SHANTO-MARIAMUNIVERSITY

OF CREATIVE TECHNOLOGY

Department of Apparel Manufacturing Management &

Technology
Program: MBA in PFM

4thSEMESTER
Module Title: Entrepreneurship Development

Module Code: MBA 6203

MODULE LEADER: LABLU MIAH

MODULE TEACHER: LABLU MIAH

Updated on: 18.03.2021

 Module Specifications Department: Apparel Manufacturing Management & Technology

• Module Title : Entrepreneurship Development

• Module Code : MBA-6203
• Year of Study : 2nd (Semester: 4th)
• Pre-Requisite :NA
• Contact Hours : 2.0 Hours per week , Total Week:18
• Total Contact Hours: 36 Hours
• Credits :3
• Assessment Way :Quiz, Class Test, Viva, Assignment, Presentation,
Mid-Term and Final Examination

Aim:

The aim of this course is to develop entrepreneurial abilities by providing

background information about support systems , skill sets , financial and risk
covering institutions and other for building an enterprise so that future budding
entrepreneurs can make right decisions for starting and running a venture. With a
solid introduction to the entrepreneurial process of creating new businesses, role
of creativity and innovation in entrepreneurial start-ups, manage family-owned
companies, context of social innovation and social entrepreneurship and issues
and practices of financing entrepreneurial businesses.

Objectives:

By the end of the module, Students will be able to:

• Understanding basic concepts in the area of entrepreneurship
• Understanding the role and importance of entrepreneurship for economic
development
• Developing personal creativity and entrepreneurial initiative
• Adopting of the key steps in the elaboration of business idea
• Understanding the stages of the entrepreneurial process and the resources
needed for the successful development of entrepreneurial ventures.
Class Contact and Teaching Pattern:
Lectures : 18
Total Hours : 36 Hours
Learning Outcomes:
After completion the module, students should be able to:
• Analyze the business environment in order to identify business
opportunities
• Identify the elements of success of entrepreneurial ventures
• Consider the legal and financial conditions for starting a business venture
• Evaluate the effectiveness of different entrepreneurial strategies
• Specify the basic performance indicators of entrepreneurial activity
• Explain the importance of marketing and management in small businesses
venture and interpret their own business plan.

Text Books:

• The Dynamics Of Entrepreneurial Development And Management by

Dr.Vasant Desai
• Entrepreneurial Development by C. B. Gupta

Mark Distribution

Mid-Term Exam Final Exam

1. Attendance: 05 1. Attendance: 05
2.Quiz: 10 2. Submission: 05
3. Class Test: 05 3. Assignment: 10
4. Mid-Term Exam: 20 4. Final Exam: 40

Total Marks: 40 Total Marks: 60

Grand Total: 100

 Module Continuous Assessment Timetable

Course: MBA in PFM

• Module Title : Entrepreneurship Development

• Module Code : MBA 6203
• Year of Study : 2nd (Semester: 4th)
• Assessment Way : Class Test, Quiz, Viva, Assignment, Presentation, Mid-Term and Final
Examination

Assessment 1 2 3 4 5 6 7 8 9 Mid-Term 10 11 12 13 14 15 16 17 18 Final

Description Examination Examination
Weeks

10%
Quiz test

5%

Class Test

20% 40%

Written Written
Assignment Examination Examination

5% 10%

Presentation
&
Submission

All the above quiz, Class Tests must be carried out in NB: 5% is in Class Attendance in Mid-Term
class. Submission & Presentation will be present in Examination and 5% is in Final Examination.
Class.

Module Leader: Lablu Miah Module Teacher: Lablu Miah Date: 18.03.21
 At a Glance: Lectures Delivery Plan

Module: Entrepreneurship Development Module Code: MBA 6203 Contact Hours / Week: 3

Week Lecture Topic (Lecture Title) Assessment

Introduction to Entrepreneurship
1 1 Development

Interpersonal Skills and Traits of an

2 2
Entrepreneur

Recognizing opportunities and

3 3
generating ideas
Industry and competitor analysis
4 4
Industry and competitor analysis
5 5
Developing effective business model
6 6
Developing effective business model Quiz /class test
7 7 15%

Writing a business plan

8 8
Writing a business plan
9 9
Mid-Term Examination

Preparing for and evaluating the

10 10 challenges of growth

Preparing for and evaluating the

11 11 challenges of growth

12 12 Firms Growth Strategies

 Emerging Trends and Social
13 13
Entrepreneurship

14 14 Market Survey

15 15 Launching Formalities
Getting financing of funding
16 16
Getting financing of funding
17 17
Review Class, Presentation,
18 18
Assignment submission
Final Examination
SHANTO –MARIAM UNIVERSITY OF CREATIVE
TECHNOLOGY
Program : MBA in Product & Fashion Merchandising
Course Title : Entrepreneurship Development
Course Code : MBA 6203
Year of Study : 2nd(Semester: 4th)
Lecture : 01
Week : 01

Topic: Introduction to Entrepreneurship Development

An entrepreneur is a creator who designs new ideas and business processes
according to the market requirements and his/her own passion. To be a
successful entrepreneur, it is very important to have managerial skill and strong
team building abilities. Leadership attributes are a sign of successful
entrepreneurs. Some political economists regard leadership, management ability,
and team building skills to be the essential qualities of an entrepreneur
Entrepreneurship Development is the art of starting a business, basically a
startup company offering creative product, process or service. We can say that it
is an activity full of creativity. An entrepreneur perceives everything as a chance
and displays bias in taking decision to exploit the chance.

ENTREPRENEURSHIP

Entrepreneurship is the dynamic process of creating incremental wealth. The

wealth is created by individuals who assume the major risks in terms of equity,
time and/or career commitment or provide value for some product or service. The
product or service may or may not be new or unique, but value must somehow be
infused by the entrepreneur by receiving and locating the necessary skills and
resources efficiently and effectively.

Entrepreneurship is thus considered as the process of creating something new

with value by devoting the necessary time and effort, assuming the accompanying
financial, psychic, and social risks, and receiving the resulting rewards of
monetary and personal satisfaction and independence that comes with it.

1. The market of organizational buyers for business innovation,

2. The hospital’s administration for a new admitting procedure and
software,
3. Prospective students for a new course or even college of
entrepreneurship, or
4. The constituency for a new service provided by a non-profit agency.

Entrepreneurship is an essential element for economic progress as it manifests its

fundamental importance in different ways by:

▪ Identifying, assessing and exploiting business opportunities;

▪ Creating new firms and/or renewing existing ones by making them more
dynamic; and
▪ Driving the economy forward through innovation, competence, job
creation and by generally improving the wellbeing of society.

Entrepreneurship is the active process of distinguishing an economic demand in

an economy, and supplying the factors of production (land, labor and capital) to
satisfy that demand, usually to generate a profit. High levels of poverty combined
with slow economic growth in the formal sector have forced a large part of the
developing world’s population into self-employment and informal activities. But
this is not necessarily negative; microenterprises contribute significantly to
economic growth, social stability and equity.

ENTREPRENEURSHIP DEVELOPMENT:

Entrepreneurship development (ED) refers to the process of enhancing

entrepreneurial skills and knowledge through structured training and institution-
building programmes. Entrepreneurship development is concerned with the study
of entrepreneurial behavior, the dynamics of business set-up, development and
expansion of the enterprise. It basically aims to enlarge the base of entrepreneurs
in order to hasten the pace at which new ventures are created. This accelerates
employment generation and economic development.
ECONOMIC ROLE OF THE ENTREPRENEUR

An entrepreneur is an individual who establishes a firm. Because of their

importance in the modern economy, entrepreneurs should be at the heart of
microeconomics. Entrepreneurs set up firms in response to economic incentives.
In turn, firms create and operate markets that provide mechanisms of exchange
for consumers. Firms also create and manage organizations that provide internal
coordination and market interactions. The actions of entrepreneurs are the
essential force that helps to drive the economy towards equilibrium.

Entrepreneurs are endogenous to the economy in the general theory of the firm.
The entrepreneur is, before anything, a consumer. The consumer becomes an
entrepreneur by choosing to establish a firm. Consumers bring to the task of
entrepreneurship their judgment, knowledge, and technology. Consumers decide
to become entrepreneurs based on their personal characteristics and their
judgment of available market opportunities. Entrepreneurs act rationally and
purposefully based on maximizing their net benefits.

CHARACTERISTICS OF EFFECTIVE BUSINESS OBJECTIVES

The most effective business objectives meet the following criteria: (SMART)

• S – Specific – objectives are aimed at what the business does, e.g. a hotel
might have an objective of filling 60% of its beds a night during October,
an objective specific to that business.
• M – Measurable – the business can put a value to the objective, e.g.
€10,000 in sales in the next half year of trading.
• A – Agreed by all those concerned in trying to achieve the objective.
• R – Realistic – the objective should be challenging, but it should also be
able to be achieved by the resources available.
• T- Time specific – they have a time limit of when the objective should be
achieved, e.g. by the end of the year.

