80340680 advanced operations and production management om0013

8/12/2019 80340680 Advanced Operations and Production Management OM0013

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Sikkim Manipal University - MBA - OM0013 Advance Production &Operation Manaement

Semester! 3 - Assinment Set! 1

Name Madhu Kumar .S

Roll No. 531011118

Program MBA 3rdSem

Subject Advance Producton ! "#eraton

Management $Set 1%

&ode "M0013

'earnng

&entre

Al ()ma * +A,S

RAK- .A./- 051

Mad"u #umar S Roll No2 531011118 Pae 1 o$ 33


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% 1 'plain (it" an e'ample t"e impact o$ product or service li$ecycle on operation stratey)

Ans!-

*ntroduction

The late 1970s and the early 1980s saw the development of themanufacturing strategyparadigm by researchers at the Harvard BusinessSchool This wor! carried out by professors "illiam #bernathy $in cler!%&obert Hayes% and Steven wheel "right emphasi'ed on how

manufacturing e(ecutives could use their factories) capabilities asstrategic competitive weapons Their main theme was concerned with theidea of factory focus and manufacturing tradeoffs They !new that afactory cannot e(cel in all performance measures *ts management mustdevice a focused strategy% creating a focused factory that performs alimited set of tas!s efficiently This re+uired tradeoffs among suchperformance measures as low cost% high +uality% and high fle(ibility indesigning and managing factories

Operations as a Service

The emerging model in industry focuses on the service business Thismodel always holds true% whether the organi'ation develops airplanes orcomputers *n the manufacturing sector% such services can be divided intocare and value,added services that are provided to internal and e(ternalcustomers of the factory The core services customers% or the e(ternalcustomers% want the products that are customi'ed to their needs%delivered on time% and priced competitively These are commonlysummarised as the ma-or performance ob-ectives of the operationsfunctions. +uality% fle(ibility% speed and price /cost of production12 3alue

added services simply ma!e the e(ternal customers si'e easier or in thecase of internal customers% help them carry out their particular functionsefficiently 3alue added factory services can be classified into four broadcategories% they are.

4 *n$ormation! *t is the ability to furnish critical data on productperformance% process parameters and cost to internal groups /such as&esearch and 5evelopment and to e(ternal customers% who then use thedata to improve their own operation or products 6or e(ample% many

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companies provide +uality data sheets documenting actual product testingand field +uality performance to field sales and service personnel

4 Pro,lem solvin!*t is the ability to help internal and e(ternal groupssolve problems especially in +uality 6or e(ample% a metal and fabricatorcompany sends factory wor!ers out with sales people to troubleshoot+uality problems This helps them -oin with shop floor personnel onremedial efforts

4 Sales support!*t is the ability to enhance sales and mar!eting effortsby demonstrating the technology% e+uipment% or production system thecompany is trying to sell 6or e(ample% ure!a 6orbes organi'es $ios!s in

busy area to demonstrate its water purifier% vacuum cleaner and otherproducts

4 ield support!*t is the ability to replace defective parts +uic!ly /fore(ample% aterpillar promises to ma!e repair parts available anywhere inthe world within 8 hours or to replenish stoc!s +uic!ly to avoiddowntime or stoc! outs /for e(ample% a retail chain is lin!ed to its Hong$ong te(tile mills via a sophisticated computer system that signalsfactories to begin producing fast selling items as soon as wee!ly salesfigures are collected

3alue added services provided to e(ternal customers yield two benefits6irstly% it helps them to differentiate the organi'ation from thecompetition *ndeed in many cases it is easier to copy a firm)s productthan to create the value added service infrastructure to supportSecondly% these services build relationships that bind customers to theorgani'ation in a positive way

The design and ongoing management of a firm)s operation have asignificant impact on the financial success of the firm The firm)s strategyis implemented with a design that is portrayed financially in the assets of

the firm ach asset , be it a plant% a warehouse% an operations centre% orthe inventory carried in these facilities is owned by the firm and re+uiresa significant investment The firm)s owners and shareholders want areturn on this investment 5ecisions such as how big a plant should be%how many plants there should be and where to locate them and whetheror not certain operations should be outsourced are ma-or topics ofoperations management :ther decisions such as how much inventory isneeded to meet re+uired service levels% relate directly to the assetinvestment 6igure ;1 shows the competitive dimensions of a firm



