Ib 1.6 - Organisational Planning Tools
Review Questions 1.6 1. Explain the meaning of ‘operational’, ‘tactical’ and ‘strategic’ decision-making.
Operational Decisions refer to the routine and day-to-day decisions, such as those handled by junior management, e.g. deciding when a worker should go for their break and how to deal with customer enquiries and complaints
Tactical Decisions refer to regular and short-term decisions that are normally handled by middle management, e.g. decisions about pricing strategies or recruitment and selection of staff
Strategic Decisions refer to high-level and long-term decisions that set the overall direction for a business. Such decisions are dealt with by senior management since they carry more risk, e.g. which products to be developed, which new markets to enter, the location (or relocation) of the business and the review of salaries and benefits paid to all staff 2. What is a ‘business plan’?
A business plan is a report detailing how a new business sets out to achieve its aims and objectives. The business plan is a useful planning tool as it requires the owner to plan marketing, financial and human resources of the business. However, the main aim of producing a business plan from the entrepreneur’s point of view is to gain financial backing from lenders such as banks and venture capitalists. It can also be used by other stakeholders such as shareholders to assess the potential gains from their investment in the business 3. Outline the components found in a typical business plan. * The Business * Name and address of the proposed business * The type of business organisation, such as sole proprietorship or partnership * A statement of quantifiable aims and objectives of the proposed business * Cost of premises and other start-up costs * Details of the owner(s) and their past business experience * The Product * Details of the good(s) and/or service(s) being offered * The forecast level of demand
Operational Decisions refer to the routine and day-to-day decisions, such as those handled by junior management, e.g. deciding when a worker should go for their break and how to deal with customer enquiries and complaints
Tactical Decisions refer to regular and short-term decisions that are normally handled by middle management, e.g. decisions about pricing strategies or recruitment and selection of staff
Strategic Decisions refer to high-level and long-term decisions that set the overall direction for a business. Such decisions are dealt with by senior management since they carry more risk, e.g. which products to be developed, which new markets to enter, the location (or relocation) of the business and the review of salaries and benefits paid to all staff 2. What is a ‘business plan’?
A business plan is a report detailing how a new business sets out to achieve its aims and objectives. The business plan is a useful planning tool as it requires the owner to plan marketing, financial and human resources of the business. However, the main aim of producing a business plan from the entrepreneur’s point of view is to gain financial backing from lenders such as banks and venture capitalists. It can also be used by other stakeholders such as shareholders to assess the potential gains from their investment in the business 3. Outline the components found in a typical business plan. * The Business * Name and address of the proposed business * The type of business organisation, such as sole proprietorship or partnership * A statement of quantifiable aims and objectives of the proposed business * Cost of premises and other start-up costs * Details of the owner(s) and their past business experience * The Product * Details of the good(s) and/or service(s) being offered * The forecast level of demand