Environmental Scanning and SWOT Analysis

Environmental analysis is the study of the organizational

environment to pinpoint environmental factors that can significantly
influence organizational operations. It is a process of gathering,
analysing and dispensing information for effective purpose.

Topic continued on next page

Scanning means detection. Environmental scanning means having a detailed investigation of
the environment. Environmental scanning can also be termed as SWOT analyses. In order to
survive and grow in a competitive business environment, it is essential for every business
firm to undertake SWOT analyses.

This is the process in which the enterprise monitors environmental factors to identify
opportunities and threats of the business. Environmental scanning is essential to understand
current and probable changes in the business environment comprising economic, political,
technological, cultural etc.

SWOT Analysis stand for:

S – Analysing Strength of the firm

W – Analysing weakness of the firm

O – Analysing opportunities of the firm

T – Analysing threats of the firm

It is rightly said that, the firm should maximise the strength, minimise the weakness, grab the
opportunities and diffuse off the threat for survival and growth of the business firm.

SWOT Analysis:

The internal analysis of the firm identifies strength and weakness, and the external analyses
helps to observe opportunities and threats coming the way of business.

Positive Negative

Strength (Internal) Weakness (Internal)

1. Technological skills2. Leading brands 1. Absence of employee skill2. Unreliable product

   

3. Distribution channels 3. Poor access to distribution

4. Customer relationship and Loyalty 4. Low customer retention

5. Management 5. Poor management

Opportunities (External): Threats (External):

1. Changing & unfulfilled customer 1. Changing customer taste & emergence of

 need2. Technological advances
substitute product.2. Arrival of new technologies
 
 
3. Favorable change in government
3. Unfavorable change in government policies
policies
4. Closing of market
4. Liberalisation of market

The Business Plan as an Entrepreneurial Tool

 AKTUTHEINTACTONE23 MAR 2019 3 COMMENTS

An entrepreneur trying to start their own business needs to have a business plan. The business
plan is a guide helps business owners stay focused on their goals and serves as a tool to lure
investors and lending institutions to finance the business. To write an effective business plan,
you need to complete several steps to ensure that the final plan includes the necessary
elements.

1. Use the outline format of any word processing program to create a business plan. An outline
format makes the plan easier to read and easier to fill in any details you need to add later.
2. Describe your business in the first section. Explain the kinds of products or services your
business will offer, how you plan to manufacture the product or administer the service and what
materials you will need. Include details about the kind of facility you will need and the types of
equipment required.
3. Create a business budget and break it down into three parts: start-up costs, ongoing
operating costs and a breakdown of the overhead into sections such as manpower and materials.
Provide as many details as possible in the budget section. Forecast your budget needs for ongoing
operating costs for at least three years. Break the budget down by department, including sales,
marketing, production and support.
4. Develop a profit projection that shows the percentage growth you expect for the next three
years. Cite reasons for your forecast and give examples of how you intend to grow your company.
5. Present a sales and marketing plan that includes detailed analysis of your competition, how
you intend to address the competition and a detailed explanation of how you will bring your product
or service to the marketplace.
6. Create a biographical section that features information about all executives and partners
who will be involved in the company. Include compensation plans, detailed job descriptions for each
person and resumes that outline past experience within the industry.

Things Needed

 Computer
 Word processing software
 Printer
 A business plan is a road map that helps navigate a company to success. It describes all
aspects of your business, including history, products, services, marketing and finance. The plan
indicates that a qualified management team exists. It communicates information to those interested
 in your business, such as an investor who reviews your plan to determine the likelihood of receiving
a good return on an investment. Without a plan, a business will likely fail.
 Create a mission statement about why your business exists. For example: “Develop Internet-
based software that provides easy project management.”
 Define a vision of what your business wants to become. For example: “To become a
respected software vendor that possesses 60 percent of the market for project management
software.”
 Define the market that your business will serve. Include the business outlook for your
industry, what customer needs are addressed and a profile of targeted customers. For example:
“Customers are project managers who manage multiple projects at construction businesses.”
 Describe products and services, including their pricing. Include what makes the products and
services competitive.
 Describe the company’s legal and management structures. Explain how business activities
are accomplished. Indicate what permits and licenses your business maintains. Include biographies
of key managers.
 Define marketing strategy, including pricing and promotion. Include customer groups whose
needs are met by your products and services.
 Provide a balance sheet, which is a snapshot of the company’s value. For an existing
business, this should cover the past three years.
 Provide an income statement, which indicates the profit or loss over a period. For an existing
business, cover the past three years.
 Provide a cash flow statement, which indicates revenue, expenses and available cash. These
are projected amounts if the plan is for a startup business. For an existing business, provide amounts
for the past 12 months. Actual and projected amounts are used to project working capital.
 Provide each principal’s personal financial statement and prior year’s federal tax return if
your business is applying for financing.
 Append miscellaneous information that helps define your company. Include marketing
materials, contracts and key employee resumes, for instance.
 Write an executive summary that defines what your business does and why. This becomes
the first section in the plan.

