Name: Mr.

Amit Kanjilal
Strategies to Improve Performance
There are three alternatives to improve the performance of a business unit, to fill the gap between actual performance and targeted performance: a) Intensive growth b) Integrative growth c) Diversification growth. Intensive Growth It refers to the process of identifying opportunities to achieve further growth within the company s current businesses. To achieve intensive growth, the management should first evaluate the available opportunities to improve the performance of its existing current businesses. It may find three options: y y y To penetrate into existing markets To develop new markets To develop new products.

At times, it may be possible to gain more market share with the current products in their current markets through a market penetration strategy. For instance, SONY introduced TV sets with Trinitron picture tubes into the market in 1996 priced at a premium of Rs.10,000 and above over the market through a niche market capture strategy. They gradually lowered the prices to market levels. However, it also simultaneously launched higher-end products (hightechnology products) to maintain its global image as a technology leader. By lowering the prices of TVs with Trinitron picture tubes, the company could successfully penetrate into the markets to add new customers to its customer base. Market Development Strategy is to explore the possibility to find or develop new markets for its current products (from the northern region to the eastern region etc.). Most multinational companies have been entering Indian markets with this strategy, to develop markets globally. However, care should be taken to ensure that these new markets are not low density or saturated markets, which could lead to price pressures. Product Development Strategy involves considerations of new products of potential interest to its current markets (e.g. Gramaphone Records to Musical Productions to CDs) as part of a Diversification strategy.

products or markets (Conglomerate Diversification). toaster oven. the business processes have to be integrated for linear growth in the profits. . If a company operating in music systems takes over the manufacturing business of its plastic material supplier. it is called horizontal integration (however. If the company legally takes over or acquires the business of any of its leading competitors. washing machines and so on. The classic examples for this would be engineering and textile firms setting up software development centres or Call Centres with new service clients. This makes sense when such opportunities outside the present businesses are identified with attractive returns and that industry has business strengths to be successful. Diversification Growth It refers to the process of identifying opportunities to develop or acquire businesses that are not related to the company s current businesses. this is planned with new products that have technological or marketing synergies with existing businesses to cater to a different group of customers (Concentric Diversification). forward or horizontal integration within the industry.Integrative Growth It refers to the process of identifying opportunities to develop or acquire businesses that are related to the company s current businesses. it might be counter-productive due to dilution of brand image). b) Developing software to allow these devices to communicate. The corporate plan may be designed to undertake backward. if this competitor is weak. dishwasher. In most cases. Alternatively. the company might choose new businesses that have nothing to do with the current technology. refrigerator. More often. if this company acquires some of its most profitably operating intermediaries such as wholesalers or retailers. c) Investing heavily to help build wireless and high-speed internet access throughout the world to link it all together. Alternatively. it would be able to gain more control over the market or generate more profit (Backward Integration). Example MICROSOFT¶s New Strategy It is called PC-plus. personal computer. It has three elements: a) Providing computer power to the most commonly used devices such as cell phone. A printing press might shift over to offset printing with computerized content generation to appeal to higher-end customers and also add new application areas (Horizontal Diversification) or even sell stationery. it is forward integration.

and the product or service we plan to offer.Microsoft envisions a home where everyday appliances and electronics are smart. It is also said at Microsoft that VCRs can be programmed via e-mail. attract investment. Executive Summary In this section of our business plan. we provide a description of our company. We must tell the audience why the business is a great idea. and establish operating goals and guidelines. We must sell our concept. we have to include what type of business we are planning (homeownership development. According to Bill Gates. manufacturing or service) and the legal . Some readers will look at this section to determine whether or not they want to learn more about a business. Other readers will look to the executive summary as a sample of the quality and professionalism of the overall plan. Microsoft plans to give these appliances brains and provide them the means to talk to each other through their Windows CE Operating System. In the near future. wholesale. PC-based networks will help us control many of our domestic matters with devices that cost no more than $100 each . laundry washers can be designed to send an instant message to the home computer when the load is done and refrigerators can be made to send an e-mail when there s no more milk. Company and product description In describing our company. the industry we will be competing in. ********************************** Business Plan A good business plan will clearly explain the business concept. retail. The executive summary may be the first and only section of our business plan that most of our audience will read. describe the market for your product or service. Components of a good business plan are: y y y y y y y y Executive summary Company and product description Market description Equipment and Materials Operations Management and ownership Financial information and timeline Risks and their mitigation. The executive summary should be no more than one to three pages long.

