Business the plan as strategic object of the company
CONTENTS
INTRODUCTION1. THEORETICAL ASPECTS OF THE STRATEGIC
MANAGEMENT AND BUSINESS PLAN
1.1 The notion of strategic management
1.2 The essence of business plan
1.3 Objectives and functions of business planning
1.4 Methodology of developing a business plan
.5 Structure of business plan
CHAPTER 2. DEPLOYMENT OF BUSINESS PLAN IN STRATEGIC
MANAGEMENT OF THE BANK
2.1 Business plan in the bank strategy
2.2 Bank’s business plan structure
2.3 The process’s essence of the bank’s business plan
realization
.4 Sequential decision and early implementation stages
of projects
CHAPTER 3. PROBLEMS OF BUSINESS PLAN AND THEIR SOLUTIONS
3.1 Widely spread mistakes and ways for their improvement
3.2 How to improve planning with the help of modern
applications
CONCLUSIONOF REFERENCES
INTRODUCTION
business plan
Today the world industry is full of all possible firms,
corporations and organizations, but what is that distinctive line that
separates and differentiates these organizations one from another? This line
can be depicted as a success of a firm. But what shows us that business in this
or that firm is going on successfully well? We can answer this question using
simple observation data: the demand for products/services of this company (let
we call it “ABS”) is high, consumers are happy to have a deal with “ABS” - then
they create positive reputation, the position of this firm is on the highest
level, employees are happy, the working location expanding, and so on. And final
question, what leads to this success? The answer is complicated one, but still
can be constructively provided:
. The management staff, which should provide the organization
with work, focus, persistence, ideas and push.
. Perfectly created strategy of the company
. Business plan for the nearest future.about management staff
- it becomes clear, that behind every successful organization there is a
successful leader. Strategy of the company is one of the core essences that
helps to lead the firm through obstacles and gain profit, good reputation. The
last notion is business plan.is important about business plan? A business plan
is a formal statement of a set of business goals, the reasons why they are
believed attainable, and the plan for reaching those goals. A good business
plan is the most significant part of running or starting a business, expanding
a business or obtaining finance for a business. If a business plan is written
properly it is much easier to leave less room for error and failure. While there
is no ability to predict everything that can happen in a business’ future, a
good business plan helps to avoid certain pitfalls, overcome obstacles, while
anticipating and creating opportunities. Here we see, that business plan is a
part of the strategy, that shows the activity and condition of the company from
every possible angle in the market, also business plan describes all future
actions and possible risks, consumers and suppliers, competitors and
stakeholders, profits and failures. Business plan is an accurate guideline of
business in the market.to the mentioned above, we can confirm, that any
business plan of the company has its direct impact on the successful operation
of this company in the market.question of this course work can be identified as
“Does business plan play significant role in the strategic management of the
firm?” Relating to this problem, this work will be devoted to the investigation
of importance of business plan in the strategic management. The investigation
will be conducted using literature search method, which involves reviewing all
readily available materials. Also, several companies will be surveyed in order
to detect their experience in using business plan and its successful
compliance.
CHAPTER 1. THEORETICAL ASPECTS OF THE STRATEGIC MANAGEMENT
AND BUSINESS PLAN
.1 The notion of strategic management
of the firm as a scientific direction in the economy emerged
in the early XX century. School of scientific management (F. Taylor, H. Gant, X.
Emerson), and then classical (administrative) School of Management (A. Fayol,
Weber, C. Bernard) highlighted planning as one of the main functions of
management. At the same time planning was short-term, and in the form of
budgeting and control. It was based on the hypothesize of stability of the
external business environment and resource potential of the company, which
generally characterized the economy of industrialized countries in the first
quarter of last century. In these terms planning of the firm’s activities was
regarded as a preparation of the annual budget of the organization, where
carefully were taken into account all income and expenses from business
activities. However, the materialization of strategic management as a
self-sufficient science has been connected with the new conditions of
corporations, there appeared a need for long-term planning and management,
aimed at the future. These conditions were determined by:
technological innovations resulting from scientific
and technological revolution, which require prediction of new production and
technological advances;
saturation of the market in developed countries,
which led to increasing competition;
the beginning of globalization of markets, the
emergence of transnational corporations, which raised the uncertainty and
complexity of the environment of the existence of business.the scientific and
methodical literature there are many descriptions to define strategic
management, which focus on various aspects of this complex administrative process.
However, they all come to one of three approaches:
) the approach, which emphasizes the organizational
parameters of the environment (environment analysis). This approach is strongly
connected with the methods of strategic planning, is attractive for its
simplicity in understanding the sequence of actions of strategic developers.
However, when it is applied there is a great danger that the internal
opportunities of the organization remain outside the scope of the analysis,
although in many cases they can successfully neutralize threats deriving from
the external environment;
) the approach based on determining the long-term goals of
the organization and the ways of achieving them (goals and means). According to
this approach, strategic management - is the direction in decision making
theory, which aims to develop an effective strategy or strategies to assist in
achieving corporate goals;
) the approach that emphasizes activities to implement the
strategy (activity approach). This approach focuses on the sequence of actions
for the implementation of strategic management, so it combines two previous
ones.modern literature following definitions of a "strategy" meet:
the art of rapid change, the portfolio of
initiatives aimed at growing the company and its value;
number of decisions that are driving or shaping
force of the majority of actions taken by the company;
set of interrelated activities aimed at achieving a
sustainable competitive advantage;
way to create a competitive advantage by
implementing distinguishing characteristics;on investigated information about
strategy, I have figured out my personal understanding of this term, it is
following: in business life under the notion of strategy understood the general
concept of how to achieve organizational goals, solve problems confronting it
and distributed to the necessary scarce resources. Such concept includes
several elements. First of all, this includes system of vision, mission, goals,
general and specific objectives. Another element of the strategy - a policy or
a set of specific rules of organizational actions aimed at achieving these
goals.of a market's corporate strategy of the company - are:
) implementation of strategies (tactics);
) informational strategy;
) human resources strategy;
) marketing strategy;
) financial strategy.company's strategy as a program of
action aimed at building and maintaining long-term competitive advantage in
target markets reflects the quantitative development of the firm and those
internal changes in the firm, which must occur to improve its competitiveness.
