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1. Explain the different circumstances under which a suitable

growth strategy should be selected by any company to

improve its performance (i.e., intensive, integrative or

diversification growth). You may select an example of your

choice to substantiate your views (10 marks).

AnswerStrategies to Improve SalesThere are three alternatives to improve the sales performance of abusiness unit, to fill the gap between actual sales and targeted sales:a) Intensive growthb) Integrative growthc) Diversification growtha) Intensive Growth:It refers to the process of identifying opportunities to achieve further

growth within the companys current businesses. To achieve intensive

growth, the management should first evaluate the available

opportunities to improve the performance of its existing current

businesses.

It may find three options:

To penetrate into existing markets

To develop new markets

To develop new products

At times, it may be possible to gain more market share with the

current products in their current markets through a market penetration

strategy. For instance, SONY introduced TV sets with Trinitron picture

tubes into the market in 1996 priced at a premium of Rs.10,000 and

above over the market through a niche market capture strategy. Theygradually lowered the prices to market levels. However, it also

simultaneously launched higher-end products (high-technology

products) to maintain its global image as a technology leader. By

lowering the prices of TVs with Trinitron picture tubes, the company

could successfully penetrate into the markets to add new customers to

its customer base.Market Development Strategy is to explore the possibility to find ordevelop new markets for its current products (from the northern regionto the eastern region etc.). Most multinational companies have been

entering Indian markets with this strategy, to develop marketsglobally. However, care should be taken to ensure that these newmarkets are not low density or saturated markets, which could lead toprice pressures.Product Development Strategy involves consideration of new productsof potential interest to its current markets (e.g. Gramophone Recordsto Musical Productions to CDs) as part of a Diversifications strategy.

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Study the following example to understand what Product DevelopmentStrategy is.MICROSOFTs New StrategyIt is called PC-plus. It has three elements:a) Providing computer power to the most commonly used devices such

as cell phone, personal computer, toaster oven, dishwasher,refrigerator, washing machines and so on.b) Developing software to allow these devices to communicate.c) Investing heavily to help build wireless and high-speed internetaccess throughout the world to link it all together.

Microsoft envisions a home where everyday appliances and electronics

are smart. According to Bill Gates, In the near future, PC-based

networks will help us control many of our domestic matters with

devices that cost no more than $ 100 each

It is also said at Microsoft that VCRs can be programmed via e-mail,

laundry washers can be designed to send an instant message to the

home computer when the load is done and refrigerators can be madeto send an e-mail when theres no more milk. Microsoft plans to give

these appliances brains and provide them the means to talk to each

other through their Windows CE Operating System.b) Integrative Growth:It refers to the process of identifying opportunities to develop or

acquire businesses that are related to the companys current

businesses. More often, the business processes have to be integrated

for linear growth in the profits. The corporate plan may be designed to

undertake backward, forward or horizontal integration within the

industry.If a company operating in music systems takes over the manufacturing

business of its plastic material supplier, it would be able to gain more

control over the market or generate more profit. (Backward

Integration)

Alternatively, if this company acquires some of its most profitably

operating intermediaries such as wholesalers or retailers, it is forward

integration. If the company legally takes over or acquires the business

of any of its leading competitors, it is called horizontal integration

(however, if this competitor is weak, it might be counter-productive

due to dilution of brand image).c) Diversification Growth:

It refers to the process of identifying opportunities to develop or

acquire businesses that are not related to the companys current

businesses. This makes sense when such opportunities outside the

present businesses are identified with attractive returns and that

industry has business strengths to be successful. In most cases, this is

planned with new products that have technological or marketing

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synergies with existing businesses to cater to a different group of

customers (Concentric Diversification).

A printing press might shift over to offset printing with computerized

content generation to appeal to higher-end customers and also add

new application areas ( Horizontal Diversification ) or even sell

stationery.Alternatively, the company might choose new businesses that havenothing to do with the current technology, products or markets(Conglomerate Diversification).The classic examples for this would be engineering and textile firmssetting up software development centers or Call Centers with newservice clients.Situation AnalysisSales Improvement Strategies:a) A supplier of computer stationery invests in a computer stationerymanufacturing unit.

b) A vendor supplying engine boxes to Maruti decides to supply thesame with modifications to Hyundai.c) A company dealing in computer floppies plans to set up a SoftwareTechnology Park

2. What are the components of a good Business Plan andbriefly explain the importance of each.(10 marks).AnswerThe format of a Business Plan is something that has been developed

and refined over the years and is something that should not be

changed. Like a good recipe, a business plan needs to include certain

ingredients to make it work.

When you create a business plan, don't attempt to recreate its format.

Those reviewing this type of document have expectations you must

meet. If they do not see those crucial decision-making components,

they'll see no reason to proceed with their review of your business

plan, no matter how great your business idea.Executive Summary Section

Every business plan must begin with an Executive Summary section. A

well-written Executive Summary is critical to the success of the rest of

the document. Here is where you need to capture the attention of your

audience so that they will be compelled to read on. Remember, it's asummary, so each and every word must be carefully selected and

presented.Use the Executive Summary section of your business plan toaccurately describe the nature of your business venture including theneed that you plan to fill. Show the reasons why people need yourproduct or service. Show this by including a brief analysis of thecharacteristics of your potential market.

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Describe the organization of your business including your management

team. Also, briefly describe your sales and marketing plan or approach.

Finally include the numbers that those reviewing your business plan

want to see - the amount of capital you seek, the carefully calculated

sales projections and your plan to repay the loan.

If you've captured your audience so far they'll read on. Otherwise,they'll close the document and add your business plan to the heap ofother rejected ideas.Devote the balance of your business plan to providing details of theitems outlined in the Executive Summary.The Business Section

Be sure to include the legal name, physical address and detailed

description of the nature of your business. It's important to keep the

description easy to read using common terminology. Never assume

that those reading your business plan have the same level of technical

knowledge that you do. Describe how you plan to better serve your

market than your competition is currently doing.Market Analysis Section

An analysis of the market shows that you have done your homework.

This section is basically a summary of your Marketing Plan. It needs to

show the demand for your product or service, the proposed market,

trends within the industry, a description of your pricing plan and

packaging and a description of your company policies.Financing SectionThe Financing section must show that you are as committed to your

business venture as you expect those reading your business plan to

be. Show the amount of personal funds you are contributing and theirsource. Also include the amount of capital you need and your plan to

repay this debt. Include all pertinent financial worksheets in this

section: annual income projections, a break-even worksheet, projected

cash flow statements and a balance sheet.Management Section

Outline your organizational structure and management team here.

Include the legal structure of your business whether it is a partnership,

corporation or limited liability corporation. Include resumes and

biographies of key players on your management team. Show staffing

projection data for the next few years.

By now you're probably thinking that you don't need Business Plan just

yet. Well you do, and there is business plan building software that can

help you through this immense project. These software packages are

easy to use and affordable. Use one today and produce a professional-

quality Business Plan - including all critical components - tomorrow!

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3. You wish to start a new venture to manufacture autocomponents. Explain different stages in the process of startingthis new business. (10 marks).AnswerEvery business starts out as an idea. This idea usually involves the

invention of a new product, or revolves around a better way of makingand marketing an existing one. While many would argue that the idea

stage is not a stage at all, it is actually a turning point, as business

adviser Mike Pendrith points out. After this, you as a business builder

must refine this idea into a money- making reality. Here in this case

supposing we are to start a new venture of manufacturing auto

components and also to market them. We will see here in the following

paragraphs different stages of achieving the same goal.1. Idea Researching

In this stage, you are researching your idea. The object of your

research is to find out who is marketing the same product or service in

your area, and how successful the marketer has been. You can

accomplish this by a Google search on the Internet, launching a test-

marketing campaign, or conducting surveys. Also, you are attempting

to find what the level of interest is in the products (or services) you

wish to market.

