LEVEL 7 STRATEGIC PLANNING LECTURER: ZELJKO DRAGOJEVIC, PhD 2017 Ebster School of Applied Sciences V1. Ebster School of Applied Sciences Education Services Questions to define strategic plan V1. Ebster School of Applied Sciences  What is the organization's business or interest?  What is considered "value" to the customer or constituency?  Which products and services should be included or excluded from the portfolio of offerings?  What is the geographic scope of the organization?  What differentiates the organization from its competitors in the eyes of customers and other stakeholders?  Which skills and resources should be developed within the organization Framework of strategic planning V1. Ebster School of Applied Sciences  1) analysis or assessment, where an understanding of the current internal and external environments is developed,  2) strategy formulation, where high level strategy is developed and a basic organization level strategic plan is documented  3) strategy execution, where the high level plan is translated into more operational planning and action items, and  4) evaluation or sustainment / management phase, where ongoing refinement and evaluation of performance, culture, communications, data reporting, and other strategic management issues occurs. Strategic planning- framework V1. Ebster School of Applied Sciences Objectives of planning 5  OPERATIONAL PLAN  MARKETING PLAN  FINANCIAL PLAN  ACCESSORIES- Incentives BUSINESS PLAN – Inroduction Topic 1:  Investor’s basic data Global Point” Joint Stock Co.  Name: “Global Point” Joint Stock Co. Abbreviation: Head office: Phone: Fax: E-mail: Director: Contact person, contact phone and its functions in the company: Factory location: Type of activity: Date of establishment: 6 BUSINESS PLAN- Introduction Identification number: Tax identification number: Current Accounts:  2. Basic data on author of business plan (BP) Name and surname of the largest owners Percentage of shares / share capital TOTAL Commercial banks Current account (local currency / foreign exchange ) No.of current acc. Institution which brings BP Project lider 7 BUSINESS PLAN- Introduction Authors of BP  3. Analisys and Estimation of investor’s capabilities  3.1. Analisys of thus far development  3.1.1. Market aspects The existing product range and assortment changes: Characteristics of industries: Main products: The characteristics of the elements of the marketing mix (product, promotion, distribution and price) and their comparison with competing companies: Market share: Name and Surname / Title Author’s part of BP Author’s Company Author’s Signature Technical - - - - Architecture and Construction - - - - Mechanical - - - - Electro - - - - Hydro - - - - Procurement and Selling Plan - - - - Financial plan - - - - 8 BUSINESS PLAN- Introduction  Participation of major competitors on the market: Total number of customers: The main customers and share of three major buyers in the sale of the investor: The main suppliers: Limitation of supply:  3.1.2. Tehnical-techonological aspects Installed capacity: The capacity utilization in the past: The characteristics of the technological process: The dynamics of the thus far investment activities: The average age of technological equipment: Means of transport owned by company and their average age: Company % market share 9 BUSINESS PLAN- Introduction  3.1.3. Organizacional aspects The current number of employees and qualification structure: The manner of organization of employees – organisational structure of the company: Working place (Occupation) Education No. of employees TOTAL 10 BUSINESS PLAN- Introduction  3.1.4. Financial aspects  3.2. Analisys of future development  4. RESUME  The subject of the business plan (BP): Projected sales: The projection of the placement in kg (pcs.) Indices 2014. 2015. 2016. Net profit in $ Net working capital in $ Coefficient turnover of customers The share of borrowed capital in total resources The rate of net income The net return on total assets Assortment Year 2017 Year 2018 Year 2019-2025 TOTAL 11 BUSINESS PLAN- Introduction 12  The projection of the other instruments of the marketing mix with a brief overview of the competition:  Absolute volume of investment (excluding compound interest) and sources of funding: The number and structure of employees necessary for the project:  The projected financial results: Type of investment Cost in $ Source of finance Object Own funds Technology (equipment) Credit TOTAL Working place No.employees Qulaifications (Education) TOTAL Financial indicators Sum Awerage net earnings in EUR Average net earnings in $ Internal rate of return Net present value IN $ (discount rate __%) Period of return •Guarantees BUSINESS PLAN- Introduction  1. Technical – technological analisys  1.1. Variants of technological solutions  1.2. Description of chosen technical solution  1.3. Compliment of techical solutions with plant constructions Surfaces of the facilities: Display of the basic elements from offer Producer »A« Producer »B« Producer »C« Cost of technological equipment in $ Annual technical capacity Annual optimum capacity The annual costs of maintaining (% of the equipment cost ) Purpose of the object Surface in m2 Production part (plant) Warehouse of finished products Storage of