Lesson 2: Enterprise Business Plan (Strategic

Planning)
Schedule: Time Frame: 2 weeks

Objective:

At the end of the chapter, the learner-entrepreneurs are expected to:

 Integrate the competencies, skills, and learning acquired by the student from the
ABM Strand courses;
 Begin Business Enterprise Simulation activities; and
 Utilize the ABM Incubation Laboratory (ABMIL) facilities.

Introduction

Purpose of Business Plan;

 It spells out your purpose, vision and means of operation. It also serves as your company's
resume, explaining your objectives to investors, partners, employees and vendors.

 2 primary purposes:
o First - used to help run your company with a more cohesive vision. It is your roadmap. By
truly analyzing your plan for marketing, sales, manufacturing, website design, etc., you
greatly improve your chances for success.
o Second - to be the reason most clients request plan. That is, a financial institution or other
lender will not invest in your company unless you can demonstrate that you have a
roadmap to success. Banks want to mitigate their risk of default and private investors, such
as Angel’s, want a realistic forecast for when they will be reaping a return on their capital.

Discussion

Strategic Planning
 A ‘start-up’ enterprise typically engages in strategic planning. The output for strategic planning is
as follows:
1. Vision, mission, goals, and objectives
2. Environmental analysis
a. Macroenvironment: PEST
b. Microenvironment: Porter Model
c. SWOT analysis
d. Strategy formulation

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 The term vision is often explained to answer the question, “Where do we want to go?’ A vision
statement is. therefore, an affirmation of what enterprise wants to become.
In the Business Enterprise Simulation course, a vision statement may not be required because of
the time limitations for the subject.
A mission statement is a declaration of the purpose of the organization. It often defines the scope
of its operations in product, market, and service terms. It is helpful to answer the following questions in
formulating the mission statement:
1. What business are we in or what business do we want to be in?
2. What customer needs are we satisfying and how do we intend to satisfy them?
3. What type of work environment do we intend to provide for our employees?
4. Who are our shareholders and what do we expect in terms of returns on investment (RON)?
5. What is our community and what do we expect to contribute to the external community?
Goals are shorter-term directions, often stated in specific metrics, such as geographic, periodic, and
other numerical terms. Goals allow organizations to be directed toward specific sites or locations over
stated periods of time and with fixed profits or sales growth. An example of a goal statement is to ‘earn
maximum profits.’

Objectives are specific targets set by entrepreneurs to direct them into achieving their goals.

One goal may have more than one objective designed to achieve it.
it is helpful for the enterprise groups to be S-M-A-R-T: make this vision, mission, and goal
statements specific, measurable, attainable, realistic, and time-bound. Goals or objectives may be limited
to:

1. Marketing objectives, such as sales volume and value targets for the period covered;
2. Financial objectives, such as gross or net profit percentages, as drawn from the projected financial
statements;
3. Management objectives, such as enterprise type choice and completion of business registration
requirements;
4. Internal objectives, such as expected learnings from the business simulation; and
5. Customer objectives, with surveys from clients for product or service improvement, or other
pertinent customer satisfaction comments.

Environmental Analysis

The external environment, which includes the government, economic conditions, social, and other
factors that generally affect all organizations, is also called the macroenvironment (Bateman and Snell
2008). The macroenvironment may be defined by acronym PEST, which list the Political, Economic,
Social or Sociological, and Technical variables in the said environment.

A variation on the PEST acronym is PESTEL, which stands for the Political, Economic, Social or
Sociological, Technical, Environment and Legal factors in the environment.

The analysis of the external environment give rise to opportunities and threats from the macro-
environment that a firm has little or no control of.

Opportunities are external possibilities or chances that may occur and benefit the business. Such
occurrences may or may not happen. Some occurrences include
1. Possibility of getting business offers from the external communities;
2. Sudden shifts in customer’s tastes, which favor the entrepreneur’s products; and
3. Changes in market trends due to new developments, such as additional grade levels in the
school community.

Threats are undesirable occurrences in the market and are disadvantageous to the business and
may include the following;
 Entry of low-cost companies into the market
 A rise in the sale of substitute goods
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  Costly regulatory requirements
 Growing bargaining power of customers and suppliers
 Changing customers/buyer needs and tastes
 Change in demographics.

For example, some merchandising industries may see the changes in tax law, e.g., the imposition of the
value added tax (VAT) as a threat, whereas the propensity to spent and the consumption patterns may be
viewed as an opportunity. The service industry mas see technological advancements and developments
as opportunities, while interest, inflation, and tax rates as threats.

Microenvironment: Porter Model

Strengths and weaknesses refer to the presence or absence of internal resource in a given
enterprise. Internal enterprise. Internal resources may include management, manpower, money,
materials and machinery, including technology.

Examples of enterprise strengths are skilled manpower, positive returns, and cutting-edge
equipment, while weaknesses may be the lack of reliable suppliers of materials and limited production
capacity.

The microenvironment of the competitive environment defined in the Porter model is composed of five
forces-competitors, new entrants, suppliers, buyers, and substitutes – as shown in the figure below:

The Porter model may be simplified for the Business Enterprise Simulation course and may just state a
listing of strengths and weaknesses, which may include:
Strengths;
 High quality product
 Affordable but profitable prices
 Ability of the product to meet the customer’s taste
 Efficiency and effectiveness in serving customers
 Ability to attract customers
 Good business location
 Good and well-trained marketing staff
 High entrepreneurial spirit

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Weaknesses;
 Being new in the market and having a weak market image
 Weak distribution image
 Below the average marketing skills
 High overall unit costs relative to competitors
 Narrow product line
 Inaccessible location to customers.

*SWOT Analysis*

The data derived from the PEST and Porter model are utilized to identify the strengths,
weaknesses, opportunities, and threats (SWOT) of given enterprise.

The identification of strength, weaknesses, opportunities and threats is called SWOT analysis.
This approach helps management formulate strategies. A sample SWOT matrix, as shown in this figure.

Strategy Formulation
The strategies that may be applicable for enterprise start-ups include;
1. Market penetration: increasing market share for products and services in existing
markets through marketing efforts;
2. Market development: introducing products and services in new geographic areas; and
3. Product or service development: increasing sales by modifying or improving products or
services.

Market penetration plans may include loyalty programs for existing buyer population to
encourage repeat purchases of products or consumption of services of enterprises. Loyalty programs
usually replace acquisition from competing businesses, thereby, increasing the market share of the
enterprise.

Introduction of products and services in new geographic areas (market development)

traditionally involves heavy promotional activities; i.e., product sampling, flyer distribution, and even
event planning.

Many businesses apply product or service development through ‘bundling’. For example, a
product may be modified or improved when sold with paired products, such as pencils and notebooks in
a single bag. Service unit maybe ‘bundled’ through pairing, such as foot massage and spa service.

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 Activity Sheet

Name: ________________________________________________ Date: ______________

Section: ______________________________________________

Direction: In background of the Enterprise. Make and finalized the following:

a. The mission statement;

b. Goals and objectives; and
c. Strategies

a. The mission statements.

_________________________________________________________________________________________________________________________
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b. Goals and objectives

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c. Strategies
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