10: Business planning and functional strategies Flashcards
What are short term plans?
HR plan
Operations plan
Marketing plan
R&D plan
Why plan?
- Co-ordinate the activities of different divisions/functions towards strategic goals
- Put the case forward to secure finance
- Gain board approval
- Develop annual budget
Suggested outline for a business plan
Cover sheet
Statement of purpose - brief explanation as to why plan has been prepared
The business - info to understand nature of business e.g. description, marketing, competition, operations
Financial data - Detailed info about financing (loan applications, capital equipment, SOFP) and projected forecast for next 3 years.
Supporting document - Info that establishes the credibility of key parties in the business and strengthens the case for a business plan application. e.g. tax returns, licenses, personal finance statements
How do the finance department contribute to the production of the strategic plan?
- Ensure financial resources are available or raised in sufficient time
- Turns strategy/functional strategies into overall financial budget
- Help with establishment of priorities
- Assist in business modelling and scenario planning
What is the role of finance as a business partner?
Finance professionals can:
- Provide other business units, departments and projects with real-time support
- Assist in analysis of financial/non-financial performance data
- Help devise stragies to improve performance
- Review and challenge proposals before being read by senior management
- Collab in prep of departmental budgets and forecasts
What should HR do?
HR should:
- Serve interests of management rather than employees
- Provide a strategic approach to meeting staffing issues
- Enable HR development to add value to products and services
- Link the business, its mission and goals to HR strategy
What is the HR strategy
The gap between where we are now (using resource audits, staff appraisals, historical records and forecasts) and where we need to be (using functional strategy plans, tech developments, new skills needed etc)
The gap includes: Recruitment, training, transfer/relocations, redundancy, morale, productivity.
What is succession planning?
Features?
Continuity of leadership e.g. when one manager leaves, someone is ready to take their place
Features:
- Increased development of existing managers
- Shared responsibility with senior managers, not just HR responsibility
- Objective assessment of current managerial talent
- Development of leadership teams
What is the HR cycle?
-Seletion: Hiring people with the qualities/skills required
- Appraisal: comparison of performance against targets
- Training and development: ensure skills remain up-to-date, relevant and comparable with the best in the industry
- Reward system: motivate and ensure valued staff are retained
- Performance: depends upon each of the four components and how they are co-ordinated
Explain product and process research
- Research may be intended to create or improve products or processes
- New product developments can be a major source of competitive advantage
but costly
Processes include:
- Operational
- Productivity improvements
- Quality management
- Planning and efficiency
How does R&D interact with porter’s generic strategies?
- product innovation could be a source of differentiation.
- Process innovation could further enable differentiation or deliver cost leadership.
How does R&D interact with porters value chain
- R&D will be included within technology development and could result in improved differentiation or lower cost of production
How does R&D interact with ansoff’s matrix
Ansoff’s matrix: R&D is found in all four quadrants:
– Market Penetration through product refinement, development of loyalty schemes
processes, improvement to customer service and so on, thereby increasing sales.
– Market Development through refinement and adaptation of product to different
markets.
– Product Development and Diversification through creation of new products, either for
existing customers or entirely new markets
How does R&D interact with Industry and product life cycles
Industry and product life cycles: introduction of new products, improvement of products
during growth stage to stay competitive, refinement of production processes to maximise
return during maturity phase and replacement of products approaching obsolescence.
What is innovation? What factors create a culture of innovation?
Generation of new ideas of how to do business.
Factors:
- Leadership: senior management encourage the exploration of new ideas
- Culture: Employees are encouraged to try new ideas out
- People: Team-based approaches encourage participation
- Structure: Flexibile organisational structures facilitate new ways of working and building relationships
- Communication: management encourage free sharing of ideas.
What are the 4 operation strategies?
four v’s
Volume
variety
Variation in demand
visibility
Explain volume high v low
High voumes require efficicency of output. Driven by:
- capital intensive operations
- specialisation of work
-established systems.
