1. 2 Recap from Marketing Planning What one thing must your business have in order to be a business?
What is business planning?What is the objective of a business plan? What are the main steps of a...
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Introduction to Business Planning Sezi Çevik Onar
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Introduction to Business PlanningSezi Çevik Onar
Outline
What is business planning?
What is the objective of a business plan?
What are the main steps of a business plan?
Business Planning (2)
Definition of Business Planning and Business Plan
Business planning is to plan a business starting from the phase of thought till the phase of business generation.
A business plan is a written explanation of the companies business model.
A business plan is a summary which shows
• how the enterprise will be organized and• which activities will be implemented for the
venture’s success.Business Planning (3
)
Goal of Business Plan
Business plans are
• used internally for management and planning and
• are also used to convince outsiders such as banks or venture capitalists to invest money into a venture.
Business Planning (4)
Goal of Business Plan
Many people think of business plans only for starting a new business.
But they are also vital for running a business.Businesses need plans to optimize growth and development according to priorities.
Business Planning (5)
Steps of Business Planning
Opportunity Analysis
Marketing Plan
Organization Plan
Financial Plan
Business Planning (6)
For a new business plan starts at this step
Opportunity Analysis
Market segmentation
Targeting
Positioning
Define marketing strategy
Pricing
Marketing Plan
Determine manufacturing process, method, flow
Define distribution system
Define after sales service
Define stock control process
Define marketing strategy
Organization Plan
Sales forecasting
Capital expenditure forecasting
Expenditure forecasting
Profit estimation
Balance sheet
Evaluation
Define marketing strategy
Financial Plan
Determine corporate strategy
Define growth ways
Select new business area
Business Planning (7)
Firm definition
o Firm: Firm Ao Products: Pumps, engineso Customers: Industrial companieso Geographical areas: Turkey
Step 1: Determining firm strategy
o Growth for P (Pump)o Divest for E (Engine)
MGR
RMS
P
E
Comp.
refrigeratorwashing machine
pumpFan
cast iron
HorizontalBackward Forward
Step 2: Determine growth ways (Opportunity analysis)
Business Planning (10)
Step 3: Determine New Business Area (Opportunity Analysis)
New Business Area: Refrigerator
Econ. Scale Skills Econ. Scale Skill Decision
Refrigerator X X X
Washing Machine
Firm Suppliers
Business Planning (11)
4.1. Segmentation
For families For singles
Step 4: Market Segmentation
Business Planning (12)
4.2. Targeting
Refrigerator for families X
Refrigerator for singles
Step 4: Market Segmentation
Business Planning (13)
4.3. PositioningIdeal
Firm A
Competitor
Standard Luxury
Step 4: Market Segmentation
Business Planning (14)
Step 5: Marketing Strategy
Message: Affordable luxury products
Media: TV / 10 sec / 50 days / year
Sales promotion: Small scale refrigerator as a toy on sale
Business Planning (15)
Step 6: Pricing
Price of refrigerator:
Volume * 1 + Number of Doors * 200
Product varieties
Product varieties: D1/V500, D1/V1000, D2/V500, D2/V1000
Price of (D1/1000) = 1000* 1 + 1 * 200 = 1200
Criteria
No Door 1 2
Volume 500 1000
Varieties
Business Planning (16)
T(21) = 500 + 10 * Period index for S=1.1T(21) = 500 + 10 * 21 = 710Y (21)= T(21) * S = 710 * 1.1 = 781 Sales of D1/V1000/Total Sales=0,50
Sales for D1/V1000= Y(21) * 0.50
X XX X
X
X
Sales
Time (period)20
Step 7: Sales Forecasting
Business Planning (17)
8.1. Production Process
P1 P2
P3
Raw Material(Part A) Part B
Refrigerator
Step 8: Business Systems
Business Planning (18)
8.2. Production Method
D1/V1000 D2/V1000PV
Q
Production Type:Product type for D1/V1000 and D2/V1000Process type for others
Step 8: Business Systems
Business Planning (19)
8.3. Production flow
P1
P2
P3
P1
P2
P3
P1
P2
P3
D1/V1000
D2/V1000
D1/V500
D2/V500
Step 8: Business Systems
Business Planning (20)
Machine DemandCapacity (Time/year) Required
P1 (for D1/V1000) 781*0.50*100 10000 4
P1 … 2
Machine Required PriceLife time (year) Total
How to finance Interest
P1 6 1000 10 6000 loan
Step 9: Capital Expenditure Forecasting
Business Planning (21)
Step 10: Expenditure Forecasting
10.1. Variable cost• Unit Variable Cost: Raw Material Cost + Unit
Energy Cost: Unit Raw Mat. * Unit Price of RM + …
= 1 (Part A) * 100 + 1 (Part B) * 100 + …
= 200 + 50 = 250
Total Variable Cost at Year 1 = Total Production* UVC
= 781 * 250
Business Planning (22)
Step 10: Expenditure Forecasting
10.2. Fixed cost
Item Year1 Year2 Year3
Depreciation for Manuf. 6000 / 10 = 600TV Advertising 50 * 500 = 25000
Promotion
Business Planning (23)
Step 11: Profit Estimation
Gross Profit = Income – Manufacturing Cost
= [1200 * (781 * 0.50) + …] – (6000 + 781 * 250)
= 100 000
Business Planning (24)
Current Asset
- Bank 50 000
Loan
- Longterm 10 000
Fixed Asset
- Machines 100 000
Equity
- 50 000
150 000 150 000
Step 12: Balance Sheet
Business Planning (25)
Step 13: Evaluation
Ratios for Year 1
Profitability for Gross Profit: 100 000 / 150 000
Evaluation ratios:
Decision: Enter Refrigerator business area
Don’t enter refrigerator business area
Business Planning (26)
