Crafting a Business Plan and Building a Solid Strategic Plan

Instructions

Assignment 8:  Chapter 5 questions

Respond to the following Questions.  Students should complete this assignment after reading and reviewing the material for each chapter, attending class and taking lecture notes.  This assignment is designed to help students review material and prepare for exams.  Save a copy of your chapter questions for your review sheet to study for exams.  Students are expected to provide at least one paragraph (3-5 sentences) for each question.  Each question assignment submission is worth 20 points. 

1.     Why should an entrepreneur develop a business plan?

A business plan, which builds off information from the feasibility analysis and business model, servers two essential functions. First and more important, it guides the company by charting its future course and defining its strategy for following it. Business plan as a systematic, realistic evaluation of a venture’s chances for success in the market; a way to determine the principal risks facing the venture; a “game plan” for managing the business successfully during its start-up; a tool for comparing actual result against targeted performance. We estimate the future obstacles, what we need, so that we are ready for long term business. It enhances opportunity to success in business. The second one is attracting lenders and investors who will provide needed capital.

2.     List and then describe the major components of a business plan.

·      Title page and table of contents. To give detail about company’s name, logo, address as well as the name and contact information of the company founders. Table of content ease the readers locate the particular section of the plan in which they are most interested.

·      The executive summary. To summarize the presentation to each potential financial institution or investor, the entrepreneur should write an executive summary

·      Mission and vision statement. A mission statement expresses an entrepreneur’s vision for what his or her company is what it is to become. Mission statement not more than 25 words.

·      Description or firm’s product or service. To describe the company’s overall product line, giving an overview of how costumers will use its good or service.

·      Business and industry profile. Provide readers with an overview of industry or market segment in which the new venture will operate.

·      Competitor analysis. Describe the new venture’s competition and the ways in which the chosen business strategy will position it effectively against key competitor.

·      Market entry strategy. To address the question of how to attract customer.

·      Marketing strategy. To prove the viable market exists for the company’s goods or services.

·      Entrepreneur’s and manager’s resumes. This section gives a chance to sell the qualifications and the experience of their management team.

·      Plan of operation. To describe how to business operates, including space requirements, inventory management if applicable, staffing plans and accounting process and policies.

·      Projected financial statement. One of the most important sections of the business plan is an outline of the proposed company’s financial statement.

·      The loan of investment proposal. To state the purpose of the financing, the amount request and the plan of repayment or in the case of investor, an attractive exit strategy.

3.     What is a competitive advantage?

Competitive advantage is a value proposition that sets a small business apart from its competitors and gives it a unique position in the market that is superior to its rival. A company builds a competitive edge on its core competencies, which are unique set of capabilities that a company develops in key operational areas, such as quality, service, innovation, team building, flexibility, responsiveness and others that allow it to vault past competitors.

4.     What are strengths, weaknesses, opportunities and threats?

Strength are internal factor that make our company can compete with other and draw on to accomplish its goal, mission and objectives. Weakness are negative internal factors that inhibit a company’s ability to accomplish its mission, goals and objectives. Opportunities are external factors that a firm can exploit to accomplish its mission, goals and objectives. Threats are negative external factors that inhibit a company’s ability to achieve its mission, goals and objectives.

5.     Describe the three basic strategies available to small companies

The three-basic strategic a business can pursue are low cost (cost leadership), differentiation and focus. Cost leadership strategy is a strategy in which a company to be the low-cost producer relative to its competitor in the industry. Differentiation is a strategy seeks to build costumer loyalty by selling goods or services that provide unique attributes and that customers perceive to be superior or competing products. A focus strategy recognizes in which a company selects one or more market segments, identifies, customer, special needs, wants and interests and approaches them with a good or service designed to excel in meeting those needs, wants and interest.