Business Planning of Charm Company - Assignment Example

Topic: B P Type of Assignment: Essay Number of pages: 19 Style: Harvard Executive Summary: A business plan is a formal arrangement of a set of business goals, the causes why they are believed attainable, and the plan for achieving the desired goals. Charm Company is an Italian Company, which is located in Branson, Missouri at "The Marketplace" Shopping Centre. A Business Plan can play important roles in different fields. Before developing a Business Plan some potential should be considered. The contribution of business plan can't be negligible in some cases. They should be offered by a business plan and it helps a company to go further. Business Plan is consist of three portion planning. They are marketing plan, Operation plan, and financial plan. Considering the mentioned areas planning has developed the Business Plan for Charm Company. The hard and soft system factors need to be addressed by the manager carefully to make a successful business plan. Carefully evaluation is very important companies. Fully costed business plans are prepared and defended in some specific ways. "Best practice" is sometimes controversial. So company authority needs to carefully think and take best practice. And it is needed to implement precisely. Table of Contents Chapter. Topic Page Number 1. Introduction 4 Overview of Italian Charm Company 4- 5 Contribution of Business Planning 6-8 Business Plan of Charm Company 9 Marketing Plan 9-11 Operations Plan 12-13 Financial Plan 14 2. Hard Systems Factors 14-15 Soft Systems Factors 16-17 3. How to Evaluate B-Plan of Charm Company 18 Comparison with Suitability 19 Comparison with Feasibility 20 Comparison with Attainability 20 4. The Ways of Plans are Prepared and Defended 21 5. Comparison between "Best practice" and Identified Approach in Element 4 22-23 6. Conclusions 23 Introduction: A business plan is a formal arrangement of a set of business goals, the causes why they are believed attainable, and the plan for achieving the desired goals. A business plan also contains background information of the organisation or team who are attempting to reach those goals. Profit-oriented Business Plans usually focus on financial goals whereas non-profit and government agency Business Plans tend to focus on service goals. A business plan that has changes in view and branding as its primary goals is known as a marketing plan. Business plans may have focus on both internally or externally. Externally focused plans are important for external and financial stakeholders, sometimes investors, customers, and donors. Internally focused Business Plans consider intermediate goals needed to reach the external one. Internally focused plans include the development of a new product, a new service, a new IT system, a redistribution of finance, the refurbishing of a factory or a redesigning of the organisation. Here we will see how a business plan not only considering either internal or external, but focusing the both have been developed. And for this, we have chosen Italian Charm Company. Overview of Italian Charm Company: Charm Company is an Italian Company, which is located in Branson, Missouri at "The Marketplace" Shopping Centre. Their normal business hours are Monday to Saturday 10am - 6pm. They emphasize on the importance of customer service. Their knowledgeable staff members are not only friendly, but also charm enthusiasts tic. If the customers feel a charm is lacking in quality or design, Charm Company doesn't sell that showing respect to the customers. Their only goal is to bring their consumers with the finest quality charms, beads, and watches at reasonable prices. They accept VISA, MasterCard, and money order etc. All of their charms, watches and beads are handcrafted (fully made by hand, not by machine) in Italy from materials including 18-karat gold, real silver, cubic zircons, semi-precious stones, premium enamel, and stainless steel. Role, Potential and Contribution that Business Planning has to offer: A Business Plan can play important roles in different fields. But in three areas business plan has a tremendous role. A Business Plan has to offer roles in the following three areas. They are: Marketing - A Business Plan keeps the Charm Company in touch with the customer. It helps them to identify their customers, their choices and expectations. In the field of marketing, a business plan should be identified for detecting target market, the methodologies to attract and keep customers, outline pricing strategy, and to have sample advertising and promotional material that will be used further. Personnel - The business plan is an excellent tool of communication. It outlines the daily operating procedures of Charming Company. It identifies the management staff and employees and describes their duties and responsibilities. It also explains hiring and firing policies, lists operating hours and outlines the benefits that can be afforded by Charm Company. In addition to it lists holidays and vacation time. Financing - Financial strategy is the heart of any business plan. It explains the way of satisfying customers while turning a profit, and is expressed in financial terms in cash flow projection of Charm Company. A Business Plan can help to understand the financial-management concepts and techniques that will increase the chances of operating a successful business for Charm Company. A Business Plan has to offer some potential. Before developing a Business Plan, these potential should be considered. They are: Potential Customers: Customers are the heart of any business. So before