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Integrated Business Planning. How To Best Meet Your Mission. Presented to the Association for Progressive Communication October 15 -16, 1998 by Charles P. Sitkin, Consultant in affiliation with Carnegie-Mellon University. Outline of Presentation. Evolution of Management Concerns

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Integrated business planning l.jpg

Integrated Business Planning

How To Best Meet Your Mission

Presented

to the

Association for Progressive Communication

October 15 -16, 1998

by

Charles P. Sitkin, Consultantin affiliation with Carnegie-Mellon University


Outline of presentation l.jpg
Outline of Presentation

  • Evolution of Management Concerns

  • Strategic Planning

  • The Mission

  • Strategic Excellence Positions

  • Goals and Objectives

  • Action Plans

  • Operating Plan and Budget

  • Results Management



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The Evolution ofManagement Concerns




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Business, Operational, Strategic ?

  • Business Plan Normally prepared to acquire financing

  • Operational PlanIdentifies specific results to be accomplished within a given time period

  • Budget

    Expresses operational plan in financial terms

  • Strategic Plan

    Identifies the basic concept and direction of an organization




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“I firmly believe that any organization in order to survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...

“Next I believe that the most important single factor in corporate success is faithful adherence to those beliefs...

“And, finally I believe if an organization is to meet the challenge of a changing world, it must be prepared to change everything about itself except those beliefs as it moves through corporate life.” Thomas Watson, Jr.


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The Mission survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...

  • Purpose

  • Values


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Mission survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...

Shared purposes provide FOCUS by driving strategy.

Shared values provide CONTROL by guiding execution.


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Example Mission Statements survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...

Bread Machine Industry Association

The mission of the BMIA is to expand and promote the long-term growth and use of all aspects of the bread machine industry for the mutual benefit of our members and consumers.

Freehold Actors’ Studio & Lab

The mission of Freehold is to deepen the transformational power of theatre to inspire through education, experimentation, and performance.


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Strategic Excellence Positions survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...


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Strategic Excellence Positions survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...

Without focus


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Strategic Excellence Positions survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...


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Strategic Excellence Positions survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...

Strategic success means to achieve better and more stable results than the competition. Achieving that requires superior competence, or the ability to excel, in a set of distinctive capabilities which have special value to a particular part of the marketplace.

Note that excellence by itself is not enough. It must be excellence in areas of strategic significance, i.e., that determine the outcome of competition in the marketplace.

That strategic excellence then forms the basis for the organization to achieve better results than the competition. In this sense it is a position which the organization “occupies” from which follows strategic success.


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Strategic Excellence Positions survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...


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SEP Example survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...

BMIA Example

  • Provide for the Unified Presence of the bread machine industry category in its marketplace

  • Provide for intra-industry communications within the bread machine industry.


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Goals survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...


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Goals survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...

  • Define the key areas in which to expect strategic results and what is expected.

  • Not measurable as stated, but contain factors that will be measurable as Objectives.

  • With Mission and SEPs determine what Objectives should be selected.


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Objectives survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...


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Objectives survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...

  • Statement of measurable results.

  • Tied to Goals, provide the basis for operational planning and budgeting.

  • Four general characteristics:

    • Starts with the word “To”

    • Specifies a single measurable result

    • Specifies a target date or time span for Completion

    • Must be realistic and attainable, but represents a significant challenge.


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Goal and Objectives Example survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...

  • Goal One

  • Educate consumers about the benefits of bread machines, facilitate their purchase decisions, and encourage usage.

  • Objectives

  • 1.1 To create a media kit for distribution to key newspapers, magazines, and the 1997 Housewares Show by January 10, 1997.

  • 1.3 To host a New York City magazine editors event "Coming Out Party" for all new bread machine products (members Only) by June 30, 1997.

  • 1.4 To explore partnerships with like minded industry associations for the purpose of producing a jointly sponsored media campaign in 1997.

  • 1.6 To evaluate and report on the possibility of a BMIA web page by August 31, 1997.


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    Three Classes of Objectives survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...

    Innovative

    Problem Solving

    Regular/Routine


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    Action Plans survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...


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    Action Plans survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...

    • Specify steps or actions required to attain an objective.

    • Designate who will be held accountable for seeing the each step or action is completed.

    • Define when these steps or actions will be carried out.

    • Define resources needed to be allocated in order to carry out the required steps or actions.

    • Define feedback mechanisms needed to monitor progress within each action step.


    Action plan l.jpg
    Action Plan survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...


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    Operational Plans survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...


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    Integrated Planning Process survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...


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    Comprehensive Business Planning survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...

    Strategy

    Laws and Regulations

    Mission

    Annual

    Ops

    Plan &

    Budget

    Statement

    Action

    Strategy

    Goals

    Vision

    Objectives

    Plans

    Issues

    Strategy


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    Operational Planning Framework survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...

    Performance Indicators

    Key Result Areas

    Issues Analysis

    Action Plans

    Objectives

    Budgets


    Operational objectives l.jpg
    Operational Objectives survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...

    • Statements of measurable results to be accomplished within the time frame of the operational plan.

