Chapter 4:

Business Letter - Report Writing –

Business Plan [Project Profile]
 Business Letter
Business Letter is the most important means of written communication. Every
organization has to maintain contacts internally and with its customers, suppliers,
intermediaries, investors, Government Department and so on.

Business letter is a letter from one business entity (company) to another, or

between such organizations and their customers or clients and other related
parties (external parties).

• In the words of H. A. Murphy and others, “The medium used most often for
written messages to persons outside the organization is business letter.”
• W. J. Weston said, “Business letter is the process of accomplishing business
transaction in written form.”

The overall style of letter depends on the purpose of the letters and relationship
between the parties concerned.

Business letter is sometimes useful because it produces a permanent written

record, and may be taken more seriously by the recipient than other forms of
communication.
 Purpose of Business Letter
According to Ricks and Gow, “The primary purposes of business letters are to
inform, instruct, request, inquire, remit, order, advice, correct and to question.”
• Convey Information: Business letter is used to convey information regarding
business activities to customers, suppliers, government authorities, bank and
insurance companies and to any other parties related with the business.
• To Inquire: Business concern not only sends messages but also receive
information from the outside. To run the business, any firm need different
types of information from outside. Through business letters firms can inquire
regarding necessary matters.
• Placing Order: Business letter is used commonly for placing order; usually
known as “Work Order”. Both trading and manufacturing concerns need to
place orders for finished goods or raw-materials to run the business.
• Conclude Transaction: BL are frequently used to conclude any transactions.
• Establishment [Acknowledgement] of Relationship: BL helps to establish
mutual relationship with the customers, suppliers and with other parties.
• Evidence: Business letters are also used to maintain documentary evidence.
Letters can be preserved for future reference.
• Problem Solving: BL as written document, plays vital role in solving
problem such as disputes and misunderstandings.
 Essentials of Good Business Letter
(Business) Letter writing is basically an art. Major features/essentials of Business Letter
are discussed below:
• Clarity: Purpose of business letter should be made clear; whether it is to inform,
invite, emphasize, remind, announce, seek participation or correct the earlier message.
• To create the desired impact: It is often necessary to lay emphasis. Emphasis can be
laid in many ways. It can be done by proper positioning—placing them in an important
position. It can be done by repetition.
• Relevant Information: BL provides the relevant details of the message. Facts, figures,
illustrations must be relevant, accurate and reliable to the context of the
communication, should be incorporated in the letter.
• Concise: The time that one can allot for reading business letters is certainly limited.
• Simplicity: Simplicity refers to the ease of understanding. A letter written in a simple,
and easily understood words catches the attention, and makes an impact.
• Timeliness: Business letters, to be effective, should have proper timing. Letters should
be written and dispatched on time. Some messages have a sense of urgency. They call
for action, which is ‘immediate’ or ‘urgent’, or within a given time frame.
• Language: It is necessary to ensure that the language used is appropriate.
• Style: Style refers to the manner of writing. It constitutes the collective characteristics
of the writing or impression or way of presenting things.
• Positive Approach: A good business letter is that which has a positive approach. It
creates a friendly atmosphere; avoids negative feelings.
 Parts/Components of Good Business Letter
Following parts usually constitute the structure of a business letter:

Heading/Letterhead/Opening:
Reference Number:
Date:
Inside address [to whom letter is address]:
Subject line:
Salutation:
Body of the letter:
 first (or the opening paragraph): builds up a relationship with the reader
 second paragraph contains the proper subject matter
 third paragraph is an extension of the second paragraph [if needed]
 fourth (or the closing paragraph) brings the letter to an end
Formal Close:
Signature block/slot:
Enclosures/Attachment:
‘CC’ or Carbon Copy notation/Distribution:
 Parts/Components of Good Business Letter
Following parts usually constitute the structure of a business letter:

 Heading/Letterhead/Opening: Heading is also known as “Head Address” or

“Letter head” contains organization name, address, logo/trade mark, phone/mobile
number, fax, e-mail address. Usually given at top center/top right side of the paper.

 Reference Number: The number which receiver refers in all future

correspondence is called reference number. The purpose of reference number is to
enable replies to be linked with previous correspondence and to send replies to
these letters.

