M.

A COLLEGE ASSOSA CAMPUS

DBA Level III
Unit of Competence: Improve Business Practice
Module Title : Improving Business Practice
UC Code : ICT HNS3 130811
Module Code : ICT HNS3 M131014

Learning outcomes:-
At the end of the module the learner will be able to:
LO1: Diagnose the business
LO2: Benchmark the business
LO3: Develop plans to improve business performance
LO4: Develop marketing and promotional plans
LO5: Develop business growth plans
LO6: Implement and monitor plans
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Information Sheet-1 Diagnose the business

LO 1: Diagnose the Business

Introduction

Any small business is, in many respects, just as complex in its basic structure as any very
large business. (At the begging any business in many respects, just its complex in its basic
structure as any activity we do).

The managers of large corporations such as General Motors, Toyota and Ford are in some
ways, easier because they do not need to know the details of the production processes in the
same way the owner-operator of a corporation must know the production process on the
corporation. It can be very over whelming when looking for solutions to problems within
your business. There needs to be a simple, systematic means of getting to the answers to
business problems.

1.1 Understanding data required

The five basic questions used for diagnosis business data are:-
1. Is there a permanent earnings problem?
2. Is the earnings problem due to the size of the business?
3. Is the problem in operations and/or production efficiency?
4. Is the problem due to enterprise choice or enterprise organization?
5. Is the problem one of marketing?

1.2. Understanding competitive advantage of the business

An advantage that firms has over its competitors allowing it to generate greater sales or
margins and/or retain more customers than its competition. There can be many types of
competitive advantages including the firm's cost structure, product offerings, distribution
network.

1.2.1 Competitive advantage

A competitive advantage is an advantage over competitors gained by offering consumers
greater value, either by means of lower prices or by providing greater benefits and service
that justifies higher prices.
Competitive advantage is defined as the strategic advantage one business entity has over its
rival entities within its competitive industry. Achieving competitive advantage strengthens
and positions a business better within the business environment. When a firm sustains profits
that exceed the average for its industry, the firm is said to possess a competitive advantage
over its rivals. The goal of much of business strategy is to achieve a sustainable competitive
advantage.
Michael Porter identified two basic types of competitive advantage:
1. Cost advantage
2. Differentiation advantage
A competitive advantage exists when the firm is able to deliver the same benefits as
competitors but at a lower cost (cost advantage), or deliver benefits that exceed those of

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competing products (differentiation advantage). Thus, a competitive advantage enables the
firm to create superior value for its customers and superior profits for itself.
Cost and differentiation advantages are known as positional advantages since they describe
the firm's position in the industry as a leader in either cost or differentiation.
A resource-based view emphasizes that a firm utilizes its resources and capabilities to create
a competitive advantage that ultimately results in superior value creation. The following
diagram combines the resource-based and positioning views to illustrate the concept of
competitive advantage:

A Model of Competitive Advantage

Resources

Distinctive
Cost Advantage or Value
Competencies
Differentiation Advantage Creation

Capabilities

Resources and Capabilities

According to the resource-based view, in order to develop a competitive advantage the firm
must have resources and capabilities that are superior to those of its competitors. Without this
superiority, the competitors simply could replicate what the firm was doing and any
advantage quickly would disappear.
Resources are the firm-specific assets useful for creating a cost or differentiation advantage
and that few competitors can acquire easily. The following are some examples of such
resources:
 Patents and trademarks
 Proprietary know-how
 Installed customer base
 Reputation of the firm
 Brand equity
Capabilities refer to the firm's ability to utilize its resources effectively. An example of a
capability is the ability to bring a product to market faster than competitors. Such capabilities
are embedded in the routines of the organization and are not easily documented as procedures
and thus are difficult for competitors to replicate.
The firm's resources and capabilities together form its distinctive competencies. These
competencies enable innovation, efficiency, quality, and customer responsiveness, all of
which can be leveraged to create a cost advantage or a differentiation advantage.

Cost Advantage and Differentiation Advantage

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Competitive advantage is created by using resources and capabilities to achieve either a lower
cost structure or a differentiated product. A firm positions itself in its industry through its
choice of low cost or differentiation. This decision is a central component of the firm's
competitive strategy.
Another important decision is how broad or narrow a market segment to target. Porter formed
a matrix using cost advantage, differentiation advantage, and a broad or narrow focus to
identify a set of generic strategies that the firm can pursue to create and sustain a competitive
advantage.

Value Creation
The firm creates value by performing a series of activities that Porter identified as the value
chain. In addition to the firm's own value-creating activities, the firm operates in a value
system of vertical activities including those of upstream suppliers and downstream channel
members.
To achieve a competitive advantage, the firm must perform one or more value creating
activities in a way that creates more overall value than do competitors. Superior value is
created through lower costs or superior benefits to the consumer (differentiation).
How competitive advantages can effectively be developed
What to Cover – Carefully evaluate established or emerging competitors in the market to
identify their strengths. Consider their weaknesses and what opportunities this creates for a
new company to potentially establish a foothold in the market by addressing those gaps. Also
evaluate companies that have established a leadership position in other markets for ideas and
examples of how competitive advantages can effectively be developed.
Review what is known about the competitive landscape to understand factors in the external
environment that may be a source of competitive advantage. Then, name the competitive
advantages that these companies have developed (i.e., what they do well that others cannot
easily imitate), as well as the business strategies they have put into place to capitalize on
them.
Where to Look:–
Analyst Reports – If players in the competitive landscape are public, carefully review
analyst reports for clues regarding a company’s core assets, strengths, and sources of
competitive advantage. These publications may also provide information about the chosen
business strategies of public companies.
Personal Networks – Network with individuals in the field to gain insight into the
competitive advantages and supporting business strategies that have been chosen by these
companies, how well their strategies support their competitive advantages, and any
difficulties they have encountered along the way (which might convert into opportunities for
a new competitor).
Market Analysis –Operating Plan & Financial Model and Funding Sources or other ideas
for investigating companies of interest.

1.2.2 Competitive Strategies

Following on from his work analyzing the competitive forces in an industry, Michael Porter
suggested four "generic" business strategies that could be adopted in order to gain
competitive advantage. The four strategies relate to the extent to which the scope of a
business' activities are narrow versus broad and the extent to which a business seeks to
differentiate its products.
The four strategies are summarized in the figure below:

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The differentiation and cost leadership strategies seek competitive advantage in a broad range
of market or industry segments. By contrast, the differentiation focus and cost focus
strategies are adopted in a narrow market or industry.
Strategy - Differentiation
This strategy involves selecting one or more criteria used by buyers in a market - and then
positioning the business uniquely to meet those criteria. This strategy is usually associated
with charging a premium price for the product - often to reflect the higher production costs
and extra value-added features provided for the consumer. Differentiation is about charging a
premium price that more than covers the additional production costs, and about giving
customers clear reasons to prefer the product over other, less differentiated products.
Examples of Differentiation Strategy: Mercedes cars; Bang & Olufsen.
Strategy - Cost Leadership
With this strategy, the objective is to become the lowest-cost producer in the industry. Many
(perhaps all) market segments in the industry are supplied with the emphasis placed
minimizing costs. If the achieved selling price can at least equal (or near) the average for the
market, then the lowest-cost producer will (in theory) enjoy the best profits. This strategy is
usually associated with large-scale businesses offering "standard" products with relatively
little differentiation that are perfectly acceptable to the majority of customers. Examples of
Cost Leadership: Nissan; Tesco; Dell Computers
Strategy - Differentiation Focus
In the differentiation focus strategy, a business aims to differentiate within just one or a small
number of target market segments. The special customer needs of the segment mean that
there are opportunities to provide products that are clearly different from competitors who
may be targeting a broader group of customers. The important issue for any business
adopting this strategy is to ensure that customers really do have different needs and wants - in
other words that there is a valid basis for differentiation and that existing competitor product
are not meeting those needs and wants.
Examples of Differentiation Focus: any successful niche retailers; (e.g. The Perfume Shop);
or specialist holiday operator (e.g. Carrier)
Strategy - Cost Focus
Here a business seeks a lower-cost advantage in just one or a small number of market
segments. The product will be basic perhaps a similar product to the higher-priced and

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featured market leader, but acceptable to sufficient consumers. Such products are often called
"me-too's".
Examples of Cost Focus: Many smaller retailers featuring own-label or discounted label
products.
1.3 Methods of SWOT Analysis
A SWOT analysis is a subjective assessment of data which is organized by the SWOT format
into a logical order that helps understanding, presentation, discussion and decision-making.
SWOT analysis can be used for all sorts of decision-making, and the SWOT template enables
proactive thinking, rather than relying on habitual or instinctive reactions.
The SWOT analysis template is normally presented as a grid, comprising four sections, one
for each of the SWOT headings: Strengths, Weaknesses, Opportunities, and Threats.

The SWOT analysis in this format acts as a quick decision-making tool, quite aside from the
more detailed data that would typically be feed into business planning process for each of the
SWOT factors. Here the 2x2 matrix model automatically suggests actions for issues arising
from the SWOT analysis, according to four different categories:

SWOT analysis, with its four elements in a 2x2 matrix.

