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A2 Business Planning for Change Corporate Plans. A2 text Chp 27 p. 444 Learning Objectives Explain and assess 1. Corporate Planning  Purpose  Influences.

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Presentation on theme: "A2 Business Planning for Change Corporate Plans. A2 text Chp 27 p. 444 Learning Objectives Explain and assess 1. Corporate Planning  Purpose  Influences."— Presentation transcript:

1 A2 Business Planning for Change Corporate Plans

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

3 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

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

5 A2 text Chp 27 p. 444 Activity Explain the stages of the Planning Cycle Sainsbury’s p. 448

6 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)

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

8 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

9 A2 text Chp 27 p. 444 Some possible weaknesses Low market share Inefficient plant Outdated technology Poor quality Lack of innovation A weak brand name High costs Cash flow problems Undifferentiated product Inadequate distribution Quality problems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

10 A2 text Chp 27 p. 444 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

11 A2 text Chp 27 p. 444 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

12 A2 text Chp 27 p. 444 Convert into strengths Weakness E.g. Outdated technology = Takeover competent competitor 1.Skills gap 2.Overdependence on a single product 3.Poor quality 4.High fixed costs

13 A2 text Chp 27 p. 444 Weaknesses into strengths WeaknessPossible Response Skills gapInvest in training & more effective recruitment Overdependence on a single product Diversify the product portfolio by entering new markets Poor qualityInvest in quality assurance High fixed costsExamine potential for outsourcing or offshoring

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

15 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

16 A2 text Chp 27 p. 444 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

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

18 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

19 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

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

21 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)

22 A2 text Chp 27 p. 444 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

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


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