What Is a Business?

A business is defined as an organization or enterprising entity engaged in commercial, industrial,

or professional activities. Businesses can be for-profit entities or non-profit organizations that
operate to fulfil a charitable mission or further a social cause.
Business plan for an organization is the document which determines the organizational
objectives, strategies and projected actions in order to promote its survival and development
within a given time frame. Business plan also focuses on two key aspects namely (i) dealing with
risks, and (ii) making profits.
Business planning process requires deep investigation, careful evaluation of all factors, which
might have an impact on the result, and study of possible results of the actions of the organization.
In addition business plan determines management actions for expansion process, designs new
ways of for management action and includes revision of all the operations of the organization.
Action plan – Action planning is the essential part of business planning process since it describes
the path to the achievement of the objectives and put everything in a good order. Action plan is
the detailed plan which includes actions required to be taken for the achievement of the
objectives. It is a useful tool of the business planning process since it identifies and sets clear
objectives, prioritizes tasks in the efficient way and states strict deadlines. Further, it lends
credibility to the organization and does not allow overlooking of some of the essential details.
Vision statement – It is a global concept presenting a picture of the direction, future and
philosophy of the company. The vision statement is required to remain firm and is not to be
influenced by the concerns of the organization. The normal time frame of vision statement to
remain firm is around 10 years to 20 years. It presents the long term goal and objectives of the
organization. Vision statement is an important part as it sets the primary direction for business
planning process.
Mission statement – Mission statement represents the main purpose and principles which guides
the actions of management, partners and employees. Further, it includes the strategy, which is
required for the achievement of the organizational goals and objectives, defines the target groups
and embodies the values of the organization. Business plan introduces the road map of the
organization, where mission plays the role of providing the guidelines to follow. Vision
statement sets the direction, while mission statement shows the way to achieve it. It is important
to be sure that the business planning process is consistent with the mission of the organization as
otherwise, the desired goals and objectives the organization are not likely to be met.
Components of business plan
Business plan of an organization is required to present the company’s overview which includes
its mission, visions, and objectives, key principles of business planning; structure of business
plan, and the PDCA (Plan-Do-Check-Act) strategy as a part of business planning process. The
main components of business plan are
1. Executive Summary,
2. Overview Of The Organization,
3. Marketing Plan,
4. Operational Plan
5. Management And Organization Plan,
6. The Financial Plan.
Marketing plan – It is one of the major and extremely significant part of the business planning
process. Marketing brings success in the long term, particularly, continuous growth in earnings.
Elements of the marketing plan are product mix, four Ps of the marketing (product, place, price
and promotion), branding strategy, competitor and market analysis, Porter’s five forces analysis
(Porter’s five forces consists of bargaining power of suppliers, threat of new entrants, threat of
substitute, bargaining power of buyers, and competitive rivalry), SWOT (strength, weakness,
opportunity, and threat) analysis, customer decision making process, and sales plan.
Operational plan – It includes daily operations, people, processes, equipment, waste generation
and recycling environment and safety. Operation plan plays an important role because it clarifies
all aspects of business and structures them. Operational plan include production targets, raw
materials, equipment and spares, maintenance and upgradation plan, personnel planning, training
and development of employees, inventory planning, waste planning, environment and safety
related plans and regulatory issues. Operational plan is also to include product quality, product
development and activities related to process development.
Operational plan is a useful tool, which facilitates the coordination between various
departments of the organization for achieving goals and objectives. Also, this plan allows
evaluating the amount of expenses needed for efficient functioning of the organization. Last but
not least, operational plan is a guideline for the whole organization, and it explains specific
strategies and actions which are needed to be taken on a daily basis.
Management and organization plan – It analyses the structure and hierarchy within an
organization. This plan includes the information about board of directors and management,
consultants and key advisors. Apart from that, it displays the responsible area of employees and
proposes a succession plan. It allows clarifying the responsibilities of the employees and
management of the business on a daily basis.
Financial plan – It evaluates current financial situation of the organization and predicts the
future financial performance. One of the objectives of the financial planning is to determine
capital requirements and capital structure in order to understand the financial state of the
business. Apart from that, financial planning process frames financial policies to control the cash
flow and ensures that the organization is utilizing its financial resources in the most efficient
way. In addition to it, financial plan is also to show the direction of the organizational activities
and analyses how each action influences at the financial stability. Last but not least, financial
plan helps to make a decision about investments as it displays the ratios (e.g. equity ratio, debt
ratio) which plays an important role in the decision making process.
Action plan – Action planning is the essential part of business planning process since it describes
the path to the achievement of the objectives and put everything in a good order. Action plan is
the detailed plan which includes actions required to be taken for the achievement of the
objectives. It is a useful tool of the business planning process since it identifies and sets clear
objectives, prioritizes tasks in the efficient way and states strict deadlines. Further, it lends
credibility to the organization and does not allow overlooking of some of the essential details.
Action plan consists of a cycle of five stages namely (i) identification of current situation,
progress and implementation of self-assessment, (ii) setting of goals, (iii) definition of the
strategy which is required to be performed in order to achieve the results (the strategy is
sometimes detailed to include smaller discreet steps), (iv) taking of the action, and (v) evaluation
of results. Once this cycle is completed, the process starts again with identification of current
situation.
Objectives – The objectives of business plan represent the end result and take the role of
quantitative measures within fixed time frame. The fixed time frame for the achievement of the
objectives corresponds with the goals which are set in the mission statement. The business plan
shows strategies for reaching the objectives and hence, it meets as well the viability in the mission
statement.
The economic environment consists of external factors in a business market and the broader
economy that can influence a business. You can divide the economic environment into the
microeconomic environment, which affects business decision making - such as individual
actions of firms and consumers - and the macroeconomic environment, which affects an entire
economy and all of its participants. Many economic factors act as external constraints on your
business, which means that you have little, if any, control over them. Let's take a look at both of
these broad factors in more detail.
Macroeconomic influences are broad economic factors that either directly or indirectly affect the
entire economy and all of its participants, including your business. These factors include such
things as:
1. Interest rates
2. Taxes
3. Inflation
4. Currency exchange rates
5. Consumer discretionary income
6. Savings rates
7. Consumer confidence levels
8. Unemployment rate
9. Recession
10. Depression
Microeconomic factors influence how your business will make decisions. Unlike
macroeconomic factors, these factors are far less broad in scope and do not necessarily affect the
entire economy as a whole. Microeconomic factors influencing a business include:
1. Market size
2. Demand
3. Supply
4. Competitors
5. Suppliers
6. Distribution chain, such as retail stores

