1.6 organizational planning tools
DESCRIPTION
1.6 Organizational Planning Tools. Business Plan Components: Executive Summary Overview of new business Description of Business Opportunity What will be sold, why, and to whom Marketing & Sales Strategy Why will customers buy, how will sell - PowerPoint PPT PresentationTRANSCRIPT
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1.6 Organizational 1.6 Organizational Planning ToolsPlanning Tools
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ReviewReview
Business PlanComponents:
Executive SummaryOverview of new business
Description of Business OpportunityWhat will be sold, why, and to whom
Marketing & Sales StrategyWhy will customers buy, how will sell
Management Team & PersonnelSkills of entrepreneur and themanagement team
OperationsWhere are production facilities, ITsystems
Financial ForecastsSales projections, cash flow, profits
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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?
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Formal Decision Making Framework
Set ObjectivesAssess the problemGather data to analyze problemIdeas and options to considerDecision-making tools to decideActionControl & Review against companies
objectives
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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
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Higher Level
Planning Tools
Fishbone Diagram◦Also known as cause and effect diagram◦Also known as the Ishikawa diagram
May include the 6 M’sMethodsMachinesManpowerMaterialsMeasurementMother Nature
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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
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1.7 Growth and 1.7 Growth and EvolutionEvolution
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Economies of Scale◦ Purchasing economies
“bulk buying” – discounts for large orders
◦ Technical economiesProduction lines – produce products at a reduced cost because of efficiencyComputer systems – afforded by large firmsthat can absorb greater fixed costs
◦ Financial economiesBanks show preference to large corporationsLarge firms can “go public” with their stock
◦ Marketing economiesAdvertising costs for large companies can be spread over a large product line
◦ Managerial EconomiesLarge firms can higher specialists
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Diseconomies of Scale
◦Communication Problems
◦Alienation of Workforce
◦Poor Coordination and slow decision making
◦Large Scale production costs
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GrowthInternal Growth
Companies expand by creating new offices, opening new stores, growing existing business
External GrowthMerging with other firms, or acquiring other firms through purchase
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MergerWhen companies agree to combine and
operate under one board of directors with shareholders in both businesses owning the newly merged company.
TakeoverWhen a company buys over 50% of the
shares of stock to gain controlling interest
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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
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Joint Venture
Two or more businesses agree to work closely together to further a common interest.
Costs are sharedDifferent companies have different strengthsDifferent 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.
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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
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Higher Level
Porter’s Generic Strategies2 Categories of Strength
1 – Cost AdvantageBeing the lowest cost producer in yourindustry
2 – Product Uniqueness or DifferentiationYour product or service is uniquewhich allows you to charge a premium
FOCUS StrategyNarrow or Broad
Narrow – a small market segmentBroad – industry wide