SWOT analysis (alternately SLOT analysis) is a strategic planning method used to evaluate
the Strengths, Weaknesses/Limitations, Opportunities, and Threats involved in a project or in
a business venture. It involves specifying the objective of the business venture or project and
identifying the internal and external factors that are favourable and unfavourable to achieve
that objective. The technique is credited to Albert Humphrey, who led a convention at the
Stanford Research Institute (now SRI International) in the 1960s and 1970s using data from
Fortune 500 companies.
Setting the objective should be done after the SWOT analysis has been performed. This
would allow achievable goals or objectives to be set for the organization.
Strengths: characteristics of the business, or project team that give it an advantage over
others.
Weaknesses (or Limitations): are characteristics that place the team at a disadvantage relative
to others.
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Opportunities: external chances to improve performance (e.g. make greater profits) in the
environment.
Threats: external elements in the environment that could cause trouble for the business or
project.
Identification of SWOTs is essential because subsequent steps in the process of planning for
achievement of the selected objective may be derived from the SWOTs.

Self-Check 1 Written Test

Please try to answer the following questions listed below by using the answer sheet
provided below.

1. Identify SWOT analysis.

2. Explain competitive advantage of a business.

3. List the five basic questions used to diagnosis business data.

4. Write and explain four business strategies that could be adopted in order to gain
competitive advantage.

5. Write two basic types of competitive advantage identified Michael Porter.

6. What is the difference between resource and capabilities?

Name: _________________________ Date: _______________

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Information Sheet-2 Benchmark the business

LO 2: Benchmark the Business

Benchmarking

What is Benchmarking?

Benchmarking is the process of comparing one's business processes and performance metrics
to industry bests and/or best practices from other industries. Dimensions typically measured
are quality, time and cost. In the process of benchmarking management identifies the best
firms in their industry or in another industry where similar processes exist, and compare the
results and processes of those studied (the "targets") to one's own results and processes. In
this way they learn how well the targets perform and more importantly the business processes
that explain why these firms are successful.

The term benchmarking was first used by cobblers to measure people's feet for shoes. They
would place someone's foot on a "bench" and mark it out to make the pattern for the shoes.
Benchmarking is used to measure performance using a specific indicator (cost per unit of
measure, Productivity per unit of measure, cycle time of x per unit of measure or defects per
unit of measure) resulting in a metric of performance that is then compared to others. Also
referred to as "best practice benchmarking" or "process benchmarking", this process is used
in management and particularly strategic management, in which organizations evaluate
various aspects of their processes in relation to best practice companies' processes, usually
within a peer group defined for the purposes of comparison. This then allows organizations to
develop plans on how to make improvements or adapt specific best practices, usually with the
aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is
often treated as a continuous process in which organizations continually seek to improve their
practices.

2.1 Methods of Identifying Benchmarking Data

Identify problem areas - Because benchmarking can be applied to any business process or
function, a range of research techniques may be required. They include: informal
conversations with customers, employees, or suppliers; exploratory research techniques such
as focus groups and or in-depth marketing research, quantitative research, surveys,
questionnaires, re-engineering analysis, process mapping, quality control variance reports,
financial ratio analysis, or simply reviewing cycle times or other performance indicators.
Before embarking on comparison with other organizations it is essential to know the
organization's function and processes; base lining performance provides a point against which
improvement effort can be measured.

Identify other industries that have similar processes - For instance if one were interested in
improving hand offs in addiction treatment one would try to identify other fields that also

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have hand off challenges. These could include air traffic control, cell phone switching
between towers, transfer of patients from surgery to recovery rooms.

Identify organizations that are leaders in these areas - Look for the very best in any industry
and in any country. Consult customers, suppliers financial analysts, trade associations, and
magazines to determine which companies are worthy of study.

Survey companies for measures and practices - Companies target specific business
processes using detailed surveys of measures and practices used to identify business process
alternatives and leading companies. Surveys are typically masked to protect confidential data
by neutral associations and consultants.

Visit the "best practice" companies to identify leading edge practices - Companies typically
agree to mutually exchange information beneficial to all parties in a benchmarking group and
share the results within the group.

Implement new and improved business practices - Take the leading edge practices and
develop implementation plans which include identification of specific opportunities, funding
the project and selling the ideas to the organization for the purpose of gaining demonstrated
value from the process.

2.2 Techniques of developing key indicators of benchmark

The technique initially used to compare existing corporate strategies with a view to achieving
the best possible performance in new situations has recently been extended to the comparison
of technical products. (See above), this process is usually referred to as "technical
benchmarking" or "product benchmarking". Its use is well-developed within the automotive
industry ("automotive benchmarking"), where it is vital to design products that match precise
user expectations, at minimal cost, by applying the best technologies available worldwide.
Data is obtained by fully disassembling existing cars and their systems. Such analyses were
initially carried out in-house by car makers and their suppliers. However as these analyses are
expensive they are increasingly being outsourced to companies who specialize in this area.
Outsourcing has enabled a drastic decrease in costs for each company (by cost sharing) and
the development of efficient tools (standards, software).

2.2.1 An Overview of Benchmarking from Different Perspectives

Process benchmarking is the initiating firm focuses its observation and investigation of
business processes with a goal of identifying and observing the best practices from one or
more benchmark firms. Activity analysis will be required where the objective is to
benchmark cost and efficiency; increasingly applied to back-office processes where
outsourcing may be a consideration.

Financial benchmarking is performing a financial analysis and comparing the results in an

effort to assess your overall competitiveness and productivity.

Benchmarking from an investor perspective is extending the benchmarking compare to peer

companies that can be considered alternative investment opportunities from the perspective
of an investor.

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Performance benchmarking- allows the initiator firm to assess their competitive position by
comparing products and services with those of target firms.

Product benchmarking- the process of designing new products or upgrades to current ones.
This process can sometimes involve reverse engineering which is taking apart competitors
products to find strengths and weaknesses.

Strategic benchmarking - involves observing how others compute. This type is usually not
necessary for all industries, meaning it is best depends to look at other industries.

Functional benchmarking - a company will focus its benchmarking on a single function to

improve the operation of that particular function. Complex functions such as Human
Resources, Finance and Accounting and Information and Communication Technology are
unlikely to be directly comparable in cost and efficiency terms and may need to be
disaggregated into processes to make valid comparison.

Best-in-class benchmarking - involves studying the leading competitor or the company that
best carries out a specific function.

Operational benchmarking - embraces everything from staffing and productivity to office

flow and analysis of procedures performed.

Energy benchmarking - process of collecting, analyzing and relating energy performance

data of comparable activities with the purpose of evaluating and comparing performance
between or within entities. Entities can include processes, buildings or companies.
Benchmarking may be internal between entities within a single organization, or - subject to
confidentiality restrictions - external between competing entities Benchmarking software can
be used to organize large and complex amounts of information. Software packages can
extend the concept of benchmarking and competitive analysis by allowing individuals to
handle such large and complex amounts or strategies. Such tools support different types of
benchmarking and can reduce the above costs significantly.

2.3. Procedures of Analyzing Data and Determines Area of Improvement

There is no single benchmarking process that has been universally adopted. The widely
applied and acceptable benchmarking has led to the emergence of various benchmarking
methodologies. One seminal book on benchmarking is Box well’s Benchmarking for
Competitive Advantage. The first book on benchmarking written and published by Kaiser
associates is a practical guide and offers a 7-step approach. Robert Camp (who wrote one of
the earliest books on benchmarking in 1989 developed a 12-stage approach to benchmarking.

The 12 stage methodology consists of:

1. Select subject 5. Collect data and select partners

2. Define the process 6. Determine the gap

3. Identify potential partners 7. Establish process differences

4. Identify data sources 8. Target future performance

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9. Communicate 11. Implement

10. Adjust goal 12. Review and recalibrate

Self-Check 2 Written Test

Answer all the questions listed below-use the answer sheet provided below

1. Define the term “benchmarking”.

2. Describe techniques and procedures of benchmarking.

3. Write some overview of Benchmarking from Different Perspectives.

4. Write methods of identifying benchmarking data.

5. What is Energy benchmarking mean?

Answer Sheet

Name: _________________________ Date: ______________

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Information Sheet-3 Develop plans to improve business performance

LO3: Develop Plans to Improve Business Performance

Introduction

Markets are situations in which people exchange goods and services. If you have money and
want produce, and a farmer has produce and wants money, a trade can make you both better
off. Consumers’ willingness to pay for a particular type of food (such as organically raised
vegetables) may induce some farmers to offer products that better meet people’s needs. In
this way, markets can efficiently allocate scarce resources, maximizing consumer value and
productivity. In recent decades there has been increased enthusiasm for market solutions to
various problems, including transportation problems.

3.1 Understanding Relevant Marketing Principle

The term ‘Marketing’ has been defined in many ways by different authorities. It is useful to
pause for a while and consult some of these.

Definitions: should be principle of market instead of marketing.

a) Marketing consists of the performance of business activities that direct the flow of goods
and services from producer to consumer or user (American Marketing Association).

b) Marketing is the management function that organizes and directs all business activities
involved in assessing and converting consumer purchasing power into effective demand for a
specific product or service, and in moving it to the final consumer or user so as to achieve the
profit target or other objectives set by the company (British Institute of Marketing).

c) Marketing is a social process by which individuals and groups obtain what they need and
want through creating and exchanging products and value with others (Kotler, 1984).

d) Marketing is a total system of business activities designed to plan, price, promote and
distribute want-satisfying goods and services to present and potential customers (Stanton,
1964).

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e) Marketing is the business function that identifies customers ‘needs and wants, determines
which target markets the organization can serve best, and designs appropriate products,
services, and programs to serve these markets (Kotler and Armstrong, 1996).

