Principles, Tools, and Techniques in Creating a Business PDF

Principles, Tools and Techniques in Creating a Business MODULE 7 ( 2ND QTR ) LESSON OBJECTIVES 1. discuss the different principles in creating a business 2. explain the SWOT techniques 3. know the different steps in decision-making PRINCIPLE, TECHNIQUE & TOOLS According to the New Oxford A...

Principles, Tools and Techniques in Creating a Business MODULE 7 ( 2ND QTR ) LESSON OBJECTIVES 1. discuss the different principles in creating a business 2. explain the SWOT techniques 3. know the different steps in decision-making PRINCIPLE, TECHNIQUE & TOOLS According to the New Oxford American Dictionary, a PRINCIPLE is “fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning.” The principles of business are the driving forces that make it successful. They are the backbone of the organization. PRINCIPLE, TECHNIQUE & TOOLS A TECHNIQUE on the other hand is a way of carrying out a particular task, especially the execution or performance of an artistic work for a scientific procedure. PRINCIPLE, TECHNIQUE & TOOLS TOOL- a device/implement used to carry out a particular a particular function. Business management tools are all the systems, applications, controls calculating solutions, methodologies ,etc. used by organizations to be able to cope with changing markets, ensure a competitive position in them and improve business performance.  10 Guiding Principles For Start-ups Business 1.SCALABILITY A business must be scalable for it to be successful. A small business built rightly can grow 10,000 times its current size. 2. BIG IDEAS A small business is more effective than the idea upon which it is built. The entrepreneurs vision is more important to the life of the business than anyone else.  10 Guiding Principles For Start-ups Business 3. SYSTEM You must recognize that a small business is a system in which all parts contribute to the success or failure of the whole. In this system, everything must work together: from employee to president; from equipment to resources. 4. SUSTAINABILITY A business must be dynamic- able to thrive through all economic conditions, in all markets, providing meaningful ,highly differentiated results to all of its customers 10 Guiding Principles For Start-ups Business 5. GROWTH All businesses need internal growth. A small business is a school in which its employees are students, with the intention, will, and determination to grow. 6. VISION A small business must manifest the higher purpose upon which it was seeded, the vision it was meant to simplify, the mission it was intended to fulfill  10 Guiding Principles For Start-ups Business 7. PURPOSE A small business is the fruit of a higher aim in the mind of the person who conceived it. 8. AUTONOMY A business is not a part of the owners life, but it is in fact, its own entity. A small business possesses a life of its own, in the service of God , in whom it finds reason  10 Guiding Principles For Start-ups Business 9. PROFITABILITY A small business is an economic entity , driving an economic reality, creating an economic certainty for the communities in which it thrives 10. STANDARD A small business creates a standard against which all small businesses are measured as either successful or not.  ACTIVITY If you are an entrepreneur, rank the 10 principles according to its importance to you. Then explain why. 1 as being the highest 10 BUSINESS PRINCIPLES 1. Scalability 2. Big ideas 3. System 4. Sustainability 5. Growth 6. Vision 7. Purpose 8. Autonomy 9. Profitability 10.Standard  7 Steps in Effective Decision-Making 1. Identify the decisions to be made. After realizing that a decision must be made, you then go through an internal process of trying to clearly define the nature of the decision you must take. 2. Gather relevant information. Most decisions require collecting pertinent information. 3. Identify alternatives. Through the process of collecting information you will probably identify several possible paths of action. In this step of decision making process ,you will list all possible and desirable. 4. Weigh evidence. In this step you draw on your information and emotions to imagine what it would be like if you carried out each of the alternatives to the end 7 Steps in Effective Decision-Making 5. Choose among alternatives.Once you have already weighed evidence ,you are ready to select the choice that seems to be suited to you. 6. Take action. You can take positive action, which begins to implement the alternative you choose 7. Review decision and consequences. Last step you experience the results of your decisions and evaluate whether or not it has solved the need you identified in Step 1 DECISION-MAKING TOOLS 1. DECISION MATRIX 2. T-CHART 3. DECISION TREE 3. DECISION TREE example is buying something from any online shopping portal where you get several recommendations based on what we are buying. 4. MULTI VOTING 5. PARETO ANALYSIS 5. COST BENEFIT ANALYSIS 6. CONJOINT ANALYSIS  Tools and Techniques in Making an Efficient Business 1.Use of technology to speed up workflow 2.Shorter meetings, fuel efficiency 3.Smart office, space pays 4.Small changes, big savings 5.Manage staff expenses 6.Keep a firm grip on cash flow 7.Stay connected to the move 8.Use time more efficiently 9.Get the best deal on insurance 10. Do not be lax with the legal 1.Useof technology to speed up workflow Small businesses should be looking to innovations in technology to solve day-to-day inconveniences. 