Business Case Vs Business Plan
The development of business case and business plan in organizations is vital in accomplishing the desired outcomes for new business ideas. The paper describes and compares and contrasts the similarities and differences between business case and business plan. The business case keeps the potential of scope creep to a minimum, assist in sustaining the morale of the team and assists in prioritizing business objectives. Whereas a business plan in a business identifies and measures risks, guides management in setting and prioritizing organizational objectives, projects future financial performance, and serve as a starting point for developing budgets. The paper also identifies three business case templates and selects the best while listing its advantages.
Business Case & Business Plan
A business case refers to a justification for pursuing a course of action in an organizational context to accomplish defined business goals. The business case entails the evaluation of the value of an investment concerning its potential benefits as well as the resources required to set it up and sustain it that is its on-going costs (Remenyi & Sherwood-Smith, 2012).It provides precise information about the return investment on a particular project such as breakeven and the period to reach the breakeven etc. The various benefits brought by developing a business case are that it keeps the potential of scope creep to a minimum, assist in sustaining the morale of the team and assists in prioritizing business objectives. It also helps investors to monitor the investment progress, risks, and budget through the regular updating of the business case.
A business plan refers to the business process and vision set to attain financial success tied to defined strategic outcomes. It gets connected to the strategic planning processes emphasizing on the sustainability of the chosen business model. Business planning in a company is responsible for the various decisions namely:
- What products or services the business will deliver
- Where the firm will compete
- Why the consumer should conduct business with the company
- How the enterprise will organize and re-engineerso as to meet its goals (Crego, Mancuso, Schiffrin & KAUSS, 1979).
A good business plan is continuous work-in-progress that must adapt to change over time. The business plan should project financial targets out further than a year, as opposed to the budget that focuses on one year. The main purpose of a business plan includes identifying and measuring risks, guides management in setting and prioritizing organizational objectives, projects future financial performance, and serve as a starting point for developing budgets.
Compare and contrast Business Case and Business Plan
|Business Case||Business Plan|
|Provides the information about the potential market opportunity at a product level. The evaluation culminates with a Go/No-Go decision on whether an enterprise should introduce a new product o compete with existing products.||It is a potential business opportunity at a business level to offer the product to the target market. The evaluation culminates with a Go/No-Go decision on whether the company should be created to compete with other companies.|
|Answers the question, “What happens when a company takes a particular course of action?”||It is a description of how a business unit aims at navigating successfully through its unique competitive environment (Harvard Business School Press, 2013).|
|It gets made up of a single action or single decision and its alternatives||An organization of the entire business and covers a single product or product line or entire company|
|It focuses on the business objectives that the action aims at accomplishing||It focuses on business objectives for the organization.|
|Its measures include financial metrics that include IRR, ROI, NPV, TCO and payback period and also non-financial impacts||Its measures are business performance elements such as profits, margins, sales and business health.|
|In government and non-profit organization, its scope comprises of benefits and costs to the consumers||In government and non-profit organization; it focuses on funding requirements, budgetary needs and operation within a budget|
|It gets based on a cost model and a benefits rationale designed for the case and applied to one or more action scenarios||It gets based on the business model for the organization and expected trends, competitor actions, etc.|
|Business case is a comprehensive project assessment to establish its viability as a stand-alone business proposition||Business plan is a blueprint for the proposed new entity operation|
Components of a business case:
- a) A clearly stated business objective and a set of outcomes. It is a justification that the proposed plan will generate an acceptable organizational return.
- b) A list of stakeholders and beneficiaries of the investment
- c) A statement of the way that the proposed infrastructure will support the corporate strategy
- d) An assessment of the appropriateness of technology and operational plan
- e) An assessment of the risks associated with the investment
The content of a business case is vital for a company as investors since they can determine whether a proposed plan will be viable/profitable or not before investing on it. The systematic financial justification for proposed projects also identifies drawbacks, risks and constraints thus can identify how to solve them in advance. The content in business case assists investors to identify whether a particular business-related concept is practical and profitable or not.
Three business case templates
Among the three business case templates considered that are business case template 1, business case template 2, and business case template 3, business case template 1 is the best.
Business Case Template 1: https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&sqi=2&ved=0ahUKEwijttO64oDNAhUeM8AKHfcbBeYQFggiMAE&url=http:%2F%2Fwww.technology.wv.gov%2FSiteCollectionDocuments%2FProject%2520Management%2520Templates%2FBusiness%2520Case%2520Template.doc&usg=AFQjCNFDvQ32Jz15jUN2y6dgf6aDcYYm0g&sig2=2ex488B5sXeHFuLmzeVOyQ&bvm=bv.123325700,d.d2s
Business Case Template 2: https://www.google.com/?gws_rd=ssl#q=business+case+template+pdf
Business Case Template 3: https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=16&cad=rja&uact=8&sqi=2&ved=0ahUKEwijttO64oDNAhUeM8AKHfcbBeYQFghhMA8&url=http:%2F%2Fwww.yesser.gov.sa%2Fen%2Fpublicconsultation%2Fdocuments%2Fppp_business_case_template-en.doc&usg=AFQjCNGgh88jFbuUc6-NsRHvgp7SHo3CKw&sig2=lJzer8D7gqnY1aFIYVBm8g&bvm=bv.123325700,d.d2s
Business case 1 is extremely detailed especially in the part of business problem/need which is a vital step when developing a business case. It is the problem which the business aims to solve hence should get considered thoroughly. The business case template 1 also gets detailed in the risks sections in which it describes the risk, classifies it likelihood and impact and also lists mitigation measures for each risk. This process would assist investors to make appropriate and informed decisions. Business case 1 then identifies various alternatives to solve the problem and compares their benefits, costs, feasibility, risks and issues options while making all the necessary assumptions thus able to identify the most suitable. According to Harvard Business School Press, (2013), the phase of identifying business alternatives is critical and ensures that a business does not select the first one or two ideas that emerge. Various pitfalls to avoid in this stage include limiting the list of choices to first solutions determined, having a limited mindset, having a strong preference for a specific solution to the business need at the outset of the process and failing to make consideration of the status quo. The other reason that makes business case template 1 seem more practicable and effective is that it contains an implementation plan for the business alternative selected in the section above. The implementation approach comprises of project initiation, project planning, project execution, project closure, and project management. The process is systematic and effective to accomplish the defined business objectives include the monitoring of the investment progress by all the involved stakeholders of the proposed business. The purpose of the business case maintenance is to track whether the investment gets undertaken as specified (concerning the changes, costs, and objectives) and update when required (concerning the assumptions and risks).
Business Case Template 1: West Virginia Office of Technology Retrieved from https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&sqi=2&ved=0ahUKEwijttO64oDNAhUeM8AKHfcbBeYQFggiMAE&url=http:%2F%2Fwww.technology.wv.gov%2FSiteCollectionDocuments%2FProject%2520Management%2520Templates%2FBusiness%2520Case%2520Template.doc&usg=AFQjCNFDvQ32Jz15jUN2y6dgf6aDcYYm0g&sig2=2ex488B5sXeHFuLmzeVOyQ&bvm=bv.123325700,d.d2s
Business Case Template 2: Initial Business Case Retrieved from https://www.google.com/?gws_rd=ssl#q=business+case+template+pdf
Business Case Template 3: Retrieved from
Crego, E. T., Mancuso, J. R., Schiffrin, P. D., & KAUSS, J. C. (1979): How to write a business plan. AMACOM Div American Mgmt Assn.
Harvard Business School Press, (2013): Developing a Business Case: Harvard Business Press
Remenyi, D., & Sherwood-Smith, M. (2012): IT investment: making a business case. Routledge.