Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • October 2016 (Revised February 2019)
  • Module Note

Strategy Execution Module 5: Building a Profit Plan

By: Robert Simons
  • Format:Print
  • | Language:English
  • | Pages:34
ShareBar

Abstract

This module reading describes how to build a profit plan to reflect the strategy of a business in economic terms. After introducing the profit wheel, cash wheel, and ROE wheel, the module illustrates how to use a profit plan to assess the viability of different strategies and evaluate whether sufficient resources will be available to implement the chosen strategy. The module examines in detail how to develop accurate estimates for sales, profit, cash flow, asset turnover, investment in new assets, and return on equity. The discussion then turns to how to gather and analyze data and the effects of sensitivity analysis on predictions. The module concludes by illustrating the critical role of a profit plan in setting goals, communicating expectations to the investment community, and evaluating the performance of individual managers and businesses. While this module is designed to be used alone, it is part of the Strategy Execution series. Taken together, the series forms a complete course that teaches the latest techniques for using performance measurement and control systems to implement strategy. Modules 1 - 4 set out the foundations for strategy implementation. Modules 5 - 10 teach quantitative tools for performance measurement and control. Modules 11 - 15 illustrate the use of these techniques by managers to achieve profit goals and strategies.

Keywords

Management Control Systems; Implementing Strategy; Execution; Profit Planning; Cash Flow Analysis; Asset Utilization; Return On Equity; Business Planning; Testing Strategy; Analyzing Strategic Alternative; Strategy; Asset Management; Cash Flow; Investment Return; Management Systems; Profit

Citation

Simons, Robert. "Strategy Execution Module 5: Building a Profit Plan." Harvard Business School Module Note 117-105, October 2016. (Revised February 2019.)
  • Purchase

About The Author

Robert Simons

Accounting and Management
→More Publications

Related Work

    • March 2017 (Revised May 2017)
    • Faculty Research

    The Strategy Execution Series

    By: Robert Simons and Jennifer Packard
    • October 2016 (Revised February 2019)
    • Faculty Research

    Strategy Execution Module 5: Building a Profit Plan

    By: Robert Simons
Related Work
  • The Strategy Execution Series By: Robert Simons and Jennifer Packard
  • Strategy Execution Module 5: Building a Profit Plan By: Robert Simons
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College.