Firm without a strategy - a set of assets burdened with liabilities.a strategy
involves the study of alternative courses of development of the organization,
their evaluation and selection of the best strategic alternatives for
implementation. It uses special tools, including quantitative methods of
forecasting, the development of scenarios for future development, portfolio
analysis. Factors influencing the choice of strategy are presented in Appendix
1.it is necessary to point out, the company has strategy, when:
The company is the initiator of innovations and
leader in its market segment;
All current activities are planned on the basis of
strategic plans and goals;
the whole staff of the company knows and shares the
strategic objectives of the organization;
strategy - is the main principle for making
investment and other long-term solutions;
every employee knows the extent of his contribution
to the achievement of strategic targets of the company (both financial and
nonfinancial);
the balanced scorecard system successfully
implemented;
balanced scorecard resource substantiated and
supplemented by a system of employee motivation, let’s consider the main
essence of business plan and its role in the strategic management.
.2 The essence of business plan
preparing for battle I have always found that plans are
useless, but planning is indispensable.Eisenhower,General and President
the effective functioning of an enterprise there is a
necessity to know exactly about all resources: material, labor, intellectual,
financial. It is important to provide sources for their extraction, how to
reveal resource efficiency in the enterprise’s operation. Extensive experience
of kazakhstanian and foreign companies shows that the underestimation of
planning activities of the business or its incompetent implementation lead to
huge economic losses.planning provides many benefits. Particularly:
· induces carefully examined prospects
for business development;
· makes precisely define business goals
and the ways to achieve them;
· identifies key business indicators
required for further evaluation and controlling of results;
· makes the company more prepared for
sudden changes in market conditions;
· allows to create clear coordination
of all efforts to achieve organizational goalsactivity helps to solve the main
task of any business - to achieve the maximum profit at minimum costs -
identifying the most profitable sources of funding and rational direction of
spending, providing a stable position of the enterprise in the market.Plan - is
a document which describes the main sections of the development of an
enterprise in a competitive market, taking into account debt and equity funding
sources, material and human capabilities and supposed risks that may arise
during the implementation of different business projects.plan helps to solve
practically all main problems that stumble upon when creating a business:
identify specific directions of business, its target
markets and position in these markets;
recognize the correspondence of existing staff at
the enterprise and the conditions that motivate its labor requirements;
formulate long-term and short-term business
objectives, strategies and tactics for achieving them and identify special
persons responsible for applying the target;
lock stock and indices of goods and services to be
offered to consumers, to estimate the corresponding production and trade costs
define a system of marketing activities for market
research, advertising, sales promotion, pricing, distribution channels, etc.;
optimize an organizing management structure;
estimate the financial position of the company, the
existing financial and material resources, the possibility of achieving set
goals;
identify the difficulties that can interfere with
the implementation of the business plan and outline measures to deal with
them.a result, business plan - is economically-based analytical document that
shows the reality of the planned business. In this case, the extent of planning
can be different: the development of organizations, activities, new products, a
new wage system, etc. It provides the strategic and tactical challenges facing
the enterprise, regardless of their functional direction, including:
organizational, managerial, financial and economic assessment of the state
enterprises, the identification of potential business opportunities, analyzing
strengths and weaknesses of the parties, the formation of investment objectives
for the planned period.business plan is complex management tool. It provides
the strategic and tactical challenges facing the enterprise, regardless of its
functional orientation, including: organizational, managerial, and financial
and economic assessment of the state enterprises, the identification of
potential business opportunities, analyzing strengths and weaknesses of the
parties, the formation of investment objectives for the planning
period.business plan demonstrates the general and specific elements of
enterprise operating under market conditions, the choice of strategy and
tactics of the competition assessment of financial, material and labor
resources needed to achieve the objectives of the enterprise.plan provides an
objective idea about the possibilities of production development, ways of
promoting goods to market, prices, potential profits, the major financial and
economic results of the company, reveals the danger zone, suggests ways to
their solutions. Such kind of plan is used, independently of the scope, size,
type of ownership, organizational and legal form of company. Either internal
problems related to the enterprise management can find its solution in business
plan or external, due in particular, relations with other firms and
organizations.to the business plan an opportunity appears to look at the work
of the enterprise as if from the outside. All the activities of the company are
represented by two components: current and future. This is because the forms, methods,
approaches to these two activities of the company are significantly different,
as outlined in the following Table 1.