We must give the reader a brief overview of the industry. and define the site or . surrounding amenities and other characteristics that may enhance our business. referencing the goals we set at the beginning of the business planning process. We should discuss how people identified in our target market currently meet their need for our product or service. We must focus on what distinguishes our product or service from the rest of the market. and discus the rationale behind that price. Discuss the advantages of the location. Briefly describe what differentiates our proposed venture from these existing businesses and discuss why we are entering this market. Whenever possible. or information gather by our organization. We will now describe the customer base or market for our product or service. if any. After describing our company and its industry context. discuss the equipment and materials necessary. We should present an estimate of how many people we expect will purchase our product or service. we should describe the products or services we plan to provide. research journals or other publications. it will play in operations. provide documentation or references supporting our trend analysis such as articles from business-oriented newspapers and magazines. Provide as much detail as necessary to inform the reader about the particular characteristics of our product that distinguish it from its competition. Sources for this information may include recent data from the Bureau of Statistics. such as membership lists. neighborhood surveys and group or individual interviews. An unrealistic price estimate may undermine the credibility of our plan and raise concerns that our product or service may not be of sufficient quality or that we will not be able to maintain profitability in the long run. such as its accessibility. the role it has played in developing this new venture and the on-going role. we will also need to describe our competition (other local developers or nearby business providing a similar service to our potential customer base). Include these references in the attachments of our business plan. describe the staff required to operate and manage the business. state or local census data. We should described the location where we will produce or distribute our product or provide our service. In addition to providing a detailed description of our customer base. Discuss what will attract consumers to our product or service. Market description We will describe how we plan to operate the business. We should discuss why we are creating this new venture. Our estimate should be based on the size of our market. We will present information on how we plan to create our product or provide our service. We should provide a realistic estimate of the price for our product or service. We should provide statistical data to describe the size of our target market.structure (corporation or partnership). describing historic and current growth trends. the characteristics of our customers and the share of the market we will gain over our competition. Also include a description of our non-profit organization.

if any. Provide a complete job description of any vacancies in our management team. what type of equipment will we need? Describe any machinery and vehicles necessary in the production. Operations In this section of our business plan. packaging and distribution of our product. fixtures and telephone systems. Also discuss the types of materials we will use in the production process and describe the source and cost of those materials. including any in the production. marketing and administration of similar businesses or within the selected industry and attach the resumes of each member to the plan. Highlight our management team s experience in managing the production. their background and their responsibilities in the business. we describe about the senior managers responsible for overseeing the start-up and operation of our business. so we must describe how we will inform our target market about our product or service and how we will convince customers to purchase it. Equipment and Materials To manufacture our product or provide our service. packaging and distribution of our product. including any office equipment such as computers. At a minimum. copiers. Also describe any commitments or investments that we may .facility requirements. Describe the responsibilities. the skills. we should provide a brief descriptive narrative for each of the following financial statements and include a copy in the attachments to our plan: y y y y Start-up budget Cash flow projection Income statement Balance sheet Financial information and timeline Here we describe the amount and type of financing we are seeking for our business. Management and ownership In this section we will describe the financial feasibility of our planned venture and provide several financial reports and statements to document why our business will be a viable enterprise and a sound investment. Are we looking for debt from a lender or equity from an investor? Refer to our start up budget and cash flow statement presented earlier. Discuss how and when we will draw on these funds and how they will affect the bottom line. A key component of the operation of our business will be our sales and marketing strategy. furniture. the background required and the steps we plan to take to fill that key position.

we should focus its presentation. If we are seeking investor. The asset being purchased is usually pledged as security for the loan. Equity investors are looking for rates of return higher than rates offered by banks or other business lenders. Prepare for negotiation if required. thinking about different challenges will strengthen our plan. *************************************** . A well-organized plan will assist us in communicating the most important elements of our business plan to the reader. such as venture capitalists. equipment or vehicles. building improvements.have already secured. What is the repayment period and the expected return on investment? Also discuss the nature of their ownership share and how it may change with future investments. The level of risk in our business and industry will help to determine the actual market rate. describe what they will receive in return for their capital. WORKING CAPITAL Short-term financing to cover operating expenses and to bridge gaps in cash flow. Risks and their mitigation Although it is impossible to know exactly what will go wrong in starting and running our business. and a persuasive plan will help us to convince the reader to invest in our business. Check with other businesses (although not direct competitors) to see what return on investment their investors demanded. After we have completed all of the elements of our business plan. FIXED ASSET FINANCIAL Longer-term financing for property. Types of financing: SEED CAPITAL Short-term financing to cover start-up costs.

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