Page 339 - Business Principles and Management

Unit 4
Technology tip
Collaboration software now
makes it easy for planning
to take place virtually rather wanted to have his meals shipped to them. The seminar helped him recognize
than requiring face-to-face
meetings. Using the software
and their desktop computers, A company has successful products, experienced employees, financial resources,
team members view the same
information and discuss it via ational or financial problems, or may have outdated facilities and equipment or
typed comments or voice
communication.
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In step 1 of the analysis, managers identify any opportunities for expanding
and improving the business and any threats the company faces from competition,
changes in the economy, new laws and regulations, technology improvements,
and other factors outside the company. For example, Eldron Huntley identified
an opportunity when he noticed that customers from outside his operating area
that new Internet technology provided a low-cost way to reach those customers.
In step 2, managers evaluate the organization’s own capabilities and weaknesses.
and well-organized operations. On the other hand, it may be experiencing oper-
limited access to new employees. All of those factors can contribute to the suc-
cess or failure of business plans. Eldron Huntley identified his company’s strengths
as the unique menu items and dependable quality and taste. His banker questioned
whether Eldron currently had the capability to distribute his quality products to a
large number of customers across the country. Managers want to build on the com-
pany’s strengths and reduce its weaknesses whenever possible.
In step 3, managers describe and agree on the business’s mission. A mission
statement is a short, specific statement of the business’s purpose and direction.
The mission flows out of a broad, lasting, and often inspirational vision of the
company’s reason for existing. For example, Huntley’s vision statement for his
company might be “to become a leading provider of memorable meals to cele-
brate life’s special occasions.” His mission statement, then, might be “to prepare
high-quality meals at reasonable prices to satisfy the tastes of our customers when
and where they want them.” Steps 4 and 5 then use the planning information
and the mission to set specific goals for the company and descriptions of activ-
ities and resources needed to achieve the goals. We will study the process of
establishing goals and strategies in the next lesson.
The top executives in a business are responsible for strategic planning. A
careful and objective process is followed to prepare the strategic plan. The
executives use information collected from lower-level managers, from the com-
pany’s employees and operations, and from other sources. Large companies
may have a special planning and research department to collect and analyze
information and to develop proposals for executives to consider. Smaller com-
panies may hire research firms or consultants to help with strategic planning.
New and small businesses may be able to obtain planning assistance from
state and federal government agencies such as the Small Business Administra-
tion and economic development offices or from the business departments of
area colleges and universities.
OPERATIONAL PLANNING
A good strategic plan tells managers where the business is going. The managers
must then take action to move the business toward those goals. Operational plan-
ning determines how work will be done, who will do it, and what resources will
be needed to get the work done in a specific area of the business.
Operational plans in a factory could include developing department budgets,
planning inventory levels and purchases of raw materials, setting production
levels for each month, and preparing employee work schedules. Operational plan-
ning in a marketing department might include the development of promotional
plans, identifying training needed by salespeople, deciding how to support retail-
ers who will handle the product, and selecting pricing methods. A great deal of
the operational planning in a business is the responsibility of middle-level man-
agers and supervisors and even some experienced employees.