Scribd
Upload
10 views35 pages

Chapter 5

The document outlines the essential components of a business plan, including its purpose, key sections, and what lenders and investors seek. It emphasizes the importance of strategic management for achieving competitive advantage and provides a structured approach for developing a business strategy. Additionally, it highlights the significance of assessing strengths, weaknesses, opportunities, and threats in the business environment.

Uploaded by

bluesandy1
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
10 views35 pages

Chapter 5

The document outlines the essential components of a business plan, including its purpose, key sections, and what lenders and investors seek. It emphasizes the importance of strategic management for achieving competitive advantage and provides a structured approach for developing a business strategy. Additionally, it highlights the significance of assessing strengths, weaknesses, opportunities, and threats in the business environment.

Uploaded by

bluesandy1
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 35

A Business Plan

 A written summary of an
entrepreneur’s proposed business
venture, its operational and financial
details, its marketing opportunities
and strategy, and its managers’ skills
and abilities
3 Functions

 Guides an entrepreneur
 Attracts lenders and investors
Reality Test
Competitive Test
Value Test
 Represents/reflects its creator
What Lenders and Investors
Look for in a Business Plan

 Capital
 Capacity
 Collateral
 Character
 Conditions
Executive Summary
 The company’s business model and
basis for competitive edge
 The company’s target markets and
the benefits its product or service will
provide
 The qualification of the founders
and/or key employees
 The key financial highlights
Business and Industry
Profile
 Overview of industry or market
segment
 Existing or anticipated profitability of
the industry
 Company’s general business goals
 Company’s immediate objectives
Business Strategy

 How to gain competitive edge


 How to achieve the goals and
objectives
 Methods to satisfy KSFs of the
Description of Product or
Service
 Overview of how customers will use it
 Any patents, trademarks or copyright
 Honest comparison with competition
 Feature (descriptive fact about a
product or service) vs Benefit (what a
customer gains from the product or
service)
 Description of production process,
strategic raw materials, sources, costs.
Marketing Strategy
 Defining the target market
Who?
Where?
How many?
Why?
 Proving that a profitable market exists

Showing customer interest


Documenting market claims
Marketing Strategy

 Advertising
 Market Size and trend
 Location
 Pricing
 Distribution
Competitor Analysis

 Each significant competitor


 Advantage over each
Description of Management
Team

 Qualifications of those with at least


20% ownership
 Resumes
 How to avoid primary reasons for
business failures
Plan of Operation

 Organizational
chart
 Form of ownership
Pro Forma Financial
Statements

 Monthly for 3 years by quarter


 3 sets: pessimistic, most likely,
optimistic
 Statement of assumptions
Loan or Investment Proposal

 Purpose of financing
 Amount requested
 Plans for repayment/exit strategy
 Timetable for implementation
 Evaluation of risks
Strategic Management
 Is crucial to building a successful
business.
 Involves developing a game plan to
guide a company as it strives to
accomplish its mission, goals , and
objectives, and to keep it on its desired
course.
Strategic Management and
Competitive Advantage
 Developing a strategic plan is
crucial to creating a sustainable
competitive advantage, the
aggregation of factors that sets
a company apart from its
competitors and gives it a
unique position in the market
that is superior to its
competition.
 Example: Blockbuster Video
Key: Core Competencies
 Unique set of capabilities a company
develops in key areas, such as superior
quality, customer service, innovation, team-
building, flexibility, responsiveness, and
others that allow it to vault past competitors.
 They are what a company does best.
 Best to rely on a natural advantage (often
linked to a company’s “smallness”).
 Example: Netflix
Key: Core Competencies
Power of Core Competence
Is the Competence hard to copy?

Is the Competence Durable?

Isthe Competence really Competitively


Superior?

Can the Competence be trumped by Rivals?


Building a Sustainable Competitive Advantage

Capabilities

Sustainable Superior value


Lessons Core competitive
learned competencies for customers
advantage

Skills
Strategic Management
Process
Step 1. Develop a vision and translate
it into a mission statement.
Step 2. Assess strengths and
weaknesses.
Step 3. Scan environment for
opportunities and threats.
Step 4. Identify key success factors .
Strategic Management
Process
(continued)

Step 5. Analyze competition.