These definitions are better explained through the examination of the following terms: needs,
wants, demands, products, exchange, and some others.

Needs- the most basic concept underlying marketing is that of human needs. Human needs
are states of felt deprivation. These needs include basic physical needs for food, clothing,
shelter and safety; social needs for belonging and affection; and individual needs for
knowledge and self expression.

The needs are in-built in human nature itself. It is not invented by marketers. That is, they
naturally exist in the composition of human biology and human condition. When the needs
are not satisfied, a person will try to reduce the need or look for an object that will satisfy

Wants- Human wants are desires for specific satisfaction of deeper needs. For example, a
man in the village needs rain and food and wants fertilizer. Also, a man may want yam, rice,
body cream, a bag, a wrist-watch, and etc. but needs money. Human needs may be few, but
their wants are numerous. These wants are continually shaped and re-shaped by social forces
and institutions such as families, church, schools and business corporations. Marketers do not
create needs; needs pre-exist in marketing. Marketers, along with other operatives in society,
influence wants. They suggest and inform consumers about certain products and persuade
them to purchase, stressing the benefits of such products.

Demands- People have almost unlimited wants but limited resources. They want to choose
products that provide the most value and satisfaction for their money. When backed by
purchasing power, wants become demand. That is, demand want for specific products that
backed up by an ability and willingness to buy them. For example, many desire a car such as
Mercedes Benz, Toyota, BMW, Honda etc. but only a few are really willing and able to buy
one. It is therefore important for marketing executives to measure not only how many people
want their company’s products, but also measure how many of them would actually be
willing and able to buy them.

Products- People normally satisfy their wants and needs with products offered in the
market. Broadly, a product can be defined as anything that can be offered to someone to
satisfy a need or want. Specifically, a product can be defined as an object, service, activity,
person, place, organization or idea. It should be noted that people do not buy physical objects
for their own sake. For example a lipstick is bought to supply service (beautify); toothpaste
for whiter teeth – prevent germs or give fresh breath or sex appeal. The marketer’s job is to
sell the service packages built into physical products. If one critically looks at physical
products, one realizes that their importance lies not so much in owning them as in using them
to satisfy our wants. For example, we do not buy a bed just to admire it, but because it aids
resting better.

Exchange- Marketing takes place when people decide to satisfy needs and wants through
exchange. Exchange is therefore the act of obtaining a desired object from someone by
offering something in return. Exchange is only one of the many ways people can obtain a
desired object. For example, hungry people can find food by hunting, fishing or gathering
fruits.
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Relationship Marketing

Relationship marketing is a process of creating, maintaining and enhancing strong value-

laden relationships with customers and other.

Markets

A market is defined as a set of all actual and potential buyers of a product and service. These
buyers share particular needs or wants that can be satisfied through exchange. The size of a
market depends on the need of people with common needs and has resources to engage in
exchange, and is willing to offer these resources in exchange for what they want.

Originally, the term ‘market’ stood for the place where buyers and sellers gathered to
exchange their goods, such as a village square.

However, Economists often use the term to refer to a collection of buyers and sellers who
transact in a particular product class, such as clothing market electronic market, cattle market,
etc.

Marketers- A marketer is someone seeking a resource from someone else and willing to
offer something of value in exchange. A marketer could be a buyer and a seller. For example
Mr. X sells TV to Mr. Y or Mr. X produces TV sets in XYZ Company which he bought for
personal use.

Functions of Marketing

1. Product Planning and Development: Product planning starts with idea generation, idea
screening and development of a prototype product. It also takes into consideration the
purchasing power of the consumers, taste and market segmentation. Research and
development is established for the analyses of ideas generated.

2. Standardization and Grading: This is concerned with setting certain standards/levels to

accomplish the produced goods. This is carried out by the production department and
regulated by some government agencies, such as Standards Organization of Nigeria. For
example, Sprite is 30 cl, Coke is 35 cl, etc.

3. Buying and Assembling: Here, we are concerned with the marketing institutions that
purchase goods or services at cheaper prices in order to resell at minimum prices to the end-
users. These marketing institutions include the wholesalers, retailers and agents.

(A) Selling: This is concerned with selling of the finished goods to the end-users either
through the manufacturers or the marketing channels. In order to get the attention of their
target consumers, they embark on various promotional strategies, such as discounts, bundle
sales, bonuses, etc.

(B) Physical Distribution

1. Storage: Storing of goods to meet future demands and for time and other utilities.

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2. Transportation: The movement of goods from the manufacturer down to the target
consumers. This includes material handling, warehousing, etc.

(C) Auxiliary Function

1. Marketing Finance: That is, allowing credits to customers and as well as obtaining credit
from customers, such as Banks, individuals etc.

2. Risk-Bearing: Risk means ‘uncertainty’. Entering into a business entails risks, such as loss
of items, road attack, weather risk, etc.

3.2 Procedures for improvement of workflow

A workflow consists of a sequence of concatenated (connected) steps. Emphasis is on the

flow paradigm, where each step follows the precedent without delay or gap and ends just
before the subsequent step may begin. This concept is related to non overlapping tasks of
single resources.

It is a depiction of a sequence of operations, declared as work of a person, a group of persons,

an organization of staff, or one or more simple or complex mechanisms. Workflow may be
seen as any abstraction of real work. For control purposes, workflow may be a view on real
work under a chosen aspect, thus serving as a virtual representation of actual work. The flow
being described may refer to a document or product that is being transferred from one step to
another. Workflow concepts are closely related to other concepts used to describe
organizational structure, such as silos, functions, teams, projects, policies and hierarchies.
Workflows may be viewed as one primitive building block of organizations.

The following steps show the workflow procedures of an operation.

1. Processes: A process is a more specific notion than workflow and can apply to physical
or biological processes, for instance. In the context of concepts surrounding work, a
process may be distinguished from a workflow by the fact that it has well-defined
inputs, outputs and purposes, while the notion of workflow may apply more generally to
any systematic pattern of activity (such as all processes occurring in a machine shop).
2. Planning and scheduling: A plan is a description of the logically necessary, partially
ordered set of activities required to accomplish a specific goal given certain starting
conditions. A plan, when augmented with a schedule and resource allocation
calculations, completely defines a particular instance of systematic processing in pursuit
of a goal. A workflow may be viewed as an (often optimal or near-optimal) realization
of the mechanisms required to execute the same plan repeatedly.
3. Flow control is a control concept applied to workflows, to distinguish from static
control of buffers of material or orders, to mean instead a more dynamic control of flow
speed and flow volumes in motion and in process. Such orientation to dynamic aspects
is the basic foundation to prepare for more advanced job shop controls, such as just-in-
time or just-in-sequence.
4. In-transit visibility is a monitoring concept that applies to transported material as well
as to work in process or work in progress, i.e., workflow.

3.3. Method of Developing Business Plan

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Definition of Business plan

A business plan is a formal statement of a set of business goals, the reasons they are believed
attainable, and the plan for reaching those goals. It may also contain background information
about the organization or team attempting to reach those goals.

Business plans may also target changes in perception and branding by the customer, client,
taxpayer, or larger community. When the existing business is to assume a major change or
when planning a new venture, a 3 to 5 year business plan is required, since investors will look
for their annual return in that timeframe.

3.3.1 Method of developing business plan

There are different methods of developing business plan out of the different methods some
selected methods are provided below.

1. Audience

Business plans may be internally or externally focused. Externally focused plans target goals
that are important to external stakeholders, particularly financial stakeholders. They typically
have detailed information about the organization or team attempting to reach the goals. With
for-profit entities, external stakeholders include investors and customers. External stake-
holders of non-profits include donors and the clients of the non-profit's services. For
government agencies, external stakeholders include tax-payers, higher-level government
agencies, and international lending bodies such as the International Monetary Fund, the
World Bank, various economic agencies of the United Nations, and development banks.

Internally focused business plans target intermediate goals required to reach the external
goals. They may cover the development of a new product, a new service, a new IT system, a
restructuring of finance, the refurbishing of a factory or a restructuring of the organization.
An internal business plan is often developed in conjunction with a balanced scorecard or a list
of critical success factors. This allows success of the plan to be measured using non-financial
measures. Business plans that identify and target internal goals, but provide only general
guidance on how they will be met are called strategic plans.

Operational plans describe the goals of an internal organization, working group or

department. Project plans, sometimes known as project frameworks, describe the goals of a
particular project. They may also address the project's place within the organization's larger
strategic goals.

2. Content

Business plans are decision-making tools. There is no fixed content for a business plan.
Rather the content and format of the business plan is determined by the goals and audience. A
business plan represents all aspects of business planning process declaring vision and strategy
alongside sub-plans to cover marketing, finance, operations, human resources as well as a
legal plan, when required. A business plan is a summary of those disciplinary plans.

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A good business plan can help to make a good business credible, understandable, and
attractive to someone who is unfamiliar with the business. Writing a good business plan can’t
guarantee success, but it can go a long way toward reducing the odds of failure

3. Presentation formats

The format of a business plan depends on its presentation context. It is not uncommon for
businesses, especially start-ups to have three or four formats for the same business plan:

 An "elevator pitch" - a three minute summary of the business plan's executive

summary. This is often used as a teaser to awaken the interest of potential funders,
customers, or strategic partners.
 an oral presentation - a hopefully entertaining slide show and oral narrative that is
meant to trigger discussion and interest potential investors in reading the written
presentation. The content of the presentation is usually limited to the executive
summary and a few key graphs showing financial trends and key decision making
benchmarks. If a new product is being proposed and time permits, a demonstration of
the product may also be included.
 A written presentation for external stakeholders - a detailed, well written, and
pleasingly formatted plan targeted at external stakeholders.

