Business Operations Planning

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Definition of business operations planning

Business operations planning refers to a process that is aimed at helping organizations to provide better customer services, short lead times, stability in the production rates and also ideal teamwork between the various departments of the organization i.e. productio9n,financer,sales,operations and human resource.

Most companies nowadays apply the Sales & Operations tool commonly referred to ad S &OP so as to enhance their performance. An operational plan is part of the larger strategic plan that is concerned with establishing the capacity needs of an organization. Operational planning thus focuses on how the managerial actions will be achieved.

The operational plans are usually short term in nature, specific to operational activity, routine, resource driven and are also predictable. The business operational plans are usually conducted by the company’s line managers (Columbus, 1999, 96-99).

Contents of a business operations planning

The following are the contents of a business operations plan; human and capacity requirements, financial requirements, mitigation strategy and risk assessment, exit strategy and estimation of the lifespan of a project.

Human resource management is key to business operations planning and thus Human requirements is the primary step in an operational planning.Usually,all the human resources determines the organizational ability to meet the operational plan goals. Other capacity requirements include the legal systems and other stakeholders that are necessary for successful completion of a project.

The team leaders usually determines as to whether or not they have the right people with technical and communication skills so as to successfully execute operational plans. If there people are not enough, the management thus determines how to get them by considering such aspects as the recruitment costs e.t.c.Also, and the management considers the amount of extra work that is required in all the departments such as the Information and technology, Human resources e.t.c. so as to determine the hiring needs of new staff.

Financial requirements are concerned with identifying the sources of funds for the project in order to successfully implement the project. The operational plans are usually expressed in financial terms by use of cash flow statements and cash budgets. The estimation of a project’s lifespan, its sustainability and the exit strategies is concerned with establishing the natural life of a project and also determining the exit strategies that are available.

The mitigation and risk assessment is concerned with identifying the possible risks that can hinder the successful completion of a project and thus devising measures to mitigate these risks. Projects usually does not have control over the risk and so, it is important to conduct a comprehensive assessment of risks so as to identify them in advance and decide on how to mitigate them.

The main steps that are involved during mitigation and risk assessment are; risk identification i.e. a formal exercise that helps to identify the possible risks that can have a major impact on the project. These risks include political risks, economical risks, technical risks e.t.c.The second step of risk assessment and mitigation is ranking the risks. This step entails the act of ranking the risks in accordance with the likelihood of occurrence and the impact on project.

The third step involves determining the final raking as well as developing the risk mitigation strategies. This step involves determining as to whether a particular risk is high, low or medium. In case of high risks, the management should ensure that there is a mitigation strategy so as to mitigate the impact of the risk. For medium risks, the management should also have a clear mitigation strategy and finally, the management requires taking no action in case of low risk (Columbus, 1999, 96-99).

The internal and external factors that impinge on the business operations plan

Business operations planning operate within an environment i.e. internal and external which can influence the execution of operational plans. The internal factor that affects the business plan includes leadership and management and cooperation between the operating units. The leadership team usually determines the success of operational plans.

The leadership team should ensure that any issues that emerges during the business operational planning is accurately recorded. The leadership team should also conduct a follow-up session so as to review the pre-budget and also to reach an agreement concerning the measures that should be undertaken on order to address fully the concerns of the board members during operational planning.

It is important for the senior leadership team to conduct meetings frequently during the operational planning process so as to review as well as to comment on the process. The leadership management team is concerned with allocating the resources so as to ensure that the business operational plans are well implemented.

They spend most of their time in giving out instructions to the employees so that they can perform their duties effectively. The leadership thus affects the business operations planning by motivating the employees towards implementing the plans. If management and leadership are indifferent to operational planning, then it is impossible to set the effective plans.

Another internal factor that affects the business operational planning is the cooperation between the operating units. This cooperation is important as far as planning is concerned. This implies that the operational plans may turn out to be ineffective if one department in the organization cooperates and another one fails to do so. The operational plans require being flexible so as to accommodate the various needs of different operating units.

The external factors that impinge on the business operations plan include; Political factors, economical factors, social factors and technical factors. The political factors that affects the business operations plan includes labour laws, company law, regulations of foreign trade, stability in the country and taxation policies.

The political climate in the modern world is complex and therefore the management should a great deal of their time in anticipating the major political factors that can influence the business operations plan. They can update their political developments by conducting frequent meetings and conferences.

The economic factors that affects the business operations plan include the disposable income, inflation rates, capital income, interest rates, money supply, unemployment rates, trade cycles e.t.c.There economic forces can hurt a firm’s prospects and in turn the business operations plan. The management should therefore seek to identify the economic risks and their impact on the operational plans.

