Role of planning in developing new business streams: Understand the importance of planning in business development and how it contributes
The Pivotal Role of Planning in Developing New Business Streams
To comprehend the significance of planning in business development, it's helpful to start with a fascinating fact. Did you know that according to CB Insights, 17% of startups fail because they lack a business model? This underlines why a well-drafted plan is an integral part of creating new business streams.
The Intersection of Planning and Business Development
In the sphere of business development, planning is the compass that guides the ship. It provides direction for all business activities and aids in navigating through the rough waters of market dynamics and competition. It's like a blueprint for constructing a building; without it, the edifice won't stand strong.
For instance, consider the case of Blockbuster. The video rental company was a giant in its industry, but its failure to plan for the digital transition led to its downfall. In contrast, Netflix, which started as a DVD-by-mail service, successfully transitioned to streaming due to its forward-thinking planning. This story underscores the indisputable role of planning in developing and sustaining new business streams.
The Planning Process: An Overview
The planning process typically follows these steps:
Defining objectives
Evaluating the environment
Setting quantitative targets
Performance analysis and choice of strategy
Implementing strategy
This sequence should not be seen as a rigid framework, but a flexible tool that can be adapted to the business's unique needs.
A tech startup might define its objective as capturing a specific market share in the next three years. It would then evaluate the environment, including competitor analysis and market trends, set targets such as user base or revenue, analyze performance metrics, and choose a growth strategy such as product diversification or market penetration.```
### The Crucial Link between Planning and Other Business Aspects
Planning is not an isolated activity but deeply interconnected with other aspects of business such as marketing, finance, HR, and operations.
#### 🎯 Planning and Marketing
**Planning** is the core of any effective marketing strategy. It identifies the target audience, determines the marketing mix (product, price, place, promotion), and sets the communication and distribution channels. Without a well-thought-out plan, businesses can end up wasting resources on ineffective marketing efforts.
#### 💰 Planning and Finance
In the realm of **finance**, planning is key to ensuring that the business has the necessary funds to support its activities and that these resources are used efficiently. It also helps forecast future financial performance and make informed investment decisions.
#### 👩💼 Planning and HR
Even **HR** relies extensively on planning. Human resources planning involves forecasting the personnel needs of the organization, planning for recruitment, training, development, compensation, and retention strategies.
#### 🏭 Planning and Operations
Lastly, **operations** are deeply influenced by planning. This involves planning for the production process, inventory management, quality control, and logistics.
By integrating planning across these various facets, businesses can ensure a coherent approach towards developing new business streams. For instance, an e-commerce startup planning to enter a new market would need to plan for marketing (identifying target audience, promotional channels), finance (budgeting for expansion), HR (hiring local talent), and operations (setting up logistics and supply chain).
In essence, planning is the thread that ties together the various aspects of business development, paving the way for new business streams.
Importance of Planning in Business Development
Question: What is the role of planning in developing new business streams?
Planning helps in identifying potential opportunities and mitigating risks.Planning is not necessary for developing new business streams.Planning only focuses on the growth of an existing business, not on developing new streams.Planning is only important for large corporations, not for small businesses.
The Backbone of a Business Plan: Key Components
Among the many factors that contribute to the success of a business, one of the most crucial is the business plan. It acts as a blueprint, outlining the steps needed to reach the organization's goals and objectives. Marketing, finance, HR, and operations are the four pillars that make up the foundation of any robust business plan.
A business plan is interconnected, with each element playing a vital role in the overall success. Let's delve into each component and understand how they contribute to business development and planning.
🎯 Marketing: Connecting with Customers
Marketing, in its essence, is about understanding the needs of the customer and then ensuring your product or service meets those needs. The marketing section of a business plan outlines the strategies and tactics a business will employ to attract and retain customers. This could include methods of advertising, pricing strategy, sales and distribution, and customer service.
For instance, Apple Inc. attributes its success to its innovative marketing strategies. They've mastered the art of creating a need for their products by appealing to consumer emotions, leading to a loyal customer base.
💰 Finance: Fueling the Future
The finance component of a business plan is concerned with how the company will fund its operations. It includes projections for revenue, expenses, and profitability.
Consider the story of Amazon. In its early years, Amazon’s primary focus was on expanding its customer base and not on profitability. This long-term financial planning strategy paid off as it is now one of the world's most valuable companies.
👥 HR: Building the Team
Human resources (HR) is a crucial aspect of business planning. It deals with the people part of your business including hiring, retaining, and developing employees. A strong HR plan contributes to the overall success of a business by ensuring that it has the right people in place to execute its strategy.
A proven example is Google. Google’s HR practices have been praised worldwide for their focus on employee satisfaction. Their strategy has resulted in high employee retention rates and a highly motivated workforce.
🏭 Operations: Making it Happen
The operations section of a business plan covers the day-to-day activities that keep a business running. This includes production, inventory, and supply chain management.
Take the case of Toyota. With its implementation of the Just-In-Time (JIT) inventory system, Toyota revolutionized its operations. This efficient system minimized inventory costs and maximized efficiency, contributing significantly to Toyota's global success.
Business Planning: Aligning with Goals and Objectives
The goal of business planning is to guide the company towards its objectives. All elements of a business plan should align with the organization's overall goals. This alignment ensures that all departments work in harmony towards a common purpose.
In the case of Starbucks, they have aligned their business plan with their objective of being the most recognized and respected brand in the world. Every component of their business plan - from their marketing to their operations - is geared towards this goal, contributing to their global success.
So, the importance of planning in business development cannot be emphasized enough. It's like a roadmap guiding a company towards its destination - success.
