1 Evaluate the importance of business planning to AEV’s future profitability.

(20)

Business planning is setting objectives determining strategies and their implementation along
with backup plans that helps business in successfully achieving its goal smoothly and prevent
departments in getting in disarray. Profit is the difference between revenue and costs.
Revenue is the amount earned against the sale of goods (in case of AEV) produced by the firm.
Business planning is vital for AEV’s future profitability as it improves the coordination of
different parts of the business and enables them to aid the firm in achieving its aim easily. Due to
a lack of effective business planning, AEV was unable to meet the demand of AEV4 lowering its
revenue and thus decreasing its profits. With the help of effective business planning, AEV would
be able to get rid of such problems as when departments are coordinating with each other
effectively they will be able to resolve problems way early than its strike. This will help it
produce its existing products i.e. luxurious cars and AEV4 in a future time will more efficiently
and would safeguard them from facing the same face as faces by AEV4 resulting in greater
supply matching demand thus increasing sales revenue and ultimately increasing AEV’s
profitability. It might be a good way but still, business planning not only is time-consuming and
utilized a firm’s resources but will create problems if there are sudden changes in the market as it
is difficult to change a business plan without wastage of resources.
Revenue from future expansion of CellX will also be affected by business planning as AEV’s
keen to expand CellX so that it could produce 400000 cars in 2021 and only with a great
business plan it would be able to achieve such a target. With the help of business planning AEV
will be able to redirect resources effectively to create an expansion site that will be able to
produce the required number of cars. Without planning first AEV might get stuck as the factory
was not properly designed and it would not work effectively to produce such large number of
EVs or just simply due to lack of business planning CellX’ s expansion might take longer than
2021 which will result in further delays of products’ dispatching resulting in lower sales and
reducing profitability. Business planning will prevent the business from losing its customers due
to delays and bad reputation as a result of mismanagement preventing its sales from falling and
thus its profitability. It all will work only with successful implementation, if not then only
planning won’t be fruitful rather will be just a waste of company resources.
Cost is the amount incurred in the production and sale of goods. Business planning is essential
for the management of cost so that it doesn’t suffer from high costs lowering its profitability.
For model, the joint venture will take place between two different organizations with different
cultures and leadership style an effective will be vital to make sure that all operations run
fluently. AEV will be able to plan its methods of conduct like how to handle labour of two
different types (different culture values) so that there are no skirmishes and each department will
be able to perform in a great manner preventing the rise of cost as labour won’t be demotivated
due to poor interactions and unable to perform their best as well as lowering the chance of
wastage of resources that would have taken place if not for an effective business plan. This will
lower the cost and ultimately increase AEV’s overall profitability. If electric trucks are to be
considered it will help in effective resource and operation management lowering cost and
improving profitability. On the other hand, making a business plan that caters such choices will
be difficult and might result in on party being unsatisfied with the measures and could cause a bit
of a bumpy ride for AEV in the future.
From the above discussion, it is clear that business planning is very important for AEV’s future
profitability as it gives a sense of direction to the business to assist managing resources but for it
to be successful, it must be successfully implemented. Without a successful implementation
technique, a plan will be nothing more than just a strategy. For illustration, if AEV goes with an
electric truck. The plan is successfully implemented in every department except marketing which
will result in poor advertisement, etc not catching the interest of consumers thus decreasing sales
and profit. In addition to that since AEV is in a dynamic market for success, its plan must be
flexible enough to cater for sudden changes in the market like government policies, etc and must
constantly review the plan to update it to be more reliable as just a single plan might be able to
work for a year but not a decade. Finally, sufficient finance is also a key in its success as if
sufficient finance is available only then the plan will be successfully executed if there is a lack of
funds then the plan’s execution might not be smooth and result in wastage of resources or halt of
the execution at all.
 1 Evaluate the importance of business planning to AEV’s future profitability. (20)

Business planning is setting objectives determining strategies and their implementation along
with backup plans that helps business in successfully achieving its goal smoothly and prevent
departments in getting in disarray. Profit is the difference between revenue and costs.
Revenue is the amount earned against the sale of goods (in case of AEV) produced by the firm.
Business planning is vital for AEV’s future profitability as it improves the coordination of
different parts of the business and enables them to aid the firm in achieving its aim easily. Due to
a lack of effective business planning, AEV was unable to meet the demand of AEV4 lowering its
revenue and thus decreasing its profits. With the help of effective business planning, AEV would
be able to get rid of such problems as when departments are coordinating with each other
effectively they will be able to resolve problems way early than its strike. This will help it
produce its existing products i.e. luxurious cars and AEV4 in a future time will more efficiently
and would safeguard them from facing the same face as faces by AEV4 resulting in greater
supply matching demand thus increasing sales revenue and ultimately increasing AEV’s
profitability. It might be a good way but still, business planning not only is time-consuming and
utilized a firm’s resources but will create problems if there are sudden changes in the market as it
is difficult to change a business plan without wastage of resources.
Revenue from future expansion of CellX will also be affected by business planning as AEV’s
keen to expand CellX so that it could produce 400000 cars in 2021 and only with a great
business plan it would be able to achieve such a target. With the help of business planning AEV
will be able to redirect resources effectively to create an expansion site that will be able to
produce the required number of cars. Without planning first AEV might get stuck as the factory
was not properly designed and it would not work effectively to produce such large number of
EVs or just simply due to lack of business planning CellX’ s expansion might take longer than
2021 which will result in further delays of products’ dispatching resulting in lower sales and
reducing profitability. Business planning will prevent the business from losing its customers due
to delays and bad reputation as a result of mismanagement preventing its sales from falling and
thus its profitability. It all will work only with successful implementation, if not then only
planning won’t be fruitful rather will be just a waste of company resources.
Cost is the amount incurred in the production and sale of goods. Business planning is essential
for the management of cost so that it doesn’t suffer from high costs lowering its profitability.
For model, the joint venture will take place between two different organizations with different
cultures and leadership style an effective will be vital to make sure that all operations run
fluently. AEV will be able to plan its methods of conduct like how to handle labour of two
different types (different culture values) so that there are no skirmishes and each department will
be able to perform in a great manner preventing the rise of cost as labour won’t be demotivated
due to poor interactions and unable to perform their best as well as lowering the chance of
wastage of resources that would have taken place if not for an effective business plan. This will
lower the cost and ultimately increase AEV’s overall profitability. If electric trucks are to be
considered it will help in effective resource and operation management lowering cost and
improving profitability. On the other hand, making a business plan that caters such choices will
be difficult and might result in on party being unsatisfied with the measures and could cause a bit
of a bumpy ride for AEV in the future.
From the above discussion, it is clear that business planning is very important for AEV’s future
profitability as it gives a sense of direction to the business to assist managing resources but for it
to be successful, it must be successfully implemented. Without a successful implementation
technique, a plan will be nothing more than just a strategy. For illustration, if AEV goes with an
electric truck. The plan is successfully implemented in every department except marketing which
will result in poor advertisement, etc not catching the interest of consumers thus decreasing sales
and profit. In addition to that since AEV is in a dynamic market for success, its plan must be
flexible enough to cater for sudden changes in the market like government policies, etc and must
constantly review the plan to update it to be more reliable as just a single plan might be able to
work for a year but not a decade. Finally, sufficient finance is also a key in its success as if
sufficient finance is available only then the plan will be successfully executed if there is a lack of
funds then the plan’s execution might not be smooth and result in wastage of resources or halt of
the execution at all.

2 Recommend which one of the two strategic options AEV should choose. Justify your
recommendation. Your answer must include an evaluation of strategic choice
techniques. (20)