Innovation & Strategic Planning

• Strategy in business plans involves formulating what the organisation wants to achieve, using approaches such as SWOT analysis or Porter’s five forces.
• Business plans support the narrative analysis with qualitative data - breakeven analysis, contribution margin analysis, cost volume profit analysis, discounted cash flow analysis and sensitivity analysis.
• Life-cycle costing extends the time horizon to capture more cost elements before and after the market cycle.
• Life-cycle costing captures the pre-market, startup and disposal costs of a product.
• The balanced scorecard presents managers with perspectives from which to choose measures and indicators to sustain the overall strategy of the company.
• The balanced scorecard encompasses financial, internal business processes, learning and growth and customer aspects of the company.
• Porter’s five forces analyse supplier power, buyer power, threat of new entrants, threat of substitute products and rivalry among existing firms.
• SMA is a form of management accounting in which emphasis is placed on information which relates to factors external to the firm, both financial and non-financial - it is a forward looking technique
• Product-Life-Cycle Costing helps to observe intangible assets, and relate and trace them back to the initial investments as they may only materialise in the long term
• Investments in intangible assets are not captured in many indicators and a solution to managing these assets is the BSC
• Factors to consider with threat of new entrants are economies of scale, product differentiation, and government policies.
• Factors to consider with rivalry among existing firms are competitor concentration, relative size of competitors and cost structures.
• Factors to consider with supplier power are availability of substitutes, importance of industry to other suppliers and supplier concentration.
• Factors to consider with buyer power are importance of product to the customer, buyer's threat of backward integration and number of buyers relative to sellers.
• Factors to consider with threat of substitute products are relative price of substitute, relative quality of substitute and switching cost for customers.
• Sensitivity analysis involves calculating annual fixed costs, one-time fixed costs and applying scenarios of different volumes for the contribution margin analysis to determine of the business is feasible
• Narrative analysis for business proposals involves the macro environment (seasons, recessions), market / competitor analysis and consumer analysis.