The first stage in the process is identifying the particular objectives the business wants to achieve. This is important because with clear objectives of the business planning process may begin to underperform.
The business planning process includes strengths and weaknesses, increasing productivity, determining how it will compete with competing companies in the future, and establishing benchmarks for development so they can be monitored.
It provides your company with direction, clarifies your goals, illustrates how you’ll get there, and helps you deal with potential hiccups. provides you control over your business – learning about the various factors that could impact your success during the planning process.
Table of Content:
- What is Business Planning and Strategy
- Identifying Objectives – Business Planning Process
- Methods of Analysis
- SWOT Analysis & Pest-G Analysis
- Types of Business Strategy
- Implementation and Evaluation
What is Business Planning and Strategy?
Once a business has clarified its objectives it needs to plan how to achieve them and decide on the most suitable strategies to use. A company’s strategy is the pattern of decisions and actions that are taken to achieve its aims and objectives.
For instance, Telling Golden Miller Group plc went public on the Alternative Investment Market in August 2003. (AIM). The company operates buses and coaches out of London. The placing on the AIM raised 2 Million ponds for the business, which was to be used to fund acquisitions of businesses and new depots. Since the flotation, the company has bought Crystal Coaches in Dartford, which increased the bus routes operated by the Group from 13 to 17. In January 2004 Tesco raised 773 Million pounds by a share placed on the stock exchange to fund expansion.
Business Planning Process and Strategy:
Most businesses will plan a strategy carefully. Making decisions about what needs to be done, identifying goals, and creating procedures to reach those goals are all part of business planning. Some plans and strategies will be short-term. These will concentrate on near-term goals like surviving a recession. Others are long-term and will be introduced to achieve long-term objectives such as market domination.
There is a number of stages involved in the business planning process. These include:
- identifying objectives
- analyzing the position of the business
- deciding on a suitable strategy
- Implementing the strategy and evaluating its effectiveness
Two issues are intended to be addressed by the business planning process: Where are we now? Where are we headed? A business plan that acts as a roadmap for management to run the company is the end product of this approach.
Businesses examine their current situation critically before starting the business planning process. Offering goods and services that surpass competitors in their ability to satisfy customers’ requirements is the key to corporate success. The marketing strategy outlines which clientele will be targeted and how they will be persuaded to buy. Planning helps prevent issues like cash flow issues, the inability to produce goods on time, or insufficient staffing.
Identifying Objectives – Business Planning Process:
There is mainly 3 objectives of the business planning process are:
Strategic Objectives – These are objectives that concern the general direction and overall policy of the business. They are far-reaching and can influence the performance of the organization.
They will also be long-term objectives and carry a degree of risk. An example might be the merger of two of the world’s largest pharmaceutical companies, Glaxo Wellcome and SmithKline Beecham in 2000 to form GlaxoSmithKline.
Tactical Objectives – That is the next objective of the business planning process. These are less far-reaching than strategic objectives. They are tactical because they are calculated and the likelihood of achieving them is more predictable.
Tactical objectives may be set in order to achieve strategic objectives. For Example, if a business has set an objective to become a global operator in six-year, establishing a foothold in Europe within one year may be a tactical objective.
Methods of Analysis:
Once a business planning process has identified an objective, the next stage in planning its strategy is to consider its current position. A thorough analysis of its circumstances will provide the business with a variety of information that can be used to develop suitable strategies. Two methods of the business planning process that a business might use are SWOT analysis and PEST-G analysis.
SWOT Analysis:
The purpose of SWOT Analysis is to conduct a general and quick examination of a business’s current position so that it can identify preferred and likely directions in the future. An examination of a company’s internal strengths and weaknesses, as well as its exterior opportunities and threats, is known as a SWOT analysis.
Strengths – These are things that the business planning process and its staff do:
- they are effective at
- they are well known for
- make money
- generate business and reputation
- lead to confidence in the market
- encourage repeat business from customers
- encourage other companies to attempt to learn from them
Weaknesses – These are the activities that the business performs inefficiently, ineffectively, or for which it has a poor reputation. It also includes the factors that cause losses, hardships, disputes, grievances, and complaints in a business planning process.
Opportunities – These are the routes that the company could go in the future and still turn a profit thanks to its strengths or the removal of its deficiencies. This involves a consideration of the business planning process’s environment from the widest and most creative possible standpoints.
