Introduction
For successful functioning, any company organizations need to establish a business plan. This allows the management to clearly follow the given actions and cover all the necessary aspects. Moreover, all corporations strive to organize a strategic plan and develop goals. It is important to understand that all companies should consider both types of plans in order to get the maximum benefit from them. However, many people confuse the terms and do not see the difference between business and strategic plans. This paper aims to provide a comparative analysis of two phenomena.
Both plans are aimed at maximizing the efficiency of the business and expanding the budget. The business plan is a detailed and painstaking explanation of the strategic direction of the organization and its further progress (Dearman et al., 2018, p. 96). At the same time, the directions given in the plan reflect accurate and specific information about the organization’s activities in the financial, production and marketing spheres. This shows how the company uses to balance its own interests in terms of growth and development and the interests of others, including consumers and investors (Dearman et al., 2018, p. 94). Additionally, the business plan reflects the capabilities and foundations of the company and how it generates its budget and revenues.
Unlike a business plan, which aims to achieve a specific goal, strategic planning includes the entire spectrum of goals. In other words, it is a management process during which long-term goals are developed within the company (Fox, 2018, p. 237). In addition, the strategic plan includes the most effective ways to achieve goals that can maximize the growth and success of the organization. It evaluates the business environment from the outside and inside at a given time.
Purpose
The purpose of strategic planning is to increase the efficiency of the business and improve its functioning. The scale of the plan highlights short-term and long-term goals that must be implemented over a different period of time (George et al., 2019, p. 812). A well-designed and structured distribution ensures the entire company is productive and efficient. Strategies allow these two factors to remain at the right level despite the constantly changing market, state business laws and changing perspectives in global business (George et al., 2019, p. 811). In this way, the organization can focus the necessary efforts and funds to move in a new direction for long-term results. Aspirations help create a more motivating nature and an active work environment. The strategic plan is aimed at the manifestation of initiative, coinciding with the general value orientations of the company.
An organization’s business plan sets two main goals that are important for the company. First of all, it shows investors how promising any organization is and whether it is worth investing in the proposed project (Kools and George, 2020, p. 263). Moreover, the business plan is important for providing information about the corporation’s activities to those directly involved in the implementation of the project. It allows the company’s management to determine the exact direction of the organization’s development. Thus, the meaning of the strategic plan is to form long-term goals that the company follows. At the same time, the business plan contributes to the formulation of clear actions in which investors can see the relevance of the organization.
In addition, the strategic plan includes the vision of the company in relation to its objectives, aspirations and ideas about the business idea. Through this, the corporation supports a specific goal and encourages teams and their employees to work together for the common good (Glushchenko, 2021, p. 37). Completion of assigned tasks and projects in this case, plays a leading role in the implementation of all strategies. In addition, the vision in the context of the strategic plan is to set a goal to establish and maintain a corporate culture for more successful work.
On the contrary, the business plan is focused on the basis of well-defined strategies for the organization and the development of the corporation. The ultimate goal of its application can be defined as obtaining funding and setting up a certain set of operations to work effectively (Rajnoha et al., 2019, p. 57). If the company is just starting to develop and wants to enter the market with the proposed product, then in this case, the business plan plays the role of a systematizer. It shows how structured and optimized efforts are to achieve the desired results. Additionally, as a rule, a business plan includes such components as an organizational plan, principles and an action plan. The main components of the strategic plan of each company are the mission, aspirations and policies of the organization, including global programs.
Importance
An organizational plan as an element of a business systematization may include a vision and values. They help the corporation to establish a niche and market sector in which the main goals will be realized. In this case, the purpose of the business plan is to review and determine the competitiveness of the company. Moreover, at this stage, the probability with which investors will invest their money in the organization is determined.
Money is the main basis on which a startup can develop and make a quality product. The financial plan characterizes the readiness of the company and is no less important element than organizational activities (Schlegel et al., 2020, p. 621). Its importance lies in the fact that it pays attention to the details that make up the financial factors. For an investor, this is an indicator of how their money will be spent, how efficiently the budget is allocated, and how much funding the project receives. The financial plan considers almost all operations and aspects that take place in the company, therefore, it has a wide impact on the success of the organization as a whole.
