people sitting on chair in front of table while holding pens during daytime

Business plan as a method of strategic planning of the firm

people sitting on chair in front of table while holding pens during daytimeDue to changes in the economic situation in the country, leaders are forced to deal with a search for the models and forms to schedule and maximize their performance in decision- making. Overall success of their business activities depends on their ability to reach the set objectives, which in their turn depend on a number of factors

Nowadays, as a notion, strategic planning is more and more discussed. This concept is an activity performed by managers. They want to ensure compliance with the goals of the business, achieve real strategic advantages over their strongest competitors.
In terms of today’s growth of economics and overall development, strategic planning is the only tool to forecast challenges in the future operations as well as opportunities. A company that does not take into account its own goal in planning of operations is at risk of being an object of other people is planning. Such third parties might be more flexible and adroit and might lead the company to achieve other people’s objectives. Almost all aspects that are promising in company’s development need external investments and in this case proper business planning might be impossible.

In each business plan, there are internal and external factors that enterprise managers want to consider. In time when they make the plan, they need to evaluate challenges, which can appear in the future activities. Upon an analysis of the situation, they set goals and objectives. At the beginning, they consider the goods to deal with. Then they decide on prices for the future. The main objectives in business planning are as follows:

— enrich business-planning experience and develop relevant skills,
— evaluate a value of a good or service and a company as such,
— generate interest and ensure support from potential investors,
— make the prospects clear presenting them with a system of specific development indicators.

Today, the business plan becomes an integral document in operation and management activities. The business plan contributes to:

— understanding a financial standing,
— setting an overall goals and objectives,
— make important decisions,
— forecast and avoid challenges that may appear in some situations.

There are some main challenges that we face in planning:

1. Even the largest, prosperous, and successful company in its business plan is unable to describe the future operations and situation in detail,
2. Reproduction takes a lot of time and many resources,
3. Hidden errors in strategic planning might cause negative consequences,
4. Strategic planning algorithm is unclear to some extent. Strategic planning as a process includes six phases:

1. Evaluation of a current strategy of a company. At this phase, an overall idea of the situation of the company is understood. In its analysis, managers ask themselves as follows:
— Which good characteristics will lead to market success?
— What are key success factors in our sector?
— What is the structure of needs that give birth to the demand for goods and services in our sector?
— What are entry and exit barriers available in the sector of interest?

2. Portfolio analysis. At this stage, interconnections with individual components of the business are clearly presented. The analysis takes into account the following algorithm:
— selection of analysis levels,
— identification of objects of analysis,
— formulation of indicators used in the analysis,
— data collection, their systematization, and analysis,
— estimation of a portfolio of goods and services of an enterprise.

3. Strategy choice. The choice is based on the following three points:
— strategy alternatives,
— key factors of success that might describe the strategy,
— results from the good portfolio analysis.
4. Estimation of the chosen strategy. The analysis helps to define whether the chosen path is correct. If we have defined that the strategy meets our expectations, then we proceed with the further analysis:
— risk tolerance assumed in the strategy,
— harmonization of strategies and environmental influences,
— compliance with capabilities and potential of the company.

5. Strategic plan development. The chosen strategy is the foundation for the strategic business plan. Depending on the use of a particular strategy, a strategic plan might look like the following:
— offensive (business development of the company. Usually, large-scale companies that show high potential and want to take new products into the marker use it).
— defensive (to keep existing standing and take measures to prevent negative consequences in the market and possible bankruptcy).

6. Working out of the system of business plans. Business planning is under strategic planning as its part, differences between business planning and strategic planning are as follows:
— business plan contains only assumes the objectives that need certain investment,
— business plan includes clear deadlines to achieve intended objectives.

Let us distinguish types of reasons with which we can understand the nature of the goal:

1. Business plan for internal needs of the company,
2. Business plan that we need to receive a loan,
3. Business plan to involve investments,
4. Business plan to make partnership or consortium with an oversea enterprise,
5. Business plan to enter into a high-price agreement,
6. Business plan to hire new highly qualified staff,
7. Business plan to merge with another enterprise,
8. Business plan for reorganization purposes.

I would like to conclude with the idea that any organization eventually needs to consider business planning of its operations. If you want to get help in drawing up a business plan or analyzing it, use the business management consultants, which will prompt and explain all non-obvious points. The company will not be sure of its present situation and future challenges, nor can it forecast the changes it may encounter. Hence, I believe that business planning definitely help to make business risks lower.