Table 1 - Activities of the company
Current
activities of the company
|
Future
activities of the company
|
Planning and
budgeting
|
Business plan
development
|
Quality
improving
|
Business
processes reengineering
|
Plans fulfilling
|
Projects
fulfillment
|
Departmental
employees
|
Special groups
and teams
|
Does not include
organizational changes
|
Connected with
organizational changes
|
1.3
Objectives and functions of business planning
Business plan became a fundamentally new document to the
Kazakhstan economy. The main goal of its development is planning in order to
support the economic activity on a nearest and more late periods in accordance
with market needs and the availability of necessary resources. Other purposes
are:
definition the viability and future sustainability
of the enterprise, reducing business risk with the use of business plan;
specification of business prospects in the form of
quantitative and qualitative indicators;
security of foreign investments.plan takes into
account not only the internal goals of the enterprise, but also the external
goals of parties interested in participating. They are mainly investors.
Business plan is a document that allows to assess the feasibility investments
funds (capital) in the drafting. Substantiated business plan is the qualitative
and quantitative guidance for both the entrepreneur and for its partners and
lenders. Many banks even do not talk about loan terms without having a business
plan. More widely spread became the requirements of foreign investors to
provide estimates of the financial plan with the help of a licensed UNIDO [1]
packages - COMFAR [2] and PROPSPIN [3], rely on Appendix 2. Except investors,
interested parties may be potential customers and suppliers of the firm. In
nowadays practice, the business plan has the following functions:
serves as the basis for developing strategies and
tactics of business;
allows the formation and implementation of planned
programs to assess the potential for new activities, to monitor the processes
that take place in the business;
attracts partners who are capable to invest own
capital or the technology available to them.plan as an integral part of the
planning system in the enterprise, is it a separate part and is not limited to
any one type of planning. Nevertheless, it is still characterized by
sufficiently stable characteristics in accordance with the challenges ahead:
business plan can not include the whole range of
common goals of the company, but only one of them, one that is associated with
the investment process (internal or external). Business plan - it is always
investment (development). No investment - there can be no business plan (as
opposed to other types of planning, such as strategic);
in contrast to the strategic and tactical plan,
business plan has clearly defined time frame, after which certain plan goals
and objectives must be met;
in business plan functional components (marketing
plan, production plan, etc.) in contrast to all other types of plans are full
and equal parts of the structure.the business plan is nothing more than a
development plan with a distinctive objectives, none of the other types of
plans can replace the business planning process. At the same time, the business
plan is subject to the common terminal of business plans and complies with the
general principles of planning.prepared and composed business plan offers the
prospect of its development, that is responsible for the most important
question: whether to invest energy and resources into this business, whether it
will bring a profit, which will pay all costs.on the purpose of preparing a
business plan (as a plan investment feasibility study, financial partners, to
attract partners, contracts, personnel) sections can be developed with varying
degrees of detail. When a plan requires less volume study, part of the sections
may be absent. When the plan will be developed in full volume there must be
conducted a wide marketing research, and the plan itself must include all
documents used in its development.
.4 Methodology of developing a business plan
business and academic literature there is no distinct
methodological approach to the content and structure of the business plan. This
is due to a variety of possible goals addressed to be resolved by a developed
business plan.general the structure of the business plan is determined by the
specific type of activity, firm size, in order to develop a business plan,
which must be complied with, such as small businesses seeking to lease
equipment. Federal Service for Insolvency and financial recovery of enterprises
developed typical structure of a business plan, which must have the following
information: a general overview of the enterprise, brief information on the
financial recovery plan, financial analysis of enterprises, measures to restore
the solvency and support effective economic activities, market competition,
marketing activities, manufacturing, financial plan., the larger the
organization, the more complex its financial activities, the more reasonable
should be developed sections of the plan, respectively, the business plan for
small businesses on the composition, structure and volume can be much easier.
Later, in practical part of this course paper, obvious example of implementing
business plan in large organization - bank, will be provided.composition and
structure of the business plan also depends on the size of the proposed market,
the presence of competitors and the growth prospects of an enterprise, since
the larger the market, the greater the number of its segments must be considered,
but with a large number of competitors is required to study the largest of
them, their goods and services and, therefore, the complication of the business
plan. Especially important for enterprise market segments or the most important
competitors for closer examination may be carried in a special section of the
plan., in Kazakhstan market the UNIDO development as one of the western methods
is best known for developing countries to prepare industrial feasibility
studies and its electronic version COMFAR. In addition, the popular development
of Tacis - EU program, developed for the CIS countries (plus Mongolia) to
subsidize the purchase of modern technology, as well as some others.can
distinguish the basis of all the above methods of business plans. This basis
has the following sections:
the financial plan;
the marketing plan;
the system of production.sections are linked by
organizational plan (a specific scheme of the project), with corresponding
calculation of risks and the allocation of compensatory measures. Particularly
these key sections have laid the fundamental element of the Kazakhstan
standards of forming business plans., on the basis of these methods appeared
the text templates for writing a business plan. Such a pattern in the
development of a business plan acquires the corrected information,
calculations, tables and graphs. Thus, achieving maximum simplification of the
work on the textual part of the business plan.business plan serves as a mean of
effective advertising for prospective investors and partners. Therefore, it
must be written on business language, understandable to financiers, bankers,
and business partners. Quantitative information that characterizes parts of the
business plan should be clear and capacious, but at the same time, relatively
brief. The volume of business plan depends on the purpose (the project), but
the main thing - it must specifically describe ultimate goal, and all the
activities, as a result of which will ensure the achievement of goals.
Typically, a business plan is developed for a few (3-5) years, but for the
first year it should be specific planning documents.key section on the basis of
the main goals of the business plan is always a financial plan. Accumulating
information from other sections, the financial plan provides an answer to the
most important question - what you need to invest and what returns, because
entrepreneurship is like work at your own risk for profit.
