Identifying and Managing High Priority Risks within the Business Plan

The assignment content focuses on developing a strategic business plan for an organization. The plan involves conducting risk management activities, regulatory compliance audit, corporate governance review, financial planning, investment funding application, and strategy development. It also includes creating a strategic action plan with primary goals, objectives, and strategies to achieve the plan's purpose. Additionally, it emphasizes the importance of performance measurement and plan review and update to ensure the plan remains effective and responsive to change.

STRATEGIC BUSINESS PLAN
for
(company name)
for Period
July 2015 to December 2017
(dates are examples only)
Created/Approved by (name), (position), on (date)
Update Status: (amendment number), on (date)

TABLE OF CONTENTS
Executive Summary
Section Page
1. Strategic Focus
2. The Business
3 Market Analysis
4 Products
5 Marketing
6 Research and Development
7 Production and Delivery
8 Supply Chains
9 Business Systems and Processes
10 Stakeholder Relationships and Alliances
11 Organisational and Management
12 Environmental and Social Impacts
13 Risk Factors and Regulatory Compliance
14 Corporate Governance
15 Financials
16 Application of Investment Funds
17 Strategic Action Plan
18 Plan Improvement
Appendices:
1.
2.
3.

Some Thoughts on Writing this Plan
before We Start
 Clearly identify the readers of this document. Then write the plan in a style
that is easily understood by readers
 Remember that this plan is a working document that has the clear purpose
of initiating focussed action and generating clear and measurable results.
Avoid the excessive use of descriptive adjectives to 'pad' or over-sell the
plan. Flowery, highly descriptive language can cloud key issues, blur the
plan's focus and slow/confuse its implementation
 Keep the plan 'tight'; ensure it remains concise, balanced, clear and logical.
Where possible use quantitative rather than qualitative information.
Remember the KISSS approach to planning; keep it simple, short and
specific. Interlink all Sections, with the Market Analysis providing a clear
focus for all subsequent sections.
 Focus on facts and information from credible and reputable sources.
Where possible avoid critical dependencies on one source of information.
Build redundancy in to information sources. Validate, validate, validate all
key information used in the plan
 Always remember that faulty assumptions and faulty logic are some of the
greatest hazards to business performance and business planning. Also
remember that a good plan implemented today will always beat an
excellent plan implemented some time in the future. So, get the plan
completed and in to action as soon as is practicable. Also, plans must be
adaptive to changing circumstances. If the plan is not performing be
prepared to complete 'major surgery' on it.
Some Thoughts on a Format for Each Section
The following is a simple, but effective planning format that will fit many of
the sections in this plan. The format is not rigid and should be adapted to the
requirements of individual Sections as applicable. The four sub-sections that
comprise the format are as follows:
 Current Situation
Clearly and concisely present the current situation with any contributing
history, and any trends, cycles, changes or future developments that are
relevant
 Key Issues
Clearly define the most urgent and important issues as they relate to the
current situation for this Section, and the overall purpose of this plan and the
company's Mission. Key issues are usually those strengths, weaknesses,
opportunities, threats, capability gaps and impediments that impact on
business performance

Strategies to Address the Key Issues
Formulate strategies using the SMAAART acronym to address the key issues.
SMAAART - Specific, Measurable, Action-orientated, Achievable, Affordable,
Relevant and Time-bound
 Key Performance Measures and Targets
Establish key performance measures/indicators, performance targets and time
lines in conjunction with the strategies to assess and improve performance
Five Tests for a Good Strategic Business Plan
 Comprehension
Am I satisfied that all readers of this plan will clearly understand it?
 Appropriateness
Am I satisfied that the strategic/business directions proposed are
aligned with the company's constitution?
 Sustainability
Am I satisfied that the strategic/business directions proposed are of
a nature and quality that should ensure the future?
 Feasibility
Am I satisfied that:
* All company implications of the strategic/business directions
proposed have been considered thoroughly,
* Implementation is possible, and
* All supporting goals, objectives and strategies are realistic,
practically achievable, affordable and comprehensive?
 Accountability
Am I satisfied that:

* Management accountability is clearly defined,
* Management is adequately resourced and well prepared to
implement this plan,
* Effective remedial action has been planned in the event a
management shortcoming occurs with plan implementation?