The third aspect of the importance of a business approach is the preparation of a sales plan. It considers all possible factors and aspects that affect marketing, brand building, sales analysis and forecasting. In this case, the company is in the business of creating an overview of all of its intended marketing initiatives (Teixeira and Junior, 2019, p. 1425). Moreover, it contemplates the market share that the organization plans to achieve in a certain period of time. Thus, the importance of the marketing plan as part of a business lies in the fact that it helps to create a stable customer base and define the goals of the organization.
On the other hand, the strategic plan consists of several elements that play an important role in the development and development of the company. One of these aspects is the company’s principles, which reflect the rules for observing the etiquette established in the workplace. Principles like vision and mission allow organizations to increase the motivation of employees. Moreover, it permits one to direct human resources and efforts to solve current problems and problems.
The main idea of the strategic plan is that it is aimed at optimizing the work and activities of the company. In addition to non-verbal aspects such as goals, vision, mission and principles, the company uses a strategic approach to create an action plan and conduct a SWOT analysis. The action plan clearly shows those projects, ideas and initiatives that employees carry out to achieve common goals within the framework of the strategic plan. Thus, all activities are distributed so that each element contributes to the implementation of the project on time. While the action plan indicates realistic expectations for projects, it is often subject to change as ideas are being implemented. This allows teams to adjust the vector of work and deadlines. At the same time, the management receives accurate information about the progress of the process and is aware of all unforeseen circumstances.
Moreover, SWOT analysis is a part of the strategic plan. It is a fairly popular strategy in modern business projects. SWOT analysis is based on the fact that, thanks to it, the company’s management can evaluate the campaign in relation to new projects (Benzaghta et al., 2021, p. 59). Additionally, it allows one to predict the expected effect after the design and implementation of new types of products. The analysis serves as the basis on which the company makes decisions regarding aspects that affect the business in the region. The word SWOT itself is an abbreviation and contains 4 main characteristics of the organization.
The S stands for strength and shows how the company identifies its core strengths. W considers weaknesses, O stands for company opportunities, active or potential. T is the threats that arise in front of the company in the process of implementing business ideas. However, SWOT analysis has its own strengths and weaknesses that must be considered when relying on the results. One of the main advantages is that when listing the data, the team sees the best moments and what needs to be improved more clearly and structured. As a result, employees think and pay attention to each step in the implementation of the plan. Thus, after the analysis is completed, management sees how successful and profitable their campaign is. Additionally, if more negative aspects were noted when reviewing the analysis, this indicates a low perspective of the idea. This means that the company will save its budget from spending on an idea that is more likely to fail.
Additionally, in the process of analysis, employees usually try to highlight all the possible weaknesses of the project. At this stage of the process, all the most vulnerable and difficult moments of the campaign are most clearly visible, which makes it possible to solve problems in advance (Steer et al., 2019, p.157). The analysis of weaknesses highlights the lack of funding and proper budget allocation. As a result, the company can always postpone the implementation of projects or attract more investors. SWOT analysis as part of strategic planning, shows how important it is to address campaign gaps. Thus, when evaluating advantages and disadvantages, weaknesses must be considered in order to avoid a failed project.
The opportunity and threat graphs are two other items in the SWOT analysis as a strategic planning tool. The main advantage of strategic planning is that it details any organizational opportunities that can be used to improve efficiency. They are clearly defined and itemized and used to implement the project (Steer et al., 2019, p.159). At the same time, opportunities are not limited to the success of the project but are allocated in case of its failure. Thus, management sees the most likely events on the basis of which a decision is made to launch a new campaign.
Strategic planning identifies threats as one of the important points in the implementation of a business. This helps not only to highlight possible encounters with troubles but to develop successful strategies to overcome them. However, the main disadvantage is that people rarely manage to objectively assess the possible dangers. Thus, this point in the strategic plan is a biased niche based on conjecture and fear.
