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George Howell (1999) says, "Those who fail to plan, plan to fail". Planning is one of the critical eras to be focused by an individual, a team, a society, a government, an organization. The purpose is to get succeeded in decided aims. It is applicable to any kind and size of identity. It clears the vision to look ahead. A business plan includes planning to look at the future time, efficient allocation scarce resources, pin points the key issues and challenges that organization is currently facing or expected to face in future. Moreover, it looks for opportunities to avail from external environment to keep strengthen in the market. (Tim Berry, 2010).
According to Berry (2010), most of the organizations make plans only for one time at the beginning of the business. But it is vital to keep making plans in ongoing businesses to get right decisions about new needs of business, loans requirements and for new investments. Planning helps to identify the priorities of the business and put the CEO into the right path.
In his Small Business Start-Up Guide, Dr. Robert Sullivan 2000 states, "A major reason for business failure is lack of planning. Prepare a strategic plan for your business that clearly defines your mission, your present situation, your strategies, and where you want to be in the next three to five years. This plan will be your roadmap to effective decision making."
George Howell (1999) says that organizations fail to make business plan only with the reason of time shortage, managers does not know where to start, where from they can get help to make it, or too costly to hire planner etc. moreover, he identify the reasons why to make a business plan by giving some features of business plan. It includes, understanding of internal issues and external challenges describe and document the tactic and strategies to address those issues and challenges, ways to implement of strategies and to make the processes efficient and effective.
i.i- Characteristics of Business Plan:
Even China, 2010 shows the scope of business plan in which he has asked to document, specifies and discusses the following:
â€¢ The company's nature and identity
â€¢ Business objectives and the aim of business existence in the eye of consumers and entrepreneurs.
â€¢ The products organization sells and offers
â€¢ Marketing strategies
â€¢ The goals that owner has planned to achieve.
â€¢ The market that organization plans to conquer
â€¢ Future plans for the business
â€¢ Financial standing prior to starting
By having all those information, an organization can see that a business plan is very much like a blueprint that will help any organization to start and manage a business regardless of its nature. (Even China, 2010) Below some major components of good business plan are being discussed that all kind of organizations i.e. national or multinational, profit or non-profit have to keep in mind.
Business plan must cover all aspects of business in detail by listing the products and services. In other words, organizations should not only itemized the products but also provide the description and scope of commodities.
Business plan should be market research based in which identification of national and international competitors, their percentage of share, market positioning, range of products must be included. By observing activities of competitors, a good business plan should indicate the industry bench marks and should tell the innovative ways of operations so that maximum efficiency can be achieved.
A business plan cannot become ideal if it has not enlisted with needs and demands of the organization to conduct all operational, administrative activities i.e. equipments, technology to be used, kind of raw material, cash for day to day activities, further investments and many other resources which may require to operate any activity. This will give idea to business how much capital is required to run and maintain the business.
The plan should be in formal style and formatted as it may be represented in front of business partners or external parties' i.e. financial institutions or banks. Moreover it should be updated time to time as per current situation.
At last, a good business plan must be free from errors. It has great importance because the business plan represents who you are as a business man. If it turned out sloppy, then that does not speak too highly of business. Furthermore, use of slangs should be avoided to make good business plan.
ii- Decision Making:
Richard Bowett (2010) says that decision-making increasingly happens at all levels of a business. The Board of Directors may make the grand strategic decisions about investment and direction of future growth, and managers may make the more tactical decisions about how their own department may contribute most effectively to the overall business objectives. But quite ordinary employees are increasingly expected to make decisions about the conduct of their own tasks, responses to customers and improvements to business practice. This needs careful recruitment and selection, good training, and enlightened management.
ii.i- Levels of Business Decisions:
Richard Bowett (2010) has mentioned 5 levels decisions, discussed below.
ii.i.i Programmed Decisions
Routine level decisions which have same cause and effects all the time can be written down in document. These kinds of decisions are normally not expected to change with change in environment. So, fixed steps are identified and announced them as standards to be followed.
ii.i.ii- Non-Programmed Decisions.Â These are non-standard and non-routine. Each decision is not quite the same as any programmed decision. Standard cannot be made in this era. same cause has different effect with respect to time or location.
