1. 1.6 Organizational Planning Tools

2. Review Business Plan Components:
Starting the Business-Description of Business Opportunity/Objectives What will be sold, why, and to whom
Business Organization-How will it be organized?
Human Resources Team-Howw ill it be staffed?
Marketing & Sales Strategy Why will customers buy, how will sell
Operations-How will the production be organized?
Financial Plan-How will the business be financed? Sales projections, cash flow, profits
Review

3. Review Decision Making Intuitive decision-making
Using your gut instincts to make choices Is this ever useful?
Scientific decision-making
Basing choices on data analysis and formal decision making frameworks
Is this ever useful?
Review

4. Review Formal Decision Making Framework Set Objectives
Assess the problem
Gather data to analyze problem
Ideas and options to consider
Decision-making tools to decide
Action
Control & Review against companies objectives
Review

5. Review Internal vs External Constraints Internal:
Your organizations structure
Financial considerations
Labor
Attitudes of workforce – resistant or acceptance of change
External:
The current business cycle (prosperity, recession, recovery or depression)
Changes in legislation
Review

6. Higher Level Planning Tools Fishbone Diagram
Also known as cause and effect diagram
Also known as the Ishikawa diagram
May include the 6 M’s
Methods
Machines
Manpower
Materials
Measurement
Mother Nature
Higher Level

7. Higher Level Decision Tree
Used to outline options connected with financial outcomes or economic returns
Squares indicate decisions on the tree
Circles indicates a range of outcomes from the decision
Higher Level
Limitations: Only as good as the accuracy of data

8. 1.7 Growth and Evolution

9. Review Economies of Scale
Purchasing economies “bulk buying” – discounts for large orders
Technical economies Production lines – produce products at a reduced cost because of efficiency Computer systems – afforded by large firms that can absorb greater fixed costs
Financial economies Banks show preference to large corporations Large firms can “go public” with their stock
Marketing economies Advertising costs for large companies can be spread over a large product line
Managerial Economies Large firms can higher specialists
Review

10. Review Diseconomies of Scale Communication Problems
Alienation of Workforce
Poor Coordination and slow decision making
Large Scale production costs
Review

11. Growth
Internal Growth Companies expand by creating new offices, opening new stores, growing existing business
External Growth
Merging with other firms, or acquiring other firms through purchase
Review

12. Merger
When companies agree to combine and operate under one board of directors with shareholders in both businesses owning the newly merged company.
Takeover
When a company buys over 50% of the shares of stock to gain controlling interest
Review

13. Franchise
A business that uses the name, logo, and marketing methods of the franchiser.
Example: McDonald’s, Dairy Queen, Wendy’s, Subway
NOT: Walmart, Target, Harris Teeter
Review

14. Joint Venture
Two or more businesses agree to work closely together to further a common interest.
Costs are shared
Different companies have different strengths
Different market shares that could be combined
Example: DowCorning (Dow Chemical with Corning Glass Works) Dow Chemical combined their silicone based products with Corning Glass Works glass products.
Review

15. Review Ansoff’s Matrix
A model used to show risk with the four growth strategies
Market Penetration – higher market shares in existing market with existing products
Market Development – selling existing products in new markets
Product Development – sales of new or improved products in existing markets
Diversification – selling different or unrelated products in new markets
Review

16. Higher Level Porter’s Generic Strategies 2 Categories of Strength
1 – Cost Advantage Being the lowest cost producer in your industry
2 – Product Uniqueness or Differentiation Your product or service is unique which allows you to charge a premium
FOCUS Strategy Narrow or Broad Narrow – a small market segment Broad – industry wide
Higher Level