1.5
Structure of business plan
The business plan as the document is endowed with specific,
inherent features, but it will wrong to talk about it as a document with a
strictly specified parameters. There is no clear regulation for the structure
of the business plan. However, there are a number of points that are essential
and without which the business plan cannot play the role entrusted to it: it's
sections, covering ideas, business goals, product-specific company, determining
the structure of the future of the enterprise, its financial projections and
prospects, offering a specific strategy firm behavior in real market
conditions. Thus, when creating own business, entrepreneur should prepare a
business plan with the desired consideration of the following points:
. Company profile - this provides a description of the
company and of its activities from its establishment to the present day;
. Market and competition analysis - here is a general
depiction of the market in which the company functions and a detailed
description of its competitors. The market depiction will include a description
of the size of the market and the trends within it (both technological and
financial), the market segmentation, the problems that exist in the market, the
main competitors, barriers to entering the market, and potential customers.
This section of the business plan should contain the results of detailed
primary and secondary research conducted by the company;
. Vision and strategy - in this part, the company
should identify its vision and its strategy for realizing it;
. Product/service description - this part focuses on
the solution offered by the company, including a detailed description of the
product and the technology, the company's intellectual property, competing
products, and why the product is superior to them;
. Development plan - describes the whole development
process, the present development status of each product and service, and the
scope of the development team and budget;
. Operating plan - describes the company's
organizational structure, such as the structure of the production system, the
costs of labor and materials, logistics and service;plan - this part describes
the company needs to specify, among other things, its objectives with respect
to each segment of the target markets, the existing and planned marketing
channels, the pricing of the products for distributors and the structure of
their remuneration, the advertising plan, and the incentives to be given to
customers;
. Management and ownership -this part is about the
management team, including brief resumes of the senior management. The
structure of ownership of the company will also be described here.
. Financial forecasting - the forecasts need to be
attended by full and detailed statements, and usually include the projected
operating budget, projected financial statements, economic analyses, and
sensitivity analyses (the projected effect of any change in the various
parameters on the forecasted business results).
. Application - here will be found a specification of
the expenses, table of comparison to competitors, full executives bios, letters
from customers, and so on.most common documents that are included in the
application:
technical products data;
executives forms;
organizational and other schemes;
results of audits;
consultants and experts opinions.
The next main step in building this course paper is considering
written above theory on practice. As I have mentioned, the larger the
organization the more obvious the necessity of business plan. In these terms I
have chosen and fully investigated the bank structure, to show all importance
of implementing business plan into its strategy.
CHAPTER
2. DEPLOYMENT OF BUSINESS PLAN IN STRATEGIC MANAGEMENT OF THE BANK
.1
Business plan in the bank strategy
plan
of the bank is connected with the future activities of the bank. It should
cover all areas of work and all departments the bank. For the separate projects
of the bank such as: branch office, the acquisition of a building, complex
technical systems and so on, establish separate business plans (often in short
form), which calculated the economic efficiency of the planned projects of the
bank. It is necessary to understand that the bank can make expenditures
appointed not only for economic benefits, but also for reducing risks, which,
however, may also, in case of implementation result in additional costs of a
bank or even a loss. For external projects, in which the bank is planning to
take participation, the business plan is the basis for the development of
schemes of financing the project, validate the extent and form of participation
in the bank, as shown in Figure 1.
Figure
1. Organizational scheme of project financing
fact,
in its submission, business plan is formulated, recorded and justified the
bank's strategy for the next two (three) years. From the mentioned above it is
obvious that it is impossible to write a business plan of the bank, not having
a strategy. At the same time it is possible to formulate some strategic
alternatives without having a business plan. The difference between a business
plan for bank and strategic alternatives is that the business plan is a
quantitative assessment of strategic alternatives, test potentials and
effectiveness of their achievement, the calculation of the expected financial
impact and formulate proposals for the selection of a strategic alternative.
Bank's strategic options adopted by the owners and top managers is accepted as
a strategy for the bank, and then work on its implementation organizes. The
business plan of the bank should be present:
when
creating a credit institution;
changing
the form of a credit institution (non-bank credit institution - on a bank, or a
bank - on a non-bank credit institutions);
when
expanding the credit institution by acquiring additional licenses for banking
operations;
when
the reorganization in the form of merger, separation, transformation;
when
the reorganization of credit institutions in the form of a merger.to this paper
business plan of bank is an instrument for the next two(three) calendar years
containing the planned program for credit institutions, including the
parameters (indicators) and expected results of operations and allows the bank
to assess:) the ability of the credit institution to provide financial
stability to fulfill prudential activities and obligatory reserve requirements,
regulatory requirements to ensure the interests of creditors and depositors;) the
ability of the credit institution for long-term survival as a profitable credit
institutions;) management adequacy of the credit institution.
2.2
Bank’s business plan structure
Here
is the typical structure of the business plan of the bank:
.
