The role of business planning

Table of Contents

1. Introduction 1

2. The role of business planning to the business 1

2.1. Definition of business plan and strategic planning 1

2.2. The differences between business plan and strategic planning 2

3. The tactics of business 2

4. Implications 4

List of references 6

1. Introduction

Newly formed business is similar to a boat floating on the ocean. The business stands in front of the vast market and does not know what to do in order to survive and develop, and how to avoid the big and dangerous storms. To find directions, and have a guide for business, it’s necessary to have a business plan which helps business understand itself and give directions for the future. According to Pinson (2008), a business plan is a blueprint of the business, and it helps the business find out the most appropriate directions. In other words, a business plan is a description of business processes over a period of time. It describes where the business is, and searches the prospects for growth and success in the future. The business plan will describe all aspects of a company, and it’s the most important document that investors, financial partners, or joint venture partners need to read.

However, it’s also commonly argued that “The plan is not the business”. Besides, Aurthu Rock, who is a famous venture capitalist, was responsible for finance of Apple, Compag,…, said that: “Strategy is easy, but tactics is hard”. So, why is there such a contradiction? Is plan different from business, and strategy is extremely difficult for every business” The answer will be given in the next parts below.

2. The role of business planning to the business

2.1. Definition of business plan and strategic planning

According to McKeever (2014, p. 9), a business plan is “a written statement that describes and analyzes your business and gives detailed projections about its future.” According to the author, business plan clearly identifies scope activities, strengths, weaknesses,… of the business. At the same time, it provides forecasts which help business orient to develop in the future. Through it, the business plan also shows the goals and actions of the business (Ross, 2004).

Meanwhile, according to Steiner (2010, p. 15), strategic planning is “the systematic and more or less formalized effort of a company to establish basic company purposes, objectives, policies, and strategies and to develop detailed plans to implement policies and strategies to achieve objectives and basic company purposes.” From this definition, we can see that the strategic plan is the acts of a business to implement policies and strategies to achieve their basic objectives. Whereas, strategic planning is considered as a process that defines the business’ future and guides business to the vision (Transportation research board, 2009). In this definition, strategic planning performs some tasks related to planning for the future for the company, and it orients the company towards the vision outlined.

2.2. The differences between business plan and strategic planning

Basically, business and plans generally aim to make the best goals of the businesses (Wankel, 2007) However, these two concepts have some differences, namely:

• The plan is a set of activities, or tasks arranged in a certain order to achieve the objectives set out. In order to implement the goals, a business must go through strategic planning. Because strategic planning is a process that the business achieves its goals. Therefore, prior to the implementation of actions to achieve common goals, the business needs to plan and have specific strategy. In other words, the plan is only on paper without strategic planning followed it (Hut, 2009).

• Whereas, business is full of specific activities in finance, HR, marketing,… in order to achieve the overall objectives of the business Therefore, from business, the enterprise can implement these actions without strategic planning to improve competitiveness and attract customers. These are the real actions to help businesses achieve their goals. In other words, business includes strategic planning. And when the company has business, it just implement immediately actions to achieve the goal, this will take less time and effort. If the company has only when plans, before implementation, it needs to have strategies (Pride, Hughes, and Kapoor, 2013)..

3. The tactics of business

In the business today, we often listen to two terms “strategy” and “tactics”. They are derived from the field of military. The tactics is the way to achieve a goal of a battle in a short time, while the strategy aims to how to win in a long period (Dolman, 2012).

Specifically, there are many different definitions, but we can understand the strategy is plan of action designed to achieve a specific goal, is a combination of long-term goals and measures, and is the path to reach that goal (Steiner, 2010). In the military, strategy is different from tactics. Tactics refers to the conduct of a battle, while strategy refers to how to link the battle together. This means that we need to coordinate the fights to reach the last military targets. Therefore, a strategy must address the following general problem:

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