Preparing a Business Plan for a Herbal Tea Company - Essay Example

Operational Plan Contents Introduction 3 Company 3 Vision, Mission, andValues 3 Mission 3 Vision 4 Value 4 Outline of the basic planning process 4 Management Levels and their influence on basic planning process 5 Quality, Productivity and Profitability 7 Human resource planning activities and the overall organizational strategy 9 Management Philosophy 9 Organisational Structure 10 Organizational Chart and Roles and Responsibilities 11 Control Process for Herbal Tea 13 Conclusion 13 References 15 Introduction The objective of the current report is to prepare a business plan for a company named Herbal Tea, selling the same. The report will include description of the company, values, mission, vision along with products and services offered. A comprehensive operational plan, including management philosophies, objectives and structures, will facilitate analyzing strengths of the business plan in context of short-term as well as long-term objectives and goal fulfillments. Operational plan for the company will also contain productivity and quality aspects, roles and responsibilities of the organization’s management and control process for effective monitoring. Company Description The name of the company selected for this report is Herbal Tea. The company belongs to the beverage industry and sub-industry, which is non-alcoholic beverages and serves herbal tea brands such as, green tea and organic tea. The overall business of Herbal Tea will include sourcing, manufacturing, packaging, distribution and marketing of Herbal Tea products. Organisation size: During launch of the company, size of the organization is expected to be 500, including executive and non-executive board of directors. However, with expansion of operations, Herbal Tea is expected to double its business size in five years time. Services and products offered: The major products of Herbal Tea will include branded green tea, organic tea, exported tea and exclusive red tea. All these brands will be available in several product variants differing in flavor and herbal properties. The brands of Herbal Tea will also be distinguished in terms of their health benefits. Besides above product offerings, Herbal Tea will also provide online consultation for health-enthusiastic customers. Vision, Mission, and Values Mission 1. Refreshing the world with its high quality herbal tea products 2. Inspire healthy living through actions and brands of Herbal Tea 3. Creating value and making a difference in every aspect of business Vision The mission statement for the company will be: “To source, distribute and promote best quality Herbal Tea with continuous commitment of incorporating sustainable and ethical development and growth, increasing value to stakeholder as well as promoting corporate practices that respects and protects the Earth and environment in the best manner.” Value The values of Herbal Tea are as follows; Herbal Tea believes in conducting business in a manner, which is both planet and people friendly. The company will give critical importance to corporate social responsibility and environmental activities will be at the core of Herbal Tea strategy, apart from providing high quality tea. Herbal tea is committed to provide natural and healthy variants of tea, which are affordable and accessible to target customers. The health and overall well-being of consumers is main priority of Herbal Tea and every decision or action plan is incorporated after properly analyzing consequences on consumers, society and environment. Outline of the basic planning process The basic planning process for Herbal Tea has been divided into four major stages; 1. Pre-planning process: Pre-planning process for Herbal Tea will include combining information found in the annual review reports comprising important data such as, statistical, financial as well as background details of external influences and internal operations. Preplanning process is important for evaluating organization’s current positioning in the market. It is also important for understanding and finalizing the strategies required for commencement of Herbal Tea’s plan (Kazmi, 2008). 2. Strategy Formulation: Strategy formulation helps in identification and review of mission, objective, vision and values of Herbal Tea for short and long term as well as facilitates identification of key performance indicators in order to formulate the strategic plan. This stage is successfully completed by incorporating stakeholder analysis and using results in the strategy formulation stage. 3. Strategy Implementation: The major objective of strategy implementation stage is to make sure that planning documents are relevant to Herbal Tea’s major stakeholders as well as are accessible to managers and employees. Implementation of strategy will also ensure that the planning is implemented as a management tool. Implementation stage is especially useful during formulation of a full-fledged operational plan (Schniederjans, 1998). 