TRAITS OF AN ENTREPRENEUR

Entrepreneurial success depends on the management of your own self. For this
you require certain traits, qualities or behavioral competencies.
Coordinator: An entrepreneur is a combiner and coordinator of productive
resources. He is at the crux of the market system. This implies that the
entrepreneur is the link of communication between the various classes of
producer and consumer. He directs the business of production and is the center of
many bearings and relationships.

Arbitrageur: The entrepreneur is someone with the ability to perceive profit

opportunities and act upon them. He observes the opportunity to sell something at
a price higher than that at which he may be willing to pay for it.

Innovator: Innovation is an outcome of new combinations created by the

entrepreneur. These new combinations are created by the entrepreneur who
develops new goods, quality, and new methods of production, new markets or
new organizations.

Uncertainty-bearer: The entrepreneur conducts all of the exchanges in the

market, buying from producers and selling to consumers. By performing this
function, he leads the market toward equilibrium. But he is more than a mere
arbitrageur (buying low and selling high) because of the presence of uncertainty.
This is further divided into sub-groups:

o A speculator: The entrepreneur, in conducting his transactions

buys at a certain price and sells at an uncertain price. He is a
speculator and the key to the market system because of his
willingness to bear risk.
o Owner: The adoption of the entrepreneurial role carries with it the
assumption of responsibilities in an uncertain business
environment. The entrepreneur motivates production and becomes
the responsible owner of the product.
o Decision-maker: In uncertain conditions, someone must decide
what to do and be responsible for that decision. The decision-
making function forecasts demand and estimates the factors
marginal productiveness. Thus the entrepreneur is more than a
manager, he is the key in the productive process by deciding, in an
uncertain environment what and how to produce. He becomes an
entrepreneur by virtue of his willingness to accept the results of a
particular endeavor.
Lecture : 02
Week : 02

Topic: Interpersonal Skills and Traits of an

Entrepreneur

PERSONAL CHARACTERISTICS OF AN ENTREPRENEUR

Successful entrepreneurs have many qualities in common. They are confident and
optimistic, disciplined self-starters. They are open to any new ideas which cross
their path.

• Confidence: The entrepreneur does not ask questions about whether they
can succeed or worthy of success. They are confidence with the
knowledge that they will make their businesses succeed. They exude that
confidence in everything they do.
• Open Minded: Entrepreneurs realize that every event and situation is a
business opportunity. Ideas are constantly being generated about
workflows and efficiency, people skills and potential new enterprises.
Have the ability to look at everything around them and focus it toward
their goals. Update their knowledge continuously and seek information
from a variety of sources.
• Disciplined: Focused on making their businesses work, and eliminate any
hindrances or distractions to their goals. Successful entrepreneurs are
disciplined enough to take steps every day toward the achievement of
their objectives.
• Self-Starter: Entrepreneurs know that if something needs to be done, they
should start it themselves. They set the parameters and make sure that
projects follow that path. They are proactive, not waiting for someone to
give them permission.
• Competitive: Many companies are formed because of an entrepreneur
knows they can do a job better than another. They need to win at the
 sports they play and need to win at the business that they create. An
entrepreneur will always be willing to highlight their own company’s
track record of success. The success of the entrepreneur will depend on
the quality of their product or service.
• Creativity: One facet of creativity is being able to make connections
between seemingly unrelated events or situations. Entrepreneur often
come up with solutions which are the synthesis of other items.
• Passion: Passion is the most important attribute of successful
entrepreneur. They genuinely love their work. They are willing to put in
extra hours to make the business grow because there is a joy their business
gives which goes beyond the money or profit. The successful entrepreneur
will always be reading and researching ways to make the business better.
• Determination: Entrepreneurs are not thwarted by their defeats. They
look at defeat as an opportunity for success. They are determined to make
all their endeavors succeed, so they will try and try again until it does.
Successful entrepreneurs do not believe that something cannot be done.
• Strong people skills: The entrepreneur has strong communication skills
to sell the product and motivate employees. Most successful entrepreneurs
know how to motivate their employees so the business grows overall.
They are very good at highlighting the benefits of any situation and
coaching others to their success.

INTERPERSONAL SKILLS OF AN ENTREPRENEUR:

• Be an active listener– Take the time to listen and show others that you’re
listening and understand their perspective-even if it is not in line with
yours.
• Body language– I don’t know many people who enjoy being around
unhappy individuals or those who appear to be unhappy in any given
moment. Make sure to smile, stand tall, make eye contact and do your
best to give off a good vibe. Body language introduces you to those
around you before you even open your mouth.
• Empathize– Try putting yourself in someone else’s shoes and understand
their perspective. This will allow you to better respond to their feelings
and it will show them that you care.
 • Humor– It is not all about business. After all, we are all human. Be
spontaneous and say something at an appropriate time that you think will
make the other person smile. If they smile, you know they’re probably
working on their interpersonal skills.
• Optimism– Be optimistic, open minded and have an overall positive
attitude. Positive attitudes are contagious to those around you. Everyone
knows someone who has a negative attitude and you definitely do not
want to be one of them.
• Think on your feet– It is important to be sharp, pick up on, and react to
both verbal and nonverbal cues of others.
• Be patient– Not everyone processes and understand concepts in the same
way. Take the time to make sure that whoever you’re talking to
understands what you’re saying.
• Practice- The more interactions you have with others, the more progress
you will make.

TRAITS OF AN ENTREPRENEUR

Entrepreneurial success depends on the management of your own self. For this
you require certain traits, qualities or behavioral competencies.

Coordinator: An entrepreneur is a combiner and coordinator of productive

resources. He is at the crux of the market system. This implies that the
entrepreneur is the link of communication between the various classes of
producer and consumer. He directs the business of production and is the center of
many bearings and relationships.

Arbitrageur: The entrepreneur is someone with the ability to perceive profit

opportunities and act upon them. He observes the opportunity to sell something at
a price higher than that at which he may be willing to pay for it.

Innovator: Innovation is an outcome of new combinations created by the

entrepreneur. These new combinations are created by the entrepreneur who
develops new goods, quality, and new methods of production, new markets or
new organizations.
Uncertainty-bearer: The entrepreneur conducts all of the exchanges in the
market, buying from producers and selling to consumers. By performing this
function, he leads the market toward equilibrium. But he is more than a mere
arbitrageur (buying low and selling high) because of the presence of uncertainty.
This is further divided into sub-groups:

o A speculator: The entrepreneur, in conducting his transactions

buys at a certain price and sells at an uncertain price. He is a
speculator and the key to the market system because of his
willingness to bear risk.
o Owner: The adoption of the entrepreneurial role carries with it the
assumption of responsibilities in an uncertain business
environment. The entrepreneur motivates production and becomes
the responsible owner of the product.

Decision-maker: In uncertain conditions, someone must decide what to do and be

responsible for that decision. The decision-making function forecasts demand and
estimates the factors marginal productiveness. Thus the entrepreneur is more than
a manager, he is the key in the productive process by deciding, in an uncertain
environment what and how to produce. He becomes an entrepreneur by virtue of
his willingness to accept the results of a particular endeavor.
Lecture : 03
Week : 03

TOPIC: RECOGNIZING OPPORTUNITIES AND

GENERATING IDEAS

An opportunity is a Favorable set of circumstances that creates a need for a new

product, service or business. An opportunity is NOT an IDEA –unless that idea is
directed at solvinga problem that people will payfor. An opportunity is driven by
filling a markets need to (and ability to)buy.

Opportunity gap – identifying a missing piece, a NEED, and a new way tofillthat
gap.An opportunity is NOT driven by a desire to make andsell.

Some innovations are radical –an entirely new way to solve a problem oran
entirely
newproduct.Otherinnovationsareincremental,orsustaining,andareextensionsof
existing solutions that are somewhatbetter.

Incremental innovation rarely works for new business, but is oftenthehallmark of

established businesses.

Window of Opportunity – timely, not too early or too late. Opportunities depend
upon acting at the right time. Too early and too late are sure ways to fail.Here are
three ways to look for opportunity gaps –if many people share the sameconcern.

• If only there was a businessthat….

• I wish I could buy a product or servicethat…
• There has to be a better way to…

Opportunities Recognition:
Rapid changes in technology, computers, the internet, globalization, and intense
economic competitiveness were forcing companies to adapt. To adapt, their
employees had to learn many newthings.
Employee training is expensive –especially for large geographically
distributedfirms.

The forces of opportunity recognition:

Economic forces:

• A rising economy – more discretionaryincome

• Until recently the growing China market has been one of the key factors
drivingthe world economy.
• A falling economy – products that cut costs orexpenses
• Increasing or decreasing energyprices
• Gas prices are falling. Hybrid sales are down and truck sales areup.
• Increasing income disparity betweengroups.
• Interest rates are rising or falling, are low orhigh.
• Access to less expensive labor forproducts

Forces of technological advances:

Technology advances that have helped to define the economy we live in today:

• Personalcomputing
• TheInternet
• Mobilephones.
• MedicalImaging
• Pharmacology
• Biologics
• RNAi – microRNA- genesilencing
 • Genomics –personalmedicine

Opportunities need to recognition:

Characteristics of those who are better at recognizingopportunity:PriorExperience
Manyentrepreneurshavepriorexperienceinanindustryandareabletospotthe market
gaps and find solutions that others havemissed.
• Cognitive Factors –entrepreneurialalertness
• A major key factor is market awareness andsensitivity.
• Social Networks –solo entrepreneurs and networkentrepreneurs
• Strongtierelationshipsareonesinwhichtherearefrequentinteractionamong
persons with commoninterests.
• They often tend to see problems in the sameway
• Weak tierelationshipsareonesinwhichinteractionsaremorein-frequentand
among those with different experiences.
• Weak ties are shown to lead to more ideas –differentperspectives.
• Creativity – the process of generating new, often unique, and useful,ideas.