Here as the main goal is to start a company that manufactures the

auto components, we are to make a research on all the auto

companies which are procuring the spares from the outside vendors.

And also the competitors who are all marketing that, their existence

and also how successful they are.

As part of the initial research process, it is important to consider thelegal requirements of selling your product or service. According to the

Biz Ed website, examine the legal ramifications of your business. Know

the tax laws governing your business. If insurance is a requirement,

prepare to budget for it. Also, be aware of any safety laws governing

you as an employer. Hence we are also to make a research on the

feasible area where we can start our organization and licenses that we

need to take keeping in mind the environmental factors as well.2. Business Plan Formulation

You must write a business plan. As Pendrith points out, this is crucial if

you want funding, such as a small business loan or grant, or if you wishto lease a building. At this stage, Pendrith advises, you need to consult

with an attorney or business adviser for assistance.In the business plan you typically include following heads:i) Executive Summaryii) Company and Product Descriptioniii) Market Descriptioniv) Equipment and Materials

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v) Operations

vi) Management and Ownership

vii) Financial Information and Start-Up Timeline

viii) Risks and Their Mitigation3. Financial Planning

Financial planning involves thinking about the financial costs ofstarting and maintaining your business. According to the Biz Ed

website, you should consider such issues as the costs of running the

business; the prices you wish to charge your customers; cash flow

control; and how you wish to set up financial reserves in case of an

emergency or an event causing significant loss to the business. This

includes the planning of whether to take any loans or make personal

investments in the company.4. Advertising Campaign

Decide how you will market your product. Consider your budget and

your target audience. Make up business cards with your logo on it,

your name and the name of your business. Make sure that they are of

the most professional quality. Utilizing print, the newspaper, the

Internet, radio or TV is also wise, considering, of course, the size of

your advertising budget.

Here in this case more than TV, a better advertising media will be road

side sign boards placed close to the auto companies for getting the

deals to manufacture their spares. As TV is useful only to reach the

common man and he is not our target customer. Hence sign boards

are the feasible solution and also pamphlets circulated across the

pioneers. This apart personal marketing is much more suggested.

5. Preparing for LaunchAdvertise for employees. This also requires adequate planning. Think

about what you look for in an employee. Be specific about the requisite

skills and experience you are seeking. Then begin requesting resumes

and setting up interviews, making hiring decisions based on the

standards you have set.In this case we will be looking for a few candidates in managerialposition who must be good in managing things apart from minimaltechnical knowledge. Lower level people at the shop floor people. Theyneed to have real time experience in the shop floor activities.The employees apart, one needs to plan on the plant and machinery aswell.Thus these are all the stages that I would consider performing if incaseI plan to start a manufacturing unit producing automobile components.

4. Explain the process of due Diligence and why it is necessary.

(10 marks).

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Answer

Due diligenceOf course, your commercial partner will need some reassurance about

the quality of the offer you are making to them. If you are involved in

licensing technology or seeking commercial support for your research

you are likely to hear of due diligence. When a future partner isconsidering whether or not to license technology, to buy a share of

patent rights, or to support your research, they will need to satisfy

themselves that it is a viable proposition. The process of assessing the

viability, risk, potential liabilities and commercial prospects of a project

is known as due diligence. Indeed, if a potential partner seems not to

be interested in this kind of issues, it may actually raise questions

about their commitment to the project or the credibility of their

business plan, particularly if the relationship assumes some degree of

risk and investment on their part. Generally, due diligence will involve

assessing the overall commercial operations, cash flow, assets andliabilities of a business that is being purchased or otherwise financially

supported. You would think twice about purchasing a business if you

found that it was burdened with debts, or was about to be involved in

difficult litigation, or if there were doubts about whether it really owned

its assets. The same applies to a potential investment involving

intellectual property. For instance, a potential commercial partner

would not want to invest in patented technology only to find out that

patent renewal fees have not been paid and the patent has lapsed, or

to find out that the patent was being opposed by another company, or

to find that there is prior art available that calls into question its

validity. It may transpire that a student, a contractor or a visiting

researcher could actually be legally entitled to some or all of the

patent rights. Even a serious level of uncertainty or doubt could be

enough to deter a potential partner, especially if they have run into

this kind of difficulty before.

Due diligence may also involve searching for information about the full

range of IP rights that might impact on the relevant technology for

instance, to check whether you have later filed patent applications on

improvements to the original patented technology, that may limit the

value of their investment in the original technology. Other intellectual

property rights such as related trade mark or design registrations, orkey trade secrets or copyright material (such as manuals or software)

may also need to be identified or located, as these may also affect the

commercial partners interests in the technology. For example, they

may be unwilling to take out a licence for your patent without getting

access to the software you have developed for a related process. They

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may want the right to use your trade mark in association with the

patented technology.So in a due diligence process, your commercial partner may undertakea range of checks and need various forms of information. These mayinclude:

Checks on external records, such as patent registers and patentdatabases, including foreign patents;

Searches of patent databases for conflicting technology;

Independent advice from patent attorneys on issues such aspatent ownership, patent validity and scope of patent claims;

Checks on employment contracts, confidentiality arrangements,and contracts with other parties that may interfere with theexercise of IP rights;

Details of the patent prosecution such as examiners reports andother opinions;

Details of any legal challenges to the patent, and the way the

proceedings were resolved;

Checks on laboratory notebooks in the event that the validity ofUS patents is of concern to the commercial partner (this alsoprovides reassurance as to claims of ownership of the patent);

Surveys of the activity of competitors and owners of competingtechnology, and possibilities of conflict; and

Analysis of freedom to operate issues.

In preparing to licence your technology, you should consider in

advance these kind of due diligence issues. If you can anticipate and

provide comprehensive answers to these questions, you will be able

more effectively to reassure your commercial partner, and you will bein a stronger negotiating position in negotiating licence terms. It should

also speed up the licensing negotiations, and ultimately the

commercialization of your intellectual property.

5. Is Corporate Social Responsibility necessary and how does itbenefit a company and its shareholders? (10 marks).Answer

Corporate social responsibility (CSR), also known as corporate

responsibility, corporate citizenship, responsible business,

sustainable responsible business (SRB), or corporate socialperformance, is a form of corporate self-regulation integrated into a

business model.

Ideally, CSR policy would function as a built-in, self-regulating

mechanism whereby business would monitor and ensure its support to

law, ethical standards, and international norms. Consequently,

business would embrace responsibility for the impact of its activities on

the environment, consumers, employees, communities, stakeholders

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and all other members of the public sphere. Furthermore, CSR-focused

businesses would proactively promote the public interest by

encouraging community growth and development, and voluntarily

eliminating practices that harm the public sphere, regardless of

legality. Essentially, CSR is the deliberate inclusion of public interest

into corporate decision-making, and the honoring of a triple bottomline: people, planet, profit.

The practice of CSR is much debated and criticized. Proponents argue

that there is a strong business case for CSR, in that corporations

benefit in multiple ways by operating with a perspective broader and

longer than their own immediate, short-term profits. Critics argue that

CSR distracts from the fundamental economic role of businesses;

others argue that it is nothing more than superficial window-dressing;

others yet argue that it is an attempt to pre-empt the role of

governments as a watchdog over powerful multinational corporations.