Elements of Business Planning Process

 AKTUTHEINTACTONE23 MAR 2019 2 COMMENTS

Your well-thought-out business plan lets others know you’re serious, and that you can handle
all that running a business entails. It can also give you a solid roadmap to help you navigate
the tricky waters. The seven components you must have in your business plan include:

1. Executive Summary
2. Business Description
3. Market Analysis
4. Organization Management
5. Sales Strategies
6. Funding Requirements
7. Financial Projections

All of these elements can help you as you build your business, in addition to showing lenders
and potential backers that you have a clear idea of what you are doing.
 1. Executive Summary

The executive summary is basically the elevator pitch for your business. It distills all the
important information about your business plan into a relatively short space. It’s a high-level
look at everything and should include information that summarizes the other sections of your
plan.

One of the best ways to approach writing the executive summary is to finish it last so you can
include the important ideas from other sections.

Coffee House, Inc.’s executive summary focuses on the value proposition of the business.
Here’s what they’ve written into their plan:

“Market research indicates that an increasing number of consumers in our city are
interested in the experience of coffee. However, there isn’t a viable place for them to meet
and learn locally. Instead, they only have access to fast coffee. Coffee House, Inc., provides a
place for people to enjoy fresh-ground beans and truly enjoy their cup.

“Coffee House, Inc., provides a hub for a subculture of coffee, offering customers a place to
purchase their own coffee-grinding supplies in addition to enjoying the modern atmosphere
of a coffee house.

“The founders of Coffee House, Inc., are coffee aficionados with experience in the coffee
industry and connections to sustainable growing operations. With the experience and
expertise of the Coffee House team, a missing niche in town can be fulfilled.”

2. Business Description

This is your chance to describe your company and what it does. Include a look at when the
business was formed, and your mission statement. These are the things that tell your story
and allow others to connect to you. It can also serve as your own reminder of why you got
started in the first place. Turn to this section for motivation if you find yourself losing steam.

Some of the other questions you can answer in the business description section of your plan
include:

 What is the business model? (What are your customer base, revenue sources and products?)
 Do you have special business relationships that offer you an advantage?
 Where are you located?
 Who are the principals?
 What is the legal structure?
 What are some of the market opportunities?
 What is your projected growth?

Answering these questions narrows your focus and shows potential lenders and backers how
you’re viewing your venture.
3. Market Analysis

This is your chance to look at your competition and the state of the market as a whole. Your
market analysis is an exercise in seeing where you fit in the market — and how you are
superior to the competition.

As you create your market analysis, you need to make sure to include information on your
core target market, profiles of your ideal customers and other market research. You can also
include testimonials if you have them.

Part of your market analysis should come from looking at the trends in your area and
industry. Coffee House, Inc., recognizes that there is a wide trend toward “slow” food and the
idea of experiencing life. On top of that, Coffee House surveyed its city and found no local
coffee houses that offered fresh-ground beans or high-end accessories for do-it-yourselfers.

Coffee House can create an ideal customer identity. The ideal customer is a millennial or
younger member of Gen X. He or she is a professional and interested in experiencing life and
enjoying pleasures. The ideal customer probably isn’t wealthy, but is middle class, and has
enough disposable income to have a hobby like coffee. Coffee House appeals to professionals
who work (and maybe live) in a downtown area. They meet their friends for a good cup of
coffee, but also want the ability to make good coffee at home.

4. Organization and Management

Use this section of your business plan to show off your team superstars. In fact, there are
plenty of indications that your management team matters more than your product idea or
pitch.

Venture capitalists want to know you have a competent team that has the grit to stick it out.
You are more likely to be successful and pivot if needed when you have the right
management and organization for your company.

Make sure you highlight the expertise and qualifications of each member of the team in your
business plan. You want to impress.

In the case of Coffee House, Inc., the founders emphasize their connections in the world of
coffee, particularly growers that use sustainable practices. They can get good prices for bulk
beans that they can brand with their own label. The founders also have experience in making
and understanding coffee and the business. One of them has an MBA, and can leverage the
executive ability. Both have worked in marketing departments in the past, and have social
media experience, so they can highlight their expertise.

5. Sales Strategies

How will you raise money with your business and make profits a reality? You answer this
question with your sales strategy. This section is all about explaining your price strategy and
describing the relationship between your price point and everything else at the company.
You should also detail the promotional strategies you’re using now, along with strategies you
hope to implement later. This includes your social media efforts and how you use press
releases and other appearances to help raise your brand awareness and encourage people to
buy or sign up for your products or services.

Your sales strategy section should include information on your web development efforts and
your search engine optimization plan. You want to show that you’ve thought about this, and
you’re ready to implement a plan to ramp up sales.

Coffee House needs to make sure they utilize word of mouth and geolocation strategies for
their marketing. Social media is a good start, including making Facebook Live videos of them
demonstrating products and how to grind beans. They can encourage customers to check in
when visiting, as well as offer special coupons and promotions that activate when they come
to the house to encourage sales.