Idea generation technique:

According to the excellent text, “Entrepreneurship: Successfully Launching New
Ventures,” by Bruce Barringer and R. Duane Ireland these are some key ways to
generate ideas.
• Brainstorming
• Nocriticism
• Freewheeling crazyideas
• Fast pace –no pontificating orarguing
• Leapfrogging
• Focusgroups
 • Library and internet research
• Other: customer advisory boards, day-in-the-liferesearch
• Create an idea bank on yourintranet.

Creativity:
Inhibitor Facilitators

Fail to hire creative Hire creative

Stifling culture Reward creativity

compartment people for years Give employees varied experiences

“Tried it-didn’t work” all ideas already Tolerate challenges to established ideas
known
Hire compatible people Hire diverse skills, experiences, and
viewpoints
Lecture : 04 & 05
Week : 04 & 05

Topic: Industry and competitor analysis

An industry is a group of firms producing a similar product or service, such as

airlines, fitness drinks, furniture, or electronic games.

Industry Analysis

Is business research that focuses on the potential of an industry?The analysis

helps a firm determine if the niche market it identified during feasibility analysis
is favorable for a new firm.

An industrial analysis is used to examine the past trends in an industry, the

current demand and supply mechanics, and the future outlook of the industry. It
also acts as a guide to investors on the viability of investing in a company.

THE STEPS OF AN INDUSTRIAL ANALYSIS

1. Review available reports

Look for reports that focus on the industry you are about to enter or are operating
in. If you have not yet joined the industry, it will help you make a decision as to
whether it is wise to invest in the industry.

2. Approach the correct industry

Every industry has sub-industries and in some cases the sub-industries are further
subdivided. Identifying the sub-industry that you intend to deal with will allow
you to use the correct industry analysis report.

3. Demand & supply scenario

The aim of entering into business is to earn profits. Profitability in an industry is
determined by the forces of demand and supply. When conducting an industrial
analysis, you ought to consider how the industry has performed in the past and
what the future looks like.

4. Competitor analysis
Competitor analysis is the process where you identify your greatest competitors
and evaluate their strategies to find out what their strengths and weaknesses are
and how they relate to your product or service. This analysis removes you from
your comfort zone but also places you on the path to success if you do it well.

PERFORMING A COMPETITOR ANALYSIS

• Goal of competitor analysis
• Identify competitor strategies and actions planned
• Determine the competitor to compete with
• Predict a competitors reaction to your actions
• How to use the behavior of the competitor for your firm’s advantage

Porter’s Five Forces

It is based on four key aspects:
• Competitor objectives
• Competitor assumptions
• Competitor capabilities
• Competitor strategy
1. Competitor’s Objectives
The objectives of your competitor can be financial or non-financial. They are
indicated by the organizational structure, backgrounds of executives, risk
tolerance, legal or contractual restrictions, management incentives, the
composition of the board of directors, and any corporate level goals that influence
competition.

2. Competitor’s Assumptions
Competitor’s assumptions are based on regional factors, opinion on its
competitive position, rules of thumbs, industry trends and past experiences in
regards to a product. The assumptions determine the strategy that they apply in
the competitive market. The assumptions are founded on facts and some on fear
so they can be true or untrue.

3. Competitor’s Capabilities and Resources

The competitor’s objectives, current strategy and assumptions exemplify how
your competitor wants to respond to competition but the competitor’s ability and
resources determine how quickly and effectively he will respond to the
competition.
The SWOT analysis is used to examine the strength and weaknesses of your
competitor in various functional areas. The ability to adapt to change is hindered
by organizational structure, low cash reserve, and heavy investment in fixed
assets.
4. Competitor strategy
In some case, what the competitor says and does are contrary to each other. Even
though he talks about his plans, you cannot rely on that alone, look at the research
and development projects he is carrying out, hiring activity, mergers and
acquisitions, promotional campaigns, strategic partnerships, and capital
investments that he is involved in.
COMPETITOR ANALYSIS USING PORTER’S FIVE FORCES MODEL
The five factor model by Porter was created to help businesses assess the nature
of competition in the industry and to come up with strategies to deal with the
competition. To have a complete understanding of the model, we will look at the
five forces that determine competition, how the model can be used, the do’s and
don’ts of the model, and the criticism of the model. The five forces determine the
profitability in the industry, the rate of competition, and how attractive the market
will be to competitors.

The five forces work in different ways for each industry. In the film market, for
example, there are many substitutes and the suppliers have a higher power. This
is not the same for the airplane manufacturing companies where the threat of new
entry is low, and the buyers have a higher bargaining power.

Five Forces in Competitor Analysis

The threat of substitutes, competitive rivalry, and threat of new entrant are
classified as horizontal forces. Vertical forces include the bargaining power of
suppliers and that of buyers. We will now discuss the five forces identified by
Porter.
1. Rivalry among competing firms
This is the rate of rivalry among competing firms. If it is high, then the
companies’ strategy, profits, and prices are affected altogether. The more the
rivalry, the more the pressure the existing firms will experience. If the rivalry is
not much, the companies will enjoy autonomy in setting the prices for their goods
and products. The customers will not have a variety of choices to choose from so
the sellers will dictate the prices as they wish. However as new companies enter
the market, the prices are streamlined by the competition.
Competitive rivalry is high when there is a low exit or high barriers of entry,
when the products in the market have the same benefits and features, when the
companies operating in the market area are of the same size, and when the
industry is growing slowly. When companies have similar strategies, the rivalry is
also high.
 2. Threat of new Entrants
Competition is not only limited to existing companies; new companies planning
to join the industry pose a threat to the existing businesses. Industries with high
profits tend to attract many companies.
To curb the high entrance, the industry places barriers of entry to limit the
number of new entrants. Otherwise, many companies would join the industry and
reduce the profits earned. Barriers to entry include:

• High initial capital

• Patents and property rights
• Government-driven obstacles
• Access to specialized infrastructure or technology
• High switching costs for clients
• Difficulty in accessing distribution channels and raw materials

3. Threat of Substitutes
Substitutes are products that can be used on behalf of others and still serve the
same purpose. A good example is Coke and Pepsi which are both soft drinks.
When setting prices, the two companies have to be aware of the substitute’s
prices. If one sets the prices so high, they will lose customers as they will have an
alternative product.
In the marketplace, when there are many competing products and services, it
becomes difficult to set the price of the service or good as you wish. You must,
therefore, set the price in accordance with the way the other players in the market
have set theirs. Trends and fads, relative prices, brand loyalty, and switching
costs affect threat to substitutes.
4. Bargaining Power of Buyers
The customer is always right and more so when they have the power to influence
the prices in the market. In an industry where the buyers purchase goods in bulk
or where there are similar products being produced, the buyers control the prices.
If a business insists on a particular price, the buyer might as well buy from
another company with the same kind of goods.

5. Bargaining Power of Suppliers

The production service relies on raw materials from suppliers. The suppliers can
influence the competitive edge of business by setting the prices for the materials,
determine the availability of materials, and dictate terms of trade.
For suppliers who supply goods to many companies, they can decide to increase
the cost of raw materials, and if the businesses do not have much choice, they will
have to pay more for the materials. To avoid these inconveniences, maintain a
steady and strong relationship with suppliers.
Lecture : 06 & 07
Week : 06 & 07

Topic: Developing effective business model

Model: A model is a plan or diagram that’s used to make or describe something.

Business Model: A firm’s business model is its plan or diagram for how it
competes, uses its resources, structures its relationships, interfaces with
customers, and creates value to sustain itself on the basis of the profits it
generates.
The term “business model” is used to include all the activities that define how a
firm competes in the marketplace.
The concept of business model changed substantially over the last few years. It
can no longer be defined as the way a company generates money or a person
attracts clients. Its definition has gone farther and now refers to the pure needs of
users and clients.
A business model describes the rationale of how an organization creates, delivers
and captures value for the client”
According to Joan Magretta in “Why Business Models Matter,” the term business
model came into wide use with the advent of the personal computer and the
spreadsheet.

Business models can be broken into three parts:

1. Everything it takes to make something: design, raw materials,

manufacturing, labor, and so on.
2. Everything it takes to sell that thing: marketing, distribution, delivering
a service, and processing the sale.
 3. How and what the customer pays: pricing strategy, payment methods,
payment timing, and so on.

Elements of business model:

1. Identify your specific audience.

Targeting a wide audience won’t allow your business to hone in on customers

who truly need and want your product or service. Instead, when creating your
business model, narrow your audience down to two or three detailed buyer
personas. Outline each persona’s demographics, common challenges and the
solutions your company will offer. As an example, Home Depot might appeal to
everyone or carry a product the average person needs, but the company’s primary
target market is homeowners and builders.

