business purpose and business environment
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LESSON 7BUSINESS PURPOS
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IDENTIFYING THE BUSINESS PURPOSE
To propel the business towards success, it
important that the entrepreneur knows why the business and what he wants to achieve.
This section will guide you in identifying awriting your business purpose by helping yo
the following:
A. Mission
B. Core alues
C. !oals and "b#ectives
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MISSION STATEMENT OF THE COMPANY
$ de%nes the purpose of the business and
in attaining the goals towards success.
3 Basic Dimensions of Mission Statem
&. 'hat the company does for its custome
(. 'hat it does for its employees.
). 'hat it does for its owners.
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*n Tim Berry+s How to Write a Mission Stain 5 Easy Steps
&. 'ho is your company
(. 'hat do you do
). -o you want to make a pro%t
. 'ho are your market and what bene%ts ythem
0. 'hat kind of environment do you have foemployees
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!uidelines in writing a mission statement
&. 1eep it short and simple.
(. 2se plain language to make sure that peowho reads it will understand.
). Be speci%c on the products3service that thcompany o/ers.
. 2se straightforward and simple e4planatio
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VISION STATEMENT OF THE COMPANY
$ lights the direction of the %rm
$ like a big picture that shows the future ocompany
$ provides long term direction and guidanc
VALUES STATEMENTS OF THE COMPANY
$ set of beliefs and principles that guides tbusiness activities and how it should be
operated by the entrepreneur
$keeps the company oriented and reliable
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GOALS AND OBJECTIVES FOR THE COM
$ create a road map for the future of thecompany and minimi5e the risk of making
wrong decisions and wasting resources$ help in clarifying the purpose of the busi
and the necessary actions to achieve its and vision
According to -on 6ofstrand:
Goals are the general statements of what need to achieve in your vision while Objectiv
speci%c, time$sensitive statements for achie
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LESSON 8
THE BUSINESSENVIRONMENT
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INDUSTRY ANALYSIS
$ market strategy tool used in determining
stage of the industry where the business fa$ allow the entrepreneur to know whether
a demand for the industry in the long run
$ help in identifying the stability of the dem
the industry
To help the entrepreneurs to assess theattractiveness of the industry, they can use
Industry rends and !ive !orces Models"
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INDUSTRY TRENDS
rend refers to the direction or a course thfollows a tendency or a style. These could b
related to business, fashion, lifestyles, languand education.
The importance of studying industry trend
&. *t helps the entrepreneur in analy5ing thesudden shift 7increase or decrease8 of thproducts or services sold by the %rm.
(. *t guides the entrepreneurs in making pos
assessment of the future of the industry w
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THE FIVE FORCES MODEL
$ marketing tool created by the 6arvard B
9chool rofessor, Michael orter$ study the attractiveness and the pro%tab
the business
$ useful in determining the strength of the
position in the market$ helps in identifying whether the new pro
service has potential to be pro%table
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A. COMPETITIVE RIVALRY
There are factors that determine the nature aintensity of the rivalry among e4isting %rms in the
&. ;umber of competitors$ competitive rivalry is hwhen there are more potential competitors in thindustry.
(. roduct di/erentiation$ how the product di/ers
producer to another a/ects the rivalry.). !rowth rate and market si5e$ the rivalry is more
during periods of low market growth.
.
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B. THREAT OF NEW ENTRANTS
Investopedia de%nes barrier to entry as t#e
e$istence o% #i start'up costs or ot#er obstt#at prevent new competitors %rom easily enan industry or area o% business" (arriers to ebene)t e$istin& companies already operatin&industry because t#ey protect an establis#edcompany*s revenues and pro)ts %rom bein& away by new competitors"
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Six Majo So!ces of Baies to Ent"#
A. >conomies of scale$ when a certain company mass$prodproducts that results to a lower average cost.
B. roduct di/erentiation$ it is di?cult for the newcomers market share since e4isting %rms have already gained lfrom the customers.
C. . Access to suppliers and distribution channels$ looking fodistribution channels and suppliers are di?cult since thaccess to them.
@. !overnment and legal barriers$ another restrictions for
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C. THREAT OF SUBSTITUTION
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D. BUYER POWER
Se$ea% factos &etemine t'e (a)ainin) *o+(!"es#
A. ;umber of customers$ if there are fewer buyers sellers, there is a greater bargaining power for tcustomer.
B. Buyer+s cost$ if the item has great importance to
buyer, he is more sensitive in the price of the prC. ;umber of %rms supplying the product$ when th
large number of customers and has low numbersuppliers, the advantage of the purchasing powefavorable for the suppliers.
-. Threat of backward integration$ the power of the
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E. SUPPLIER POWER
9uppliers are powerful when they have established a doposition in the market. These include the following:
A. 9upplier concentration$ when there is large number of bonly few suppliers can provide a critical product, the suthe power over the buyers.
B. 9witching costs$ if the supplier provides the key ingredi
customer that is not easy to %nd or buy somewhere elsbargaining power of the supplier is high.
C. Attractiveness of substitute$ if there are no substitutes product or service, it is more likely that the power of this enhanced.
-. Threat of forward integration$ the bargaining power of t
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CUSTOMER ANALYSIS
*t plays an important role in planning the
business. *t is conducted to identify and distthe customers+ characteristics to better undtheir needs and their purchasing behavior. Tdata are usually gathered through feedbackgroup, transactions and product testing.
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UNDERSTANDING CUSTOMERS
,!stomes are the ones who pays and p
the products3services. There are %ve main rothat e4ist in the purchasing situations of thecustomers:Ro%es -!nctions*nitiator These are individuals who initiate the search for a solu
problem of the customer.
*nuencer These are individuals who may have some inuence opurchase decision.
-ecider These individuals who are responsible in making %nal whether to purchase or not the product.
urchaser These are individuals who buys the product or the serv
2ser These individuals are the end$user and the ones who cproduct.
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CONDUCTING CUSTOMER RESEARCH
1nowing the customer will help the entrep
know where to %nd them, what kind of produservices they like and what motivates them make the purchases.
*n conducting research studies on custom
important to study the geographic, demograpsychographic and behavioral patterns of bu
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RESEARCH METHODS
A. uestionnaires and surveys$ used to obtain generainformation which is ine4pensive and easy to analy
feedback may not be accurate and somehow impeB. *nterviews$ used to probe answers which help in ge
fuller range of information. This method is di?cult analy5ing the gathered information and the analysusually takes some time.
C. "bservation$ done by documenting the behavior ofbuyers. *t can easily get the information. The probledi?culty in interpreting %ndings and somewhat e4p
-. -ocumentation review$ involves in studying the fachistory of the transactions of the clients. 6owever,
time consuming and the data is limited based on th
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COMPETITOR ANALYSIS
An essential marketing strategy to measu
company+s strategies against competitors. Tpurpose is to determine the strengths andweaknesses of the competitors that will prov%rm the competitive advantage.
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IDENTIFYING THE COMPETITORS
A. -irect competitors$ businesses that o/er
same products3services. These are the mimportant competitor since they go after same customers.
B. *ndirect competitors$ businesses that o/esubstitute to the product3service.
C. @uture competitors$ businesses that are nconsidered as direct or indirect competito
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THE RI,H .IDS
;as, @rancheska unice Bea C.
Merlan eramiah -.
-e era, 1imy