Business Ideas and Market Strategies
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Questions and Answers

Which method is NOT mentioned as a source of market information?

  • Mail questionnaires
  • Phone interviews
  • Negotiations with prospective customers
  • Online surveys (correct)

    • What is a primary purpose of determining financial feasibility for a business idea?

  • To evaluate marketing strategies
  • To identify potential partnerships
  • To assess profitability (correct)
  • To ensure sustainable growth

    • Which of the following is NOT a common source of financing listed?

  • Bank loans
  • Personal savings
  • Friends and relatives
  • Government grants (correct)

    • Which of the following statements about technical feasibility is TRUE?

    <p>Difficulties can arise in acquiring necessary resources.</p> Signup and view all the answers

    Which financial statement is NOT included in the preparation for assessing financial feasibility?

    <p>Cost analysis report</p> Signup and view all the answers

    What does an analysis of financial ratios help determine in the context of a business idea?

    <p>Financial performance indicators</p> Signup and view all the answers

    Why is prior market studies considered valuable?

    <p>They offer historical context for market trends.</p> Signup and view all the answers

    Which situation could impact the technical feasibility of a business idea?

    <p>Difficulty in procuring materials and manpower.</p> Signup and view all the answers

    What is an advantage of local production over imported products?

    <p>Local products can meet the immediate demands of the market.</p> Signup and view all the answers

    Which of the following is NOT a method for generating business ideas?

    <p>External validation</p> Signup and view all the answers

    Which of the following best describes 'unanticipated means'?

    <p>Finding business ideas without serious effort.</p> Signup and view all the answers

    What is a step in determining the best business idea?

    <p>Preparation of the list of business ideas.</p> Signup and view all the answers

    What challenge is highlighted regarding local products and international operations?

    <p>The entry into foreign markets can be a challenge.</p> Signup and view all the answers

    What can employees encounter that may lead to entrepreneurial opportunities?

    <p>Demand for products or services not currently offered.</p> Signup and view all the answers

    Which of the following is an example of a product that can be locally produced?

    <p>Agricultural goods such as fruits and vegetables</p> Signup and view all the answers

    What is indicated by the entry of local companies into foreign markets?

    <p>Greater opportunities for entrepreneurship.</p> Signup and view all the answers

    What is the primary purpose of sales forecasts in a business?

    <p>To predict future sales or income of the firm</p> Signup and view all the answers

    How long are short-term forecasts typically made for?

    <p>One year or less</p> Signup and view all the answers

    What activities are required to implement strategic plans?

    <p>Identifying specific methods and deploying necessary resources</p> Signup and view all the answers

    What is defined as factors that hinder an organisation from achieving its goals?

    <p>Weaknesses</p> Signup and view all the answers

    Which of the following is an example of a weakness for an organisation?

    <p>Limited product range</p> Signup and view all the answers

    What is the role of tactics in strategic planning?

    <p>To determine how specific tasks can be accomplished</p> Signup and view all the answers

    Which of the following is NOT a type of forecast mentioned?

    <p>Strategic-term</p> Signup and view all the answers

    What term refers to the chance offered by the external environment to improve a firm's situation?

    <p>Opportunity</p> Signup and view all the answers

    What is a key characteristic of the flexibility strategy in small business?

    <p>Adaptability to change in circumstances</p> Signup and view all the answers

    Which scenario describes a threat to a local business?

    <p>Proposed construction of a bypass road</p> Signup and view all the answers

    To successfully deploy resources, which aspect is essential according to the content?

    <p>Determining the right quality and quantity of resources</p> Signup and view all the answers

    An inefficient process within an organisation is considered what in a SWOT analysis?

    <p>Weakness</p> Signup and view all the answers

    What is a common factor in determining sales forecasts?

    <p>Combination of statistical and intuitive forecasts</p> Signup and view all the answers

    Which of the following would NOT be considered a weakness in a SWOT analysis?

    <p>Strong customer relations</p> Signup and view all the answers

    Which situation illustrates an opportunity for a small restaurant?

    <p>The complete withdrawal of a major competitor</p> Signup and view all the answers

    What challenge posed by external conditions is referred to as a threat?