Figure 1: Levels of Decision-Making
ii.i.iii- Strategic Decisions.Â These affect the long-term direction of the business. These decisions are normally being made top management and have major affects on whole organization. For instance, decisions regarding Investments, merger or takeover of other businesses.
ii.i.iv- Tactical Decisions.Â These are medium-term decisions. Here managers or medium level management are involved to decide how to implement strategy. But this strategy must be in the scope of strategic decisions i.e. what kind of marketing have, how to get an optimized solution or how many extra staff is to be recruited for particular job.
ii.i.v- Operational Decisions.Â These are short-term decisions. These are also administrative decisions which are concerned implementation of tactic e.g. which organization is to use for deliveries so that optimal situation can get.
Below in figure 2, the process of decision making is mentioned briefly by Richard Bowett (2010).
Figure 2: The Decision-Making Process
It is very important for any organization to make business to predict the future of the organization because it provides a track to adopt and provide a vision to the organization where it want to be after a certain point of time. More over right decisions on right time at right place by right person take organizations to the sky immediately. By combining both skills including making business plan and right decision making an organization can become a star of BCG matrix internationally by securing maximum market share and market growth. The multinational Organization will become Leader of the industry in world market.
Dr. Robert A. Sullivan, 2000 "The Small Business Atart-up Guide" 3rd addition, publisher: information international
Even China, 2010, "Five Characteristics of Good Business Plan", [online: ezine articles], available at <http://ezinearticles.com/?Five-Characteristics-of-a-Good-Business-Plan&id=4108071> [accessed on: Oct 02, 2010]
George Howell, 1999, three steps of effective business plan "The Business Planning Process", part-1
Richard Bowett, 2010, methods of business decision-making "Organization - Decision-Making & Business" [online] available at: <http://tutor2u.net/business/organisation/decisionmaking.htm> [accessed on Oct 04, 2010].
Tim Birry, 2010 "What is Business Plan" [online] available at: <Â http://articles.bplans.com/writing-a-business-plan/what-is-a-business-plan/33#ixzz12PUiCjlY> [accessed on Sep 28, 2010].
CONCEPTS AND MODELS:
The concepts and models are most commonly use in business for have a look of their business. there are a number of definitions of both of these.
Three words that occur very regularly in research texts are concept, theory and model. It is often assumed that everyone knows what these words mean and what the differences between them are. These are usually false premises. The terms will be defined and briefly discussed. As in most situations there are a number of possible definitions for each word.
Ref ( Theodorson & Theodorson 1969 )
Concepts are use for communication and effectiveness which is produced by people. In other word concepts are features which are common.
Models shows a picture of create, the process of business model is a major role of business planning.
In business language model covered a wide area of formal and informal explanation to signify aspects of business such like as company structure, import and export practice, and taking action and laws.
Ref (wiki pedia as a idea)
Some models are very simple and easy to understand , even the inspection of world .
Strategic drift refers to the situation in which organizations have to take initiatives for adjusting organization against external environmental change. It is usually has impact on internal culture of organization. In this case organization has to be proactive or reactive. Proactive approach will give batter results for changing cultural as it has sufficient time to get adjusted in the changing environment.
Prevention is to be there in changing culture that contains innovative decisions which are responsible for good change in strategies that leads the organization to strategic drift.
The changing response is generated from inside of organization in order to get supported from external business environment rather than objectively understood. For this it has to be assumed that strategic change is directly related to suitable cultural change.
Managers may look for extending the market for the business, but it has to be assumed that the extension which is to be made will be same as of existing market and new venture management styles will also be the same as they have been used to earlier.
If the strategic change is not implemented in well manners, it will become barrier to get succeeded in changing the culture according to the demand of external environment. It may further damage the performance of organization.
So, organizations must transform changing culture only if there is no other way to do. Because element of risk of failure is associated with change with higher ratio.
VALUES AND VISION OF RETAIL COMPANY:
A vision tells the future destiny of an organization. Vision is a long-term view, it is the cause of motivation. It is how to attract and make a difference to customers, to the society, and to the world.
Your vision could project a compelling story about the future. When Steve Jobs, the Apple founder, said "An Apple on every desk," it was his vision of the company.
Vision statement should include:
â€¢ bright and clear pictureÂ
â€¢ explanation of a brilliant futureÂ
â€¢ brilliant and charming wordingÂ
â€¢ Realistic aspirationsÂ
â€¢ Alignment with organizational values and culture
Apple Vision Statement: "To make a contribution to the world by making tools for the mind that advance humankind."