TOWS Matrix and Response
To do: Create a hypothetical TOWS Matrix for a new business stream. Investigate an industry or market that you are interested in, and identify the Strengths, Weaknesses, Opportunities, and Threats for developing a new business in this area. From this, devise a strategic plan that leverages Strengths and Opportunities, mitigates Weaknesses, and prevents Threats.
Scoring Criteria: The TOWS Matrix and the corresponding strategic plan will be evaluated based on:
Comprehensiveness: The TOWS Matrix should thoroughly capture significant Strengths, Weaknesses, Opportunities, and Threats in a structured manner. It should also consider both internal factors (Strengths and Weaknesses) and external factors (Opportunities and Threats) effectively.
Quality of Analysis: The strategic plan should demonstrate an intelligent application of the TOWS Matrix. The strategic responses should align with the identified Strengths, Weaknesses, Opportunities, and Threats.
Step-by-step plan:
Identify the Strengths: List what the business does well or what resources it has that can be leveraged for developing a new business stream. Example: Established brand, existing customer base, technical expertise, etc.
Identify the Weaknesses: List potential obstacles for the business or areas where the business lacks resources or capabilities. Example: Limited capital, inadequate manpower, weak market presence, etc.
Identify the Opportunities: List potential areas for growth or improvements in the market or industry. Example: Emerging markets, technological advancements, gaps in competitors' offerings, etc.
Identify the Threats: List potential challenges or risks in the external environment. Example: Economic downturn, regulatory changes, competitive actions, etc.
Plot these factors into the TOWS Matrix: The first quadrant is Strengths/Opportunities, the second quadrant is Weaknesses/Opportunities, the third quadrant is Strengths/Threats, and the fourth quadrant is Weaknesses/Threats.
Develop a strategic plan: Based on the TOWS Matrix, formulate strategies for each quadrant that maximizes Strengths and Opportunities, mitigates Weaknesses, and prevents Threats.
🍏The best solution:
Strengths: Strong brand recognition, skilled workforce
Weaknesses: Limited financial resources, lack of market presence
Opportunities: Emerging markets, increasing demand for eco-friendly products
Threats: Rising raw material prices, new competitors
TOWS Matrix:
| | Opportunities | Threats | |------------|-----------------------------|----------------------------| | Strengths | Use brand recognition and skilled workforce to capture emerging markets and cater to the increasing demand for eco-friendly products | Leverage brand recognition to maintain customer loyalty despite rising raw material prices; Utilize skilled workforce to innovate and stay ahead of new competitors | | Weaknesses | Seek external funding or strategic partnership to overcome financial limitations and expand into emerging markets; Develop a robust marketing plan to improve market presence | Implement cost control measures to manage the impact of rising raw material prices; Differentiate products and focus on niche marketing to counter the threat of new competitors |
Strategic plan:
Expand into emerging markets leveraging strong brand recognition and skilled workforce.
Develop eco-friendly products to meet increasing market demand.
Look for external funding options or form strategic partnerships to augment financial resources.
Initiate a robust marketing campaign to improve market presence.
Implement cost control measures to manage rising raw material costs.
Differentiate products and focus on niche marketing to counter new competitors.
Market Research and Assessment
Fascinating Reality of Market Research and Assessment
Did you know that 60% of new businesses fail within their first three years? Shocking, isn't it? The main reason behind this failure is usually lack of rigorous Market Research and Assessment. Let's dive in and explore the intricacies, practical examples and powerful stories connected to this pivotal step in business planning.
Understanding the Art of Primary and Secondary Research
To begin with, let's think about a situation. Suppose, you plan to open a vegan restaurant in the heart of New York City. Before you jump into investing capital, it's wise to assess the demand and market potential. How can you do that? The answer is: through primary and secondary research.
Primary Research: The Direct Approach
In your case, you might conduct primary research by distributing surveys to people in New York City, asking whether they are interested in a vegan restaurant, what kind of dishes they prefer, and what price range they consider reasonable. You might also conduct interviews or focus groups to get a deeper understanding of consumer preferences.
A real-life example of successful primary research comes from Airbnb. Before launching, the founders lived off their site and rented their own homes to understand their customers' needs.
Secondary Research: The Indirect Approach
Parallelly, Secondary Research involves gathering existing data already researched by others. This might include online search for data about the vegan food market in New York City, reading reports about food industry trends, and studying competitor strategies.
A well-known story here is Netflix. They based their decision to produce the successful series "House of Cards" on secondary data analysis, which revealed their users' interest in the director David Fincher and actor Kevin Spacey.
Crunching the Numbers: Analyzing Research Findings
Once you have gathered the data, you need to analyze your research findings. This might involve determining the potential size of your customer base, figuring out how much they might be willing to pay, and assessing the growth potential of the market. This phase is crucial in defining the size of the opportunity before you.
Matching Resources with Opportunity
After defining the opportunity, it's time to evaluate your tangible and intangible resources. Tangible resources might include capital, equipment, and physical space. Intangible resources could be your network, skills, and brand name.
As a case in point, Tesla leveraged its intangible resources like technical know-how and brand reputation, to enter the competitive automobile industry and successfully introduce a new concept of electric vehicles.
In conclusion, Market Research and Assessment is not a mere step, it's the backbone of your business planning. It ensures that you don't just enter the market, but you do so with a full understanding of the landscape, thus increasing the odds of your success significantly.
Business Model Development and Sales Planning
Question: What is the role of planning in developing new business streams?
❌ Option1: 🚫 This is incorrect option.
❌ Option 2: 🙅♂️ This is incorrect option.
👋 This is the correct option.
❌ Option4: 🙆♀️ This is incorrect option.