Corporate Social Responsibility has been redefined throughout theyears. However, it essentially is titled to aid to an organization's

mission as well as a guide to what the company stands for and will

uphold to its consumers.Development business ethics is one of the forms of applied ethics thatexamines ethical principles and moral or ethical problems that canarise in a business environment.

In the increasingly conscience-focused marketplaces of the 21st

century, the demand for more ethical business processes and actions

(known as ethicism) is increasing. Simultaneously, pressure is applied

on industry to improve business ethics through new public initiatives

and laws (e.g. higher UK road tax for higher-emission vehicles).Business ethics can be both a normative and a descriptive discipline.

As a corporate practice and a career specialization, the field is

primarily normative. In academia, descriptive approaches are also

taken. The range and quantity of business ethical issues reflects the

degree to which business is perceived to be at odds with non-economic

social values. Historically, interest in business ethics accelerated

dramatically during the 1980s and 1990s, both within major

corporations and within academia. For example, today most major

corporate websites lay emphasis on commitment to promoting non-

economic social values under a variety of headings (e.g. ethics codes,social responsibility charters). In some cases, corporations have re-

branded their core values in the light of business ethical considerations

(e.g. BP's "beyond petroleum" environmental tilt).

The term "CSR" came in to common use in the early 1970s, after many

multinational corporations formed, although it was seldom

abbreviated. The term stakeholder, meaning those on whom an

organization's activities have an impact, was used to describe

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corporate owners beyond shareholders as a result of an influential

book by R Freeman in 1984.

ISO 26000 is the recognized international standard for CSR (currently a

Draft International Standard). Public sector organizations (the United

Nations for example) adhere to the triple bottom line (TBL). It is widely

accepted that CSR adheres to similar principles but with no formal actof legislation. The UN has developed the Principles for Responsible

Investment as guidelines for investing entities.Potential business benefitsThe scale and nature of the benefits of CSR for an organization can

vary depending on the nature of the enterprise, and are difficult to

quantify, though there is a large body of literature exhorting business

to adopt measures beyond financial ones (e.g., Deming's Fourteen

Points, balanced scorecards). Orlitzky, Schmidt, and Rynes found a

correlation between social/environmental performance and financial

performance. However, businesses may not be looking at short-runfinancial returns when developing their CSR strategy.The definition of CSR used within an organization can vary from thestrict "stakeholder impacts" definition used by many CSR advocatesand will often include charitable efforts and volunteering. CSR may bebased within the human resources, business development or publicrelations departments of an organization, or may be given a separateunit reporting to the CEO or in some cases directly to the board. Somecompanies may implement CSR-type values without a clearly definedteam or program.The business case for CSR within a company will likely rest on one or

more of these arguments:Human resourcesA CSR program can be an aid to recruitment and retention, particularlywithin the competitive graduate student market. Potential recruitsoften ask about a firm's CSR policy during an interview, and having acomprehensive policy can give an advantage. CSR can also helpimprove the perception of a company among its staff, particularlywhen staff can become involved through payroll giving, fundraisingactivities or community volunteering. See also Corporate SocialEntrepreneurship, whereby CSR can also be driven by employees'personal values, in addition to the more obvious economic and

governmental drivers.Risk management

Managing risk is a central part of many corporate strategies.

Reputations that take decades to build up can be ruined in hours

through incidents such as corruption scandals or environmental

accidents. These can also draw unwanted attention from regulators,

courts, governments and media. Building a genuine culture of 'doing

the right thing' within a corporation can offset these risks.

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Brand differentiation

In crowded marketplaces, companies strive for a unique selling

proposition that can separate them from the competition in the minds

of consumers. CSR can play a role in building customer loyalty based

on distinctive ethical values. Several major brands, such as The Co-

operative Group, The Body Shop and American Apparel are built onethical values. Business service organizations can benefit too from

building a reputation for integrity and best practice.License to operate

Corporations are keen to avoid interference in their business through

taxation or regulations. By taking substantive voluntary steps, they can

persuade governments and the wider public that they are taking issues

such as health and safety, diversity, or the environment seriously as

good corporate citizens with respect to labour standards and impacts

on the environmentStakeholder priorities

Increasingly, corporations are motivated to become more socially

responsible because their most important stakeholders expect them to

understand and address the social and community issues that are

relevant to them. Understanding what causes are important to

employees is usually the first priority because of the many interrelated

business benefits that can be derived from increased employee

engagement (i.e. more loyalty, improved recruitment, increased

retention, higher productivity, and so on). Key external stakeholders

include customers, consumers, investors (particularly institutional

investors), and communities in the areas where the corporation

operates its facilities, regulators, academics, and the media.

6. Distinguish between a Financial Investor and a StrategicInvestor explaining the role they play in a Company. (10marks).AnswerIn the not so distant past, there was little difference between financial

and strategic investors. Investors of all colors sought to safeguard their

investment by taking over as many management functions as they

could. Additionally, investments were small and shareholders few. A

firm resembled a household and the number of people involved inownership and in management was correspondingly limited. People

invested in industries they were acquainted with first hand. As markets

grew, the scales of industrial production (and of service provision)

expanded. A single investor (or a small group of investors) could no

longer accommodate the needs even of a single firm. As knowledge

increased and specialization ensued it was no longer feasible or

possible to micro-manage a firm one invested in. Actually, separate

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businesses of money making and business management emerged. An

investor was expected to excel in obtaining high yields on his capital

not in industrial management or in marketing. A manager was

expected to manage, not to be capable of personally tackling the

various and varying tasks of the business that he managed.

Thus, two classes of investors emerged. One type supplied firms withcapital. The other type supplied them with know-how, technology,

management skills, marketing techniques, intellectual property,

clientele and a vision, a sense of direction.

In many cases, the strategic investor also provided the necessary

funding. But, more and more, a separation was maintained. Venture

capital and risk capital funds, for instance, are purely financial

investors. So are, to a growing extent, investment banks and other

financial institutions. The financial investor represents the past. Its

money is the result of past - right and wrong - decisions. Its orientation

is short term: an "exit strategy" is sought as soon as feasible. For "exitstrategy" read quick profits. The financial investor is always on the

lookout, searching for willing buyers for his stake. The stock exchange

is a popular exit strategy. The financial investor has little interest in the

company's management. Optimally, his money buys for him not only a

good product and a good market, but also a good management. But

his interpretation of the rolls and functions of "good management" are

very different to that offered by the strategic investor. The financial

investor is satisfied with a management team which maximizes value.

The price of his shares is the most important indication of success. This

is "bottom line" short termism which also characterizes operators in

the capital markets. Invested in so many ventures and companies, the

financial investor has no interest, nor the resources to get seriously

involved in any one of them. Micro-management is left to others - but,

in many cases, so is macro-management. The financial investor

participates in quarterly or annual general shareholders meetings. This

is the extent of its involvement.

The strategic investor, on the other hand, represents the real long

term accumulator of value. Paradoxically, it is the strategic investor

that has the greater influence on the value of the company's shares.

The quality of management, the rate of the introduction of new

products, the success or failure of marketing strategies, the level ofcustomer satisfaction, the education of the workforce - all depend on

the strategic investor. That there is a strong relationship between the

quality and decisions of the strategic investor and the share price is

small wonder. The strategic investor represents a discounted future in

the same manner that shares do. Indeed, gradually, the balance

between financial investors and strategic investors is shifting in favour

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of the latter. People understand that money is abundant and what is in

short supply is good management.Given the ability to create a brand, to generate profits, to issue newproducts and to acquire new clients - money is abundant.