Step 6. Create goals and objectives.
Step 7. Formulate strategies.
Step 8. Translate plans into actions.
Step 9. Establish accurate controls.
Step 1: Develop a Vision and
Create a Mission Statement
 Vision – the result of an
entrepreneur’s dream of something
that does not exist yet and the ability
to paint a compelling picture of that
dream for everyone to see.
 A clearly defined vision:
 Provides direction
 Determines decisions
 Motivates people
Step 1: Develop a Vision and
Create a Mission Statement
 Addresses question: “What business
are we in?”
 The mission is a written expression of
how the company will reflect an
entrepreneur’s values, beliefs, and
vision – more than just “making
money.”
 Serves as a “strategic compass.”
Step 1: Develop a Vision and
Create a Mission Statement
 Survey of employees: 89 percent
of employees say their
companies have a mission
statement
but…
 Only 23 percent of workers
believe their company’s mission
statement has become a way of
doing business!
Step 2: Assess Company
Strengths
and Weaknesses
 Strengths
 Positive internal factors a
company can draw on to
accomplish its mission, goals,
and objectives.
 Weaknesses
 Negative internal factors that
inhibit a company’s ability to
accomplish its mission, goals,
and objectives.
Step 2: Assess Company
Strengths
andfor
What to look Weaknesses
in Identifying
Company’s Strengths
Core competencies in ______.

 A strong financial condition; ample financial


resources to grow the business.

 Strong brand name image/company


reputation.

Economy of scale and/or learning and


experience curve advantages over rivals.
Step 2: Assess Company
Strengths
and
What to look Weaknesses
for in Identifying Company’s
Strengths
Proprietary technology/superior technological
skills/important patents.

 Cost advantages over rivals.

 Product innovation capabilities.

Proven capabilities in improving production processes.

 Good supply chain management capabilities.

 Good customer service capabilities.


Step 2: Assess Company
Strengths
andfor
What to look Weaknesses
in Identifying
Company’s Strengths
Better product quality relative to rivals.

Wide geographic coverage and distribution


capability.

 Alliances/joint ventures with other firms


that provide access to valuable Technology,
competencies, and/or
attractive geographic markets.
Step 2: Assess Company
Strengths
and
What to look for inWeaknesses
Identifying Company’s
Weaknesses
No clear strategic direction.

No well-developed or proven core competencies.

Aweak balance sheet; burdened with too much


debt.

Higher overall unit costs relative to key competitors.

A product/service with features and attributes that


are inferior to those of rivals.
Step 3: Scan for
Opportunities
What to look and
for inThreats
Identifying
Company’s Weakness
Behind on product quality, R&D, and/or

technological know-how.

Lack of management depth.

Shorton financial resources to grow the


business and pursue promising initiatives.
Step 3: Scan for
Opportunities
and Threats
 Opportunities
 Positive external factors the company
can exploit to accomplish its mission,
goals, and objectives.
 Threats
 Negative external factors that inhibit
the firm's ability to accomplish its
mission, goals, and objectives.
Step 3: Scan for
Opportunities
What to look and
for inThreats
Identifying
Company’s Opportunities
Utilizing existing company skills or

technological know-how to enter new product


lines or new businesses.

Falling
trade barriers in attractive foreign
markets.

Acquiring rival firms or companies with


attractive technological expertise or
capabilities.
Step 3: Scan for
Opportunities
What to look and
for inThreats
Identifying
Company’s Opportunities
Serving additional customer groups or

market segments.

Expanding into new geographic markets.

 Expanding the company’s product line


to meet a broader range of customer
needs.
Step 3: Scan for
Opportunities
and
What to look for ThreatsCompany’s
in Identifying
Threats
Increasing intensity of competition among industry

Slowdowns in market growth.

Likely entry of potent new competitors.

Growing bargaining power of customers or


suppliers.

A shift in buyer needs and tastes away from the


industry’s product.
Step 3: Scan for
Opportunities
and
What to look for Threats Company’s
in Identifying
Threats

Adverse demographic changes that threaten to


curtail demand for the industry’s product.

Vulnerability to unfavorable industry driving


forces.

Restrictive
trade policies on the part of foreign
governments.

Costly new regulatory requirements.

You might also like