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Stages of business planning

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Stages of business planning

  1. 1. Stages of Business Planning
  2. 2. Professor Philip Kotler, author of Marketing Management, said that there are four stages of business planning. Businesses which have passed these stages are on their way to sophisticated planning. Many enterprises are classified in each of these stages:  Unplanned Stage At the start of the business , the owner-manager is busy looking for funds, customers, materials and equipment. He has no time for planning. His entire attention is devoted to the daily operations of his business in his intense desire to survive.  Budgeting-System stage Eventually, the owner-manager realizes the need to develop and use a budgeting system. Estimated incomes from sales and expected expenditures are made. This is done to facilitate the orderly functions of the growing enterprise.
  3. 3.  Annual planning stage The owner-manager drafts an annual plan. He can use either the top-down planning or bottom-up planning. In top-down approach, the owner-manager provides the goals and let the employees comply with them. In the case of the bottom-up approach, he encourages his employees to participate in planning the goals and strategies of the enterprise. The first approach in planning is autocratic while the other one is democratic.  Strategic planning stage As the business enterprise becomes bigger, a long-rage planning is needed. This is a three-or five-year plan. Such plan has flexibility to able to adjust to changing conditions. An executive of the Xerox Corporation claims that some of their plan are being revised every day of the year. At this stage, planning develops into a more strategic character.
  4. 4. Criteria of Effective Planning 1. The plan should state clearly its objectives. Such clear statement is necessary so that hose who will be involved in the execution of the plan will understand, believe, accept and support it. 2. The plan should provide measures for a satisfactory accomplishment of the objectives in terms of quantity, quality, time and cost. These help in delegating responsibility and measuring results. 3. The plan should state the policies which should guide people in attaining the objectives. 4. The plan should indicate what department or unit will be involved in accomplishing the objectives. It may or may not spell out the procedures for performing the required work.
  5. 5. 5. The plan should indicate the time which should be allowed for each activity. It may be necessary to establish a target data for completing the activity. 6. The plan should specify the required resources and their corresponding costs. 7. The plan should designate the officers who will be held accountable for the accomplishment of the objectives. Sufficient authority should be delegated to such officers/executives.
  6. 6. Components of Business Planning 1. SWOT. The chances of a product or service can be evaluated through the SWOT analyses. (This is explained in Chapter 6.) Every product or service has its own strength, weakness, opportunity and threat. Planning should include the improvement of the product/service in order to survive competition. 2. Objectives. These should be specific and realistic. Such objectives can be daily, weekly, monthly and yearly. For example, 10% increase in sales after 6 months of operations. Environmental factors should be considered I n formulating business objectives. Peace and order, power supply and government polices affect business activities.
  7. 7. 3. Strategies . These are ways of accomplishing the objectives. Such ways are stated in the financial, production, marketing and organizational plans of the enterprise. For instance in the objective of increasing sales by 10% after 6 months of operations, there are several ways of attaining it. One way is to advertise the product. Another is to improve customer relations. It can be also done by reducing the selling price, or a combination of the three ways. 4. Time frame. In business, time is gold. For this reason, an entrepreneur must be efficient in time management. Every activity has its own time schedule. Activities which are completed on time save money. Here is a sample time schedule for a small business:
  8. 8. Activity Month 1 2 3 4 5 6 7 8 9 10 11 12 1. Market analyses ________________________________ _ 2. Strategies ________________________________ _ organizational ___ financial ______ production ___ _________ marketing ___________________ 3. Open business ___

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  • DanteArana2

    Jul. 24, 2016
  • DanielBawa

    Nov. 17, 2016

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