These are the functions normally reserved to financial investors:

Financial Management The financial investor is expected to take over the financial

management of the firm and to directly appoint the senior

management and, especially, the management echelons, which

directly deal with the finances of the firm.1. To regulate, supervise and implement a timely, full and accurate

set of accounting books of the firm reflecting all its activities in a

manner commensurate with the relevant legislation and regulation

in the territories of operations of the firm and with internal

guidelines set from time to time by the Board of Directors of the

firm. This is usually achieved both during a Due Diligence process

and later, as financial management is implemented.

2. To implement continuous financial audit and control systems to

monitor the performance of the firm, its flow of funds, the

adherence to the budget, the expenditures, the income, the cost of

sales and other budgetary items.

3. To timely, regularly and duly prepare and present to the Board of

Directors financial statements and reports as required by all

pertinent laws and regulations in the territories of the operations ofthe firm and as deemed necessary and demanded from time to time

by the Board of Directors of the Firm.

4. To comply with all reporting, accounting and audit requirements

imposed by the capital markets or regulatory bodies of capital

markets in which the securities of the firm are traded or are about

to be traded or otherwise listed.

5. To prepare and present for the approval of the Board of Directors

an annual budget, other budgets, financial plans, business plans,

feasibility studies, investment memoranda and all other financial

and business documents as may be required from time to time bythe Board of Directors of the Firm.

6. To alert the Board of Directors and to warn it regarding any

irregularity, lack of compliance, lack of adherence, lacunas and

problems whether actual or potential concerning the financial

systems, the financial operations, the financing plans, the

accounting, the audits, the budgets and any other matter of a

financial nature or which could or does have a financial implication.

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7. To collaborate and coordinate the activities of outside suppliers

of financial services hired or contracted by the firm, including

accountants, auditors, financial consultants, underwriters and

brokers, the banking system and other financial venues.

8. To maintain a working relationship and to develop additional

relationships with banks, financial institutions and capital marketswith the aim of securing the funds necessary for the operations of

the firm, the attainment of its development plans and its

investments.

9. To fully computerize all the above activities in a combined

hardware-software and communications system which will integrate

into the systems of other members of the group of companies.10. Otherwise, to initiate and engage in all manner of activities,

whether financial or of other nature, conducive to the financial

health, the growth prospects and the fulfillment of investment plans

of the firm to the best of his ability and with the appropriatededication of the time and efforts required.

Collection and Credit Assessment1. To construct and implement credit risk assessment tools,

questionnaires, quantitative methods, data gathering methods and

venues in order to properly evaluate and predict the credit risk

rating of a client, distributor, or supplier.

2. To constantly monitor and analyse the payment morale,

regularity, non-payment and non- performance events, etc. in

order to determine the changes in the credit risk rating of said

factors.3. To analyse receivables and collectibles on a regular and timelybasis.4. To improve the collection methods in order to reduce theamounts of arrears and overdue payments, or the average period ofsuch arrears and overdue payments.

5. To collaborate with legal institutions, law enforcement agencies

and private collection firms in assuring the timely flow and payment

of all due payments, arrears and overdue payments and other

collectibles.

6. To coordinate an educational campaign to ensure the voluntarycollaboration of the clients, distributors and other debtors in thetimely and orderly payment of their dues.

The strategic investor is, usually, put in charge of the following:

Project Planning and Project ManagementThe strategic investor is uniquely positioned to plan the technical sideof the project and to implement it. He is, therefore, put in charge of:

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1. The selection of infrastructure, equipment, raw materials,industrial processes, etc.;2. Negotiations and agreements with providers and suppliers;3. Minimizing the costs of infrastructure by deploying proprietarycomponents and planning;

4. The provision of corporate guarantees and letters of comfort tosuppliers;5. The planning and erecting of the various sites, structures,buildings, premises, factories, etc.;6. The planning and implementation of line connections, computernetwork connections, protocols, solving issues of compatibility(hardware and software, etc.);7. Project planning, implementation and supervision.

Marketing and Sales1. The presentation to the Board an annual plan of sales and

marketing including: market penetration targets, profiles ofpotential social and economic categories of clients, sales promotion

methods, advertising campaigns, image, public relations and other

media campaigns. The strategic investor also implements these

plans or supervises their implementation.

2. The strategic investor is usually possessed of a brandname

recognized in many countries. It is the market leaders in certain

territories. It has been providing goods and services to users for a

long period of time, reliably. This is an important asset, which, if

properly used, can attract users. The enhancement of the

brandname, its recognition and market awareness, marketpenetration, co-branding, collaboration with other suppliers are all

the responsibilities of the strategic investor.3. The dissemination of the product as a preferred choice amongvendors, distributors, individual users and businesses in theterritory.4. Special events, sponsorships, collaboration with businesses.5. The planning and implementation of incentive systems (e.g.,points, vouchers).6. The strategic investor usually organizes a distribution anddealership network, a franchising network, or a sales network (retail

chains) including: training, pricing, pecuniary and qualitysupervision, network control, inventory and accounting controls,advertising, local marketing and sales promotion and other networkmanagement functions.

7. The strategic investor is also in charge of "vision thinking": new

methods of operation, new marketing ploys, new market niches,

predicting the future trends and market needs, market analyses and

research, etc.

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The strategic investor typically brings to the firm valuable experience

in marketing and sales. It has numerous off the shelf marketing plans

and drawer sales promotion campaigns. It developed software and

personnel capable of analysing any market into effective niches and of

creating the right media (image and PR), advertising and sales

promotion drives best suited for it. It has built large databases withmulti-year profiles of the purchasing patterns and demographic data

related to thousands of clients in many countries. It owns libraries of

material, images, sounds, paper clippings, articles, PR and image

materials, and proprietary trademarks and brand names. Above all, it

accumulated years of marketing and sales promotion ideas which

crystallized into a new conception of the business.

Technology

1. The planning and implementation of new technological systems

up to their fully operational phase. The strategic partner's engineersare available to plan, implement and supervise all the stages of the

technological side of the business.

2. The planning and implementation of a fully operative computer

system (hardware, software, communication, intranet) to deal with

all the aspects of the structure and the operation of the firm. The

strategic investor puts at the disposal of the firm proprietary

software developed by it and specifically tailored to the needs of

companies operating in the firm's market.3. The encouragement of the development of in-house, proprietary,technological solutions to the needs of the firm, its clients and

suppliers.4. The planning and the execution of an integration program withnew technologies in the field, in collaboration with other suppliers ormarket technological leaders.

Education and Training

The strategic investor is responsible to train all the personnel in the

firm: operators, customer services, distributors, vendors, sales

personnel. The training is conducted at its sole expense and includes

tours of its facilities abroad. The entrepreneurs who sought to introduce the two types ofinvestors, in the first place are usually left with the followingfunctions:Administration and Control1. To structure the firm in an optimal manner, most conducive to the

conduct of its business and to present the new structure for the

Board's approval within 30 days from the date of the GM's

appointment.

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2. To run the day to day business of the firm.3. To oversee the personnel of the firm and to resolve all the

personnel issues.4. To secure the unobstructed flow of relevant information and the

protection of confidential organization.

5. To represent the firm in its contacts, representations andnegotiations with other firms, authorities, or persons.

This is why entrepreneurs find it very hard to cohabitate with investors

of any kind. Entrepreneurs are excellent at identifying the needs of the

market and at introducing technological or service solutions to satisfy

such needs. But the very personality traits which qualify them to

become entrepreneurs also hinder the future development of their

firms. Only the introduction of outside investors can resolve the

dilemma. Outside investors are not emotionally involved. They may be

less visionary but also more experienced.

They are more interested in business results than in dreams. And

being well acquainted with entrepreneurs they insist on having

unmitigated control of the business, for fear of losing all their money.