6. Funding Requirements

Here’s where you ask for the amount of money you need. Make sure you are being as
realistic as possible. You can create a range of numbers if you don’t want to try to pinpoint an
exact number. Include information for a best-case scenario and a worst-case scenario. You
should also put together a timeline so your potential funders have an idea of what to expect.

It can cost between $200,000 and $500,000 to open a coffee house, and profit margins can be
between 7 and 25 percent, depending on costs. A well-run coffee house can see revenues of
as much as $1 million a year by the third year, according to the Chronicle. Some of the things
Coffee House, Inc., would include in its timeline are getting premises, food handlers’ permits
and the proper licenses, arrange for regular supply and get the right insurance. How long
these items take depend on state and local regulations. No matter your business, get an idea of
what steps you need to take to make it happen and how long they typically take. Add it all
into your timeline.

7. Financial Projections

Finally, the last section of your business plan should include financial projections. Make sure
you summarize any successes up to this point. This is especially important if you hope to
secure funds for expansion of your existing business.

Your forward-looking projections should be based on information about your revenue growth
and market trends. You want to be able to use information about what’s happening, combined
with your sales strategies, to create realistic projections that let others know when they can
expect to see returns.

Even though it can be time-consuming to create a business plan, your efforts will be
rewarded. The process is valuable for helping you identify potential problems, as well as help
you plan ahead. You’ll be more organized and better prepared for success.

Preparation of Project Plan
 
 Step 1: Explain the project plan to key stakeholders and discuss its key components

One of the most misunderstood terms in project management, the project plan is a set of
living documents that can be expected to change over the life of the project. Like a roadmap,
it provides the direction for the project. And like the traveler, the project manager needs to set
the course for the project, which in project management terms means creating the project
plan. Just as a driver may encounter road construction or new routes to the final destination,
the project manager may need to correct the project course as well.

A common misconception is that the plan equates to the project timeline, which is only one
of the many components of the plan. The project plan is the major work product from the
entire planning process, so it contains all the planning documents for the project.

Typically many of the project’s key stakeholders, that is those affected by both the project
and the project’s end result, do not fully understand the nature of the project plan. Since one
of the most important and difficult aspects of project management is getting commitment and
buying, the first step is to explain the planning process and the project plan to all key
stakeholders. It is essential for them to understand the importance of this set of documents
and to be familiar with its content, since they will be asked to review and approve the
documents that pertain to them.

Components of the Project Plan Include:

Baselines. Baselines are sometimes called performance measures, because the performance of

the entire project is measured against them. They are the project’s three approved starting
points and include the scope, schedule, and cost baselines. These provide the ‘stakes in the
ground.’ That is, they are used to determine whether or not the project is on track, during the
execution of the project.

Baseline management plans. These plans include documentation on how variances to the

baselines will be handled throughout the project. Each project baseline will need to be
reviewed and managed. A result of this process may include the need to do additional
planning, with the possibility that the baseline(s) will change. Project management plans
document what the project team will do when variances to the baselines occur, including
what process will be followed, who will be notified, how the changes will be funded, etc.

Other work products from the planning process. These include a risk management plan, a
quality plan, a procurement plan, a staffing plan, and a communications plan.

Step 2: Define roles and responsibilities

Not all key stakeholders will review all documents, so it is necessary to determine who on the
project needs to approve which parts of the plan. Some of the key players are:

 Project sponsor, who owns and funds the entire project. Sponsors need to review and
approve all aspects of the plan.
 Designated business experts, who will define their requirements for the end product. They
need to help develop the scope baseline and approve the documents relating to scope. They will be
quite interested in the timeline as well.
 Project manager, who creates, executes, and controls the project plan. Since project
managers build the plan, they do not need to approve it.
 Project team, who build the end product. The team needs to participate in the development
of many aspects of the plan, such as identifying risks, quality, and design issues, but the team does
not usually approve it.
 End users, who use the end product. They too, need to participate in the development of
the plan, and review the plan, but rarely do they actually need to sign off.
 Others, such as auditors, quality and risk analysts, procurement specialists, and so on may
also participate on the project. They may need to approve the parts that pertain to them, such as the
Quality or Procurement plan.

Step 3: Hold a kickoff meeting

The kickoff meeting is an effective way to bring stakeholders together to discuss the project.
It is an effective way to initiate the planning process. It can be used to start building trust
among the team members and ensure that everyone’s idea are taken into account. Kickoff
meetings also demonstrate commitment from the sponsor for the project. Here are some of
the topics that might be included in a kickoff meeting:

 Business vision and strategy (from sponsor)

 Project vision (from sponsor)
 Roles and responsibilities
 Team building
 Team commitments
 How team makes decisions
 Ground rules
 How large the group should be and whether sub-groups are necessary

Step 4: Develop a Scope Statement

The Scope Statement is arguably the most important document in the project plan. It’s the
foundation for the rest of the project. It describes the project and is used to get common
agreement among the stakeholders about the scope. The Scope Statement clearly describes
what the outcome of the project will be. It is the basis for getting the buy-in and agreement
from the sponsor and other stakeholders and decreases the chances of miscommunication.
This document will most likely grow and change with the life of the project. The Scope
Statement should include:

 Business need and business problem

 Project objectives, stating what will occur within the project to solve the business problem
 Benefits of completing the project, as well as the project justification
 Project scope, stated as which deliverables will be included and excluded from the project.
 Key milestones, the approach, and other components as dictated by the size and nature of
the project.

