Lesson Structure: Operational Business Management I (Horticulture) BHT326

There are 9 lessons in this course:

1  The Economic Environment

• The world of economics
• Scarcity
• Opportunity costs
• Goods
• Definitions
• Economic systems
• Economic ownership
• Performance criteria for an economy
• Other economic performance indicators
• Basic economic principles
• Law of demand
• Law of Substitution
• Law of diminishing return
• Law of diminished marginal utility
• Competition
• Sustainability
• Total Quality Management
• Strategic Planning
• Creating a strategic plan
• European economic union
• European Central bank
• Asia Pacific Economic Community

2  External Influences on Horticultural Enterprise

• Monopoly
• Monopolistic Competition
• Oligopoly
• Perfect competition
• International markets and tradeable commodities
• Globalisation
• Supply and demand
• Market forces
• Demand
• Supply
• Elasticity
• Economics of scale
• Cost structures
• Liquidity

3  Information Management for Horticulture

• Scope and nature of office work
• Functions of an office
• Common jobs in an office: reception, clerical, secretarial, information processing
• Departments within an organisation
• Office processes
• Data knowledge, strage and management
• Filing systems
• Classifying information
• Hard copy
• Filing procedure
• Active and inactive records
• Computer databases
• Designing a filing system
• Data protection
• Financial records
• Books needed in business
• Different ways to approach bookkeeping
• Steps in the bookkeeping process
• Developing a record keeping and accounting system
• Flow of information
• Financial reports
• Ledger
• Journal
• Source documents
• Cash transactions
• Credit transactions
• Returns and allowances
• Other business documents
• Use of business documents
• The cash book
• Credit sales and credit purchases journal
• The general journal
• The ledger
• A trial balance
• Bank reconciliation
• Petty cash

4  Strategic Planning in Horticulture

• Strategic planning
• Documenting the strategy
• Operational planning
• Documenting an operational plan
• Key components of a business plan
• SWOT analysis
• A planning procedure
• Decisions
• What to plan for
• Finance
• Structure for a Financial plan
• Developing a budget
• Structure for a marketing plan
• Plan drawing

5  Implementing Strategies

• Implementing strategy
• Benchmarking
• Reviewing strategy and strategy management
• Environmental audits
• Key elements of EIA
• Steps in an environmental assessment process
• Study design
• Baseline studies
• Predicting impacts
• Mitigation measures
• Flora and fauna assessment
• Open space management plan
• Rehabilitation plan

6  Developing a Business Plan

• Business planning
• Case study: nursery development plan
• Sensitivity analysis
• PBL project to formulate criteria required for the successful implementation of a business proposal to develop a business plan.

7  Business Control Systems for Horticulture

• Financial statements
• The balance sheet
• Classification in the balance sheet
• Working capital
• Profit and loss statement
• Link between profit and balance sheet
• Depreciation of assets
• Analysis and interpretation of accounting reports
• Analytical ratios
• Ratio yardsticks
• Profitability ratios
• Operating efficiency ratios
• Efficiency ratios and profitability
• Liquidity ratios
• Liquidity analysis and cash budgeting
• Financial stability ratios
• Gearing rate of return on investment
• Limitations to ratio analysis
• Risk
• Risk analysis
• Contingency planning
• Business systems
• Quality systems
• Innovation management
• PERT (Program evaluation and review)
• CPA (Critical path analysis)
• GNATT ChartsFastest and slowest completion times
• Business expansion and sources of finance
• Record keeping

8  Evaluating Horticultural Marketing

• Introduction
• Market research
• The marketing mix
• Marketing planning
• Services marketing
• Customer service
• Buying, selling and decision making
• Different heuristics
• Decision making process
• Customer satisfaction
• Goodwill

9  Marketing Strategies for Horticulture

• Target markets and market segmentation
• Targeting strategies
• Defining your target market
• Determining market segmentation
• Projecting the future
• Positioning
• Case study: The market for landscape contractors
• The business portfolio

Each lesson culminates in an assignment which is submitted to the school, marked by the school’s tutors and returned to you with any relevant suggestions, comments, and if necessary, extra reading.

Learning Goals: Operational Business Management I (Horticulture) BHT326

To develop an ability to formulate and evaluate strategy as well as to ensure effective business performance in today’s fast changing social, political and economic environment, for horticultural enterprises within one sector of the horticulture industry.

