Entrepreneurship in the Global Market Place

Business Plan (Report): Structure

Lecturer: S. Ajendra MBA (PIM-SJP), ACMA, CGMA, SAT, BSc in Comp & Mgt
 NEW BUSINESS STARTUP

The business idea could be either a fresh start-up in a foreign country (not
the country of your origin) or a new hypothetical extension of an existing
business.

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 IMPORTANT!

Do NOT directly copy and paste the contents of the literature. Read the
sources, extract the information and write them in your own words and
properly acknowledge the sources through citations.

If the contents are extracted and written as it is, it will increase similarities
and it can even lead to failure.
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 COVER PAGE

Use the standard cover page for the assignment.

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 EXECUTIVE SUMMARY

Executive summary should encapsulate the overview of the entire

assignment.
It is a concise synopsis of the report which enables the user to have an
overall idea about the report.
It should attract the reader to read the entire report by revealing the key
points/ findings.
It should be written once the entire report is completed.
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 TABLE OF CONTENTS (SAMPLE)

No. Title Page No.

1.0 Introduction 1
2.1 Internationalisation 2
2.2 Host country analysis X
2.2.1 PESTEL analysis X
3.1 Mode of Entries X

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 LIST OF TABLES

Table number, title of the table and page number should appear.
Example

No. Title Page No.

Table 4.1 Risk management 15

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 LIST OF FIGURES

Figure number, figure name and page number should appear.

Example:

No. Title Page No.

Figure 2.1 Porter’s Diamond 08

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 LIST OF ABBREVIATIONS

List of abbreviation should be in the alphabetic order.

Example:
ILC - Internal Locus of Control
PBC - Perceived Behavioural Control
SN - Social Norm
TPB - Theory of Planned Behaviour
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 1.0 INTRODUCTION

Background*: Provide a brief background about the selected company.

Scope: key areas which you are going to cover in this report.

*Discussed in the next slide.

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 1.1 INTRODUCTION

Brief your business idea. Your briefing should include the

following,
Name of the business and offer(s)
Target customer base
Unique selling points (USP) and their benefits
The form of your business (Partnership, Company etc.)
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 1.2 PRODUCT / SERVICE READINESS FOR
INTERNATIONALISATION

Choose the product / service you want to take to the international market and
the country where you want to operate. Justify you choice on following
grounds.
The selected product or service is successful in the home market.
And / or
The foreign market is a viable option for the product / service.

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 2.0 HOST COUNTRY & INDUSTRIAL ANALYSIS
Host country market analysis can include the following,

PESTEL
Porter’s Diamond or Porter’s Five / Six Forces Analysis
Note: At least two models must be used to analyse the conditions of host
country.

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 2.1 HOST COUNTRY ANALYSIS
PESTEL analysis
Relevant trend, changes in the political, economic, social, technical,
ecological and legal factors should be discussed with the impacts of
those factors on the new venture.
PESTEL must be customised to your business.
The outcomes of the PESTEL analysis must be positive or the
student must explain the rationale of the decision to enter into the
market, even though the environment is not conducive.
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 SAMPLE DETERMINANTS OF PESTEL FACTORS
Political Economic

Degree of Bureaucracy Inflation

Corruption level unemployment rate
Freedom of the press income disparity rate
International business policies average disposable income level
Trade control interest rate
Regulation and deregulation exchange rate
Tax policy (tax rates and incentives) stage in economic cycle
Government stability and related changes poverty
Government involvement in trade unions and agreements changes in the energy prices
Import restrictions on quality and quantity of product
Consumer protection and e-commerce
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 SAMPLE DETERMINANTS OF PESTEL FACTORS
Social Technological

Lifestyles & buying habits internet connectivity

education level internet penetration rate
emphasis on safety speed of the internet
Religion and beliefs degree of automation
Health consciousness & Environmental consciousness availability of skilled labour force
Social classes
Family size & Sex distribution
Sex orientation
Attitudes toward saving and investing
Population growth & Life expectation
Attitudes toward imported products and services
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Attitudes toward work, career, leisure and retirement
 SAMPLE DETERMINANTS OF PESTEL FACTORS

Ecological Legal

Laws that regulate environment pollution Education Law

climate change Anti-trust law
natural disasters Employment law
changes in seasons Discrimination law
pollution Data protection law
availability of non-renewable, renewable resources Environmental Law
government policies towards the usage of scarce resources Health and safety law
Intellectual property law (Copyright, patents)

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2.2 Porter’s Diamond

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 Porter’s Diamond…
Factor Endowments Demand Conditions
Basic factors: Natural resources, climate, Substantial, sophisticated and innovation-
demographic and location. demanding domestic customers.