2. Shorter meetings, fuel efficiency Hold a brief meeting standing up, every morning where each person explains what they are going to work on that day. This will ensure everyone is on the right track and not wasting on non-urgent tasks. By doing this standing-up you can make sure the meeting is energized and to the point. 3.Smart office, space pays Office space can involve a big outlay for SMEs, but it is also an area where some smarter thinking can make a real difference. Sharing meeting rooms and other communal space, for example kitchen facilities, with other companies and individuals reduces costs. The added benefit of co-working spaces is it fosters collaboration and creativity between the various businesses and people using the space. 4. Small changes, big savings One way of improving efficiency is for business owners to make small changes to the way they handle their company’s expenses. 5.Manage staff expenses Implement a corporate card program which can help oversee and manage employee expenses and provide high quality management information. 6. Keep a firm grip on cash flow Monitor the financial operation of the business. 7. Stay connected to the move Keep an eye on the day-to-day operations of the business. 8. Use time more efficiently Proper time management is the key to use time efficiently. 9. Get the best deal on insurance Trawling insurance companies, either online or by phone, to find the best deal on business insurance can be extremely costly in time. Business owners can save time by getting multiple insurance from quotes from one place, either by using a broker or a quote comparison tool. 10. Do not be lax with legal Be strict in following legal matters such as taxes and other mandatory business requirements. ACTIVITY: TRUE or FALSE 1. Overseeing the business daily operations is a must for a business owner. 2. Insurance is only optional to a business. ACTIVITY: TRUE or FALSE 3. The use of technology can speed up workflow. 4. Taxes and other legal matters of the business must be regularly observed. 5. Keeping track of your business finances is essential. Technical Marketing Techniques TECHNICAL MARKETING TECHNIQUES 1. Create utility and usefulness with your product - the first marketing technique you can use to beat your competition is to create utility, usefulness and satisfy the needs of your customers to achieve specific result. 2. Change your pricing. By bringing your goods and services into the price range of your customers. TECHNICAL MARKETING TECHNIQUES 3. Emphasize your product’s key benefit to the customer. Each product offers a “key benefit” that is the primary reason why customers would buy. 4. Deliver true value of your product to your customer. It is your job to make sure that you stay ahead of the game and ahead of your competition. COMPETITIVE ADVANTAGE  is anything that gives a company an edge over its competitors, helping it attract more customers and grow its market share. can take three primary forms ( cost advantage, offer advantage and niche advantage )  3 PRIMARY FORMS OF COMPETITIVE ADVANTAGE 1. Cost Advantage – producing a product or providing a service at a lower cost than competitors.  3 PRIMARY FORMS OF COMPETITIVE ADVANTAGE 2.Offer Advantage – differentiating a product by adding features that are highly valued by customers.  3 PRIMARY FORMS OF COMPETITIVE ADVANTAGE 3. Niche Advantage – serving a specific segment of the market better than anyone else. **A niche is a specific portion of a market that is united by common interest or demographic.  Methods of Competitive Advantages 1. Cost Leadership - It is an advantage that occurs when a business is able to offer same quality product as its competitors, but at a lower price 2. Differentiation - It is a strategy that businesses often use to set themselves apart from competitors  Methods of Competitive Advantages 3. Defensive Strategies - This strategy becomes an actual advantages it becomes increasingly difficult for the so- called competitors to offer any real opposition to the business. A defensive strategy is a marketing tool that management uses to defend their business from potential competitors. In other words, it's a battleground where you have to fight and protect your market share by keeping your customers happy and stabilizing your profit.  Methods of Competitive Advantages Some examples of defensive strategies include: A pricing war, in which a company commits to matching or beating a competitor on price. Adding more features to keep ahead of a competitor. Offering better service or warranties that speak to having better products. Advertising and marketing more to raise awareness of improved products or service. Partnering with suppliers or retailers to exclude or limit access to competitors. Countering a move by a competitor, such as when one moves into a company's home market by entering their own home  Methods of Competitive Advantages 4. Alliances - Competitive advantages can also be gained by businesses that seek strategic alliances with other businesses in related industries or within the same industry  Types of Business Competition The goal in business is to make profit by selling a product or service. In most situations several companies will be competing for sales and the market share. The purpose of competition in the company is to win the hearts and minds of the customer  Types of Business Competition 1. Performance competition. By providing good products and services, these companies hope to be successful and even lead the pack. Using the Total Quality Management (TQM) or Six-Sigma methods and conforming to the ISO 9000 Standards, a company can enhance their ability to make quality products and have a well-run company.  