Business Management Teach Yourself Series Topic 3: Planning in Business

Transcription

1 Business Management Teach Yourself Series Topic 3: Planning in Business A: Level 14, 474 Flinders Street Melbourne VIC 3000 T: W: tssm.com.au E: TSSM 2011 Page 1 of 6

2 Contents Planning in Business... 3 Initial terminology... 3 As it appears in Units Small Business Planning... 4 As it appears in Unit The Marketing Plan... As it appears in Unit 2... Planning for Large-scale Organisations... As it appears in Unit 3... HR Planning... As it appears in Unit 4... Solutions to Review Questions... 6 TSSM 2011 Page 2 of 6

3 Planning in Business The success of an organisation will often depend upon the effectiveness of management. A manager is a crucial player in the day-to-day operation of the organisation. Each manager will perform a number of roles, communicate with employees and other stakeholders utilising a certain style and possess a number of skills. Planning is one role undertaken by managers and planning occurs at all stages of a business and is conducted by all levels of management. Initial terminology As it appears in Units 1 4 Planning is the process of setting the goals and objectives of the organisation and then determining the most effective means of achieving those objectives. To be as effective as possible, planning should involve all activities at all levels of the organisation. There are three levels of planning: i. Strategic (long-term) planning this level of planning is for the following 3 5 years and is concerned with responding to emerging trends, events, challenges and opportunities within the context of the LSO s vision and mission statements. It aims to create a framework for achieving a competitive advantage by analysing the potential of the LSO and its internal and external environments. This level of planning is conducted by senior management. ii. Tactical (medium-term) planning this level of planning is for the following 1-3 years. It is flexible and adaptable and is conducted by middle management who are able to react quickly to changes in the internal and external environments. iii. Operational or frontline (short-term) planning conducted by lower level managers or supervisors which involves the planning of the day-to-day operations of the organisation. This planning works to assist in achieving the tactical plan and overall strategic planning of the organisation. TSSM 2011 Page 3 of 6

4 Small Business Planning As it appears in Unit 1 Planning for success in operating a small business begins with the idea to commence business. A prospective small business owner must make some important decisions and planning will assist the manager in ensuring the business starts off in the right manner. Key areas of planning for a small business include: Type of business to operate a business can provide a service such as a retail store or an accountancy practice or can produce a good. Type of business ownership - There are primarily three forms of ownership. Sole trader this is a business where only one person owns the business. In most situations the owner is also the manager and therefore works in the business. This form of ownership provides greater independence in terms of decision-making, location, hours of work and when to take holidays. Partnership - this is a business where ownership is shared between 2 and 20 people. Each partner does not have to have an equal share and not all partners have to work in the business. This form of business ownership is easy to establish, provides greater access to capital, shares the workload and may improve the skill base of the business as well the range of services offered for example an accountant and a lawyer may form a partnership. Family business this form of business ownership is similar to a partnership however there are generally only 2 people owning the business and they are related often married. In these situations both owners work in the business. This form of ownership has the same advantages as a sole trader and a partnership increased skill base, greater independence and a greater say in hours of work, holidays and location. Public companies a public company is one that is listed on the Australian Stock Exchange (ASX). Individuals can buy and sell shares (ownership rights) on a daily basis. This form of ownership requires a minimum of 5 owners and ownership is restricted only by the number of shares issued by the business. As the business is listed on the ASX it is required by law to publish annual reports detailing assets, revenues and profits. The business pays tax as it is a separate legal entity and the owners have their liability restricted to the value of their shares. Private companies a private company is one that is not listed on the Australian Stock Exchange (ASX). Individuals can t buy and sell shares (ownership rights) as ownership is restricted to a minimum of 1 owner and a maximum of 50. As the business is not listed on the ASX it is not required to publish annual reports so information about these businesses is limited. The business pays tax as it is a separate legal entity and the owners have their liability restricted to the value of their shares. These businesses have greater access to capital as there are more owners than in a partnership and there is often a greater range of skills amongst owners. Private companies are identified by the initials Pty. Ltd. after the business name. This stands for Proprietary Limited. TSSM 2011 Page 4 of 6

5 Profit or Not-for-profit what purpose will the business serve? For profit organisations the organisation exists to make a profit. This profit is then redistributed back to the owners/shareholders of the organisation. Some of the profit may be used to assist the organisation to expand, replace assets or undertake research and development. Not-for-profit organisations these organisations aim to provide goods and services that aim to reduce or prevent social problems or aim to benefit the community. Examples include charities such as the Brotherhood of St. Laurence or Foundations such as the Cancer Council of Victoria. Individual businesses or franchises a business owner may wish to start their own business, using their own name as part of the business name. Another alternative is to operate a business as part of a franchise. A franchise operates where the owner of the franchise (usually a large organisation) sells the right to sell the product or service of the large company to a smaller, independent business. An example would be Jim s Mowing. Size of the business businesses can be classified as small, medium or large and a key determinant of the size of a business is the number of employees (according to the Australian Bureau of Statistics). Small businesses are considered small if they employ fewer than 20 people. Medium businesses are classified as medium if they employ between 20 and 199 people. Large-scale organisations are classified by the Australian Bureau of Statistics as those businesses that employ more than 200 employees. New or established businesses some owners would like to start their own business, others may wish to take the opportunity to purchase an existing business. Location location is important and there are a number of factors to consider: Location of competitors Location of customers Parking Access to transport networks Finance options all businesses require money to start. Finance can be obtained from the owner(s), from loans or by selling shares (ownership rights) if the business is to be a company. All options have benefits and risks. It is only after these decisions have been made that an owner can start to put the business into effect. TSSM 2011 Page 5 of 6

6 Solutions to Review Questions 1. The Australian Bureau of Statistics uses the number of employees as one criteria for classifying businesses in Australia. 2. i. Two advantages of a franchise agreement are: - Proven successful concept - All decision are made for you ii. Two advantages of locating a business in a large shopping centre are. - High levels of customer traffic - Excellent visibility iii. Two disadvantages of a partnership are: - May not agree with partner on issues - One partner may put in more work than the other iv. Two sources of business finance are: - Own personal savings - Borrowing from a bank 3. Not-for-profit organisations generally aim to provide a service to the community at a cost that is affordable. All profits are returned to the organisation to continue and expand operations Not-for-profit organisations operate to fill a need that profit organisations do not fill. 4. Mary told her mother that marketing was so much more than just advertising. It was in fact a whole process involving every aspect of preparing a concept for sale. 5. Market Research is an organised procedure used to gather and analyse information and data related to a specific marketing issue. TSSM 2011 Page 6 of 6