Advanced factors: Infrastructure, skilled

labours, technology and research facilities.
Related and Supporting Industries Firm Strategy, Structure and
Rivalry
Presence of suppliers or related industries that Management ideologies. Eg: USA &
are internationally competitive. German
Eg: US semiconductor PC and smart phone Vigorous domestic rivalry

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 Porter’s Diamond…

Government Change

Government policies and initiatives can

Disruptive innovations can change the
detract from/ improve national advantage.
industry structure.
Eg: China’s quota system on rare earth
Eg: Presence of internet on mass media
metals’ export

These key factors and trends must be discussed along with the impacts of
those factors and changes on your business.

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 Porter’s Diamond
OR
Porter’s Five Forces Analysis

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 2.2 PORTER’S FIVE/ SIX FORCES ANALYSIS

Incorporate a range of factors which can influence the elements of the

five forces/ six forces such as rivalry, bargaining power of suppliers,
bargaining power of customers, threat of new entrants, threat of
substitutes and complementary products.
Categorise and mention the degree of severity of each element as high,
medium and low.
State about the attractiveness of the industry at the end of the analysis.
Provide the detail analysis in an appendix. 22
 SAMPLE DETERMINANTS OF SIX FORCES
Rivalry Threat of new entrants

Number of businesses Entry barriers reduce the threat of new entrants. Potential
Size of businesses entry barriers,
Degree of differentiation High level of capital
Level of switching cost Usage of protected or sophisticated technology
Life cycle stage of the industry Government regulations
Switching cost Economies of scale
Control over distribution channel
Control over supply of key resources

Threat of substitutes Complementary products

Threat of substitute products can be mitigated through High demand for complementary products could increase
high level of differentiation the market attractiveness 23
 SAMPLE DETERMINANTS OF SIX FORCES
Bargaining power of suppliers
Supplier concentration/ number of suppliers
Degree of differentiation
Level of switching cost
Ability of forward integration
Availability of substitute products
Proportion of purchase by the customer
Customers’ knowledge about the supplier’s Customers’ knowledge about the supplier’s
industry
Bargaining power of customers
buyer concentration/ number of buyers
Required special product specifications
Level of switching cost
Ability of backward integration
Availability of substitute products
Proportion of purchase by the customer
industry
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 2.3 Hofstede’s six dimensions of national culture
Cultural Home Host Implication Strategies to
Dimension condition condition close the gap
Eg: Individualism Individual Collective Lower level employees Mentor the senior
and collectivism decision decision making may be demotivated as management for
making (DM) (DM) they were not involved in participative DM
the DM process. culture while
holding the
individual
responsibility for
decisions made.

If you feel that it is hard to explain the implications and strategies within the table given
above, you can explain them under the table.
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 3.0 Potential Entry Strategies
Indirect export
Direct export
Note: Explain how the entry strategy would enable
 Turnkey projects the company to grab the opportunities and
Licensing overcome the identified risks.
Franchising
Joint ventures with a host country firm
Wholly owned subsidiary

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 4.0 Operation strategies
Explain the proposed organisation structure in the host country (Functional
structure, worldwide production divisional structure, worldwide area structure or
matrix structure).
Explain the degree of centralisation and decentralisation of different functions (Eg:
HR is centralised).
Explain the ways of integrating the activities of the divisions located in different
countries (Eg: Direct contacts, Liaison officers, inter-divisional teams or/and matrix
structure).
Explain the proposed controlling systems (Personal, bureaucratic, output or/and
cultural control system).
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 5.0 Marketing strategy
Identifying the potential customers
Segmentation:
The differences between countries in the structure of market
segments.
The existence of segments that transcend national borders. Eg: Global youth
segment
Targeting: define your target customers clearly, state the USP
and the benefits of those USP.
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 OPPORTUNITY GAP

Mention the business name, offer(s)

Prepare a perceptual map to show the opportunity gap (the axes of
the graph can be determined by the student).
Explain about the depicted opportunity gap in the slide note. Your
explanation may talk about, if applicable, first mover advantages and
time-based opportunities.

