a2 business planning for change corporate plans. a2 text chp 27 p. 444 learning objectives explain...
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A2 Business
Planning for Change
Corporate Plans
A2 text Chp 27 p. 444
Learning Objectives
Explain and assess
1. Corporate Planning Purpose Influences – Internal/ External
SWOT / PESTLE
2. Contingency Planning
A2 text Chp 27 p. 444
Purposes of Corporate Planning
Clarify direction Ensure efficient use of resources Provide a way of measuring progress Support effective decision-making Co-ordinate activities Allocate responsibility Motivate & guide people
A2 text Chp 27 p. 444
The planning cycle
Gather information
Monitor implementation
Evaluation of performance
Mission Statement
Goals
Devise strategies
Implementation of plan External
Environment
SWOT
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Activity
Explain the stages of the Planning Cycle
Sainsbury’s p. 448
A2 text Chp 27 p. 444
Influences on Corporate Planning
Internal and External influences assessed via SWOT.
Auditing Internal audit looks at current resources External audit looks at possibilities for
development (PESTLE)
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Kings SWOT
Brand reputation
Inefficient site
Social or lifestyle change
Economic downturn
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Some possible strengths
Market share Economies of scale High quality Leadership & management
skills Financial resources Research and development
capabilities
Technological leadership Brand reputation Protected IP Distribution network Employee skills High productivity Flexibility of production
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Some possible weaknesses
Low market share Inefficient plant Outdated technology Poor quality Lack of innovation A weak brand name High costs
Cash flow problems Undifferentiated product Inadequate distribution Quality problems Low productivity Skills gap De-motivated staff
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Possible opportunities
Technological innovation New demand Market growth Demographic change Social or lifestyle change Government spending
programmes
Higher economic growth Trade liberalisation EU enlargement Diversification opportunity Deregulation of the market
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Some possible threats
New market entrants Change in customer tastes
or needs Demographic change Consolidation among
buyers New regulations
Economic downturn Rise of low cost production
abroad Higher input prices New substitute products Competitive price pressure
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Convert into strengths
Weakness
E.g. Outdated technology = Takeover competent competitor
1. Skills gap
2. Overdependence on a single product
3. Poor quality
4. High fixed costs
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Weaknesses into strengths
Weakness Possible Response
Skills gap Invest in training & more effective recruitment
Overdependence on a single product
Diversify the product portfolio by entering new markets
Poor quality Invest in quality assurance
High fixed costs Examine potential for outsourcing or offshoring
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How can a firm manage risk?
Snow disruption
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Different ways to deal with risk
Ignore it (wait and see) Reduce probability of risk Reduce or limit the consequences Share or deflect the risk (e.g. by insurance) Make contingency plans - prepare for it Adapt in order to maintain performance Treat it as an opportunity- particularly if it affects
other competitors
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Risk management
Identifying what and how things can and might go wrong
Understanding the potential effects if things go wrong
Devising plans to cope with the threats Putting in place strategies to deal with the risks
either before or after their occurrence
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What’s difference between contingency planning and crisis management, if any?
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Contingency Planning
Minimise the impact of foreseeable yet non-critical events. Usually involves gathering detailed information on predictable situations and using computer models to ask ‘what if’.
Crisis Management is damage limitation involving Public Relations
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Contingency planning
Businesses prepare contingency plans because things do go wrong from time to time
Contingency planning involves:
Preparing for predictable and quantifiable crises Preparing for unexpected and unwelcome events
The aim is to minimise the impact of a foreseeable event and to plan for how the business will resume normal operations after the crisis
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Articles – Draw up a contingency plan
Mad cow disease on farm industry
Strikes
Recession
Kings swine flu outbreak
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Drawing up a contingency plan
Identify possible contingencies All the possible adverse and crisis scenarios
Specify the likely consequences Assess of the degree of risk to each eventuality
Determine risk strategy: To prevent a crisis to deal with a crisis should one occur
Prepare plan and identify responsibilities Test the plan (crisis simulation)
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The “what if” question
Scenario analysis This involves constructing multiple but equally
plausible views of the future The scenario consists of a “story” from which
managers can plan
Sensitivity analysis Involves testing the effect of a plan on alternative
values of key variables e.g. the effect of a 25% loss of capacity
A2 text Chp 27 p. 444
Learning Objectives
Explain and assess
1. Corporate Planning Purpose Influences – Internal/ External
SWOT / PESTLE
2. Contingency Planning