2. Establish business processes.

Before your business can go live, you need to have an understanding of the
activities required to make your business model work. Determine key business
activities by first identifying the core aspect of your business’s offering.

3. Record key business resources.

What does the company need to carry out daily processes, find new
customers and reach business goals? Document essential business resources to
ensure the business model is adequately prepared to sustain the needs of the
business. Common resource examples may include a website, capital,
warehouses, intellectual property and customer lists.
4. Develop a strong value proposition.

How will the company stand out among the competition? Does the company
provide an innovative service, revolutionary product or a new twist on an old
favorite? Establishing exactly what the business offers and why it’s better than
competitors is the beginning of a strong value proposition. Once you’ve got a few
value propositions defined, link each one to a service or product delivery system
to determine how you will remain valuable to customers over time.

5. Determine key business partners.

No business can function properly (let alone reach established goals) without key
partners that contribute to the business’s ability to serve customers. When
creating a business model, select key partners, like suppliers, strategic alliances or
advertising partners. Using the previous example of Home Depot, key business
partners may be lumber suppliers, parts wholesalers and logistics companies.

6. Create a demand generation strategy.

Unless you’re taking a radical approach to launching your company, you’ll need a
strategy that builds interest in your business, generates leads and is designed to
close sales. How will customers find you? More importantly, what should they do
once they become aware of your brand? Developing a demand generation
strategy creates a blueprint of the customer’s journey while documenting the key
motivators for taking action.

7. Leave room for innovation.

When launching a company and developing a business model, your business plan
is based on many assumptions. After all, until you begin to welcome paying
customers, you don’t truly know if your business model will meet their ongoing
needs. For this reason, it’s important to leave room for future innovations. Don’t
make a critical mistake by thinking your initial plan is a static document. Instead,
review it often and implement changes as needed.

The different kinds of business models:

The business models you can use to start your own business.
1. Advertising
The advertising business model has been around a long time and has become
more sophisticated as the world has transitioned from print to online. The
fundamentals of the model revolve around creating content that people want to
read or watch and then displaying advertising to your readers or viewers.

In an advertising business model, you have to satisfy two customer groups: your
readers or viewers, and your advertisers.
An advertising business model is sometimes combined with a crowdsourcing
model where you get your content for free from users instead of paying content
creators to develop content.

Examples: CBS, The New York Times, YouTube

2. Affiliate
The affiliate business model is related to the advertising business model but has
some specific differences. Most frequently found online, the affiliate model uses
links embedded in content instead of visual advertisements that are easily
identifiable.
Examples: The Wire Cutter.com, Top Ten Reviews.com
3. Brokerage
Brokerage businesses connect buyers and sellers and help facilitate a transaction.
They charge a fee for each transaction to either the buyer or the seller and
sometimes both.
One of the most common brokerage businesses is a real estate agency, but there
are many other types of brokerages such as freight brokers and brokers who help
construction companies find buyers for dirt that they excavate from new
foundations.
Examples: ReMax, RoadRunner Transportation Systems

4. Concierge/customization
Some businesses take existing products or services and add a custom element to
the transaction that makes every sale unique for the given customer.
For example, think of custom travel agents who book trips and experiences for
wealthy clients.
Examples: NIKEiD, Journy
5. Crowdsourcing
Crowdsourcing business models are most frequently paired with advertising
models to generate revenue, but there are many other iterations of the model.
Threadless, for example, lets designers submit t-shirt designs and gives the
designers a percentage of sales.
Companies that are trying to solve difficult problems often publish their problems
openly for anyone to try and solve. Successful solutions get rewards and the
company can then grow their business. The key to a successful crowdsourcing
business is providing the right rewards to entice the “crowd” while also enabling
you to build a viable business.
Examples: Threadless, YouTube, P&G Connect and Develop, Cuusoo

6. Disintermediation
Disintermediation is when you sidestep everyone in the supply chain and sell
directly to consumers, allowing you to potentially lower costs to your customers
and have a direct relationship them as well.
Examples: Casper, Dell
7. Fractionalization
Instead of selling an entire product, you can sell just part of that product with a
fractionalization business model.
One of the best examples of this business model is timeshares, where a group of
people owns only a portion of a vacation home, enabling them to use it for a
certain number of weeks every year.
Examples: Disney Vacation Club, NetJets

8. Franchise
Franchising is common in the restaurant industry, but it can be found in all sorts
of service industries from cleaning businesses to staffing agencies.
Examples: Ace Hardware, McDonald’s, Allstate

9. Freemium
Freemium isn’t the same as a free trial where customers only get access to a
product or service for a limited period of time. Instead, freemium models allow
for unlimited use of basic features for free and only charge customers who want
access to more advanced functionality. For more on the freemium model (and
other pricing models popular with SaaS businesses)
Examples: MailChimp, Evernote, LinkedIn

10. Leasing
Leasing might seem similar to fractionalization, but they are actually very
different. In fractionalization, you are selling perpetual access to part of
something. Leasing, on the other hand, is like renting. At the end of a lease
agreement, a customer needs to return the product that they were renting from
you.
Leasing is most commonly used for high-priced products where customers may
not be able to afford a full purchase but could instead afford to rent the product
for a while.
Examples: Cars, Direct Capital

11. Low-touch
With a low-touch business model, companies lower their prices by providing
fewer services. Some of the best examples of this type of business model are
budget airlines and furniture sellers like IKEA. In both of these cases, the low-
touch business model means that customers need to either purchase additional
services or do some things themselves in order to keep costs down.
Examples: IKEA, Ryan Air

12. Marketplace
Marketplaces allow sellers to list items for sale and provide customers with easy
tools for connecting to sellers.
The marketplace business model can generate revenue from a variety of sources
including fees to the buyer or the seller for a successful transaction, additional
services for helping advertise seller’s products, and insurance so buyers have
peace of mind. The marketplace model has been used for both products and
services.
Examples: eBay, Airbnb

13. Pay-as-you-go
Instead of pre-purchasing a certain amount of something, such as electricity or
cell phone minutes, customers get charged for actual usage at the end of a billing
period. The pay-as-you-go model is most common in home utilities, but it has
been applied to things like printer ink.
Examples: Water companies, HP Instant Ink

14. Razor blade

The razor blade business model is named after the product that essentially
invented the model: sell a durable product below cost to increase volume sales of
a high-margin, disposable component of that product.
This is why razor blade companies practically give away the razor handle,
assuming that you’ll continue to buy a large volume of blades over the long term.
The goal is to tie a customer into a system, ensuring that there are many
additional, ongoing purchases over time.
Examples: Gillette, Inkjet printers, Xbox, Amazon’s Kindle

15. Reverse razor blade

Flipping the razor blade model around, you can offer a high-margin product and
promote sales of a low-margin companion product.
Similar to the razor blade model, customers are often choosing to join an
ecosystem of products. But, unlike the razor blade model, the initial purchase is
the big sale where a company makes most of its money. The add-ons are just
there to keep customers using the initially expensive product.
Examples: Apple’s iPod & iTunes, and now MacBooks & Pages, Numbers, and
Keynote

16. Reverse auction

A reverse auction business model turns auctions upside down and has sellers
present their lowest prices to buyers. Buyers then have the option to choose the
lowest price presented to them.
Examples: Priceline.com, Lending Tree
17. Subscription
Subscription business models are becoming more and more common. In this
business model, consumers get charged a subscription fee to get access to a
service.
While magazine and newspaper subscriptions have been around for a long time,
the model has now spread to software and online services and is even showing up
in service industries.
Examples: Netflix, Salesforce, Comcast

Development of business model:

Great business models depend on developing three "green lights," or qualities that
help the business succeed: finding high-value customers, offering significant
value to customers, and delivering significant margins. Great business models
also avoid three "red lights" that can derail a business: difficulties in satisfying
customers, trouble maintaining market position, and problems generating funding
for growth. The list below outlines key factors in determining whether the model
meets each green light and avoids the red lights.

Green Lights:
1. Acquire high-value customers.
High-value customers doesn't mean rich customers, but customers who meet the
following requirements:

• Are easy to locate

• Allow you to charge a profitable price
• Are willing to try your product after minimal marketing expenses
• Can generate enough business to meet your sales and profit objectives
2. Offer significant value to customers.
There are a number of ways you can create significant value and competitive
advantage, including the following:

• Unique advantages in features and benefits

• Better distribution through retail or distribution
• More complete customer solutions through alliances with other companies
• Lower pricing due to manufacturing efficiencies or pricing options
• Faster delivery, broader product line or more customization options

The rise of the internet, outsourcing and, most of all, the increased willingness of
companies to partner in creative ways to serve customers has resulted in every
industry creating innovation in business strategy.

3. Deliver products or services with high margins.

Better manufacturing costs due to overseas manufacturing is typically not the
clear way to higher margins, as competitors will typically match your costs in the
end. Higher margins come from having a product that can be made from an
improved process or by having features that provide significant value and allow
you to charge more. You can achieve high margins with other tactics, including
the following:

• Use a more efficient distribution channel.

