Enterprise and Entrepreneurial Manamgement

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The Creation of a Successful Entrepreneurial Venture INTRODUCTION In order to start up a business or a company, a business plan is one of the most important things to have. Some people say it is a road map to a bigger business but the truth is a business plan summarizes what a company does, shows how they will develop and where do you want it go to. In particular, it should cover the strategy for improving the existing sales and process to achieve the growth you want. Planning a business is not hard, running the business is hard but to make the business success is the hardest. Therefore to achieve it u need to include a set of standard elements such as Idea Generation, Strategic Objective, Market Analysis and Research, Understanding the Competition, Cash Flow, Profit and Loss Forecast, Balance Sheet, Competitive Strategy, and Scenario Analysis. The most important thing about business plan it has to be complete and also short so it will be easy to present and to understand, integrated, and organize so that it will look nicer and neat. ELEMENTS As it mention above idea generation is one elements of the standard set in business plan. It is the first step of business plan which it will tell the rough idea of the business or what business it is going to be. A new product development starts with idea generation and it is the systematic search for new product idea. However, it is not just ideas that needed but creative ideas to make a product. Although creative idea is the best to make a product but it need time and a lot of brainstorming to do, which will include analysis, discussion, and criticism. Basically idea generation is a creative process of generating, developing, and communicating to make a new product. It is also cover almost all elements in business plan by generating idea for problem solving idea which is the most simple method of progress where someone has found a problem and as a result solve it, and evolutionary idea which is taking and improving something that is already exist. The next step of the business plan, which is the strategic objectives, will be taking over. Strategic objective are used to focus business goals by using method designed for organization to help growth and success. It can use as much method and it can set as much strategy as it needs to achieve success. However it is important that an organization to be more alert of some common pitfalls such as over ambition, no prioritisation, poor analysis, no focus, overly high expectation, and ignoring national policies. SMART is an acronym that describes the key characteristic of meaningful objective that are specific, measureable, achievable, realistic, and time bound. Although SMART is well known method and well understood to most organization but it is poorly practiced. It is the stepping stones for an organization to reach their goals. Market analysis is process that seeks to identify and quantify the key features of a market by using a range of market research techniques. According to David A. Aaker a professor of university of California outlined some dimension of market analysis and that are market size, market growth rate, market profitability, industry cost structure, distribution channel, market trends, and key success
Muhammad Azri bin Zolkifli 1

Enterprise and Entrepreneurial Manamgement

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factors. Market size is the number of buyers and sellers in a particular market and it is to a company who wish to launch a new product or service since smaller markets are less likely to be able to support a high volume of goods while large market could bring more competition. Market growth rate indicates the health of the company, if the company sales growth is greater than or equal to market growth, it means the firm is comparatively healthy and it is also indicates the product stage in the product life cycle.

The picture above is bcg matrix also known as Boston Consulting Group is a chart that had been created by Bruce Henderson. It is used for developing marketing strategies and performing marketing analysis related to planning and analysis of products and services. Basically bcg matrix has 4 quadrants and they are question marks, stars, cash cow, and dogs. According to bcg matrix, question marks quadrant have low market shared but high growth market while cash cow quadrant generates most of the cash flows in business organization but the market growth are generally very low. Star quadrant is the leader quadrant because it has high market shares and also high growth market mean while dog quadrant has very low market share and operates in low growth market, basically it does not generate much cash flow and most likely no potential to grow. Bsg matrix is an effective business tool that can be used for an organizations current analysis, marketing planning and estimating the future development such as potential market positioning of new products or services in the market place. By using the BCG Matrix Analysis approach business and marketing managers are able to better understand the marketplace and develop effectively plans and strategies. This business analysis helps with planning and optimizing the company's current portfolio of products and services and helps managers make better decisions on how to allocate their marketing resources efficiently and effectively.
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Enterprise and Entrepreneurial Manamgement