4. Strategy Evaluation: Strategy evaluation is often a neglected part in the operational planning process. Strategy evaluation includes determination, monitoring and review of the operational plan. Without constant monitoring of any planning process, it is extremely difficult to manage the same efficiently. Advanced monitoring systems will ensure that Herbal Tea is proceeding in the right path, in terms of objectives and short-term goals. Management Levels and their influence on basic planning process The overall management of Herbal Tea will be categorized into three levels described as follows; 1. Top Level Management or Administrative Level 2. Middle Level Management or Executive Level 3. Lower Level Management or Supervisory Level 1. Top Level Managers Top-level or administrative managers include CEO (Chief Executive Officer), MD (Managing Director), President, GM (General Manager) as well as BOD (Board of Directors). In general, Board of Directors comprises shareholder’s representatives, implying that they are selected by company’s shareholders. The top level managers of Herbal Tea will be responsible for determining policies, plans as well as objectives, assembling the resources under one roof, organizing strategies for short-term and long-term growth and development for the organization. As individuals in this organizational level have maximum responsibility and authority, they will be directly involved with the government, national legal authorities as well as shareholders. So, managers with conceptual and strategic skills are more essential and beneficial than those with technical skills. Hence, top level management or administrators of Herbal Tea will be responsible for strategy formulation. Apart from that, they will also engage in strategy evaluation with other members for understanding attributes, resulting in success or failure (McGraw Hill, n.d.b). 2. Middle Level Managers The middle level managers of Herbal Tea will consist of department heads, junior executives and branch managers. While department heads will be in charge of the entire department such as, finance, marketing, sales and operations, branch managers will lead branches within the departments, such as, accounts, tax, legal in finance and IT, logistics and supply chain in operations. Middle level managers are appointed by the top management. The major responsibilities of the middle level managers include providing recommendations to the administrative level, implementing plans and policies established or formulated by the higher management, communicating and coordinating activities and action plans across all departments as well as preparing short-term objectives department wise, generally ranging from 1 to 5 years. Their major task will be to form a liaison between the lower level and top level management. For them, management and communication skills are more important than conceptual or technical skills. As a result, it can be said that middle level managers are responsible for the implementation and to some extent, evaluation of the strategies formulated by top managers. 3. Lower level managers Lower level managers for Herbal Life will consist of supervisors, operational and administrative executives. They will be appointed by the middle level managers, who are also termed as front-line managers. The major responsibilities of these managers include directing employees and workers, developing morale and motivation in them and maintaining a liaison or link between middle level managers and workers. They are also responsible for communicating the decision taken by higher and middle level management. Subsequently, worker’s demands, feelings, difficulties and performance are conveyed to middle level managers by the lower level management. Their time is mostly spent in controlling and directing as they are responsible for daily, weekly as well as monthly plans. For these managers, having communication and technical skills is imperative, along with basic skills of management. Hence, lower level managers are responsible for core or frontline execution of the strategies. Figure: Herbal Tea’s Organizational Hierarchy (Source: Author’s Creation) Quality, Productivity and Profitability Productivity can be described as relationship between inputs and outputs required for producing a product. Productivity is measured or evaluated through comparison between final products delivered and amount of manpower and final products required for producing the same. Consequently, high productivity occurs when amount of final products required is more compared to that of raw materials and manpower (Mellat, Elham & Fini, 2010). Herbal Tea’s management will assess the following factors for achieving high productivity in their operations. 1. The amount of raw materials such as, tea leaves and packaging, required for making Herbal Tea 2. The amount of labor and time necessary to run the production lines and machinery for processing and packaging tea packets. 3. The amount of tea packets produced in standard timeframe, such as, in hours. Quality, on the other hand, is an evaluation of excellence and flawlessness of the product generated. Quality can be a distinguishing factor between two similar products. Maintaining quality will be an important aspect in the production process for Herbal Tea as this will provide a competitive edge to the new business (McGraw Hill, n.d.a). Herbal Tea uses only quality and imported tea leaves for manufacturing of its tea brands. Productivity is described as the final profit or revenue gained by a company after deduction of all taxes and expenses. Profitability of a company is directly proportional to higher quality products. Higher quality, in turn, can be achieved by producing more finished goods in less time and with less manpower. Profitability is affected by quality and productivity through various means. It can occur when production is less than expected, raw