1.6 organizational planning tools
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DESCRIPTION1.6 Organizational Planning Tools. Business Plan Components: Executive Summary Overview of new business Description of Business Opportunity What will be sold, why, and to whom Marketing & Sales Strategy Why will customers buy, how will sell - PowerPoint PPT Presentation
1.6 Organizational Planning Tools
ReviewBusiness Plan Components:Executive Summary Overview of new businessDescription of Business Opportunity What will be sold, why, and to whomMarketing & Sales Strategy Why will customers buy, how will sellManagement Team & Personnel Skills of entrepreneur and the management teamOperations Where are production facilities, IT systemsFinancial Forecasts Sales projections, cash flow, profits
Intuitive decision-makingUsing your gut instincts to make choices Is this ever useful?
Scientific decision-makingBasing choices on data analysis and formal decision making frameworks
Is this ever useful?
ReviewFormal Decision Making Framework Set ObjectivesAssess the problemGather data to analyze problemIdeas and options to considerDecision-making tools to decideActionControl & Review against companies objectives
ReviewInternal vs External Constraints
Internal:Your organizations structureFinancial considerationsLaborAttitudes of workforce resistant or acceptance of change
External:The current business cycle (prosperity, recession, recovery or depression)Changes in legislation
Higher LevelPlanning Tools
Fishbone DiagramAlso known as cause and effect diagramAlso known as the Ishikawa diagram
May include the 6 MsMethodsMachinesManpowerMaterialsMeasurementMother Nature
Higher LevelDecision Tree
Used to outline options connected with financial outcomes or economic returns
Squares indicate decisions on the treeCircles indicates a range of outcomes from the decisionLimitations: Only as good as the accuracy of data
1.7 Growth and Evolution
ReviewEconomies of ScalePurchasing economies bulk buying discounts for large orders Technical economies Production lines produce products at a reduced cost because of efficiency Computer systems afforded by large firms that can absorb greater fixed costsFinancial economies Banks show preference to large corporations Large firms can go public with their stockMarketing economies Advertising costs for large companies can be spread over a large product lineManagerial Economies Large firms can higher specialists
ReviewDiseconomies of Scale Communication Problems Alienation of Workforce Poor Coordination and slow decision making Large Scale production costs
Internal Growth Companies expand by creating new offices, opening new stores, growing existing business External GrowthMerging with other firms, or acquiring other firms through purchase
ReviewMergerWhen companies agree to combine and operate under one board of directors with shareholders in both businesses owning the newly merged company. TakeoverWhen a company buys over 50% of the shares of stock to gain controlling interest
A business that uses the name, logo, and marketing methods of the franchiser.
Example: McDonalds, Dairy Queen, Wendys, Subway
NOT: Walmart, Target, Harris Teeter
Two or more businesses agree to work closely together to further a common interest.Costs are sharedDifferent companies have different strengthsDifferent market shares that could be combined Example: DowCorning (Dow Chemical with Corning Glass Works) Dow Chemical combined their silicone based products with Corning Glass Works glass products.
A model used to show risk with the four growth strategies
Market Penetration higher market shares in existing market with existing productsMarket Development selling existing products in new marketsProduct Development sales of new or improved products in existing marketsDiversification selling different or unrelated products in new markets
Higher LevelPorters Generic Strategies
2 Categories of Strength
1 Cost Advantage Being the lowest cost producer in your industry2 Product Uniqueness or Differentiation Your product or service is unique which allows you to charge a premium FOCUS Strategy Narrow or Broad Narrow a small market segment Broad industry wide