Planning for Change Corporate Plans A2 Business Planning for Change Corporate Plans

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 3

The planning cycle SWOT A2 text Chp 27 p. 444 4

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) A2 text Chp 27 p. 444

Kings SWOT Brand reputation Inefficient site Social or lifestyle change Economic downturn A2 text Chp 27 p. 444

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 A2 text Chp 27 p. 444 8

Some possible weaknesses Low market share Inefficient plant Outdated technology Poor quality Lack of innovation A weak brand name High costs Cash flow problems Undifferentiated product Inadequate distribution Quality problems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 A2 text Chp 27 p. 444 9

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 A2 text Chp 27 p. 444 10

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 A2 text Chp 27 p. 444 11

Convert into strengths Weakness E.g. Outdated technology = Takeover competent competitor Skills gap Overdependence on a single product Poor quality High fixed costs A2 text Chp 27 p. 444 12

Weaknesses into strengths 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 A2 text Chp 27 p. 444 13

How can a firm manage risk? Snow disruption A2 text Chp 27 p. 444

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 A2 text Chp 27 p. 444 15

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 A2 text Chp 27 p. 444 16

What’s difference between contingency planning and crisis management, if any? A2 text Chp 27 p. 444

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 A2 text Chp 27 p. 444

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 A2 text Chp 27 p. 444 19

Articles – Draw up a contingency plan Mad cow disease on farm industry Strikes Recession Kings swine flu outbreak A2 text Chp 27 p. 444

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) A2 text Chp 27 p. 444 21

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 22

Learning Objectives Explain and assess 1. Corporate Planning Purpose Influences – Internal/ External SWOT / PESTLE 2. Contingency Planning A2 text Chp 27 p. 444