What Is ISO 9000? ISO 9000 is a set of standards for quality management, developed as an internationally-acceptable baseline for performance by businesses and other organizations. It was created by the International Organization for Standardization (ISO) with input from standards professionals from many nations.  Types of Business Competition 2.Head-to-Head Competition. Companies will compete directly with their competitor. They will not only try to perform well, but they will also try to make it difficult for their competitors to do well. 3. Controlling Supplies. One way which a company can deter their opponents from doing well is to try to control the supplies. By outbidding in vital supplies or controlling suppliers can be done to hinder the opponents.  Types of Business Competition 5. Distribution Competition. Controlling the distribution of products is another method of deterring the competition. 6.Predatory Competition. Large companies have been known to buy out smaller companies or they make simply make it difficult for the company to stay in business.  SUPPLIERS Suppliers are individuals or business that provide goods or services to vendors in return for the agreed compensation.  Impact of Suppliers to Business 1.Quality. Higher quality increases customer satisfaction and decreases returns, which adds cash to your bottom line 2.Timeliness. The timely deliveries are crucial to how customers view your reliability 3.Competitiveness. They can give you the one-up on your competition based on their pricing, quality, reliability, technological breakthroughs and knowledge of industry trends 4.Finance. If you ‘ve proven to be a considerate, loyal and paying customer, you may be able to tap into your suppliers for additional financing once you hit the growth mode 5.Innovation. Suppliers can make major contributions to your new product development.  SHORT ACTIVITY 1. Large companies have been known to buy out smaller competitors 2. Companies will compete directly with their top competitors. 3. Use Total Quality Management (TQM) or Six Sigma methods and conforming to the ISO. 4. Outbidding in vital supplies or controlling suppliers can be done to hinder the opponents. 5.Marketing sometimes employ negative ads about the competitors  SWOT ANALYSIS SWOT is an acronym for Strength, Weaknesses, Opportunities and Threats. Business owners. Business owners can conduct a SWOT analysis as a part of planning. This analysis helps you identify vital areas to either emphasize or improve. Simply listing strengths, weaknesses, opportunities and threats does not provide you a useful analysis. Techniques for addressing each of the four SWOT categories can improve the accuracy of your analysis.  SWOT ANALYSIS Strengths This pertains to characteristics of the business or project that give it an advantage over others. The advantages or the internal attributes that support a positive result or the edge that you have over the competitors.  SWOT ANALYSIS Weaknesses  Characteristics that place the business or project at a disadvantage relative to others. The disadvantages or internal characteristics that work against a successful outcome compared to the competitors  SWOT ANALYSIS Opportunities  These are the elements that the business or project could exploit to its advantage. Current external factors or trends that can be used to be taken advantage  SWOT ANALYSIS Threats These are the elements in the environment that could cause trouble for the business or project. Current external factors which may cause a problem to cause a negative impact and can jeopardize the business.  INTERNAL FACTORS The internal factors are the strengths or as weaknesses depending upon their effect on their organization objectives. The factors may include all of the 4Ps-Price, Product, Promotion and Place: as well as personnel, finance manufacturing capabilities and so on. EXTERNAL FACTORS External factors may include macroeconomic matters like : 1.technological change – methods, techniques & approaches adapted 2. political environment – government policies and attitude towards the business community EXTERNAL FACTORS 3.Legal environment- laws, regulations and legalities 4. socio-cultural changes in the market place or in competitive position – behaviors, beliefs, thoughts, patterns, lifestyle, interpersonal relationship, poverty, life expectancy rate, literacy EXTERNAL FACTORS 5. Economic environment – economic growth, interest rates, foreign exchange, inflation rates, globalization 6. Competition – “know thy competitors” is the rule of the thumb in the industry SAMPLE SWOT FOR A RESTAURANT STRENGTHS WEAKNESSES New and refreshing Confusing menu Highly enthusiastic Price confusion team Experienced Expensive price management team with small serving Modern and relaxing Low efficiency environment booking system Outstanding customer service  OPPORTUNITIES THREATS Health conscious Competitors offer trend delivery Loyal returning Competitors located customers nearby Fast growing sector Inflation rates