raw materials Administrative part TOTAL 13 BUSINESS PLAN- Introduction Capacity storage areas:  1.4. Inventory of necessary means  1.5. Capacity and Volume of production Production Volume Capacity utilization (Profitability) Purpose of the object Production days Warehouse of finished products Storage of raw materials Year Unit (Measure) Production in units Year Volume of production in units ( kg) (pcs.) Annual technically capacityin kg (pcs.) Annual optimal capacity in kg (pcs.) Annual utilization of technical capacity in % Annual utilization of optimal capacity in % 14 BUSINESS PLAN- Operational plan 1.6. Norms of input costs (Consumption of material inputs) Standard (normalized) consumptions of material inputs for 1 kg (Pc) of the final product Dynamics of consumption of material inputs per year life of the project 1.7.Labor force and technological process Materials Unit The amount in units Consumed material Unit Duration of the project by/in years kg Pcs. Pcs. Workin place (Occupation) Education No. of employees TOTAL 15 BUSINESS PLAN- Operational Plan 1.8. Group present investments, durability and maintaining  2. Analysis of organizational and labor aspects  2.1. Total no. of employees, labor security and education Total nos. of employees:  The personal policy (reallocation of existing and / or new hiring):  Education of employees: Cost type Investment amount in $ Expiration date in years The annual cost of major maintenance (% purchase value) Object Technol. Equipment Passenger cars Means of transport Forklifts Working place (Occupation) Education Nos of employees TOTAL 16 BUSINESS PLAN- Operational Plan  2.3. Key Personal  Biography (CV) - Name and Surname   Proposed Position in the company: Date of Birth: Years spent in the company: Membership in professional associations: Details of the assigned task: Key qualifications (give a brief overview of the experience and training relevant to the present task): Education: (summarized university and other specialized education, citing the names of schools, dates of attendance and degrees obtained): Information about previous employment (starting from the current position, stated in reverse order every employment): 17 BUSINESS PLAN- Operational plan  3. Analysis of location Compliance of selected locations with urban plans: Features of macro location : Characteristics of micro location: The construction, acquisition or rental of space in which investment activity is to be performed: The consequences of displacement: The impact on the development of the area:  4. Analysis of environment protection and protection of Labor Force  4.1. Environment protection The negative effects of the investment on the environment (hazardous substances in the liquid, solid and gaseous form): The projected environmental protection measures: Assessment of environmental suitability:  4.2. Protection of Labor Force Potential hazards for workers (inadequate working hours, non-use of protective equipment, insufficient brightness premises, noise, risk of electric shock, lack of instructions on safety, etc.): Projection of safety measures: Assessment of safety measures: 18 MARKETING PLAN  Business orientation of company, Mission and Strategy  Motives for internatialization  Factors of competitiveness  Porter’s diamond of competitive advantages Figure 1. Profit of the company - aligning company resources and market demands The area of overlap between resource of companies and markets Marketing concept means the orientation of the company to meet the needs of consumers!!! Actual or potential resources of company Market-consumer -needs -wishes -domestic markets -international markets 19 MARKETING PLAN  1. The business orientation of a company The choice of the business orientation of a company is influenced by several factors: • company size, • Business capacities (financial, human resources, etc.) • character of the products and services, • experience and engagement in international production/trade.  Orientations of companies can vary:  Ethnocentric orientation of the company It is characterized by efforts of companies to sell at the international market the same products and / or services, which are sold in the domestic market  Polycentric orientation The company in its business orientation takes into account the specifics of the differences between foreign markets and adjust their own performance (differentiated approach in the formulation of strategies for different markets). Key Management (mainly TNC) respects the view that the subsidiaries in their operations rely on local staff who know the local conditions.  Regional-centric orientation Management takes into account the fact that the characteristics and conditions of regional integration are such that it is best to rely on personnel from the same regional integration (e.g., EU, NAFTA, GCC, ASEAN, MERCOSUR, etc.).  Global (geo-centric) orientation The company looks at total world market as a unique opportunity for its business. 20 MARKETING PLAN 2. International, Foreign, Transnational and Global Marketing  International Marketing consists of marketing activities that go beyond the national market. Management of the international marketing activities aimed at the international market. - Oversea marketing consists of activities carried out in foreign markets, as opposed to domestic marketing.  