MEDIUM-LONG RANGE PLANNING
Some of the important aspects to be analyzed when preparing a
Medium-Long Range Plan are:
|
definition of
the company mission (products,
prices, markets, profitability, etc.) and clear identification
of the "core business "; |
|
verification
of the company assets (human
resources, industrial logistics, financial strength, etc.); |
|
study of the
marketing mix (products,
prices, quantities and gross profits) and definition of the strategies
to be adopted (which products in which markets, industrial logistics,
necessary resources, etc.); |
|
analysis of the
evolution
in sectors related to the fields in which the enterprise operates; |
|
unbiased assessment
of the product portfolio
(actual and projected) indicating the competitive position for
each product in each market; |
|
marketing data
collection (competition,
market share, total available market, etc.) in the market in
which the enterprise is active, or wants to become active. |
PERFORMANCE CONTROL
When properly installed
it makes available to the Top Management the following elements:
|
flexible budget (with clear indication of the break-even
point) and an accounting plan showing the categories of homogeneous
groups of expenditures, to facilitate the control of the costs
and the gross margin; |
|
monthly situation
of costs and revenues
(showing the differences from the budget) indicating the profitability
of the enterprise (without waiting for the mandatory fiscal reports); |
|
an updated situation
of the assets to check,
and therefore to manage, the active and passive evolution of
the enterprise; |
|
product costs evolution (by
product, by production cycle, by activity, etc.) to intervene,
when necessary, in due time, on sales department, warehouse management,
purchasing office, etc.; |
|
EDP system that reduces the times (and the costs)
necessary to elaborate all the necessary information to allow
the Top Management to operate with methods similar to those indicated
by the "total quality philosophy". |
|
At the threshold of the third
millennium, the enterprises must recover the ability to remunerate
the production factors: labour and capital.
The goal is not only to produce new wealth, but also to
assure survival, profitability and development
for the years to come; and the future has never been so
uncertain as today.
Time to market, flexibility, lean organization,
ABM (Activity Based Management), attitude toward change,
internationalization, outsourcing, reduction
of the circulating capital, excellence in quality,
are some managerial techniques that have proved to be valid in
the past and that today are considered essential in every firm
correctly managed.
Two fundamental prerequisites
are necessary to adopt these techniques with profit: an accurate
representation of the business situation and a medium-term
planning that will drive the business evolution.
From these prerequisites a synthesis
can be derived that will drive the enterprise in all the initiatives
to be undertaken.
MEDIUM-LONG RANGE PLANNING (LRP or Business Plan)
In extreme synthesis it collects and presents in an explicit
manner the knowledge that the enterprise already possesses, paying
particular attention to the motivations and the conditionings
that will influence the business development in the years to
come; it is very often necessary to integrate the internal data
with a deep analysis of the status of the market in which the
enterprise operates.
The Business Plan or LRP (usually for three years) can
be prepared starting from these data, integrated by the analysis
of the points of strength and weakness of the enterprise
(know-how, technology, managerial resources, commercial coverage,
etc.). The LRP must underline the turnover, the cost trends,
the forecasted profits, the investments needed in the commercial
department, in R&D, etc. identifying all the actions and
controls which are necessary to be taken to ensure a correct
implementation.
PERFORMANCE CONTROL
Performance Control allows an effective control of the business
profitability studying the economic and organizational variables;
in practice it consists of a complete set of data locating the
points of the business activity that originate the costs
and the revenues.
Starting from this information we can identify the causes that
determine the differences between the actual and forecasted
results (budget) and the corrective interventions must be
defined.
These are the necessary elements
to prepare economic and financial plans (business plan) necessary
to present the enterprise to the banks, to the
industrial investors, etc. |