developing any business plan, Charm Company should consider their possible or potential customers who may purchase their products. Potential Investors: Investment is a vital factor of any organisation. So before constructing any business plan, Charm Company should offer things that attract the investors. Potential Lenders: Lenders can lend money to establish any company and to continue further. So Charm Company should also consider them so that the company may go forward with success by a business plan. Potential Competitors: Competition is a very important thing for a business. To become successful, Charm Company should consider their competitors. The business plan of them should consider their potential competitors to build up a business plan. The contribution of business plan can't be negligible in some cases. They should be offered by a business plan and it helps a company to go further. Some Business Planning contributions for Charm Company are given below: Determining the viability in a designated market; Assisting in organizing planning activities; Determining if the business will be profitable or not and the growth opportunities availability; Defining target market; Identifying competitors' strengths and weaknesses; Determining an effective pricing strategy or technique; Identifying company's skills, strengths and weaknesses; Identifying capital and working-capital needs; Learning how to prepare and use cash flow projections, balance sheets, break-even point analysis and so on. Business Plan of Charm Company: Business Plan is consist of three portion planning. They are marketing plan, Operation plan, and financial plan. Considering the mentioned areas planning should develop the Business Plan for Charm Company. Marketing Plan: Stutely, R. (2005: 15) mentioned a marketing plan embodies the strategic marketing management process. It is a formal, written document that asserts the context and scope of an organisation's marketing effort to achieve defined goals or objectives within a specific time period. Charm Company has developed their goals and objectives, but they will have to develop a marketing plan for making a successful Business Plan. Before making a marketing plan, Charm Company will have to make a market plan questionnaire by which they will be able to know about their own position or capability in the business world. According to Stutely, R. (2005:18) The questionnaire should contain the following things: 1. Where are we now Situation Analysis; Opportunity and Problem Statement. 2. Where do we want to go Statement of Objectives. 3. How do we get there Action Plan; Statement of Expected Results. Primary and Secondary Research on Competitors: While Charm Company searching for information for developing a Business Plan, it is important to understand the value of both primary and secondary sources to do the work accordingly. Charm Company will have to make a research on their competitors. After completing the primary and secondary research on the competitors, Charm Company might have found the following things: There is huge number of alternative companies who can produce charms, beads, and watches. To compete with the competitors Charm Company will need to develop cost effective and time oriented business planning. They will have to use modern technology to do the business in future. PEST Analysis: Robbins, S. & Coulter, M. (2004: 105-6) added that the PEST is a useful starting point for the analysis of an organisation's external environment and the forces at which it works.PEST stands for political, economical, socio-cultural, and technological facts. To develop a time-oriented Business Plan, Charm Company will have to consider these factors. By considering the existing political, economical, socio-cultural, and technological situation Charm Company can take decisions of their whole company. And an effective Business Plan and other decisions can achieve success for the business. SWOT Analysis: The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieve the objective of an organisation. SWOT analysis distinguishes key pieces of information into two main categories: Internal factors - The strengths and weaknesses internal to the organisation. External factors - The opportunities and threats presented by the external environment. Charm Company will have to consider the strengths, weaknesses, opportunities, and threats of them to make a successful Business Planning. Market Research: Market Research is a systematic, objective gathering and analysis of data about a particular target market, competition, and/or environment. It always assembles some form of data collection whether it is secondary or primary research. The data is collected directly from a respondent. Quantitative research is numerically oriented. It requires significant attention to the measurement of market situation and often involves statistical analysis. Charm Company might have found the following comments after doing a quantitative research: The products of Charm Company are of good quality. But it would be better if it costs more reasonable. From the research Charm Company might get the following grades: Excellent- 39% Good- 35% Poor- 13% Very poor- 13% Qualitative research provides an understanding or explanation of how or why things are as they are. It is basically occurred face-to-face. Charm Company should make a quantitative research also. Operations Plan: Marketing plan implementation is the "how" component of marketing strategy. It is also known as operations plan. That means marketing plan implementation is the process of putting marketing strategies into