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    Basic Planning Model

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    johnijala2
    Economic

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    © All Rights Reserved
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    Basic Planning Model

    Uploaded by

    johnijala2
    8 views8 pages
    Economic

    Original Title

    Basic planning model

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    © © All Rights Reserved

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    PDF, TXT or read online from Scribd

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    Economic

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    8 views8 pages

    Basic Planning Model

    Uploaded by

    johnijala2
    Economic

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 8

    Planning is formulized procedure to produce an articulated result in form of an

    integrated system of decisions.On the other hand basic planning models are
    frameworks that allow organizatios to map out their short and long term business plans.

    Planning models can help to;

     Identify and overcome obstacles

     Improve and streamline

     Reach overarching business goals

     Create alignment between different departments

     Track progress overtime.

    There are various basic planning models in a business which Include the following;

    1.SWOT Analysis.It was not founded by a single individual but it's a framework that
    is commonly used in business and strategic planning . SWOT stands for Strength,
    Weaknesses, Opportunities,and Threats.We use the SWOT model to define internal and
    external factors affecting your business.Theb compare the different factors to assess
    the risk of a potential strategy such as if your organization's strengths match
    opportunities in the market that's to say; you have alot of carpital and your competitors
    don't, you know you have a competitive advantage.

    Example of SWOT analysis for a sales based organization;

    Strengths- We have an excellent rapport with our customers and a loyal customer base.

    Weaknesses-Our current supply chain is inadequate.

    Opportunities-There is high customer demand for one of our products.

    Threat -Our main competitor is developing a similar product.

    Strengths of SWOT analysis.

     Strategic planning.SWOT analysis helps organizations assess their current


    situation and make informed decisions about their future direction.

     Internal reflection.It encourages organizations to reflect on their internal


    strengths and weaknesses fostering self awareness and facilitating
    improvements in operations.
     Resource allocation.The analysis helps to allocate resources more efficiently by
    highlighting areas where resources can be optimized or directed for maximum
    impact.

    Weaknesses of SWOT analysis.

     Simplicity.SWOT analysis over simplifies complex situations and may miss


    important nuances

     Subjectivity.The analysis can be influenced by personal bias and opinions of


    those conducting it

     Lack of prioritization.It doesn't provide a clear method for prioritizing factors


    making it hard to focus on the most critical issues.

     Overlooked interdependencies.It may miss the inter-relationship between


    different internal and external factors.

    2.PEST model.Like the SWOT, PEST analysis focuses on the external factors that
    affect your organization.It is an acronym which stands for; Political, Economic, Social-
    cultural and Technological.And depending on your industry,you might add Legal and
    Environmental factors to make it PESTLE.It is illustrated as below;

    Example of PEST/PESTLE;

    Political factors.The government of the country were we sell many products is planning
    to raise import tariffs.

    Economic factors.Our target demographic has more disposable income now that COVID
    -19 restrictions have been lifted.
    Social-cultural factors.Surveys report that customers consider our products healthy.

    Technological factors.Engineers devised a more efficient way to farm the main


    ingredient in half our products.

    Legal factors.FDA approved our latest chocolate bar.

    Environmental factors.NGO's are pressuring us to use more environmentary friendly


    processes.

    Strengths of PEST analysis.

     Strategic planning.It helps organizations to understand the broader external


    factors that influence their business environment aiding in informed strategic
    planning and decision making.

     Risk assessment.By identifying political, Economic, social and technological


    factors,it helps in assessing potential risks and uncertainties that might impact
    the organization's operations and profitability.

     Opportunity identification.It allows organizations to spot opportunities in the


    external environment such as emerging markets, technological advancements.

     Adaptation to change.By mornitoring changes in political, Economic, social and


    technological factors, organizations can pro-actively adapt their strategies to o
    remaining competitive and relavant in dynamic markets .

    Weaknesses of PEST analysis.

     Static nature.The PEST analysis is static and doesn't consider the dynamic
    and evolving nature of external factors.

     Simplistic approach.It provides a broad over view of factors without delving


    into the complexities and interrelationships between them.

     Lack of prioritization.The model doesn't inherently provide a way to prioritize


    or weigh different factors on their potential impact.

    3. Balanced scorecard framework or model:This is a strategy management framework


    created by DRs.Robert Kaplan and David Norton.It let's you take a holistic approach to
    business planning that doesn't just focus on Economic performance instead you look at
    four perspectives;

    Financial perspective.How well your organization is performing economically.

    Customer perspective.Your customer satisfaction and retention levels.