It can be treated like a contract between the project manager and sponsor, one that can only
be changed with sponsor approval.
 Step 5: Develop scope baseline

Once the deliverables are confirmed in the Scope Statement, they need to be developed into a
work breakdown structure (WBS), which is a decomposition of all the deliverables in the
project. This deliverable WBS forms the scope baseline and has these elements:

 Identifies all the deliverables produced on the project, and therefore, identifies all the work
to be done.
 Takes large deliverables and breaks them into a hierarchy of smaller deliverables. That is,
each deliverable starts at a high level and is broken into subsequently lower and lower levels of
detail.
 The lowest level is called a “work package” and can be numbered to correspond to activities
and tasks.

The WBS is often thought of as a task breakdown, but activities and tasks are a separate
breakdown, identified in the next step.

Step 6: Develop the schedule and cost baselines

Here are the steps involved in developing the schedule and cost baselines.

1. Identify activities and tasks needed to produce each of the work packages, creating a WBS of
tasks.
2. Identify resources for each task, if known.
3. Estimate how long it will take to complete each task.
4. Estimate cost of each task, using an average hourly rate for each resource.
5. Consider resource constraints, or how much time each resource can realistically devoted to
this project.
6. Determine which tasks are dependent on other tasks, and develop critical path.
7. Develop schedule, which is a calendarization of all the tasks and estimates. It shows by
chosen time period (week, month, quarter, or year) which resource is doing which tasks, how much
time they are expected to spend on each task, and when each task is scheduled to begin and end.
8. Develop the cost baseline, which is a time-phased budget, or cost by time period.

This process is not a one-time effort. Throughout the project you will most likely be adding
to repeating some or all of these steps.

Step 7: Create baseline management plans

Once the scope, schedule, and cost baselines have been established, you can create the steps
the team will take to manage variances to these plans. All these management plans usually
include a review and approval process for modifying the baselines. Different approval levels
are usually needed for different types of changes. In addition, not all new requests will result
in changes to the scope, schedule, or budget, but a process is needed to study all new requests
to determine their impact to the project.

Step 8: Develop the staffing plan

 The staffing plan is a chart that shows the time periods, usually month, quarter, year, that
each resource will come onto and leave the project. It is similar to other project management
charts, like a Gantt chart, but does not show tasks, estimates, begin and end dates, or the
critical path. It shows only the time period and resource and the length of time that resource is
expected to remain on the project.

Step 9: Analyze project quality and risks.

Project Quality: Project quality consists of ensuring that the end product not only meets the
customer specifications, but is one that the sponsor and key business experts actually want to
use. The emphasis on project quality is on preventing errors, rather than inspecting the
product at the end of the project and then eliminating errors. Project quality also recognizes
that quality is a management responsibility and needs to be performed throughout the project.

Creating the Quality Plan involves setting the standards, acceptance criteria, and metrics that
will be used throughout the project. The plan, then, becomes the foundation for all the quality
reviews and inspections performed during the project and is used throughout project
execution.

Project Risks: A risk is an event that may or may not happen, but could have a significant
effect on the outcome of a project, if it were to occur. For example, there may be a 50%
chance of a significant change in sponsorship in the next few months. Analyzing risks
includes making a determination of both the probability that a specific event may occur and if
it does, assessing its impact. The quantification of both the probability and impact will lead to
determining which are the highest risks that need attention. Risk management includes not
just assessing the risk, but developing risk management plans to understand and communicate
how the team will respond to the high-risk events.

Step 10: Communicate!

One important aspect of the project plan is the Communications Plan. This document states
such things as:

 Who on the project wants which reports, how often, in what format, and using what media.
 How issues will be escalated and when.
 Where project information will be stored and who can access it.

For complex projects, a formal communications matrix is a tool that can help determine some
of the above criteria. It helps document the project team’s agreed-on method for
communicating various aspects of the project, such as routine status, problem resolution,
decisions, etc. 

Once the project plan is complete, it is important not just to communicate the importance of
the project plan to the sponsor, but also to communicate its contents once it’s created. This
communication should include such things as:

 Review and approval of the project plan.

 Process for changing the contents of the plan.
 Next steps—executing and controlling the project plan and key stakeholder
roles/responsibilities in the upcoming phases.

Components of an ideal Business Plan-Market Plan,

Financial Plan
1. Overall Summary of the Business Model

Without prior knowledge regarding what the business is supposed to do, an entrepreneur
can’t achieve his or her goals.

