Dynamic Business Planning
BY HAROLD L. COLTMAN Manager, Management Advisory Services, Portland Office
Presented before the Annual Convention of Oregon Consumer Finance Association, Portland— October 1960
BUSINESS PLANNING can be defined as the process of selecting the course of action to be followed after evaluating all reasonable alternatives. Thus, sound comprehensive business plans determine the business that a company will be in, set the direction in which it will go, and fix the activities that will be carried out.
The key planning decisions in any given situation can be grouped into two broad categories: (1) one-time or irregularly recurring decisions on major alternative courses of action, and (2) decisions reflected in the annual operating plans of the business.
ONE-TIME, IRREGULARLY RECURRING DECISIONS
This category includes—but is not limited to—decisions required
• Getting into or out of a business
• Merging with or acquiring a business
• Expanding or acquiring facilities
• Choosing among alternative methods of operation
• Revising the line of products or services to be offered
In this area of one-time, irregularly recurring decisions, economic analyses and revenue—cost-profit projections are essential to reaching an informed decision on a specific planning proposal. It requires the development of basic procedures and techniques that will enable the company to reach fact-founded decisions on a continuing basis. For example, analytical procedures must be worked out and followed for the different types of one-time decisions. These would specify the factors to be considered, the data to be gathered, and the manner in which the data are to be analyzed and evaluated. In addition, it is necessary to set approval limits and establish reviewing authorities. Finally a reporting system must be designed to enable management to appraise their planning effectiveness—over all and in terms of specific projects.