New Tools for Strategic Planning Chapter 8 Business Plans and Presentations

1. New Tools for Strategic Planning Chapter 8 Business Plans and Presentations T. A. Sgritta University of North Carolina at Charlotte

2. Planning

3. Formal Business Plans • Project/Product Development • Annual Profit Plan/Budget • Strategic Plans • Status Reports on Above Plans

4. Additional Applications • Actual business plans – large corporations • Proposals for projects – small groups • Entrepreneurial requests for financing • Proposals to customers/clients

5. Complete Planning Outline • Situation analysis (SWOT) • Objective • Detailed action plan • Detailed by the specific functions/actions that need to be accomplished • Logistics/Finance • Management, communication and control

6. Keys to Effective Plans • You are trying to “sell” your idea or plan, therefore you need to be convincing • Review your presentation from the audience’s perspective • You need to have a balance between a good concept and a good presentation.

7. Keys to effective plans, cont’d • Make it easy to understand • Use simple to read/understand material • Display enough“facts” to make your point • And be prepared for challenges! • Believe in the plan yourself • Remember why your audience is there!

8. Three Pillars of the Plan • Facts and data that explain the situation (Real) • Action plans that indicate what you are doing (Win) • Financial data that proves your plan (Worth)

9. Level of Detail Include enough detail to be convincing of your points. Base your plan on: Facts- establishing your need Objectives- that represent objectively (in metric form) the needed results Actions- to reach the objectives Quantifications (measurements - metrics)- to prove the results but do not overkill – keep some detail in reserve. Use financial and market planning tools!

10. Purposes of the Action Plan Details • The action plans are to: • Convince the audience that the overall plan is workable and realistic • Indicate that the overall plan has been well thought out • Develop (and show) the control procedure.

11. Remember Your Audience • Frequently corporate executives • They know the background • They want to know: • Why you are taking action (situation) • What you will accomplish (objective) • Who is responsible (action plan) • What milestones will be reached (action plan) • When will the milestones be reached (action plan) • How the action will be accomplished (action plan)

12. Specifics vs. Generics • Avoid generics in the plan • Generic means the process, not the actual case at hand. Don’t say, “We should do a SWOT analysis.” Do it. • Remember, you are key members of the team, not disinterested students, act that way! • Your management will evaluate you on your demonstrated capabilities to perform, not to talk about the process.

13. Generic Avoidance, Cont’d • Avoid • “Competition is a threat” Is there a specific action that is a threat now? Competition is always a threat to act or react, therefore include it only if unusual. • “Costs may increase” • “We may not be successful” • Do • Focus on the task/plan/project at hand. What specific items or actions effect the plan? Avoid generalities.

14. Do Not • Do not use “approximately”, we “feel”, we “believe”, we “think”, “if” (sometimes, but rarely okay). • Do not use adjectives that are not necessary. These are sales presentations, but they are not suppose to look like sales presentations. • Do not think that you are making a product sales presentation.

15. Do • Quote facts. • If facts are not available, estimate them, but make them sound like facts – be confident. • Tie numbers and plans together. • All team members need to help other!

16. Tables, Charts and Graphs • A picture is worth a thousand words! • Use them often • Keep them simple and easily understandable • Make them self supporting • Include them in both written and oral plans

17. Tables, Charts and Graphs • Uses: • Market data • Market size, market preferences, survey data, sales and margin data • Action plans • Timing, relationships, responsibilities, costs • Financial • P&L, balance sheet, cash flow. • Excel sheets can be imported into PowerPoint

18. Planning the Corporate Plan • Who will participate • What they will say • When they will say it • How they will say it

19. Typical Presenters • Participants- • CEO/General Manager or Team Leader • Marketing/Sales Manager • Product Development (Engineering) Manager • Operations Manager • Controller – Finance Manager • (HR, Quality, Purchasing, others in large pres.)

20. What they will say: CEO/ GM/ Team Manager • Introduce the overall plan and your team • Refresh company mission • Perform SWOT analysis to prepare the audience for the upcoming project(s). • Note: dwell on the related issues, but be sure that omitted issues are not important. • Just name the project(s) in the plan; they should be logical outgrowths of the situational analysis. • Add corporate strategy (include international) as appropriate • Address overall plan coordination if appropriate

21. Detailed Portion of Action Plan Marketing/Sales Manager • What/how/why is the overall strategy? (A KFS or other analysis may be helpful) • Then explain the projects and their potential, possibly with charts and explanations • Market size (by year if multi-year plan) • Our market share before and after the projects • Sales levels before and after the projects • Margin $ impact of the projects

22. Detailed Portion of Action Plan Marketing/Sales Manager (Cont’d) • Explain product projects – what they are and how they differ from existing (or not) – but not too much detail – focus on the identified needs • What is/are the price actions? • What is/are the promotion strategy and actions? • What are the channel of sale improvement plans?