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 Marketing strategy - Positioning

Positioning is done using the marketing mix.

Product: Impact of culture, level of economic development and technical
availability should be considered when designing the offer.
Price: Price discrimination, strategic pricing (Predatory, multipoint and
experience curve) and host country regulations related to pricing should
be discussed.

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 Marketing strategy – Positioning………

Promotion: The impact of cultural barriers, source/ country of origin

effects and noise level should be considered. Ability of using standardised
promotion materials should also be considered when devising promotion
strategy.
Place: Impact of entry strategy, retail concentration, channel length,
channel exclusivity and channel quality on distribution should be discussed.

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 6.0 Human Resource strategies

Explain and justify the proposed staffing policy: Ethnocentric, polycentric or

Geocentric.
Explain how would you overcome expatriates’ failure, if you were to
employ polycentric or geocentric staffing policy.
Explain about any new labour regulations you need to follow in the host
country which are NOT imposed in the home country.

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7.0 Financial Feasibility

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 START-UP CAPITAL BREAKDOWN

Provide the breakdown of the ways the start-up capital is going to be

spent for initial set-up costs.

Provide the breakdown of the sources of start-up capital.

 SAMPLE OF INITIAL SET-UP COSTS
Particular Amount
Business Registration Cost XX
Furniture XXX
Machinery XXX
Delivery Vehicle XXX
IT Infrastructure XXX
Land and Building XXX
Initial recruitment and selection costs XXX
 SAMPLE OF INITIAL SOURCES OF FINANCE

Particular Amount
Owner’s Capital XXX
Long-term Bank Loans XXX
Loans from unstructured Market XXX
Bank Overdraft XXX

Note: Mostly the initial capital should be used to acquire the capital
assets. There may be some money left for working capital and
future development
 The following financial information needs to be furnished under
financial plan:

Quarterly based cash budgets – Cash budgets consist of four quarters

should be prepared for each year for two years.

Budgeted Income statements – Three separate annual income statements

should be prepared for two years.

Budgeted statement of financial position at the end of the first and

second year should be depicted.

Break-even analysis
 CASH BUDGET (PRO-FORMA)
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Receipts
Cash sales
Credit sales
Total
Payments
Eg: payments for raw
materials
Salary
Capital expenditures
Total
Net inflow / outflow
Opening cash balance
Closing cash balance
BUDGETED INCOME STATEMENT (PRO FORMA)

Revenue / Sales XXX

Cost of Sales (XXX)
Gross Profit XXX
Distribution Cost
Bad Debts XX
Promotion expenses XX
Marketing Manager’s Salary XX (XXX)
Administration Expenditures
Furniture depreciation XX
Admin Employees’ Salaries XX (XXX)
Operating Profit XXX
Other income XX
Finance Cost XX (XX)
Profit Before tax XXX
Tax (if applicable) (XX)
Profit after tax XXX
Budgeted Statement of Financial Position / Balance Sheet
(Pro forma)

See next slide

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 Cost Provision for NPV
Depreciation
Property Plant and Equipment
Land and Building XXX (XXX) XXX
Furniture XXX (XXX) XXX
XXX XXX XXX
Intangible assets XXX

Current Assets
Inventories XXX
Trade Receivables XXX
Cash and Bank Balance XXX

Total Assets XXX

Capital and Liabilities

Capital XXX
Profit XXX XXX

Non-Current Liability
% Bank Loan XXX XXX

Current Liability
Trade Payables XXX
Accrued Expenses XXX XXX
Total Capital and Liabilities
 BREAK EVEN POINT CALCULATION
If your business sells only one product, you can calculate the breakeven point using the
equation given below,

BEP (Units) = Fixed Cost

Contribution per unit

Contribution per unit = Selling price – variable cost per unit

If your business sells more than one product, you need to calculate multiproduct
breakeven point. A sample calculation of multiproduct breakeven point has been given in
the next slide.