The executive summary should define the overall details of what the business is all about and
the goals and objectives.

It should be clear with the core values and the positioning in the market. It must clearly
explain how the brand will enter the local market followed by the international market – if
ultimate ambitions stretch that far. This can be done by maintaining its equipment base,
input/output process and the good quality of items. It further focuses on the generation of
financial resources.

2. A Strategy That Must Be Followed

You should be clear with your product strategy, which must be based on consumer needs.
He/she should survey the situation using various details of their customers.

A few of the elements that must be included are:

 Company or product mission

 Marketing and Financial objectives
 Resource availability
 Cashflow analysis
 Competitive analysis

3. Availability of Products and Services

Entrepreneurs should have a full understanding of how their products or services will reach
their target audience. 

Designing good products and services to customers is just one part of the whole plan,
however. The aim must be making it available that too in a cost-effective manner. And it
should be the ultimate goal of an entrepreneur. It can be achieved by making the best use of
the team, promotional activities used for sales, advertising methods and other tools that are
being used for communication.

4. Pricing Strategy

The most important stage of any business model is its pricing. Price can be the maker or
breaker of a product. It is the one element of the marketing mix that produces revenue. All
other elements fall on the opposite side of the ledger. People should design their product or
brand so that it commands a premium price and reaps big profits. It should also reflect a value
that the consumers are willing to pay and a benefit that outweighs the cost.

5. Awareness of the Product

Always plan how you intend to make your product or service known to your intended
customer base. You could have the best offering in your industry or niche, but if nobody has
heard of it or you, you’re as good as sunk.

The time to plan your social media, content marketing and advertising campaigns is not when
you are ready to go to market! 

6. Who Will Benefit From Your Offering?

Segmentation, targeting and positioning are the essences of Marketing. Your target customer
base will go some way to determining the price you can ultimately charge. It will also
determine how you can best communicate your offering to them and where you will find
them. 

7. Short Term and Long Term Objectives

Entrepreneurs must have a clear vision of their mission, marketing and financial objectives.
They need to be specific about how their brand will satisfy the target market. Nobody can
expect immediate profit.  But planning must include short, medium and long-term goals. You
need to be clear regarding how your business will proceed as per the life cycle of whatever
you are selling. And you need input from other areas of marketing. Nobody can think of or
execute everything entailed in pushing an offering to market. 

8. SWOT Analysis

Before designing a complete project, a pilot project needs to be designed and implemented.
An entrepreneur should know everything – including any flaws that may become apparent.
Also, the project strength, shortcomings, appropriate options for progressing and warnings
can be tested in the pilot project itself for the successful completion or execution of the main
project. For this, you need to do a thorough SWOT (Strengths, Weaknesses, Opportunities,
Threats) analysis.

9. PEST Analysis

SWOT Analysis will give you the inner view of the business model. However, it is very
important to determine how a business will run in the changing economic scenario. Hence, a
detailed PEST analysis needs to be done to know how your model will run in the changing
Political, Economic, Social and Technological Environment.

Financial Plan

The financial section of your business plan determines whether or not your business idea is
viable and will be the focus of any investors who may be attracted to your business idea. The
 financial section is composed of three financial statements: the income statement, the cash
flow projection and the balance sheet and a brief explanation/analysis of these three
statements.

This article will guide you in the preparation of each of these three financial statements.
Before you begin, however, you must gather the financial data you will need including all of
your expenses.

Taking Stock of Expenses

Think of your business expenses as two cost categories; your start-up expenses and
your operating expenses. All the costs of getting your business up and running should be
considered start-up expenses. These expenses may include:

 Business registration fees
 Business licensing and permits
 Starting inventory
 Rent deposits
 Down payments on property
 Down payments on equipment
 Utility setup fees

This is just a sample of startup expenses; your own list will expand as soon as you start to
itemize them.

Operating expenses are the costs of keeping your business running. Think of these as your
monthly expenses. Your list of operating expenses may include:

 Salaries (including your own)

 Rent or mortgage payments
 Telecommunication expenses
 Utilities
 Raw materials
 Storage
 Distribution
 Promotion
 Loan payments
 Office supplies
 Maintenance

Once again, this is just a partial list. Once you have listed all of your operating expenses, the
total will reflect the monthly cost of operating your business. Multiply this number by 6, and
you have a six-month estimate of your operating expenses. Adding this amount to your total
startup expenses list, and you have a ballpark figure for your complete start-up costs.

Now you can begin to put together your financial statements for your business plan starting
with the income statement.
 Components of an ideal Business Plan: Operation Plan
The operations section of your business plan is where you explain – in detail – you
company’s objectives, goals, procedures, and timeline. An operations plan is helpful for
investors, but it’s also helpful for you and employees because it pushes you to think about
tactics and deadlines.

In the previous course, you outlined your company’s strategic plan, which answers questions
about your business mission. An operational plan outlines the steps you’ll take to complete
your business mission.

Your operations plan should be able to answer the following:

 Who: The personnel or departments who are in charge of completing specific tasks.