EXECUTIVE SUMMARY
The Executive Summary is the last section written. It should be restricted to
two to three pages in length. In essence the Executive Summary is a very
effective distillation of the overall business plan into a 'hard hitting' summary
of key performance initiatives and performance targets. Typically it would
include the following:
 The Business Opportunity
 The Product
 The Market Strategy
 The Management Team
 Profit and Cash Projections
 Investment Needs
 Returns to Investors
SECTION ONE
STRATEGIC FOCUS

The Aim of this Plan
What do we wish to achieve with this plan?…start, grow, consolidate,
downsize or exit.
Our Mission
A Mission Statement clearly defines the primary purpose or reasons
for our existence. It is heavily focused on Customer Value. It is also
vital to achieving organisational alignment
A mission statement typically provides clear and concise answers to the
following questions:
 What products and services do we deliver?
 Where and when do we deliver our products and services?
 Which customer groups are our primary groups?
 Where are our primary customers
 What tangible value do our products and services deliver to customers?
 What is our competitive advantage?
 What additional community and environmental benefits do we generate?
Answers to the above questions provide a start-point for preparing a
statement that clearly positions the company in the minds of key stakeholders
and customers
Core Organisational Competencies
Which core organisational skills and competencies are vital to achieving our
mission
Organisational Values
What core organisational values must be imbedded in our organisation to
establish a culture capable of achieving our Mission?

Highest Priority Goals
List up to six of your highest priority goals in order of priority. These goals
are formulated at Section 17. Section 17 shows how to use the SMAAART
acronym to write clear, concise action-oriented goal statements. SMAAART
Goals - are Specific, Measurable, Action-oriented, Achievable, Affordable,
Time-bound. An example of a SMAAART Goal: By 30 June 2014 to construct
and commission a world-standard production and delivery facility capable of
producing two 20 metre road bridges per month for direct installation in to
Australia's public road system.
In essence strategic goals progressively take the company to its next level of
performance and keep it there.
 Goal One.
 Goal Two
 Goal Three
 Goal Four
Performance Objectives
The performance objectives below, in combination, form a performance
scorecard for easily tracking the performance improvements generated by
this plan. Section 17 provides the inputs for this scorecard. The planning
team determines the composition of the performance scorecard.
Performance
Area
Performance
Measures
Target Time Frame
Financial
Performance
Customer and
Market
Performance
Internal
Efficiency and
Effectiveness
Long Term
Development

and
Innovation

SECTION TWO
THE BUSINESS
Provide a concise overview of the business. Areas for consideration when
preparing this section to include:
Owners/Directors/Shareholders/Shareholdings
A brief history of the business
Corporate and business cultures
Nature of the business and it main activities
Location
Current stage in its life cycle
Past performance and key achievements
Key business advisors - Solicitor, Banker, Accountant, and Consultants
Relationships with key stakeholders
Competitive strengths and weaknesses
SECTION THREE
MARKET ANALYSIS

Conduct a detailed analysis across each of the following areas to identify and
quantify key market opportunities/gaps, barriers to market entry, threats,
compliance requirements, risks, performance multipliers, critical success
factors etc that must be considered when developing high priority product
development, marketing and business strategies. All budgetary and financial
constraints must be factored in to this planning.
 Global/National Trends, Developments, Cycles and Changes of
Relevance
 Macro-environment (eg, political, economic, legal, social/cultural,
demographics, technology)
 Industry
 Markets, Customers and Suppliers
 Competitors and their Products
Questions typically asked during the analysis would include:
- What are the industry's economics, critical success factors, key risks,
competitiveness, compliance and standards requirements, emerging trends
and key technologies?
- Who are the key customers and major competitors in each target markets?
- What are the sizes of the target markets? Are they growing? If yes, at what
rate?
- What market share does each major competitor hold in your primary
markets
- What are the strengths and weaknesses of major competitors and their
products?
- What are the competitive price points for products in each market?
- What competitive advantages must your products have to successfully enter
and compete in target markets? How will you differentiate your products and
add more-customer-value than competitors?
- Key questions about your primary customers:
* Specifically what need or problem does your product target?
* Who will make the decision to purchase your products?
* What are their decision criteria?
* Where are the products bought?
* How are the products bought?
* When are the products bought?
* Why are the products bought?
- How well do you know your primary customers and key competitors?
- How strong are your relationships with key customers and key stakeholders.
How do you involve them in product development? What factors will be
critical to building strong and enduring brands with them?
- What levels of demand for your products are realistic across your primary
markets?
- In order of priority what are your primary markets? Why?
- How will your primary competitors react when you enter their markets, now
and over the next two years? What are you going to do about their
responses?
- What are the major barriers to market entry?
- What are the critical success factors for each market?
- What key product distribution, product support and customer service issues
must be considered?