Note: You need to show the breakdown of the fixed costs and the variable costs per unit
in this section.
 Finance – sample multi-product BEP
calculation
Gowshi Ltd is a consultancy firm which offers business advisory services to three categories of customers,
micro business, small business and medium business. Expected price and variable cost for each segment
along with the expected number of services (sales units) are given below.
Segment Forecast Forecast Forecast sales
selling price variable cost units per
per annum
assignment
Micro $50 $30 5000

Small $70 $40 3000

Medium $100 $50 2000

The expected fixed cost per annum is $145,000. Calculate the multi-product BEP.
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Finance – sample multi-product BEP calculation
Step 01: Calculating the Contribution for each offer.
Segment Forecast selling price Forecast variable cost Contribution
(SP) per assignment (VC) (SP-VC)

Micro $50 $30 $20

Small $70 $40 $30

Medium $100 $50 $50

Step 02: Calculating the total contribution

Segment Sales (Unit) Contribution Total Contribution
Micro 5000 $20 $100,000
Small 3000 $30 $90,000
Medium 2000 $50 $100,000
$290,000
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Finance – sample multi-product BEP
calculation
Step 04: Divide the fixed cost by the weighted average
contribution.

Multi-product BEP =

Multi-product BEP =

= 5000 units

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Finance – sample multi-product BEP
calculation
The 5000 units are expected to be sold in the ratio of 5:3:2,

Segment Sales Contributi Total Contribution

(Unit) on
Micro 2500 $20 $50,000
Small 1500 $30 $45,000
Medium 1000 $50 $50,000
$145,000

Now the total contribution is equal to the total fixed cost. Thus,
BEP has been achieved.
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 8.0 CONCLUSION

A summary of the background of the business, environmental viability,

industrial attractiveness, marketing strategies, operation and HRM
strategies and risk identification and mitigation strategies should be
discussed under conclusion.

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 SAMPLE WORD COUNT PLAN
No. Heading Approximate
word count
1.0 Introduction 600 words
2.1 Host Country Analysis – PESTEL (Detail analysis can be annexed) 900 words
2.2 Five Forces Analysis (Detail analysis can be annexed) 750 words
2.3 Cultural Analysis Eg: Hofstede’s model (Detail analysis can be annexed) 600 words
3.0 Mode of Entry 200 words
4.0 Operation Strategy 200 words
5.0 Marketing Strategy 300 words
6.0 HRM Strategy 200 words
7.0 Financial Plan 150 words
8.0 Conclusion 100 words
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 SAMPLE WORD COUNT PLAN

It is a sample plan, you may have an alternative word count plan.
Detail PESTEL, Five forces and Hofstede’s analysis can be given in the
appendices by mentioning “refer appendix x” in the main body.
All the financial statements should be given in the appendix and briefly give
an explanation on key financial figures in the main body.

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 REFERENCE

A good level of reading and usage of literature would lead to a high grade.
Thus, it is important to prepare a lengthy reference list for the sources you
have used in the presentation paper. All the sources in the reference list
must be cited in the body of the paper and vice versa.
Harvard referencing should be strictly followed.
Reference list must be in the alphabetic order.

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 BIBLIOGRAPHY

Bibliography are the sources which we have read but not cited in the body
of the report.
Eg: The sources which had given the background knowledge of the topic(s)
you have discussed in the report.

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 APPENDICES

You can attach any relevant document which could add value to the
contents of the assignment.
However, appendices should NOT be bigger than the body of the
report.
Do not attach documents that can increase the similarity count of the
assignment.
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 GENERAL GUIDELINES
• Word count: 4000 words +/- 10%. Any deviation from this will be penalised.
• Assignment type: Report
• Font type:Times New Roman
• Font size: 12
• Sub headings: size 12 bold
• Main headings: size 14 bold
• Line spacing: 1.5
• Assignment submission deadline: 05th January, 2021 before 18:00 (SL time)
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 DEMONSTRATE PROFESSIONALISM

Answers in image format is strictly prohibited.

Do NOT upload the assignments to third party web sites to check the
similarities.
Plagiarism is strictly prohibited and high similarity must be avoided.
Self plagiarism and collusion are prohibited.

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The assignment has to be submitted on or

BEFORE

05-01-2021

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S. Ajendra
Senior Lecturer
Selvaratnam.ajendra@Saegis.edu.lk
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