These things antagonize the entrepreneurs. They feel that they are

losing their creation to cold-hearted, mean spirited, corporate

predators. They rebel and prefer to remain small or even to close shop

than to give up their cherished freedoms. This is where nine out of ten

entrepreneurs fail - in knowing when to let go.

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Master Of Business Administration-MBA Semester 4

MB0036- Strategic management & Business Policy

Assignment Set-2

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1. What is the purpose of a Business Plan? Explain the features

of the component of the Plan dealing with the Company and its

product description. (10 marks)

AnswerA good business plan will help attract necessary financing by

demonstrating the feasibility of your venture and the level of thoughtand professionalism you bring to the task.

The first step in planning a new business venture is to establish goals

that you seek to achieve with the business. You can establish these

goals in a number of ways, but an inclusive and ordered process like

an organizational strategic planning session or a comprehensive

neighborhood planning process may be best. The board of directors of

your organization should review and approve the goals, because these

goals will influence the direction of the organization and require the

allocation of valuable staff and financial resources. Your goals will

serve as a filter to screen a wide range of possible businessopportunities. If you fail to establish clear goals early in the process,

your organization may spend substantial time and resources pursuing

potential business ventures that may be financially viable but do not

serve the mission of your organization in other important ways. A

liquor store on the corner may be a clear money-maker; however, it

may not be the retail to assist your community desires.The following are examples of goals you may seek to achieve throughthe creation of a new business venture:Revenue Generation Your organization may hope to create abusiness that will generate sufficient net income or profit to finance

other programs, activities or services provided by your organization.Employment Creation A new business venture may create jobopportunities for community residents or the constituency served byyour organization.Neighborhood Development Strategy A new business venturemight serve as an anchor to a deteriorating neighborhood commercialarea, attract additional businesses to the area and fill a gap in existingretail services. You may need to find a use for a vacant commercialproperty that blights a strategic area of your neighborhood. Or yourbusiness might focus on the rehabilitation of dilapidated single familyhomes in the community.

Whenever possible, goals should have quantifiable outcomes such asto generate a minimum of $50,000 of net income or profit within

three years; to employ at least 15 community residents within two

years in new permanent jobs at a livable wage; to occupy and

support a minimum of 10,000 square feet of neighborhood commercial

space; or to rehabilitate 50 single-family houses over three years.

Clearly defined and quantifiable goals provide objective measurements

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to screen potential business opportunities. They also establish clear

criteria to evaluate the success of the business venture.Establish GoalsOnce you have identified goals for a new business venture, the nextstep in the business planning process is to identify and select the right

business. Many organizations may find themselves starting at thispoint in the process. Business opportunities may have been dropped atyour doorstep. Perhaps an entrepreneurial member of the board ofdirectors or a community resident has approached your organizationwith an idea for a new business, or a neighborhood business has closedor moved out of the area, taking jobs and leaving a vacant facilitybehind. Even if this is the case, we recommend that you take a stepback and set goals. Failing to do so could result in a waste of valuabletime and resources pursuing an idea that may seem feasible, but failsto accomplish important goals or to meet the mission of yourorganization. Depending on the goals you have set, you might take

several approaches to identify potential business opportunities.Local Market Study: Whether your goal is to revitalize or fill space ina neighborhood commercial district or to rehabilitate vacant housingstock, you should conduct a local market study. A good market studywill measure the level of existing goods and services provided in thearea, and assess the capacity of the area to support existing andadditional commercial or home- ownership activity. This assessment isbased on the shopping and traffic patterns of the area and thedemographic and socio-economic characteristics of the community. Abad or insufficient market study could encourage your organization topursue a business destined to fail, with potentially disastrous results

for the organization as a whole. Through a market study you will beable to identify gaps in existing products and services and unsatisfieddemand for additional or expanded products and services. If yourorganization does not have staff capacity to conduct a market study,you might hire a consultant or solicit the assistance of businessadministration students from a local college or university. Conducting asolid and thorough market study up front will provide essentialinformation for your final business plan.Analysis of Local and Regional Industry Trends: Another methodof investigating potential business opportunities is to research localand regional business and industry trends. You may be able to identify

which business or industrial sectors are growing or declining in yourcity, metropolitan area or region. The regional or metropolitan areaplanning agency for your area is a good source of data on industrytrends.Internal Capacity: The board, staff or membership of yourorganization may possess knowledge and skills in a particular businesssector or industry. Your organization may wish to draw upon thisinternal expertise in selecting potential business opportunities.

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Internal Purchasing Needs / Collaborative Procurement:Perhaps, your organization frequently purchases a particular service orproduct. If nearby affiliate organizations also use this service orproduct, this may present a business opportunity. Examples of suchproducts or services include printing or copying services, travel

services, transportation services, property management services,office supplies, catering services, and other products. You will still needto conduct a complete market study to determine the demand for thisproduct or service beyond your internal needs or the needs of yourpartners or affiliates.Identify Business OpportunitiesBuying an Existing Business: Rather than starting a new business,you may wish to consider purchasing an existing business. Perhaps alocal retail or small light manufacturing business that has been ananchor to the local retail area or a much-needed source of jobs in theneighborhood is for sale. Its closure would mean the loss of jobs and

services for your neighborhood. Your organization might considerpurchasing and taking over the enterprise instead of starting a newbusiness. If you decide to pursue this option, you still need to gothrough the steps of creating a business plan. However, before movingahead, these are just a few important areas to research in assessingthe business you plan to purchase:

Be sure to conduct a thorough review of the financial statements for

the past three to five years to determine the current fiscal status and

recent financial trends, the validity of the accounts receivable and the

status of the accounts payable. Are all the required licenses and

permits in place and can they be transferred to a new owner?

Also look at the quality of key employees who, because of theirexpertise, may need to remain with the business. You will also need toassess the customer or client base and determine whether itsmembers will remain loyal to the business after it changes hands.

Another area to evaluate is the perception or image of the business.

Inspect the facilities and talk to suppliers, customers and other

businesses in the area to learn more about the reputation of the

business.

At this early stage of your planning process, be sure to consult an

attorney experienced in corporation law. As a non-profit corporation,

engaging in income-generating activities not related to your missionmay affect your tax-exempt status. You may also wish to protect your

organization from any liability issues connected with the proposed

business activity. After you have decided on a particular business

activity, have a qualified attorney advise you on the proper corporate

structure for your new venture. In addition to qualified legal counsel,

seek the expertise of an experienced professional in that particular

industry. He or she will bring valuable knowledge and insights

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regarding the industry that will prove extremely useful during the

business planning process.AdvisoryYou have decided on a business opportunity that meets the goals of

your organization. Now you are ready to test the feasibility of the

venture and to present your business concept to the world. A solidbusiness plan will clearly explain the business concept, describe the

market for your product or service, attract investment, and establish

operating goals and guidelines.

The first step in writing your business plan is to identify your target

audience. Will this be an internal plan the board will use to assess the

feasibility and appropriateness of the business? Or will this plan be

distributed to a larger external audience such as funding sources,

commercial lenders or the community to gain financial backing and

political support for the proposed venture? The content and emphasis

of the plan will shift according to the audience.You will also need to decide who will conduct the necessary research

and write the plan. The following table lists the advantages and

disadvantages of several options for getting the work done. You might

consider a combination of the options.

Creating Ones Own Business Plan

It is also important to establish a timeline for completing the plan. A

business plan can be completed by one staff member working full time

in as little as a week, although a thorough market analysis will add

several days at least. A committee will probably need much more time.