General information about the credit institution
1.1. Name of the credit institution;
.2. Information about establishment of a credit institution;
.3. Location of the credit institution;
.4. The authorized capital of credit organization;
.5. Information about the audit organization (auditor);
.6. Persons with whom the cooperation in the process of
reviewing the business plan is held;
. Business prospects of the credit institution
.1. Goals, objectives and market-oriented policies of the
credit institution;
.2. Influence of economic and legal conditions in the country
and regions attend on the activities of credit organization;
.3. The main parameters of active and passive operations,
expected financial results;
.4. Risk management of the credit organization;
.5. Assessment of compliance with obligatory standards and obligatory
reserve requirements;
.6. Status, possibilities and limitations of the customer
base;
.7. Capabilities and limitations of branches network,
representative offices, separate departments and exchange offices;
.8. Participation in the banking groups and bank holding
companies;
. Management system of the credit institution
.1. Scheme and the development of the credit institution;
.2. Internal control system;
.3. Internal documents regulating the conduct banking operations;
. Founders (participants) of credit institution
.1. Information about founders (participants) of credit
institution;
.2. Nature of relations between the founders (participants);
.3. Financial position and business activities of founders
(participants);
. Features of the credit institution
.1.Material and technical support;
.2. Personnel policy;
. Other significant factors that, in the opinion of the
credit institution are required to reveal the main objectives of the business
plan.attachments business plan should also include:
balance of payments with a breakdown of some of its
articles;
plan of income, expenses and profit with a breakdown
of some of its articles;
the forecast performance of certain obligatory
standards;
assumptions admitted in the business
plan.information contained in the business plan must necessarily reveal the
contents of the following aspects of the credit institution.of these aspects
should include the results of the SWOT-analysis, which allows to identify the
strengths and weaknesses of a credit institution, as well as potential
opportunities and threats.
. Goals, objectives and market-oriented policies of the
credit institution. In determining the goals and objectives of the credit
institution there should be reflected the long-term vision the role and place
in the banking market, the specific features of its positioning in the market
environment, as well as the most important principles of commercial activity.of
commercial activity:
in relation to the commercial activities (the target
orientation on market segments of banking and financial services, the
definition of market specialization of credit institution, the regional aspect
of the business of credit institutions);
in relation to the client (the target orientation related to
the customer base, short and clear description of what needs which customers do
have and how is going to provide a credit institution);
in relation to managers and employees (the target orientation
with respect to the business culture of the credit institution);
in relation to the founders (participants) (description of
the interests of the founders (participants), arising from the goals and
objectives set by them before a credit institution, and how is going to meet
the credit institution);
in relation to banking technologies (task orientation on the
use and improvement of banking technologies).oriented policy of the
organization should include a description of the spectrum of its banking
operations and transactions (planned change in the spectrum compared with the
actual state - for operating credit organizations created as a result of
conversion, the planned range of - for credit institutions, created as a result
of other forms of restructuring, as well as newly created credit institutions).of
economic and legal conditions in the country and regions on the activities of
credit institutions. A credit institution should present its assessment of the
impact dynamics of economic indicators and indicators of financial markets, the
main areas of business, taking into consideration, including, product
orientation, and prospects for business activity in the regional context,
including:
results of marketing research (types of services that are
highly demanded, key customers and their preferences, potential competitors,
the benefits of the credit institution, the activities of capturing the market
niche of banking services, ongoing activities, opportunities and limitation to
expand the niche and scope of banking operations - for credit institutions,
capabilities and limitations in capturing a niche - for newly established
credit institutions);
the actual distribution of the business volume of the credit
institution, by regions (the possibilities and limitations of existing
branches, representative offices, internal departments and exchange offices);
. Description of the main parameters of active and passive
operations, expected financial results should include:
analysis of active operations (performed from the position of
operations like liquidation, profitability, risk, timing of placement);
analysis of passive operations (performed by type of
transaction, terms of borrowing, cost of funds, contractors);
analysis of the status and dynamics of the capital;
analysis of volume and structure of incomes, expenses and
profit, the rationale for indicators.
. Assessment of compliance with obligatory standards and
obligatory reserve requirements:
calculation of prudential norms that have a quantitative
assessment, substantiation and evaluation of conformity of the planned
indicators established criteria;
calculation of allocations to legal reserves (as at the
beginning of each year of operation) based on indicators of "Explanation
of individual articles account balance", "The structure of assets and
liabilities of credit organizations".
. Status, possibilities and limitations of the customer base,
including the actual state of the customer base and planned changes in
comparison with the actual state.
. Capabilities and limitations of a branches network,
representative offices, separate divisions and exchange offices in the regions
for which the credit institution intends to extend its influence.
. Participation in the banking groups and bank holding
companies.
. Information about management system, which includes a
description of the following elements:
scheme of the credit institution, the principles of the
distribution of administrative functions between the management of the credit
organization and power between leaders of this organization, including the
subordination of the functions and departments, committees (with their names
and planned staff departments);
development of the credit institution, including
organizational structure, improvement of banking technologies, the development
of internal control, accounting management system, the transition to accounting
in accordance with international standards of accounting and financial
reporting;
internal control system - a description of the system of
internal control in credit institutions, including quantitative and personal
composition of the internal control, a description of intra-bank system about
counteract the legalization (laundering) of proceeds of crime;
documents that regulate banking operations, procedures for
their approval;
. The list of founders (participants).
. Information about securing the credit institution,
including:
.1. Material-technical base of the credit institution - a
description of security of the credit institution:
Building, where is (will be) a credit institution located,
indicating the proper use of it or it is carried out (will be) on the basis of
the lease (sublease), indicating the duration;
office equipment and banking facilities;
vehicles, including special technical devices for the
formation of the security staff and banking activities (including software
tools to protect information against unauthorized access), as well as fire
safety systems;
.2. Personnel policy.
internal documents relating to the corporate culture of a
credit institution, the prospects of developing corporate culture credit
institution;
number and qualifications of personnel, changes in these
parameters in the planning period, the basic qualification requirements for
managers of medium and low-level qualifications for staff;
incentive system of labor motivation inside the organization.
