1. Business Plan: Business plan is a document that is the outcome of an integrated process of making future plans for different
organizational functions. More specifically, business plan is (1) A written document that details the proposed venture. (2) A
description of all the facts, like the project, marketing, research and development, manufacturing, management, critical risks,
financing and milestone of proposed venture. (3) A document written to raise money for a growing company from the banks of
financial investors. (4) Future guide for successful operation of the venture.
Why business plan is so essential?
1.The preparation process of a business plan forces the entrepreneur to take an objective , critical, and unemotional look at the
business in its entirely. 2. It is a tool to managing the business better. 3. It is a way of communicating the firm’s ideas to others and
the basis for the financial proposal. 4. It improves the firm’s chances of success. 5. It sells the entrepreneur and others on the
business.6. It communicates the strategy and business approach within the firm.
Business plan checklist: A personal step by step evaluation
1. Business description segment 2. Marketing segment 3. Research design & development segment 4. Manufacturing segment
5. Management segment 6. Critical risk segment 7. Financial segment 8.Milestone schedule segment 9. Appendix segment
Joint venture: A joint venture is a separate entity involving two or active participants as partners. Sometimes called strategic
alliances, they involve a wide variety of partners, including universities, not-for-profit organizations, business and public sector. For
examples, Boeing/Mitsubishi/Fuji/Kawasaki entered into a joint venture for the production of aircraft in order to share technology and
cut costs.
Acquisition: Purchasing all or part of a company. One entrepreneur acquired a chemical manufacturing company after becoming
familiar with its problems and operations as a supplier of the entrepreneur’s company.
Advantages: 1. Established Business: Acquired firm has established image and track record. 2. Location: Not new to the
customers. 3. Established marketing structure: Existing channel and sales structure, known a supplier, wholesalers, retailers and
manufactures reps are important assets to an entrepreneur. 4. Cost: The actual cost of acquiring a business can be lower than
other methods of expansions. 5. Existing employers: The employees know how to run the business and can help assure that the
business will continue in its successful mode.
Merger Motivation
Defensive (passive) ------------------------------------------------------------------------------------------------------------------------Offensive (active)
Survival requirement Protection against Diversification Gains in
Capital structure deterioration Market infringement Counter cyclical Market position
Technological obsolesce Low cost position of a Counter seasonal Technological edge
competitor
Loss of raw materials Product innovations by others International operations Financial strength
Market loss to superior A unwanted takeover Multiple strategic plans Managerial talent
products
Hostile takeover: One from of acquisition. A company acquiring another company against its will. Three items make a hostile
takeover possible.1. A low stock valuation versus performance. 2.. A low debt ratio, allowing the entrepreneur to use the assets of
the company to found the takeover. 3. A high percentage of institutional investors holding the company’s stock.
Leveraged Buyouts: A leveraged buyout (LBO) occurs when an entrepreneur uses borrowed funds to purchase an existing venture
for cash. Most LBO occurs because entrepreneur purchasing the venture believes that he/she could run the company more
efficiently than the owners have done.
Franchising: The entrepreneur will be trained and supported in the marketing by the franchisor and will be using a name that has
some establish image. Franchising is also an alternative strategy for an entrepreneur to expand his business by having others pay
for the use of name, process, product, service, and so on.
What you may in a franchise?
1. A product or service with established market and favorable image 2.A patented formula or design 3. Trade name or markets
-A financial management system for controlling the financial reve nues 4. Managerial advice from expert in the field 5. Economics
of scale for advising and purchasing 6. Head office services 7. A tested business concept