Combinations of staff, volunteers, consultants and a board committee

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may lengthen or shorten the process depending on skill level, available

time, experience with planning and research, andthe groups facilitation needs. Now that you have decided who will puttogether your businessplan and have set a timeline for its completion, you are ready to begin

assembling the elementsof the plan. Your business plan should contain the following sections:

Executive summary

Company and product description

Market description

Operations

Management and ownership

Financial information and timeline

Risks and their mitigationA solid business plan will clearly explain the business concept, describe

the market for your product or service, attract investment, andestablish operating goals and guidelines.1 Executive SummaryIn this section of your business plan, provide a description of yourcompany, the industry you will be competing in, and the product orservice you plan to offer.

Sell your concept! The executive summary may be the first and only

section of your business plan that most of your audience will read. Tell

the audience why the business is a great idea. Some readers will look

at this section to determine whether or not they want to learn more

about a business. Other readers will look to the executive summary as

a sample of the quality and professionalism of the overall plan. Theexecutive summary should be no more than one to three

pages long and should answer the following questions:

Who are you? (describe your organization)

What are you planning? (describe the service or product)

Why are you planning it? (discuss the demand and market for

the service or product)

How will you operate your business?

When will you be in operation? (overview of timeline)

What is your expected net profit? (discuss your projected sales

and costs)Although the executive summary is the first part of your business plan,

you should write it after you have written the other sections of the plan

in order to include the most important points of each section.2 Company and Product DescriptionIn describing your company be sure to include what type of businessyou are planning (homeownership development, wholesale, retail,manufacturing or service) and the legal structure (corporation or

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partnership). You should discuss why you are creating this newventure, referencing the goals you set at the beginning of the businessplanning process. Also include a description of your non-profitorganization, the role it has played in developing this new venture andthe on-going role, if any, it will play in operations. Give the reader a

brief overview of the industry, describing historic and current growthtrends.

Whenever possible, provide documentation or references supporting

your trend analysis such as articles from business-oriented newspapers

and magazines, research journals or other publications. Include these

references in the attachments of your business plan.Product or Service

After describing your company and its industry context, describe the

products or services you plan to provide. Focus on what distinguishes

your product or service from the rest of the market. Discuss what will

attract consumers to your product or service. Provide as much detail as

necessary to inform the reader about the particular characteristics ofyour product that distinguish

it from its competition many nonprofits, for example, expect to

produce higher-quality housing than otherwise exists in the area.

Mention any distinctive elements in the manufacture of the product,

such as being hand-made by a particular people from a specific area.

If you are providing a service, explain the steps you will take to provide

a service that is better than your competition.PriceProvide a realistic estimate of the price for your product or service, and

discuss the rationale behind that price. An unrealistic price estimatemay undermine the credibility of your plan and raise concerns that

your product or service may not be of sufficient quality or that you will

not be able to maintain profitability in the long run. Describe where

this price positions you in the marketplace: at the high end, low end or

in the middle of the existing range of prices for a similar product or

service.

In other sections of the plan you will discuss the target market for your

product or service and also provide additional details on how the price

of your product fits into the overall financial projections for the

enterprise.Place

Describe the location where you will produce or distribute your product

or provide your service. Discuss the advantages of the location, such

as its accessibility, surrounding amenities and other characteristics

that may enhance your business.

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Depending on your anticipated customer base, accessibility to yourlocation via public transportation could affect the marketability of yourproduct or service.CustomersIn this section of your business plan, you will describe the customer

base or market for your product or service. In addition to providing adetailed description of your customer base, you will also need to

describe your competition (other local developers or nearby businesses

providing a similar service to your potential customer base).Who will purchase your product or use your service? How large is yourcustomer base? Define the characteristics of your target market interms of its:

Demographics Measures of age, gender, race, religion andfamily size.

Geography Measures based on location.

Socioeconomic Status Measures based on individual orhousehold annual income.

Provide statistical data to describe the size of your target market.

Sources for this information may include recent data from the Bureau

of Statistics, state or local census data, or information gathered by

your organization, such as membership lists, neighborhood surveys

and group or individual interviews. Be sure to list the sources for your

data, as this will further validate your market assumptions. Include any

relevant information regarding the growth potential for your target

market if your business is expected to rely on growth. Cite any

research forecasting population increases in your target market or

other trends and factors that may increase the demand for yourproduct or service.CompetitionDiscuss how people identified in your target market currently meet

their need for your product or service. What other businesses exist in

your area that are similar to your proposed venture? For example, for a

housing business, what are the local markets for purchase and rental?

How much are people currently paying for similar products or services?

Briefly describe what differentiates your proposed venture from these

existing businesses and discuss why you are entering this market.Sales Projections

Present an estimate of how many people you expect will purchase your

product or service. Your estimate should be based on the size of your

market, the characteristics of your customers and the share of the

market you will gain over your competition. Project how many units

you will sell at a specified price over several years. The initial year

should be broken down in monthly or quarterly increments. Account for

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initial presentation and market penetration of your product and any

seasonal variations in sales, if appropriate.3 Market DescriptionIn this section, you will describe how you plan to operate the business.

You will present information on how you plan to create your product or

provide your service, describe the staff required to operate andmanage the business, discuss the equipment and materials necessary,

and define the site or facility requirements, if any. A key component of

the operation of your business will be your sales and marketing

strategy, so you must describe how you will inform your target market

about your product or service and how you will convince customers to

purchase it.Production Description

Describe the steps for creating your product, from the raw material or

initial stage to the finished product, packaged and ready for

distribution and sale. If you plan to provide a service, describe theprocess of service deliver (such as the initial interview, for instance, if

you are offering consulting services), assessment, research and

design, and final presentation. Provide a description of any sub-

contractors or external services you plan to use in the production

process. The reader of the plan may be unfamiliar with the industry, so

avoid using industry jargon to describe the production process.StaffingDescribe the staff required to operate your business: discuss how

many people you will need; describe the tasks they will carry out; and

the skills they will need. Prepare a chart outlining the salaries and

benefits you will provide to your workforce. Provide information on howyou will recruit staff and provide initial and ongoing training of

employees.4 Equipment and MaterialsTo manufacture your product or provide your service, what type of

equipment will you need? Describe any machinery and vehicles

necessary in the production, packaging and distribution of your

product, including any office equipment such as computers, copiers,

furniture, fixtures and telephone systems. Also discuss the types of

materials you will use in the production process and describe the

source and cost of those materials.Facility

Describe the type of facility in which you will house your business.

Indicate the amount of building space you will need for production and

administration. Also discuss any building features required for the

production process such as high ceilings, specialized ventilation and

heating systems, sanitized laboratory space or vehicular accessibility.

If you have already identified a location and a facility that meets your

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requirements, describe its features. Even if you are planning to provide

a service instead of manufacturing a product, you need to demonstrate

that you will have adequate space for administrative functions and

other activities related to the service you plan to provide .Market Description

Describe your strategy for locating your target market, informing oreducating customers about your product or service and convincingthem to purchase it. Provide details on the methods you will use toadvertise your product, such as print media (advertisements innewspapers, magazines or trade journals), electronic media (television,radio and the Internet), direct mail, telemarketing, individual salesagents or representatives, or other approaches. Discuss the productsor services features you plan to emphasize to gain the attention ofyour target market. Also detail how you will distribute and sell yourproduct or service. Will you use sales agents or existing retail outlets,or directly distribute your product through a delivery service such as

United Parcel Service, Federal Express or independent truckingcompany?5 OperationsIn this section of your business plan, describe the senior managers

responsible for overseeing the start-up and operation of your business,

their background and their responsibilities in the business. Be sure to

highlight your management teams experience in managing the

production, marketing and administration of similar businesses or

within the selected industry and attach the resumes of each member

to the plan. Be sure to provide a complete job description of any

vacancies in your management team. Describe the responsibilities, theskills, the background required and the steps you plan to take to fill

that key position.OwnershipWhat is its relationship to your existing organization? Who is on the

board of directors / board of advisors of the new business and what are

their backgrounds and areas of expertise? Potential investors or

lenders will be interested in the ownership stake of the board of

directors and also in what portion of the companys equity is available.