23. Marketing Data, New Hot Sauce

24. Market Potential – Light Aircraft

25. Market Strategy: Pilot Schools • Pricing: List less 30% school discount to place us under competition. • Promotion: Sponsor scholarships to school if they buy our aircraft. Scholarships = price. • Distribution: Direct sales by sales manager. • Timing: First two production units, July 1996. • Cost: (two aircraft at cost) $145,000 • Responsibility: John Quon, Sales Manager

26. Private Purchase Market • Pricing: $132,000, based on average resale price to new price for continuously produced aircraft. • Promotion Budget: • Magazines (list names) $ 340,000 • Shows (Oshkosh, two more) 60,000 • Pilot training, etc. 85,000 • Total $ 485,000

27. Private Purchase Market • Distribution objectives 9/96: • Domestic – Contract 20 independent dealers • International – five countries: • Mexico • Canada • Venezuela • Bahamas • England

28. Private Purchase Market – Distribution Project Responsible: Sally Medina, Distribution Manager Methodology: Personal contact with former and recommended new dealers. Milestones: Identify domestic candidates: complete Sign first contract Mar 15, 1996 Complete 20 domestic agreements July 1 Identify 5 international locations June 1 Complete 5 int. agreements Sept. 1, 1996 Budget: $35,000.

29. Formal Plan Formats – NOTE! Do not use one page case analysis format for action plans!

30. Market/Sales Manager(s) - Note • These are different jobs with different skill requirements • They will be separate in most large companies • Some companies combine them although they are different functions

31. Detailed Portion of Action Plan Product Development Manager • Relate new products to the market’s needs for features (first presented in the marketing manager’s presentation) • Describe new product’s functioning to achieve the market’s needs • Explain your development plan. You may use a Gantt or Pert chart or other method. Include enough verbage to explain the chart or detail in words your plan.

32. Detailed Portion of Action Plan Product Development Manager • Be sure to cover all the product changes required for the plan – new products, and if necessary, cost reductions, product improvements etc. • If a general plan, cover capabilities improvement, new technology, etc. as action plans.

33. Detailed Portion of Action Plan Product Development Manager • Add the plan to obtain additional resources if necessary for the product development portion of the plan. Do you need people? Equipment? New technology? Outsourcing? What is the timing and cost of these items? – again, present action plans.

34. Detailed Portion of Action Plan Operations Manager • Indicate plans for sourcing, production, procedures, equipment and people. Indicate costs associated with these. They should cover both new products and improvements to current operations • Provide a chart (standard, Gantt, Pert as appropriate) indicating timing. Be sure to coordinate with marketing and product development on timing.

35. Detailed Portion of Action Plan Operations Manager (Cont’d) • Indicate logistic considerations • Indicate special or potential problems that you may see. • For general plans, remember that operations always seeks improvements in quality, efficiency and cost. Be sure to indicate these action plans.

36. Quality Assurance ISO 9001 Project Responsible: Mary Smith, QC Manager Methodology: In conjunction with a Johnson & Johnson Consultants Milestones: Consultant contract: Feb. 1, 1996 Preliminary review Mar 15 Documentation complete July 1 Final review August 1 Certification Sept. 1, 1996 Budget: $ 160,000.

37. Financial Section of Plan Finance Manager • For general plans, indicate finance department action plans for quality, cost or other improvement • Perform a pro-forma financial analysis for the plan • Make a simple P&L • Make a simple balance sheet • Provide a ROI calculation • Make a list of capital expenses and indicate where the capital will come from • List accommodations you must make within your department for the project(s), if any

38. Financial Section of Plan Finance Manager (Cont’d) • Indicate financial risks and opportunities to this specific plan (be brief - one or two is enough!) • Opportunities typically include increased sales (where would they come from?), lower costs, etc.* • Risks include timing problems, specific competitive reactions, quality etc.* *These are not the strategic opportunities or threats, rather they are the impacts of major events that are not included in the plan as written.

39. Unit Margin, Burgers

40. Project Profitability, Burgers

41. Action Plans • Action plans indicate the leadership and direction of the organization, department or project. Use the keys: • Who: In the real world you would put a name here – the person that the company holds accountable for accomplishing the objective

42. Action Plans • Does what – here indicate the metric that is the goal or objective of the action. • When – indicate the time that the above goal will be met • How – indicate the basic methodology for accomplishing the task. This is a plan, so this section is to convince the audience that the objective is reasonable and has been thought out. Do not become too detailed.

43. Important! Keep SWOT, action plans and financials focused on the task at hand.

44. Project Tips • Price vs. cost • Margin vs. profit • Do SWOT using the four areas (or portion thereof); do not use the term SWOT • Use the term “project chart,” not “Gantt” chart • Avoid terms wasted on the current audience (our great customers, etc.) • I, we and they • Avoid “due to the fact that”, “in the amount of”

45. Annual & Strategic Plans • Same as project/product development plans except: • Larger scope – do not make into a project only plan. Concentrate on the main concerns of the organization. • Usually HR participate as a separate section • Sub-functions (purchasing, research, etc.) may have their own sections within their overall function

46. Annual Plans • Must consider all areas of the organization, focusing on the key issues for the next year. Areas that will be worked for the future (product development projects or new facilities that will not be implemented until future years but will require significant effort in the upcoming year should be mentioned.

47. Strategic Plans • Same as annual plans except the results for planned actions should be included (see example). • Corporate level strategy is especially important.

48. Strategic Plan Sales Forecast

49. Strategic Plan Profit Forecast

50. Class Project Considerations • Much data is not available - you must logically invent it • You may use other formats, but the plan requirements must be covered • Be creative • Be Brief! – Too long of a plan will not be accepted by management or others – but include metrics to make the plan believable