action. This process has several components, all of which must be integrated if the Charm Company wants to make the Business Plan and marketing plan implementation is to succeed. Components that are important in implementation include: Marketing structure; Marketing strategy; Leadership; Human resources; Organisational resources; and Organisational systems. Financial Plan: A budget is a crucial component to develop, both from the licensing standpoint as well as for financial and professional reasons. Start-up budget costs include what is needed to start the center. "One-time-only" expenditures for major equipment purchases; renovation; utility deposits; initial staff training and recruitment, and down payments are included. Not only the start-up budget, but also other financial statements should be made for making a business plan of Charm Company. Key People who are Involved in Preparing the Business Plan: There are two groups of people who are involved in preparing the plan. They may be categorized as directly related groups and indirectly related groups. From the directly related groups some people form a team and make a Business Plan. Indirectly related groups don't work directly for making the plan, but the team consider the indirect group of people while planning. Directly Related Groups: Top-Level Management; Mid-Level Management; Researchers; Planning and Management department, etc. Indirectly Related Groups: Lower-Level Management; Other existing working departments of Charm Company; Competitors; Investors, etc. Hard Systems Factors: Barrow, C, (2005: 36) supported that there are many factors, which have huge impact on the success and failure in the application of business plan. Their factors affect an organisation greatly. So the planning team needs to address these factors meticulously. Hard system factors affect the organisation more directly than from soft system factors. The hard system factors of Italian Charm Company are: 1. Value Only if the company is able to carry better value and gain advantage over competitors, then the company should make the business plan. Groups, societies, or cultures have values that are mainly shared by its affiliates. Affiliates share a culture even if every member's private values do not completely concur with some normative values certified in the culture. This reveals an individual's capability to synthesise and take out aspects valuable to them from many subcultures they belong to. To build a successful business plan, the values of the Charm Company need to be considered. 2. New Management Ideas: Charm Company has constantly developed innovative management ideas for its business plan and acquired a superior position in its customers mind. Charm Company is always innovative so it has taken diverse steps in different times for its progress. And Charm Company management body is making way via the new ideas for general people. Charm Company management ideas are not similar to other organisations. They often take modern ideas. Their ideas are modest, liberal, autonomous and entrepreneurial. They also concerned in goal, training, hard work and personal achievement. As something new attracts customers it does not need any explanation why management of Charm Company should be creative. 3. Implementation Process: This procedure is not so much complex in Charm Company. It is often very easy for the management to apply the process. Implement means to use or put into effect an idea or rule or something else. They take a decision together and do it very easily. Charm Company should select researchers for business plan. Evaluating implementation process is very important, because if organisation fails to implement then it can't achieve its goal. 4. First Impression for Customers: Charm Company is one of the renowned companies for charms, beads, and watches in Europe. Though its various business plans were not good enough because it failed to take different cultural values and behaviours into account. But now they are ready to set up new-invigorated attraction for different customers. First impression for the customers is very important in evaluating business plan. Soft Systems Factors: Unlike hard system factors, these soft system factors do not affect organisation as much. The soft system factors of Italian Charm Company are: 1. Customer Management Issues: Kotler, P. & Armstrong, G. (2004: 247) addressed that Customers need to be managed for a better organisation. In case of business planning, customers need to be managed very carefully. Business Planning plays a key role in the company's strategic planning in several ways. First, Business Planning provides a guiding philosophy for new plan of an organisation; that suggests the company plan should rotate around building profitable relationships with the significant buyer groups. Second, Business Planning provides inputs to tactical planners by helping to recognize good-looking market opportunities and by measuring the firm's potential to take advantage of them. At last, within individual trade units, Business Planning creates strategies for attainment the unit's purpose. Once the unit's objectives are put into action worker's task is to carry them out profitably. 