    <p>Unfavorable market trends</p> Signup and view all the answers

    What does a company's vision statement primarily define?

    <p>The goals the company has for the future and how to achieve them</p> Signup and view all the answers

    What is the main purpose of a mission statement?

    <p>To clarify what the company does, who it serves, and how</p> Signup and view all the answers

    Which of the following is NOT an example of a strategic objective?

    <p>Achieve a certain level of employee satisfaction</p> Signup and view all the answers

    What does a strategy indicate in the context of a business?

    <p>The steps an entrepreneur will take to achieve objectives</p> Signup and view all the answers

    Which tool is commonly used by entrepreneurs to develop strategies?

    <p>SWOT Analysis</p> Signup and view all the answers

    In SWOT analysis, what does 'strength' refer to?

    <p>A valuable organizational resource or capability that gives a market advantage</p> Signup and view all the answers

    What example illustrates a firm's strength in the context of SWOT analysis?

    <p>A well-known and trusted brand</p> Signup and view all the answers

    Which of the following statements best describes 'forecast of future sales performance' in strategic decision-making?

    <p>A way to estimate future sales based on historical data</p> Signup and view all the answers

    What is regarded as a crucial factor in fostering a creative organization?

    <p>Encouragement of Creativity and Risk-taking</p> Signup and view all the answers

    Why is allowing errors considered important in innovative environments?

    <p>It enables correction and encourages creative endeavors.</p> Signup and view all the answers

    What role does open communication play in organizational creativity?

    <p>It facilitates the flow of ideas and problem-solving.</p> Signup and view all the answers

    What is the impact of rewarding creativity within an organization?

    <p>It encourages a continuation of creative activities.</p> Signup and view all the answers

    What defines the concept of 'climate of participation' in relation to creativity?

    <p>Engagement of employees in decision-making processes.</p> Signup and view all the answers

    Which of the following best describes the relationship between creativity and risk-taking?

    <p>Creative ideas must be tested, often involving risks.</p> Signup and view all the answers

    How does training in the creative process benefit an organization?

    <p>It enhances skills and encourages innovative thinking.</p> Signup and view all the answers

    What is the significance of structural mechanisms in supporting creativity?

    <p>They provide frameworks that facilitate creativity.</p> Signup and view all the answers

    Study Notes

    Introduction

    • Starting a new business prioritizes establishing a presence in the target market
    • Existing businesses focus on expansion or maintaining competitiveness
    • Business ideas can involve improving existing products/services or innovating customer service

    Product/Service Improvement

    • Performance
    • Acquisition Cost
    • Maintenance Cost
    • Salvage Value
    • Use

    Sound Business Idea

    • A sound business idea is an economic opportunity, essentially a plan or concept potentially successful and profitable.
    • It addresses a market need or problem
    • It has a clear target audience
    • It can be executed effectively within resource constraints

    Sound Business Idea Examples

    • Parcel delivery services like DHL, FedEx, and LBC adapted business ideas to address the poor service of postal services thus addressing a need in the market.

    Importance of Sound Business Ideas

    • A sound business idea is crucial for new ventures to gain market entry success
    • Established businesses use sound business ideas to remain competitive

    Different Forms of Business Ideas

    • Professionalization: Streamlining and organizing operations (e.g., McDonald's)
    • Customization: Offering various colors, designs, and features for products (e.g., clothing, sporting goods)
    • Technological Adaptation: Utilizing new technology to enhance existing products/services (e.g., bakery using machines)
    • Local Product Replacement: Replacing imported products with local production (e.g., agricultural goods)
    • Internationalization: Expanding business operations internationally (e.g., Jollibee)

    Procedure in Determining the Best Business Idea

    • Preparation of the list of business ideas
    • Screening of the listed ideas
    • Final selection

    Method of Searching for Ideas

    • Unanticipated means (e.g., work, hobbies, acquaintances, chance events)
    • Deliberate search (e.g., using questions, idea prompting)

    Unanticipated Means

    • The person's work
    • The person's hobbies
    • The person's acquaintances
    • A chance event encountered by the person

    The Person's Work

    • Employees directly interacting with customers may identify unmet needs or demands.
    • Unmet needs can be an opportunity for business development (e.g., tutor academy)

    The Person's Hobbies

    • A hobby can serve as a platform for business development
    • A hobby can create the necessary skills and experience needed to excel in a new venture (e.g., guitar enterprise)

    Acquaintances

    • Another person can spark an awareness of a business opportunity (e.g., book store)

    A Chance Event

    • An encountered event can act as a catalyst for a business venture (e.g., trading tomatoes based on class mate's feedback).