• Require less sales support and sales effort.
• Have an industry-leading lean manufacturing process.
• Offer more auxiliary products or other opportunities for revenue without
increasing cost.
Red Lights:
1. Provide for customer satisfaction.
Consider whether it will be difficult--and therefore expensive--to satisfy
customers once they buy. Some of the aspects of a business that create high
customer satisfaction costs include:

• High warranty costs

• Extensive technical support
• Extensive installation requirement
• Extensive customer service
• Interface problems with other equipment

2. Maintain market position.

A good business model uses its resources to improve its market position, adding
new products, features and customers or expanding into new applications. The
red flags that indicate it will be difficult to maintain market position include:

• Two or three major customers buy most of your product.

• Major potential competitors control the distribution network.
• Technology changes rapidly and requires high-risk product development.
• There are alternative technologies being developed to meet the same need.
• You have well-funded potential competitors who could quickly move into
your market.

3. Fund the business.

Startup costs, operating capital, personnel costs and overhead costs are just a
small percentage of the funding requirements for any business. The question is
whether the investments will have a high return and whether the business can
grow without substantial new investments. Red flags for a business model
regarding investments include:

• ROI is less than 25 percent in the first three years.

• Incremental production of products or services requires substantial
additional investments.
• Fewer than 50 percent of the investment required will be used in revenue
producing areas, such as sales and production.
• Investments have to be made prior to sales commitments.
• Industry as a whole has a poor ROI or poor profitability.
Lecture : 08 & 09
Week : 08 & 09

Topic: Writing a business plan

A business plan in any company is a document with every crucial detail. It covers
the following information: what you are going to sell or produce, the structure of
your business, your vision on how to sell the product, how much funding you
need, information on financial projections, among other details.

Responsible for writing a business plan:

An individual or a group of individuals who start a business are responsible for

writing a plan. In most scenarios, it is up to the founders of the company.

It’s important to remember that this is not a document for internal use only. On
the contrary, it’s a promotional document that will undergo constant updates and
changes. Keep in mind whom you write it for (investors, customers, etc.) and do
it in an easy-to-read language without challenging to understand words and terms.

Time ofwriting a business plan:

It is evident that a business plan of a company should be documented before your
business starts. Though this step is the first one, this is only one of those many
steps to create and run a business. Even if you have prepared the best plan ever, it
is worth nothing if you fail to implement it successfully.
Steps of writing a business plan

Step 1. Executive summary

The summary is where you (succinctly) introduce the business vision. Try to
make sure your exec summary answers these questions:

• What sector are you in?

• What products/services do you provide?

• Who is your target audience?

• What does the future of your industry look like?

• How is your company scalable?

• What are the next steps?

• Who are the owners of your company? Backgrounds? Experience in

sector/business?

Step 2. Mission statement

This part is important to you and your team. However, this isn’t quite
as important to your audience as you think it is.

The mission statement should include your goal and the objectives that will lead
you toward it; your industry, how you see it evolving in the short and long term,
and who your customers are. Your mission statement also says who you are, and
talks about the strengths of you and your team. This is where you, in part (and in
brief), sell the features and benefits of your company.
Step 3. Products and/or services

This part includes information on what you do and what you plan to sell it for.
This is also where you sell the benefits of your business.

This being a business plan and all, it’s important to list the cost of the
products/services you are providing:

• How much does it cost to produce? Versus how much will you sell each
piece for?
• Is there packaging?
• How will the client purchase the product?
• What system will you use to bill them?
• Are there extra costs in getting it to the customer? How will it be
transported?
• The products/services section should also differentiate your new business.
• What makes your business different?
• What gives your company’s product or service an edge in the
marketplace?
• What distinguishes it from competitors?

Step 4. Marketing plan

This is where you prove you know what you’re talking about and that your
company is ready to provide a service to a proven audience.

• Your customers: Are you B2B or B2C? Who are your customers? How do
you plan to reach them? Where will you sell your product/service? How
will you garner feedback from them? How will they know you care?
 • Your competition: Who are your direct/indirect competitors? What’s your
advantage? Don’t be shy — tell them you are better and why.
• Your niche: Or market or sector. Again, what separates your business
from your competitors — how will you make yourself known in the
niche?
• Your distribution: Of course, this is a marketing plan, so they’ll want to
know your tricks for promoting within the said niche. How are you selling
it — directly to clients, to a vendor, online, at a store, an office, freelance,
etc.
• Your advertising: Are you advertising already? Where? When you have
more funding, where do you advertise? How will you use advertising to
retain customers? Get new ones? Make sure you outline your marketing
budget either here or within the financial plan. How much will be spent on
print, TV/radio, Internet, direct mail, external ads, etc?
• Your sales strategy: Depending on the industry, this could be one of the
most important parts — how are you going to sell your product/service?
Online? A sales team? Telesales? How will you incentivize sales? Will
you offer a free sample or trial? Host a free workshop?
• Your face: You’ve described how you will market, what, to whom, on
where. Now it’s time to explain the image you’re going to project. This
can include your slogan, images, logos, website, social media channels,
etc.

Step 5. Operational plan

This part takes a reader through the day-to-day of your company, explaining the:

• Location/Logistics of your business

 • Transportation (if you’re selling a product)
• Legal — do you need a permit? License? Do you need to join a union or
other professional organization?
• Inventory — if you’re selling a product, where will you need to store it?
• Providers/Suppliers/Freelancers — Detailed contact info/pricing for
anyone you’re outsourcing to.

Step 6. Management organization

This part includes a hierarchical chart of your company and how the operations
we talked about above flow through it. List the positions and briefly describe the
functions of each integral member of your business, including but not limited to:
board of directors, advisors, technical specialists, accomplished salespeople,
accountants, and lawyers.

Step 7. Fiscal planning

The fiscal piece of your business plan puzzle is the piece investors and loan
managers are going to spend the most time looking at. Without proper
capitalization and financial planning, even the most excellent business idea that
fulfills an urgent need is at high risk for failing.

• Cash-flow analysis

This reflects what you are going to sell versus your business expenses. This
analysis projects your profit margin.

• Profits & Losses analysis

Done in conjunction with the cash-flow, this looks ahead at least a year and
includes revenue predictions, including graphical representations of those
numbers.

• Break-even analysis

This breaks down how much you have to, well, break even.

Step 8. Addendum

The addendum shows your research. Also, this is where you add any technical
diagrams of your business plan. The addendum is also a great place to put
references and press about your company, as well as resumes/CVs, adding proof
of your awesomeness.
Lecture : 10 & 11
Week : 10 & 11

TOPIC: PREPARING FOR AND EVALUATING THE

CHALLENGES OF GROWTH

Preparing For Growth

Most entrepreneurial firms want to grow. Especially in the short term, growth in
the sales revenue is an important indicator of an entrepreneurial venture's
potential to survive today and be successful tomorrow. Growth is exciting and,
for most businesses, is an indication of success.

While there is some trial and error involved in starting and growing any business,
the degree to which a firm prepares for its future growth has a direct bearing on
its level of success.

Here are the three most important this a business can do to prepare for growth:

Appreciating the Nature of Business Growth

Growing a business successfully requires preparation, good management, and an

appreciation if the issues involved. The following are issues about business
growth that entrepreneurs should appreciate:

Not all businesses have the potential to be aggressive growth firms → The
businesses that have the potential to grow the fastest over a sustained period if
time are ones that solve a significant problem or have a major impact on their
customers' productivity or lives.

A business can grow too fast → Many businesses start fast and never let up,
which stresses a business financially and can leave its owners emotionally
drained.
 Business success doesn't always scale → Unfortunately, the very thing that
makes a business experts often mean when they say growth is a "two-edged
sword."

There is also a category of businesses that sell high-end or specialty products that
earn high margins. These businesses typically sell their products through venues
where customers prioritize quality over price. These business can grow, but only
at a measured pace. If they grow too quickly, they can lose the "exclusivity" they
are trying to project, or can damage their special appeal.

Staying Committed to a Core Strategy

An important part of a firm's business model is its core strategy, which defines
how it competes relative to its rivals. A firm's core strategy is largely determined
by its core competencies, or what it does particularly well. If a business becomes
distracted or starts pursuing every opportunity for growth that presents itself, the
business can easily stray into areas where it finds itself at a competitive
disadvantage.

Planning for Growth

The third thing that a firm can do to prepare for growth is to establish growth-
related plans. The task involves a firm thinking ahead and anticipating the type
and amount of growth it wants to achieve. A business plan normally includes a
detailed forecast of a firm's first three to five years of sales, along with an
operations plan that described the resources the business will need to meet its
projections. It’s also important for a business to determine, as early as possible,
the strategies it will choose to employ as a means of pursuing growth.

Reasons for Growth

Although sustained, profitable growth is almost always the result of deliberate

intentions and careful planning, firms cannot always choose their pace of growth.
A firm's pace of growth is the rate at which it is growing on an annual basis.
Sometimes firms are forced into a high-growth mode sooner than they would like.
Here are the appropriate reasons for firm growth:

Capturing Economies of Scale

Economies of scale are generated when increasing production lowers the average
cost of each unit produced. Economies of scale can be created in service firm as
well as traditional manufacturing companies. This phenomenon occurs for two
reasons. First, if a company can get a discount by buying component parts in
bulk, it can lower its variable costs per unit as it grows larger. Variable costs are
the costs a company incurs as it generates sales. Second, by increasing
production, a company can spread its fixed costs over a greater number of
units. Fixed costs are costs that a company incurs whether it sells something or
not. A related reason firms can grow is to make use of unused resources such as
labor capacity and a host of others.