materials costs higher than the budget, labor costs are higher and quality is poor. Thus, it is critical to maintain high quality as well as high productivity so as to achieve high profitability for Herbal Tea. Also, it is important to note that profitability can be influenced by external as well internal factors. For instance, availability of imported tea leaves depend of the nation’s political, legislative, legal, export and taxation policies. In addition, any natural disaster might destroy the plantation, resulting in substantial price increase. Herbal Tea can increase productivity and quality of its products through the following ways: 1. Proper training for skills and knowledge enhancement among staff, workers and employees. Appropriate selection and requirement can also increase overall productivity and henceforth, product quality. 2. Investing in advanced technology and equipments facilitating faster output and increasing per worker output. 3. Motivating employees through incentives, bonuses and other employee engagement activities. Human resource planning activities and the overall organizational strategy HR plays a critical role in establishing competitive advantage among organizations. Integrating HR activities is important for executives for successful strategy implementation. For instance, consistency organizational objectives and HR practices like, reward and recognition, staffing, communication and appraisal, is critical for an effective demand and supply forecast. HR planning is essential as this helps in developing a clearer focus towards identification of critical organizational functions. HR planning is also useful for recognizing capability gaps that prevent successful strategy implementation. Inappropriate HR planning might result in poor resource utilization as well as ineffective responsiveness towards crisis (Huselid, 1995). HR planning activities foreground present organizational capabilities as well as analyze the current trends. So, organizational competencies are evaluated in terms of past and present actions and forecasting is done according to the past trends, present resources and future demands. For instance, any shortfall or excess of a particular type of ability, skill or competency might not be beneficial, without realizing the exact area to which the skill or competency contributes by way of transforming the resource into organizational competitiveness (Ruffini, Boer & Riemsdijk, 2000). Management Philosophy Management philosophies help an organization to define its priorities and set strategies and action plans accordingly. Herbal Tea aims at manufacturing and distributing high quality herbal tea as well as enhancing overall health and lifestyle of its consumers. Herbal Tea is distinct from other beverage companies in a number of ways. In this company, products are tailored according to customer needs as well as promoted in a way that gives a sense of fulfillment and satisfaction to the customer. As the company focuses on a narrow market segment and offers specialized products, it will be better able to serve customers and provide superior products (Brooks, 2006). The company’s management philosophies can be summarized as follows; 1. Developing strong relationship with the society by becoming both quality and customer focused By becoming quality and customer focused, Herbal tea does not mean producing good quality products as well as offering services. Rather, it refers to creating products that will enhance and enrich overall customer experiences. In order to build a stronger relationship with the society and community, Herbal Tea will also participate in activities pertaining to environmental protection. This will include community services, donations to charities and NGOs as well as active participation in social campaigns (Bamford & Forrester, 2003). 2. Becoming a diverse corporate management Herbal Tea will promote diversity by providing equal employment opportunities to both women and men and establishing an organizational system with culturally diverse employees. During international operations, Herbal Tea will stress upon an organizational structure having both global and local leaders. Organisational Structure The basic organizational structure of Herbal Tea will consist of three management levels. An organizational structure will be presented at the end of this report, including details of designations and responsibilities. Herbal Tea can become a creative organization by fostering a positive work environment. This work environment can be achieved by maintaining a hierarchy as well as allowing employees and managers to participate in organization’s decision making process (Drago, 1997). While the top managers are responsible for strategy making, front line managers and executives are those engaging in daily interaction with the consumers. Hence, Herbal tea ensures that exclusive information from front line managers is incorporated during strategy formulation. As a result, Herbal Tea will launch internal interactive session, where front line managers can directly communicate with the top managers, either through face-to face meetings or video conferencing. A positive work environment can also be fostered by way of establishing a tall organization, creating opportunities for promotions and cross-functional transfers. Organizational Chart and Roles and Responsibilities (Source: Author’s Creation) Position Roles and Responsibilities CEO 1. To lead with the head of departments and board of directors for development and growth of the company. 