 What: A description of what each department is responsible for.
 Where: The information on where daily operations will be taking place.
 When:The deadlines for when the tasks and goals are to be completed.
 How much: The cost amount each department needs to complete their tasks.

In this session, we explain each item to include in your operations plan.

Goals and Objectives

The key to an operations plan is having a clear objective and goal everyone is focused on
completing. In this section of your plan, you’ll clearly state what your company’s operational
objective is.

Your operational objective explains how you intend to complete your strategic objective.

In order to create an efficient operational objective, think SMART:

 Specific– Be clear on what you want employees to achieve.

 Measurable– Be able to quantify the goal in order to track progress.
 Attainable & Realistic– It’s great to be ambitious but make sure you aren’t setting your team
up for failure. Create a goal that everyone is motivated to complete with the resources available.
 Timely– Provide a deadline so everyone has a date they are working towards.

Different departments will have different operational objectives. However, each department
objective should help the company reach the main objective. In addition, operational
objectives change; the objectives aren’t intended to be permanents or long term. The timeline
should be scheduled with your company’s long-term goals in mind.

Let’s look at the following example for a local pizza business objective:

 Strategic objective: To deliver pizza all over Eastern Massachusetts.

 Technology department operational objective: To create a mobile app by January 2017 to
offer a better user experience.
 Marketing department operational objective: To increase website visitors by 50% by
January 2017 by advertising on radio, top local food websites, and print ads.
 Sales department operational objective: To increase delivery sales by 30%, by targeting 3 of
Massachusetts’s largest counties.

Sales department operational objective: To increase delivery sales by 30%, by targeting 3 of

Massachusetts’s largest counties.

Production Process

After you create your objectives, you have to think strategically on how you’re going to meet
them. In order to do this, each department (or team) needs to have all the necessary resources
for the production process.

Resources you should think about include the following:

 Suppliers– do you have a supplier (or more) to help you produce your product?
 Equipment & Technology– does each department have the necessary equipment,
technology and software to meet objectives? For instance, in keeping with the pizza business
objective above, necessary tools might include:
o Technology team: app developing software
o Marketing team: software licenses for website analytical tools
o Sales team: headsets, phone systems or virtual phone system technology
 Cost– what is the budget for each department?

In addition to the production process, you’ll also need to describe in detail your operating
process. This will demonstrate to investors that you know exactly how you want your
business to run on a day-to-day basis.

Items to address include:

 Location– where are employees working? Will you need additional facilities?
 Work hours– will employees have a set schedule or flexible work schedule?
 Personnel– who is in charge of making sure department tasks are completed?

Timeline

Creating a timeline with milestones is important for your new business. It keeps everyone
focused and is a good tracking method for efficiency. For instance, if milestones aren’t being
met, you’ll know that it’s time to re-evaluate your production process or consider new hires.

Below are common milestones new businesses should plan for.

Hiring
When you completed your Management Plan Worksheet in the previous course, you jotted
down which key hires you needed right away and which could wait. Make sure you have a
good idea on when you would like those key hires to happen; whether it’s after your company
hits a certain revenue amount or once a certain project takes off.
 Production Milestones
Production milestones keep business on track. These milestones act as “checkpoints” for your
overall department objectives. For instance, if you want to create a new app by the end of the
year, product milestones you outline might include a beta roll out, testing, and various
version releases.

Other product milestones to keep in mind:

 Design phase
 Product prototype phase
 Testing
 Product launch
 Version release

Market Milestones
Market milestones are important for tracking efficiency and understanding whether your
operations plan is working. For instance, a possible market milestone could be reaching a
certain amount of clients or customers after a new product or service is released.

A few other market milestones to consider:

 Gain a certain amount of users/clients by a certain time

 Signing partnerships
 Running a competitive analysis
 Performing a price change evaluation

Financial Milestones
Financial milestones are important for tracking business performance. It’s likely that a board
of directors or investors will work with you on creating financial milestones. In addition, in
startups, it’s common that financial milestones are calculated for 12 months.

Typical financial milestones include:

 Funding events
 Revenue and profit goals
 Transaction goals

Feasibility Analysis Aspects

A well-designed study should offer a historical background of the business or project, such as
a description of the product or service, accounting statements, details of operations and
management, marketing research and policies, financial data, legal requirements, and tax
obligations. Generally, such studies precede technical development and project
implementation.

Five Areas of Project Feasibility

A feasibility study evaluates the project’s potential for success; therefore, perceived
objectivity is an important factor in the credibility of the study for potential investors and
 lending institutions. There are five types of feasibility study—separate areas that a feasibility
study examines, described below.