    Deliberate Search for Ideas

    • Using search questions to define the needed answers
    • Idea prompting based on an encounter with another person's idea, customer request, or an event can lead to new ideas.

    Screening Generated Ideas

    • Market feasibility
    • Technical feasibility
    • Financing feasibility
    • Financial feasibility

    Market Feasibility

    • Stable and sufficient demand
    • Potential competitive strength of the firm

    Market Feasibility - Demand

    • Business ideas must have sufficient demand
    • The failure to meet demand would lead to a business' demise.

    Market Feasibility - Strength

    • The business idea must be able to compete with existing or potential competitors.

    Stages to screen a strong idea.

    • Search for business ideas
    • Screening
    • Adoption of the selected business idea
    • Preparation of formal plans

    Sources of Market Information

    • Prior market studies from other companies, government agencies, and entrepreneurs
    • Actual polls of typical customers using various methods (questionnaire, advertisements, phone interviews, and personal interviews).
    • Negotiation with prospective customers to determine their purchasing intentions

    Technical Feasibility

    • The real execution of converting ideas to products or services may experience challenges in quality, quantity, sufficient resources, material procurement, and manpower.

    Financing Feasibility

    • Sufficient funds to finance operations
    • Sources include the entrepreneur's savings, relatives/friends, and financial institutions.

    Financial Feasibility

    • Profit is the result of business idea financial feasibility, determined through an analysis done in steps:
      • Prepare projected financial statements (income statement, balance sheet, and cash flow statement)
      • Analyze financial ratios derived from projected statements.

    Projected Financial Statements

    • Forecasts of future financial performance of a firm

    Determining Financial Feasibility

    • The process of evaluating the financial performance of an idea using projected financial statements and ratio analysis to determine financial feasibility.
    • The resulting determination can lead to approval or rejection of the idea.

    Projected Income Statement

    • Summarizes planned revenues, expenses, and profits over a given time period.

    Projected Balance Sheet

    • Showcases projected financial position of a firm on a particular date.

    Projected Cash Flow Statement

    • Shows projected cash sales and/or purchases.

    Final Selection

    • Process of screening the best business ideas and eliminating the rest.
    • Potential outcomes of screening: status quo, shorter list, zero listing.

    Evaluation of Shortlisted Business Ideas

    • Proposal evaluation based on expected value
    • Expected value criteria can be used to evaluate shortlisted business ideas.

    Organizational Culture and Creativity

    • Encouragement of creativity and risk-taking
    • Rewards for creativity
    • Open communication
    • Allowance for errors
    • Climate of participation
    • Training in the creative process
    • Flexibility

    Encouragement of Creativity and Risk-Taking

    • Creativity involves proactively finding solutions to obstacles affecting a firm's objectives.
    • Testing a business concept necessarily requires a calculated risk; risks can be good or bad

    Rewards for Creativity

    • Rewarding creative activity encourages its continuity in the organization

    Open Communication

    • Free-flowing exchange of ideas among firm members.
    • Communication flows vertically and horizontally through organizational structure.
    • Open communication allows easy identification of problem-solving potential.

    Allowance for Errors

    • Acknowledging and correcting errors is crucial for creative endeavors; errors should not hinder the creative process.
    • Creative individuals won't be discouraged by errors. The company benefits from open error corrections

    A Climate of Participation

    • Organizational participation encourages contribution to creative efforts in the organization.
    • Employee participation leads to generating more creative ideas.