 An internal operational plan - a detailed plan describing planning details that are
needed by management but may not be of interest to external stakeholders. Such plans
have a somewhat higher degree of candor and informality than the version targeted at
external stakeholders and others.

Typical structures for a business plan for a start up venture are

 cover page and table of contents

 executive summary
 business description
 business environment analysis
 industry background
 competitor analysis
 market analysis
 marketing plan
 operations plan
 management summary
 financial plan
 attachments and milestones

4. Revisiting the business plan

Cost overruns and revenue shortfalls

Cost and revenue estimates are central to any business plan for deciding the viability of the
planned venture. But costs are often underestimated and revenues overestimated resulting in
later cost overruns, revenue shortfalls, and possibly non-viability. The main causes of cost
overruns and revenue shortfalls are optimism bias and strategic misrepresentation. Reference

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class forecasting has been developed to reduce the risks of cost overruns and revenue
shortfalls and thus generate more accurate business plans.

5. Legal and liability issues

Disclosure requirements

An externally targeted business plan should list all legal concerns and financial liabilities that
might negatively affect investors. Depending on the amount of funds being raised and the
audience to whom the plan is presented, failure to do this may have severe legal
consequences.

6. Open business plans

Traditionally business plans have been highly confidential and quite limited in audience. The
business plan itself is generally regarded as secret. However the emergence of free software
and open source has opened the model and made the notion of an open business plan
possible.

An open business plan is a business plan with unlimited audience. The business plan is
typically web published and made available to all. In the free software and open source
business model, trade secrets, copyright and patents can no longer be used as effective
locking mechanisms to provide sustainable advantages to a particular business and therefore a
secret business plan is less relevant in those models.

7. Not for profit businesses

The business goals may be defined both for non-profit or for-profit organizations. For-profit
business plans typically focus on financial goals, such as profit or creation of wealth. Non-
profit, as well as government agency business plans tend to focus on the "organizational
mission" which is the basis for their governmental status or their non-profit, tax-exempt
status, respectively—although non-profits may also focus on optimizing revenue.

The primary difference between profit and non-profit organizations is that "for-profit"
organizations look to maximize wealth versus non-profit organizations, which look to provide
a greater good to society. In non-profit organizations, creative tensions may develop in the
effort to balance mission with "margin" (or revenue).

8. Satires

The business plan is the subject of many satires. Satires are used both to express cynicism
about business plans and as an educational tool to improve the quality of business plans. For
example, Five Criteria for a successful business plan in biotech uses Dilbert comic strips to
remind people of what not to do when researching and writing a business plan for a biotech
start-up. Scott Adams, the author of Dilbert, is an MBA graduate (U.C. Berkeley) who sees
humor as a critical tool that can improve the behavior of businesses and their managers. He
has written numerous critiques of business practices, including business planning.

The Best Method for Developing a Business Process Plan

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By Jerry Garner, Demand Media

When you are either starting up a new business or changing the process of how you conduct
your already started business, there are many ways it can be done. Some processes are better
than others as you are sure to find out. Even though they may take a little more time,
developing these methods are worth it and will result in a better business process plan.

Workforce

Every employee that you have is somehow involved in the process of your business because
of the skills that they contribute. Decide who amongst these individuals are best to help in the
making of the business process plan. Base your decisions on experience and knowledge of
the area as some will have great working skills but not these other two qualities that are
needed. Discuss developing a training program for every employee. Anyone who is not
familiar with the processes that you business will be taking on must be trained to work in the
business the same way. This way all of the employees will have the same knowledge base.

Goals

Develop a common goal for everyone to work towards and create ways to accomplish this.
This generally means thinking of objectives that represent reference points along the way to
achieve those goals. Many times this means changing workloads or positions, and even
adding new ones and eliminating old ones. Create a system of workload management such as
hiring a student to help with heavier workloads when they arrive. Write all of these plans
down for each employee to read and obtain an appreciation for. In the written statement,
make the objectives clear, measurable, realistic and acceptable. They should also be given a
good time frame that doesn't extend an individual's abilities to a greater extent than what is
possible. In the future, when an objective is reached, make a note of that as well and
announce it.

Accountability

Clearly state the people responsible for each activity, type of work and so on. Check that
these individuals are taking account for their responsibilities. This review needs to be done
regularly as it is easy for this type of thing to slip if the rules are relaxed. Deviations from the
plan should be allowed in certain circumstances, but another plan should always be made.
Evaluate the new business process plan regularly and make any adjustments either to the plan
or to the actions taken if needed. Arrange for a way of receiving feedback from managers,
supervisors, employees, and others regarding this process plan. Communicate with each other
and make it understood that any comments whether positive or negative should be made
known to a manager for the appropriate action to be taken.

3.3.2 What are the steps in the planning process?

A business plan should not be something you prepare once, then put on a shelf and forget.
Dynamic planning should be an integral part of managing your business. Most successful
ventures prepare a three-to-five year business plan every year. This involves updating last
year’s business plan by comparing the planned figures and goals with results achieved and
taking into account changes new information, experiences and new ideas.

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The steps involved in the business planning process are the following:

1. Assessing the situation

2. Developing a mission

3. Getting ready

4. Setting goals

5. Working out the business plan

6. Setting employee objectives

7. Monitoring the process

3.4 Understanding of organizational structure

An organizational structure consists of activities such as task allocation, coordination and

supervision, which are directed towards the achievement of organizational aims. It can also
be considered as the viewing glass or perspective through which individuals see their
organization and its environment.

Organizations are a variant of clustered entities.

An organization can be structured in many different ways, depending on their objectives. The
structure of an organization will determine the modes in which it operates and performs.

Organizational structure allows the expressed allocation of responsibilities for different

functions and processes to different entities such as the branch, department, workgroup and
individual.

Organizational structure affects organizational action in two big ways. First, it provides the
foundation on which standard operating procedures and routines rest. Second, it determines
which individuals get to participate in which decision-making processes, and thus to what
extent their views shape the organization’s actions.

3.4.1 Operational organizations and Informal organizations

Informal organization and Formal organization

The set organizational structure may not coincide with facts, evolving in operational action.
Such divergence decreases performance, when growing. E.g., a wrong organizational
structure may hamper cooperation and thus hinder the completion of orders in due time and
within limits of resources and budgets. Organizational structures shall be adaptive to process
requirements, aiming to optimize the ratio of effort and input to output.

3.4.2 Organizational structure types

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Pre-bureaucratic structures

Pre-bureaucratic (entrepreneurial) structures lack standardization of tasks. This structure is

most common in smaller organizations and is best used to solve simple tasks. The structure is
totally centralized. The strategic leader makes all key decisions and most communication is
done by one on one conversations. It is particularly useful for new (entrepreneurial) business
as it enables the founder to control growth and development.

Bureaucratic structures

Weber (1948, p. 214) gives the analogy that “the fully developed bureaucratic mechanism
compares with other organizations exactly as does the machine compare with the non-
mechanical modes of production. Precision, speed, un ambiguity strict subordination,
reduction of friction and of material and personal costs- these are raised to the optimum point
in the strictly bureaucratic administration. Bureaucratic structures have a certain degree of
standardization. They are better suited for more complex or larger scale organizations,
usually adopting a tall structure. The tension between bureaucratic structures and non-
bureaucratic is echoed in Burns and Stalker's distinction between mechanistic and organic
structures. The Weber and characteristics of bureaucracy are:

 Clear defined roles and responsibilities

 A hierarchical structure
 Respect for merit.

Post-bureaucratic

The term of post bureaucratic is used in two senses in the organizational literature: one
generic and one much more specific. In the generic sense the term post bureaucratic is often
used to describe a range of ideas developed since the 1980s that specifically contrast
themselves with Weber's ideal type bureaucracy. This may include total quality management,
culture management and matrix management, amongst others.

Functional structure

Employees within the functional divisions of an organization tend to perform a specialized

set of tasks, for instance the engineering department would be staffed only with software
engineers. This leads to operational efficiencies within that group. However it could also lead
to a lack of communication between the functional groups within an organization, making the
organization slow and inflexible.

As a whole, a functional organization is best suited as a producer of standardized goods and

services at large volume and low cost. Coordination and specialization of tasks are
centralized in a functional structure, which makes producing a limited amount of products or
services efficient and predictable. Moreover, efficiencies can further be realized as functional
organizations integrate their activities vertically so that products are sold and distributed
quickly and at low cost. For instance, a small business could make components used in
production of its products instead of buying them. This benefits the organization and
employees faiths.

Divisional structure
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Also called a "product structure", the divisional structure groups each organizational function
into a division. Each division within a divisional structure contains all the necessary resources
and functions within it. Divisions can be categorized from different points of view. One
might make distinctions on a geographical basis (a AU division and an EU division, for
example) or on product/service basis (different products for different customers: households
or companies). In another example, an automobile company with a divisional structure might
have one division for SUVs, another division for subcompact cars, and another division for
sedans. Each division may have its own sales, engineering and marketing departments.

