Week 8 Business Assignment

Part A Summary on business planning process

The business planning process

 human resources
o skills
o costs – wage and non-wage
 taxation – federal and state taxes, local rates and charges

 sources of planning ideas

– situational analysis

 vision, goals and/or objectives

o vision
o business goals
o long-term growth
 organising resources
o operations
o marketing
o finance
o human resources

 forecasting
o total revenue, total cost
o break-even analysis
o cash flow projections

 monitoring and evaluations

o sales
o budgets
o profit
 taking corrective action

 Sources of planning ideas

Part B textbook questions

Pg 504
1. Define the term ‘business plan’.
A business plan is a written summary and evaluation of the business idea. It sets out the
desired goals and direction of the business, and how it will maintain its focus.

2. Explain why it is important for a business owner to develop a business plan.

It is important for a business owner to develop a business plan as without planning the
business owner does not know where the business is heading. The business ‘journey’ will
most likely end in disaster. It is also crucial for business owners to develop a business plan as
it acts as a link or bridge between the business owner’s ideas and actual operation of the
business; it is a way of turning dreams into reality.

7. Identify the benefits of developing a business plan.

The benefits of developing a business plan include there is a higher possibility that the
owner’s dreams and goals for the business become a reality as a business plan acts as a link
between the owner’s ideas and the actual operation of the business. The business plan also
become a useful reference point for the running of the business. Any small business with a
plan has direction, which ultimately saves money, time and effort and also increases the
likelihood of success.

Pg 508
1. Distinguish between a business’s internal and external environments.
The internal business environment covers the factors within the direct control of the owners.
It represents what occurs within the business. While the external business environment is a
larger environment within which the business operates. It consists of factors over which the
business has little control and represents what occurs on a larger scale outside the business.

3. Recall what the acronym SWOT represents.

SWOT represents strengths, weaknesses, opportunities and threats. Strengths are questions
which asses the internal strengths of a business such as, what the business is good at, what
product is the most popular, and more. Weaknesses asses the internal weaknesses of a
business such as if staff and managers are competent, if their computer system is obsolete and
more. Opportunities are external assessments which refer to the business asking itself what
their opportunities are such as if the national economy is strong, if the interest rates are low
and more. Threats are also external assessments that a business must acknowledge. Business
must assess what their threats are, what trends are evident in their market, if there are any
new competitors, if current competitors are taking over their market share.
 4. Outline the benefits of a situational SWOT analysis as a planning tool.
Benefits of a situational SWOT analysis as a planning tool are it analyses the business’s
strengths and weaknesses in an internal analysis which allow business owners to analysis
what needs to be improved to increase profits. Given that the business has a degree of control
over its internal environment, the analysis will provide information that can help place the
business in a stronger financial position. From this position, the business can set new goals.
Another benefit of a situational SWOT analysis used as a planning tool refers to the
business’s ability to analyse the business’s opportunities and threats. This will benefit the
business as it allows them to identify the unmet or unsatisfied demand that the business can
perhaps satisfy. The analysis of opportunities and threats can help the owner cover threats
into opportunities.

Pg 515
3. Recall the three main goals of most businesses.
The three main goals of most businesses refer to strategic goals, tactical objectives and
operational objectives.

6. Distinguish between strategic goals, tactical objectives and operational objectives.

A senior manager will normally set the strategic goals and they focus on the long term, broad
aims and apply to the business as a whole. For example, the CEO may establish a strategic
goal of ‘increasing market share’. This will involve the input of the four key business
functional areas – operations, marketing, finance and human resources. Middle management
set tactical objectives, which focus on the mid-term, departmental issues and describe the
course of action necessary to achieve the business’s strategic goals. To use the example of
increasing market share, a marketing manager may set a tactical objective of researching
customer tastes and preferences in order to help achieve the strategic goal. Front-line
managers or supervisors set operational objectives, which focus on short-term issues and
describe the course of action necessary to achieve the business’s tactical objectives. For
example, a marketing supervisor may set an objective of arranging for 20 customers to attend
a focus group to help achieve the tactical objective and strategic goal.