Transnational marketing is the creation of international marketing strategies and programs that adapt to the business environment of each country in which the company operates or indirectly cooperate.  Global marketing understands creating a of unified strategy for all countries (global access to the World Market). This does not mean that some parts of marketing program can be adapted to local market requirements (eg, promotion’s instruments or sales channels). One of the biggest marketing guru Kotler F., in his "Marketing Management" states that US companies avoided aggressive international marketing, because they were prone to huge domestic but international market. Slowdown in the US economy, the growth of research and development costs, and the increase business opportunities abroad, intensified approach to international marketing of US companies. 21 MARKETING PLAN 3. Company Decisions in International Marketing  Strategic decisions to be made in the international marketing are:  Research and evaluation of international marketing environment,  Deciding whether to export and which markets perform,  Deciding on marketing program  Deciding on marketing organization. Figure 2. The main decisions in the International Marketing Exploration and Evaluation of international marketing environment Deciding whether to export and which markets perform Deciding on a marketing program Deciding on the marketing organization 22 MARKETING PLAN  The company may have offensive objectives: • an increase in long-term growth and profit, • maximization of total sales, • the realization of economies of scale, • improving market position.  The objective of managing one TNC that operates in the global market is to maximize participation in this market, but not the traditional short-term profit maximization as it was with old time corporation "(Peter Drucker," Management for the Future ").  Defensive company objectives: • competition with foreign companies, • access to technological innovations, • advantage of the difference in operating costs between different countries, • permanently monitor the situation on certain markets. Marketing program must be aligned, and difficulties arise with the implementation on the international market. Therefore it is important knowledge about the local culture and environment. 23 MARKETING PLAN 4. Tasks of International Marketing – Figure 3. Controlled: product price promotion distribution Domestic environment Not controlled: Political/Law factors Econ. policy Competition Foreign environment Not controlled: Political/Law factors Technology level Geography and infrastructure Cultural factors Econ.forces Competition Distribution structure 24 MARKETING PLAN The theory of international product life cycle – The basis of this theory is the fact that the advanced technology is mainly created in highincome countries. The main supporters are the OECD experts.  There are three stages in the life cycle of the product: • phase of a new product, • maturity stages of products and • Phase of standardized products. Figure 4. Porter’s diamond of national competitiveness advantages Factors of production Company strategy, structure and rivalry in the sectors Terms of demand Development of connected , related sectors 25 MARKETING PLAN  Porter points out that the availability of factors of production is not enough for international competitiveness, but how they are used (efficiency).  The quality of demand in the domestic market has a significant impact on business improvement and innovation of enterprises. If the demand in the domestic market is sophisticated, its saturation requires high standards of product quality, customer service, packaging, post-sales ;  The importance of integration related sectors in order to improve the competitiveness of products. It is extremely important that the company has an internationally competitive suppliers of raw materials, parts and sub-assemblies and equipment;  A fourth determinant comprise a wide range of specificities associated for the company, i.e.. its structure, strategy and the presence of rival firms; 26 MARKETING PLAN V1. Ebster School of Applied Sciences 5. Domestic and International business environment  There are two basic methods of analysis of the business environment:  PEST and SWOT analysis MARKETING PLAN  PEST acronym derived from the initials of the words of influential exogenous factors:  political - lawful factors (political - legal factors)  economical factors (economic factors)  social factors (sociological factors),  technical factors (technical, technological factors) • Technologic analysis • Sociologic analysis • Economic analysis • PoliticalLegal analysis Political stability - Incentives for foreign investors - the level of freedom - competition law -labor law -Level of development - Inflation rate - GDP -sallaries and unemployment state invest. in R&D - patent protection -energy supply - innovations and technological transfers -population rate - religions and cultural groups - educational level - social cohezion 28 MARKETING PLAN  SWOT analysis includes factors of internal potential of the company: SWOT analysis makes evaluation of opportunities for the company's performance