- Which companies and products are likely to become competitors in the
future?
- What new or emerging technologies and substitute products are likely to
become threats in the future?

SECTION FOUR
PRODUCTS
Based on the findings of Section Three identify your product's key strengths
and weaknesses as they relate to key market opportunities and threats. Then
develop strategies to address each issue (eg, build on strengths and correct
weaknesses) for each product in your product portfolio. When preparing this
section consider the following framework for clustering key issues and related
strategies. All budgetary and financial constraints must be factored in to this
planning.
 Describe your current and near-future products?
 What gives your products a clear competitive advantage?
 What are the benefits and value provided to customer as opposed
to 'features'?
 What are the environmental and social impacts and implications?
 What regulations, standards and codes must be complied with?
 At what stage is each product in its life-cycle? For example:
- Research completed
- Prototype completed
- In-house testing
- Customer testing
- Market ready
- First up-grade completed
Also consider conducting the product analysis and planning for this section
across the following stages:
Current Situation
Key Product and Market Issues
Key Strategies
Performance Measures and Targets
SECTION FIVE

MARKETING
Based on discussions at previous sections develop a concise set of highly
focussed marketing strategies for your most attractive and highest priority
markets. These strategies will guide your market entry, market development,
and brand building activities. Establish budgets for these activities. Set
realistic and measurable performance targets and time lines for each market
entry/development strategy. These targets are critical to designing and
building business and production capacities aligned with expected market
demands on entry, and in to the future.
In essence marketing strategies in combination create the well differentiated,
high value and compelling proposition to customers that persuades them to
purchase from you rather then a competitor. These strategies should build on
the competitive strengths of the company while exploiting the weaknesses of
key competitors. A highly competitive, high-value proposition to customers is
typically created around the following drivers of competitive advantage:
 Product benefits highly valued by the customer
 Product distribution eg, simple, speedy and easy customer-access to the
product
 Product promotion
 Customer communication, interaction and feedback
 Product support for the life of the product
 Customer service
 Product pricing and purchasing
 Product presentation and packaging
 Product compliance with all relevant legislation
SECTION SIX

RESEARCH AND DEVELOPMENT
Provide a background to current activities. Then identify key issues (strength,
weakness, gaps, threats and opportunities) and develop related strategies for
addressing each key issues. Link the R&D effort to your market research,
product development and marketing activities discussed in previous sections.
All budgetary and financial constraints must be factored in to this planning.
Areas to be analysed to include:
 Sources of R&D
- Current and planned
- Strategic alliances for R&D
 Intellectual Property Protection
- Patents held plus the corporate entity that holds the patents
- Shared intellectual property and its protection
- Intellectual property being used, but not owned
- Intellectual property protection currently being sort for new
developments
 Current and planned R&D activities
 Processes employed for the development and commercialisation of
new products and technologies
SECTION SEVEN
PRODUCTION AND DELIVERY
Provide a background to current activities. Then identify key issues -
strengths, weaknesses, and gaps in production capacities and capabilities - as
they relate to meeting the marketing requirements and targets, and R&D

requirements developed in earlier sections. Then develop linked strategies
with clear targets, time lines and budgets to develop and progressively
expand production capabilities and capacities. All budgetary and financial
constraints are factored in to this planning.
Key issues are typically identified following an evaluation of key production
and delivery performance-drivers. Typical areas to be addressed during this
evaluation include:
- Plant design, location, size and site requirements
- Access to key manufacturing technologies
- Production capacity and capability requirements
- Criteria for selecting contractors and suppliers
- In-house versus out-sourcing of manufacturing requirements
- The manufacturing and production standards, codes, regulations and OH&S
requirements that must be complied with
- Equipment needs
- Inventory management
- Manufacturing processes - configurations and technologies
- Product and production costings
- Purchasing systems
- Quality control systems
- Manufacturing resources planning
- Material requirements planning
- Warehousing
- Scheduling and dispatch
- Material supplies and inventory
- Critical/key inputs to all manufacturing and production processes
- Risk management
- Key staffing and skills requirements
- Clear linkages to, and feedback loops with the company's marketing,
product development, and R&D functions
- Work systems and teams for staff
- Designing, testing and improving all production and delivery systems to
meet market demands and expected growth
- Key performance measures and targets for controlling and improving all
production and delivery systems to increase production efficiencies and
effectiveness.
- Benchmarking and best-practice

