Business Planning and Management
What you must understand
A business plan sets objectives, market analysis, operations, marketing, finance and risk. It serves two audiences: internal (guiding decisions) and external (securing finance). Know its typical sections and why lenders want it.
Objectives should be SMART (Specific, Measurable, Achievable, Relevant, Time-bound). Understand the hierarchy from mission and vision through aims to objectives and strategies. Distinguish strategic, tactical and operational decisions.
Management theory includes leadership styles (autocratic, democratic, laissez-faire, paternalistic), motivation theories (Maslow's hierarchy, Herzberg's hygiene factors versus motivators, Taylor's scientific management) and organisational structures (tall versus flat, functional, matrix, span of control, chain of command, delegation). Understand change management and risk management: identifying, assessing and mitigating risk.
Traps examiners set
- Calling an objective SMART when it lacks a deadline or a number.
- Confusing leadership (setting direction) with management (organising resources).
- Misreading Herzberg: pay is a hygiene factor, not a motivator.
- Assuming a flat structure always improves communication - it can reduce promotion prospects.
- Describing a business plan as only for start-ups; established firms use them for growth or finance.
Worked example / rule of thumb
Objective: "increase sales". Not SMART. Rewrite: "increase UK sales by 10% within 12 months, measured by monthly revenue reports". Rule of thumb: if you cannot measure it or date it, it is not an objective - it is an aim.
Key terms to use precisely
Mission, vision, SMART, strategy, tactic, span of control, delegation, autocratic, democratic, hygiene factor, contingency planning.