Threats – Competitor activity, missed opportunities, and failure to build on successes are all threats to a company. Threats also come from complacency, a lack of rigor, and falling profit, perhaps due to rising costs.
The analysis is often carried out as a discussion exercise. It is an effective way of gathering and categorizing information, illustrating particular matters, and generating interest in the business planning process and its activities quickly.
The result of such an exercise may provide a basis on which a more detailed analysis can be conducted. SWOT analysis is often used as a method by which marketing departments can plan their marketing strategy.
Pest-G Analysis:
Pest-G Analysis examines the external environment and the global factors that may affect a business planning process. It can offer an immediate and visible depiction of the external forces a firm is subject to and their potential strategic limitations.
Political – This is concerned with how regional, national, and international political developments may impact a business’s strategy. It might include a consideration of legislation, such as consumer laws, regulation, such as control of water companies, political pressures, and the government’s prospect of having to comply with new UK legislation and EU regulations about age discrimination, for example.
Economic – Analysis of various economic issues and how they affect the company could be part of this. They might include in the business planning process are;
- consumer activity -self-assurance, spending habits, and spending willingness
- economic variables – inflation, unemployment, trade, growth
- government policy – fiscal, monetary, supply side, exchange rate
- fixed and variable costs of the business
- the effect of changes in product and labor market
For example, in a recession demand for many products and services tend to fall. The business planning process may also need to analyze the possible effect on their plans of government policy designed to live the economy out of the recession.
Social – What competitive advantage might a gain by social changes taking place outside of the business? For example, after the year 2000, the UK had a falling birth rate, an increase in life expectancy, and an aging population. This has led to the development of products, particularly private pensions, private medical schemes, sheltered housing development, and ‘third age’ holidays, aimed at the older age group. Pressure groups can also affect the business planning process.
Technological – The business planning process operates in a world of rapid technological change. Organizations need to regularly review the impact of new technologies on their activities.
Products can become obsolete quickly. Production methods can become out of date. Communication may become inefficient as ICT develops. A new market may open. For example, some music companies have considered sales via the Internet. The strategy and business planning process towards R&D is vital in industries where technological change is rapid.
Green – In the business planning process, environmental factors might include legislation to control pollution or consumers’ views about the ingredient of the product. Taking into account environmental considerations may raise costs, but might also generate.
Types of Business Strategy:
When a business has completed the analysis stage it must decide upon a suitable strategy to achieve its objectives. Strategics can take a number of forms.
There are 3 types of business strategies in the business planning process;
1. Functional Strategies:
Functional strategies are designed to improve the efficiency of a business. They concentrate on a single area, like product development, marketing, production, or financial control. They shouldn’t, however, be used alone. Cooperation between departments is essential if the strategy is to be effective. Examples of functional strategies in the business planning process might include;
- lean production methods to reduce waste and lower production costs
- improving staff skills with training
- matching consumers’ needs better, through improved market research techniques
2. Business-level Strategies:
These are some kinds of business planning processes that most companies use to gain a competitive advantage over their rivals. They are sometimes called generic strategies because all businesses can use them. They often involve exploiting a particular strength that a business has. Examples of generic strategies might include;
- cost leadership, when a company strives to be the lowest-cost producer on the market in order to cut its prices
- consolidation in a market, perhaps by developing a more effective marketing strategy
- diversification, where a business aims to produce a wider range of goods or services.
3. Corporate Strategies:
These are aimed at the business planning process and focus on the long-term position of the business. They are designed to develop the overall shape and nature of the organization. For example, they might involve;
- organic growth, where a business expands through internal development by opening 10 new stores per year
- joining together formally with another company to form a larger organization
- buying other companies to grow quickly
4. Global Strategies:
These involve the development of a business outside national boundaries. For example;
- setting up production plants in countries where coast are lower
- setting up operations in other countries to avoid traffic
- transferring skills or productions to another country because competitors in those countries lack them
Implementation and Evaluation:
Once a business has identified its strategies in the business planning process they need to be implemented. The organizational and management systems needed to carry out the strategies have to be put into place.
This might involve adapting existing systems or designing new ones. Businesses also need to main control while strategies are being implemented ensuring that managers with their budgets, for example.