Value statement is an expression of a company's middle idea. Values tell about organization's culture and priorities. Companies write the value statement to identify and connect with the consumer. Additionally, this statement allows for the company's staff to be aware of the priorities and goals of the company.
Best Buy Value Statement:
We have four values that guide our actions:
* Have fun while being the best.Â
* Learn from challenge and change.Â
* Show respect, humility and integrity.Â
* Unleash the power of our people.
Nina Telpoukhovskaia is a President of Be Best Professional Development Centre, bestselling author of 5 books in Russia and Canada, including Retail Sales. 6 Steps to Double Your Profit. She is an inspiring workshop leader, sales coach and consultant, dynamic and knowledgeable public speaker with 22 years of unique international teaching experience
GOALS AND VALUES IN RELATION TO STAKEHOLDER FOCUSING CORPORATE GOVERNANCE:
Corporate governance is a relationship among stakeholder that is used to determine and control the strategic direction and performance of organizations
Concerned with identifying ways to ensure that strategic decisions are made effectively
It is used in corporations to establish order between the firm's owners and its top-level managers.
AGECNY RELATIONSHIP WITH STAKEHOLDERS:
Ref ( photo from google business .com)
CORPORATE GOVERNANCE MECHANISM:
The firm's CEO and other Top-level managers are insiders and they are the actual persons who encourage the employee's to achieve goals and values of organization and CEO is the final decision maker ,
Individuals who are not involve with day to day operations, but who have a relationship with the company are known as affiliated outsider like project manager etc.
Individuals who are independent of the firm's day-to-day operations and other relation
ROLE OF THE BOARD OF DIRECTORS:
Are managers acting in shareholders' best interests?
Examine propdals decisions actions provide feedback and offer direction.
All in all stakeholders play vital part in any of organization to change its decisions and to carry on organization's value and they encourage the organization to fulfill the desired goals. Stakeholder could be in different shapes.
Impact of external environment ON BUSINESS:
In today's competitive environment, organizations have to be attentive of environment in which they are running business and the external factors that may have influence on their activities. These opposite influences may create problems for internal factors of the business which may affect the progress of organizations and its goals.
Many of the external environment modify rapidly and significantly. Most of the time outside a firm's control is very low as external environment is hardly stable , even some external forces may become so risky for running business that their effect is very critical for organization. On the other hand, organizations can avail some new opportunities from the external environment to make their internal strength for market competition.
In order to analyze their business the organization can use a PEST analysis method to know the external influences that can influence the planning of business underneath these areas; political , economic , social, technological ..
All organizations have to proactive and deal with the change that have occur within their organization environment .if changes happen constantly and the organization not able to recognize and react to them runs the chance to cope with business problems. The upper management department carries out regular monitoring of the organization environment to regulate and recognize such influences that may need to take some action. There are two techniques that normal use to measure organization environment in which business operating. PESTLE analysis STEEP and Porters diamond model.
the study of the external forces must be an continuing procedure for top management because the factors recognize might be provide insights into problem for the future or opportunities for new successes. With the help of PESTLE and porter's diamond model together it make possible to show a clear view of situation which organization facing. Using the less techniques could leave gaps in the information and understanding.
STRATEGY ANALYSIS EXTERNAL BUSINESS ENVIRONMENT
Technique 1: PESTLE analysis
There are some related approaches apply to investigate the international business environment in wich the organization work. The most frequently approaches for the external environment examine are :
(Political, economic, socio-cultural, technological)
(political, economic, social, technological, environmental, ecological and legal)
(Political, economic, social, technological, legal, international, ecological (or environmental), demographic)
(social, technological, environmental, economic, political, legal, ethic)
The study of PESTLE shows a framework for investigating and analyzing the external forces for a business. The framework tells six areas that ought to be measured when attempting to verify the source of change.
The PESTLE analysis has been used from last 10 years in the business continuously and its difficult to explain its true history. The most recent reference to evaluate and scanning the business environments by Francis J. Aguilar who explain about ETPS' for four sectors Economic, Technical, Political, and Social..
After a short time of introducing ETPS Arnold brown modify it as a STEP model (Strategic trend evaluation process ) for the Institute of Life insurance in US.
After this macro external environment analysis or measurement for the change was established again and come so-called STEPE model ( the social, technical, economics, political, and ecological )
After some time in 1980s many of other authors such as Fahey, Narayanan, Morrison, Renfro, Boucher, Mecca and Porter. They all involve in variation of the models and modifying in different ways : PEST, PESTLE, STEEPLE etc. The remodify of these factors and addition in that factors help us broad understanding and better view of environment.