SECTION EIGHT
SUPPLY CHAINS
Provide a background to current activities and list all key suppliers. Then
identify key issues - strengths, weaknesses, and gaps in supply chain
capacities and capabilities - as they relate to meeting the production and
delivery requirements and targets developed at Section Seven. Then develop
linked strategies with clear targets, time lines and budgets to develop and
progressively improve supply chain capabilities and capacities. All budgetary
and financial constraints must be factored in to this planning. Supply chains
assessments to include out-sourcing. For example any R&D that is out-
sourced should be included in this assessment.
Conduct the analysis and planning for this section across the following stages:
Current Situation
Key Supply Chain Issues
Key Strategies
Performance Measures and Targets
SECTION NINE
BUSINESS SYSTEMS AND PROCESSES

Based on the plans/strategies developed and performance targets established
in sections One to Eight identify key issues - strengths, weaknesses and gaps -
within the business systems and processes that drive business performance.
Then develop strategies to address these issues.
Performance reviews to improve internal business systems and processes
typically include an assessment of the following performance areas:
 Quality Management (eg, ISO 9001 - Quality Standard, AS 4269 -
Complaints Handling Standard)
 Risk Management (eg, AS/NZS, Risk Management Standard)
 Regulatory Compliance (eg, AS 3806, Compliance Program
Standard)
 Information Management and Security (eg, Security Standard
AS/NZS ISO/IEC 17799:2000)
 Financial management
 Managing the environmental and social impacts of business
operations
 Performance improvement across the business, to include
performance indicators and targets
 Future planning and ongoing innovation (eg, new product
development & process innovation)
 Employee performance and morale
 Stakeholder relationships
 Board and management performance
SECTION 10
STAKEHOLDER RELATIONSHIPS AND
ALLIANCES

Describe the current situation and list those key stakeholders that currently
contribute to business performance. Identify key issues - strengths,
weaknesses and gaps - that relate to improving stakeholder relationships and
alliances. Then develop strategies to address each key issue.
Stakeholder groups typically include customers, suppliers of good and
services, employees, regulators, the environment, community, government
departments and investors. Questions asked during the stakeholder analysis
include:
Are all of our key stakeholders clearly identified?
Who will become key stakeholders in the near future?
Are their expectations and requirements clearly understood?
Are they regularly consulted?
Are they kept updated, and involved in those business decisions that will
affect them?
SECTION 11
ORGANISATIONAL AND MANAGEMENT
Section Seven provides clear production and delivery projections and targets
for the company. Current organisational structures and human resource
capabilities will most likely require improvement to meet these increasing
business demands.

Conduct an analysis of the current situation and growth projections for the
company to identify the key organisational and human resource issues that
must be addressed if these growth projections are to be realised. Then
develop strategies with key performance measures and targets to address
these key issues.
Areas to be addressed typically include:
 Organisational Chart - show current structures and future structures
 The Management team with brief resumes - show the situation now and in
to the future
 Staffing requirements - now and in to the future
 Job descriptions and work design for management and staff - now and in to
the future
 Human performance standards, measurement and feedback - now and into
the future
 Management and staff training and development - now and in to the future
 Recruitment and induction - now and in to the future
 Encouraging innovation across the company
 Providing leadership and building morale
 Training needs analysis - now and in to the future
 Occupational health and safety
 Industrial relations
 Wages and on-costs
 Other relevant human resource issues

SECTION 12
ENVIRONMENTAL AND SOCIAL IMPACTS
Conduct the analysis and planning for this section across the following stages:
Current Situation
Key Environmental and Social Issues
Key Strategies
Performance Measures and Targets
SECTION 13

