Develop Business Practice

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Develop Business Practice

BUF BAW2 13 0812

This unit specifies the outcomes required to establish a business operation from a planned
concept. It includes researching the feasibility of establishing a business operation, planning the
setting up of the business, implementing the plan and reviewing operations once commenced.

1. Identifying Business Opportunity

1.1 Investigating and Identifying Business Opportunities

Business opportunities maybe influenced by:

 expected financial viability


 skills of operator
 amount and types of finance available
 returns expected or required by owners
 likely return on investment
 finance required
 lifestyle issues

Opportunities are positive or favourable factors in the environment which the entrepreneur
should make use of or which make his project idea potentially viable.

They are, however, mostly beyond the control of the entrepreneur. They are different from
strengths in the sense that strengths are positive internal factors of the business.

 few and weak competitors


 no such products in the market
 rising income of target market
 scarcity of product in the locality
 growing demand

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 favourable government policy
 similar products making profit
 favourable government programs
 technical assistance available
 low interest on loans
 access to cheap raw material
 adequate training opportunities

1.2 Undertaking Feasibility Study to Determine Likely Business Viability

Business viability may include:

 opportunities available
 market competition
 timing/ cyclical considerations
 skills available
 resources available
 location and/ or premises available
 risk related to a particular business opportunity, especially
 in regard to Occupational Health and Safety and
 environmental considerations

1.3 Undertaking Market Research on Product or Service

Marketing Research Guide questions

1. What is the product?

2. How is quality and price as compared to competitive products?

3. Where will the business be located?

4. What geographical areas will be covered by the project?

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5. Within the market area, to whom will the business sell its products?

6. Is it possible to estimate how much of the product is currently being sold?

7. What share or percent of this market can be captured by the business?

8. What is the selling price of the product?

9. How much of the product will be sold?

10. What promotional measures will be used to sell the product?

11. What marketing strategy is needed to ensure that sales forecasts are achieved?

12. What do you need to promote and distribute your product?

Market Research Stages

I – Planning Stage

A – Questionnaire Elaboration

1. Research objective definition

2. Research universe definition

3. Sample definition

4. Areas to be covered by research (indispensable or dispensable ones)

5. Question contents

6. Question configuration (open questions, close questions, speech fitness for target
group)

7. Question sequence

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8. Trial research

9. Final elaboration

Suggestions:

· It is important to avoid questions which shall lead the responding person's answer, or those
which are less likely to be negatively answered;

· You should select only those questions which are really important to reach research objectives;

· It is advisable to place more delicate questions in the final part of the questionnaire;

· You should use colloquial and clear speech, proper for the target group;

· Avoid words which express some other meaning;

· Keep track of a logical sequence in your questionnaire;

· Place some initial questions to establish contact with the person you interview (“break the
ice”);

· It is important to insert some questions to check if given answers are coherent.

B – Field Work Preparation

Field researchers should be allocated, and work should be distributed according to:

- functions;

- geographic criteria;

- contents.

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II – Market Research Execution Stage

A – Introduction and research application

1. Introduction

2. Research objective explanation

B – Research Execution

Recommendations to fieldwork researcher

· Keep track of objectives at all times (do not waste time)

· Keep an adequate distance from whom you are interviewing

· Try to adapt the speech to the target group

· Clearly explain the purpose of the research

· Value every effort which a responding person makes

III – Research Result Tabulation Stage

Basic Approaches to Market Research

WHO The universe to be investigated

WHAT What will be investigated:- market, consumer, consumer habits channels of

distribution/selling

WHY The purpose of the research

HOW Resources: equipment, human resources, financial resources, time required

Information: needed, indispensable

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Content analysis

Balance between cost of information and its additional value for decision

making

WHERE Geographic area of research.

