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Bm 1.6 organizational planning tools
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Bm 1.6 organizational planning tools



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  • 1. The rich man never plans for tomorrow, the poor man for today. -Chinese proverb1.6 Organizational Planning Tools By Alex Arancibia, for Nuevo Mundo High School – Gye, 2012 Sources: Business and Management for IB, Paul Hoang, 2007 Business and Management for IB, Peter Stimpson, 2011 Business and Management for IB, Paul Clark, 2009 1 LibreOffice Productivity Suite
  • 2. SanaSana business plan gives business healthystartSetting up a new business with no clear plan is like sailing across an ocean with no charts or compass. The business plan of SanaSana is an excellent example of how new business entrepreneurs can increase their chances of success, and gain acceptance from stakeholders, with a clear explanation of:● who the business owners are, their strengths and experiences● the central purpose of the business and the intended market● benefits to consumers of using the business● the market research undertaken● financial forecasts and the borrowings required● the main risks likely to be faced by the business.SanaSana was set up by fi ve friends, ‘who share one another’s dreams and passions’, to provide a health care information service for Hispanic (Spanish) speakers in the USA. Three of the partners are Hispanic and the other two are qualifi ed doctors. Collectively, they have 50 years’ experience in management, e-commerce, finance and medicine. The financial projections forecast a net profit of over $18 million by the fifth year of operation.Source: MOOT CORP® Competition sample business plan 2 LibreOffice Productivity Suite
  • 3. Points to think about:● Why would you advise new entrepreneurs to write a detailed business plan?● Which stakeholders would find such a plan useful, and why?● Do you think SanaSana stands a good chance of being successful? Explain your reasons, referring to the details of the business plan given above. 3 LibreOffice Productivity Suite
  • 4. Planning for the future and taking effective decisions are two very important management functions that are linked. Planning means establishing the future direction the business should take and setting overall objectives and targets. Strategic decision-making focuses on making choices between different strategies so that the objectives of the business are more likely to be achieved. 4 LibreOffice Productivity Suite
  • 5. There are 3 levels of decision-making Operational: routine and day-to-day decisions. Usually handled by junior management. Examples: when a worker should go for a break, dealing with customer enquiries/complaints. Tactical: short-term decisions, normally handled by middle management; examples: pricing strategies, recruitment and selection of staff. Strategic: high-level and long-term decisions that set the overall direction of the business; dealt by senior management due to the risk involved. Examples: relocation, which products to develop, entering new markets, review of salaries and benefits. 5 LibreOffice Productivity Suite
  • 6. Management jobs are different Because of the amount of decision- making involved Due to the scale of importance of those decisions Theres an element of risk associated with almost every business decision. 6 LibreOffice Productivity Suite
  • 7. What is a business plan?Its a written document that describes a business, its objectives and its strategies, the market it is in and its financial forecasts and details how they plan to achieve them.The contents of a typical business plan are: The business – Name and address of proposed business – Type of organization (sole proprietor, partnership) – A statement of quantifiable aims and objectives – Cost of premises and other start-up costs – Details of the owner and their past business experience 7 LibreOffice Productivity Suite
  • 8. A Business Plan The product Details of the goods/services offered Forecasted level of demand (present and future) with any supporting evidence showing why customers will pay for this product How and where production will take place, such as the equipment that is needed Details of suppliers of resources, such as raw materials or stocks Costs of production, e.g. the running costs of operating the business Pricing strategies to be used 8 LibreOffice Productivity Suite
  • 9. A Business Plan The market The size of the market as determined by the potential number of customers for the product The nature of the market, such as the customer profile and market segmentation The recent growth rate of the market and expected growth rates in the foreseeable future Outline of both direct and indirect competitors, including their market share and their strengths and weaknesses 9 LibreOffice Productivity Suite
  • 10. A Business Plan The finance Proposed sources of finance to show how the business will be funded Break-even analysis to project the firms break-even level of sales Steps to be taken to deal with cash flow problems Security than can be offered to lenders in case the borrower defaults the loan A cash flow forecast showing thje projected earnings from sales and the expected monthly cash payments for the ongoing costs of the business. A projected profit and loss account showing the estimated profit at the end of the 1st year A projected balance sheet for the end of the 1st year showing the firms assets and liabilities Forecast rate of return for investors on the business venture 10 LibreOffice Productivity Suite
  • 11. A Business Plan The personnel The number and positions of the employees likely to be employed Organizational chart showing the internal structure of human resources Details of payment systems such as wage rates, salaries and remuneration packages 11 LibreOffice Productivity Suite
  • 12. A Business Plan The marketing Details of the promotional mix that will be used to reach customers and make sales The distribution plan, detailing where the products will be sold Evidence of whether any market research, such as test marketing, has been carried out Any unique selling point that the business can use to differentiate itself from its competitors 12 LibreOffice Productivity Suite
  • 13. Financers will want to see the business plan because it shows the entreprenuer has comprehensively reasearched the business opportunity and has reasons to support the venture.This will help financial lenders to make a more objective judgment regarding the firms likely success rated and therefore its ability to repay any loans 13 LibreOffice Productivity Suite
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  • 16. Economies of ScaleA large factory should produce a large number of units to minimize its fixed cost per unit. Say that an automobile factory costs 1 million dollars. If it only produces 1000 cars, then its Fixed Cost Per Unit is 1 million dollars divided by 1000 cars, or $1000/Car. If the factory produces 8000 cars, however, its Fixed Cost Per Unit is 1 million dollars divided by 8000 cars, or $125 per car. By producing 7000 more cars, the firm gets an 88% fixed cost reduction per car. 16 LibreOffice Productivity Suite
  • 17. Economies of Scale Time for a video: 17 LibreOffice Productivity Suite
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