RISK FACTORS AND REGULATORY COMPLIANCE
Risk Management
Establish key risks to the overall business and its performance by identifying
high priority risks within each performance area represented by the sections
of this plan. Quantify these risks by assessing the gravity of their impacts on
the business should they be realised, and determining the probability that
they will be realised.
Following quantification of the risks establish an order of priority for their
control. Then develop risk management strategies - with performance
measures, targets and time lines - that address the highest priority risks.
The Australian Risk Management Standard AS/NZS 4360 provides a good
framework for conducting risk management activities within this sub-section
Regulatory Compliance
Conduct an audit of regulatory compliance requirements across each area of
the business as represented by the sections of this plan. Develop strategies
to address regulatory gaps and weaknesses. Australian Compliance Programs
Standard AS 3806 provides a good framework for developing an effective
compliance management system.
A regulatory compliance audit would typically embrace:
 Corporate governance
 Taxation
 Superannuation
 Employing staff
 Health and safety
 Trade Practices
 Intellectual Property Rights
 Environmental Issues
 The Privacy Act
SECTION 14
CORPORATE GOVERNANCE
Areas to be addressed by this section typically would include:
Corporate Structures

Company Constitution
Board of Directors - Size and Composition
Duties and Responsibilities of the Board
Board Performance
Advisors to the Board
Shareholder Agreements
SECTION 15
FINANCIALS
Based on the strategies and plans formulated, costings calculated, and sales
projected develop a set of financials for the duration of the plan. These
financials should include cash flows, profit and loss, balance sheets,
investment requirements, and key financial performance indicators and
related performance targets.

SECTION 16
APPLICATION OF INVESTMENT FUNDS
This section should be linked to all prior planning and at minimum address the
following:
 What will be the total investment requirement across the duration
of this plan - when and how much?
 Which investors will be involved; how much will they provide and
when will they provide it?
 How will the funds be used at each round of investment?
 What will the capital structure and ownership be after each round
of investment?

SECTION 17
STRATEGIC ACTION PLAN
Primary Goals, Objectives and Strategies
The Aim of this section is to integrate all strategies developed across previous
sections into a cohesive and balanced plan of highly focussed action that will
achieve the overarching purpose of this Strategic Business Plan.
Firstly…..High-priority, clear, action-orientated, time-bound and practicably
achievable goals are formulated around clusters of 'like' strategies developed
across the previous sections. Goals mark a clear and well-marked pathway for
achieving the aim of this plan. To ensure the plan has a sharp focus the
number of key goals should be restricted to six or less when ever possible. A
clear time frame and performance target should be integrated in to each goal
statement. An example of a goal statement: By 30 June 2002 to construct and
commission a world-standard production and delivery facility capable of
producing two 20 metre road bridges per month for direct installation in to
Australia's public road system.
After each goal has been clearly formulated develop a set of supporting
objectives and strategies. Objectives define the best pathway for achieving
each goal. Strategies define the pathway for achieving each objective.
Objectives and strategies are also written using the SMAAART acronym -

Specific, Measurable, Action-orientated, Affordable, Achievable, and Time-
bound. The final step in developing an interacting hierarchy/network of
focussed action is the Task plan. This plan allocates people and resources to
completing those tasks required for achieving each strategy. Vital budget and
resource considerations are integrated in to the overall planning process to
ensure all planned actions are affordable.
The interacting hierarchy/network of action for achieving the aim of the plan is
illustrated below. The hierarchy/network of focussed action is not a rigid
structure and, where possible, should be adapted to the each situation to
ensure it provides fast, effective and relatively simple action pathways for
delivering results of significance.
 Key Strategic Goal
 Objectives to achieve the strategic goal
 Strategies to achieve each objective
 Task Plans to achieve each strategy

Plan Implementation
Typically management in consultation with staff and key stakeholders
implements each Goal and its supporting objectives, strategies and
action/task plans. Balanced teams can be effectively employed to implement
strategies and supporting action/task plans.

SECTION 18
PLAN IMPROVEMENT
Performance Measurement
The plan's performance should be assessed against its effectiveness in
achieving its high priority goals and performance targets.
Plan Review and Up Date
To ensure the plan continues to provide a sharp focus and remain responsive
to change it should be formally reviewed and updated every six months, at
the achievement of a Strategic Goal and at any other time deemed necessary.
Implementation of this plan is to be a fixed agenda item at meetings of the
Board of Directors.