TECHNIQUES

1. Secondary Information

1.1. Environment information

1.2. Documents: public or private documents, historical registers, census

1.3. Check: representativity of document, reliability of document

1.4. Data type: data on education, lifestyle, economic and professional data etc.

1.5. Problems: defective information, different interpretation criteria, alteration of


registry criteria, definition comprehension

2. Content Analysis

2.1. Definition of sample criteria

2.2. Definition of measuring instrument

3. Observation

3.1. Behaviours selection

3.2. Conditions of observation

3.3. Score counting possibility

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3.4. Reliability of observed subject

3.5. Level of influence of observed subject

4. Interviews (qualified informers)

4.1. This technique allows a more accurate contact with behaviours, opinions and
perceptions

4.2. Basic Steps: a) explain purpose and objectives of interview

b) describe the interviewees’ selection criteria

c) ensure the anonymity and confidentiality of any given information

4.3. An interview is established when:

d) there is empathy between interviewer and interviewee

e) the interviewee understands the objectives

f) there are no communication obstacles

g) Interviewee notices an opportunity of benefit for himself or his business

4.4. A guideline for the interview allows:

a) ask the same questions in every interview

b) stimulate answers

c) obtain some additional information

d) clarify obtained information

e) record the given information

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5. Questionnaires:

Households Self-administrated

Telephone Panel

5.1. Sample:- random, systemic, stratified, not-random: casual, proportional

5.2. Types: open or closed questions

5.3. Criteria: - avoid suggestive questions;

- select questions which are important for inquiry objectives;

- leave delicate questions to the end of questionnaire;

- choose questions which motivate an answer;

- use clear, simple and adequate language;

- avoid technical language;

- present only one idea in each question;

- keep track of a sequence;

- establish some “warm-up questions”;

- elaborate some questions to check on the reliability of responding person;

- try to previously test the questionnaire;


- keep an adequate distance from responding person.
5.4. Encoding
5.5. Information analysis (statistics)
Will Continue in Level III

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Sample Marketing Questionnaire

Name of Interviewee: _________________________Category: _______________

Show a prototype of the product, or describe the selected product, to the possible persons
responding to this survey and note down their answers to the following questions:

1. PERSONAL INFORMATION

1.1. Age of the responding person:

(a) 15 to 20 (d) 41 to 50

(b) 21 to 30 (e) Over 50

(c) 31 to 40

1.2. Sex:

(a) Male (b) Female

1.3. Marital Status:

(a) Single (c) Divorced/Separated

(b) Married (d) Widow

1.4. Education (Highest)

(a) Grade School (e) University (Bachelor's degree)

(b) High School (f) Master's degree

(c) Vocational/Technical School (g) Doctoral degree

(d) College

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1.5. Residence:

(a) House (owned) (c) Apartment

(b) House (rented) (d) Boarding House

2. MARKET INFORMATION

2.1. Have you seen this product before?

(a) Yes (b) No

2.2. If yes, where?

(a) In a store (c) At a friend's house

(b) On television (d) Others, specify:

_____________________________________________________________
_____________________________________________________________
2.3. Do you own a similar product?

(a) Yes (b) No

2.4. If yes, for how long?

(a) Less than 1 year (c) Over 2 to 5 years

(b) 1 to 2 years (d) Over 5 years

2.5. If available, would you buy the product?

(a) Yes (b) No

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2.6. If yes, for how much?

(a) Br. 0.50 to 1.00 (d) Br. 3.01 to 4.00

(b) Br. 1.01 to 2.00 (e) Br. 4.01 to 5.00

(c) Br. 2.01 to 3.00 Specify exactly :

________________________________________________________________

3. PRODUCT INFORMATION

3.1 What colour would you like the product to be?

(a) Lighter (c) Specify:

(b) Darker ____________________________________

3.2 What size would you like the product to be?

(a) Larger (c) Specify:

(b) Smaller ______________________________

3.3 What changes would you like incorporated in the product design?

_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
4. COMPETITORS’ INFORMATION

4.1 How many competitors exist?

(a) None (b) 1 to 2

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(c) 3 to 4

(d) 5 to 6 (e) Over 6

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4.2 Competitors and Addresses:

Competitors Business Address

_______________________ ______________________
_______________________ ______________________
_______________________ ______________________
_______________________ ______________________

4.3. Describe the features of the competitors' products

Competitors Special Features Price Remarks


1. Benefits
2. Durability
3. Taste
4. Multiple Use
5. Quality
6. Brand
7. Design
ETC

Other Information:

