CDU – School of Information Technology Introduction to Business Planning - Slide 1 The demand for business planning is driven by the need for management processes that: l Identifies business areas where action - especially effort and control - is essential. l Provides a framework to communicate the organisation’s future direction. l Encourages strategic planning, and the evaluation of the strengths and weaknesses of the organisation. l Encourages development of management information systems to support decision-making. l Provides a process for analysing the potential success of a new product or process. HIT241 - BUSINESS PLANNING Introduction

CDU – School of Information Technology Introduction to Business Planning - Slide 2 Business planning is also important in providing the project and organisational information required by potential sources of finance. This is particularly critical where organisations are dependent on external sources of finance, such as bank loans or government grants. Large organisations are generally more successful in obtaining access to finance, often because they are able to provide more detailed justification of their requirements. HIT241 - BUSINESS PLANNING Introduction

CDU – School of Information Technology Introduction to Business Planning - Slide 3 A business plan is a systematic way of planning for the future. It is based upon the experience & achievements of an organisation, and aims to set realistic objectives for the future. A business plan seeks to achieve the most advantageous and workable compromise between what an organisation wants to do, and what it can do. It will show how proposed policies are integrated, and how one issue affects another. HIT241 - BUSINESS PLANNING Definition

CDU – School of Information Technology Introduction to Business Planning - Slide 4 Any business plan must meet three criteria: l It must be simple. l It must be accurate. l It must be useful. The benefit of initially developing a relatively simple business plan is that it is easy to identify the limitations, and make allowance for detail that may be collected at a later date. HIT241 - BUSINESS PLANNING Criteria

CDU – School of Information Technology Introduction to Business Planning - Slide 5 There are things that a business plan cannot do: l Planning is not a cure for all problems - it does not exempt management from making decisions. l Planning should not be seen as a rigid, inflexible answer to all the firms problems. External and internal conditions will change. l Planning is only as good as the people who carry it out, and the use to which it is put. HIT241 - BUSINESS PLANNING Limitations

CDU – School of Information Technology Introduction to Business Planning - Slide 6 Many organisations treat planning as an annual ritual that must be completed, but make no attempt to develop realistic plans, relevant to the core business. There is no point in planning if it is not realistic. A plan, once completed, should be the best possible solution to the situation facing an organisation. Planning takes resources - time and effort - so the results of planning should be used - not discarded at the earliest opportunity. HIT241 - BUSINESS PLANNING Pitfalls - What to Avoid

CDU – School of Information Technology Introduction to Business Planning - Slide 7 HIT241 - BUSINESS PLANNING BUSINESS PLAN Understanding the Business & providing corporate information. Identifying problems and areas of conflict. Identifying areas to improve performance. Clarify corporate objectives and ensure that they are consistent. Coordination of business unit INFLUENCES GovernmentStockholdersMarketing Competitors