IGCSE, A Level Business Student Forum

Q7. Explain one limitation of business plans. [3]

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Possible Structure:
[KN]
[AN]
[AN+]

(kn) not ideal in dynamic markets.
(An) as in dynamic market the trend changes rapidly which makes long term business plans useless as now business has to come with a new plan accordingly.
(An+) if business uses old plan so this would lead business working in a wrong path hence, results in inefficiency and business may collapse.

KN: There is a lot of uncertainty due to the constant changes in market conditions
AN: Because of this uncertainity buisness might have to change its plans on regular basis due to change in objectives
AN+: This will cause a lot o time waste and waste of resource due to which making business plans is a limitation

I couldn't put some nice effort here since I'm sleepy now

Kn: Business plan may become outdated after some period of time as when the new trend starts.
An: It may be out use with the passage of time as people taste change and of such happens the time and money invested to create a business plan all will be wasted.
An+:This will lead to long time taken to achieve business goals and their aims that are targeted wont’t be achieved.

[KN]Business plan might not be accurate.
[AN]Therefore it may not be able to predict future efficiently.
[AN+]Leading the business towards greater losses as the objective will not be clear.

May become outdated in dynamic business plan as dynamic business plan changes with time so new innovation is required with new strategies thus customer demand changes technology gets outdated thus it will outdated the business.

[KN] the plan might not be efficient in the future
[AN] due to dynamic business environment, the plan might help improve the business in the short run but cannot be beneficial in the long run
[AN+] thus, the business can lose its effectiveness and it's profits can reduce due to barriers in it's productivity

KN: Market uncertainty as demand can change anytime
AN: causing old stock and investment to go to waste
AN+: this cant be predicted by the business plan and such changes cant be planned for

KN: Business plans cannot predict shift in trends (unpredictability)
AN: Business plan needs to be revised in the dynamic business environment
AN+: Creating a new business plan is resource intensive but will be beneficial in the long term

[kn]the buisness plan must be detailed and supported by evidence such as market research.
(An)if it is not,then prospective credition can delay in making a finance decision until the plan is brought up to the required standard.
(AN+)therefore the plan might lead entrepreneurs to be inflexible.

[KN] A business plan could create a false sense of certainty for business owners. [AN] This means that the business owners may overlook the fact that it is being based on forecasts and predictions. [AN+] As the owners ignore the true current state of business due to what is described in the business plan, they may eventually lead the business to failure due to their inability to identify real strengths and weaknesses that exist within the business in that particular time.

[KN] business plan is not always accurate
[AN] plan may be changed due to some reasons [like recession period]
[AN+] business should do something beneficial for business rather than using that time in making a business plan

[KN]: A business plan is uncertain and cannot predict fluctuations in the economy.
[AN]: If the economy goes into recession, it would not be suitable to set-up a business, especially one which is related to normal goods and services because if people's incomes reduces, the demand for normal goods and services would reduce.
[AN+]: The entrepreneur may have to alter his business plan or look into opening another business, and the time and cost used to devise the previous business plan would be wasted.

[KN] Time-consuming and resource-intensive to develop.
[AN]Businesses may become overly focused on the planning process, which can divert resources and attention from actual operations.
[AN+]This can lead to a situation where planning becomes disconnected from reality.

kn: predictions.
an: business plans rely on forecasts, projecting future revenues, costs, and market trends, therefore, this leads to the business plan being unreliable.
an+: predictions can lead to disappointment if things dont go as expected