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The term competition is common among businesses. A business needs to enter the competition as soon as they published their product or enter the market in order to make it to the top. The more competition will be the larger competition it is, and the larger the competition is the more faster the business will grow. Before a business entering a competition, they must understand the competition. Therefore the Micheal Porter five forces are introduced to make the understanding of competition easier and clearer. The first of the five forces is the threat of new market entrance. The question of how costly is it going to be to enter the industry will be questioned. And the factors, which will affect the cost, will be the distribution, economy of scales, and differentiation of product or brand. There are few options depending on the situation but the safes and fastest is franchising because the product is already known and the advantage of having the brand power of a parent company, and the set up cost of buying equipment may be cheaper. The second of the five forces is the existing competitive rivalry among competitors. The competition can grow the business but large competition can help to promote the companys market. Who are you competing with is questions perhaps the company can form alliance or strategic interrelationship with competitors. Usually this happened to tourism industry where a hotel trying to promote the market, they join forces to compete with the large competitors. The third of the five forces is the power of suppliers, which will be focusing on suppliers concentration, importance of the volume to suppliers, impact of input on cost or differentiation, and threat of forward integration. The fourth of the five forces is bargaining power of buyers. The questions that will be facing are who are the buyers? and what are their demand in terms of profits or quality? this two angle angles that we are looking are to satisfy a large number of buyers with a generic product. In this, we will be focusing on bargaining leverage, buyers volume, price sensitivity, and buyers incentives. Financial number are consists of cash flow, profit and loss forecasts, and balance sheet projection. It is important for a business to have cash flow, profit and loss forecast, and balance sheet projection in their business so the business will not be in chaos and more systematic. Cash flow is a movement of cash into and out of the business. Basically it is a measurement of a company's financial health. Equals cash receipts minus cash payments over a given period of time or equivalently, net profit plus amounts charged off for depreciation, depletion, and amortization. Cash flow will increase by selling more goods, selling assets, reducing costs, increasing the selling price, collecting faster, slower payment, bringing in equity, and taking loan. However the level of cash flow does not necessarily means a good measure of performance. Profit and loss statement shows the progression of a business, which will show the profit or loss has been made over a period of time, and it will be updated regularly to show the progression of the business. in a simple case the profit and loss equals the increase or decrease in the businesss assets as shown on balance sheet. Balance sheet is one of the most important accounts in a business. It shows the assets and liabilities of the business, and how the business is founded.
Muhammad Azri bin Zolkifli 3

Enterprise and Entrepreneurial Manamgement

SID : 0821220/3

SUMMARY As shown above I have critique a business plan which consist of idea generation, strategic objective, marketing analysis, understanding the competition, understanding the financial numbers, and competitive strategy. From what I have written, idea generation is the most important thing to have because without it, there will be no business. It is important that a business to have a business plan and to have a better business plan is by letting others to critique the business plan.

Muhammad Azri bin Zolkifli

Enterprise and Entrepreneurial Manamgement

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REFFERENCE George J. Kress,Taryn Webb, and John Snyder, Forecasting and Market Analysis Techniques: A Practical Approach (Westport, CT: Quorum Books, 1994)

Alan Chapman, 2009. Michael E Porter's five forces of competitive position model [online]
http://www.businessballs.com/portersfiveforcesofcompetition.htm [Access on 29 April 2011] Graham, D and Bachmann, T., (2004) Ideation: The Birth and Death of Ideas. John Wiley and Sons Inc. Epstein, Barry J.; Eva K. Jermakowicz (2007). Interpretation and Application of International Financial Reporting Standards. John Wiley & Sons. Helfert, Erich A. (2001). "The Nature of Financial Statements: The Cash Flow Statement". Financial Analysis - Tools and Techniques - A Guide for Managers. McGraw-Hill. p. 42 Jan R. Williams, Susan F. Haka, Mark S. Bettner, Joseph V. Carcello. (2008) Financial & Managerial Accounting. Harry I. Wolk, James L. Dodd, Michael G. Tearney. (2004).Accounting Theory: Conceptual Issues in a Political and Economic Environment Dess, Gregory G., G.T. Lumpkin and Marilyn L. Taylor. (2005).Strategic Management. 2 ed.McGraw-Hill Irwin,

Muhammad Azri bin Zolkifli