Tactical Business Plans
& What-If Analysis
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Template for: Tactical Business Plans & What-If Analysis
TACTICAL BUSINESS SCENARIOS
The purpose of this section is to discuss important tactical decisions that
most businesses face at some time.
The following major tactical plans should be considered within the context
of the overall business strategy. They include:
- Acquiring or merging with another company;
- Joint venturing with another company;
- Outsourcing one or more activities;
- Selling the business. At a minimum, management should have a
general idea of what the business could be sold for today. Even a perfectly
well-run business should sometimes be sold. For example, a well run cable
company can be worth more when linked with a telephone company.
WHAT-IF ANALYSIS
The purpose of this section is to provide an open ended opportunity to ask
"what-if" questions on any aspect of the business, the industry or
anything else that is relevant. This section also facilitates the planning
of quick responses to potential situations where speed and reaction time are
critical, whether it's for damage control or the ability to exploit a favorable
opportunity.
The what-if analysis should be more comprehensive than just exploring what if
something happens directly within the business unit. Asking what-if questions
pertaining to potential actions of competitors usually provokes the most
interesting discussion. For example, many business managers when asked,
"Why don't you raise prices 15%?" would say, "Impossible, we
would lose market share." When asked, "What if Competitor X raised
prices 15%?" they would quickly respond, "We would match the increase
immediately." A more constructive discussion on price leadership, signaling
and pricing options would follow.
Another example of how what-if analysis can provide thoughtful discussion is
in the area of information technology (I/T). Business managers are often
frustrated that the information systems budget does not seem to support the
needs of the business. Many I/T managers are frustrated that their budgets are
not large enough to cover basic research (which is often done in secret using
funds from other projects). Battle lines are drawn. The information systems
budget will only be large enough for maintenance and emergency projects. Using
what-if analysis helps to break the log jam. The question to ask is,
"What-if Competitor XYZ employs a new type of system that significantly
lowers its costs and/or provides a unique service?" The mood changes
dramatically. The discussion becomes more thoughtful and decisions regarding
research and development of new systems are more likely to be based on the
strategy of the business and the facts behind each proposal.
What-if analysis is a simple way to deal with uncertainty. Anyone reviewing
the business should be free to add to the list of what-if questions. What-if
analysis greatly improves the business unit's planned response and reaction time
to a variety of possible events.
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