1. Technical Feasibility – this assessment focuses on the technical resources available to the

organization. It helps organizations determine whether the technical resources meet capacity and
whether the technical team is capable of converting the ideas into working systems. Technical
feasibility also involves evaluation of the hardware, software, and other technology requirements of
the proposed system. As an exaggerated example, an organization wouldn’t want to try to put Star
Trek’s transporters in their building—currently, this project is not technically feasible.
2. Economic Feasibility – this assessment typically involves a cost/ benefits analysis of the
project, helping organizations determine the viability, cost, and benefits associated with a project
before financial resources are allocated. It also serves as an independent project assessment and
enhances project credibility—helping decision makers determine the positive economic benefits to
the organization that the proposed project will provide. 
3. Legal Feasibility – this assessment investigates whether any aspect of the proposed project
conflicts with legal requirements like zoning laws, data protection acts, or social media laws. Let’s
say an organization wants to construct a new office building in a specific location. A feasibility study
might reveal the organization’s ideal location isn’t zoned for that type of business. That organization
has just saved considerable time and effort by learning that their project was not feasible right from
the beginning.
4. Operational Feasibility – this assessment involves undertaking a study to analyze and
determine whether—and how well—the organization’s needs can be met by completing the project.
Operational feasibility studies also analyze how a project plan satisfies the requirements identified in
the requirements analysis phase of system development. 
5. Scheduling Feasibility – this assessment is the most important for project success; after all, a
project will fail if not completed on time. In scheduling feasibility, an organization estimates how
much time the project will take to complete.

When these areas have all been examined, the feasibility study helps identify any constraints
the proposed project may face, including:

 Internal Project Constraints: Technical, Technology, Budget, Resource, etc.

 Internal Corporate Constraints: Financial, Marketing, Export, etc.
 External Constraints: Logistics, Environment, Laws and Regulations, etc.

Benefits of Conducting a Feasibility Study

The importance of a feasibility study is based on organizational desire to “get it right” before
committing resources, time, or budget. A feasibility study might uncover new ideas that could
completely change a project’s scope. It’s best to make these determinations in advance, rather
than to jump in and learning that the project just won’t work. Conducting a feasibility study is
always beneficial to the project as it gives you and other stakeholders a clear picture of the
proposed project. 

Below are some key benefits of conducting a feasibility study:

 Improves project teams’ focus

 Identifies new opportunities
 Provides valuable information for a “go/no-go” decision
 Narrows the business alternatives
 Identifies a valid reason to undertake the project
 Enhances the success rate by evaluating multiple parameters
 Aids decision-making on the project
 Identifies reasons not to proceed

Apart from the approaches to feasibility study listed above, some projects also require for
other constraints to be analyzed – 

Internal Project Constraints: Technical, Technology, Budget, Resource, etc.

Internal Corporate Constraints: Financial, Marketing, Export, etc.
External Constraints: Logistics, Environment, Laws and Regulations, etc.

Economic Analysis
An economic analysis is a process in which business owners gain a clear picture of the
existing economic climate, as it relates to their company’s ability to thrive. Economists,
statisticians, and mathematicians often carry out this analysis on behalf of for-profit and
nonprofit businesses. These types of economic evaluation consist of an in-depth appraisal of
the strengths and weaknesses of the market. An economic analysis isn’t limited to medium or
large-sized businesses, it’s valuable for small companies as well. In fact, small businesses
probably need to perform economic analysis more often than businesses that have enough
built-in capital and resources to sustain an economic downturn. There are several types of
economic evaluation methods business owners can use to gain a comprehensive view of how
their companies will fare in the future.

Cost-Benefit Analysis

One of the most effective types of economic evaluation is the cost-benefit analysis, also
referred to as a benefit-cost analysis. This is a technique used to determine whether a project
or activity is feasible by weighing the monetary cost of doing the project or activity versus
the benefits. A cost-benefit analysis will always compare the cost of the effort against the
benefits that result from that effort. Because it deals solely in monetary terms, a cost-benefit
analysis is one of the most bottom-line types of economic evaluation. It can provide valuable
insight in comparing and contrasting work projects, help determine whether an investment
opportunity is ideal, and help assess the consequences of implementing changes to your
business. However, there is a drawback to this analysis as it is difficult to place a monetary
value on some activities such as the benefits of increased public safety versus the cost to
increase law enforcement presence in major cities. After performing the cost-benefit analysis,
a small business owner can make an educated business decision.

Cost-Effective Analysis

In a cost-effective analysis, you weigh the effectiveness of a project against its price. Unlike
with cost-benefit analysis, however, a low cost doesn’t mean high effectiveness, and the
reverse is also true. For example, let’s say you’ve determined that installing an automated
system that can handle customer orders 24-hours a day, seven days a week, is the cheapest
way to boost your incoming orders. After research, however, you determine that many calls
that come into the automated system are not complete, because callers hang up when they
hear the automated voice on the system. Your market research also indicates that your
customers want to speak to a live representative. A cost-effective analysis would tell you that
the cheaper route of installing an automated system is not effective in processing more
orders. Depending on the type of business you own, you may find that saving money doesn’t
result in creating a desirable effect on your business.