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iure +)1! .ompetitive /imensions o$ a irm


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optimally control such resources as inventory transportation andproductions e+uipment

*ncreased .o-production o$ oods and Services

The internet has opened new ways for the customer to interact directlywith a firm Simple direct entry and monitoring of orders is only the firststep in ensuring value to the customer through information sharing*ntelligent use of information technology allows the shedding of entirelayers of inefficient customer oriented functions within a firm% resulting indramatic reductions in cost while actually improving service to thecustomer

Manain .ustomer 5ouc" Points

#s companies strive to be more efficient% customer support and trainingbecome the first areas to ta!e cost cutting This will eliminate customerfrustration and results in avoidable frustration to the customers andresults in implied costs in the form of litigations and lost customers



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% + 'plain t"e types o$ value added $actory services) 'plain t"e

ma7or competitive dimensions o$ operations stratey)

Ans!-

Operations as a .ompetitive 8eapon

*n addition to developing the organi'ations strategy% each functional unitwithin the organi'ation should establish a strategy and wor! to achieve itsgoals Traditionally% the organi'ation strategies of most companiesfocused on the mar!eting function > which products to ma!e% whichmar!et to penetrate etc However% most aspects of the mar!eting function

affect the operation function to some degree very time a product isintroduced or revised% or the product promotion is changed% theproduction system feels the effect This is especially true for services%where the service system is the product

The following e(ample shows how operational strengths can be usedeffectively as competitive weapons.

4 Product 9 process e'pertise!# company can have special e(pertise inma!ing certain products 6or e(ample% Sharp orporation has prospered

in consumer electronics , than!s to its dominance in producing li+uidcrystal displays

4 %uick delivery! # company can have a production process andcapacity% enabling it to produce and satisfy a customer)s re+uest +uic!lySome e(amples are one hour eyeglass manufacturing% one hour photodeveloping and same day dry cleaning and shoe repair

4 S"ort product cycle!&esearch has shown that the first company toenter a mar!et gains a significant mar!et share advantage over

subse+uent competitors # mar!et entry study by #


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4 Prediction $le'i,ility! Some companies speciali'e in having highlyfle(ible and responsive operations elestica% a anadian computer

component manufactures uses e+uipment that is not bolted to the floor sothat production lines can be reconfigured within hours or days to ma!enew and different products This fle(ibility has allowed elestica toe(pand from ma!ing a few products for only customer /*B


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developed production processes that allowed them to be low costproducers But each company wor!ed hard on its production processes to

develop a reputation for high +uality as well Toyota is able to outsellcompetitors consistently while being priced higher because of its higherperceived +uality :ne component of product +uality% especially forrestaurants% is product consistency


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low price% high +uality% product features innovation% availability%convenient location% customi'ed products% reliability customer services%

guarantees and so on The difficulty of actually gaining this advantagedepends on the performance of competitors > and when competition iswea!% it is relatively easy to gain a competitive advantageE it is verydifficult when competition is fierce But the level of competition dependson the mar!et features% including its si'e% growth potential% stability%profitability% significant trends% ris!s% number competitors% relative si'e ofcompetitors% barriers to entry and e(it% etc

1) Porter?s ive orces o$ .ompetition

=orter

;2

summari'es the forces of competition in his model of five forcesof competition which is shown in figure ;;

iure +)+! Porter?s ive orces Model

ivalry amon orani


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4 @o single organi'ation dominating the mar!et or controlling the mar!etconditions

4 :rgani'ations that use diverse strategies to improve their mar!etposition

4 High e(it barriers so it costs more to get out of a mar!et than to stay inand complete

4 ustomers who have no loyalty to a particular supplier and can changeto another supplier with little cost or inconvenience

Suppliers o$ key inputs

very organi'ation needs reliable suppliers for its materials such as rawmaterials% resources% services% utilities etc These suppliers can play adirect role in competitiveness #t a basic level% an unreliable supplier canreduce the availability of some !ey resource ma!ing it impossible for anorgani'ation to compete customer orders thereby reducing itscompetitiveness :n a broader level suppliers affect the cost ofoperations% +uality% performance of products% production +uantities%delivery times% terms and conditions of supply and the very feasibility ofan organi'ation This effect is particularly strong when.

