BUSINESS PLANNING
PROCESS
PRESENTATION FOR MEMBERS OF ICAI
DUBAI CHAPTER
24th October 2015
OBJECTIVES OF BUSINESS
• Profitability: sole motive of business; all other
objectives are subservient to profit motive
• Survival: function of nature of ownership, nature
of business competence of management, general
and industry conditions, financial strength of the
enterprise, etc.
• Stability: cautious and conservative objective
• Growth: increase in assets, manufacturing
facilities, increase in sales volume
• Efficiency: doing things in best possible manner;
utilizing resources in a most suitable combination
to get highest productivity
BUSINESS PLANNING PROCESS
FRAMEWORK OF STRATEGIC MANAGEMENT
• Stage One: Beginning – starting point – Where
are we now? – situational analysis in the
environmental context – SWOT Analysis
• Stage Two: End – destination – Where we want
to be? – vision and mission
• Stage Three: Means – How to get there?
• Stage Four: Evaluation – Which is the best way? –
SWOT Analysis
• Stage Five: Control – How can we ensure arrival
at the destination?
STRATEGIC PLAN
• Long Term
• Big Picture
• Environmental Scan
• Vision – What
• Mission – Why
• Core Values - How
COMPONENTS OF BUSINESS
ENVIRONMENT
• External – factors outside the
organisation which provides
opportunities or poses threats
• Internal – factors within the
organisation which impart strengths
or cause weaknesses of a strategic
nature
PESTLE ANALYSIS
• P – Political – political stability, ideologies, taxation policy,
regulatory bodies, government policies, government term and
change, thrust areas of political leaders
• E – Economic – situation, trends, market and trade cycles, specific
industry cycles, end-user drivers, interest and exchange rates,
inflation and unemployment, consumer spending
• S – Socio-cultural – lifestyle trends, demographics, attitudes and
opinions, brand image, buying patterns, ethnic/religious factors,
media views and perception
• T – Technological – replacement technology, maturity of
technology, manufacturing maturity, innovation potential,
technology access, licensing, patents, intellectual property rights
• L – Legal – business and corporate laws, employment law,
competition law, health & safety law, international treaty and law,
regional legislation
• E – Environmental – ecological/environmental issues,
environmental hazards, environmental legislation, energy
consumption, waste disposal
VISION
Vision is the ultimate goal, dream and the guiding star of the
Organisation
NIKE
• "To bring inspiration and innovation to every athlete* in the
world"
* If you have a body, you are an athlete.
TOYS ‘R’ US
• "Our Vision is to put joy in kids’ hearts and a smile on
parents’ faces."
AMAZON
• "Our vision is to be earth's most customer centric company;
to build a place where people can come to find and discover
anything they might want to buy online."
IKEA
• Ikea’s Vision “Affordable solutions for better living”.
MISSION
• Mission is focused on present business scope – “who
we are and what we do” – the reasons for our
existence
• Mission describes who our customers are and what
we produce as outcome for them
• Mission amplifies what brings the firm to this
business or why it is there, what existence it seeks
and what purpose it seeks to achieve as a business
firm
• Mission defines the role that an organisation plays in
the society
• Mission should be inclusive to include all
stakeholders
CORE VALUES
• Describes how the business should be
conducted
• Desired culture of the organisation
• Principles that guide the behaviour of the
people involved in the organisation
EXPECT THE UNEXPECTED
ANNUAL BUSINESS PLAN
• Strategies/Goals
• Action Plan – who, who else, what support, by
when, measurement criteria, status
• Infrastructure requirements
• Resources Required
• Organisation Structure (good for atleast two
years)
AMAZING SENTENCE
I do not know where family doctors
acquired illegibly perplexing
handwriting; nevertheless,
extraordinary pharmaceutical
intellectuality counterbalancing
indecipherability transcendentalizes
intercommunication's
incomprehensibleness.
DISRUPTIVE INNOVATION
PORTER’S FIVE FORCES MODEL
• Competitive Analysis – five forces model of
competition
• The five forces are:
– Rivalry among existing firms
– New entrants
– Substitute products
– Suppliers bargaining power
– Customer bargaining power
STRATEGY
• Shutting doors first and then keeping only one
door open
• Strategy seeks to relate the goals of the
organization to the means of achieving them
• Strategy is partly planned and partly reactive
LEAD OR FOLLOW
COMPETE OR COLLABORATE
MERGER/ACQUISITION
GROW OR SHRINK
DIVERSIFICATION
FINANCIAL BUDGET
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•
•
•
•
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Revenue Plan
Working Capital Cycle
Cash Flow Statement
Statement of Profit or Loss
Statement of Financial Position
Assumptions and Milestones
BUSINESS PLAN PACKAGE
•
•
•
•
•
•
Strategic Plan
Annual Business Plan
Organisation Structure
Assumptions and Milestones
Risk Assessment
Financial Budget
Key to success: Monthly Review of the
Plan Vs. Actuals to take corrective actions, if any
WARREN BUFFETT’S RULES
• Rule No.1 – Do not lose any of your
shareholders’ money
• Rule No.2 – Do not forget rule No.1
THANK YOU
follow-up queries:
tpanand@motivaluate.com
Please visit my blog: tpanand.blogspot.com
(TP Talks)