Capturing Economies of Scope

With economies of scope, the advantage a firm accrues comes through the scope
(or range) of a firm's operations rather than from its scale of production.

Market Leadership

Market leadership occurs when a firm holds the number one or the number two
position in an industry or niche market in terms of sales value. Being the market
leader also permits firm to use slogans in its promotions, helping it wins
customers and attract talented employees as well as business partners.

Influence, Power, and Survivability

Larger businesses usually have more influence and power than smaller firms in
regard to setting standards for an industry, getting a "foot in the door" with major
customers and suppliers, and garnering prestige. As a firm grows and adds
employees, it's normally not as vulnerable to lose a single person or a small group
of people's participation or passion for the business.
Ability to Attract and Retain Talented Employees

It is natural for talented employees to want to work for a firm that can offer
opportunities for promotions, higher salaries, and increased levels of
responsibility. Growth is a firm's primary mechanism to generate promotional
opportunities for employees, while falling to retain key employees can be very
damaging to a firm's growth efforts.

Managing Growth

Many businesses are caught off guard by the challenges involved with growing
their companies. One would think that if a business got off to a good start,
steadily increased its sales, and started making money, it would get progressively
easier to manage the growth of a firm. The reality is that a company must actively
and carefully manage its growth for it to expand in a healthy and profitable
manner.

Knowing and Managing the Stages of Growth

The majority of businesses go through a discernable set of stages referred to as

the organizational life cycle. It's important for an entrepreneur to be familiar with
the stages of organizational life cycle, along with the unique opportunities and
challenges that each stage entails.

Introduction stage → The start-up phase where a business determines what its
strengths and core capabilities are and starts selling its initial production or
service.

Early growth stage → Increasing sales and heightened complexity.

Continuous growth stage → Start developing a new product and services and will
expand to new markets.

Maturity stage → Focuses more intently on efficiently managing the products

and services it has rather than expanding in new areas.

Decline stage → A firm can enter the decline stage if it loses its sense of purpose
or spreads itself so thin that it no longer has a comparative advantage in any of its
markets. A firm's management teams should be aware of these potential pitfalls
and guard against allowing them to happen.
Challenges of Growth

There is a consistent set of challenges that affect all stages of a firm's growth. The
challenges illustrate that no firm grows in rival firms; there will be a certain
amount of retaliation that takes place. This is an aspect of competition that a
business owner needs to be aware of and plan for. Competitive retaliation
normally increases as a business grows and becomes a larger threat to its rivals.

Managerial Capacity

As a firm goes about its routine activities, the management team becomes better
acquainted with the firm's resources and its markets. This knowledge leads to the
expansion of a firm's productive opportunity set, which is the set of opportunities
the firm feels it's capable of pursuing.

Entrepreneurial service generate new market, product, and services ideas,

while managerial services administer the routine functions of the firm and
facilitate the profitable execution of new opportunities. When a firm's managerial
resources are insufficient to take advantage of its new product and service
opportunities, the subsequent bottleneck is referred to as the managerial capacity
problem.

Day-to-Day Challenges of Growing a Firm

Along with the overarching challenges imposed by the managerial capacity

problem, there are a number of day-to-day challenges involved with growing a
firm.

Cash flow management → A firm must carefully manage its cash on hand to
make sure it maintains sufficient liquidity to meet its payroll and cover its other
short-term obligations.

Price stability → If firm growth comes at the expense of a competitor's market

share, price competition can set in. There is no good way for a small firm to
compete head-to-head against a much larger rival on price.

Quality control → As the firm grows, it handles more service requests and
paperwork and contends with an increasing number of prospects, customers,
vendors, and other stakeholders.
Capital constraints → Some business needs capital from time to time to invest
in growth-enabling projects. Their ability to raise capital, whether it's through
internally generated funds, through a bank, or from investors, will determine in
part whether their growth plans proceed.
Lecture : 12
Week : 12

Topic: Firms Growth Strategies

The majority small companies have plans to grow their business and increase
sales and profits. However, there are certain methods companies must use for
implementing a growth strategy. The method a company uses to expand its
business is largely contingent upon its financial situation, the competition and
even government regulation. Some common growth strategies in business include
market penetration, market expansion, product expansion, diversification and
acquisition.

Market Expansion or Development

A market expansion growth strategy, often called market development, entails

selling current products in a new market. There several reasons why a company
may consider a market expansion strategy. First, the competition may be such
that there is no room for growth within the current market. If a business does not
find new markets for its products, it cannot increase sales or profits.

A small company may also use a market expansion strategy if it finds new uses
for its product. For example, a small soap distributor that sells to retail stores may
discover that factory workers also use its product.

Product Expansion Strategy

A small company may also expand its product line or add new features to
increase its sales and profits. When small companies employ a product expansion
strategy, also known as product development, they continue selling within the
existing market. A product expansion growth strategy often works well when
technology starts to change. A small company may also be forced to add new
products as older ones become outmoded.

Market Penetration Strategy

One growth strategy in business is market penetration. A small company uses a
market penetration strategy when it decides to market existing products within the
same market it has been using. The only way to grow using existing products and
markets is to increase market share, according to small business experts. Market
share is the percent of unit and dollar sales a company holds within a certain
market vs. all other competitors.One way to increase market share is by lowering
prices. For example, in markets where there is little differentiation among
products, a lower price may help a company increase its share of the market.

Growth through Diversification

Growth strategies in business also include diversification, where a small company

will sell new products to new markets. This type of strategy can be very risky. A
small company will need to plan carefully when using a diversification growth
strategy. Marketing research is essential because a company will need to
determine if consumers in the new market will potentially like the new products.

Acquisition of Other Companies

Growth strategies in business can also includes an acquisition. In acquisition, a

company purchases another company to expand its operations. A small company
may use this type of strategy to expand its product line and enter new markets.
An acquisition growth strategy can be risky, but not as risky as a diversification
strategy.

Alternative Channels

Maybe you sell everything through wholesalers. Or you only have one retail
store. In either case, you could add the other one you don’t currently offer or
perhaps even add an online shopping option. Or maybe you start selling direct in
addition to your wholesale channel.

The key here is communication with existing channels so there aren’t hurt
feelings or lost business. Or if you plan to lose business in one area, make sure
that it will be more than made up for in another area, either in total sales volume
or profit or both.
Reducing or Increasing Prices

True, it might cause you to lose a customer or two, but part of that is how well the
price is communicated. Many times, customers will understand an increase if
their prices haven’t gone up in many years, and you remind them of this fact
along with solid reasons their costs are going up. Plus, taking a personal approach
of communicating this face-to-face with all of, or at least, your top customers will
go a long way towards assuring them that their business is important. Here are
some tips for raising your prices without losing customers.

Or on the flip side, perhaps a strategic price reduction for specific items is in
order. This could help drive market share for a product that gets the customer in
the door in order to sell them something else more profitable later.

Steal Competitor Strategies

Now, I’m not advocating doing anything illegal or unethical, but if you can gain
knowledge of what they’re doing on the up-and-up, then why not do so. Keep in
mind that you may need to modify their strategies to your own company, but by
the same token, be careful not to water it down too much, thus losing the power
of what’s working for them.

Key Partnerships or Alliances

Are there other companies or influential people in your industry that you can
align yourself with to grow your revenues. Typically, these aren’t your industry
leaders since they don’t need your help in return. But if you can find a company
or person that has a certain level of success and needs others to create a win-
win scenario for both organizations, then by all means do it. Check out these tips
for successful partnerships and alliances.

Brand Differentiation

Are your brand and products you sell truly differentiated in the market?

Perhaps, you have the best quality, or maybe you have the fastest turnaround. Or
you have the most advanced product on the market. Just make sure you have
something that is genuinely unique, that sets you apart and actually matters to
your customer, meaning they are willing to pay for it at a price you can make a
profit. And make sure to communicate that to potential customers as your main
point of differentiation from the competition.

Firms growth strategies:

Workforce Supply

Discussing this with your team leaders and HR folks can be a real eye-opener.
This issue is not one that will go away anytime soon as many companies are
challenged with finding quality employees who are the right skills and culture fit.

Orders or Service Capacity (Vendor Capacity)

Perhaps, you need to replace or supplement some of those before you get in a
pickle and have to turn away or significantly delay some of this new business that
you’ve just spent a ton of time and money getting in the door.

Communications (Internal & External)

Do they know how to communicate this to existing and potential customers? It

might be a good time to chat with your team leaders and formalize your
communications plan to make sure everyone is on the same page.

Targeted Marketing Campaigns

Consider doing highly targeted campaigns to grow your business, whether digital
or traditional marketing. Most of your customers are bombarded with generic
ads every day. Find out where your customers hang out, whether physically or
digitally, and speak directly to them there.

