Question 1: Importance of a Business Plan
As American Images learned, a business plan is a vital element in a firm's strategic growth effort. A business plan that delineates the goals and objectives of the firm in terms of both the short- and long-term, specifies what actions are to be taken and which actors within the firm are responsible for then, and establishes clear benchmarks is useful not only in determining how well the firm is doing. Such a plan also provides a framework on which work itself is structured and measurements of progress can be based.
Entrepreneurial firms like American Images often grow rapidly, straining the skills and competencies of their leaders or founders. A business plan allows these innovators to identify what they want and need to accomplish financially as well as structurally. It can assist in targeting expenditures to maximize return on investment. It can also identify weaknesses in the design and structure of the organization and provide guidance regarding filling those deficits. American Images began to achieve profitability only after it created a strategic business plan setting out measurable goals and objectives and identifying the roles of all members of the organization. A comprehensive business plan is a strategic statement of purpose.
Question 2: Organization-wide Planning
The idea that every person in an organization should participate in creating and then achieving the firm's strategic goals and objectives as reflected in its business plan reflects Jack Stack's contention that since strategy involves all stakeholders; these same stakeholders should help to create strategy. People who are empowered to participate in deciding where the company will go and how it will get there are more likely to perceive themselves as invested in the plan. They are more likely to feel a sense of ownership in the organization itself and to recognize their own important to it.
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