Role
Strategic planning and business planning play an important role in the formation and operation of any organization. First of all, they make it possible to facilitate the work, calculate possible risks and outline development plans. Entrepreneurs gain an understanding of more sustainable development by considering market trends and demand for a product or service (Wu et al., 2020, p. 1733). The role of strategic planning is to assess the real and potential capabilities of the company. Moreover, the company can develop its own programs and campaigns, and coordinate the activities of all offices, branches and divisions.
For each service, strategic planning designates its own goals, which should ultimately lead to a common result. The formation of a set of specific actions for the long term allows management to evaluate all the possibilities of the business and its relevance. In addition, the business plan is generally aimed at an objective and accurate assessment of the business. This is the so-called economic tool for the implementation of design and investment decisions in accordance with the needs of the market and the capabilities of a commercial enterprise.
In modern market conditions, a business plan is actively used in various fields and forms of entrepreneurial activity. The management is aimed at developing it not only with the desire to plan all processes but also for the economic and financial justification of investments in various kinds of solutions. At the same time, thanks to the business plan, it is possible to identify those problems that may be caused by the volatility, and unpredictability of market situations that the enterprise will face in the future.
The role of a business plan is to help identify the type of product or business that has the potential to make a profit once it enters the market. Since the processes of the business plan are divided into external and internal, then, accordingly, they have different meanings. The idea of the internal direction of business planning is to prepare an information program for the implementation of the project proposal with an assessment of the results at each stage of implementation (AlQershi, 2021, p. 1005). The external direction of planning is to inform about the technical, organizational, economic, financial, and legal advantages of a business. Moreover, it considers the possible risks and problems of the external investor and other interested decision-makers.
The business plan is aimed at a specific type of production and a comprehensive analysis of the factors and phenomena in the enterprise that can lead to the desired result. It can be designated as the basis for managing both a commercial project and an enterprise implementing it. The business plan reflects the enterprise from the outside, as a result of which the management sees the strengths and weaknesses of its business more clearly.
The role of strategic planning is evaluating and selecting optimal solutions, which is based on systematic activities. Planning is a set of specific actions, such as research, analysis, which are carried out in order to determine a set of measures aimed at achieving the goals of the organization. In addition, depending on the tasks set, the management divides strategic plans into 3 options. Short-term planning, which can be designated as current, is designed for a time frame not exceeding one year. Such a plan combines the plan for the sale of goods and services and compares the volume of production with the actual resources of the company.
The so-called medium-term planning is relevant for terms from one year to about five years. It is a more accurate and detailed presentation of details and quantitative indicators, among other types of strategic planning. The medium-term option focuses on capital investment, budget balance, financial resources and enterprise capacity. Long-term planning includes a time frame of five to fifteen years of company development. The role of long-term prospects is based on the development of those organizational goals that will allow the most efficient use of available resources in the future.
Strategic planning for each company is relevant only when it achieves the goal through various methodologies. The strategic planning methodology considers and describes the necessary goals (Glushchenko, 2021, p. 37). It defines approaches to solving problems of strategic planning, a system of indicators that ensures the optimization of strategic plans. The expert method is based on the experience of specialists in the specific field but often has indirect and incomplete information.
The method of analysis of socio-economic factors focuses on the study of specific realities that help determine the future vector of development. Another approach to achieving strategic planning is direct calculations, in which the popular type of product and market needs are highlighted. The balance method involves considering and making a connection between indicators regarding the market, needs and demand. The economic-mathematical model allows the company and management to create the most efficient program for the production of products with the available material resources and labor force. In addition, due to system analysis, all the phenomena and sub-items of planning can be decomposed into elements and identify on the market those necessary needs that will contribute to the development of the organization.
Conclusion
In conclusion, it should be said that the business planning process is an ordered set of stages and actions associated with a situational analysis of the external and internal business environment. It is engaged in setting planning goals, promoting a business plan to the intellectual property market, its implementation, and monitoring the implementation process. At the same time, successful strategic planning aims to improve the enterprise’s efficiency as a whole. This makes the organization more successful and sustainable in the market of goods and services in a constantly changing economic situation. Thus, despite these two approaches presenting different goals and ways to achieve them, both aim to realize the firm’s goals and establish greater efficiency.
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