    • Standards of performance related to financial and operating results that can be tracked on a regular basis.


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    Budgeting survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...

    • Determine the level of financial resources required to achieve the operational plan’s objectives.

    • Allocate available financial resources to ensure their optimum use in achieving the plan’s objectives.

    • Control the use of available resources to ensure the achievement of plan objectives.


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    Budgeting Problems survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...

    • Budgets can grow to be so complex that they become expensive, cumbersome, and even meaningless

    • Budget objectives may come to supersede enterprise objectives—budgets should be considered a tool, not an end in themselves. Enterprise goals should supersede business unit plans

    • Budgets may contribute to inefficiencies by continuing initial expenditures without proper evaluation

    • Budgets as a pressure device defeat their basic purpose


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    Results Management survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...


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    Integrated Planning Process survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...


    Results management38 l.jpg
    Results management survive and achieve success must have a sound set of beliefs on which it premises all its policies and actions...

    • Control Systems

    • Management Reports

    • Organizational results

    • Individual Results

    • Corrective Action

    • Reward System


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    “I believe the real difference between success and failure in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people. What does it do to help these people find common cause with each other? And how can it sustain this common cause and sense of direction through the many changes which take place from one generation to another...”

    “The basic philosophy, spirit, and drive of an organization have far more to do with its relative achievements than do technological or economic resources, organizational structure, innovation, and timing. All these things weigh heavily in success. But they are, I think, transcended by how strongly the people in the organization believe in its basic precepts and faithfully they carry them out.” Thomas Watson, Jr.


    Supporting discussions l.jpg

    Supporting Discussions in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.


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    Issues Analyses in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.


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    Steps in Operational Analysis in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.

    1. Identify Issues

    2. Prioritize Issues

    3. Analyze Issues

    4. Summarize Issues

    Major ConclusionsAlternative Courses of Action


    Identify issues l.jpg
    Identify Issues in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.

    • Most critical issues facing the business unit, what might be their impact.

    • Issues likely to have greatest effect on profitability.

    • Issues likely to have greatest effect on long-term success of the business unit.

    • What changes have taken/will take place effecting the business units performance in the coming year.

    • What cross-functional problems or opportunities are likely to have impact on the business unit’s performance.

    • What are major impediments to conforming to your Mission.


    Analyze issues l.jpg
    Analyze Issues in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.

    • What is the Issue.

    • What data/information is available (or needed) to resolve the issue.

    • What appear to be the factors causing this to be an issue for the organization.

    • What types of results are needed in this area.


    Key result areas l.jpg

    Key Result Areas in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.


    Key result areas guidelines l.jpg
    Key Result Areas Guidelines in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.

    • Those 4 to 6 major areas wherein performance is essential during the coming year.

    • Include both financial and non-financial areas.

    • Will not cover the entire organization—will identify the critical few areas where priority efforts should be directed.

    • Most will require cross-functional effort.

    • Each will be limited, generally, to 2 or 3 words and will not be measurable as stated, but will contain factors that could be measurable.


    Indicators of performance l.jpg
    Indicators of Performance in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.

    • Measurable factors, falling logically within a given key result area, on which objectives may be set.

    • May be hard numbers, percentages, significant achievements, or problems to be overcome.

    • Identify what will be measured, not how much or in which direction.

    • Represent factors that can be measured on an ongoing basis.


    Example indicators of performance l.jpg

    Return/ Profit in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.

    Productivity

    People development

    Market penetration

    Return on RevenueDonations to Sales RatioNet profit

    $ sales per employeeUnits produced/month

    Percent ethnic hireDays of training/employee

    Percent of market sharePercent growth by product

    Example Indicators of Performance

    Key Results Areas Indicators of Performance


    Strategies l.jpg

    Strategies in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.


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    Competitive Intensity in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.


    Strategic implementation l.jpg
    Strategic Implementation in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.

    • Direct Means

    • Indirect Means

    • Time Related Aspects.


    Direct means l.jpg
    Direct Means in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.

    • Action Plans and Project Plans

    • Procedures/Management Systems

    • Planning and Budgeting

    • Management Information Systems

    • Organizational Structure.


    Indirect means l.jpg
    Indirect Means in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.

    • Communication

    • Symbolic Actions

    • Institutionalizing Actions

    • Fostering Innovation

    • Corporate Culture.


    Time related aspects l.jpg
    Time Related Aspects in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.

    • Research and Development

    • Manufacturing Life Cycle

    • Marketing Cycle

    • Economic Trends

    • Competition.


    Strategic plan outline l.jpg
    Strategic Plan Outline in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.

    • Executive Summary

    • Current Situation and Vision

    • Critical Issues

    • Mission

    • Strategic Excellence Positions

    • Goals and Objectives

    • Action Plans


    Operational plan content l.jpg
    Operational Plan Content in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.

    I. Executive Summary

    II. Business Unit Description

    III. Product and Services

    IV. Operational Analysis: Issues and Conclusions

    V. Key Result Areas & Indicators of Performance

    VI. Operational Objectives

    VII. Action Plans

    VIII. Budgets

    IX. Plan Implementation and Review Schedule

    Appendices


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