The different environmental factors that affect the business can be broadly categorized as internal
ands has its own external factors.

INTERNAL FACTORS : Internal factors are those factors which exist within the premises of
an organization and directly affects the different operations carried out in a business. These
internal factors are :
A. VALUE SYSTEM : It implies the culture and norms of the business. In other words, it means
the regulatory framework of a business and every member of the organization has to act within
the limits of this framework.

B. MISSIONS AND OBJECTIVES : Different priorities, policies and philosophies of a

business is guided by the mission and objectives of a business.

C. FINANCIAL FACTORS : Financial factors like financial policies, financial position and
capital structure also affects a business performance and its strategies.

D. INTERNAL RELATIONSHIP : Factors like the amount of support the top management
enjoys from its shareholders, employees and the board of directors also affects the smooth
functioning of a business.

The EXTERNAL FACTORS include all those factors which exists outside the firm and are
often regarded as uncontrollable.. These external forces can further be categorized as MICRO
ENVIRONMENT and MACRO ENVIRONMENT.

MICRO ENVIRONMENT includes the following factors.

1.SUPPLIERS : Suppliers are those people who are responsible for supplying necessary inputs
to the organization and ensure the smooth flow of production.

2.COMPETITORS : Competitors can be called the close rivals and in order to survive the
competition one has to keep a close look in the market and formulate its policies and strategies
as such to face the competition.

3.MARKETING INTERMEDIARIES : Marketing intermediaries aid the company in

promoting, selling and distribution of the goods and services to its final users. Therefore,
marketing intermediaries are vital link between the business and the consumers.

MACRO ENVIRONMENT includes the following factors.

1.ECONOMIC FACTORS : Economic factors includes economic conditions and economic

policies that together constitutes the economic environment. These includes growth rate,
infation, restrictive trade practices etc. Which have a considerable immpact on the business.

2.SOCIAL FACTORS : Social factors includes the society as a whole alongside its preferences
and priorities like the buying and consumption pattern, beliefs of people their purchasing power,
educational background etc.

3.POLITICAL FACTORS : The political factors are related to the management of public
affairsAnd their impact on the business. It is important to have a political stability to maintain
stability in the trade.

4.TECHNOLOGICAL FACTORS : Latest technologies helps in improving the marketablity

of the product plus makes it more consumer friendly. Therefore, it is important for a business to
keep a pace withv the changing technologies in order to survive in the long run.