Matrix structure

The matrix structure groups employees by both function and product. This structure can
combine the best of both separate structures. A matrix organization frequently uses teams of
employees to accomplish work, in order to take advantage of the strengths, as well as make
up for the weaknesses, of functional and decentralized forms. An example would be a
company that produces two products, "product a" and "product b". Using the matrix structure,
this company would organize functions within the company as follows: "product a" sales
department, "product a" customer service department, "product a" accounting, "product b"
sales department, "product b" customer service department, "product b" accounting
department. Matrix structure is amongst the purest of organizational structures, a simple
lattice emulating order and regularity demonstrated in nature.

 Weak/Functional Matrix: A project manager with only limited authority is assigned

to oversee the cross- functional aspects of the project. The functional managers
maintain control over their resources and project areas.
 Balanced/Functional Matrix: A project manager is assigned to oversee the project.
Power is shared equally between the project manager and the functional managers. It
brings the best aspects of functional and project zed organizations. However, this is
the most difficult system to maintain as the sharing power is delicate proposition.
 Strong/Project Matrix: A project manager is primarily responsible for the project.
Functional managers provide technical expertise and assign resources as needed.

3.4.3 Format and organization of a business plan

Before discussing the content (substance) of a business plan, it is important to consider some
basic issues regarding its format and presentation. If the plan has to look professional and to
be a useful tool, then there are a number of points that require special attention, as discussed
below.

• The cover page- The purpose of a cover page is to tell readers what they are about to read
and how to reach the author. The cover of the document is often the first impression of a
business that any interested parties or investors get. Your cover page is also a way to make
your business plan noticed. Financiers receive numerous business plans every week, but
something as simple as a cover page on good-quality paper may attract their attention (and
thus ensure that they give higher priority to the business plan). Your cover should bear the
words "Business Plan" and should include: The legal name of the business; the entity's logo
(If you have spent time and effort on a company logo, slogan or other identifying graphic or
text, the cover page is the place to put it. If you have not considered these basic marketing
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tools, you are advised to do so. Building an identity is vital if you want people to recognize
and remember your business).

The date of preparation or modification of the document, and the period it covers:

The address

The telephone number

The fax number, the e-mail address and website (Internet address) if applicable other contact
information, if any.

• Table of contents: Your table of contents provides readers with a quick and easy way to
find individual sections in the plan. Be sure to list headings for major sections as well as for
important subsections. If your table of contents is more than one page long, reconsider the
length of the entries, the length of your plan and the number of documents you have attached.

• Paper: Print the plan on good-quality paper. Print on one side of the paper only.

• Contact person: Be sure to include identifying information for the business and to name
the person who should be contacted regarding the plan.

• Fonts: Use a typeface that is easy to read and a font size that is large enough to prevent eye
strain. This may require tables with financial projections to be spread over several pages in
order to maintain legibility.

• Margins: Maintain reasonably wide margins. These are useful to readers for noting their
questions and comments. • Terms and acronyms. If your business uses specialized
terminology or acronyms, use them sparingly and be sure that you define any terms that
someone outside your area of expertise would not know.

• Page numbers: Number the pages, and be sure that these numbers are correct in the table
of contents.

• Size of document: Keep the plan short and concise. Limit the inclusion of extraneous
material. You can always provide additional detail in an appendix, if required.

• Samples: Include in the appendix samples of advertisements, marketing material and any
other information that aids the presentation of your plan.

• Editing: Be certain to edit the document carefully. Spelling mistakes and grammatical
errors do not make a good impression. Modern word-processing software provides effective
spelling and grammar checking tools - use them. It is worth while having one or two persons
to read and check the text and figures again.

• Binding: Bind the document so that it lies flat when opened.

• Overall quality of presentation: Do not go overboard on expensive binders, binding,

embossing etc. According the form of the plan more importance than its substance can raise
doubts among those reading it. But not let it look cheap or sloppy.
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Organizational structure

In planning your business you have most probably thought about how you would like to
structure the company, i.e. divide it in distinct functional units.You probably have also
identified the head of each of these units. If this work has been done, you should compile an
organizational chart and include it in your business plan. Organizational charts are very
useful pieces of information. They enable the reader to quickly grasp the way you plan to
structure your business.

They define responsibilities and lines of reporting of middle and higher management. An
organizational chart is particularly useful in:

• Providing evidence to the lender or investor that you have seriously considered the future of
your business;

• Confirming that you have identified the people required for operating the business. Naming
persons in the chart helps to give a sense of reality to your business plan;

• Making clear to everybody in or outside the company who is responsible for what.

There are many different ways to structure a company. Factors that play an important role are
the type of business, the industry, the size of the company, the ownership situation (partner
organization, family business etc.), the profiles and competences of managers available, and
the style of management.

Figure below is a typical example of an organization that is often seen in production

companies. Organizational structure is varied depends on the nature and characteristics of
organizations as an example is illustrated below. It consists of three major divisions. Each
division consists of a number of departments. In such an organization, the three division
managers and the Chief Executive Officer (CEO) form the higher executive management of
the company.

This team should meet regularly to discuss and decide on important company issues. The
department managers (middle management) of a division and the responsible division
manager form the management of a division. These should also meet regularly to discuss and
decide about division matters. The division manager is the link between middle and higher
management. He or she plays an important role in the transfer of information, opinions,
suggestions and instructions between the two management levels.

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Chief Executive officer

Technical section Marketing and sales Finance & administration

R&D Marketing Accounting

Production Sales Human resource

Logistics
Quality control Client service
qualit

Client relation Procurement

Information technology

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Self-Check 3 Written Test

Please try to answer all the questions listed below by using the answer sheet provided
below.

1. Identify relevant market principles?

2. List workflow improvement procedures?
3. Draw a sample of organizational structure?
4. Define the terms needs, wants, demands, products and exchange.
5. What are the primary difference between profit and non-profit organizations?

Answer Sheet

Name: _________________________ Date: ______________

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Information Sheet-4 Develop marketing and promotional plan

LO 4: Develop Marketing and Promotional Plan

Introduction

Promotion is a mix of communications designed to convey information about a company and

its products/services to prospective customers. Your promotion needs to be persuasive
enough to elicit a desired response. The purpose of promotion is either to sell more products
or services to existing clients and/or to acquire new customers.

A Promotional Plan is an integral part of executing your marketing strategies and ensuring
you meet your objectives for the year. Without it, all the hard work you put into making that
dynamite Marketing Plan could go to waste. In this article, we will walk you through the
process of designing an effective Promotional Plan, including key items for consideration and
contents of the practice vision statement, objectives, market research and target market well
as competitors’ analysis are exactly what your finalized plan should look like.

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A Promotional Plan covers all types of communication between the seller (you) and your
audience of potential or existing clients. There are four basic components of a promotion
plan:

1. Advertising

Advertising is paid promotion and includes media such as newspaper, magazine, radio,
television, billboard, subway, direct mail, banner advertising, flyer advertising etc. For artists,
the most effective forms of advertising have proven to be direct mail, source book advertising
and on-line portfolios.

2. Personal Selling

Personal Selling is about getting a personal meeting with an interested buyer, showing your
portfolio and selling your vision.

3. Sales Promotion

Sales Promotion involves paid (generally) marketing communication activities other than
advertising, publicity or personal selling. Examples of sales promotion activities include your
website, email marketing, your blog, catalogues or brochures, reprints of advertisements,
tradeshows, hosting a cocktail party or event, etc.

4. Public Relations

Public relations (PR) include any communication intended to create a positive image for your
product/service amongst your target audience. You might hire a PR freelancer to write a press
release about a showing of your newest collection of work (or write it yourself), and send this
to relevant media read by art buyers (typically magazines and on-line vehicles such as PDN,
American Photo, your online portfolio provider, your local APA or ASMP chapter, any
photo-related newsletters you subscribe to or photo blogs that showcase work). Although you
have no control over which publications, if any, will publish your press release or talk about
your showing, it is generally considered to have greater value than paid advertising, because
it is an unpaid endorsement of your service.

4.1 Method of developing and reviewing vision and objectives

Definitions of vision, mission and objectives
Vision: What organization wants to become in future.
Mission: What is the purpose of the existence of the organization?
Objectives: Objectives are the targets towards which management is directed.
Strategy: The process of determining appropriate courses of action for achieving
organizational objective.

Strategic planning is an organization's process of defining its strategy, or direction, making

decisions on allocating its resources to pursue this strategy. In order to determine the
direction of the organization, it is necessary to understand its current position and the possible
avenues through which it can pursue a particular course of action. Generally, strategic
planning deals with at least one of three key questions

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Vision Statements for New and Small Firms

Vision statements and mission statements are very different. A vision statement for a new or
small firm spells out goals at a high level and should coincide with the founder's goals for the
business. Simply put, the vision should state what the founder ultimately envisions the
business to be, in terms of growth, values, employees, contributions to society, and the like;
therefore, self-reflection by the founder is a vital activity if a meaningful vision is to be
developed. As a founder, once you have defined your vision, you can begin to develop
strategies for moving the organization toward that vision. Part of this includes the
development of a company mission.

