Question

Discuss the different business planning approaches you would use when looking at a software company compared to a traditional manufacturing company. Highlight the differences . Pay attention to the 7 strategic variables of business planning and how they apply and SWOT analysis

Answer 1

Answer :

Traditional Types of Manufacturing Business Models/Approaches :

A business model is simply the overarching plan of a company to generate a profit by selling a service or a product. The business model provides an outline of the plans of the company to produce a product or service and to market it. This plan also includes the expenses that will occur with manufacture and marketing of the service or product. Different business models exist, each of which can suit different companies and types of businesses.

Manufacturer

The manufacturer business model utilizes raw materials to create a product to sell. This type of business model might also involve the assembly of prefabricated components to make a new product, such as automobile manufacturing. A manufacturing business can sell the products created directly to customers, which is known as the business-to-consumer model. Another option involves outsourcing the sales aspect of the process to another company, which is known as the business-to-business or B2B model. Wholesaling manufacturers typically sell products to retailers, which then sell directly to consumers. An example of this type of company might be a clothing manufacturer that sells merchandise to a retailer, which then sells to consumers.

Distributor

A company fitting the distributor business model would be a business that buys products directly from a manufacturing company. This business would then resell the products directly to consumers or to a retailer. The distributor often acts as one of the middle points between a manufacturer and the general public. Distributors have the challenge of setting price points that will produce a profit while also utilizing effective promotion strategies that will secure strong sales. Competition can be fierce for distributors, which necessitates continual analysis of the market.

Retailer

A retailing business purchases products directly from a wholesale or distributing company, then sells the inventory directly to the public. Retailers often utilize a brick-and-mortar location for points of sale. Examples of retailers include grocery stores, clothing stores, and department stores. Retailers might be nationwide chains, or they could be independent shops operated by a single entity. A physical location for a retailer is common but not mandatory. Retailers may choose to offer sales as an online retailer. Online retailing can be done alone or in combination with selling from a physical location. Retailers experience the ongoing challenge of competing against other retailers that offer similar products.

Franchise

A franchise business model might involve any of the other business models, such as manufacturing, distributing, or retailing. Franchise business are set up according to the unique service or product sold or produced. The business model of the franchise is adopted by the purchaser of the franchise, who is known as the franchisee. Purchasing a franchise has some important benefits for the franchisee, since most business processes and protocols are already established for the business. However, with these established protocols come less flexibility for the franchisee.

Strategic Planning Models : Strategic planning is used to set up long-term goals and priorities for an organization. A strategic plan is a written document that outlines these goals.

1. The Balanced Scorecard (BSC) : The balanced scorecard is a strategic planning model gives you a big picture look at your strategy. Start out by reflecting on your organization's mission, vision, and strategic focus areas. Strategy maps are used to visualize each objective.

2. Objectives and Key Results (OKR) : This strategic planning model is broken down into objectives and key results. Organizations will determine three to five objectives then list three to five key results below each objective.

3. Theory of Change (TOC) : Theory of change is a strategic planning method that requires you to think backward and identify the conditions that are necessary for you to achieve your goals. The theory of change model is used when you're:

• Goal setting
• Building a team
• Planning an initiative
• Developing an action plan

Apply this method by following the steps below:

1. Identify long-term goals.
2. Backward map the preconditions necessary to achieve your goal. Explain why they're necessary.
3. Identify your basic assumptions about the situation.
4. Determine the interventions your initiative will fulfill to achieve your goals.
5. Come up with indicators to evaluate the performance of your initiative.
6. Write an explanation of the logic behind your initiative. SWOT Analysis

1. SWOT analysis: SWOT analysis is a strategic planning tool and acronym or strengths, weaknesses, opportunities, and threats. It's used to identify each of these elements in relation to your business.

2. Porter's Five Forces : Use Porter's Five Forces as a strategic planning tool to identify the economic forces that impact your industry and determine your business' competitive position. The five forces include:

1. Competition in the industry
2. Potential of new entrants into the industry
3. Power of suppliers
4. Power of customers
5. Threat of substitute products

3. PESTLE Analysis : The PESTLE analysis is another strategic planning tool you can use. It stands for:

• P: Political
• E: Economic
• S: Social
• T: Technological
• L: Legal
• E: Environmental

Each of these elements allow an organization to take stock of the business environment they're operating in, which helps them develop a strategy for success.

4. Visioning : Visioning is a goal-setting strategy used in strategic planning. It helps your organization develop a vision for the future and the outcomes you'd like to achieve. Once you reflect on the goals you'd like to reach within the next five years or more, you and your team can identify the steps you need to take to get where you'd like to be. From there, you can create your strategic plan.

5. VRIO Framework : The VRIO framework is another strategic planning tool that's used to identify the competitive advantages of your product or service. It's composed of four different elements:

• Value: Does it provide value to customers?
• Rarity: Do you have control over a rare resource or piece of technology?
• Imitability: Can it easily be copied by competitors?
• Organization: Does your business have the operations and systems in place to capitalize on its resources?

By analyzing each of these areas in your business, you'll be able to create a strategic plan that helps you cater to the needs of your customer. With these strategic planning models and tools, you'll be able to create a comprehensive and effective strategic plan. This strategic planning tool allows you to determine new opportunities and which areas of your business need improvement. You'll also identify any factors or threats that might negatively impact your business or success.

Here are the 7 variables to keep an eye on in your strategic planning process.

1) Products And Services : What exactly are the products and services that you are planning to offer? What do they do to change or improve the lives or work of your customers? What is it about them that makes them clearly superior and the best choice for the customers that you are going after?

2) Finances : How much money do you have, and how much money will you need to achieve and sustain financial profitability? Over 30% of new businesses fail because they do not watch their finances and their key business metrics. Business success is the result of changing one of these metrics.

3) Customers : Who is your ideal customer, your perfect customer? What are the demographics of your ideal customer? What is this customer’s age, education, income, occupation, and level of family formation? What are your customers’ psychographics? What are their goals, ambitions, desires, and aspirations? What are their fears, misgivings, or suspicions that might cause them to hesitate from buying your product or service? What do they use your product or service for? How do they use it? How does it change or improve their lives in some way?

4) Markets : What markets are you going to enter? How are you going to penetrate these markets? Are you going after geographic markets, horizontal markets, or vertical markets? Who are your competitors in these markets? How do you need to advertise, promote, sell and otherwise penetrate these markets?

5) People : Who are the key people you will need in terms of skills, abilities, and proven competence? Where and how will you get and keep these people?

6) Technology : What sort of technology will you require to build and operate your business? Is your current technology sufficient and satisfactory in light of the rapid changes in technology that you competitors are adapting?

7) Production Capability : Finally, what is your production capability? How much can you produce, deliver, sell, and service in a competent fashion? What do your products or services costs to produce, sell, deliver, install, and service? Keep an eye on your cost of goods sold.