- If you need an independent and creative inputs to your company and which are not conditioned by internal perspective, an outside consultant could provide an invaluable contribution in preparing your business plans. In Australia this has been a popular practice.
- Being independent, the consultant could play a pivotal role as an intermediary and to improve effective communication among members of the management team.
- Management may spent two or three days to focus on the development of a set of strategic plans for the folowing year. The team evaluate whether the strategies and models applied at the last financial year was correct and whether we could learn anything from their past experiences.
- Initially, they evaluate the income model where costs, prices and volume strategies are set. From the graph, they evaluate their safety sale margin, improve costs and set the business at the right operating level. The model should produce a healthy return on sales or profit margin. The leading role of this model is the marketing manager. This is the most critical model in the business. Negative return should be avoided. The marketing strategies [4Ps] have great influence on the model. More importantly, the strategies position the company's products at the right market position.
- The responsibiity of working capital rests with both the marketing and finance manager. Currents assets must be kept low while credit from suppliers must be taken advantage of.
- Fixed assets actually provide capacity to the business. Buildings and equipment could be acquired on lease or financed.
- Working and fixed capital must be kept low and fully operational. The best manager is one that runs high business with the lowest capital. Ideally sourcing of capital must be cost driven and balanced; equity and loans.
- The business must financed by a balanced cash budget. Inflows and outflows of cash must produce positive balance at any point of time. This is the responsibility of the CFO.
- To consolidate and integrate the strategies, models and metrics, the ROE / ROA model should be applied. Simulations could be applied to arrive at the most ideal set of strategies that generate the best outcomes. The strategic map developed by the Scorecard could not be applied for this purposes.
- The sustainability strategies are monitored by the CFO and CEO. Sales asset turnover and business leverage are critical elements in maintaining sustainability.
- All the stakeholders needs must be met. For example, employees must get their annual increment, Shareholder must get their expected dividents. Bank and loan debts must be paid of their interest. Apparently you need minimum 30% ROE annually to pay of your stakeholders. Can your management team able to generate this return at the end of the year with the adopted strategies?
- The role of the consultant is to assist the CEO in preparing and validating the annual business plans of the company. With modeling and simulation, the plans produced should be precised and integrated.
- Once agreed, the KPIs must be distributed and delegated to all of which are monitored by the HR department for their annual appraisal purposes.
- ROE / ROA refers to return on equity or assets.