2. Quality Indicators for Customer Service Provision: Another soft factor that is known to impact upon success and failure in the application of business plan is quality indicator. To build a perfect business plan, some quality indicator is important. The quality indicators for Charm Company are boost in sales, increase in the quantity of people buy Charm products every year. 3. Service Script: Charm Company gives a great deal of services to its clients. It gives exact offer for families, teenagers and children. Particular occasion is also important to make a business plan successful. Charm Company also frequently launches many new products for people. There are many unique offer, Internet offer, gift packs, etc. An effective business plan should have own supporting system. Evaluate the system of business plan is not easy since it involve many systems. But to evaluate it successfully, planning team needs to address all issues regarding the possible service of the business plan. 4. Staff Management: It is another soft system factor to be considered for effective business plan. Charm Company instructs each member of staff very resourcefully and for this reason it can serve up its customers efficiently. They provide training for their employees if needed. Staff management has been a key discussable factor for business plans. To evaluate it, the team needs to get feedback from its employees. These mentioned hard and soft system factors need to be addressed by the planning team carefully to make a successful business plan. How Business Plan of Charm Company are evaluated: Richard Stutely, (2005: 156) mentioned that there are some ways to evaluate Business Plan. And evaluating Business Plan is not easy task. Carefully evaluation is very important for workers and companies as well. Business organisers must presume that potential investors, mainly details of advertising assumptions, will evaluate all written in their business plan. Mainly course entrepreneurs, when reading a business plan, seek for causes they don't want to read more. Potential investors, both business angels and business venture entrepreneurs, would look for concealed traps, mistakes, oversimplifications, unseen contestant, and upside opportunities. Their business plan assessment criteria, in order of significance, include: Key workers: People/management who are going to do the job; A big, rapidly increasing market and the company's marketing plan; An exclusive brilliant idea or expertise that can be commercialized and sheltered; A business strategy that has a tough sustainable aggressive advantage. Comparison with Suitability: Charm Company is thinking of a business plan, which is very much suitable for its customers. And for this reason its planning team should study its customers. This Business Plan must be suitable, because it can be done using available resources and time frame is also possible for this plan. In this way, personal goals are uttered and it can be determined if an individual goal helps to fulfil the in common goals of the process. Internal Revenue Service (IRS) works to measure the effectiveness of the process. In the business plan of Charm Company, IRS has some specific task to do. To make a business plan, money is needed, so IRS department is responsible for supplying some fund for this Business Plan. So During this time, Internal Revenue Service department manager should do some evaluation. However, the Internal Revenue Service department policy to assessing an operation will never be sufficient from a business management point of view. Each planning team worker should evaluate the operation to decide whether objectives set for the year have been met, and if they haven't, should the objective stay for the next year or should the goal be adjusted. Robbins et al (2004: P-34) mentioned the planning team needed to assess suitability for the life of a business owner/operator. They should recognise and evaluate several business facts and decide which one is right for company. It's time to obviously eloquent and describes company's intended business course of action by completing a business plan. Comparison with Feasibility: Robbins et al. (2004: 34) supported that the Business Plan may be very useful for its customers. It is very much likely that customers will be attracted to it. It is feasible but time frame of this plan need to be revised to be sure that goal and objectives of this plan are possible. In a very broad sense, the plan is a declaration of how we aim to react to the steady alteration in the business environment in which we function, and how to attain the goals and purpose that we have set. Most significantly, the procedure can help to recognize the spirited advantage (or advantages) of the person operation, and help us to plan precise strategies and plans to capitalize on those advantages. Top-Level Management in Charm Company contributes in business planning procedure greatly. To achieve the goal of business planning, it is needed to carefully evaluate organisation's current position in the market and then develop a business plan, which will give the organisation competitive advantage. Richard Stutely, (2005: 157) supported that the first, and significantly, they need to make clear/confirm the standard that needs to be satisfied in order to validate starting or continuing the project or group, and then maps these vital support criteria into a configuration. In other words, work via the targeted template structure according to, and orientated as intimately as planning team can do, the endorsement criteria. Comparison with Attainability: To attain this business plan, planning team of Charm Company will need to do hard work. The attainability of this plan is not impossible. Charm Company doesn't have any shortage of resources, so this plan is attainable through this time frame and present resources. Each process should recognize its goals. These comprise the overall goals of the process, but should also take into account the individual goals of the individuals