bm 1.6 organizational planning tools
DESCRIPTION
IB Business and Management (Standard Level)All material taken from the IB Business and Management Textbook:"Business and Management", Paul Hoang, IBID Press, Victoria, 2007TRANSCRIPT
- 1. IB Business and Management Unit 1.6Organizational Planning Tools Pg. 95-102
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- The rich man plans for tomorrow, the poor man for today.
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- ~ Chinese proverb
What is meant by this quote? Image taken from:http://images.google.ca/url?source=imgres&ct=ref&q=http://ded.mo.gov/BDT/Community%2520Services/Community%2520Planning.aspx&usg=AFQjCNFVLE2fnSZkd3WK-Ie3M1AuSJM1Qw 3. 1. An overview
- What is at the heart of business and management?
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- Decision-making.
- What does decision-making involve?
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- Making choices between competing alternative.
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- Make the right decision = business will thrive.
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- Make the wrong decision = may fail.
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- There are three levels of decision-making in an organization:
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- Operational decisions : routine, day-to-day, junior management.
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- Deal with workers, customers
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- Tactical decisions : regular, short-term, middle management.
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- Deal with pricing strategies, hiring of staff.
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- Strategic decisions : high-level, long term, senior management.
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- Sets overall direction of the firm, new markets to enter, location of business, staff salaries etc.
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4. 2a. Business Plans
- What is a business plan ?
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- A report explaining how a new business will achieve its aims and objectives.
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- Do you remember the difference between AIMS and OBJECTIVES?
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- The business plan is a planning tool.
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- Requires you to plan the marketing, financial, and human resources of a business.
- What is the main aim of a business plan?
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- To gain financial backing from banks or venture capitalists (lenders).
- Why would financiers want to see your business plan?
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- It shows that you have thoroughly researched the business opportunity and provided reasons to support the venture.
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- Will help lenders judge the success rate and ability to repay loans.
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- Will help them see the cash flow of the business.
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- Will allow them to see how the working capital is being managed.
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- Will allow investors to assess the risks and opportunities of the venture.
5. 2b. Business Plans
- There are many ways to write a business plan, a typical one will include the following (see pg. 97):
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- The Business
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- The product
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- The market
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- The finance
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- The personnel
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- The marketing.
- Also, business plansSHOULDhave a section devoted to aSWOT analysis .
- It MUST also contain acontingency plan.
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- This will outline what the entrepreneur will do in case something goes wrong with the business.
- A business plan should be no more than 5-6 pages in length.
- An executive summaryshould be included at the beginning of the plan.
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- This will highlight the main information in the report, key points, and conclusions.
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- An overview of the business.
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6. 3a. SWOT Analysis
- What does a SWOT Analysis represent ?
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- Strength-Weakness-Opportunities-Threats
- What does it assess ?
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- Thecurrent and futuresituation of a product, brand, company, proposal or decision.
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- Itassessesbothinternalandexternalfactors (see pg. 98).
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- See table 1.6a pg.100
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- How can a SWOT analysis be an extremely useful tool for investigating all sorts of business situations?
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- It can provide a good framework for :
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- Evaluating business proposals
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- Assessing opportunities
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- Strategic planning
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- Competitor analysis
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- Reviewing strategy
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- Risk assessment (see pg. 99)
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7. 3b. Advantages and Limitations of
- Advantages :
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- Simple, quick and easy to use.
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- Used for a wide range of decisions.
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- Determines an organizations position in the marketplace.
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- Encourages foresight and proactive thinking.
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- Helps reduce risk of decision making.
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- Very objective and logical.
- Limitations:
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- some argue that it is very simplistic and does not provide detailed analysis.
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- Model is static, whereas the market is not.
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- Is ONLY useful if decision-makers are willing to act upon the weaknesses.
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- It is not used by itselfwill be used with other strategic tools, such as PEST.
8. 4a. Decision-making Frameworks
- Remember ALL businesses have to make decisions in order to achieve their objectives .
- They will decides on :
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- What to produce?
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- How to produce it?
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- Whom to produce it for?
- Adecision-making frameworkis need to answer these many questions .
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- SO, what is a decision-making framework ?
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- It is a systematic process of dealing with business problems, concerns, or issues in order to make the best decision.
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9. 4b. Decision-making Frameworks
- A decision-making model will have the following seven steps:
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- Identify the problem.
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- Gather data and information.
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- Analyze the data to produce options.
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- Assess the consequences of each options (costs).
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- Select the best option.
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- Communicate this decision to staff.
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- Review and evaluate outcome; lessons learnt.
- VeryIDEAL , yes?
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- I dentify the problem.
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- D efine the problem.
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- E xplore the possible solutions.
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- A ction to tackle the problem.
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- L ook back to review the progress and level of success.
10. 4c. Decision-making Frameworks
- There are several models or frameworks that you can use to limit the risk involved in decision-making.
- Here are a list of commonly used ones (see pg. 101-102.)
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- Cost Benefit Analysis (CBA).
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- Six Thinking Hats.
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- Forced Field Analysis.
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- Pareto Analysis.
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- The 5 Whys.