 Date: The date consists of day, month and year either at left margin/right.

 Inside Address: Inside address contains name & address of organization or

individual to whom the letter is written. It is written below the reference number at
left margin.

 Subject Line: Subject line is placed below inside address and above salutation; it
is underlined/bold. It meant why the letter is written/subject matter of the letter.
 Parts/Components of Good Business Letter
 Salutation: Salutation means to greet the addressee; written below the subject line
and starts from the left margin. It may or may not end with comma (,) or colon (:).

 Body of Letter: This part contains the message to be converged. It is the most
important part of the letter and usually consists of 3-4 paragraphs.

 Formal Close: It is also known as subscription. It is merely a polite way of ending

a letter. It is written below the last paragraph of the body of the letter.

 Signature block/slot: Signature is the assent of the writer to the subject matter of
the letter and is a practical necessity. It is usually hand written and contains the
writers name, status, department, firm etc.

 Enclosures: Sometimes some documents like price list catalogue etc. are attached
with the letter. Enclosure mentions the documents which are enclosed or attached
with the letter. The enclosures usually find their place at the bottom left margin.

 ‘CC’ or Carbon Copy notation/Distribution: When copies of the letter are

meant to be sent to more than one person it is mentioned under “CC” or carbon
copy notation/under distribution.
Parts/Components of Good Business Letter
Parts/Components of Good Business Letter
Parts/Components of Good Business Letter
Parts/Components of Good Business Letter
 Punctuation Styles in Business Letter
2 punctuation styles are commonly used in business letter:

 Mixed/Closed Punctuation: Mixed punctuation requires a colon to follow

the opening salutation [Dear Mrs Smith:] – and comma to end the
complementary close – [Sincerely,].

Example: Dear Mr. Frazier: Sincerely, (your name)

Ph.D. a.m. / P.O. Box.

 Open Punctuation: In open punctuation, both the colon and the comma is
omitted. This style is popular in the United States and it's also gaining
popularity in Europe. Open punctuation is a relatively new concept. It
involves a minimal use of punctuation throughout the body of the letter.

Examples: JT Doe PhD instead of J.T. Doe, Ph.D.,

Dear Mr Rodriguqez instead of Dear Mr. Rodriguez:
Sincerely instead of Sincerely,
am / PO BOX
 Format Style/Layout of Business Letter
How the elements/parts of a letter are arranged determines format/layout. In
general, 4 major letter layouts/format styles are commonly used:

Layout Description
Block / Widely popular & most modern style. All elements [except the letterhead
Full Block heading] are aligned to the left margin of the page. punctuation marks are
omitted in each element except the salutation, complimentary close, and
message. Double line space between paras.

Modified This format differs in positioning few elements: Heading, complimentary

Block close, and signature block are aligned to the right margin. Address,
salutation, the body, and enclosures are aligned to the left.

Semi-block This is similar to modified block style except that the start of each
paragraph is indented: each paragraph of the message starts a few spaces
away from the margin. Usually out of the style; not used.

Simplified Format is similar to block format with few unique features: Omits
Block salutation, Often includes a subject line in capital letters, Omits
complimentary close. This format is convenient when do not know the
recipient’s name. The format seems mechanical and impersonal.
Block / Full Block Layout
Modified Block Layout
Semi-blocked Layout
Semi-blocked Layout
Simplified Layout
 Major Types of Business Letter
There are lots of types of letters are used in business/organization. Whatever the
type is, the components/parts of all business letters are almost same.
 Report Writing - Business Report
Report = A written document on something that has observed/heard/investigated
Report writing = It is the process of writing a report
Business Report = A report is written for business purpose
A written document on business/business activity related issues
• According to Lesikar and Petit, “A business report is an orderly, objective
communication of factual information that serves some business purpose.”
• Boone and Other said, “A business report is a document that organizes
information and a specific topic for a specific business purpose.”
• According to Murphy and Hildebrandt, “A business report is an impartial,
objective, planned presentation of a fact to one or more persons for a specific,
significant business purpose.”
Business report is a written-official document that contains factual information,
statistical data, research findings, or any other form of information related to specific
business matter in making decisions. Business report mainly used for internal
communication within an organization. It helps the interested persons to get insight
into the problem and to overcome the problem.
Example: Production manager wants to know about the sudden increase in wastage in
production process. Production supervisor is instructed to look into the issue and to
submit a report that highlights the problems and recommends solutions.
 Characteristics/Features/Qualities of Good Report
Business reports carry information on facts related to business activities. The unique
characteristics of business report are discussed below:

