The purpose and content of a business plan, the role of corporate (business) planning, contingency planning and crisis management, and how risk and change are managed strategically.

What this dot point is asking

CCEA wants you to explain the purpose and content of a business plan, describe the corporate planning process, explain contingency planning and crisis management, and evaluate how a business manages risk and change strategically.

The business plan

A business plan typically contains:

• An executive summary and description of the business and its objectives.
• Market research on customers and competitors.
• The marketing strategy (the marketing mix).
• The operations plan (how the product will be produced and delivered).
• The management and staffing structure.
• Financial forecasts - cash flow forecast, break-even analysis and projected profit.

Why a business plans

A business plan helps the firm raise finance (lenders and investors require it), clarify and test the idea, guide decisions and coordinate activity, and measure progress against targets. The discipline of writing it forces owners to think through risks before committing money.

Corporate (business) planning

Corporate planning is the continuous, organisation-wide process of setting long-term objectives and the strategies to achieve them, then reviewing progress. It links the mission and objectives to SWOT and PEST analysis, the choice of strategy, its implementation, and regular review, so the business adapts as the environment changes.

Contingency planning

Firms plan for risks such as fire or flood, IT or systems failure, supply-chain disruption, a product recall, the loss of a key customer or staff member, and adverse publicity. A contingency plan sets out who does what, how to communicate, and how to keep operating, protecting people, assets and reputation.

Crisis management

Where contingency planning prepares before an event, crisis management is how the business responds during and after a crisis: acting quickly, communicating honestly with stakeholders, protecting safety, and restoring normal operations and reputation. Good crisis management can limit lasting damage; poor handling can deepen it.

Managing risk and change

Strategically, a business manages risk and change by scanning the environment (PEST), assessing risks by likelihood and impact, planning for the most serious, and building flexibility so it can adapt. Planning reduces uncertainty and improves the firm's chances of surviving shocks and seizing opportunities.

Try this

Q1. State two items contained in a business plan. [2 marks]

• Cue. Objectives, market research, marketing strategy, operations plan, staffing, financial forecasts (any two).

Q2. Explain one benefit of contingency planning. [3 marks]

• Cue. It lets a business respond quickly to an emergency such as IT failure, limiting losses and protecting its reputation.

Q3. Analyse why corporate planning should be a continuous process. [6 marks]

• Cue. Markets, competitors and the economy change, so the business must keep reviewing and adjusting its objectives and strategy or its plan becomes outdated and ineffective.