4 &eliable advertise are critical for smooth operations

4


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.ustomers

ustomers prefer competitive mar!ets% which offer the best deals *ngeneral% customers are in a strong position when.

4 Their numbers are big and they buy in large +uantities

4 They buy a large proportion of a particular organi'ation)s output

4 =roducts are standardi'ed% with little to differentiate between them

4 There are many competing suppliers of the same product or service% and

customers can shift between them with little cost or inconvenience

4 There are low cost substitutes or alternative products

4 ustomers can integrate bac!ward and established their own services ofsupply

4 The materials are relatively e(pensive% ma!ing customers more carefulin their choices

Potential ne( entrants

#s the mar!et widens there is always an opportunity for new entrants intothe mar!et *f conditions are in place% they bring e(tra capacity% in eitherbuilding new facilities or ac+uiring and reorgani'ing operations thatalready supply the mar!et #nd they typically adopt strategies ofaggressive competition to build mar!et share at the e(pense of e(istingsuppliers

=otential new entrants to a mar!et usually face some !ind of entrybarrier% which consists of the obstacles that put them at a disadvantage

compared with organi'ations already in the mar!et The sources of thesebarriers include.

4 The need for large initial investments

4 conomics of scale that ma!e it difficult for new entrants to start smalland build up their operations

4 ffects of e(perience and the learning curve



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4 @eed to access speciali'ed !nowledge or technology

4 ustomer loyalty and brand preferences

4 #ccess to logistic channels that might be reluctant to ta!e on newproducts

4 3ertically integrated competitors that limit access to parts of the supplychain

4 &egulatory barriers such as heresies% tariffs and international traderestrictions

4 The threat from new entrants is increasing

"hen entry barriers are low% the industry is attractive and there are manypotential new entrants The e(isting players in the industry find it difficultto compete when the entrants bring in new operations% technologies thatma!e the e(isting competitors obsolete

Su,stitute products

These situations occur when customers can replace one product by

another that comes from organi'ations in a different industry 6ore(ample% a mail service can substitute printed letters by telephone emailor te(t messages Similarly% customers can substitute contact lenses forglasses% artificial sweetness for sugar% and internet news services fornewspapers Substitute products are a strong force when.

4 They are relatively cheaper compared with the e(isting price of theproduct

4 :ther costs of moving to the substitute are low

4 They are readily available

4 They have e+uivalent performance and features

4 =roducers of substitutes are !een to increase their sale

4 =roducers of the substitute can easily add new capacity

alue addition t"rou" operations

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#ll the operations contributing to a process must add value to the finalproduct &otter says that Fan organi'ation adds value by performing both

primary and support activitiesG The primary activities are.

4 *n bound logistics.


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iure +)3! Sources o$ .ompetitive Advantae

The !eys to competitive success for the operations strategy lie in.

4 Anderstanding target mar!ets

4 *dentifying the priority choices

4 Anderstanding the conse+uences of each choice

4 #ppreciating the various trade offs

Thus% the starting point of any competitive analysis must be a basicunderstanding of the organi'ation)s mar!ets and then the choices thatcustomers face when deciding which product or service to buy

The following are the main steps necessary to perform a competitiveanalysis.

1 Stae 1!5eveloping properly defined corporate ob-ectives

; Stae +!5etermining mar!eting strategies to meet those ob-ectives

Stae 3!#ppreciating the operational implications for the mar!ets inwhich firm operates

Stae 4!Anderstanding the essential attributes of product and servicecombinations

I Stae 6!stablishing operations strategy competitive priorities usingthe main building bloc!s of the operations strategy /tactical and supportactivities% core competencies and processes% resources and technologies

J Stae :!#naly'ing how the strategies are interconnected% how theywill affect the mar!et% and customer choices with respect to a particularproduct or service

7 Stae =!5eveloping a strategy for operations

8 Stae >!(ecuting the operations strategy

5ifferent customers are attracted by different attributes2 Somecustomers are interested primarily in the cost of a product or service and

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hence some companies attempt to position themselves to offer the lowestprices The ma-or competitive dimensions of operations strategy include

the following.

