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Strategic Management

Strategic Management

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Published by gargpriyanka
Sikkim Manipal University MBA-4 Sem.
Sikkim Manipal University MBA-4 Sem.

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Published by: gargpriyanka on Dec 18, 2010
Copyright:Attribution Non-commercial


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Strategic Management & Business Policy
What are the components of a good Business Plan and briefly explain theImportance of each components.
Within the overall outline of the business plan, the executive summary will followthe title page. The summary should tell the reader what you want. This is very important.All too often, what the business owner desires is buried on page eight. Clearly state whatyou're asking for in the summary.The statement should be kept short and businesslike, probably no more than half apage. It could be longer, depending on how complicated the use of funds may be, butthe summary of a business plan, like the summary of a loan application, is generally nolonger than one page. Within that space, you'll need to provide a synopsis of your entirebusiness plan. Key elements that should be included are:
Business concept.
Describes the business, its product and the market it willserve. It should point out just exactly what will be sold, to whom and why thebusiness will hold a competitive advantage.
Financial features.
Highlights the important financial points of the businessincluding sales, profits, cash flows and return on investment.
Financial requirements
. Clearly states the capital needed to start the businessand to expand. It should detail how the capital will be used, and the equity, if any,that will be provided for funding. If the loan for initial capital will be based onsecurity instead of equity, you should also specify the source of collateral.
Current business position.
Furnishes relevant information about the company,its legal form of operation, when it was formed, the principal owners and keypersonnel.
Major achievements
. Details any developments within the company that areessential to the success of the business. Major achievements include items likepatents, prototypes, location of a facility, any crucial contracts that need to be inplace for product development, or results from any test marketing that has beenconducted.When writing your statement of purpose, don't waste words. If the statement of purposeis eight pages, nobody's going to read it because it'll be very clear that the business, nomatter what its merits, won't be a good investment because the principals are indecisiveand don't really know what they want. Make it easy for the reader to realize at firstglance both your needs and capabilities.
You wish to start a new venture to manufacture auto components. Explain Differentstages in the process of starting this new business.
Every business starts out as an idea. This idea usually involves the invention of anew product, or revolves around a better way of making and marketing an existing one.While many would argue that the idea stage is not a stage at all, it is actually a turningpoint. After this, you as a business builder must refine this idea into a money-makingreality.
Idea Researching
In this stage, you are researching your idea. The object of your research is to find outwho is marketing the same product or service in your area, and how successful themarketer has been. You can accomplish this by a Google search on the Internet,launching a test-marketing campaign, or conducting surveys. Also, you are attempting tofind what the level of interest is in the products (or services) you wish to market.As part of the initial research process, it is important to consider the legal requirementsof selling your product or service. According to the Biz Ed website, examine the legalramifications of your business. Know the tax laws governing your business. If insuranceis a requirement, prepare to budget for it. Also, be aware of any safety laws governingyou as an employer.
Business Plan Formulation
You must write a business plan. As Pendrith points out, this is crucial if you wantfunding, such as a small business loan or grant, or if you wish to lease a building. At thisstage, Pendrith advises, you need to consult with an attorney or business adviser for assistance.
Financial Planning
Financial planning involves thinking about the financial costs of starting and maintainingyour business. According to the Biz Ed website, you should consider such issues as thecosts of running the business; the prices you wish to charge your customers; cash flowcontrol; and how you wish to set up financial reserves in case of an emergency or anevent causing significant loss to the business.
Advertising Campaign
Decide how you will market your product. Consider your budget and your targetaudience. Make up business cards with your logo on it, your name and the name of your business. Make sure that they are of the most professional quality. Utilizing print, thenewspaper, the Internet, radio or TV is also wise, considering, of course, the size of your advertising budget
Preparing for Launch
Advertise for employees. This also requires adequate planning. Think about what youlook for in an employee. Be specific about the requisite skills and experience you areseeking. Then begin requesting resumes and setting up interviews, making hiringdecisions based on the standards you have set.
Not all businesses will progress through each of these stages. Some businesses arecreated just to be “flipped”. In other words, the business owner starts the business withthe specific intention of selling it within the first couple of years.Some companies avoid the sunset stage by constantly repositioning their business. Bydeveloping or acquiring new products and entering new markets, a company canstimulate growth and revitalize the organization.3. Explain the process of due Diligence and why it is necessary
Due diligence is a program of critical analysis that companies undertake prior tomaking business decisions in such areas as corporate mergers/acquisitions or major product purchases/sales. The due diligence process, whether outsourced or executedin-house, is in essence an attempt to provide business owners and managers withreliable and complete background information on proposed business deals, whether thedeal in question is a proposed acquisition of another company or a partnership with aninternational distributor, so that they can make informed decisions about whether to goforward with the business action. "The [due diligence] process involves everything fromreading the fine print in corporate legal and financial documents such as equity vestingplans and patents to interviewing customers, corporate officers, and key developers,"wrote Lee Copeland in Computerworld. The ultimate goal of such activities is to makesure that there are no hidden drawbacks or traps associated with the business actionunder consideration.Many companies undertake the due diligence process with insufficient vigor. In somecases, the prevailing culture views it as a perfunctory exercise to be checked off quickly.In other instances, the out-come of the due diligence process may be tainted (either consciously or unconsciously) by owners, managers, and researchers who stand tobenefit personally or professionally from the proposed activity. Businesses should bevigilant against letting such casual or flawed attitudes impact their own processes, for anefficient due diligence process can save companies from making costly mistakes thatmay have profound consequences for the firm's other operational areas and/or itscorporate reputation.
Areas of Due Diligence
The due diligence process is applied in two basic business situations: 1) transactionsinvolving sale and purchase of products or services, and 2) transactions involvingmergers, acquisitions, and partnerships of corporate entities. In the former instance,purchase and sales agreements include a series of exhibits that, taken in their entirety,form due diligence of the purchase. These include actual sales contracts, rentalcontracts, employment contracts, inventory lists, customer lists, and equipment lists.These various "representations" and "warranties" are presented to back up the financialclaims of both the buyer and seller. The importance of this kind of due diligence hasbeen heightened in recent years with the emergence of the Internet and other transformative technologies. Indeed, due diligence is a vital tool when a company isconfronted with major purchasing decisions in the realm of information technology. "Adue diligence investigation should answer pertinent questions such as whether anapplication is too bulky to run on the mobile devices the marketing plan calls for or 

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