_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_________________________ _____________
(Name of Interviewer) Date
Note: This is only a sample questionnaire. The trainees are encouraged to design their own
questionnaires that suit their specific products and target markets.
Will continued in Level III

1.4 Seeking Assistance With Feasibility Study of Specialist and Relevant Parties

Specialist and relevant parties

 Chamber of commerce
 Financial planners and financial institution representatives, business planning
specialists and marketing specialists
 accountants
 lawyers and providers of legal advice
 government agencies
 industry/trade associations
 online gateways
 business brokers/business consultants

1.5 Evaluating Impact of Emerging or Changing Technology Including E-commerce, on


Business Operations
1.6 Practicability of business opportunity assessed in line with perceived risks, returns
sought and resources available
1.7 Completing Business Plan for Operation

2. Identifying Personal Business Skills

2.1 Identifying and Taking into Account Financial and Business Skills Available when
Researching Business Opportunities
2.2 Assessing and Matching Personal skills/attributes Against those Perceived as
Necessary for a Particular Business Opportunity

Personal skills/attributes may include:

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 technical and/ or specialist skills
 business knowledge and skills
 entrepreneurship
 willingness to take risks

2.3 Identifying and Assessing Business risks According to Resources Available and
Personal Preferences

Business risks may be affected by and may include but are not restricted to:

 occupational health and safety and environmental


 considerations
 relevant legislative requirements
 security of investment
 market competition
 security of premises/ location
 supply and demand
 resources available

3. Planning for Establishment of Business Operation

3.1 Determining and Documenting Business structure and operations


3.2 Developing and Documenting Procedures to Guide Operations
3.3 Securing Financial Backing for Business Operation
3.4 Identifying and Complying Business Legal and Regulatory Requirements
3.5 Determining Human and Physical Resources Required to Commence Business
Operation

Human and physical resources may include:

 software and hardware


 office premises

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 communications equipment
 specialist services through outsourcing, contracting and
 consultancy
 staff
 vehicles

3.6 Developing and Implementing Recruitment Strategies

4. Implementing Establishment Plan

4.1 Undertaking Marketing of Business Operation


4.2 Obtaining Physical and Human Resources to Implement Business Operation

Resources may include:

 staff
 money
 time
 equipment
 space

4.3 Establishing Operational Unit to Support and Coordinate Business Operation

Operational unit refers to:

 office location staffed with required personnel and equipped to service and
support business
 home-based site or other location such as leased or owned property

4.4 Developing and Implementing Monitoring Process for Managing Operation


4.5 Maintaining Legal documents Carefully and Keeping and Updating relevant
records to Ensure Validity and Accessibility

Legal documents may include:

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 partnership agreements, constitution documents, statutory books for
companies (Register of Members, Register of Directors and Minute Books),
Certificate of Incorporation, Franchise Agreements and financial
documentation, appropriate software for financial records
 recordkeeping including personnel, financial, taxation, OHS and
environmental

4.6 Contractual procurement rights for goods and services including contracts with
relevant people, negotiated and secured as required in accordance with the business
plan

Contracts with relevant people may include:

 owners, suppliers, employees, landlords, agents, distributors, customers or any


person with whom the business has, or seeks to have, a performance-based
relationship

4.7 Options for leasing/ownership of business premises identified and contractual


arrangements completed in accordance with the business plan

5. Reviewing Implementation Process

5.1 Developing and Implementing Reviewing Process for Implementation of Business


Operation

5.2 Identifying Improvements in Business Operation and Associated Management


Process
5.3 Implementing and Monitoring Identified Improvements for Effectiveness

Critical Aspects of Competence


A person must be able to provide evidence:
 that a business operation has been planned and implemented from initial
research into feasibility of the business and completion of the plan,
through to implementing the plan and commencing operations
 the Asrat
Prepared by Alelign ability to evaluate the results
LII UC13of research and assess the likely viability 17
and practicability of a business opportunity, taking into account the
current business/market climate and resources available
Prepared by Alelign Asrat LII UC13 18

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