Success is often due to ones contacts, so fully describe your business

relationships with attorneys, accountants and advertising or public

relations agencies, and any industry-specific services such as suppliersand distributors.6 Management and Ownership

In this section you will describe the financial feasibility of your planned

venture and provide several financial reports and statements to

document why your business will be a viable enterprise and a sound

investment. At a minimum, you should provide a brief descriptive

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narrative for each of the following financial statements and include a

copy in the attachments to your plan:

Start-up budget

Cash flow projection

Income statement

Balance sheetIn preparing these statements, you may want to seek the advice of acertified public accountant (CPA).Start-up BudgetDescribe the initial expenses you will incur to get your business up and

running. Some items you might include in your start-up budget

research and product design and development expenses, legal

incorporation and licensing expenses, facility purchase or rental,

equipment and vehicle purchase or rental, and initial material or

supply purchase. You can use Worksheet B as a sample format for

preparing your start-up budget.Cash Flow Projection

This statement presents a month-to-month schedule of the estimated

cash inflows and outflows of your business for the first year. This

schedule should indicate how much money your business will have or

need and when you will need it. You should describe your sources of

income and capital, detailing your projected sales revenue and

indicating your own or investor equity contribution, lenders, investors

and other sources of capital. Itemize your projected expenses,

distinguishing between the cost of goods sold (materials, supplies,

production labor), overhead expenses (rent, utilities, insurance,

maintenance, interest, insurance, administrative costs and salaries,legal and accounting services, marketing, taxes, fees and other

ongoing operating expenses) and capital expenditures (land and

buildings, equipment, furniture, vehicles, and building repair or

renovation expenses). In preparing this statement, account for a

gradual increase in sales from initial product introduction and any

expected seasonal fluctuations in revenue projections.Income Statement

Prepare a multiyear (three- to five year) statement of projected

revenue, expenses, capital expenditures and cost of goods sold. If you

make assumptions about the growth of your business, providesupporting documentation such as growth patterns of similar

companies or studies that forecast an industry-wide growth rate. This

statement should indicate to the reader the potential of your business

to generate cash and its profitability over time. For an existing

business, also submit an income statement for at least three prior

consecutive years. Lenders may look at this statement to determine

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whether your business can support the additional debt you are

requesting.Balance SheetA start-up business probably will not have any assets or liabilities at

the time you are drafting the business plan. Provide a copy of the

balance sheet of the businesss sponsoring organization or individual.Describe in your narrative any assets that will be allocated to the start-

up of the business.7 Financial Information and Start up TimelineCapital Requirements

Describe the amount and type of financing you are seeking for your

business. Are you looking for debt from a lender or equity from an

investor? Refer to your start up budget and cash flow statement

presented earlier. Discuss how and when you will draw on these funds

and how they will affect the bottom line. Also describe any

commitments or investments that you may have already secured.

If you are seeking investors, such as venture capitalists, describe what

they will receive in return for their capital. What is the repayment

period and the expected return on investment? Also discuss the nature

of their ownership share and how it may change with future

investments. Equity investors are looking for rates of return higher

than rates offered by banks or other business lenders. The level of risk

in your business and industry will help to determine the actual market

rate, as will the availability of equity dollars. Check with other

businesses (although not direct competitors) to see what return on

investment their investors demanded. Be prepared to negotiate. And

make sure you research the investment market carefully; severalsocially minded investment pools exist and more are in development.

or lenders, describe the type of financing you are seeking:

Seed Capital Short-term financing to cover start-up costs.

Fixed Asset Financing Longer-term financing for property,building improvements, equipment or vehicles. The asset beingpurchased is usually pledged as security for the loan.

Working Capital Short-term financing to cover operatingexpenses and to bridge gaps in cash flow.

Initial Start-up Timeline

Provide a timeline of tasks and events necessary to get your businessoperational. Be sure to describe the current stage you are in and whatsteps you have taken to date. Include deadlines for task completion.Set realistic deadlines according to your capacity to complete thesetasks. The following is a list of some of the steps you may wish toinclude:

Filing legal incorporation documents

Identifying and securing suitable space

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Designing and developing the product

Obtaining required licenses or permits

Securing necessary financing

Leasing or purchasing equipment

Hiring key staff

Hiring and training of production or support staff Purchasing materials and production supplies

Beginning marketing activities

OpeningAlthough it is impossible to know exactly what will go wrong in startingand running your business, thinking about different challenges willstrengthen your plan. Potential problems could include:

Insufficient public subsidy available to new home owners orresidents

The competition drops its prices

Not enough customers Production costs exceed estimates

Difficulty in finding qualified employees

Environmental or governmental changes such as tax increases,additional regulations or population changes

For each potential problem, discuss its likelihood and describe possiblesolutions or actions you might undertake to mitigate the problem.Risks and their MitigationAlthough it is impossible to know exactly what will go wrong in startingand running your business, thinking about different challenges willstrengthen your plan.

After you have completed all of the elements of your business plan,you should focus its presentation. A well-organized plan will assist you

in communicating the most important elements of your business plan

to the reader, and a persuasive plan will help you to convince the

reader to invest in your business.Executive Summary

As mentioned earlier, this section should be written last. However, if

you have already written the executive summary, review it to make

sure it embodies the following characteristics. Because it is the first

and possibly the only section of the plan that many readers may see,

the executive summary should provide an overview of the plan andentice the reader to read the whole plan or to agree to meet with you.

The executive summary should be no more than three pages and

should briefly describe the most important elements of the plan.

Review the Executive Summary section of this manual for more tips on

this critical introduction to your business.

2. Write short notes on :

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a) sales projections (10 marks).

Answer

Sales ProjectionsPresent an estimate of how many people you expect will purchase your

product or service. Your estimate should be based on the size of yourmarket, the characteristics of your customers and the share of the

market you will gain over your competition. Project how many units

you will sell at a specified price over several years. The initial year

should be broken down in monthly or quarterly increments. Account for

initial presentation and market penetration of your product and any

seasonal variations in sales, if appropriate.Steps for Developing Sales ProjectionsYour business plan is not just a funding tool, but also a blueprint forhow your business should operate. The following are steps for

developing sales projections.Step I: EstimateFor each product or service, estimate the number of people who are

likely to buy and when they will buy it. You can get this information

from asking your likely customers about their possible use of your

business, or you can base your estimates on your knowledge of the

market.Step 2: Use a Calendar

Estimate your sales and number of customers served during one week.

Using the totals for a week, make projections for each month. For the

first few months, keep in mind that business will start off slowly before

people become more aware of your business. Use will most likelyincrease as people learn about your products and services. Seasonal

variations may affect your business as well. You will use these

numbers to project your equipment, supply and staffing needs, as well

as income.Cost Account Heads:

Organizational Start up Costs

Product Design/Development

Research & Development

Legal/Licensing Expenses

Property & Facilities Land/Building Purchase

Initial Lease Deposit

Building Repairs/Improvements

Equipment/Machinery

Production-related

Administrative/Office Equip.

