Strategic Planning in the Small Business

HO 2-5 (continued)

Unit 2

therefore,

the business must

ask what will these materials

and

supplies

cost? Indeed, a promising

opportunity may

be negated

by either costly or inconsistent

sources

of supply.

Consider this

example. A most creative

entrepreneur de­

sired

to sell sports buttons

and pins to area

schools. Through

a personal sales approach

the entrepreneur

was able to con­

vince

school personnel

that having these items

available for

students

would enhance school

spirit and pride. His

marketing

efforts

were successful and

orders were far above

initial ex­

pectations.

Unfortunately, the

entrepreneur had lined

up only

one very small

supplier located

many miles from the

target

geographical

area. Not only was

the supplier unable

to meet

the required

demand, but he refused

any shipments until

the

price was renegotiated.

Glumly, the

entrepreneur was forced

to cancel orders

and, in the process, see

his credibility and image

shattered.

Inventory Control

In examining

inventory, the

manager is evaluating

the strength

of the

system for ordering,

stocking, and reordering

materials

(raw or

finished products). Success

in this area may

be the key

to meeting the

customer's needs

in a timely manner.

Does the

• 
  

,

owner know

what materials

on hand? Can they

be located

and accessed?

Are there clear, established

procedures for

ini­

tiating reorders?

Is there typically

an acceptable level

of ma­

terial stocked, or

is the business regularly

plagued with inventory

backlogs for

some materials and outages

of others? The

inven­

tory control system

need not be computerized

nor highly

so­

phisticated. Yet,

it should provide the

necessary information

to

prompt action to

ensure steady, desired

inventory flow.

Structure

The

structure of the organization

depicts the formal

flow of

information

and authority

within the organization.

It indicates

both

the jobs that people

do and their accompanying

areas of

80

Part One The Analysis

Phase

223