Mission Statements for New and Small Firms

The mission statement should be a concise statement of business strategy and developed from
the customer's perspective and it should fit with the vision for the business. The mission
should answer three questions:

1. What do we do?
2. How do we do it?
3. For whom do we do it?

What do we do? This question should not be answered in terms of what is physically
delivered to customers, but by the real and/or psychological needs that are fulfilled when
customers buy your products or services. Customers make purchase decisions for many
reasons, including economical, logistical, and emotional factors. An excellent illustration of
this is a business in the Twin Cities that imports hand-made jewelry from east Africa. When
asked what her business does, the owner replied, "We import and market east African
jewelry." But when asked why customers buy her jewelry, she explained that, "They're
buying a story in where the jewelry came from." This is an important distinction and
answering this question from the need-fulfilled perspective will help you answer the other
two questions effectively.

How do we do it? This question captures the more technical elements of the business. Your
answer should encompass the physical product or service and how it is sold and delivered to
customers and it should fit with the need that the customer fulfills with its purchase. In the
example above, the business owner had originally defined her business as selling east African
jewelry and was attempting to sell it on shelves of boutique retail stores with little success.
After modifying the answer to the first question, she realized that she needed to deliver the
story to her customers along with the product. She began organizing wine parties that
included a slide show of east Africa, stories of personal experiences there, and pictures and
descriptions of the villagers who make the jewelry. This method of delivery has been very
successful for her business.

For whom do we do it? The answer to this question is also vital; as it will help you focus
your marketing efforts. Though many small business owners would like to believe otherwise,
not everyone is a potential customer, as customers will almost always have both demographic
and geographic limitations. When starting out, it is generally a good idea to define the
demographic characteristics (age, income, etc.) of customers who are likely to buy and then
define a geographic area in which your business can gain a presence. As you grow, you can
add new customer groups and expand your geographic focus.
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4.2. Ways of identifying target market

Target Market

Target market is a specific group of consumers at which a company aims its products and
services. Your target customers are those who are most likely to buy from you. Resist the
temptation to be too general in the hopes of getting a larger slice of the market. That's like
firing 10 bullets in random directions instead of aiming just one dead centre of the mark--
expensive and dangerous.

Ways of identifying target group

Try to describe them with as much detail as you can, based on your knowledge of your
product or service. Rope family and friends into visualization exercises ("Describe the typical
person who'll hire me to paint the kitchen floor to look like marble...") to get different
perspectives-the more, the better.

Here are some questions to get you started:

Are your target customers male or female?

How old are they?

Where do they live? Is geography a limiting factor for any reason?

What do they do for a living?

How much money do they make? This is most significant if you're selling relatively
expensive or luxury items. Most people can afford a carob bar. You can't say the same of
custom murals.

What other aspects of their lives matter? If you're launching a roof-tiling service, your target
customers probably own their homes.

Once upon a time, business owners thought it was enough to market their products or services
to "18- to 49-year olds." Those days are a thing of the past. Because the consumer
marketplace has become so differentiated, it's a misconception to talk about the marketplace
in any kind of general way anymore. Now, you have to decide whether to market to
socioeconomic status or to gender or to region or to lifestyle or to technological
sophistication. There's no end to the number of different ways you can slice the pie.

Further complicating matters, age no longer means what it used to. Fifty-year-old baby
boomers prefer rock 'n' roll to Geritol; 30-year-olds may still be living with their parents.
People now repeat stages and recycle their lives. You can have two men, who are 64 years
old, and one is retired and driving around in a Winnebago, and the other is just remarried
with a toddler in his house.
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Generational marketing, which defines consumers not just by age, but also by social,
economic, demographic and psychological factors, has been used since the early 80s to give a
more accurate picture of the target consumer.

A newer twist is cohort marketing, which studies groups of people who underwent the same
experiences during their formative years. This leads them to form a bond and behave
differently from people in different cohorts, even when they're similar in age. For instance,
people who were young adults in the 50s behave differently from people who came of age
during the tumultuous 60s, even though they're close in age.

4.3. Techniques of obtaining market data

Ten Methods and Resources to Obtain Market data

The objective of market research whether you are starting a business or growing an existing
one is to find out if there are enough potential customers for your product or service and if
enough of them will be eager to pay your price for the product/service you have to offer. In
writing a business plan you want to convince the reader and yourself that there are enough
members of your target market to warrant your forecasted sales results. You also must
convince the reader that that target market will pay your price for the product. Here are some
ideas about how to do the research.

1. Survey - One way to find out if your target market has a need for your product and is
willing to pay for your product is to conduct a survey.
2. Focus Group - If you want to brainstorm with a group of people about your product
and its attractiveness to the market enlist the aid of a focus group. This group can
provide valuable input to shape your offer. The focus group would consist of from 8-
10 people in your target group. One book to read on focus groups is called Focus
Groups - a Practical Guide for Applied Research by Richard Krueger and Mary Anne
Casey.
3. Demographic Information - What is the age, sex, income, occupation, marital status
of your target market. How many prospects are in your target market?
4. Interviews - Conduct individual face-to-face interviews with members of your target
market. You could use survey questions as an outline for your interview. This will
lead you to a more in depth understanding of what your target market wants.
5. Similar Businesses - Talk with others in similar businesses. Talk to someone in a
similar business in a different geographic area if talking to a competitor seems
inappropriate. Otherwise find people who serve the same target market to find out the
concerns and challenges they face.
6. Chambers of Commerce - Chambers of Commerce have a wealth of information
about their members and usually know most of the businesses in their area. They may
be able to direct you to businesses that could be strategic partners as well as people in
your target market.

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7. Trend information - Understand the trends that would bring you customers. Trend
spotting -Think Foreword, Get Ahead, Cash in On the Future by Richard Laemer is a
book that addresses the trends in the 21st century. If you can hook your product or
service to a trend, marketing it becomes easier.
8. Psychographic information - Psychographic profiling is a process of grouping
customers via lifestyle choices, personality, activities, beliefs and values. This
information will help you to locate your target market (important when you want to
market to the group) and help you to talk to them in a voice they are receptive to.
9. Associations - Find associations that your prospects belong to. The leaders of the
association can direct you to members who are able to help you in understanding your
market. Associations may also provide you access to your target market.
10. Advertise - Place a test ad for your product/service in the paper to see if you a get
response. Make your ad hard to refuse.(Free or low price) This is a test to see if your
product is wanted and needed. Make note of the response. Is the customer/client
satisfied? Follow up to get customer testimonials and comments. Another test ad
could check your price point to see what the market will bear.

4.4. Techniques of analyzing Competitor

Competitor analysis in marketing and strategic management is an assessment of the strengths

and weaknesses of current and potential competitors. This analysis provides both an offensive
and defensive strategic context to identify opportunities and threats. Profiling coalesces all of
the relevant sources of competitor analysis into one framework in the support of efficient and
effective strategy formulation, implementation, monitoring and adjustment.

Competitor analysis is an essential component of corporate strategy. It is argued that most

firms do not conduct this type of analysis systematically enough. Instead, many enterprises
operate on what is called “informal impressions, conjectures, and intuition gained through the
tidbits o information about competitors every manager continually receives.” As a result,
traditional environmental scanning places many firms at risk of dangerous competitive blind
spots due to a lack of robust competitor analysis.

Competitor array

One common and useful technique is constructing a competitor array. The steps include:-

 Define your industry - scope and nature of the industry

 Determine who your competitors are

 Determine who your customers are and what benefits they expect
 Determine what the key success factors are in your industry
 Rank the key success factors by giving each one a weighting - The sum of all the
weightings must add up to one.
 Rate each competitor on each of the key success factors
 Multiply each cell in the matrix by the factor weighting. This can best be displayed on a
two dimensional matrix - competitors along the top and key success factors down the
side. An example of a competitor array follows:

Key Industry Weighting Competitor Competitor Competitor Competitor

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Success Factors #1 rating #1 #2 rating #2
weighted weighted
1 - Extensive .4 6 2.4 3 1.2
distribution
2 - Customer focus .3 4 1.2 5 1.5
3 - Economies of .2 3 .6 3 .6
scale
4 - Product .1 7 .7 4 .4
innovation
Totals 1.0 20 4.9 15 3.7

In this example competitor #1 is rated higher than competitor #2 on product innovation

ability (7 out of 10, compared to 4 out of 10) and distribution networks (6 out of 10), but
competitor #2 is rated higher on customer focus (5 out of 10). Overall, competitor #1 is rated
slightly higher than competitor #2 (20 out of 40 compared to 15 out of 40). When the success
factors are weighted according to their importance, competitor #1 gets a far better rating (4.9
compared to 3.7).

Two additional columns can be added. In one column you can rate your own company on
each of the key success factors (try to be objective and honest). In another column you can
list benchmarks. They are the ideal standards of comparisons on each of the factors. They
reflect the workings of a company using all the industry's best practices.

Competitor profiling

The strategic rationale of competitor profiling is powerfully simple. Superior knowledge of

rivals offers a legitimate source of competitive advantage. The raw material of competitive
advantage consists of offering superior customer value in the firm’s chosen market. The
definitive characteristic of customer value is the adjective, superior. Customer value is
defined relative to rival offerings making competitor knowledge an intrinsic component of
corporate strategy. Profiling facilitates this strategic objective in three important ways. First,
profiling can reveal strategic weaknesses in rivals that the firm may exploit. Second, the
proactive stance of competitor profiling will allow the firm to anticipate the strategic
response of their rivals to the firm’s planned strategies, the strategies of other competing
firms, and changes in the environment. Third, this proactive knowledge will give the firms
strategic agility. Offensive strategy can be implemented more quickly in order to exploit
opportunities and capitalize on strengths. Similarly, defensive strategy can be employed more
deftly in order to counter the threat of rival firms from exploiting the firm’s own weaknesses.

