Integrated Business Planning

1. To aid (unterstützen) the planning of actual operations

   “Planning is replacing chance by error”

2. To coordinate the activities of the organization

3. To communicate plans to responsibility center managers

4. To motivate managers to strive to achieve the budget goals

5. To control activities

6. To evaluate the performance of managers

1. Communicate details of budget policy and guidelines to those people responsible for preparing the budget

2. Ongoing review of the budgets

3. Determine the factor that restricts output.

—> Brings both sides together / lower management and workers + higher management

Rolling Forecast is first established for a 12-18 month outlook, bridging strategy and operations. It's solely for forecasting, focusing on key metrics like order entry, revenues, costs or investments, ensuring simple preparation.

1. Separation of targets from forecasts (telling the management what they need to know rather than what they want to hear)

2. A bottom-up process performed quarterly rather than monthly

3. Forecast past year-end (e.g. six months ahead)

4. The annual entitlement to spend is replaced with a quarter-by-quarter funding mechanism

5. The annual plan becomes a by-product of the QRF

6. The QRF should be based around main events / key drivers of the future

1. Income statement plan:

   Revenue plan, HR planning, Depreciation plan, Other expenses plan

2. Cash flow plan

   Investment plan, Liquidity plan, Capital needs plan, Interest and redemption plan

3. Balance sheet plan

1. Production flexibility: Adjusting output as needed.

2. After-sales service: Post-purchase customer support.

3. Delivery reliability: Consistent, timely product delivery.

4. Product quality: Standard of the finished product.

5. Market penetration: Depth of product market reach.

6. Reference customers: Satisfied clients boosting reputation.

Direct:

• This method presents the specific cash inflows and outflows from operating activities.

• It provides a detailed list of cash receipts (from customers) and cash payments (to suppliers, employees, etc.).

• It directly shows the sources and uses of cash.

Indirect:

• This method starts with net income (from the income statement) and then adjusts for changes in balance sheet accounts to calculate the cash from operating activities.

• Non-cash items like depreciation and amortization are added back, and changes in working capital (like changes in accounts receivable, accounts payable, etc.) are accounted for.

• It indirectly determines cash flow by making adjustments to the net income.

• High quality products and services

• offer products or services that command higher prices and margins

• develop efficient distribution channels and superior service support facilities

• prepare detailed monthly financial plans for the next year and annual financial plans for the next five years

• efficient and effective managing of the firms assets and financial resources

• plan an exit strategy consistently

• functioning management team that is balanced in functional area and market knowledge

• collaborative decision making style

• board of members that is balanced in internal and external members

1. Clearly Identifiable Customer Benefit: Demonstrating a distinct value proposition ensures the product or service meets a specific market need, driving customer interest.

2. Acceptable Market Size: A sizable target market ensures there's ample opportunity for sales and growth, validating the business's potential.

3. Feasibility and Profitability: Establishing that the business can operate successfully and profitably is crucial for attracting investments and long-term viability.

4. Sufficient Degree of Innovation: Offering a unique or innovative solution differentiates the business in a competitive market, providing a competitive edge.

• A Business Model describes the rationale of how an organization creates, delivers, and captures value

• The Business Model Canvas is a shared language that allows you to easily describe and manipulate business models to create new strategic alternatives.

• The business model is described through nine basic building blocks that show the logic of how a company intends to make money.

• The nine blocks coverthe four main areas of a business:

  1. customers

  2. offer

  3. infrastructure

  4. financial viability.

• The business model is like a blueprint for a strategy to be implemented through organizational structures, processes,and systems.

1. Customer Segments

2. Value Proposition

3. Channels

4. Customer Relationships

5. Revenue Streams

6. Key Resources

7. Key Activities

8. Key Partners

9. Cost Structure

• The "Customer Segments Building Block" identifies specific target groups for a business. Distinct segments have unique needs, distribution channels, relationship types, profitability levels, and value perceptions

The "Value Propositions Building Block" outlines how products/services offer value to specific customer segments. It's the unique reason customers choose one company over another, addressing specific problems or needs.

!USP!

The "Channels Building Block" details how a company interacts with its customers to convey its Value Proposition. It encompasses communication, distribution, and sales, facilitating awareness, purchases, and value delivery

The "Customer Relationships Building Block" defines the interactions a company sets with its customer segments. It's vital to determine relationship types, which can vary from personal to automated, driven by acquisition, retention, or upselling motives

The "Revenue Streams Building Block" denotes a company's earnings from each customer segment. It discerns between one-time transaction revenues and recurring revenues, based on customer value perceptions and payment patterns.

The "Key Resources Building Block" identifies essential assets for a business model's functionality, enabling value proposition delivery, market reach, customer relationships, and revenue generation. These resources can be physical, financial, intellectual, owned, leased, or partner-acquired.

The "Key Activities Building Block" outlines crucial actions for a business model's success, like delivering value, reaching markets, and earning revenue. Activities vary by business type: software development for Microsoft, supply chain for Dell, and problem-solving for McKinsey.

The "Key Partnerships Building Block" highlights essential suppliers and partners for a business model. It encompasses strategic alliances with non-competitors, coopetition with competitors, joint ventures for new businesses, and buyer-supplier relationships for supply assurance.

The "Cost Structure" details business model expenses. It differentiates between cost-driven models prioritizing cost minimization and value-driven models emphasizing value over costs. It considers fixed, variable costs, economies-of-scale, and economies-of-scope.