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Long-Range Planning
Business Planning...
In its simplest form, Business Planning is a projected allocation of funds designed to guide, bolster; encourage, and direct company resources in the direct attainment of the company's business management goals.
A company’s mission statement defines both the direction and magnitude of what it hopes to accomplish often in the form of a five (5) year plan. To achieve this mission, a set of business goals are established to set targets for each year's achievements to reach or achieve an identified mission.
As an example, lets say to achieve our mission in five years, we set five goals each representing what needs to be done each year to grow the business in the direction that seems best at this time. Each year, as we see what has actually been achieved, we revise or adjust each annual goal to correct for anticipated gains or losses as they occur. This 5-year plan is a broad-based effort to steer the corporate boat.
For each of the five years we have a statement of annual goals, but only the current year gets fleshed out by detailing a set of management objectives used now to accomplish this year's goals. Our effort to claim increased marketshare by some percent increase for this year , will be tentatively, our goal for this year.
We develop a MARKETING STRATEGY to extend tile business into the market place to secure a greater share of the market. This strategy is used to quantify and establish a set of quarterly objectives that translate our strategy for the year into a MARKETING PLAN for each quarter.
The Marketing Plan is a statement of our quarterly marketing objectives that act as targets to hit or exceed in the current quarter. Each set of Quarterly Objectives gets revised each month as we track and adjust the plan to match the actual achievements, i.e. gains and losses of this quarter.
MARKETING OBJECTIVES of this quarter must be adjusted to meet the ACTUAL DEMAND that comes in the form of ACTUAL SALES or BOOKINGS.
The Marketing Plan includes a projection for sales related to existing products, newly released products, and future products now, or soon to be in development.
DEMAND MANAGEMENT is used as a strategy to guide and direct the achievements of your Marketing Plan. In simple terms, Demand Mgt. is used as a tool to manage and reduce the “gap” between anticipated demand and actual demand.
As a simple example, lets say we only have existing products that always sell the same way to the same customers every week. In this world, our ANTICIPATED DEMAND is always the same as our ACTUAL DEMAND. There is no gap between what we plan to do and what we actually do.
Our sales forecast then is a statement of what we will sell in each week and the uncertainty (the gap) is zero. Managing this environment is a piece of cake if production of product is managed appropriately and, when the product ships on-time, its quality is found to match the customer's expectations--and the features provided match the features purchased!
As the gap, or uncertainty begins to increase, the demand pattern changes and how we supply product to meet those changes may need to be changed. In the real world, uncertainties can be very high in relation to changes in demand each week for existing, new and future products.
Demand Management is used as a strategy in the current quarter to make best use of company resources, to satisfy the very real changing demands that come from the outside world, i.e., direct sales, school sales, OEM's, etc.
Company resources consist of three interrelated groups: MARKETING & SALES, PRODUCTION & SHIPPING, and RESEARCH & DEVELOPMENT.