An auto company C Ltd. is facing a problem of declining market
share due to increased competition from other new and existing
players in the market. Its competitors are introducing lower priced
models for mass consumers who are price sensitive. For quality
conscious consumers, the company is introducing new models with
added features and new technological advancements.
Questions
1. Prepare a model business plan for C Ltd. to meet the existing
challenge. You need not be very specific about quantitative
parameters. You may specify which type of plan you are
preparing.
2. Identify the limitations of such plans.
3. How will you seek to remove these limitations?
Answers
SOLUTION :
1. Model business plan for C Ltd. :
The types of plan needed are :
OBJECTIVES :
To assess the declining share in the market and to increase a reasonable level in the long run.
STRATEGIES :
To introduce new variants of the cars with innovative features to attract the customers.
POLICIES :
To attract competent people for the new kind of work.
PROCEDURES :
Procedure for requisition of a raw material, recruitment procedure , procedure to pay creditor and to ensure timely collection of debts.
METHODS :
Innovative methods of training for employees and methods to allow discounts.
RULES :
To frame the rules for the conveyance of staff.
BUDGETS :
It should consists of sales budget, production budget, purchase budget, master budget.
2. Limitations of such plans :
The plans may have limitations with respect to rigidity, change in the environment, lack of creativity, time consuming and assurance of guaranteed results.
3. Measures to remove limitations in the planning :
The company should provide for adequate flexibility , business environment should be studied well in advance and to involve all relevant persons who can contribute to the growth of the company.
HOPE THIS ANSWER WILL HELP YOU…
Answer:
The type of plan needed to be prepared under this situation is strategy and the steps involved in preparing this plan are:
(a) Setting up of objective: The company may set up a long term objective of capturing more and more quality conscious consumers or becoming a leader in quality and trend setter in market by one year time.
(b) Adopting a particular course of action: The company must import latest technology or spend more or research and development department to innovate latest technology to make their goods superior than competitor's goods
(c) Allocating resources for achieving the objectives. Company must take permission for importing technology and must allocate extra funds to their R and D section and appoint people with latest knowledge to innovate new technology.
(ii) The common limitations are
(a) It may involve huge costs
(b) It is time consuming process
(c) There is no guarantee of success
(d) It may not fit in dynamic environment.
(iii) To overcome these problems
(a) Prepare budget to carry on this plan and function within the revenue allocated in the budget
(b) Fix a time limit to achieve the plan and then to execute the plan within that time limit only.
(c) Scan the environment properly before implementing the plan
(d) Use the plan with caution and care.