Download 1.6 powerpoint

1.6 Organizational Planning
Tools

Business Plan
Components:
 Starting the Business-Description of
Business Opportunity/Objectives
What will be sold, why, and to whom
 Business Organization-How will it be
organized?
 Human Resources Team-Howw ill it be
staffed?
 Marketing & Sales Strategy
Why will customers buy, how will sell
 Operations-How will the production be
organized?
 Financial Plan-How will the business be
financed?
Sales projections, cash flow, profits
Review

Decision Making

Intuitive decision-making
◦ Using your gut instincts to make choices
Is this ever useful?

Scientific decision-making
◦ Basing choices on data analysis and formal decision
making frameworks
Is this ever useful?
Review

Formal Decision Making Framework

Set Objectives
Assess the problem
Gather data to analyze problem
Ideas and options to consider
Decision-making tools to decide
Action
Control & Review against companies
objectives






Review

Internal vs External Constraints
Internal:
 Your organizations structure
 Financial considerations
 Labor
 Attitudes of workforce – resistant or acceptance of change
External:
 The current business cycle (prosperity, recession, recovery
or depression)
 Changes in legislation
Review

Planning Tools

Fishbone Diagram
◦ Also known as cause and effect diagram
◦ Also known as the Ishikawa diagram
May include the 6 M’s
Methods
Machines
Manpower
Materials
Measurement
Mother Nature
Higher Level

Decision Tree
Used to outline options
connected with
financial outcomes or
economic returns
Squares indicate
decisions on the tree
Circles indicates a
range of outcomes
from the decision
Limitations: Only as good as the accuracy of data
Higher Level
1.7 Growth and
Evolution

Economies of Scale
◦ Purchasing 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 costs
◦ Financial economies
Banks show preference to large corporations
Large firms can “go public” with their stock
◦ Marketing economies
Advertising costs for large companies can be spread over
a large product line
◦ Managerial Economies
Large firms can higher specialists
Review
 Diseconomies
of Scale
◦ Communication Problems
◦ Alienation of Workforce
◦ Poor Coordination and slow decision
making
◦ Large Scale production costs
Review
 Growth
Internal Growth
Companies expand by creating new
offices, opening new stores, growing
existing business
External Growth
Merging with other firms, or acquiring
other firms through purchase
Review
Merger
 When companies agree to combine and
operate under one board of directors with
shareholders in both businesses owning
the newly merged company.
Takeover
 When a company buys over 50% of the
shares of stock to gain controlling interest
Review
Franchise
A business that uses the name, logo, and
marketing methods of the franchiser.
Example: McDonald’s, Dairy Queen,
Wendy’s, Subway
NOT: Walmart, Target, Harris Teeter
Review
Joint Venture
Two or more businesses agree to work closely
together to further a common interest.
 Costs are shared
 Different companies have different strengths
 Different 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.
Review
Ansoff’s Matrix
A model used to show risk with the four growth
strategies
Market Penetration – higher market shares in
existing market with existing products
 Market Development – selling existing
products in new markets
 Product Development – sales of new or
improved products in existing markets
 Diversification – selling different or unrelated
products in new markets

Review
Porter’s Generic Strategies

2 Categories of Strength
1 – Cost Advantage
Being the lowest cost producer in your
industry
2 – 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
Higher Level