• Specific Issue: Business report is written on specific subject or for certain need.
• Specific Structure or Layout: In preparing report, certain structure or layout or format
is followed. The layout or structure of report is almost same in every case.
• Upward Flow: Direction of report is always upward in the organizational structure. The
higher authority normally assigns the duty of preparing reports to their immediate lower
authority and after preparing the report, they submit it to their boss or higher authority.
• Written on Past Events: In most of the cases, the reports are written on past events.
Most of the business reports carry the reasons of happing the incident, the ways of
recovery etc. Reports are also written in past forms.
• Factual Information: Business report is always written based on factual information.
The data collected on specific events is factual, not factious.
• Joint Effort: A report is an outcome of joint efforts of a group of people. No one can
personally or solely prepare a report. In most cases, committee is formed.
• Pre-Specified Audience: Business report has a pre-specified audience. Usually business
report is prepared and addressed to specific group of people.
• Signature and Date: It is customary to put the signature of the reporter with date at the
end of the report. If it is prepared by a committee, signature must be given by each
member of the committee.
Business Report
 Components / Parts of Business Report
Business report may include the following fairly standard sections:

 Front Pages: These includes Title fly, Title page, Letter of transmittal (if
needed), Acknowledgment.

 Executive Summary: It summarizes the main points of the report, such as

report topic, objectives, data obtained and data analysis methods, and
recommendations. Summary could be as short as a paragraph or as long as
four pages, depending on the length of the full report. It helps audience not to
read the entire report. While executive summary comes first in a report, it is
written after the main part of the report has been written.

 Table of Contents: If report is lengthy, table of contents is included. Table of

contents lists the main topics the report covers and the page on which that
information may be found.

 Introduction: A report starts with introduction. It highlights the major topics

that are covered and provides background information on the report; why the
report is prepared (report objectives) etc.
 Components / Parts of Business Report
 Body: The body of the report describes the problem, the data that was
collected, how the data was collected, analyze the data/information, and
address the major findings. The body may be broken into subsections,
with subheadings that highlight the specific point to be covered in that
subsection.

 Conclusion: Conclusion explains how the data described in the body of the
document may be interpreted or what conclusions may be drawn. Conclusion
often suggests how to improve some aspect of the business or recommends
additional research.

 Reference: References section lists the resources used to research or collect

the data for the report. References provide proof for the points/views and
enable readers to review the original data sources themselves.

 Appendix: Appendix is optional and may include additional technical

information that is not necessary to the explanation provided in the body and
conclusion but supports the findings, such as charts or pictures, or additional
research not cited in the body but relevant to the discussion.
 Types of Business Report
Reports differs by nature, function & purpose; they also differ by presentation,
style, length and tradition. The classification may look like:

 On Presentation: Oral and Written Report

 On Formality/Legality: Formal and Informal Report
 On Function: Informative and Analytical Report
 On Nature: Problem solving, Fact finding, Performance and Technical Report
 On Frequency: Routine and Special Report
 On Length: Short and Long Report
 On Use: Internal and External Report
Types of Business Report
 Based on Types Explanation
Oral presents information/facts verbally or through oral media
Presentation
Written reports are presented in written form

Formality/ Formal carefully structured, specific objective, detailed, and written

Legality Informal less structured, short, to assists routine managerial functions

Informative present facts about certain activity in detail without any suggestion
Function
Analytical presents information with a comprehensive analysis to solve problems
Problem
present to solve a problem or suggestions to solve a problem
solving
Nature Fact finding present detailed information on specific issue – why happened/reasons
Performance present performance related information/data or progress of work
Technical present technical aspect / specification / suitability of a process/system
Routine prepared periodically (let knowing what happening), only facts
Frequency
Special prepared on special/specific request or need
Short one to few pages, less time required
Length
Long may be more than 100 pages; detailed and time required
Internal reports travel within the organization
Use
External prepared for distribution outside the organization
 Business Plan and “Business / Project Proposal”
Mostly “Business Plan” and “Business/Project Proposal” are used in the same
manner, though they have a little difference in objectives. While business plan
mainly focuses on “Functional/Operational”, while business proposal focuses on
get or obtain “funding/financing” from potential investors/institutions.