Cost-Minimization Analysis

As the term suggests, cost-minimization analysis focuses on finding the cheapest cost to
complete a project. This is one of the economic evaluation methods that business owners use
when cost savings are at a premium and outweigh all other considerations. It is also used
when there are two or more ways to accomplish the same task. Cost-minimization analysis is
most often used in healthcare. For example, drug manufacturers may compare two drugs that
have been shown to produce the same effect in patients, or a pharmaceutical company may
implement cost-minimization analysis, to determine which of two medications that treat the
same illness will cost the least amount of money to produce. In many instances, the generic
equivalent of a name-brand drug is the least expensive drug to manufacture, especially if it
produces the same therapeutic effect in patients.

Financial Analysis
Financial analysis is the process of evaluating businesses, projects, budgets and other
finance-related entities to determine their performance and suitability. Typically, financial
analysis is used to analyze whether an entity is stable, solvent, liquid or profitable enough to
warrant a monetary investment. When looking at a specific company, a financial analyst
conducts analysis by focusing on the income statement, balance sheet, and cash flow
statement.

Financial analysis is used to evaluate economic trends, set financial policy, build long-term
plans for business activity, and identify projects or companies for investment. This is done
through the synthesis of financial numbers and data.

One of the most common ways to analyze financial data is to calculate ratios from the data to
compare against those of other companies or against the company’s own historical
performance. For example, return on assets (ROA) is a common ratio used to determine how
efficient a company is at using its assets and as a measure of profitability. This ratio could be
calculated for several similar companies and compared as part of a larger analysis.

Financial analysis can be conducted in both corporate finance and investment finance

settings. In corporate finance, the analysis is conducted internally, using such ratios as net
present value (NPV) and internal rate of return (IRR) to find projects worth executing. A key
area of corporate financial analysis involves extrapolating a company’s past performance,
such as gross revenue or profit margin, into an estimate of the company’s future performance.
This allows the business to forecast budgets and make decisions based on past trends, such as
inventory levels.

In investment finance, an outside financial analyst conducts a financial analysis for

investment purposes. Analysts can either conduct a top-down or bottom-up
investment approach. A top-down approach first looks for macroeconomic opportunities,
 such as high-performing sectors, and then drills down to find the best companies within that
sector. A bottom-up approach, on the other hand, looks at a specific company and conducts
similar ratio analysis to corporate financial analysis, looking at past performance and
expected future performance as investment indicators.

Technical and Fundamental Analysis

There are two types of financial analysis: technical analysis and fundamental analysis.
Technical analysis looks at quantitative charts, such as moving averages (MA), while
fundamental analysis uses ratios, such as a company’s earnings per share (EPS).

For example, technical analysis was conducted on the GBP/USD exchange rate after the
results of the Brexit vote in June 2016. Looking at the exchange rate chart, it was determined
that the rate dropped significantly after the vote on June 23, 2016, and then it recovered over
a 48-hour period by 375 basis points (bps).

As an example of fundamental analysis, Discover Financial Services reported first-quarter

2016 results on July 19, 2016. The company had an EPS of $1.40, up from an EPS of $1.33
for the same quarter in 2015, which was a good sign.

Market and Technological feasibility

1. Detailed interviews with stakeholders: The market feasibility study begins with an in-depth
interview with the stakeholders. This is a perfect starting point. The market research team will be
able to familiarize themselves with the projects and its objectives by using an open-discussion
format. This first step is beneficial to both the parties. A stakeholder can be a key personnel in the
enterprise or outside the company. It could also be a person involved in the local economy or any
other key person who plays an in important role in the enterprise’s business plan and who can
provide the market research team with valuable feedback.
2. Meticulous demographic assessment and trend analysis: Demographics assessments are
used to conduct secondary research, analyse the market and perform demand modelling and
estimates. Information like consumer expenditures, population trends, education, age and other
such relevant demographic statistics are collated about the market that you wish to enter into. A
detailed trend analysis is then conducted to search for current industry trends. Important ancillary
data is made a note of. Both these processes can be conducted seamlessly over the internet with the
use of search engines.
3. In-depth quantitative survey: A quantitative survey is used to collect primary data from
among the end-users. The questions that are asked are focussed on the current usage, the predicted
usage and a clear understanding of the impact of the new business idea on the market. This is a very
important step in a market feasibility study, as the questions asked during the quantitative surveys
serves as a foundation for the future demand model and estimate.
4. Careful assessment of competitors: A competitive assessment is created to analyse the
enterprise’s competitors in the proposed market area. Detailed profiles of each competitor is
created by the research team. Mystery shopping calls will be made. Personal visits will also be
conducted to collect non-publically available information, which at times, will not be available
online. By performing an in-depth analysis on competitors, it will help the client spot service/product
gaps, in which they can successfully market themselves in.
5. Demand model with estimates and recommendations: The final step in a market feasibility
study is to compile the first four components and use the findings from each step to develop a
demand model. This model will be used to predict the likelihood and habits of end-customers for the
new business service/product that you wish to market. Predictive modelling will be used to offer you
a figure based on a combination of known factors and assumptions. Based on the estimate, you can
either decide to go ahead or end ties with the proposed business venture.