• Explain the economic environment in which horticultural business operates.
• Appraise the impact of external influences.
• Establish the type of information required for operations in both commercial businesses and service organisations.
• Examine the process and analyse approaches to strategic planning.
• Examine the process and analyse approaches to strategy formation and implementation.
• Prepare a business plan.
• Assess the importance of business control systems utilising IT integration into financial management; prepare, read and interpret annual statements, appreciate the importance of budgetary control.
• Identify the benefits involved when preparing marketing plans; analyse organisational strengths, weaknesses, opportunities and threats.
• Formulate customer-orientated and realisable strategies for selected markets

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General

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Q. Completing a 100 hour module – how long will it take?
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Assessment

Q. Assessment – how does it work?
A. For each 100 hour module you are assessed by assignments (at the end of each lesson) and a final one and a half hour exam (or you may elect to complete a Project, instead of sitting the exam) – the choice is yours – you sit for the exam in your own location.

Q. I don’t cope well with exams – what can I do?
A. You may elect to undertake a Project (set by your tutor) instead of sitting the exam. Projects are completed from your home and can usually take a couple of weeks to complete.

Q. If my assignment is not up to standard is there an opportunity to resubmit my work?
A. Yes –

Q. How many assignments do I need to complete for each module?
A. At the end of each lesson, there is an assignment – so if a course has say, 10 lessons, there would be 10 assignments.

Q. I am having difficulty attending workshops/industry meetings, what can be done?
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Tutors

Q. Our tutors – who are they?
A. We appoint Tutors and require that they must be currently active in their industry, with at least 5 years’ experience in their chosen profession.

Q. Can I contact my tutor at any time?
A. Yes – you have unlimited access to your tutor via email through our Online Classroom. You can always leave a message with ADL requesting your tutor to contact you. You decide on how much or how little contact you wish to have.

Q. Practical work – How is this done?
A. To find out more about this part of the course please visit the section on How Our Courses Work here.

Excerpt From The Course

STRATEGIC PLANNING

“If one piece is moved wrongly, the whole game is lost” (Chinese proverb)

A strategy is a route map. It shows you where you want to be and how you intend to get there. It does not tell you how to drive or how to overcome hurdles and obstacles along the way – this is covered in the operational plan.

Documenting the Strategy – 5 Steps

1. Identify the domain ie. market niche, unique products, etc.
2. Explain your competitive advantage in the said domain.
3. Introduce the devised strategy.
4. Specify strategic objectives (covered later in course).
5. Outline potential rewards (normally financial).

OPERATIONAL PLANNING

As mentioned earlier, the operational plan tells you how to overcome problems encountered along the route. In other words, it is more a tactical plan. The operational plan is more focused on the day to day activities of the business needed in order to achieve the strategic plan. This tends to include managing resources.

Documenting the Operational Plan

A simple Gantt chart helps to illustrate the key steps within the operational plan. You may also write a step by step guide describing each activity. The diagram below illustrates the operational plan in a simple Gantt format for a new bar opening up. The shaded boxes show the time taken per operation. The vertical arrows show the critical path i.e. once the lease has been signed, the floor can be installed without the other operations completed.

The Key Components of a Business Plan

The Executive Summary – The Executive summary is essentially a miniature business plan. It should summarize all of the significant points of the whole plan in ideally one page. The executive summary sets the tone of the business plan, it can tell the reader what to expect. Infuriatingly, some key decision makers can base finance decisions based on the summary alone, so make sure it’s good!

The Main Body – this will become apparent throughout this course.

The Conclusion – What is the business building up to? What last impression do you want to leave on the reader’s mind?

Business plans are not static they need to be revised and re-developed constantly along with the growth and changing needs of the business.  There is a saying that is “nothing is constant except for change” – this is something that needs to be understood in planning for the future.  You can make a plan for the future, but it needs to be flexible to incorporate impending changes that most likely will occur.

A good strategic plan will help you to focus the direction in which your business develops and should have the following benefits:

• You will know where to focus your time and energy to help you achieve your goals
• You will know where and how to allocate resources
• Will help you to gain an edge on the competition through a solid marketing strategy
• Your employees will clearly understand your plans and directions for the business, and can work within the parameters of the plan
• You can keep a close eye on results and reassess your goals if they appear to be taking you in the wrong direction, or you are not achieving as expected
• Basic business plans can be used to develop a more targeted plan, when applying for a loan or looking to attract investors.