The social factors that affects the business operational plans relates to the assessment of social-cultural influences such as the income distribution, the social values, educational level e.t.c. (Heath, 1997, 24).

Technology is important as it enables a business to achieve efficiency .The increased use of computers have changed the increased the distribution speed and has also enabled the creation of new products. The technical factors that affect the business operations plan include the following; obsolescence rates, emergence of new information technology, the adoption of information technology e.t.c.

Technology can hinder the business operational planning and therefore, it is necessary for the management to evaluate the technological factors that are capable of disrupting the operational plans. The management should maintain knowledge on information technology so as to decrease the obsolescence rate and also to promote innovation (Nwankwo, 2011, 55).

The impact of environmental and technological change on the process of business operations planning

The environmental factors that affect the process of business operations planning include the competitors, creditors, customers, labour market and suppliers. The management .Competition is present in virtually all the businesses and therefore it should not be ignored. Competitor analysis should be conducted in business operational planning because it helps to reveal the company’s competitiveness in the market. Competitor analysis also helps in developing strategies so that a firm can be competitive.

Futhermore, the, the, the shareholders and other stakeholders are concerned with competitor analysis and so, the management should never ignore its impact ion the business operational planning. The first step with regards to competitor analysis is to identify the main competitors.

Competitors can be grouped into three main groups’ i.e. direct competitors, indirect competitors and future competitors. Direct competitors involve the firms that offer similar products and they represent the most extreme competition. Indirect competitors represent the firms that offer products close substitutes and in most cases, they offer different products with the same value as that of the firm.

Future competitors entail the present firms that have not established themselves in the market but have plans to compete with other firms in the industry in the future. The operational managers find it challenging to identify all the competitors and so, it is important to identify the major competitors as they have the greatest impact on the business operational planning. The operational managers can identify the main competitors by the use of internet, published directories and other useful sources.

The main reason behind the analysis of competitors is to understand the nature of competition and its effect on the marketing opportunity. Competitors’ analysis enables the management to; predict the competitors future moves or the future competitors, to clearly understand the main vulnerable areas in order to exploit them, to predict the competitors reactions and also to benchmark against the competitors so as to improve on the business operational planning(Needle,2010,370).

Because business operational planning deals with a wide variety of environmental issues, there is a great likelihood of decision uncertainty.Enviromental uncertainty is classified as follows; simple environment, dynamic environment, complex environment and stable environment. Simple enviroment.

In entails a business enviroment.In that is relatively straightforward to understand and it is not undergoing significant change e.g. raw material suppliers and mass manufacturing companies. Dynamic environment is one characterized by high degree of uncertainty thus encouraging active scanning and sensing of environmental changes e.g. technology driven organizations like Microsoft, mobile phone service providers e.t.c.

Complex environment is one that is characterized by uncertainty and constant dynamism. It is common amongst firms in the electronic industries. A multinational company faced with diversity might equally find itself in a complex environment. A stable environment is a business environment where there’s little change emanating from environmental forces. The degree of uncertainty is low and it is easy to comprehend the environmental changes (Graham, & Allan, 2008, 6).

The technological change on the process of business operations planning entails the innovation rate of a business organization. Over the last few years, Information Technology (IT) industry has experienced tremendous growth and as a result, businesses are increasingly embracing IT in their operations. Innovation has become an important competitive edge in most organizations.

Peter Ducker in his study defined innovation as the task of endowing human and material resources with new and greater wealth-producing capacity. Because organizations exist to create wealth through customers, it is thus necessary for them to direct all their efforts towards meeting the various needs of the customers. In operational business planning, the operational managers should seek to understand the customers’ behaviours so as to produce goods that satisfy the customers.

Thus, technology advancements can hep in reducing the manufacturing costs and also influence the demand of products and services. The operational managers should therefore view innovation as continuous attempt to keep ahead of the vagaries of the business environment (Ettlie, 2006, 349).

The importance of good business operations planning to the overall success of the business

The following are the importance of good business operational planning to the overall success of the business; Business operational planning helps in preparing a project in raising funds i.e. it enables the management to know the possible sources of funds.

With this regards, a good business operations planning enables the team leaders to determine as to whether or not the donors are in a position to fund the project.Fundrasing is usually the main reason behind business operational plans as it determines the success or failure of a project (Lussier,2008,24).

A good business planning is essential since it helps the management in allocating the resources efficiently. Many organizations usually allocate resources to projects twice in a year and this is advantageous as it ensures that the overall work is limited.

It is necessary for the management team to allocate resources once the operational plan is done in order to allow sufficient time for input of action items. The business operational planning is important as it enables the management to asses the changes that occurs once the resources are allocated to a project.

