Financial system/capital allocation system Compensation system/reward system Customer satisfaction monitoring system


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Style "Style" refers to the cultural style of the organization, how

key managers behave in achieving the organization'sgoals, how managers collectively spend their time andattention, and how they use symbolic behavior. Howmanagement acts is more important that what

management says. Staff "Staff" refers to the number and types of personnel within

the organization and how companies develop employeesand shape basic values.

Skills "Skills" refer to the dominant distinctive capabilities and

competencies of the personnel or of the organization as awhole.


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Documents

Business Level Planning