.3 The process’s essence of the bank’s business plan
realization
put into practice a business plan - means to fulfill all work
tasks inside and outside the bank. It is necessary for transformation a
business project from the business plan stage into a real production stage. It
is necessary to create a real schedule for various stages of project
implementation. Such schedule should initially identify the various stages of
implementation and duration of each stage. The implementation plan should
contain a timetable for uniting the various stages of implementation in a coherent
framework for action. This detailed schedule must cover the entire investment
phase, including the period of decision on investment to the initial stage of
production and the continued functioning of the project. It is very important
to prepare the implementation phase of the business plan as well as deviations
from the original data, that can put in danger the entire business plan.
Implementation schedule should reflect the costs of the project and the final
cash resources in order to determine the appropriate inflow of funds required
for financing. For different stages of implementation of business projects
require differing periods of time. It depends on the circumstances prevailing
in the country, the specific nature of the plan and special requirements for
organizations implementing a specific business plan. Between the decision
making moment on investment and the actual launching, considerable time passes
by. This period includes the following basic steps:
Appointment of the team that will implement the business
project;
Foundation of the bank;
Finance planning;
Finance design;
The acquisition and transfer of technology;
Basic engineering;
Selection of contractors, consultants and suppliers;
Preparation of application documents;
Display of the proposals;
Offer product price;
Offer assessment;
Negotiations and contract signings;
Detailed engineering;
Purchase of the land;
Construction works;
Equipment installation;
Purchase of raw materials;
Pre-production marketing;
Training and job appointment;
Start a business project and production.the realization of
business plan of the bank there may be involved both local and foreign parties.
In some cases, the implementation period can be so long that these business
plans become an outdated and will need a revision. It is necessary that data on
costs have been dated and documented so that it was fashionable to continuously
monitor the prices as a method of forecasting, as well as by collecting real
information. Comparing the actual data accumulated during the implementation
phase, with the data presented in the study stage, we can determine the impact
of any exceedings of the costs of liquidity, financial requirements and the
overall profitability of the business project of the bank
Figure 2. Business plan realization scheme
Planning the business plan of the bank and budgeting include
the following main tasks:
) identification the type of work tasks inside and outside
the firm that are necessary for project implementation;
) determining the logical sequence of events in the business
objectives;
) preparation of implementation the schedule, which
determines the workers' problems, adjusting the time necessary to complete each
individual task;
) determine the resources needed to complete individual
tasks, and identifying the relevant costs;
) preparation of budget implementation and the flow of funds
to provide financing throughout the phases of implementation and operation of
the business project;
) documentation of all data implementation, allowing to
adjust plans and budget implementation, as well as projections made at the time
of preparing a business plan.
.4 Sequential decision and early implementation stages of
projects
the process of business planning in the bank a final decision
about the beginning of project implementation is delayed until the approval of
business plans by management. This is explained by the fact that some decisions
can not be taken until the moment by which the essence of the project would be
clarified. Such approach is not always acceptable. In this case, slightly
different way can be used. It contains the fact that in the end of each module
it becomes clear the necessity to act independently from the findings at a later
stage. For example, after analyzing the prospects it becomes clear that the
ability of the bank to observe the external environment is insufficient. At the
end of the competitiveness analysis it may occur that the bank has no future in
some traditional segments, and therefore it is necessary to stop investing in
these areas in order to avoid further losses. In such cases, the rearrangement
of action, which ultimately must still be taken, will give nothing. Hence, the
corresponding program must begin at the end of each module. This offers the
whole row of advantages.
) Dispersal decisions over time provides a uniform workload
of senior executives of the bank, removes the overload, the accompanying
decision-making in the usual manner.
) Early beginnings of the programs similarly can disperse the
load associated with the implementation, and provides an early completion of
the process changes.
) The implementation, which occurs during parallel planning,
provides continued feedback on the additional justification of planning
decisions and their assumptions.
) Early beginning of implementation develops and improves the
capacity of making strategic decisions about implementation, which will follow
at the end of the planning process.
) The possibility of an earlier decision making enables
managers to control the duration of the change process, confirming it with the
decision.
CHAPTER
3. PROBLEMS OF BUSINESS PLAN AND THEIR SOLUTIONS
3.1.
Widely spread mistakes and ways for their improvement
is nothing perfect in this world. From described above, it is
already known, that for effective creation and leading business, companies need
bright and detailed business plan. By the way, while constructing such kind of
document, many mistakes can be admitted. The business plan can make or break an
idea. If vital pieces are mislaid or handled poorly, investors will quickly
move on to the next potential entrepreneur. By adhering to time-tested
principles and avoiding common mistakes, business owners can earn the second
look that may lead to the funding they need.great amount of explored
information helped me to reveal several major pitfalls and I’ve generated
effective tips, how to avoid them. These tips are effective not only for credit
institutions, but also for all types of business: developing and developed,
small, medium and large, etc.
. Creation of a vision.. Sometimes, when people create
business, they are too enthusiastic, they are eager to start business planning
as faster as it is possible, they dive into the details of business: evaluating
products, studying market segments and sizing up competition. Yet it's possible
to get so caught up in the process of planning a business that they lose sight
of what they’re planning for.. Before getting lost in the details, there is a
great necessity to take a step back. Outline a clear vision and a coherent set
of values for company. Develop a mission statement and use it to define
short-term goals and priorities.