.ost or price

*n any mar!et% there is always a segment of the mar!et that buys solelyon the basis of low cost To successfully complete in this inch% a firm mustbe the low cost producer% but even this does not always guaranteeprofitability and success products and services sold strictly on the basis ofcost are typically commodity li!e the customer do not differentiate theproduct or service of one company from that of the others This segment

of the mar!et is usually +uite large and many companies are lured by thepotential for significant profits% which they associate with the large hintvolumes ompetition in this segment is fierce and so is the failure rateAltimately% there can be only one low cost producer% who usuallyestablishes the selling price in the mar!et

%uality

There are two characteristics of a product or service that define +uality.design +uality and process +uality 5esign +uality relates to the set offeatures the product or service contains This relates directly to the designof the product or service The goal in establishing the proper level ofdesign +uality is to focus on the re+uirements of the customer

=rocess +uality% the second characteristic of +uality% is critical because itrelates directly to the reliability of the product or service The goal ofprocess +uality is to produce defect free products and services =roductand service specifications% given in dimensional tolerances andKor serviceerror rates define how the product or service is to be made #dherence tothese specifications is critical to ensure the reliability of the product orservice as defined by its intended use

/elivery speed

*n some mar!ets a firm)s ability to deliver more +uic!ly than itscompetitions may be critical # company that can offer an on,site repairservice in only 1 or ; hours has a significant advantage over a competingfirm that guarantees service only within ; hours

/elivery relia,ility



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This dimension relates to the firm)s ability to supply the product or serviceon or before a promised delivery due date 6or an automobile

manufacture% it is very important that its supplier of tyres provide theneeded +uantity and types for each day)s car production *f the tyreneeded for a particular car is not available when the car reaches the pointon the assembly line where the tyres are installed% the whole assemblyhire may have to be shutdown until they arrive

.opin (it" c"anes in demand

*n many mar!ets% a company)s ability to respond to increase anddecrease in demand is important to its ability to complete "hen demand

is strong and increasing% costs are continually reduced due to economiesof scale% and investments in new technologies can be easily -ustified Butscaling bac! when demand decreases% the company has to ta!e manydifficult decisions about laying,off employees and related reduction inassets The ability to deal with dynamic mar!et demand over the longterm is an essential element of operations strategy

le'i,ility and ne( product introduction speed

6le(ibility from a strategic prefecture refers to the ability of a company tooffer a wide variety of products to its customers The critical feature ofoperations strategy is the ability of the company to turn out new productsin the shortest possible time span

5"e concept o$ 5rade o$$C in Operations Stratey

The underlying logic of the concept of FTrade offG in :perations Strategyis that an operation cannot e(cel simultaneously on all competitivedimensions% onse+uently% management has to decide which parametersof performance are critical to the firm)s success and then concentrate theresources of the firm on these particular characteristics 6or e(ample% if a

company wants to focus on speed of delivery% it cannot afford to be veryfle(ible in its ability to offer a wide range of products Similarly% a low coststrategy is not compatible with either speed of delivery or fle(ibility High+uality is also viewed as a trade off to low cost

# strategic position is not sustainable unless there are compromises withother positions Tradeoffs occur when activities are in compatible so thatmore of one thing necessitates less of another

5"e Marketin Operations link

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*t is necessary for an organi'ation to understand its mar!ets from bothmar!eting and an operations perspective Terry Hill% a professor at :(ford

Aniversity% has coined the terms Lorder winner) and Lorder +ualifier) todescribe mar!eting oriented dimensions that are !ey to competitivesuccess #n order winner is a criterion that differentiates the product orservices of one firm in from other 5epending on the situation% the orderwinning criterion may be the cost of the product /price product +ualityand reliability or any of the other dimensions developed earlier #n order+ualifier is a screaming criterion that permits a firm)s products even beconsidered as possible candidates for purchase