Business plan is a written statement/description and analysis of a business

and presents detailed projection about its future in terms of functions,
operations, finance and most importantly about profit. It is a document that
tells what you plan to do and how you plan to do it.

Business/Project proposal is a business document that produced/prepared

to persuade a group/audience to achieve/get a defined outcome/objective.

In this lesson for study, we use the terms in the same meaning. Moreover, most of
the components both in business plan and business proposal are same.

Business plan/proposal includes every information that describes/answers

(5W1H):
Who What Where
How When Why
Business Plan
 Business Plan
https://www.sba.gov/starting-business/write-your-business-plan%20

Business Plan Format

SBA.gov recommends that a business plan include:

• Executive Summary: a snapshot of your business

• Company Description: describes what you do
• Market Analysis: research on your industry, market and competitors
• Organization and Management: your business and management structure
• Product or Service: the products or services you’re offering
• Marketing and Sales: how you’ll market your business and your sales
strategy
• Funding Sources: how much money you’ll need for next 3 to 5 years
• Financial Projections: supply information like balance sheets
 Components/Parts of Business Plan/Proposal
Effective business proposals are built around a great idea or solution. Business
proposals need to have an attractive idea or solution in order to be effective. The
most common business plan/proposal format / components as follows:
[Remember, few of components are same as the components of report]
Components Descriptions
Cover Pages Title page with name, title, date, and specific reference to request
for proposal if applicable.
Executive Summary one- or two-paragraph summary of the product or service and how
it meets the requirements and exceeds expectations.
Table of Contents Table of contents lists the main topics the report covers and the
(optional for proposal) page on which that information may be found.
Background / For existing business: Discuss business vision, mission,
Business Description objectives, product, service, company position in market, focusing
on the relationship between company & potential customer
Proposal (current & potential) and/or similar companies.

For new business/startup: Describe the IDEA [5W1H]. Make it

clear and concise. Use clear, well-supported reasoning to
demonstrate the product or service [How buyer will benefited?]
 Components/Parts of Business Plan/Proposal
Components Descriptions
Industry Analysis / Industry/Market characteristics: what currently exists in the
Market Analysis marketplace like products or services, and how does your
product/service compare? Market size, potential etc.

Customer profile: Specify who are willing & able to buy

Competitor Assessment Identify competitors:

Close (similar product): Soft drinks; Coke vs Pepsi
Broad (same functions): Soft drinks, Juice, Water etc.
Marketing Plan Here need to describe 4Ps:
Product/service: Core – Actual - Augmented products
Pricing: Cost based – Mark-up based etc.
Place/Distribution: Physical and Online [own vs. agent]
Promotion: Advertising, Personal selling, Sales promotion etc.

Management Plan:
Organizational structure: who do what? Supervision patterns?
Ownership plan, Production: Automated vs. manual? Technology? Machines?
Production plan, production capacity?
HR Plan HR: what type of people needed? how many needed?
 Components/Parts of Business Plan/Proposal
Components Descriptions
Financial Plan what are the initial costs [fixed cost] & working capital
sources of funds/capital
Projected sales & revenue over time/years [Income Statement]
when can revenue be anticipated
when will there be a return on investment (if applicable)

Timeline A clear presentation, often with visual aids, of the process, from
start to finish, with specific, dated benchmarks noted.

Conclusion Like a speech or essay, restate your main points clearly. Tie them
together with a common them and make your proposal
memorable.

Appendix Appendix is used to support the business plan/proposal. This may

includes:
Financial projections/statements
Technical drawing
Production process flowchart
Partnership deed/Company registration/Legal papers