concerned in the operation. A goal ought to be SMART (specific, measurable, attainable, rewarding and timely) also. The Ways by which Fully Costed Business Plans are Prepared and Defended: Alan Chapman, (2007: 208) mentioned that Business plan is very important part of a business. Thus it is prepared very carefully. Fully Costed Business Plans are prepared and defended in the following way: 1) Recognize goals: What do we want to achieve 2) Recognize inventory assets: What do we have to work with 3) Review the business and environment in which the process exists: What might we do in the upcoming future 4) Examine business performance: How have we done in the past 5) Make a decision on actions: What will we do now 6) Apply strategies: How will we do it 7) Evaluate the plan: Is it working At first goal should be targeted because if something is not targeted then we cannot achieve it. So if Charm Company wants to make a plan, then they must recognize the goal. All possessions accessible to the operation should be determined. These include material/natural, human/workers, apparatus, living thing/crop, and monetary resources. To implement a business plan SWOT analysis is also important. Alan Chapman, (2007: 209) added that the business should be assessed to decide its manufacture and monetary strengths and flaw. However, the business should also be appraised from the monetary side. The planning team should decide those goods that are contributing to the monetary power of the business and those that are not. Once the first four questions have been sufficiently solved, they can come to a decision upon a path of action. This may comprise changing goods produced; accept new technology, buying new capital, etc. Applying strategies comprise the procedure of communicating with the other members of the process, the wanted actions and how they should react to attain those actions. Once the issues about where the business should go and property at present accessible to work with have been addressed, the next step in the setting up process is to recognize, select and test substitute. Roger A. K. & Peterson, R. A. (2004: 67) confirmed that the feasibility of anticipated option (both financial and production) is explored, and risk supervision strategies may need to be measured in this step. The last continuing task in the process is to apply the plan. This engage controlling and steering production actions in the direction sketched in the plan, check development toward goals and objectives, and documenting the procedure along the way. If found any inconsistency or lack of success, then find out the problematic areas and modify the plan. Comparison between "Best Practice" and Identified Approach in Element 4: "Best Practice" is a managerial idea which implies that, there is a technique, method, process, activity, incentive or reward that is more effective in case of delivering a particular outcome than any other technique, method, process, etc. The idea asserts that a desired outcome can be delivered with fewer problems and unforeseen complications with proper processes, checks, and testing. Roger A. K. & Peterson, R. A. (2004: 67) mentioned that there are some differences in the practice identified above and "Best Practice". Identifying goal is not so easy task. Planning team may have to think of different ideas or events to exercise best business plan. There might be different problems in the organisation. But it needs to exactly target the most critical one. Best practice involves one best way to do a job. The team may do a work with different appliances but there is always one best way to do a particular job. Identifying resources is not always easy. There are many systems via members recognize organisation's assets. There is cash basis, accrual basis for determining assets. To assess the environment managers, need to study about the organisation's background. The "Best Practice" is to examine the environment carefully. The planning team of Charm Company has not studied the environment meticulously. Conclusions: To analyse performance, there are many procedures. The planning team of this company has not practised all the procedures. The best practice is to control the organisational performance. To measure whether company is in its course of action or not, the team needs to control the performance of the organisation. There are many kinds of practices of Business Plan over world. The best practice is sometimes controversial. So Business Planning team of Charm Company should carefully think and take best practice. And he or she also needs to implement it precisely. References: Barrow, C. 2005, The Business Plan Workbook, 5th Rev Ed, London: Kogan Page Ltd. Business Plan available at: < http: // en.wikipedia.org/wiki/Business_plan > [accessed on 10 May 2007] Business Plan available at: < http: // www.sbdchelp.com/plan.htm > [accessed on 10 May 2007] Chapman, A. 2007, Business Plans and Marketing Strategy, available at: < http://www.businessballs.com/freebusinessplansandmarketingtemplates.htm > [accessed on 10 May 2007] Dallas 2003, Business Planning, available at: < http://www.dallas.tamu.edu/econ/Business%20Planning/Section%201/Business%20Planning.pdf > [accessed on 10 May 2007] Roger A. K. & Peterson, R. A. 2004, Strategic Marketing Problems, 3rd ed., London: Prentice Hall. Robbins, S. & Coulter, M. 2004, Management, 8th edition, London: Pearson. Stutely, R. 2005, The Definitive Business Plan, Rev. 2nd Ed edition London: Times Prentice Hall. The Italian Charm Company available at: < http: // www.italiancharmcompany.com > [accessed on 10 May 2007] Read More