SWOT Analysis

The SWOT (strengths, weaknesses, opportunities and threats) analysis helps the business to identify internal and external factors that may have an affect on your business. Strengths and weaknesses are internal, ie. maintained within the business, factors which you have some control over. Opportunities and threats are external, ie. environmental factors you have no control over.

Penny’s Parties SWOT analysis

The major outcome of strategic road-mapping and strategic planning, after gathering all necessary information, is the setting of goals for the organization based on its vision and mission statement. A goal is a long-range aim for a specific period. It must be specific and realistic. Long-range goals set through strategic planning are translated into activities that will ensure reaching the goal through operational planning.

Many people believe they plan; they consider the future and/or contemplate how they might increase profits.  However, merely thinking ahead will not produce either an efficient or an effective plan.  Planning is a process that involves the development of goals and objectives, and determining methods or strategies for reaching them.  It also involves re-evaluation – making sure that the plan is viable and according correct if not.

By setting goals and objectives, you are establishing the outcomes you wish to achieve, first in a broad sense (goals) and then more specifically, in measurable terms (objectives).

Objectives are the targets which must be achieved in order to fulfil the corporate aims.  These will vary greatly according to ownership, size, industry etc. however, some objectives are at the core of the majority of businesses. Examples of objectives include:

• Maximise profit – this is usually the primary objective of any business in the private sector.
• Maximise shareholder wealth – This is often presented by the Board of Directors within large PLC’s.
• Business growth – this can be in a variety of forms depending on the type and current size of the company.
• Spreading risk – most often in the form of diversification. The long-term survival of the company can be supported when the company does not rely on one main product. For example, the chocolate manufacturer Cadbury is now Cadbury Rowntree Schweppes as it has diversified into soft drinks and sweets.
• Increasing market share.

In order for objectives to be truly effective, they should also be SMART: Specific, Measurable; Achievable; Realistic

The anagram of Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis is a strategy development tool that matches internal organizational strengths and weaknesses with external opportunities and threats. SWOT analysis is the key component of strategic development. It can prompt actions and responses to possible struggles in the future.

Gap analysis is a way of finding niche markets which can give you a competitive edge. To solve a company’s problems, or to fulfil its manager’s growth ambitions, moving into new product and market areas (“diversification”) is often the recommended prescription.

But diversification has a poor record of success. Most companies (and people) think that they know their own strengths. They do, to a limited extent. But an outsider looking in can often find hidden strengths (and weaknesses).

An example of successful Gap Analysis is villa holidays. In the 1970s, package tour companies found a segment of the public who didn’t want to organise all of their holidays, but who disliked the regimentation of package tours.

Since then, the exploitation of this market gap has revealed other niches, which has resulted in Fly ‘n Drive holidays and Fly ‘n Camp holidays (with tents provided at the destination).

A business strategy is a plan devised in order to allow an organisation to achieve a specific objective. The currently dominant view of strategy is the resource-based theory. Traditional strategy models focus on the company’s external competitive environment. They are looking at all the possibilities coming from the outside of the company. Most of them do not attempt to look inside the company.

In contrast, the resource-based perspective highlights the need for a fit between the external market context in which a company operates and its internal capabilities.  This can also include internal liabilities or places where there are weaknesses to look at within the company.  This is a more overall comprehensive view of the company.

According to this view, a company’s competitive advantage derives from its ability to assemble and exploit an appropriate combination of resources – from both inside and outside the company. Sustainable competitive advantage is achieved by continuously developing existing and creating new resources and capabilities in response to rapidly changing market conditions.

In order to form a strategic plan it is necessary to gather information about the business and its market-place. This will come from two sources:

1. Internal sources of information, such as the company’s prices, costs and efficiency levels
2. External data from organisations like the government and trade associations

The planning should be undertaken regularly and involve an internal audit to appraise the strengths and weaknesses of the firm. And an external audit to evaluate the threats and opportunities in the company’s competitive environment; in other words a SWOT analysis.

When analysing a firm’s approach to establishing corporate objectives and developing strategic policy to achieve these goals, it is useful to consider the following points:

• Are they understood and supported by staff? Are they clearly defined?

• Is the outcome of each objective measurable so that it will be clear when it has been achieved?
• Does each objective have a target date for completion in order to ensure action?
• Are the organisation’s objectives focused excessively on short-term profit maximisation at the expense of the long-term development of the business?
• Do the managers of the business clearly understand its strengths and weaknesses?
• Have opportunities in the competitive environment been identified?
• Does the strategic policy of the organisation match the firm’s strengths to opportunities in the competitive environment?