Read the supplementary text and write down some 5-6 sentences to cover the main idea of the text.

When you think business plan, what comes to your mind? A number of different types of plans are found in today‘s business world. Two very popular plans, with which you likely have some familiarity, are what we usually call the classic business plan and the strategic plan. The classic business plan is the one that you will most often be referred to at your local bookstore or library when you ask for a book on business planning. The strategic plan is the one that always looks and reads like a doctoral thesis and collects dust on bookshelves.

The classic business plan typically presents a description of the company; an analysis of the industry and the particular markets it‘s in; a description of the competition; a marketing plan; and a description of the operations, management, and organisation of the company, as well as its financials, including an income statement, a balance sheet, and a cash-flow analysis. This plan describes the history of the company, its current position, and projections for its future. Its main purpose is to raise capital from outside sources or to persuade senior management to invest in a particular organisation or concept. It‘s not really a plan but more a statement as to the worthiness of the business venture – a selling document. It‘s somewhat short on strategy and doesn‘t address tactics at all. These types of plans are necessary if you are seeking to raise capital.

On the other hand, typically prepared once a year, the strategic plan contains a description of the company and its market, and strategies for attacking this market, as well as a set of long-range goals, usually covering a five-year-period.

It’s important to distinguish strategy from tactics. In terms of business planning, strategy can be viewed as a road map and tactics as the vehicle to implement the strategy. Strategy takes place in the long-term, whereas tactics is more a shortterm undertaking. With these definitions in mind, strategic plans are just the road maps without the tactics.

Read the supplementary text and ask your partner 6 questions on it.

Companies whose objectives include high market share and market growth generally have long product lines, i.e. a large number of items. Companies whose objective is high profitability will have shorter lines, including only profitable items. Yet most product lines have a tendency to lengthen over time, as companies produce variations on existing items, or add additional items to cover further market segments. Additions to product lines can be the result of either line-stretching or line-filling. Line- stretching means lengthening a product line by moving either up-market or down-market, i.e. making items of higher or lower quality. This can be carried out in order to reach new customers, to enter growing or more profitable market segments, to react to competitors’ initiatives, and so on. Yet such moves may cause image problems: moving to the lower end of a market dilutes a company’s image for quality, while a company at the bottom of a range may not convince dealers and customers that it can produce quality products for the high end. Line-filling – adding further items in that part of a product range which a line already covers – might be done in order to compete in competitors’ niches, or simply to utilize excess production capacity.

Notes: to delute – тут погіршувати

Read what the consultant says about Total Quality Management. Do you agree with her?

The key to quality is very simple. You should do a job right first time. Most organisations do jobs approximately. They make mistakes that they have to fix later so they incur higher costs. In a TQM organisation they know it’s cheaper to do the job right in the first place.

So what does “doing it right” involve? It means you mustn’t waste resources; no wasted materials, no wasted time and no wasted space. And it means you have to throw out outdated processes. It’s a constant and never-ending process and it has to involve everyone in the organisation.

You have to push responsibility close to the point where employees and customers meet. It’s your operating employees that have to make the important decisions because they’re closest to the customers. And that means you have to stand the traditional management hierarchy on its head.

You must give employees more decision-making powers. Instead of giving them orders from above, your administration should support them and try to make their life easier. You can’t do that in an atmosphere of conflict. You can only do it through creative team work.

Exercise 1. Your boss has asked for a report on TQM, giving a brief description of the principles behind it and your opinion on how it benefits, or could benefit, your organisation. Complete the report below. Look back to what the consultant said, to see what verbs to use. Put them into the passive.