CHAPTER 1

Industry Analysis
 Background

• You need to explain the type of business you’re in. You’ll be expected
to explain the general state of your industry and the nature of the
business, especially if your plan is going outside your company to
banks or investors.
• Whether you’re a service business, manufacturer, retailer, or some
other type of business, you should do an Industry Analysis,
describing:
1. Industry Participants.
2. Distribution Patterns.
3. Competition and Buying Patterns.
Industry Analysis
• Everything in your industry that happens outside of your
business will affect your company. The more you know about
your industry the more advantage and protection you will
have.
• A complete business plan discusses general industry
economics, participants, distribution patterns, factors in the
competition, and whatever else describes the nature of this
business to outsiders.
Industry Participants
• You should know who else sells in your market. You can’t easily
describe a type of business without describing the nature of the
participants. There is a huge difference, for example, between an
industry like broadband television services, in which there are only a
few huge companies in any one country, and one like dry cleaning, in
which there are tens of thousands of smaller participants.
• This can make a big difference to a business and a business plan. The
restaurant industry, for example, is what we call “pulverized,” which,
like the dry cleaning industry, is made up of many small participants.
The fast food business, on the other hand, is composed of a few
national brands participating in thousands of branded outlets, many
of them franchised.
Distribution Pattern
• Products and services can follow many paths between suppliers and users.
Explain how distribution works in your industry. Is this an industry in which
retailers are supported by
• regional distributors, as is the case for computer products, magazines, or
auto parts? Does your industry depend on direct sales to large industrial
customers? Do manufacturers support their own direct sales forces, or do
they work with product representatives?
• Some products are almost always sold through retail stores to consumers,
and sometimes these are distributed by distribution companies that buy
from manufacturers. In other cases, the products are sold directly from
manufacturers to stores. Some products are sold directly from the
manufacturer to the final consumer through mail campaigns, national
advertising, or other promotional means.
• In many product categories there are several alternatives, and
distribution choices are strategic. Encyclopedias and vacuum cleaners
are traditionally sold door-to-door, but are also sold in stores and
direct from manufacturer to consumer through radio and television
ads.
• Many products are distributed through direct business-to-business
sales, and in long-term contracts such as the ones between car
manufacturers and their suppliers of parts, materials, and
components. In some industries companies use representatives,
agents, or commissioned salespeople.
• Technology can change the patterns of distribution in an industry or
product category. The Internet, for example, is changing the options
for software distribution, books, music, and other products. Cable
communication is changing the options for distributing video
products and video games.
Competition and buying patterns
• It is essential to understand the nature of competition in your market. This
is still in the general area of describing the industry, or type of business.
Explain the general nature of competition in this business, and how the
customers seem to choose one provider over another.
• In the computer business, for example, competition might depend on
reputation and trends in one part of the market, and on channels of
distribution and advertising in another. In many business-to-business
industries, the nature of competition depends on direct selling, because
channels are impractical. Price is vital in products competing with each
other on retail shelves, but delivery and reliability might be much more
important for materials used by manufacturers in volume, for which a
shortage can affect an entire production line.
Main competitors
• Do a very complete analysis of your main competitors. List the main
competitors. What are the strengths and weaknesses of each?
Consider their products, pricing, reputation, management, financial
position, channels of distribution, brand awareness, business
development, technology, or other factors that you feel are
important. In what segments of the market do they operate? What
seems to be their strategy? How much do they impact your products,
and what threats and opportunities do they represent?
• One of the most overlooked, forgotten, and intentionally ignored
sections in a business plan is the analysis of the competition. Don’t
kid yourself. You have competition. Everyone has competition. It’s a
fundamental reality of being in business.
Competitive comparision
• Make a general comparison of your offering as one of several choices
a potential buyer can make. Determine how your product lines and
retail offering compare in general to the competition. For example:
1. Your ski shop might offer better ski equipment than some other
general outdoor store, or perhaps it is located next to the slopes
and caters to rental needs.
2. Your jewelry store might be mid-range in price but well known for
proficiency in appraisals, remounts, and renovation.
3. Your hobby shop has by far the largest selection of model trains and
airplanes.
Analyzing your competition
• The who, what, where, when, why, and how
• Knowing your competition allows you to identify a niche and
develop your own Unique Selling Proposition (USP). Clearly
defining and understanding the core value you offer your
clients can depend on your having a firm grasp of your
competitors' strengths and weaknesses.
Where do you start
1. Make a list of your competitors
2. List specific companies you compete with
3. Do a detailed competitive analysis
Gathering Information
• The next step in a competitive analysis is gathering information
through competitive intelligence (CI). CI is the practice of gathering,
analyzing, and disseminating information on what the marketplace
requires (the demand), about how and you and your competitors
meet these requirements (the supply), and how each strives to meet
market needs better than others (the competition).
• Gather marketing materials, visit stores, call and ask questions. These
are common ways to collect competitive data. I go straight to Web
sites and find almost everything I need there.
• Here are a few things to look for while gathering competitive
information:
1. What products/services competitors produce
2. Who their target audience is
3. Guarantees, pricing, hours of operation, and delivery options
4. Overall, how do they position themselves (cheapest, best value,
fastest, unique, patented, etc.)? What is their USP?
Porter five forces
• Understanding the dynamics of competitors within an industry is
critical for several reasons. First, it can help to assess the potential
opportunities for your venture, particularly important if you are
entering this industry as a new player. It can also be a critical step to
better differentiate yourself from others that offer similar products
and services.
• One of the most respected models to assist with this analysis is
Porter’s Five Forces Model. This model, created by Michael E. Porter
and described in the book “Competitive Strategy: Techniques for
Analyzing Industries and Competitors,” has proven to be a useful tool
for both business and marketing-based planning.
 CHAPTER 2
MARKET FORECAST &
MARKET RESEARCH
Market Forecast
• A market forecast is a core component of a market
analysis. It projects the future numbers,
characteristics, and trends in your target market. A
standard analysis shows the projected number of
potential customers divided into segments.
Market value
• Market value
Normally you would also look at market value, not just market size.
For example, although the high-end home segment is 2.5 times larger
than the small business segment as measured by number of
customers, the small business customer spends almost four times as
much as the home office customer. Therefore, the small business
market is a more important market in terms of dollar value.
Reality checks
• A market forecast should always be subject to a reality check. When you
think you have a forecast, you need to find a way to check it for reality. In
this case if the total market is worth some estimate, you could estimate
sales of all the competitors and see if the two numbers relate to each
other. In an international market, you might check production and import
and export figures to see whether your estimates for annual shipments
appear to be in the same general range as published figures.
• You might check with vendors who sold products to this market in some
given year to see whether their results check with your forecast. You might
look for macro-economic data to confirm the relative size of this market
compared to other markets with similar characteristics.
Review Target focus
• The market analysis should lead to developing strategic market focus.
That means selecting the key target markets. This is the critical
foundation of strategy. We talk about it as segmentation and
positioning.
• Under normal circumstances, no company will attempt to address all
the segments in a market. As you select target segments, think about
the inherent market differences, keys to success, competitive
advantage, and strengths and weaknesses of your company. You want
to focus on the best market, but the best one is not necessarily the
largest one or the one with the highest growth. It will be the one that
matches your own company profile.
Market Research
• Most every organization will benefit from even the most elementary
market research. If it does not provide new information, it will
confirm what is known.
• Market research is the process of gaining information about your
market. Preferably, this is specific information about your target
market and the key factors that influence their buying decisions.
Market research can be casual and limited in scope and, although it
may not be “statistically significant” research, it can still be valuable.
The value and “degree of fit” may be based on the quality, cost, or the
amount of time to acquire the information using these practical
market research tools.
• Determine what form of market research is going to work best for
you. Make that decision based on the value you will receive, versus
the time and other resources you need to invest to gain access to that
information.
• Market research is often confused with an elaborate process
conducted by a third party that takes a tremendous amount of time
and money. It may be important to take a different perspective on
what market research is and how it is conducted.
Primary market research
• Primary market research is research that you conduct yourself, rather than
information that you find already published. Primary market research may
result from you having direct contact with your customers or the public.
This may be through the following types of information gathering:
1. Focus groups gather a small group of people together for a discussion
with an assigned leader.
2. Customer surveys
1. Existing customers
2. Potential customers
3. Your competition
1. Solutions
2. Technologies
3. Niches
Secondary market research
• Market research may also come from secondary sources. This is
information others have acquired and already published which you
may find relevant. Access to this secondary market research data may
be yours for the asking and cost you only an email, letter, phone call,
or perhaps a nominal fee for copying and postage. Much of it is
entirely free. Much of it is available to search on the Internet.
Gaining Information from internet
• There are many websites sponsored by a variety of organizations that
can provide you with the business information you’ll need for your
business and marketing plans. These provide a beginning, a jump-off
place for more in-depth research.
• DI SLIDE YG BEDA

