MANAGERIAL ECONOMICS: QUIZ 3

Nikoli Franceska E. Joven

To be successful in a business venture, the company requires sufficient capital and

management proficiency with a feasible product that can meet the needs of the market. Following
the market research, there is likely to be a consumer base that would make use of a product or
service. Prospective consumers are excited by such prospects and tend to support products they
deem beneficial.

In most cases, the first step in feasibility analysis is to estimate the potential size of the
market for the product proposed to be manufactured and get an idea about the market share that
is likely to be captured. Given the importance of market and demand analysis, it should be carried
out in an orderly and systematic manner. Companies use market demand analysis to understand
how much consumer demand exists for a product or service. This analysis helps management
determine if they can successfully enter a market and generate enough profits to advance their
business operations. The key steps involved in market and demand analysis are as follows:
situationsl analysis and specification of objectives, collection of secondary information, conduct
of market survey, characterization of the market, demand forecasting, and formukation of the
market plan.

A SWOT analysis will position the company to seize opportunities and prepare effective
strategies. Getting a clear and realistic view of your internal environment will help us identify ways
to better satisfy clients, achieve the business objectives and strengthen weaker areas that have
an impact on the performance. Analyzing the business’ external environment help potential
business owners and current business owners to prepare for opportunities (e.g., changing
demographics, announcement of a new residential development in the area, new trade
agreement) and threats (e.g., new technologies, changing exchange rates, loss of a major
employer in the community, new trade agreement) that will affect their business in coming years.

The business doesn’t operate in a vacuum. One of your most crucial tasks as a business
owner is deciding how to react to your market and competitive landscape changes. Whether
you’re starting a business or running an existing small business, it’s essential to know where you
stand relative to your competition. Lastly, a competitive analysis gives you the vital information
you need to make educated decisions about your marketing, branding position, pricing, and more.
If you plan your brand strategy or marketing strategy without a competitive analysis, you’re flying
blind. Optimize and focus your marketing strategy with a competitive analysis.

Moreover, your business plan acts as a reflection of you, showing that you have really
thought things through. It requires advance preparation, delegation, refinement, and, most
importantly, a disciplined approach. Writing a business plan forces you into disciplined thinking if
you do an intellectually honest job. An idea may sound great in your mind, but when you put down
the details and numbers, it may fall apart. Many entrepreneurs begin business planning by
incorrectly estimating the length of time and effort it takes to prepare an effective business plan.
It cannot be completed in one attempt. A business plan is a living document, and business
planning is a process that never ends. The plan changes, especially with most high-tech ventures,
where it may change in the early stages on a weekly if not a daily basis. These are not huge
changes but iterations, and the business plan becomes “someplace” where modifications are
noted as the venture takes shape and more information is collected. The overall business
planning effort is based on the degree of uncertainty, the degree of complexity, and the potential
threat from competitors.