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Materials & Supplies

Personnel

Key Employees

Contract Labour/Temps

Training Expenses

Marketing Expenses Advertisements

Brochures/Literature/Other

Insurance Premiums

Distributor Contracts

Contingency (5%)

Expenses:Costs of Goods Sold

Materials/Supplies

Labor Rent

Utilities

Insurance

Admin. Exp. (PT Sec.)

Legal & Accounting

Marketing

Equipment Maintenance/Supplies

Facility Maintenance

Fees/Miscellaneous

Debt / Equity Investment: Equipment Loan

Building Rehabilitation Loan

Grants

Owner EquityExpenses

Cost of Goods Sold

Wages & Benefits

Materials

Supplies

Overhead Expenses: Rent

Utilities

Building Maintenance/Security

Marketing

Accounting

Legal

Administrative Expense

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Interest Expense

Depreciation

The Business Priorities are based upon six top-level objectives;

these are:

To make Business data available both to decision-makers and as

much as possible available in the public domain; To ensure all holders of Business information are able to

participate.

To ensure that the data available through the NETWORK are ofknown quality;

To ensure that the NETWORK Gateway gives access to data onLocation and species used to inform decisions affecting Businessat local, regional, national and international levels;

To promote knowledge, use and awareness of the NETWORK;

To enhance the skills base and expertise needed to support and

develop the NETWORK.

i) The objectives have cross-cutting themes which are:

A. Infrastructure development

B. Data standards and tools

C. Capacity building

D. Working with the wider public

E. Co-ordination and promotion

i) In addition, the partners will contribute to the overall realization of

the objectives through work that they initiate on their own account, but

which does not necessarily fall under the focused objectives for the

Network.ii) A series of assumptions have been made in formulating the BusinessPriorities and their associated work programme. These are:

It is assumed that the present way of working, i.e. a lead partnerapproach for each project will be retained;

The plan is not intended to represent all the work that could beundertaken;

It is anticipated that other work towards the principal aim of

adding content and providing a fully functional gateway will be

adopted by the NETWORK as part of its programme, but this

work would have to be prioritised against this core activity andseparately resourced;

To give additional focus to the challenging nature of the task that theNETWORK is setting itself, a series of principle drivers have beenrecognised. The drivers are:

Processes This driver relates to facilitated targeted action onthe ground through providing knowledge of resource location,

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extent, pattern of distribution, data quality and gaps. It also hasthe potential for engaging more partners in the NETWORK;

Environmental Impact Assessment (EIA) and Strategic

Environmental Assessment This driver is concerned with

providing ready access to data on location, extent, pattern and

quality of Business. Data contributor engagement This driver is concerned with

accessing sources of data for the NETWORK enabling the

assessment of actions and continual improvement in the

targeting of actions from the two previous drivers;

Operational use This relates to the use of the NETWORK withinthe day to day business of agencies as a source of data relevantto local reporting or casework;

Generic enhancement This driver encompasses capacitybuilding and Recording Schemes and other contributingorganisations and user groups, in order to ensure the continuedand enhanced supply and use of information.

These lead naturally to three broad areas of work:

Developing the recording network;

Enhancing the Internet Gateway in terms of its functionality andthe data it accesses;

Ensuring that the benefits already secured through the earlierwork are maintained.

The plan also acknowledges the need to co-ordinate activity between

the members of the NETWORK and their partners, and to communicate

the progress and successes of the work programme.

b) Importance of creativity in Business

Answer

CreativityEveryone in business is creative.

Some of most creative people are in manufacturing.

They actually CREATE products that change the world.Some of the least creative people perhaps are in advertising.They spend most of their creative energy telling manufacturers that

theyarent creative!Salespeople Are Creative They are natural born story-tellers.

Accountants are creative.

Best Creative Exercise Ever

Write down your ideas.

You have a ton every day.

But most of the time, you cant remember them by the days end.

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Dont let spelling and grammar issues or relentless self-editing stop

you.

Get your ideas on paper (Let someone else edit it.)Go retro: Carry a notebook, pen, and calendar into your meetings.Look up at people.

Story First, Technology Last.Dont invest in a presentation class called How to Use PowerPoint.until youve taken a class called How to Tell Stories and Connectwith Your Audience.2 A Simple Creative ExerciseSimplify everything. Your life, your home, your office, your desk, yourprocesses, vision, policy, procedures. Everything.Fixing Problems is Creative.

Your job is to fix problems, not to complain.

Brainstorming

Dont tell people that their ideas are bad, especially if you dont have a

better one.

Its only your lifes work.Never say, Its not my job to be creative.

How to Lose an Audience

Show your audience slides with columns of numbers.

Refuse to tell them a story about the meaning of the numbers.

Do not read your speech or presentation.

Instead, read your audience.

How about a Show?

Try giving a performance instead of merely giving a presentation.Everyone in Sales Knows

Tell stories.

Dont just provide data.Avoid Meetings.Do not attend more than two meetings a day, or else you will never getany real creative work done.Get Fresh Ideas.Leave the office building at least once a day.Another Lame ExcuseDesigners should put more of their passion into designing great work,

instead of endless (boring) discussions about thes up eriority of theMacintosh over the PC!The Lame ExcuseI cant [write/design/create] because I dont have the latest[software/hardware/ upgrade].You cant let a machine take credit for your creativity.And you cant blame a machine for your creative failures, either.

Dont Blame the Tool!

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The more you become a master of your particular creative form.

.the fewer tools you will use.

Master carpenters use fewer tools than novices.

So do cooks.

Use what works.

Creativity: Use it or Lose it.Create something every day.

Creativity takes place every day, not once in a while.

Its not rare.

Its just been mystified Own your creativity.Facts and observationsGiga-investments made in the paper and pulp industry, in the heavy

metal industry and in other base industries, today face scenarios of

slow growth (2-3 % p.a.) in their key markets and a growing over-

capacity in Europe.The energy sector faces growing competition with lower prices andcyclic variations of demand.Productivity improvements in these industries have slowed down to 1-2% p.a .

Global financial markets make sure that capital cannot be used non-

productively, as its owners are offered other opportunities and the

capital will move (often quite fast) to capture these opportunities.

The capital markets have learned the American way, i.e. there is a

shareholder dominance among the actors, which has brought (often

quite short-term) shareholder return to the forefront as a key indicator

of success, profitability and productivity.

There are lessons learned from the Japanese industry, which point tothe importance of immaterial investments. These lessons show thatinvestments in buildings, production technology and supportingtechnology will be enhanced with immaterial investments, and thatthese are even more important for re-investments and for graduallygrowing maintenance investments. The core products and services produced by giga-investments areenhanced with life-time service, with gradually more advancedmaintenance and financial add-on services.New technology and enhanced technological innovations will changethe life cycle of a giga-investment.

Technology providers are involved throughout the life cycle of a giga-investment.Giga-investments are large enough to have an impact on the marketfor which they are positioned:A 3,00,000 ton paper mill will change the relative competitivepositions; smaller units are no longer cost effective.A new technology will redefine the CSF:s for the market.Customer needs are adjusting to the new possibilities of the giga-

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investment.The proposition that we can describe future cash flows as stochasticprocesses is no longer valid; neither can the impact be expected to becovered through the stock market.Types of options

Option to Defer

Time-to-Build Option

Option to Expand

Growth Options

Option to Contract

Option to Shut Down/Produce

Option to Abandon

Option to Alter Input/Output MixFuzzy numbers (fuzzy sets) are a way to express the cash flowestimates in a more realistic way. This means that a solution to bothproblems (accuracy and flexibility) is a real option model using fuzzysets.

3. What factors are to be taken into account in a crisis

communications strategy? (10marks).

Answer

The following items should be taken into account in the crisis