CHAPTER 3
MARKETING PLAN
 CHAPTER 4
OPERATIONAL PLAN
R&D
Business Plan Guide:
Operational Plans
1. Locations & Facilities
• Indicate locations and main facilities. Describe plant/office/facilities
capacity & utilization (past, present and future).
2. Operating Methods/Procedures
• Describe major elements of production/ operations/ distribution. Use
simple diagrams to illustrate processes or complex relationships.
• For example, in the case of a producer, highlight the main processes
and activities and discuss use of materials, capacities & utilization,
staffing levels, productivity, quality issues, energy consumption,
waste, inventory-building, transport/distribution and so on.
3. Capital Expenditure Projections
• Specify investments to date and plans. Distinguish between
mandatory and discretionary expenditure. If appropriate,
include or append maps, charts, pictures etc.
• Where relevant, cost justify investments by indicating their
expected return-on-investment.
4. Operating Cost Projections
• Segment costs as variable, semi-variable and fixed. Indicate
costings for key products/services and specify individual
gross margins. Discuss break-even points at operating unit
and product levels.
• If appropriate, specify unit costs for key inputs such as
materials, labor, payroll, power, communications,
environmental services etc. and forecast how these might
move in the future due to inflation, currency rates etc.
Technology R&D
• If R&D is relevant to your business, use this section to describe
progress to date, plans and resources. Highlight any technological
advances or achievements.
1. Overview of Technology
• Introduce the key technology trends/developments within your
industry or product area and explain how you are responding to
them. Summarize existing/planned patents and describe the
ownership status of all intellectual property rights (including
trademarks, copyrights etc.).
• Keep technical details to the minimum and explain unusual terms as
soon as used. Use simple drawings or flow diagrams to help describe
any complex issues.
 CHAPTER 5
Management &
Administration
Management & Administration
• Use this section to introduce the management team and structure
and to describe administrative (overhead) arrangement.
1. Management Structure
• Indicate any gaps in the management team and explain measures to
recruit. If necessary, present job specs in an Appendix.
• If the management structure is likely to change significantly within
the plan's life, present separate early- and late-stage organization
charts along with a simple table depicting the growth in management
head count.
2. Key Management Profiles
• Introduce the management team and their roles. Include
short profiles but relegate details to an appendix.
• Also, introduce the board of directors (and any sub-
committees) and profile non-executive directors
(existing/proposed). Place significant details in an appendix.
Outline the board's role in the management of the business.
• Summarize management remuneration and key clauses in
employment contracts.
3. Administration & Systems
• Describe administrative arrangements and indicate locations
and facilities.
• Explain key operational, accounting and related management
systems. Specify communications and IT systems. Describe
development plans and costs.
4. Head Count Projections
• The following table could be used to present head count projections
for administration and management function along with brief
explanations of major items or changes:

5. Overhead Expense Projections

• Indicate main components of overhead costs and present high-level
projections as shown in the following table:
MID TERM QUESTIONS
1. Everything in your industry that happens outside of
your business will not affect your company. The more
you know about your industry the more disadvantage
and thread you will have.
False. Everything in your industry that happens
outside of your business will affect your company.
The more you know about your industry the more
advantage and benefit you will have
2. Before starting your business, you
should do an industry analysis, i.e
describing the industry participants,
distribution patterns, competition and
buying patterns.
True
3.Market forecast is the process of gaining
information about the market.
False. Market research is the process of gaining
information about the market
4. Market research is specific information about
the target market and the key factors that
influence customers’ buying decisions.
True
5.Secondary market research is research that you
conduct yourself, rather than information that
you find already published.
False. Primary market research is research that
you conduct yourself, rather than information
that you find already published
6. Basically, a market forecast should always have
a situation analysis, marketing strategy, sales
forecast and expense budget
False. Basically, a marketing plan should have a
situation analysis, marketing strategy, sales
forecast and expense budget
7.Marketing strategy in marketing plan should
include at least a mission statement, objectives
and focused strategy including market segment
focus and product positioning
True
8. A marketing expense budget is how much you
are going to spend, on what and how your
spending relates to marketing strategy
True
9. A marketing plan should indicate locations and
main facilities, describe major elements of
production/ operations/ distribution, specify
investments to date and plans to estimate the
capital expenditures, indicate costings for key
products/services and specify individual gross
margins to develop the operating cost
projections.
False. An operational plan should indicate
locations and main facilities, describe…. (Same)
10.Management and administration plan section
is used to introduce the management team and
its structure, as well to describe administrative
(overhead) arrangement
True
11. The financial plan section of a business plan
consists of two financial statements i.e, the
income statement and the cash flow and a brief
explanation/ analysis of these two statements
False. The financial plan section of a business plan
consists of three financial statements i.e, the
income statement; the cash flow; balance sheet
and a brief explanation/ analysis of these three
statements
12. The cost of land and building, business
registration fees, business licensing and permits
are examples of operating costs.
False. The cost of land and building, business
registration fees, business licensing and permits
are examples of start-up expenses
13.The cash flow projection shows the revenues,
expenses and profit for a particular period. It
shows whether or not the business is profitable
during the period.
False. The Income statement projection shows
the revenues, expenses and profit for a particular
period. It shows whether or not the business is
profitable during the period.
14. The balance sheet presents a picture of the
business’ net worth at a particular point in time. It
summarises all the financial data into 3
categories: asset; liability and equity.
True
15. Investment costs consists of cost of fixed
assets, preproduction expenditures and net
working capital.
True