Question

3) Discuss where or what sections each of the following would be addressed in a business plan.

1. Commitment of the entrepreneur
2. Present and future financial needs
3. Specifics of the opportunity
4. Significant risk
5. Competition
6. Sources of competitive advantage
7. Capabilities of management
8. Harvesting

Answer 1

3) Discuss where or what sections each of the following would be addressed in a business plan.

Ø Commitment of the entrepreneur

Ø Present and future financial needs

Ø Specifics of the opportunity

Ø Significant risk

Ø Competition

Ø Sources of competitive advantage

Ø Capabilities of management

Ø Harvesting

Answer:

Ø Commitment of the entrepreneur

           

            Entrepreneurs stay committed when they are passionate about their businesses. You pursue your goals with higher energy and more hours when emotions are involved. For example, if you have an abiding love, fascination and respect for animals, this passion motivates you to create a success of your pet-sitting business.

Ø Present and future financial needs

            Financial planning is an ongoing process that will reduce your stress about money, support your current needs and help you build a nest egg for your long-term goals, like retirement. Financial planning is important because it allows you to make the most of your assets, and helps ensure you meet your future goals.

Financial planning isn't just for the wealthy: Creating a roadmap for your financial future is for everyone. You can make a financial plan yourself, or you can get help from a financial planning professional. Due to online services like robo-advisors, getting assistance with financial planning is more affordable and accessible than ever.

Ø Specifics of the opportunity

An opportunity cost is defined as the value of a forgone activity or alternative when another item or activity is chosen. Opportunity cost comes into play in any decision that involves a trade off between two or more options. It is expressed as the relative cost of one alternative in terms of the next-best alternative. Opportunity cost is an important economic concept that finds application in a wide range of business decisions.

Ø Significant risk

        Significant risk is those inherent risks which have high Probability and high amount involved. Inherent risk already includes MATERIAL MISSTATEMENTS (MM) and MM it includes those risks whose probability is high and involves high amount.

Ø Competition

  Competition is healthy for businesses – it will force you to innovate, staying ahead of the curve. Yet that rivalry can also be intimidating. You don’t want to back down, but you aren’t sure how to combat competition. Every company deals with this problem, and what success comes down to here is developing a plan that helps you better serve your customers, accurate branding, and supporting your team.

Ø Sources of competitive advantage

            A competitive advantage is what makes an entity's goods or services superior to all of a customer's other choices. While the term is commonly used for businesses, the strategies work for any organization, country, or individual in a competitive environment.

There are 6 sources of competitive advantage.

Ø People. People are the driving force behind most competitive advantage. ...

Ø Organizational Culture & Structure. ...

Ø Products & Intellectual Property. ...

Ø Capital & Natural Resources. ...

Ø Processes & Practices. ...

Ø Technology…

Ø Capabilities of management      

          Capability management is the approach to the management of an organization, typically a business organization or firm, based on the "theory of the firm" as a collection of capabilities that may be exercised to earn revenues in the marketplace and compete with other firms in the industry.

The 3 Fundamental Capabilities of Managers:

Knowledge  

            Knowledge refers to the body of knowledge that an individual has accumulated over the course of his or her career or life. For instance, as a CEO, you would be required to have a body of knowledge that gives you the capability to do the work, the knowledge you need to be successful in that position. Similarly, to be an accountant, one would need to have the knowledge that is obtained through the education required for the acquisition of an accounting designation.

Technical Skills

            Technical Skills refer to the proficient use of knowledge, meaning how well you can apply what you know. It is possible to have knowledge recognized by appropriate academic degrees, but lack the technical skills to apply that knowledge in a meaningful way in the organization. Demonstrated ability means having the ability to use knowledge in an effective way to accomplish the work needed to complete a task, or produce and output. For example, a Director of IT, would need to have the technical skills to be able to apply the knowledge acquired that would be appropriate for the Director level position. Similarly, a Project Manager would need to have the knowledge with respect to project management and the project management technical skills to be able to use that knowledge to successfully complete the project.

Social Processing Skills

Finally, Social Processing Skills are those that give an individual the ability to function in different kinds of social situations while understanding the processes needed to complete the work. Front-line workers, for instance, must have some understanding of how to interact with the people around them so that, together with their peers, they can accomplish what the front-line manager expects. As you move up in the organization, the complexity of social situations increases. A CEO must be able to manage not only all of the social interaction between his or her employees and across departments, but also interactions between key stakeholders and others in the external environment such as government agencies.

Ø Harvesting

            A harvest strategy or harvesting strategy is a business plan for either cancelling or reducing marketing spending on a product. The management has decided that it would cost too much to boost sales. In other words, they could not justify the expense after considering likely future revenues from the product.

When implementing a harvest strategy, the company has three options:

• Eliminate or reduce all capital spending on the product. In other words, keep using existing equipment until it no longer works.
• Reduce or eliminate marketing and advertising expenditure. New sales will rely on brand loyalty.
• Eliminate or reduce operating expenses. In other words, only approve expenditure when the return on investment is very high.