Political factors are what level of government intervention in the financial system and how. Specially political reason comprise areas such as environmental law, law for labour, buy and sell, duty, and political permanence. Government wish to provide goods and services like advantages and those that government does not like to give disadvantages may also add in the political factors. What's more government also has influence on culture, physical condition and infrastructure of a population.
This factor can be narrow to the state but in this arising international trade, financial problems in one state tent to have wide which will affect whole world. The economic factors such as inflation speed
and growth of economy. These factors have serious cause on how organization works ad take certain step and decisions. The price of exporting imported goods and services affected by currency rates .
The gradual change in the condition and in social change the demand for invention and how that company work. Socio-cultural factors are growing from customers. The often slight changes and they could be hard to forecast or recognize until there's a great impact on company. More over organization may change different executive strategies toward these social trends. . For example, an aging population may imply a smaller and less-willing workforce (thus increasing the cost of labour)
This part of model control the factors happen due to improvement of technology. Mainly the two types of changing occur in the industry one is can be development of IT department and other is adopting the advance equipments in a particular industry. The development in IT can initiate general business impacts regularly on organizations and domains of the business on a range of industries. It is difficult to recognize the possible use of technology until a new entrant come in the market with new and advanced technology. For example update mobiles with now software and technology and internet connections can give chance to new organizations. The detection of such scientific advances dangerous if organization prospective offer.
It is very important to consider the facts which arising due to change in the law. From last many years has seen a many of changes in the width and depth of legal rule in which organization are operates. This may be effect on availability of material, areas, resources, employment, trade, etc.
The concerns about the ecological and environment like green, pollution and increase in the packaging are the main factor of arising.
The use of PESTL analysis is normally in a workshop where different idea and information van be collect. As a unit representative it's a useful impact to research and get information with the help of PESTLE analysis.
It's very essential to identify the difference here. From identifying a threat to fast solution is not a professional analysis, and it can be lead to straight and un successful solution.
One more main point when using PESTLE is the target to identify the factor could be cause of organization. The spending time on the factors practical for the organization.
PORTER'S DIAMOND MODEL:
The diamond model published in the book The competitive Advantage of Nations, by Michael Porter where he discuss about the competition of organization and theories about his model.
Factor condition indicates about factors of production such as land, labour, capital resources and natural resources.
This Condition refers the customer demand in economic crunch and help companies to have competitive edge over competitor and make them able to produce and innovate more items according to demand of customer.
RELATED AND SUPPORTING INDUSTRIES:
Strong related supporting industries are very important to the competitiveness of firms. This includes supplier and related industries. These are usually at regional level or international level.
The observable fact of companies to situate in same area is known as clustering or agglomeration. These industries provide cost-effective inputs, but they also participate in the upgrading process, thus stimulating other companies in the chain to innovate.
FRIM STRATEGY, STRUCTURE AND RIVALRY:
Firm strategies goals and managed structure is important for success. But the presence of intense rivalry is very important because its pressurize the firm to do well over competitor and enhance the competitive effectiveness.
Impact of Government on each of the four determinants of competitiveness. Government insists companies to raise their performance, supply conditions of key production factors and demand conditions. Government occur could be and national regional or international level.
Chances are some events which are out of control of firm. Some times its effictive for competitiveness and sometimes its lose for firm.
SWOT analysis is an extremely useful tool for understanding and decision making for all sort of situation in business and organization. SWOT is an acronym for Strength, Weaknesses, , opportunities and Threats. I am going to explain about SWOT analysis of retail store and how can we use.
Ref ( class lecture by sir tabbasum )
The overview of retail companies similar to other organization normally uses a SWOT analysis to scan their business and position in the market. The implementation of SWOT analysis on retail sector give a clear picture regarding to its Strength, Weaknesses, Opportunities, and Threats as compare to other competitors in the market. Strength and Weaknesses use as a internal factors over the business has more control. Opportunities and threats are using as a external factor on business that facing.
The very first point of analyzing retail store is recognize strengths. The capabilities competitive advantages, financial reserves are strengths of retailers. Another strength of retailers the quality and rates of the things are cheaper as wholesaler. One more the product which this retail introducing may be unique in the market. For example a shoe seller may be selling a brand shoe at same price but defective. What the situation but retailer have information about its strengths vs. other stores in the market.