    Structural Mechanisms that Aid Creativity

    • Structural support for creative endeavors within an organization.
    • A designated unit for creative logistical support helps manage creative activities effectively

    Training in the Creative Process

    • Training can enhance creative abilities, even for individuals with natural talent.

    Flexibility

    • Flexibility in scheduling and working environment allows individuals to create ideas in the most comfortable way.

    Strategic Planning for Small Businesses

    • Determining primary objectives
    • Adopting a course of action
    • Allocating resources

    Determination of Primary Objectives

    • Defining the overarching goal provides clarity, alignment, direction for informed decisions, prioritizing activities, and rallying the team for long-term success in a competitive marketplace.

    Vision and Mission Statements

    • Vision statement: Defines firm goals, objectives, and direction
    • Mission statement: Defines the company's work, customer base, and mode of operation.

    Strategic Objectives

    • Specific targets that entrepreneurs hope to achieve for their organization.
    • Define in specific terms, how the firm's mission will be realized.
    • Examples include expanding capacity, increasing sales, and market share.

    Adoption of Course of Action

    • Strategy as the carefully designed plan to accomplish firm objectives.
    • Strategies outline how to reach goals with available resources such as SWOT analysis and forecasting future sales.

    SWOT Analysis

    • SWOT analysis (strengths, weaknesses, opportunities, threats) is an organized approach to evaluate a firm's internal aspects and external environment.
    • Evaluates internal organizational strength and weaknesses and external environment challenges.

    Forecasts of Future Sales Performance

    • Estimation of future sales or income of a firm,
    • Performed for short-term, medium-term and long-term estimations.
    • A combination of statistical and intuitive forecasts tempered by the experience of the entrepreneur.

    Implementing Strategic Plans

    • Implementation of strategies needs suitable methodology
    • Identify suitable methods, and resources required.

    Identifying Specific Methods

    • Establishing the optimal methods for utilizing resources
    • Strategies should involve relevant tactics for effective resource utilization.

    Deploying Resources

    • Identifying available human and non-human resources necessary to achieve objectives.

    Fundamental Strategies for Small Businesses

    • Flexibility Strategy
    • Strategy of Effectiveness as a Higher Priority Approach
    • Start Simple Approach or a Gradual Approach

    Strategy Concerns of Small Business

    • Two fundamental situations:
    • Organizing a new business
    • Running an existing business

    Situation for New Business

    • Acquiring an existing business
    • Organizing a new business
    • Buying a franchise

    Situation for Existing Business

    • Compete with small business
    • Compete with large business

    New Business - Acquiring an Existing Business

    • Advantages: Immediate access to revenue streams, established brand, existing processes
    • Disadvantages: Higher upfront costs, possible debt and liabilities, limited flexibility.

    New Business - Organizing a New Business

    • Advantages: Full control over the concept, flexibility to adapt, unique brand/culture, potentially lower initial investment
    • Disadvantages: Higher risk and uncertainty, longer time frame to establish brand and revenue, effort and resources needed to develop operational processes and systems, challenges with attracting initial customers

    New Business - Buying a Franchise

    • Advantages: Proven business model, training & support, established brand, potential for faster growth and expansion independently
    • Disadvantages: Initial franchise fees, limited autonomy, restrictions on business operations and branding, potential for conflict.

    Strategies for a Going Concern

    • Segment market
    • Efficient use of research and development
    • Think small

    Why Small Business Operators Ignore Strategic Planning

    • Inability to start
    • Lack of expertise
    • Failure to realize the importance of strategic planning
    • Focus on daily operations
    • Resource poverty
    • Uncontrollable and intangible variables

    Summary

    • Businesses need strategic planning to be successful
    • Strategy selection depends on whether it's a new or existing business
    • Challenges such as lack of expertise, daily operations focus, and resource constraints frequently prevent entrepreneurs from performing strategic planning.

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    Related Documents

    The Search For Sound Business Idea PDF

    Description

    This quiz explores the essentials of starting a new business, focusing on developing sound business ideas that meet market needs. It includes strategies for improving products and services and examples of successful businesses that adapted to market demands. Understand the elements that contribute to a business's competitive edge.

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