2. To oversee as well as direct implementation of the organization’s short as well as long term plans, according to set strategies. 3. To make sure that all senior managers and executives are in proper coordination with each other and are able to take difficult decisions for strategy completion. 4. Drafting the annual budget, assessing major risks for the company as well as ensuring that risks are managed and monitored. Head of Finance 1. Preparing briefings and financial report and providing direction to the financial departments by short-term objectives and strategy formulation. 2. Management of company’s capital reserves, investments, shareholders, dividends as well as all legislative and financial matters. Head of Marketing 1. Developing and implementing short-term and long-term brand strategies. 2. Development of marketing strategies for existing and new services and products. 3. Establishing and implementing communication and marketing strategies. 3. Undertaking frequent analysis of consumer trends and competitive environment. Head of Operations 1. Directing internal operations with the objective of achieving financial and budget results. 2. Participate and prepare long-term and short-term budgets and plans for the operations department. 3. Direct the entire installation and development of controls and procedures in the operations department and develop operational policies, which are consistent with organization’s strategic policies. Head of Human Resource 1. Developing and implementing effective and creative training programs. 2. Effective structuring of benefits program for attracting and retention of top talents. 3. Leveraging advanced skills and knowledge for success and growth of the organization Control Process for Herbal Tea By establishing a control process for the organization, Herbal Tea will be able to monitor as well as maintain authority across the organization. The three major types of operational control in Herbal Tea will be strategic control, operational control and management control. Strategic Control: In strategic control, overall strategies such as, branding, promotion, advertising, goal setting and sustainable development, will be evaluated, both before and after the implementation process. Management control: In management control, focus will be on objective completion of the sub-strategies as well as immediate plans; for instance, meeting the objectives of quality control for Herbal Tea. Operational control: Operational control is the comparison between final group and individual performance and the roles and responsibilities prescribed to them. The steps for control process are as follows; 1. Establishing performance standards, targets and goals for evaluation of performance. These standards should be consistent with company strategies and managers at every functional level should be aware of set standards. 2. Measuring the actual performance through activities such as, worker behavior, monthly and weekly output achievements. 3. Comparing final performance against chosen performance standards. 4. Result evaluation as well as planning and implementing corrective actions, in case above standards are not achieved. Conclusion The objective of the report was to establish an operational plan for launch of a new enterprise. The new company chosen was Herbal Tea. The organizational structure composed of CEO, board of directors and head of departments, followed by middle and lower level managers. The organizational culture would be hierarchical, but managers and executives will be allowed to put forward their ideas and perspectives. The overall productivity at Herbal Tea can be increased through improving overall productivity and quality of the operational processes. Lastly, strict control process will be established for the strategies, management and operations departments in order to monitor and improve performance and growth of organization. References Bamford, D.R. & Forrester, P.L. (2003). Managing planned and emergent change within an operations management environment. International Journal of Operations & Production Management, 23(5), 546 – 564. Brooks, I. (2006). Organisational Behaviour. New Delhi: Pearson Education India. Drago, W. (1997). Organisation structure and strategic planning: An empirical examination. Management Research News, 20(6), 30 – 42. Huselid, M. A. (1995). The impact of human resource management practices on turnover, productivity and corporate financial performance. Academy of Management Journal, (38), 635-672. Kazmi, A. (2008). Strategic Management and Business Policy. New Delhi: Tata McGrawHill. McGraw Hill. (n.d.a). The Role of Technology in Operations. Retrieved from http://highered.mcgraw-hill.com/sites/dl/free/0072402857/46901/dav27254_ch04_web.pdf McGraw Hill. (n.d.b). Managers and Managing. Retrieved from http://highered.mcgraw-hill.com/sites/dl/free/0078112699/862163/Chapter01.pdf Mellat, M., Elham, P. & Fini, H. (2010). The effect of productivity and quality on profitability in US airline industry: An empirical investigation. Managing Service Quality, 20(5), 458 – 474. Ruffini, F.A.G., Boer, H. & Riemsdijk, M.J. (2000). Organisation design in operations management. International Journal of Operations & Production Management, 20(7), 860 – 879. Schniederjans, M. J. (1998). Operations Management in a Global Context. Westport: Greenwood Publishing Group. Read More