Clearly, those firms practicing systematic and advanced competitor profiling have a
significant advantage. As such, a comprehensive profiling capability is rapidly becoming a
core competence required for successful competition. An appropriate analogy is to consider
this advantage as akin to having a good idea of the next move that your opponent in a chess
match will make. By staying one move ahead, checkmate is one step closer. Indeed, as in
chess, a good offense is the best defense in the game of business as well.

A common technique is to create detailed profiles on each of your major competitors. These
profiles give an in-depth description of the competitor's background, finances, products,
markets, facilities, personnel, and strategies. This involves:

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 Background
 location of offices, plants, and online presences
 history - key personalities, dates, events, and trends
 ownership, corporate governance, and organizational structure
 Financials
 profitability
 various financial ratios, liquidity, and cash flow
 Profit growth profile; method of growth (organic or acquisitive)
 Products
 products offered, depth and breadth of product line, and product portfolio
balance
 new products developed, new product success rate, and R&D strengths
 brands, strength of brand portfolio, brand loyalty and brand awareness
 patents and licenses
 quality control conformance
 reverse engineering
 Marketing
 segments served, market shares, customer base, growth rate, and customer
loyalty
 promotional mix, promotional budgets, advertising themes, ad agency used,
sales force success rate, online promotional strategy
 distribution channels used (direct & indirect), exclusivity agreements,
alliances, and geographical coverage
 pricing, discounts, and allowances
 Facilities
 plant capacity, capacity utilization rate, age of plant, plant efficiency, capital
investment
 location, shipping logistics, and product mix by plant
 Personnel
 number of employees, key employees, and skill sets
 strength of management, and management style
 compensation, benefits, and employee morale & retention rates
 Corporate and marketing strategies
 objectives, mission statement, growth plans, acquisitions, and divestitures
 marketing strategies

Media scanning

Scanning competitor's ads can reveal much about what that competitor believes about
marketing and their target market. Changes in a competitor's advertising message can reveal
new product offerings, new production processes, a new branding strategy, a new positioning
strategy, a new segmentation strategy, line extensions and contractions, problems with
previous positions, insights from recent marketing or product research, a new strategic
direction, a new source of sustainable competitive advantage, or value migrations within the
industry.

A competitor's media strategy reveals budget allocation, segmentation and targeting strategy,
and selectivity and focus. From a tactical perspective, it can also be used to help a manager

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implement his own media plan. By knowing the competitor's media buy, media selection,
frequency, reach, continuity, schedules, and flights, the manager can arrange his own media
plan so that they do not coincide.

New competitors

In addition to analyzing current competitors, it is necessary to estimate future competitive

threats. The most common sources of new competitors are:

 Companies competing in a related product/market

 Companies using related technologies
 Companies already targeting your prime market segment but with unrelated products
 Companies from other geographical areas and with similar products
 New start-up companies organized by former employees and/or managers of existing
companies.

4.5 Developing market Positioning

Working collaboratively with your staff, CMC will prepare a market analysis of your market
area, which is predicated upon where your existing members reside. CMC, in concert with
your staff, will ascertain the competitive market; review the demographics of your market
area including households, incomes and participation in golf and any changes in your current
membership program that may be necessary based upon this market information. The
resulting report presentation will provide you with an understanding of the depth of market
capable of affording the current fees.

Knowing where you are relative to your market's willingness or ability to afford your specific
categories of membership and fees is crucial to your success. Market positioning reports
combine the elements of the One Day Site Evaluation with a thorough demographic
evaluation of your marketplace. Just as in the process we employ for a one day evaluation we
will initiate a conference call with you and a panel of your choosing, to discuss your needs
and to create a general strengths, weaknesses, opportunities and threats analysis (SWOT
Analysis) relative to your membership position.

4.6. Understanding branding and its benefit

A brand is a "Name, term, design, symbol, or any other feature that identifies one seller's
good or service as distinct from those of other sellers."

Branding began as a way to tell one person's cattle from another by means of a hot iron
stamp. A modern example of a brand is Coca Cola which belongs to the Coca-Cola
Company.

When developing your start-up’s value proposition, remember the definition for the value
proposition: “A product’s value proposition is a statement of the functional, emotional and
self-expressive benefits delivered by the brand that provides value to the target customer.”

What are functional, emotional and self-expressive benefits? These terms are explained
below.

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Functional benefits are based on a product attribute that provides the customer with
functional utility. The goal is to select functional benefits that have the greatest impact with
customers and support a strong position relative to competitors. However, it is important to
keep in mind that functional benefits often fail to differentiate, can be easy to copy and may
reduce strategic flexibility.

Examples of functional benefits include the phone capability of an iPhone, the thirst-
quenching offered by a bottle of water and the warmth of a wool sweater.

Emotional benefits provide customers with a positive feeling when they purchase or use a
particular brand. They add richness and depth to the experience of owning and using the
brand.

Examples of emotional benefits include the “feel-good” factor when purchasing groceries
carrying a fair-trade label or when donating to charities such as the Heart & Stroke
Foundation. Buying local or organic foods has also started to carry emotional benefits,
although most brands in these areas are niche brands that are currently not well known to
others than enthusiasts.

Self-expressive benefits provide an opportunity for someone to communicate his or her self-
image. They heighten the connection between the brand and the customer by focusing on
something linked to his or her personality. Self-expressive benefits focus on the act of using
the product, as opposed to the emotional benefits associated with the result of using the
product.

A self-expressive benefit can include the elegance and the feeling of being cool projected by
the Apple iPhone, the raw masculinity projected by the Harley-Davidson motorcycle brand or
the luxury displayed by carrying a Louis Vuitton bag.

Six Keys to Building a Successful Brand

 Identify Your Customers

 Clarify What Is Important To These

Customers

 Narrow The List To Their Top Four

Priority Outcomes

 Gear Every Decision And Activity

Toward Delivering These Top Four
Priority Outcomes

 Stay Boringly Consistent And

Thoroughly Innovative

 Market To Resonate

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4.7 Types of promotion tools

Promotion tool is a combination of promotional methods used to promote a specific product.

The four possible elements of promotional mix are:

1. Advertising: is a paid non-personal communication about an organization and its

product that is transmitted to a target audience through a mass media such as TV, New
Paper magazines, direct mail, mass transit display or outdoor displays. Individuals and
organizations use advertising to promote goods, services ideas, Issues and people.

2. Personal selling: Is a paid personal communication that seeks to inform customers and
persuade them to purchase products in an exchange situation. It has both advantage and
limitations when compared with advertising. Advertising is general communication
aimed at a relatively large target Audiences, whereas personal selling involves more
specific communication Aimed at one or several persons. Personal selling also provides
immediate feedback, allowing marketers to Adjust their message to improve
communication. It helps them to determine and respond to customer’s information
needs.

3. Public Relation: is a broad set of communication efforts used to create and maintain
Favorable relationships between an organization and its educators, Potential investors,
government officials and society in general. Maintain In a positive relationship with
one or more public can affect a firm’s sales and profits as well as its long-term survival.
Public relations can be achieved through the use of a variety of tools including: annual
reports, Brochures, event sponsorship, sponsorship of socially responsible programs
Aimed at protecting the environment or helping disadvantaged individuals.

Other tools arise from the use of publicity, which is part of public relations. Publicity is non-
Personal communication in news story from about an organization, its product or both that is
transmitted through a mass media at no charge.

Example: News release, press conference, etc.

4. Sales promotion: Is activity or material that acts as a direct inducement, offering

added, or incentive for the product to resellers, sales persons or consumers.

Example: Free samples. Premium and coupons etc.,

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Self-Check 4 Written Test

Please try to answer all the questions listed below by using the answer sheet provided
below.

1. Describe the difference between vision and objectives?

2. List ways of identifying target market?

3. Write the techniques of obtaining market data?

4. Identify techniques of analyzing competitors?

5. Mention the importance of branding?

6. Explain the type of promotional tools?

7. Write six keys to building a successful brand.

Answer Sheet

Name: _________________________ Date: _____________

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Information Sheet-5 Develop business growth plan

LO 5: Develop Business Growth Plan

Introduction

Business growth plan like most entrepreneurs, you probably had a business plan to start.
Maybe you used it to help raise money. But now you operate in the real world, and
everything seems a little different. No matter how much research you did in advance, and
how neatly you set up your company, the everyday business playing field tends to be a
disorderly place where things rarely go according to design.

What you may need now is a plan of a different sort a business growth plan that acts more
like an internal compass to guide you toward success. It starts with a specific mindset. The
day-to-day actions of everyone involved in your business should have a growth-oriented
edge. Everyone should buy into your vision that growth can and will happen as you work
collectively to capture opportunities.

5.1 Strategic planning

Strategic planning is an organization's process of defining its strategy, or direction, and

making decisions on allocating its resources to pursue this strategy, including its capital and
people. Various business analysis techniques can be used in strategic planning, including
SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) and PEST analysis
(Political, Economic, Social, and Technological analysis) or STEER analysis involving
Socio-cultural, Technological, Economic, Ecological, and Regulatory factors and EPISTELS
(Environment, Political, Informative, Social, Technological, Economic, Legal and Spiritual).