Financial Resources

While it might be tempting to think that we can just figure that out later…once
growth happens, that can lead to a bad situation where you can’t deliver on the
promises you just made to these new customers. You can borrow money from a
bank, add equity through shareholders, or use an alternative financing model
like supplier financing.
Lecture : 13

Week : 13

Topic: Emerging Trends and Social Entrepreneurship

The Revaluation of unfilled Spaces

Soul Roots, a nonprofit organization that wants to use the vacant spaces of
Toronto to install urban agriculture projects.

Public Accessory, which uses public and private vacant spaces in Toronto in order
to install the eco-urban infrastructure, such as bike racks.

Lande facilitates the recovery of vacant land by citizens themselves, listing

vacant lots in Montreal that are ready for community repurposing.

Social integration

Many of the innovators present in Toronto run enterprises that stress the
importance of equity and inclusion.

The Binners Project allows "recyclers" living or busking on the streets of

Vancouver to organize themselves through workshops and meetings. In this way,
it recreates social linkages and enables a supportive community.

The Montreal-based organization, AXCS, provides stores with custom-built

accessibility ramps—in this way, implementing practical and inexpensive
solutions to the physical barriers faced by people with reduced mobility.

NextGenMen offers programs to improve the social acceptance of everyone,

regardless of gender identity or sexual orientation, through workshops given in
schools and online.
Kindess Connect links people who want to volunteer with groups in search of
their skills and time.

Health

Health also figured strongly in the projects present in the Bootcamp:

Mommy Monitor, a platform designed in Toronto, is intended mainly for women

from Africa and the Caribbean to enable them to better monitor their pregnancies
through access to social benefits and by providing them with health advice.

PASS (Panic, Anxiety, Stress& Support) is a prevention platform targeting mental

health by providing a “First Aid” kit to address panic or stress crises.

Environmental innovation

The environment and the optimization of existing processes were also among the
topics covered by the entrepreneurs in the Toronto cohort.

MycoRemedy offers a more environmentally friendly and economical way to

decontaminate the soil and restore large-scale sites.

Zooshare uses waste from the Toronto Zoo and its surrounding stores
(excrement and food) to convert them into biofuel.

5. Food, Hunger & Waste

Two initiatives included in this year's Toronto Boot camp take diverse approaches
to addressing hunger, food insecurity and waste.

Growing North works with families in Nunavut, 79 percent of which face food
insecurity. The organization set a goal of reducing the cost of food to help these
families to save money; it also empowers families to take an active role in the
development of their community.
Meal Exchange helps students create a sustainable food system in their
schools. The main idea is to use local suppliers and create the shortest possible
circuit for supplying these schools in an environmentally responsible manner.
Lecture : 14
Week : 14

Topic: Market Survey

Market Survey

Market survey is the survey research and analysis of the market for a particular
product/service which includes the investigation into customer inclinations.
Market surveys are tools to directly collect feedback from the target audience to
understand their characteristics, expectations, and requirements.Marketers
develop new and exciting strategies for upcoming products/services but there can
be no assurance about the success of these strategies. For these to be successful,
marketers should determine the category and features of products/services that the
target audiences will readily accept. By doing so, the success of a new avenue can
be assured. Most marketing managers depend on market surveys to collect
information that would catalyze the market research process. Also, the feedback
received from these surveys can be contributory in product marketing and feature
enhancement.
Market surveys collect data about a target market such as pricing trends, customer
requirements, competitor analysis, and other such details.

Purpose of Market Survey

• Gain critical customer feedback: The main purpose of the
market survey is to offer marketing and business managers a platform to
obtain critical information about their consumers so that existing
customers can be retained and new ones can be got onboard.
• Understand customer inclination towards purchasing products: Details
such as whether the customers will spend a certain amount of money for
their products/services, inclination levels among customers about
upcoming features or products, what are their thoughts about the
competitor products etc.
• Enhance existing products and services: A market survey can also be
implemented with the purpose of improving existing products, analyze
 customer satisfaction levels along with getting data about their perception
of the market and build a buyer persona using information from existing
clientele database.
• Make well-informed business decisions: Data gathered using market
surveys is instrumental in making major changes in the business which
reduces the degree of risks involved in taking important business
decisions.

Importance of Market Survey

1. Understanding the demand and supply chain of the target

market: A product is most likely to be successful if it is developed
by keeping in mind the demand and supply of the target market.
This way, marketers can obtain insights about market capabilities
to absorb new products and concepts to develop customer-centric
products and features.

2. Developing well-thought marketing plans: The World is a target

market for an organization, especially a well-established one.
Getting data from the target market through thorough market
research using market surveys and segmentation can be a source of
creating concrete and long-term marketing plans.

3. Figure out customer expectations and needs: All marketing

activities revolve around customer acquisition. All small and large
organizations require market surveys to gather feedback from their
target audience regularly, using customer satisfaction tools such
as Net Promoter Score, Customer Effort Score, and Customer
Satisfaction Score (CSAT) etc. Organizations can analyze
customer feedback to measure customer experience, satisfaction,
expectations etc.

4. Accurate launch of new products: Market surveys are influential in

understanding where to test new products or services. Market
surveys provide marketers a platform to analyze the scope of
 success of upcoming products and make changes in strategizing
the product according to the feedback they receive.

5. Obtain information about customer demographics: Customer

demographics form the core of any business and market surveys
can be used to obtain intricate and sensitive details about customer
demographics such as race, ethnicity or family income.

Types of Market Survey

Telephone interviews: This is an inexpensive, fast way to get information from

potential customers. Prepare a script before making the calls to ensure you cover
all your objectives. Most people don't like to spend a lot of time on the phone, so
keep your questions simple, clearly worded and brief. If you don't have time to
make the calls yourself, hire college students to do it for you.

Direct-mail interviews: If you want to survey a wider audience, direct mail can
be just the ticket. Your survey can be as simple as a postcard or as elaborate as a
cover letter, questionnaire and reply envelope. Keep questionnaires to a
maximum of one page, and ask no more than 20 questions. Ideally, direct-mail
surveys should be simple, structured with "yes/no" or "agree/disagree" check-off
boxes so respondents can answer quickly and easily. If possible, only ask for one
or two write-in answers at most.

Fax/e-mail interviews: Many of the principles used in direct-mail interviews

also apply to these surveys. One exception: Never send an unsolicited fax that is
more than one page. Give clear instructions on how to respond, and be
appreciative in advance for the data you get back.

Product Surveys: New products/concept testing survey templates offer questions

to obtain insights about products and concepts. These survey questions are
curated by market research experts and can help in analyzing which kind of
products or features will work in a market.

Conference Feedback Surveys: Conference feedback survey templates provide

questions that can be asked to participants of a conference. An organization
can organize better conferences by implementing feedback received from these
surveys such as enhancing overall conference management, improved IT
infrastructure, better content coverage or other such factors.

Focus Group Surveys: Focus group survey templates can be implemented

during and after the recruitment of the focus group. Gaining insights from a
dedicated group of 8-10 people can be done easily with this existent survey
template.

Hardware And Software Surveys: Hardware and software survey templates

offer editable questions about software product evaluation, hardware product
evaluation, pre-installation procedure, technical documentation quality and other
such factors.

Website Surveys: Website survey templates are customizable as per application

and consist of questions pertaining to website customer feedback, visitor profile
information, online retail information etc.
Lecture : 15
Week : 15

Topic: Launching Formalities

Steps for launching a new product or services:

1. Conduct Testing

confidence business owners take time to test their new items and perform
necessary adjustments. Before listing a product for sale on your website, or
stocking it in your retail store, send out complimentary versions for trusted clients
to test and evaluate. The goal is to collect feedback from surveys and focus
groups so you can make any needed improvements before releasing the product
wide.
One of the reasons that testing is so crucial is that it ensures a product’s first
impression with buyers will be a positive one. After all, if you release a flawed or
buggy item, customers will remember that fact and be loath to try future versions.
The internet means shoppers have virtually endless options, and they are unlikely
to give a second chance to a disappointing company or product.

