Critical Appraisal of Business Planning Process Essay - 1

Critical Appraisal of Business Planning Process - Essay Example This report describes the importance of strategy, market research and analysis, financials, competitive strategy and generating ideas as fundamental outcomes of proper business planning. Idea generation and strategy External market conditions change rapidly in certain industries, thus driving a need for innovation in order to compete with other businesses operating in the same market environment. Products and services both from an entrepreneurial business and the competitive environment have a specific life cycle by which it generates profitability and consumer adoption patterns. A product or service will move from growth to maturity, a period where sales decline and thus new product development becomes a critical internal activity of the organisation. This is why generating new ideas becomes a paramount objective in the planning process, usually requiring the input of executive leadership and managers to determine how best to introduce a new product whilst still recognising costs. I n generating new product ideas, the business leadership must determine whether compromises will be made, opportunity costs or trade-offs, in order to launch a new product or service on the market. ... Innovations, however, are critical to maintaining a stable market position. Strategy formulation determines the objectives necessary to achieve a long-term market position. Strategy defines sustainability over the long-run or whether growth is an expectation related to revenue-building. An entrepreneurial dimension of strategy is persisting to find a better fit in the competitive market or developing a vision by which the organisation founds its values and organisational structure against (Majumdar 2008). Developing a long-term orientation is necessary in business planning as it determines the strategic direction the business intends to pursue and thus resources are allocated toward meeting this purpose. Market analysis and competitive strategy Michael Porter identifies five competitive forces that impact business success, including threat of new entrants, the availability of substitute products, supplier and buyer power in the market, and concerns over what types of competitive stra tegies are being developed by other businesses operating in the same market (Porter 2010). It is necessary to scan the external environment in order to understand what socio-economic and socio-cultural trends are observable in key target markets in order to develop a service or product plan designed to properly fit these attitudes or financial predictors. Market analysis identifies all of the fundamental hindrances or advantages that are linked to strategic intention and competitive strategy, thus the planning process must include market research. Businesses that are heavily reliant on consumer revenues must understand what drives buyer behaviour, and this is best performed through surveys, questionnaires or focus groups. Consumers either favour or disapprove of a particular