Components of strategy

• Your company's current or desired core competencies

• A description of how you will differentiate vs. competitors

• The industry or industries in which you intend to compete

• The initiatives you plan to implement in the areas of marketing, operations, information technology, finance and organizational development

• A financial forecast that shows how your plans will meet stakeholder requirements over the next 3 to 5 years

28. Operational planning. Single-use plans. Operational planning

An operational planning is a subset of strategic work planning. It describes short-term ways of achieving milestones and explains how, or what portion of, a strategic plan will be put into operation during a given operational period, in the case of commercial application, a fiscal year or another given budgetary term. An operational plan is the basis for, and justification of an annual operating budget request. Therefore, a five-year strategic plan would need five operational plans funded by five operating budgets.

Single-use plans

A set of activities aimed at achieving a specific goal within a particular budget and time period that is unlikely to be repeated in future. Examples of a single use plan that could be employed by a business might be an advertising campaign for a new product launch or an integration plan for a recent acquisition.

29. Contingency planning and its specifics. Contingency planning

In business continuity and risk management, a contingency plan is a process that prepares an organization to respond coherently to an unplanned event. The contingency plan can be also used as an alternative for action if expected results fail to materialize. A contingency plan is sometimes referred to as "Plan B."

It’s specifics

Businesses prepare contingency plans because things do go wrong from time to time. Contingency planning involves:

• Preparing for predictable and quantifiable crises

• Preparing for unexpected and unwelcome events

The aim of contingency planning is to minimise the impact of a foreseeable event and to plan for how the business will resume normal operations after the event.

The key stages in contingency planning are:

• Recognise the need for contingency planning

• Identify possible contingencies (all the possible adverse and crisis scenarios)

• Specify the likely consequences

• Assess of the degree of risk to each eventuality

• Determine risk strategy (to prevent a crisis and deal with one should it occur)

• Prepare plan and identify management responsibilities

• Test the plan (crisis simulation)

Contingency planning work well when the “what if” question is considered carefully. Two techniques really help with addressing “what if”?

Scenario analysis : This involves constructing multiple but equally plausible views of the future

The scenario consists of a “story” from which managers can plan.

Sensitivity analysis : Involves testing the effect of a plan on alternative values of key variables

e.g. the effect of a 25% loss of capacity.

30. Managing the planning process and barriers to effective planning.