In general, a poorly prepared business plan would definitely fail and can be attributed to one or more of the following factors: inadequate information about the industry, lack of competitors and knowledge about the position of the business unit, i.e. strengths and weaknesses, opportunities, threats. and unrealistic goals.

Good business planning could be the means to achieve this. Business planning could be described as the past of an ongoing ongoing activity related to the direction of the entire organization. It contains the mission, objectives, strategies, tactics, and policies that will guide the organization in adapting to the environment over a given period of time. A business plan is considered as the backbone of the business unit. And as such, business planning involves a vision and an attempt to follow it to reach the goal.

Planning must generate a specific course of action based on the objectives set by the organization. Plans are intended to generate positive results, but there is a chance that this will not happen due to constraints that may be inherent in the planning process.

Business planning should not be a blueprint, so to speak, but flexible and accommodating so that it can be changed from time to time to successfully adapt to the overall environment. For example, in the case of problems in a production process, those who are directing the issues, not necessarily the planners, could easily take corrective action.

Business planning could be done for both a new and existing organization or business unit; The sequence is to define the mission statement of the company and then thoroughly analyze the situation in which the business is currently. This is the concept of analysis of the company’s situation.

Next in the sequence is an organizational objective which is how the company should accomplish its mission and clarifies where the company wants to be. These, unlike the mission statement, must be quantified. Then follows the choice of strategies that are the concrete ideas that are proposed to achieve the company’s objectives; they are related to the way in which the mission will be achieved. From the strategy comes the tactic, which is the daily operation of the objectives and the mission to achieve the objectives of the company.

There are two parts to doing this analysis. The first input relates to the organization’s macro environment and these are factors over which the company has little or no control. They are listed under four separate headings: Political, Economic, Socio-Cultural and Technological and are known by the acronym ”PEST”. Some planners also add ‘Legal’ (making the acronym SLEEP) and environmental (PESTLE). This is the external audit part of what is called the company audit. A series of very brief statements are made regarding each of the PESTLE subdivisions.

The second part refers to what is called internal auditing; this considers the individual capabilities of the company, SBU by SBU, and again brief statements are made. Thereafter, a fundamental evaluation process, the SWOT analysis, is carried out. This SWOT (strengths, weaknesses, opportunities, and threats) analysis is an attempt to translate the company-specific factors from the company audit into corporate strengths and weaknesses, as well as external environmental factors (from the PESTLE analysis) into opportunities and threats. external. It should be noted here that strengths and weaknesses have to do with the internal environment part of the situation analysis, while opportunities and threats have to do with the external environment. The SWOT analysis is a simple tool to audit an organization and its environment and generate strategic alternatives based on the situation analysis. It is the first stage of business planning, it is applicable to the organization in the issues that potentially have the greatest impact, so it is useful when time is very limited.

The analysis of the internal and external situation can produce a large amount of information, much of which is highly irrelevant, so the SWOT analysis serves as an interpretive filter to reduce the information to a manageable number of key issues. By understanding these four aspects of its situation, a company can better capitalize on its strengths, correct its weaknesses, take advantage of opportunities and remedy potential threats. The organization can also use the understanding of these situation analyzes as evaluation criteria to judge the current state of the organization. An example of corporate strength could be found in the brand image of a company like Coca Cola, which can withstand failures such as when after some newspapers reported that coca was contaminated, sales soared despite the report in Pakistan against Coca-Cola. Tail.

It is reported that Google lacks client lock. Your competitors have much tighter control over customers because they have so much information about users. The opportunities are the possibility of introducing a new product or service, while a threat may be the entry of competitors into the market.

Using as part of a situational analysis tool, corporate strengths and weaknesses can be identified by function area and/or key issues, each of which will be discussed below. An example of issues (by function) to analyze include marketing (market position), technology (eg, R&D, product development), finance (profitability, ROCE), etc., operations (JIT requirements, profitability , etc.), human resources (skills and flexibility). , competence, etc.) Human resources (skills and flexibility, competence, etc.) Human resources (skills and flexibility, competence, etc.) and management (attitudes towards innovation and change). Others are (by key issues the ability to achieve and maintain an adequate competitive advantage and market position in the medium and long term; ownership structure and the means for policy formulation, ability to develop and manage international or global activities, etc. .

Having considered the internal analysis of the state of the company, a brief consideration of the external analysis through the opportunities and threats by using the PESTLE analysis; each word of the acronym is briefly discussed, for example:

Politician:
The government in power can make (usually political) decisions that affect economic trends, market and industrial structure, and labor law. These can affect the business directly or indirectly.
Economic factors: exchange rates, interest rates, tax laws, etc. they also have a direct effect on the organization.

Sociocultural factors:
Social and cultural factors also affect the environment in which the organization operates. For example, education, income levels, and skills and competencies will have an impact on the organization.

Technological environment:
Analysis of the technological posture of the organization itself and/or the rate of technological advance prevailing in the industry, for example, the computer, electronics and automotive industry, could indicate the potential of the company. People are increasingly concerned about environmental issues such as pollution, noise and destruction, to the point of campaigning against certain products and indeed the companies in question.

Legal environment:
Morden (1993) writes that external environments can be analyzed in terms of the following:

Stability:
Variables within the extension environment show little or no change over long periods of time. This is the mature stage. It shows a good relationship between the company and the shareholders.
Moderately dynamic: Variables show a limited degree of change over time, for example minor changes in technology.

Turbulent:
The variables show a significant degree of change over time. The situation can worsen due to the entry of new entrants and the departure of others. An example of the turbulent environment in the UK was the Building Societies Act 1986 which led to the deregulation of Building Societies and increased competition.

Turbulent with increasing rates of change: Environmental variables show an increasingly rapid rate of change. This threatens the survival of existing operators who are not forward thinking and therefore not innovative. The computer industry provides a good example when the founders of Google came up with a unique search engine that even took MSN by surprise. Innovation at this stage must be constant.

At the end of this analysis, the inherent threats and opportunities would have been discovered. Threats are the characteristics or variables that threaten the very survival of the business directly or indirectly. Some examples include political uncertainty, global recession presenting as bottlenecks for growth. Opportunities may include changes in legislation, the removal of barriers to international trade and the emergence of ‘grey’ markets.

For the business planner, having analyzed the business situation in depth as stated above, and identified corporate strengths and weaknesses, external environment, environmental stability and specific threats and opportunities, these can be used in the aspect of planning. For example, choosing the appropriate strategy to exploit corporate strengths and external opportunities, as well as those to remedy corporate weaknesses and external threats. This is made possible by the knowledge of the general environment available to the planner as a result of the situation analysis.
Since the intended result of business planning is the successful positioning of the company armed with the above information collected, situational analysis becomes very much a valid tool needed to carve out the future position of the business.

Reference:
1. Cole, GA (2000) Strategic Management, 2nd Edition, Continuum, London.
2. Development of chain stores. [http://www.angelfire.com/stars/tkchang/retail.htm] (accessed 01/11/02).
3. Drucker, PF (1993) The Practice of Management; Butterworth and Heinemann, Oxford.
4. Bigley, AG Porter, L:W; Steers, R.M.; (1996) Motivation and Leadership at Work, Sixth Edition, McGraw Hill, Singapore.