The Roles of Business Plan to an Organization

Importance of a Business plan

A business plan is a document that helps a business to look ahead, allocate available resources, be ready for opportunities or problems and be able to focus on the critical areas. A well prepared business plan assists an organization in ensuring that there is maximum growth and expansion (Abrams & Kleiner, 2003). A business plan contains: an executive summary, company outline, product summary, market opportunity, sales and marketing, operations such as human resource, and financial statements.

A business plan helps a business to assess the viability of a business concept and to measure the long and short term success. It serves as a path to the future of the business, it includes both operational and financial outlook. With a well completed document of financial statements, then incomes can be estimated, the cash flow, and the balance sheet both for long term and short term (Abrams & Kleiner, 2003).

A well prepared business plan helps the business to plot a course that will help it in meeting its objectives, helps to allocate the scarce resources optimally to achieve its goals. It helps to clarify the business’s vision and to communicate to key stakeholders such as the bankers, investors, advisors, and senior employees. Banks rely on the business plan to establish the credibility (Abrams & Kleiner, 2003). Also key investors rely on the writing business plan to establish whether the business is worthy to be invested in.

A business plan helps an enterprise determine the market share that its product will be able to attract and whether it will be profitable to undertake that venture. With this it will help to define the market that the business wants to target and establish good marketing strategies in order to reach this target market. It helps in estimating capital to start up the business and also estimate any additional finances that will be required before the business kicks off. Businesses that have well prepared plans rarely meet disasters because the plans help them to anticipate potential problems and risks and look for ways of solving them before they become disasters (Abrams & Kleiner, 2003).

The theory of demand and supply

The theory of demand and supply helps organizations to determine prices and quantity of goods to be sold and how the economy is changing. It is the determination of price and output in an economy. Demand shows the quantities of output that buyers are willing and able to purchase at a prevailing market price. Demand theory therefore shows how individual consumers are rational in choosing the most preferred quantities of a good in respect to price, income, and preference among others (Anon. 2010). If the price of a given commodity rises, the consumer’s purchasing power reduces and consumers move to substitute products that are cheaper.

On the other hand supply shows the quantity of goods and services that suppliers are willing and able to sell at a given price. Producers always aim at maximizing profits and they tend to produce more when the prices are high. The Demand and supply theory can be used by businesses to determine the amount of factors of production such as capital, labor, and raw materials, to be employed and income allocation. For example in determining the cost of labor, the quantity of labor employed and the wage rate are modeled from demand for labor and labor supply (Anon. 2010). Theory of demand and supply helps in determining the quantity of total output to be sold and the price per unit.

Business ethics

Business ethics show the expected behavior that a business should portray when dealing with the public at large. It is diverse and it not only concern dealings with the public but also with the customers. Business ethics plays a major role in the success of any business. The way a business deals with the environment around it contribute a lot to how the public views it. The way a business treats its employees and the communities around it determines its public image.

Business ethics are directly related to investment. Business ethics involves being responsible to an investor. The stronger the business ethics are for a particular company, the higher the chances of attracting investors in the business and this leads to success (Crane & Matten, 2007). A business does well when it has joint ventures, for these ventures to help a company to succeed then they ought to be good partners in the business. Good partners result from good public image which results from strong business ethical behaviors.

Marketing strategy

A marketing strategy can either make or destroy a business. A good marketing strategy should concentrate on the critical areas that will ensure customer satisfaction. It’s a combination of promotion, pricing, distribution, products development, and other basics. It should identify the business goals for marketing, and show the method of achieving them. It helps a business to concentrate on the available resources on the greatest opportunities in order to increase sales and thus have a competitive advantage (Fifield, 1998).

Organization structure

An organization structure forms a system with tasks and responsibilities and the respective authorities. With an organization structure, employees know who to report and where to seek help in case of difficulties. This leads to a smooth learning of the organization and employee corporation which in turn results to business success.

Reference

Abrams, R., & Kleiner, E. (2003). The successful business plan: secrets & strategies. 4th edition. Palo Alto, CA: Planning Shop.

Anon. (2010). Economics Basics: Demand and Supply. Web.

Crane A., & Matten, D. (2007). Business ethics: managing corporate citizenship and sustainability in the age of globalization. New York: Oxford University Press.

Fifield, P. (1998). Marketing strategy. New York: Elsevier.

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