"hen apanese companies entered the world of automobile mar!ets in

the 1970s% they changed the way these products respond to orders% frompredominantly price to product +uality and reliability #mericanautomobile producers were losing orders through +uality to the apanesecompanies By the late 1980s% the product +uality was improved by 6ord%Ceneral motors and hrysler and hence they became L+ualified) to be inthe mar!et onsumer groups continually monitor the +uality andreliability criteria% thus pre,+ualifying the top performing companies

.urrent 5rends in Operations Manaement

*n recent years many significant trends in operations management havecontinued to bring change &adical changes have been brought into thebusiness world due to !ey changes in process in operations managementSome of these !ey developments and concepts are listed below.

4 lo,al operations!"ith organi'ations trading in a single world mar!er%and competition% not limited to other local organi'ations but appearingfrom anywhere in the world

4 Mass customi


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% 3) 8"at is t"e meanin o$ per$ormance measureH 'plain (it"an e'ample) ;ist t"e di$$erent types o$ ,enc"markinH

Ans!-

*n =erformance


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the companies safety program% or number of on,time vendor deliveriesper total number of vendor deliveries =erformance measures e(pressed

this way almost always convey more information than the single,dimensional or single unit performance measures *deally% performancemeasures should be e(pressed in units of measure that are the mostmeaningful to those who must use or ma!e decisions based on thosemeasures


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The Ceneral Services #dministration)s /CS#)s Performance-BasedManagement: Eight Steps to Develop and Use Information echnolog!

Performance Measures Effectivel! states that.N


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N =erformance measurement is mandated by the Covernment=erformance and &esults #ct /C= of 199 and is central to other

legislation and #dministration initiatives *n addition to holding federalagencies accountable for achieving program results% C= also promotesa focus on service +uality and customer satisfaction% and see!s toimprove e(ecutive and ongressional decision ma!ing byclarifying and stating organi'ational performance e(pectations% measures%and program costs upfrontG The Covernment


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N 5etermine whether organi'ations are fulfilling their vision and meetingtheir customer,focused strategic goals

N =rovide measurable results to demonstrate progress towards goals andob-ectivesN 5etermine the effectiveness of your part of yourgroupKdepartmentKdivisionKorgani'ation

Benc" Markin.,, *t is a method of measuring a company)s processes%methods% procedures and in a way all functions in great detailBenchmar!ing is used to understand how these got into the system andwhat circumstances brought them about *t is a learning process with afew to find out whether some of the reasons have changed and bring in

new processes for improvement The metrics thatcould be used are > number of pieces per hour% cost per unit% number ofbrea!downs per wee!% customer alienation during a wee!% return oninvestment% number of returns from customers in a month% inventoryturnover% and many others #s can be seen the figures as found abovedetermine the efficiency of the organi'ation To !eep focused% manyorgani'ations% especially the large ones% select afew processes for purposes of benchmar!ing This helps in ensuringconstant and deep attention to those aspects which are to be dealt withThe following are the types of benchmar!ing firms consider

Types of benchmar!ing.,N

=rocess benchmar!ing , the initiating firm focuses its observation andinvestigation of business processes with a goal of identifying and

observing the best practices from one or more benchmar! firms #ctivityanalysis will be re+uired where the ob-ective is to benchmar! cost and

efficiencyE increasingly applied to bac!,office processes where outsourcingmay be a considerationN 6inancial benchmar!ing , performing a financial analysis and comparingthe results in an effort to assess your overall competitiveness andproductivityN Benchmar!ing from an investor perspective, e(tending thebenchmar!ing universe to also compare to peer companies that can beconsidered alternative investment opportunities from the perspective ofan investorN =erformance benchmar!ing , allows the initiator firm to assess theircompetitive position by comparing products and services with those oftarget firmsN =roduct benchmar!ing , the process of designing new products orupgrades to current ones This process can sometimes involve reverse

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engineering which is ta!ing apart competitors products to find strengthsand wea!nesses

