9. Corporate planning and implementation

Question 1

Components of corporate plan

Answer 1

1. The overall objectives of the organisation to be achieved within a given time frame. These could be profit target-related, sales growth-related, or market share target-related.
2. The strategy or strategies to be used to attempt to meet these objectives. For example, to achieve sales growth, the business could consider the choices as analysed by the Ansoff matrix:
   * increase sales of existing products – market penetration
   * develop new markets for existing products – market development
   * research and develop new products for existing markets – product development
   * diversify – new products for new markets.
3. The main objectives for the key departments of the business derived from the overall objective.

Question 2

Benefits of corporate plan

Answer 2

• Senior managers have a clear focus and sense of purpose for what they are trying to achieve. Strategies are then chosen with the best chance of achieving the objective which has been set.
• The plan helps to communicate this sense of purpose and focus to all managers, employees and other stakeholders
• control and review process. The original objectives can be compared with actual outcomes to see how well the business’s performance matched its aims.

Question 3

Corporate plans
* Limitations

Answer 3

Plans are great if nothing changes. The best-laid plans of any business can be made obsolete by rapid and unexpected internal or external changes. This does not mean that planning is useless. Part of the planning process is to look ahead to consider how to respond to unforeseen events (see Section 9.5). However, if a business puts a five-year plan into effect and then refuses to make any variations or adaptations to it, no matter how much external environmental factors might change, then inflexibility could be disastrous. The corporate planning process should be as adaptable and flexible as possible to allow corporate plans to continue to be relevant and useful during periods of change.

Question 4

The main internal influences on a corporate plan

Answer 4

• Financial resources: Can the new proposed strategies be afforded?
• Operating capacity: Will this be sufficient if expansion plans are approved by directors?
• Managerial skills and experience: This may be a major constraint on the plan’s success, especially if the diversification strategy is chosen.
• Employee numbers and skills: Workforce planning is a key factor in the success of any corporate plan.
• Culture of the organisation

Question 5

The main external influences on a corporate plan

Answer 5

• Macroeconomic conditions: Expansion may have to be put on hold during a recession.
• Central bank and government economic policy changes.
• Likely technological changes: These could make even the best laid plans appear very outdated quite rapidly.
• Competitors’ actions: The competitive nature of the market.

Question 6

Corporate culture

Answer 6

A commonly used definition of corporate culture is ‘the way we do things around here’. This means how people within an organisation take decisions and interact with each other, and with other stakeholders

Values, attitudes and beliefs have a very powerful influence on the way employees in a business act, take decisions and relate to others in the organisation. They define what is normal in an organisation. So, it is possible for the same person to act in different ways in different organisations.

Question 7

Types of corporate culture

Answer 7

1. Power culture: This is associated with autocratic leadership. Power is concentrated at the centre of the organisation. Swift decisions can be made as so few people are involved in making them.

2. Role culture: This is most associated with bureaucratic organisations. People in an organisation with this culture operate within the rules and show little creativity. The structure of the organisation is well-defined, and each individual has clear delegated authority. Power and influence come from a person’s position within the organisation.

3. Task culture: Groups are formed to solve particular problems and there will be lines of communication similar to a matrix structure. Such teams often develop a distinctive culture because they are empowered to take decisions. Team members are encouraged to be creative.

4. Person culture: There may be some conflict between individual goals and those of the whole organisation, but this is the most creative type of culture.

5. Entrepreneurial culture: Success is rewarded in an organisation with this culture. However, failure is not necessarily criticised as it is considered an inevitable consequence of showing initiative and risk-taking.