    Internal business perspective.The quality and efficiency of your internal operations.

    Innovation and learning perspective.Your ability to improve, pivot,and grow your


    business.

    It creates objectives and defines measures to track your progress for each
    perspective.Those measures will support you in planning and executing initiatives to
    achieve your goals.

    Forexample;The management of ECI(Electrical Circuits Inc) wanted to improve their


    delivery times but when they talked to customers about the issue,the organization
    received unreliable feedback that is; different people had different definitions of
    being"on Time" . Therefore, using Balanced scorecard framework, managers shifted to
    their operations and checked the efficiency of their manufacturing process.They
    discovered ways to optimize the business cycle time, yield and costs.

    Strengths of balanced scorecard framework.

     Comprehensive view.The balanced scorecard framework provides a holistic


    view of an organization's performance by considering financial, customer,
    internal processes and learning and growth perspectives.This helps avoid a
    narrow focus on just financial metrics.

     Alignment.It aligns departments and individuals within an organisation towards a


    common strategy.By linking goals and measures across different perspectives,it
    ensures everyone is working together towards the Same objectives.

     Clarity and communication.The framework promotes clear communication of


    strategic goals and priorities throughout the organization.This reduces confusion
    and enhances understanding of the bigger picture.

     Feedback and adaptation.Regular measurements and analysis of performance


    metrics enable organizations to identify areas that need improvement and make
    informed decisions for strategic adjustments, fostering continuous learning and
    adaptation.
    Weaknesses.

     Complexity.Implementing and maintaining a balanced scorecard can be


    complex and time consuming especially for larger organizations.It requires
    careful planning and coordination across various departments.

     Measurement challenges.Developing relavant and accurate performance


    metrics for each perspective can be difficult.Chosing the right indicators that
    truly reflect performance can be a challenge.

     Subjectivity.Some of the metrics used in the model might be subjective


    leading to potential bias in performance evaluation.This subjectivity can
    reduce the objectivity of assessment.

     Focus on short term goals.The model's financial perspective tends to


    emphasize short term financial outcomes which might not align long term
    strategic goals and sustainability.

    4.Alignment model.This strategic Alignment Model (SAM) is among the most used.Its
    made up of two parts that is ; strategic fit and functional integration.This means that the
    model aligns business and IT strategies.To do this requires identifying the key goals of
    an organization and then what the steps are to reach those goals.The plan must
    maximize the process to best achieve those .There are four perspectives to guide you in
    this model;

    Strategic execution.which is when the business strategy is driving the model.

    Technology potential.Which also sees the business strategy as the driver but with an IT
    strategy to support it.

    Competitive potential.Deals with using emerging IT capabilities to create new products


    and services.

    Lastly,there is the service level which is focused on creating the best IT system in the
    organization.

    5.VRIO framework or model.The VRIO framework is an acronym for value,


    Rarity,Imitability , organization.This strategic planning model relates more to your vision
    statement than your overall strategy.The ultimate goal in implementing the VRIO model
    is that it will result in a competitive advantage in the market place.Ith has the basic four
    components;
    Value .Are you able to exploit an opportunity or neutralize an outside threat using a
    particular resource.

    Rarity.Is there a great deal of competition in your market or do only a few companies
    control the resource referred to above.

    Imitability.Is your organization's product or service easily imitated or would it be difficult


    for another organization to do so.

    Organization.Is your company organized enough to be able to exploit your product or


    resource.

    Once you answer these four questions above, you will be able to formulate a more
    precise vision statement to help you carry you through all the additional strategic
    elements in your plan.

    6.Porter's five forces.This is an older strategy execution framework or model created by


    Michael Porter in1979 built around the forces that impact the profitability of an industry
    or market.The five forces it examines are ;

    The threat if entry; could other companies enter the market place easily or there are
    numerous entry barriers they would have to overcome.

    The threat of substitute products or services;can buyers easily replace your product
    with another.

    The bargaining power of customers; could individual buyers out pressure on your
    organization to say lower costs.

    The bargaining power of suppliers; could large retailers put pressure on your
    organization to drive down the cost.

    The competitive rivalry among existing firms;are your current competitors poised for
    major growth .If one launches a new product or files a new patent, could that impact
    your company.
    REFERENCES

    John Argenti (1974). Systematic Corporate Planning. Wiley.

    Bradford and Duncan (2000). Simplified Strategic Planning. Chandler House.

    Patrick J. Burkhart and Suzanne Reuss (1993). Successful Strategic Planning: A Guide
    for Nonprofit Agencies and Organizations. Newbury Park: Sage Publications.

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