When identifying the weaknesses, the retailers first recognize the main weaknesses. Lack of competitive strength, cash flow, leadership and commitment of workers are
Main weaknesses. During market research the retail may come to know it has weak brand as compare to other store in the market. Another weakness is lacking in customer service. Retailer should notice all weakness and try to cope as soon as possible.
The third point of SWOT analysis is to recognize the opportunities available in the market. Market is full of opportunities that retailer may recognize with the help of market research and doing marketing. Opportunities like technology development, seasonal, weather, fashion and information research. Retail have chance to buy a small retailer for enhance the market share.
By applying or using SWOT analysis retailer discover certain threats like change of consumer mind, political effect, IT development, price competition in the market, or due to more competitors. For example when people adopt modern fashion, the traditional retailer affected with this change.
USING SWOT ANALYSIS:
The retailers not only have to identify their strength, weakness, opportunities and threats, also have to cope with them and develop marketing strategies. It is prove of proficiency that retailer is pro-active and identify the position in market. For example, the owner have chain of off-license shops may have a skilled and experienced worker so he may see the opportunity of progress of his business.
PORTERS FIVE FORCES MODEL:
Michael Porter develop framework to scan or evaluate the business and industry analysis in 1979. The porter model is simple to understand but useful tool for analyze your business position and situation. It helps you to examine your competitive strengths. It also show you a clear picture of strength you considering moving into. It is good to apply Porters five forces on business in combination with SWOT analysis. The two points are internal and the other three refer to rivalry from external powers.
REF (Class lecture by sir tabbasum)
THREATS OF NEW ENTRANTS:
From last decade business also affected by those new retailers who easily enter in the market and most of them is chain store. If the retail have strong and reliable barrier to entry then u can get profit advantage and status in the market, if there is a couple of investors are interested and get a place in market with new technologies then they can weaken your position.
New contract strategy
Customer loyalty to brand
Economies of product differences
The main thing is the number of your competitors and their strengths in the market .if u have a number of competitors and retail packages for consumer not according to their demand then you have a only few chances of stability. On the other hand if retailer are able to satisfied their suppliers and buyers then retailers can have a great strength.
Size of firm
Industry size and trend
Fixed and variable cost basis
Product/ service ranges
Suppliers can increase the prices. it depend on less number of suppliers as compare to number of buyers in the market. Suppliers of components, labor, and services can be reason to hold over the firm. The few reasons are
There are very few suppliers of a particular product
There are noÂ substitutes
The product is extremely important toÂ buyers -Â can't do without it
BARGAINING POWER OF BUYER:
Customers are the major part of business. If customer have a purchasing power to buy at any amount then retailer get a good profit. Customer have hold the real power to effect company sale. In some point customer have a power
Small number of buyer
Purchases large volumes
Switching to another product is simple
Customers are price sensitive
THREATS OF SUBSTITUTES:
The customer skills to search a new way of operating that same thing will affected the substitutes. For example if retailer provide a automatic and imported things which is difficult for common customer to operate , people could substitute by operating that manually this is weaken your authority.
FUTURE CHALLENGES TO AN ORGANIZATION:
A very nice definition of future challenges to an organization by American author like that.
If there is any period one would desire to be born in, is it not the age of revolution; when the old and the new stand side by side, and admit of being compared; when the energies of all men are searched by fear and hope; when the historic glories of the old can be compensated by the rich possibilities of the new era? This time, like all times, is a very good one, if we but know what to do with it.
Ref (Ralph Waldo Emerson)
It is about the future challenges to an organization of new possibilities and changing in the organization. it explain the nature of small retailer emerging in the market and forecasting about business.
THE FEAR AND THE HOPE:
The fear of changing trends, opportunity for new organization, and challenges from competitors explained by market researchers who visit market every day. They also discover about possible opportunities that realized by small independent retailer of their strengths.
Trend - Value equation:
Price is not only the reason in a value purpose. Electronic media , service and knowledge ,convenience are playing a vital role in changing of trend . it depend on situation that what a buyer get for his money. A well reputed competitor have in the market then y customer buy from you.
Trend - Increased Competition:
The competition is always in the market for every field and have a risk and fear to every one of their position. The market is so competitive that each and every organization has to be proactive and take quick decisions for any change to be faced in the competitive environment