2. Contact Influencers
Blogs and social media sites are great for marketing new businesses and products
online. However, if you only post about your brilliant invention on your own
website, you’re unlikely to generate the sales results you desire. Instead, startups
should target key influencers, or trusted brand advocates, in their chosen
industries.
Start by creating a list of popular bloggers, social media mavens, and even high-
profile customers who have shopped with you before. You can then email or
message these individuals and ask them to review a free sample of your product.
If they like the item, the chances are good that they will blog about it or share
details with their social followers. The goal is to generate buzz and excitement
about a product before you launch and identify any outstanding issues that could
affect your item’s ability to generate a profit.
3. Get Your Team Excited
It doesn’t matter how strong your product is if your marketing and customers
service teams aren’t behind you. Before launching your new item, it’s important
to educate your employees and get them excited about the item. (Ideally, you will
also involve product managers and sales staff throughout the item’s development,
so they can weigh in on aspects.)
To prepare your team members for launch, sit down with them to discuss the
product ahead of time and ensure they have the resources needed to support
customers and answer their questions. If your staff is going to be selling products
over the phone, consider creating new talk tracks to aid in the process. For best
results, create a number of small but attainable goals so employee morale stays
high throughout the launch.
4. Create a Schedule—and Stick to It
It’s easy to lose sight of your goals while trying to launch a new product. Smart
business owners create detailed production schedules to ensure tasks are
completed on time and team members are held accountable for their roles.
Additionally, you should review your timetable to ensure it covers all the
necessary tasks, from performing market research on your target audience to
contacting your favorite blogger or YouTube star, and set clear objectives. If you
want to sell 1,000 products in the first month, put that goal in writing and commit
to achieving it.
While it’s important to ensure your schedule is realistic, entrepreneurs also need
to consider the best times of year to release their new products. For example,
depending on the item you’re selling, you might want to consider seasonal factors
or the timing of trade shows or pop culture events. And of course, you will want
to ensure you are properly staffed for the launch. The last thing you want is to
find yourself struggling to release a new product because several of your
employees are out for summer vacation.
5. Identify Your Marketing Channels
Disappeared are the days when businesses could market their wares on one or two
sales channels only. Today, savvy startups maximize potential sales by targeting
as many potential channels as possible. Along with traditional outlets like TV,
radio, and mailers, modern businesses promote their goods on websites, social
media pages, and online retail sites. They create email marketing campaigns,
utilize PPC advertising, and even contact customers via text. The more channels
you target with your marketing materials, the more opportunities you will have to
find new and profitable audiences.
Lecture : 16 & 17
Week : 16 & 17

TOPIC: GETTING FINANCING OR FUNDING

Financing or Funding

Entrepreneurs need to have as full an understanding as possible of the alternatives

that are available in regard to raising money. And raising money is a balancing
art. Although a venture may need to raise money to survive, its founders usually
don't want to deal with people who don't understand or care about their long-term
goals.

There are three reasons that most entrepreneurial ventures need to raise money
during their early life:

Cash Flow Challenges

Inventory must be purchased, employees must be trained and paid, and

advertising must be paid for before cash is generated from sales.

Capital Investments

The cost of buying real estate, building facilities, and purchasing equipment
typically exceeds a firm's ability to provide funds for these needs on its own.

Lengthy Product Development Cycles

Some products are under development for years before they generate earnings.
The up-front costs often exceed a firm's ability to fund these activities on its own.

Sources of Personal Financing

Typically,the seed money that gets a company off the ground comes from the
fonder's own pockets. There are three categories of sources of money in this area

Personal Funds
Involves both financial equity. Sweat equity represents the value of the time and
effort that founder puts into a firm.

Friends and Family

Often comes in the form of loans or investments, but can also involve outright
gifts, foregone or delayed compensation, or reduced or free rent.

Bootstrapping

Finding ways to avoid the need for external financing through creativity,
ingenuity, thriftiness, cost-cutting, obtaining grants or any other means.

Preparing to Raise Debt or Equity Financing

The most important thing an entrepreneur must do at this point is to determine

precisely with the company needs and the most appropriate source to use to
obtain those funds. These are the steps of preparation for debt or equity financing:

Step 1: Determine precisely how much money is needed.

Step 2: Determine the most appropriate type of financing or funding.

Step 3: Develop a strategy for engaging potential investors or bankers.

Sources of Equity Funding

The primary disadvantage of equity funding is that the firm's owners relinquish
part of their ownership interest and may lose some control. Unlike a loan, the
money received from an equity investor doesn't have to be paid back. The
investor receives a return on the investment through dividend payments and by
selling the stock. Here are the three most common forms of equity funding

Business Angels

Business angels are individuals who invest their personal capital directly in start-
ups. The term angel was first used in conjunction with finance to describe
wealthy New Yorkers who invested in Broadway plays. Business angels are
valuable because of their willingness to make relatively small investments.

Venture Capital
Venture Capital is money that is invested by venture capital firms in start-ups and
small businesses with exceptional growth potential. The majority of venture
capital money goes to follow-on funding for businesses that were originally
funded by angel investors, government programs, or by some other means. The
investors who invest in venture capital funds are called limited partners. The
venture capitalists, who manage the fund, are called general partners.

Initial Public Offering

An IPO is the first sale of stock by a firm to the public. Any later public issuance
of shares is referred to as a secondary market offering. Most entrepreneurial firms
that go public trade on NASDAQ , which is weighted heavily toward technology,
biotech, and small-company stocks. An IPO is an important milestone for a firm.
Typically, a firm is not able to go public until it has demonstrated that it is viable
and has a bright future.

A variation of IPO is a private placement, which is the direct sale of an issue of

securities to a large institutional investor. When a private placement is initiated,
there is no public offering, and no prospectus is prepared.

Sources of Debt Financing

Debt financing involves getting a loan or selling corporate bonds. There are two
common types of loans.

Single-purpose loan, in which a specific amount of money is borrowed that must

be repaid in a fixed amount of time with interest.Line of credit, in which a
borrowing "cap" is established and borrowers can use the credit at their
discretion.

There are two major advantages to obtaining a loan as opposed to equity funding.
The first is that none of the ownership of the firm is surrendered. The second is
that interest payments on a loan are tax deductible, in contrast to dividend
payments made to investors, which are not.

There are two major disadvantages of getting a loan. The first is that it must be
repaid, which may be difficult in a start-up venture in which the entrepreneur is
focused on getting the company off the ground. The second is that lenders often
impose strict conditions on loans and insist on ample collateral to fully protect
their investment.

Here are the three most common sources of debt financing available to
entrepreneurs:

Commercial Banks

Historically, commercial banks have not been viewed as practical sources of

financing for start-up firms. Banks are interested in firms that have a strong cash
flow, low leverage, audited financials, good management, and a healthy balance
sheet. Although many new ventures have good management, few have the other
characteristics, at least initially. But banks are an important source of credit for
small businesses later in the life cycles.

Other Sources of Debt Financing

There are a variety of other avenues business owners can pursue to borrow money
or obtain cash. Vendor credit (aka trade credit) is when a vendor extends credit to
a business in order to allow the business though buy its products or services up
front but defer payment until later. Factoring is a financial transaction whereby a
business sells its account receivable to a third party, called a factor, at a discount
in exchange for cash.

Creative Sources of Financing and Funding

Because financing and funding are difficult to obtain, particularly for start-ups,
entrepreneurs often use creative ways to obtain financial resources. Here are the
common creative sources of financing and funding for entrepreneurial firms:

Crowd funding

Crowd funding is the practice of funding a project or new venture by raising

monetary contributions from a large number of people, typically via the Internet.
There are two types of crowd funding sites:

Rewards-based crowd funding allows entrepreneurs to raise money in exchange

for some type of amenity or reward. Once a novelty, rewards-based crowd
funding has become a major source of start-up funds.
Equity-based crowd funding helps businesses raise money by tapping individuals
who provide funding in exchange for equity in the business.

Leasing

A lease is a written agreement in which the owner of a piece of property allows

an individual or business to use the property for a specified period of time in
exchange for payments. The major advantage of leasing is that it enables a
company to acquire the use of assets with very little or no down payment.

There are many different players in the leasing business. Some vendors lease
directly to businesses. As with banks, the vendors look for lease clients with good
credit backgrounds and the ability to make the lease payments. There are
also venture-leasing firms that act as brokers, bringing the parties involved in a
lease together. One of the responsibilities of these firms is conducting due
diligence to make sure that the new ventures involved will be able to keep up
with their lease payments.

SBIR and STTR Grant Programs

The Small Business Innovation Research (SBIR) and the Small Business
Technology Transfer (STTR) programs are two important sources of early-stage
funding technology firms. The main difference between the SBIR and the STTR
programs is that the STTR program requires the participation of researches
working at universities or other research institutions.

The SBIR Program is a competitive grant program that provides over $2.5 billion
per year to small businesses for early-stage and development projects. The SBIR
is a three-phase program, meaning that forms that qualify have the potential to
receive more than one grant to fund a particular proposal. These are the three
phases:

Phase I is a six-month feasibility study in which the business must demonstrate

the technical feasibility of the proposed innovation.

Phase II the purpose is to develop and test prototype of Phase I innovations.

Phase III is the period during which Phase II innovations move from the research
and development lab to the marketplace.
The STTR Program is a variation of the SBIR for collaborative research and
projects that involve small business and research organizations, such as
universities or federal laboratories.

Other Grant Programs

There are limited numbers of other grant programs available to entrepreneurs.

Obtaining a grant takes a little detective work. Granting agencies are, by nature,
low-key, so they normally need to be sought out. Finding a grant that fits your
business is the key. One thing to be careful of is grant-related scams. Business
owners often receive unsolicited letters or e-mail messages from individuals or
organizations that assure them that for a fee they can help the business gain
access to hundreds of business-related grants. The reality is that there aren't
hundreds of business-related grants that fit any one business. Most of these types
offers are a scam.

Strategic Partners

Strategic partners are another source of capital for new ventures. Indeed, strategic
partners often play a critical role in helping young firms fund their operations and
round out their business models. Many strategic partnerships are also formed to
gain access to a particular resource or to facilitate speed to market. In exchange
for access to plant and equipment and established distribution channels, new
ventures bring an entrepreneurial spirit and new ideas to these partnerships. These
types of arrangements can help new ventures lessen the need for financing or
funding.
Lecture : 18
Week : 18

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