. A budget isn't the same thing as a plan.. It is
impossible create a solid business plan without a budget and a financial
forecast. But a budget should be the product of all the other elements in the
plan.. In order to get actual data and numbers, that will reflect to the
reality, there is a need to achieve a clear picture of the industry, customers,
competitors and market conditions before the development of a budget.
. Customers - essential part of every business.. This
may sound obvious, but too many entrepreneurs assume they know exactly what
their customers need without bothering to ask. Still, analyzing the customer
situation of different not very successful companies, it became evident, that
issue connected with entrepreneur’s blindness becomes a relevant pitfall, that
lead to certain losses of the company.. Customers - is the driving force of any
company. They bring profit. The only possible way to earn customer preference
and loyalty -is to conduct various surveys, open questionnaires, interviews in
order to learn about customers, and build business plan around their needs and
desires.
. Competition. Most of the companies underestimate the power
of competition. Some of them suppose, that their firm will be the only game in
town, another just fail to take existing competitors seriously, for such
companies it is going to bea real trouble.. Actually, it is very useful and
helpful to look after competitors, because usually they can be a great source
of information about what works and what doesn't. With the help of competitors
it is possible to avoid many drawbacks and earn positive moments for the
company.
. Taking risks. The commonly spread problem -
misunderstanding the role of business plan in the risks sphere. Creating a
business plan isn't about avoiding risk; it's about understanding and managing
risk.. That's why a good business plan anticipates possible challenges and
includes a variety of scenarios for meeting those challenges. There's a
difference between a calculated risk and recklessness, and right business plan
can help to make that distinction.
. Second (or third) opinion.. Some of the
entrepreneurs mistakenly think, that they know everything about their
organization, and do not need the help of third parties. This can become a
serious drawback. More often people are blinded with their personal
achievements and do not notice possible negative outcomes, that can occur with
their business.. The most experienced entrepreneur can still benefit from a
different point of view. Moreover, if several independent persons will be
involved in examining business plan - more alternatives and mistakes they will
be able to find. Even if there is the only person involved in business, it will
be helpful to find someone who can study the plan objectively and point out
possible weaknesses that might have been missed.
. Expect the unexpected.. As we live in an instable
world, many different unexpectedness may happen. The majority of such surprises
are negative.. Every business plan needs some wiggle room to allow for
unexpected changes. Part of this involves creating budgets and marketing plans
with some built-in flexibility; but adapting to change also requires the
acceptance that business practices that worked well in the past might have been
modified or even abandoned.
. Uniqueness.. Template business plans - might help to
get started, but it won't help to succeed. Many entrepreneurs simply forget
about uniqueness of their business, and strive to copy their competitors, just
because it seems that they are more successful.. After all, people are in
business to beat the competition. To learn from the competitors' strengths, but
also learn how to spot their weaknesses and use them to improve own business
plan will be like a perfect strategy
. What's the point?. Building a business involves hard
work and struggle. Effectiveness will not be achieved without any motivation..
For effective work there must be a clear set of rewards for employees. When
setting goals in business plan, it is necessary to include some concrete
motivation that goes beyond the satisfaction of a job well done. Another strong
accent should be made on the SMART of the goal. (Specific, Measurable,
Attainable, Realistic, Timely).
. Don't skip the plan!. Of course, the biggest mistake
of all is failing to create a business plan in the first place. Planning is
hard work, and there's no guarantee it will make business succeed.. A good
composed plan is still the best way to turn vision into a realistic, coherent
business.
.2 How to improve planning with the help of modern
applications
budgets are drawn up with a too low level of detail;
in the budgets accents are placed incorrectly:
focuses on spending on a cost center and operational performance parameters
remain in the shadows;
lack of integration between financial planning,
traditional sales and operations planning;
forecasts are made only for fiscal year;
data definitions are inconsistent or level of detail
is different from the actual figures that at least makes it difficult to
compare real and planned performance or even makes it impossible;
non-aggregated processes are complicated with
spreadsheets and permanent variations;
too much attention to the long preparation of the
annual budget and not enough - a permanent, flexible adjustment process
forecasts.consequences of poor planning and forecasting are very significant
and negative. In addition to the inefficient manual work and increased costs,
the risks associated with inaccurate forecasts include a decline in confidence
to the business with external stakeholders, which leads to a parallel decrease
in market capitalization. In this context, these risks represent a real
danger.mentioned above, it is possible to emphasize the following. The current
process of planning is complicated by the inefficiency of its individual
stages, the lack of integration with the strategic and operational planning and
the inability to establish common, comparable standards of data. If we consider
these issues in the broader context of the overall role of the financial system
in an organization, it becomes obvious that they interfere with this system in
order to become a true business partner of the corporation.the past two years
many organizations have begun the process of improving the budgeting and
planning. This trend has spread to all sectors, with both small and large
companies. But the problem is what kind of a way the company should choose to
implement the required changes. Often, instead of admitting that their organizations
need to rethink the role of the planning function, the heads of financial and
information departments fall into the software "trap" and try just to
use new tools to solve problems.results.manufacturers have learned to
incorporate the requirements of planning functions and can provide the incoming
efficiency gained by automating processes and eliminating isolated decisions
based on spreadsheetsresults.organizations choose the package application
because of advertising slogans that promise fast and hassle-free introduction,
and partly because of own aspirations as soon as possible to achieve the
desired results. But without the constant work of improving the use of these
applications, further advantages that they can provide, may be frustrated. In
fact, the introduction of packaged applications can be a first step towards
addressing the problems within the planning process, but attention should not
escape the fact that these applications will lay only the groundwork, but far
from comprehensive in order to achieve the expected results in increasing
productivity and efficiency. Companies that focus only on the implementation of
packaged applications to support planning, essentially limit themselves to
improve processes and efficiency, as well as analytical and predictive
capabilities.goal.need to conduct a fundamental revision of the planning
process in the context of the overall situation with the management efficiency.