in the international market. It is the essence of strategic company profile:  Strength  Weaknesses  Opportunities  Threats 29 Swot analysis V1. Ebster School of Applied Sciences  SWOT analyses can serve as a precursor to any sort of company action, such as exploring new initiatives, making decisions about new policies, identifying possible areas for change, or refining and redirecting efforts midplan. Performing a SWOT analysis is also great way to improve business operations. S (strengths) and W (weaknesses), refer to internal factors V1. Ebster School of Applied Sciences  Financial resources (funding, sources of income, investment opportunities)  Physical resources (location, facilities, equipment)  Human resources (employees, volunteers, target audiences)  Access to natural resources, trademarks, patents and copyrights  Current processes (employee programs, department hierarchies, software systems) O(Opportunities) and T (treats) refer to external factors V1. Ebster School of Applied Sciences •Market trends (new products and technology, shifts in audience needs) •Economic trends (local, national and international financial trends) •Funding (donations, legislature and other sources) •Demographics •Relationships with suppliers and partners •Political, environmental and economic regulations MARKETING PLAN V1. Ebster School of Applied Sciences 6. PRACTICAL APPLICATION PEST and SWOT analysis  Political indicators: 1. The form of social and political order? 2. Type of ownership? 3. Membership in international institutions and organizations. 4. Preferential agreements? 5. Membership of regional integration? 6. size and geographical position of the country / region? 7. The official and spoken language in use? 8. The economic regions of the country? 9. The external debt? 10. Foreign trade balance? MARKETING PLAN  Economic indicators:  17. The value of annualimports?  18. The most important partnercountries?  19. The potential marketsfor the export of a particular product or product group?  21. The potential marketfor imports of a particular product or product group?  22. The ownershipstructure?  23. Interestrates?  24. The situation of balance of payments?  Competition:  25. Percentage share of domestic producers?  26. Theholders of retailstores?  27. Holders of distribution centers?  28. Theexistence of legislationregarding the protection of domestic producers?  29. Distribution/Organization structure?  30. Thepresence of foreign manufacturers?  31. Foreign brands that arepresent?  32. Retail prices of domestic and foreign manufacturers?  33. The presence of foreign manufacturersin a form of brownfield investment?  34. The presence of foreign manufacturers,as wellas domestic, signing a strategicagreement on cooperation? 34 Financial plan V1. Ebster School of Applied Sciences  Financial Planning is the process of estimating the capital required and determining it’s competition. It is the process of framing financial policies in relation to procurement, investment and administration of funds of an company.  Objectives:  Determining capital requirementsThis will depend upon factors like cost of current and fixed assets, promotional expenses and long-range planning. Capital requirements have to be looked with both aspects: short-term and long- term requirements.  Determining capital structure- The capital structure is the composition of capital, i.e., the relative kind and proportion of capital required in the business. This includes decisions of debt- equity ratio- both shortterm and long- term.  Framing financial policies with regards to cash control, lending, borrowings, etc.  A finance manager ensures that the scarce financial resources are maximally utilized in the best possible mannerat least cost in order to get maximum returns on investment. Importance of Financial Planning V1. Ebster School of Applied Sciences  Adequate funds have to be ensured.  Reasonable balance between outflow and inflow of funds has to be enabled so that stability is maintained.  Suppliers of funds are easily investing in companies which exercise financial planning.  Helps in making growth and expansion programmes which helps in long-run survival of the company.  Reduces uncertainties with regards to changing market trends which can be faced easily through enough funds.  Reduces the uncertainties which can be a hindrance to growth of the company. This helps in ensuring stability an d profitability in concern. Strategic planning V1. Ebster School of Applied Sciences  Strategic planning is an organizational management activity that is used to set priorities, focus energy and resources, strengthen operations, ensure that employees and other stakeholders are working toward common goals, establish agreement around intended outcomes/results, and assess and adjust the organization's direction in response to a changing environment. It is a disciplined effort that produces fundamental decisions and actions that shape and guide what an organization is, who it serves, what it does, and why it does it, with a focus on the future. Effective strategic planning articulates not only where an organization is going and the actions needed to make progress, but also how it will know if it is successful. End… V1. Ebster School of Applied Sciences Q&A