This in turn helps to determine the effectiveness of the resource allocation to the project. Also; it is a means of motivating the staff as they recognize that their efforts towards the success of a project matters. In assessing the changes that occurs, the resource allocation plays an important role of aligning Information Technology better with organizational operational plans and this contributes to the overall success of a business (Ryans, 2000, 124).

A good business operations planning as far as the overall success of a business is concerned because, it helps the management to clearly define the capacity gaps and areas where the resources are greatly required. In order to achieve success in a particular project, it is important to have staffs that have the needed skills.

A good business operations planning helps to increase the skills of the staff by assessing the capacity that is needed, assessing the present capacity and also determining the gap that exists between the required capacity and the capacity that is presently available.

Thus, a good business operations planning enables management to put the right staff, processes and systems in pace in order to ensure that the project is successfully implemented. Specifically, a good business operations planning contributes to the overall success of a business by; defining the specific capacity that is required i.e. whether to introduce new skills or provide training to the already existing staff.

Also it helps in developing robust operational plan i.e. the timelines, sources of funds and the activities to be carried out in order to develop and maintain the capacity that is required for a certain project. Also, it good business operational planning assists in assessing the implications for the support functions i.e. it helps to ensure that the office support functions are in a position to perform the extra work that is generated by a project (Weiss, & Molinaro, 2005, 246).

A good operational plan contributes to the overall success of a business by reducing risks and also assisting in preparing the contingency plans. A good business operational planning enables organizations to reduce possible risks that can hinder their success by ensuring that there adequate workforce so as to carry out the operations. A good operational plan enables organizations to plan in advance and this is important as it helps in mitigate the possible risks (Chong, 2004).

The managerial qualities and resources that are necessary for effective business operations planning

Basic management qualities and resources are necessary so as to enhance effectiveness in business operations planning. The following are the managerial qualities and resources that are necessary for effective business operations planning; a good manager should be able to break tasks into sub tasks for effective business operations planning.

A good manager should thus agree on reporting schedules with the staff. This means that if things are not going well, the manager can have time to correct, coach and put them back on track (Johnson, et.al.2006, 143).

No tasks can be competed without the proper resources an so, a manager has the responsibility of ensuring that there is adequate resources such as time, money and staff in order for the business operations planning to be effective.

The manager should be able to know the expected result I order for the business operations planning to be effective. The manager should also not delegate if he or she don’t know the results expected from a task.

The manager should ensure that all the functions of the organization participates in business operational planning by establishing an environment for effective decision making. The manager has the responsibility of planning in advance i.e. he or she is required to select a course of action out of the many alternatives that are available in order to achieve the stated objectives.

The manager thus should start by forecasting the business environment so as to have information concerning the market trends, changes in IT as well as the external factors that can affect the business operational plans. The manger should also determine the alternative course of action as his ability is based on creating various alternatives. A manager can create various alternatives by building a situational model and using it to generate the alternatives. The manager should select the best alternative.

A good manager should be able to handle work-related issues effectively. A manager should thus develop operations-planning schedules so as to prevent problems from arising. The manager should also posses conflict management skills so as to enhance the success of business operational planning (Wart, 2011, 338).

Reference List

Chong, Y.Y., 2004. Investment risk management. Hoboken: John Wiley and Sons.

Columbus, L., 1999. Administrator’s guide to e-commerce: a hands-on guide To setting up systems and websites using Microsoft BackOffice. Hong Kong: LWC Research.

Ettlie, J.E., 2006. Managing innovation: new technology, new products, and New services in a global economy, Volume 10. London: Butterworth-Heinemann.

Graham, G. & Allan, W., 2008. CIMA Official Exam Practice Kit Management Accounting Business Strategy. London: Butterworth-Heinemann.

Heath, R.L., 1997. Strategic issues management: organizations and public Policy challenges. Thousands Oaks: SAGE.

Johnson, L.G. et al., 2006.The exceptional manager: making the difference. Oxford: Oxford University Press.

Lussier, R.N., 2008. Management Fundamentals: Concepts, Applications, Skill Development. London: Cengage Learning.

Needle, D., 2010. Business in Context. Stamford: Cengage Learning EMEA.

Nwankwo, S., 2011. Entrepreneurship Marketing: Principles and Practice of SME Marketing. London: Taylor & Francis.

Ryans, A.B., 2000. Winning market leadership: strategic marketing planning For technology-driven businesses. Hoboken: John Wiley and Sons.

Wart, M.V., 2011. Dynamics of Leadership in Public Service: Theory and Practice. London: M.E. Sharpe.

Weiss, D. S. & Molinaro, V., 2005.The leadership gap: building leadership Capacity for competitive advantage. Hoboken: John Wiley and Sons.

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