Finally, in the business planning process, a business needs to access whether the new strategies have been successful. To this, it must measure performance against targets that have been set. The information generated in the evaluation process may be used to adjust strategies if necessary.
Corporate Culture:
Corporate culture is a set of values and beliefs that are shared by people and groups in the organization. A simple way of explaining the business planning process, and corporate culture might be to say that it is the way that things are done in business, eg the McDonald’s way. Tor example, at Microsoft, the computer company, staff work long hours, dress casually and communicate by e-mail. These are the norms of behavior.
Business leaders are able to create a corporate culture in the business planning process that helps to achieve the corporate objectives and strategy of the company. For example, some businesses encourage staff to solve their own problems and take risks. This will help the business to be more creative, which might make the company more innovative and give it a competitive advantage.
It is important to ensure that all staff working in an organization understand its culture.
If a positive corporate culture has been fostered by an organization, new staff need to be trained when they are inducted. The culture must also be reinforced in everyday work situations.
There are certain benefits to a business of establishing a strong corporate culture in the business planning process.
- It provides a sense of identity for employees. They feel part of the business. This may enable employees to be adaptable when the business must change or faces challenges.
- Workers identify with other employees. This could be beneficial for corporate functions like teamwork.
- It increases the commitment of employees to the company, This may prevent problems in the business planning process such as high labor turnover or industrial relations problems.
- It motivates workers in their jobs. This may lead to increased productivity.
- It enables staff members to be aware of their surroundings. It also enables them to interpret the meaning of different organizational activities. This can prevent misunderstandings in operations or instructions passed to them.
- It helps to reinforce the values of the organization and senior management.
- It serves as a control device for management with which to shape employee behavior. This can help when setting company strategy
FAQ:
What is the first step in the business planning process?
The following five essential actions can help you develop a successful plan for your business:
- Determine your strategic position.
- Prioritize your objectives.
- Develop a strategic plan.
- Execute and manage your plan.
- Review and revise the plan.
What is the first step in the aim planning process in a simple way?
The first and most crucial phase in our method of Aim planning is “analyze.” The three areas of the AIM Planning Process are audience analysis, idea generation, and message structuring. In essence, the planning stage should involve assessing your audience’s needs, creating strong concepts to address those needs, and then organizing your message.
What are the Steps to Help Make Your Business Planning Process Successful:
You can cause enough disruption in your organization by implementing these 4 business planning process stages that your current shortcomings will turn into strengths in the future.
The design, steps, and defined resources required to achieve the ideal balance of goals or demands with available resources are all part of the fundamental management function of business planning. What steps comprise the business planning process, then? I usually divide the procedure into 4 Fundamental Steps.
- Decide what you’re going to do.
- Determine how you will do it.
- Pick who will accomplish it.
- Take action.
What is the PROCESS FOR DEVELOPING YOUR BUSINESS PLAN?
This is the bare minimum you’ll need to run your business successfully and the information you’ll be expected to give lenders and investors. You can create your business plan using the ten steps listed below.
10 steps of the Business Planning Process:
- Begin the Plan with a Summary
- Describe Your Company — Its Business, Goals, and Objectives
- Describe your product or service and the manufacturing process.
- Describe Your Product/Service and How They are Produced
- Describe Your Management Organization
- Describe Your Operations
- Summarize Your Financial Needs
- Determine Your Proposed Financing
- Outline Your Plan(s) for the Future
- Other Considerations
Conclusions: Business planning process
An organization that creates and implements a strategic plan benefits greatly from the experience, and it can be more efficient to start with a functioning model before creating a concrete plan.
- A business plan is a document that outlines a company’s primary business operations and how it intends to accomplish its objectives.
- Business plans are used by startup enterprises to gain traction and draw in outside investors.
- An executive team can utilize a business plan as an internal roadmap to maintain focus on and progress toward short- and long-term goals.
- Businesses may write a typical business plan that is longer or a lean startup plan that is shorter.
- An executive summary, sections on products and services, marketing strategy and analysis, financial planning, and a budget should all be included in good business plans.
What to Read Next:
Business Planning and strategy – business planning process – business strategy – business planning – business planning process – business plan process – the first step in business planning process – aim planning process for business messages – business plan process flow chart