Expect low unit costs
Low volume means
- specialisation is less achievable,
- individuals perform multiple tasks
- less systemisation
Unit costs are comparatively higher
Explain variety high vs low
High levels of variety of output requires
- flexibility
- adaptability to customer needs
Work may be complex and unit costs comparatively higher
Limited variety should lead to
- defined processes
- standardisation
Unit costs comparatively lower
Explain variation in demand
High levels of VID have means operations have to match capacity to demand.
- Higher unit costs
- Under-utilisation in offpeak period
Limited VID means capacity and demand is easily matched
- Costs comparatively lower
Explain visibility h v l
Highly visible businesses rely on staff with good communication and interpersonal skills
- Generally need more staff, hence increased costs
When visibility is low, can be time lag between production and consumption, less customer contact skills needed e.g. customer services team partly visible
What are the types of capacity planning?
Level capacity: Production or provision of service constant regardless of demand
Chase demand: capacity is matched to forecasted fluctuations in demand
Demand management: businesses that encounter peak and off-peak demand levels use price discrimination methods to manage their ability to provide for the market
Mixed - combination of above
Explain Just-in-time systems And give key elements
an approach to planning and control based on the idea that g&s should be produced only when they are ordered or needed. Also known as lean manufacturing
- Elimination of activities that do not at value e.g. overproduction, waiting times, waste
- Involvement of all staff in the operation
- Kaizen - idea that process can never be perfect, thus must be subject to continuous improvement
How can JIT be applied to purchases and service industries
JIT purchases: close relationship with trusted suppliers, means quality materials are only purchased when needed for production
JIT and service operations: elimination of queues should yield in recaptured time, reduced waiting room space and improvement in customers’ perception of service.
Explain quality assurance and quality control
Assurance: focuses on the way a product or service is produced and delivered with the aim of ensuring defects are eliminated
Control: Concerned with checking and reviewing work that has been done
What are the elements of Total Quality management?
Internal customers and internal suppliers: all parts of the organisation are involved in quality issues, and need to work together
Service level agreements between supplier and customer
Quality culture within the firm: every person has an impact on quality and thus is everyones responsibility to get quality right
Empowerment: Recognition that employees themselves are the best source of info about how to improve quality.
Explain the purchase mix
Purchasing manager has to strike the right balance between the following interlinked factors:
Price - best value over time
Quality - deemed acceptable to customers (higher quality increases price)
Quantity - striking balance between lacking inventory (causes delays) and overstocking (waste). (Cheaper price with bulk buy discounts)
Delivery - Inventory control is dependant on lead times from suppliers (pay premium for fast delivery ^price)
What are sourcing strategies?
Single supplier, multiple supplier, delegated (a supplier given responsibility for the delivery of a complete sub-assembly)
Evaluate single supplier
ADV: - Stronger supplier relationship
- Potential superior quality as more focused assurance programme
- EOS
- Facilitates better communication and confidentiality
DISADV: - Vulnerable to any disruption in supply
- Supplier power may increase if no alt supplier
- Supplier is vulnerable to shift in order levels
Evaluate use of multiple suppliers
ADV: - Access to a wide range of knowledge and expertise
- Competition among suppliers may drive price down
- Supply failure by one supplier will cause minimal disruption
Disadv: - Not easy to develop an effective quality assurance programme
- Suppliers may display less commitment
- Neglecting EOS
Evaluate delegated suppliers
ADV: - Allows the utilisation of specialist external expertise
- Frees up internal staff for other tasks
- Purchasing entity may be able to negotiate EOS
Disadv:
- First tier supplier is in a powerful position
- Competitors may utilise the same external organisation so unlikely to be a source of competitive advantage
Explain and describe Strategic procurement
The development of a true partnership between a company and a supplier of strategic value.
- Long term
- Single source
- Integrated supply chain