N Strategic benchmar!ing , involves observing how others compete Thistype is usually not industry specific% meaning it is best to loo! at otherindustriesN 6unctional benchmar!ing , a company will focus its benchmar!ing on asingle function to improve the operation of that particular functionomple( functions such as Human &esources% 6inance and #ccountingand *nformation and ommunication Technology are unli!ely to bedirectly comparable in cost and efficiency terms and may need to bedisaggregated into processes to ma!e valid comparisonN Best,in,class benchmar!ing , involves studying the leading competitor

or the company that best carries out a specific functionN :perational benchmar!ing , embraces everything from staffing andproductivity to office flow and analysis of procedures performed

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% 4) 8"at is le'i,le Manu$acturin SystemH Io( does it "elp in

improvin t"e manu$acturin processH

Ans!-

# 6le(ible


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design are strategic and to be ta!en in initial phase with e(treme careensuring that the designed 6


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different part By doing this% you are using fle(ible system manufacturing


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has aided their company to produce better products and services How

much money did 6ord o$ 33
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be moved from one machine to another very easily and% therefore% moreattention can be paid to machine locations can be paid to machine

locations and handling of materials

+) olume o$ production!3olume of production and the standardi'ationof the product also affect the type of layout *f standardi'ed commoditiesare to be manufactured on large scale% line type of layout may beadopted

3) Basic manaerial policies and decisions! The type of layoutdepends very much on the decisions and policies of the management tobe followed in producing the commodity with regard to the si'e of plant%

!ind and +uality of the product% scope for e(pansion to be provided for%the e(tent to which the plant is to be integrated% amount of stoc!s to becarried at anytime% the !ind of employee facilities to be provided etc

4) ature o$ plant location!The si'e shape and topography of the siteat which the plant is located will naturally affect the type of layout to befollowed in view of the ma(imum utili'ation of the space available 6oreg% if a site is near the railway line the arrangement of general layout forreceiving and shipping and for the best flow of production in and out theplant may be made by the side of the railway lines *f space is narrow andthe production process is lengthy% the layout of plant may be arranged onthe land surface in the following manner.

6) 5ype o$ industry process!This is one of the most important factorsinfluencing the choice of type of plant layout Cenerally the types oflayout particularly the arrangement of machines and wor! centers and thelocation of wor!men vary according to the nature of the industry to whichthe plant belongs or t"e purpose o$ lay out2 industry may ,eclassi$ied into t(o ,road cateories!

/i *ntermittent and EiiF continuous *ntermittent type of industries isthose% which manufacture different component or different machines

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Such industries may manufacture the parts% when re+uired according tothe mar!et needs (amples of such industries are shipbuilding plants *n

this type of industry functional layout may be the best The second typeof industry in Lcontinuous industry in this type of industry raw materialare fed at one end and the finished goods are received at another end #continuous industry may either be analytical or synthetic # analyticalindustry brea!s up the raw material into several parts during the courseof production process or changes its form% eg oil and sugar refineries #synthetic industry on the other hand mi(es the two or more materials tomanufacture one product along with the process of production orassembles several parts to get finished product ement and automobilesindustries are the e(amples of such industry ?ine layout is more suitable

in continuous process industries

:) 5ypes o$ met"ods o$ production! ?ayout plans may be differentaccording to the method of production proposed to be adopted #ny of thefollowing three methods may be adopted for production, /1 ob orderproduction% /; batch production% and / mass production Ander -obproduction goods are produced according to the orders of the customersand therefore% specification vary from customer to customer and theproduction cannot be standardi'ed The machines and e+uipment can bearranged in a manner to suit the need of all types of customers Batchproduction carries the production of goods in batches or group atintervals *n this type of manufacturing the product is standardi'ed andproduction is made generally in anticipation of sales *n such casesfunctional or process layout may be adopted *n case of mass productionof standardi'ed goods% line layout is most suitable form of plant layout

=) ature o$ mac"ines! @ature of machines and e+uipment also affectsthe layout of plants *f machines are heavy in weight or create noisyatmosphere% stationery layout may reasonably be adopted Heavymachines are generally fi(ed on the ground floor #mple space should beprovided for complicated machines to avoid accidents