Understanding of customer service provision

Customer service is the provision of service to customers before, during and after a
purchase. Customer service is a series of activities designed to enhance the level of customer
satisfaction – that is, the feeling that a product or service has met the customer expectation Its
importance varies by products, industry and customer; defective or broken merchandise can
be exchanged, often only with a receipt and within a specified time frame. A customer
service experience can change the entire perception a customer has of the organization.

5.2 Develop business growth plan

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Business Growth Plan

Like most entrepreneurs, you probably had a business plan to start. Maybe you used it to help
raise money. But now you operate in the real world, and everything seems a little different.
No matter how much research you did in advance, and how neatly you set up your company,
the everyday business playing field tends to be a disorderly place where things rarely go
according to design.

What you may need now is a plan of a different sort — a business growth plan that acts more
like an internal compass to guide you toward success. It starts with a specific mindset. The
day-to-day actions of everyone involved in your business should have a growth-oriented
edge. Everyone should buy into your vision that growth can and will happen as you work
collectively to capture opportunities.

5.3 Developing proposal plan

Importance Tips for developing Business Proposal:

1. Write clearly and briefly: There is a tendency in business writing generally, and in
business proposals specifically, to try and show how smart you are by using excess verbiage,
jargon, and run-on sentences. Don't do it. Be succinct. Make your point and move on.
Remember: When people begin reading the proposal, they have little or no idea what you are
proposing, so you have to walk them through the process. You do so by starting at the
beginning and clearly, simply, and logically moving forward by making your points one at a
time. Start with the big picture and drill down as you go along.

2. Make a Good Argument and Counter Possible Obstacles: A great proposal is,
essentially, a sales brochure, disguised. In it, you put your best foot forward, put your
company in the best light, and make yourself irresistible to the reader. How do you do that?
The best way is to marshal the top facts and arguments in your favour. Have a theme and
reinforce it again and again. Take the reader down a path that leads but to one conclusion that
hiring you makes the most sense for them. You also have to put yourself in the readers'
position, think of what counter arguments they may be considering, and deal with those
potential obstacles honestly. That makes you trustworthy.

3. Show Your Personality: Far too often, business proposals are devoid of life, as if the
person writing it is some Employee, programmed to say nothing, be boring, and not offend. I
say, let your personality come through. Of course this is business and you have to follow
some business conventions, but as you do, also let the reader see who you are. Share your
enthusiasm for your business, their business, the idea, something.

4. Use Graphics Intelligently: Don't make the mistake of bogging down a perfectly fine
proposal with excess graphics. Yes, of course you need graphics; they can clarify an idea, and
liven up a proposal and allow readers to focus on something other than words. That's smart.
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Just don't get carried away. Whether you use a program like Publisher or PowerPoint, just be
sure that the graphics reinforce the sale rather than distracting from the point.

5. Don't Oversell: Avoid hyperbole. As soon as you cross the line from understandable pride
to obnoxious overstatement, you lose credibility. Once readers think you're not shooting
straight with them, they may question the truthfulness of everything in your proposal, and
what’s to come. You avoid this unenviable fate by staying on the safe side of overstatement.

6. Avoid Boilerplate Language and Catch Typos: Another sure way to lose readers is to
have them think that your proposal is a cut-and-paste job, consisting of boilerplate data and
text. Certainly you can reuse persuasive information from elsewhere, but try to keep it to a
minimum and don't make it obvious. Your proposal should read as if it were created
especially for this particular client or customer and while you're personalizing the proposal,
triple-check for typos. If it is clear that you didn't give the proposal your best effort, why
would your readers think you would give their project your best effort?

7. Always Keep the Reader in Mind: A proposal is a marketing tool and as such, remember
Marketing Stress benefits. Finally, while price is important and must be discussed, do so only
after you have wowed readers with your crisp writing, powerful arguments, supporting
graphics, and a plethora of potential benefits. Then you can go in for the sale.

5.4 Ranking proposed plan

Evaluating business opportunities is one of the most difficult decisions anyone can make.
Formal business plans can a standard tool to capture relevant information, but the task of
evaluating these plans is still very complex. Business Plan helps you or teams evaluate a
business plan across several dimensions, visibly identifying both strengths and areas for
improvement. The tool provides a comprehensive framework to evaluate multiple factors,
including the market and competitive elements and leadership skills brought to the venture.
Using comparable and meaningful performance metrics, Business Plan first identifies key
criteria for making decisions about a business plan's potential, and then enables you to
evaluate those factors for across one or more business plans. This allows you and the
prospective business's stakeholders to competently assess the merits of the proposed business
and make decisions confidently. The tool allows one person to evaluate up to 8 business
plans, or up to 8 people evaluate one business plan.

Ranking Criteria

New business ventures must be strong in a number of areas to be viable: they must provide a
major or unique advance on current offerings; they must be based on feasible technical
considerations; the management team must be experienced and skilled in this kind of
business venture; the potential financial return must be substantial compared to the proposed
investment; etc. Simply following a business plan template won't guarantee these elements
are in place.

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For investors, venture capitalists, business school professors and others who must evaluate a
number of business plans and compare them, it is critical to see where plans are strong or
weak. Weakness in one area will doom a plan that is otherwise strong, as in a business plan
that is based on an exciting innovation but which has no prospects of making strong returns.
Those who prepare business plans want to assess their overall prospects early, before they
sink large amounts of time into the process. If they can identify weak areas early, they can
work to revise the strategy or bring in more resources.

Businesses are representative of key considerations that are commonplace in decisions

regarding technology innovations. Using a standard form, an evaluator can rate up to eight
business plans and compare and rank them against the ideal characteristics of a strategically
and financially advantageous venture.

The tool helps you select business plans that:

The Advance Represent a significant advance on the current offerings or

practices in a particular market
Position Offer a realistic chance of establishing defensible intellectual property
Status  Propose offerings which have undergone significant real world testing 
Capability  Are backed up with sufficient resources and business capacity to
execute on the opportunity 
Validation  Have been tried and vetted by a representative group of customers 
Marketing Plan  Have a realistic and detailed marketing plan 
Management Are backed up with a management team with sufficient experience
Team  and education to execute the plan 
Investment Have a favorable investment structure 
Offering 
Market Size and Target a large and attractive market and the chance to capture a
Share significant portion of it
Competition Don't face competitive threats that are too entrenched or powerful
ROI Represent an attractive return on investment

 Business Plan can be used for:

 Analyzing the potential of the proposed business or businesses.

 Making an initial "rough" assessment to determine whether a plan merits a closer
look.
 Determining the unique factors of a business plan, and if it has the requisite elements
to succeed.

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 Ensuring that management, potential investors and other stakeholder are fully aligned
with the Business's strategic plan and objectives.
 Identifying "qualified" business plans and articulate why you believe they will
succeed.
 Helping business students learn how to develop their own plans and evaluate others'
plans through clear written and visual feedback.
 Comparing business plans competently and confidently, with clear, transparent
justification.
 Judging business plan competitions

5.5 Developing an action plan

Developing an action plan means turning ideas raised during strategic planning or evaluation
into reality. It means identifying the steps that need to be taken to achieve the resource
centre’s aims. The resource centre officer and their manager or supervisor should develop the
action plan, in consultation with members of the resource centre advisory committee and/or
other users. It is useful to have action plans for each area of the resource centre’s work, such
as:

 fundraising  providing information services

 selecting and ordering materials  promoting the resource centre
 organizing materials  Networking and cooperation.
 computerization

An action plan consists of seven steps: setting objectives, assessing the objectives, identifying
action required to meet the objectives, working out how to evaluate the activity, agreeing a
time-frame for action, identifying resources (human, financial and technical), finalizing the
plan and evaluating the results.

1. Set objectives; you need to identify clear objectives that will guide your work to achieve
the resource centre’s aims. Objectives need to be achievable - do not be over-ambitious. They
need to be measurable (for example, a certain number of activities carried out within a certain
period), so that you can know whether you have achieved them.
2. Assess the objectives; Assessment helps to determine whether or not the objective is
appropriate. It may result in confirming the objective, abandoning it or revising it.
3. Identify action required to achieve the objective; a series of tasks needs to be identified
for the objectives to be achieved.

4. Work out how to evaluate the activity; Plans for finding out how far the activity has
achieved its objectives need to be built into the action plan.
5. Agree a time frame; as you identify each task, work out how long it will take and when it
needs to be done. This will help you to see whether your action plan is on schedule or
whether you need to modify the schedule.
6. Assess the action plan; ask yourself:

 How will you know whether the individual tasks have been achieved?
 Have you allowed for possible interruptions?
 Have you tried to do too much or too little?

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(i) An action plan must be realistic if it is to work. It is easy to over-estimate what you
can do, leading to disappointment and failure. For example:
1. Leaflets that you had planned to include in the pack may have run out and need to
be reprinted. Can you substitute something else, or will you need to arrange for them
to be reprinted before you can finish preparing the packs?
(ii) The member of staff preparing the pack will take annual leave for six weeks during
the period in which the pack was planned to be prepared. Can you re-schedule the
work, or can someone else do it?

7. Finalize the action plan; Revise the action plan. Obtain feedback and comments from
colleagues, and revise it again if necessary.

Self-Check 5 Written Test

Please try to answer all the questions listed below by using the answer sheet provided
below.

1. What is a customer service?

2. What are the basic criteria to rank proposed business plan?

3. What is strategic plan?

4. Write seven steps of an action plan.

Answer Sheet

Name: _________________________ Date: ______________

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