Question

Takyiwaa, Salamatu and Adade are Undergraduate Students from the University of Professional Studies who studied Management of Small and Medium Enterprise. After their National Service they decided to start a Restaurant Business. The overarching purpose for opening a Restaurant, was to be the second to none producers of Quality service in the Restaurant Business in Accra and respect for the customer. Starting a business of like nature is time consuming and full of uncertainty in view of the risk involved. Takyiwaa, Salamatu and Adade have been in the same class since Level 100 and they have the belief that, the future of the business they are about to start, its success and failure is within their control and that external influence has a very little control.

They had a meeting and agreed that it is important to systematically gather information and analyze these information concerning other Restaurants Business trends and activities within Accra, in order to further their Objective. They successfully carried out the project and were able to analyze the information from the field. The unresolved issue was where to locate the Restaurant and how the design should look like because this to a large extent will impact the Performance of their Restaurant Business. Thankfully after several deliberations and considerations of certain factors it was generally agreed that the Restaurant be located around Rawlings Circle.

These young Graduates are aware of the fact that potential customers are not homogenous because they have different needs, wants, taste, income level and characteristics. One way by which they can get larger share of the market in the next three to five years is to concentrate more on Students and satisfy their needs, wants, interest and specification of Packaging. Sales will also increase all things being equal if their price offer is the lowest possible (within the restaurant business) in the next three to five years. They agreed to make offer the lowest possible price to increase sales volume in the next three to five years.

Additionally, these young Graduates are very confident that they have something to offer in the Restaurant Business for that matter they are ready to go all out to do what the big guys failed to do in the Restaurant Business over the years. They resolve to make their Restaurant very clean, comfortable seats to suit customers, high food quality, treat customers with dignity and respect, timely service, have a well trained staff and most importantly putting the customer first. These students with their knowledge and competencies in the Management of Small and Medium enterprises are very much aware that their ability to successfully compete in the Restaurant Business in the Short, Medium and Long term to a large extent depend on the factors stated above.

They approached a financial institution for a support to enable them start their business operation without a delay. The credit officer of the financial institution requested that they furnish them with a written document describing the direction the business is taking, what its goals are, where it wants to be and how it is going to get there, is a fundamental perquisite that is to be satisfied before the loan is granted.

Additionally, the financial institution agreed to introduce their restaurant business to a company that helps new and startup business to develop by providing service such as management training and office space. The financial institution in a letter to these young Graduates who intend to start the Restaurant business agreed to provide them with a loan facility to the tune of fifty thousand Ghana cedis (GH 50000) at the rate of one percent (1%) interest per annum. These young Graduates in their letter of response, have also agreed in principle to all the conditions attached to the loan facility.

To ensure prudent management of the business financial position for development, growth, sustenance and realisation of its profit motives in the short-long term through the deployment of sound financial practices such as effective record-keeping, frequent inventory taking, monitoring of cash coming into and out of the Business, other relevant accounting control measures and strategic sourcing and disbursement of funds will be strictly adhered to.

From the Case study read above identify the sentence(s) or phrase(s) that indicate each of the concept below and explain them:

a) Mission Statement

b) CompetitiveIntelligence

c) Cost Leadership Strategy

d) FocusStrategy

e) Key Factors for Success (KFS)

f) Business incubator

g) Business Plan

h) Internallocusofcontrol

i) Debt Financing

j) Cash Flow Statement

Answer 1

a)Mission Statement

A mission statement is a statement of why an organization exists, what its overall goal is, identifying the goal i.e

i)what kind of product or service it provides

ii) its primary customers or market

iii) geographical condition of place of business.

Sentence-"They resolve to make their Restaurant very clean, comfortable seats to suit customers, high food quality, treat customers with dignity and respect, timely service, have a well trained staff and most importantly putting the customer first".

The statement clears that how the graduates look forward for their operations,and how to provide their service and to reach its goal for its operation

b)Competitive Intelligence

Competitive intelligence refers to the ability to collect and provide information on factors that matters a business competitive position.The Analysis of collected data and information of organizations to develop effective and efficient business approaches.

Sentence- "They had a meeting and agreed that it is important to systematically gather information and analyze these information concerning other Restaurants Business trends and activities within Accra, in order to further their Objective"

The statement clears that gradutes were studied the market and they are collecting informations to reach their goal.

c)Cost Leadership Strategy

Cost leadership is a strategy use to increase efficiencies and reduce production costs below the industry average or their closest competitor.

Sentence-"Sales will also increase all things being equal if their price offer is the lowest possible (within the restaurant business) in the next three to five years.

As providing low price increasing the turnover to increase the efficiency of the operation as compared to their competitors.

d)Focus Startegy

A Focus strategy is usually employed where the comopany knows its segment and has products to competitively satisfy its needs.

Sentence-" One way by which they can get larger share of the market in the next three to five years is to concentrate more on Students and satisfy their needs, wants, interest and specification of Packaging "

The graduates has found at which point their operation has to be pull of and provide a monopolistic style to their business and their approaches

e)Key Factors for Success (KFS)

Key success factors are the important elements of a company to compete in its target markets. In effect, it finds what the company must do, and do well, to achieve the goals according to their plan.

Sentence-"high food quality, treat customers with dignity and respect"

They have to found out elemets to reach its targeted markets and means to achieve its goals .

f) Business Incubator

A business incubator is the organisations that helps new and startup companies to develop by providing services such as management training or office space

Sentence-the financial institution agreed to introduce their restaurant business to a company that helps new and startup business to develop by providing service such as management training and office space.

g)Business plan

A business plan is a formal written document containing business goals, the methods on how these goals can be attained, and the time frame within which these goals need to be achieved.

Sentence-""The credit officer of the financial institution requested that they furnish them with a written document describing the direction the business is taking, what its goals are, where it wants to be and how it is going to get there, is a fundamental perquisite that is to be satisfied before the loan is granted".

h)Internal Locus of Control

Locus of control is what an individual believes causes his or her experiences, and the factors to which that person attributes their successes or failures.Locus of control as a person’s perception of his or her control over events and outcomes in their environment.

Sentence-"they have the belief that, the future of the business they are about to start, its success and failure is within their control and that external influence has a very little control."

i)Debt Financing

Debt financing occurs when a firm raises money for working capital or capital expenditures by selling debt instruments to individuals and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise that the principal and interest on the debt will be repaid.

Sentence-"The financial institution in a letter to these young Graduates who intend to start the Restaurant business agreed to provide them with a loan facility to the tune of fifty thousand Ghana cedis (GH 50000) at the rate of one percent (1%) interest per annum.

j)Cash Flow Statement

Cash flow statement is a financial statement that shows how effects in Financial position and its accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities.

Sentence-"To ensure prudent management of the business financial position for development, growth, sustenance and realisation of its profit motives in the short-long term through the deployment of sound financial practices such as effective record-keeping, frequent inventory taking, monitoring of cash coming into and out of the Business, other relevant accounting control measures and strategic sourcing and disbursement of funds will be strictly adhered to"