>) .limate! Sometimes% temperature% illumination and air are thedeciding factors in the location of machines and their establishments 6ore(ample% in lantern manufacturing industry% the spray,painting room isbuilt along the factory wall to ensure the re+uired temperature controland air e(pulsion and the process of spray painting may be underta!en

@)ature o$ material! 5esign and specification of materials% +uantityand +uality of materials and combination of materials are probably themost important factors to be considered in planning a layout So%



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materials storage% space% volume and weight of raw materials% floor loadcapacity% ceiling height %method of storing etc should be given special

consideration This will affect the space and the efficiency of theproduction process in the plant *t will facilitate economic production ofgoods and prompt materials flow and soundly conceived materialshandling system

10) 5ype o$ mac"ine!


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Ans!-

Some people believe that only business start,ups need funding and thatonly large companies need business plans But the truth is that everybusiness needs a QblueprintQ , not -ust for the benefit of potentialinvestors% but so that the people who wor! in the business can have aclear idea of its direction% and can commit to a plan

# good business plan serves various functions% but it must have apractical structure Here are five essential ingredients.

1 # business description and mission statement very business needs a

clear declaration of why it e(ists% and a basic description of how it intendsto meet its primary ob-ective*f you loo! at a good company website% it will often include elements ofthe mission statement in an Q#bout AsQ section *t need only be a fewsentences% and might be something li!e :ur company aims to provideoutstanding solutions and service to the ( industry in and around the areaof y Thin! of your mission statement as the heart of your business plan#ll your goals and activities should flow from it

Having prepared your mission statement% you ne(t need to

comprehensively describe your company =rovide a brief history and thene(plain what it does% identify the mar!etplace niche it fills and assert whyyou and the business will succeed Oou may also wish to reveal why yourbusiness chose its location and how you will benefit the local community

; # management profile *n business% as in any wal! of life% peoplematter =otential investors% lenders and even employees are notinterested in a faceless% soulless corporate entity They need to !now thatcompetent% e(perienced people are steering the ship=rovide an outline of your organi'ational structure and managementteam% giving solid reasons why your staff are competent to succeed #chart illustrating the roles and relationships of !ey employees can wor!particularly well% and if you are a small company you may even be able toinclude every single employee

# financial portrait and strategy =rospective investors and lendersneed a good idea of the financial aspects of your business *nclude basicdata such as current and pro-ected balance sheet% a profit and lossaccount and an analysis of cash flow *f you are a start,up% pro-ect this

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information as accurately as possible *t is important not to cut cornerswith these calculations and do as! for our assistance with this

#bove all% ma!e sure your numbers demonstrate that you and yourmanagement team have considered the !ey QdriversQ that will determineyour success or failure 5onQt fill the business plan with overly optimisticfinancial pro-ections that could ultimately depict your company in a badlight

Sales and mar!eting ob-ectives (pertise and past success mean littlewithout an up,to,date strategy for bringing your products or services tomar!et 5escribe your intended mar!et% giving specific details on its si'e

and how much of it you intend to serve "hat is your mar!etQs growthpotentialM "hat specific geographic and economic factors play a roleMompetitor intelligence is another crucial factor @ame your five largestcompetitors and e(plain why you can serve your mar!et better than theserivals 5o not conceal your wea!nesses. recognising the challenges youmust overcome shows that you are realistic

I #n e(ecutive summary The li!elihood is that many potential lenderswill initially only read an e(ecutive summary ThatQs not to say theyQllnever read your entire business plan , but it does mean that a concise%

readable e(ecutive summary may be necessary to get your Qfoot in thedoorQ #n e(ecutive summary should show the highlights of each sectionof the business plan% providing a clear synopsis of who you are% what youdo and where youQre heading#n :ngoing =rocess ?i!e !eeping a QTo 5oQ list% writing a business plan isan ongoing process Oours must adapt to changes in your company% itsmar!et and the economy , and that means regular reviewing andupdating

80340680 advanced operations and production management om0013

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