This is necessary to achieve the ultimate goal: to improve the company's
ability to predict the effectiveness of their work and at the same time create
conditions for the continuous monitoring of performance and to adjust their
activities.this, strategy should be closely associated with the objectives
related to efficiency, and actual performance should be easily comparable to
the targets. Finally, financial incentives should depend on how performance is
related to the plan. This will ensure that actions are consistent with goals.
Here are some key issues that will help to understand what possibilities for
improvement has an organization.
The choice of direction and set goalswell does the
corporation understand its organizational strategy? Does the organization
understand the factors of business value and potential financial implications
of different scenarios? What is a balanced set of indicators to establish the
tasks for raising efficiency and incentive systems of managers in accordance
with all the strategic objectives?
Business Planningwell are the strategic plans and
objectives related to the operational planning process? Was a functional
planning and scheduling so-called "bottom up"(bottom-up) integrated
(e.g, sales plans and financial plans)? Are the functional and individual
assessment panels, indicators and definitions to the achievement of these goals
connected between each other?
Performance Managementthe set of reports and evidences of
efficacy well-organized, to provide managers with information about how the
company is on track to meet the planned and strategic goals? Does the organization
have features (tools, processes, skills and culture) for rapid response to
changing circumstances on the market (effective and efficient change
projections)?many companies the process of planning is the area where the
financial system can effectively demonstrate the concept of partnership with
the business. But the improvement of the process will also require integration
with other functions, using the latest technology, determined to change the
existing order of things and the desire to better support the planning function
with the overall business performance management. This is certainly not an easy
task, but its solution can significantly enhance the role of the financial
system in the future.
CONCLUSION
the scientific and methodical literature presented enough
options to define strategic management, which focuses on various aspects of
this complex administrative process.current pace of change and increase the
volume of knowledge is so great that planning is the only way to predict the
real future challenges and opportunity. Planning also provides a basis for
making effective management decisions. When we know what the organization wants
to achieve, it is easier to find the most appropriate action. Planning helps
reduce risks when making decisions. Taking informed planning decisions,
management reduces the risk of errors caused by incorrect or misleading
information about the possibilities of the enterprise or the external
situation. Planning is to formulate and achieve key objectives within the
organization.plan of an organization - is a document that clearly demonstrates
the success of the business and its profitability, appealing to those who could
potentially support it, a document which sets forth concise, accurate and clear
description of its goals, objectives, conducted market research and business
opportunities, justified development trends are formed and vendors and buyers
are analyzed, quality of products assessed, assessed all risks and proposed
mitigation measures, produced estimates of cash flows are calculated
forward-looking statements financial statements, financial ratios are
calculated, determined and calculated indicators of business efficiency.it
would be wrong to consider the business plan as a once and forever defined
business strategy. When using the strictly fixed parameters, the relevance of a
particular development can be easily lost. Business planning can think through
new ways of conduct business on the basis of the analyzed scenarios. Therefore,
there are no universal guidelines and cannot be. Business plan, perhaps, the
only official document allowing such a large variability in its formulation and
implementation. For any business plan it is required, according to most
authors, only a marketing plan, production plan, financial and organizational
plans, the latter should saturate all of these sections. In all other cases,
each business plan depends on a huge number of factors, primary among them -
himself an entrepreneur, with his goals, professionalism and focus on success.
It is important to remember that planning is not in itself guarantee success,
but it can provide many important and beneficial factors for achieving it.
LIST OF REFERENCES
1. Barinov V.A., Kharchenko, V.L., “Strategic
Management”. Moscow: INFRA-M, 2006.
. Vesnin V.R., “Strategic Management”. M.: TC
Welby, Univ Prospect, 2006.
. Popov V.M., Lyapunov S.I., “Business
Planning”. Moscow: Finance and Statistics, 2003 - 672p.
. Bowman K. “Principles of strategic
management”. - Moscow: UNITY-DATA, 2007.
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APPENDIX 2
[1] UNIDO (The United Nations Industrial Development
Organization) - is a specialized agency of the United Nations. Its mandate is
to promote and accelerate sustainable industrial development in developing
countries and economies in transition, and work towards improving living
conditions in the world's poorest countries by drawing on its combined global
resources and expertise.
[2] COMFAR (Computer Model for Feasibility Analysis and
Reporting) - UNIDO has been working with governments, business associations,
development banks and individual companies to solve industrial problems - and
equip them to help themselves. One of the tools developed to serve this purpose
is the COMFAR. This is licensed software currently used in a financial
institutions for financial analysis and evaluation of economic efficiency of
investment projects aimed primarily at attracting foreign investments.
[3] PROPSPIN (Project Profile Screening and Pre-appraisal
Information system) - is an information system pre-project evaluation. It was
developed by UNIDO to develop, research and analysis of industrial investment
projects. As COMFAR, PROPSPIN is a licensed and internationally recognized
software product. PROPSPIN designed to:
formulating an investment project;
study the effects of changes of selected parameters;
prepare possible scenarios based on different
assumptions about the future of the project.