Bio Entrepreneurship

Business Strategy, Entry and exit strategy, pricing strategy, negotiations with
financiers, bankers, government and law enforcement authorities, dispute
resolution skills, external environment/ changes, avoiding/managing crisis,
broader vision–global thinking, mergers & acquisitions.

Business Strategy:
A business strategy refers to all the decisions taken, and actions undertaken
by a business for achieving the larger vision. Knowing what business strategy is
and how to execute it properly can help businesses become market leaders in
their domain. Precisely, a business strategy is the backbone of every business,
and any shortcomings could mean that the business goals get lost midway.
Importance of Devising a Business Strategy

Once you commence a business, the importance of business strategy cannot

be ignored. Any leader who is unaware of the importance cannot ensure the
long-term sustainability of their organization.

As the business environment, today is becoming increasingly competitive, the

importance of business strategy cannot be underplayed. We’ve put together
some reasons why devising should be your first priority.

 In the initial phase of a business, a lot of planning is required. While a

plan clarifies the goals, it is the strategy that helps in executing and
reaching the vision.
 When leaders formulate a strategy, it helps them understand their
strengths and weaknesses. This way, they can capitalize on what they
are good at and improve on their weaker aspects.
 It ensures that every aspect of a business is planned. This means more
efficiency and better and more effective plans. Everyone in the team is
aware of what they need to do, and the capital is allocated properly.
 It can help businesses gain a competitive advantage over others in the
segment. It also makes them unique in the eyes of their customers.
 It ensures that leaders have control over the processes. This means they
will also go as planned.
Key Aspects of a Business Strategy

A business strategy is an answer to what, how, why, where, and how. This is
where all-embracing leadership courses come into the picture. These courses
help leaders understand the key aspects and other nitty-gritty of a business
strategy. You can pursue these leadership courses to update yourself on recent
developments in this domain.

 The first component is – the mission, vision, and objectives. This will
have clear instructions on what is to be done when it is to be done, and
how it is to be done.
 The second component is – the core values of a business, which should
be clear right at the outset.
 The third component is – a SWOT analysis. SWOT refers to strengths,
weaknesses, opportunities, and threats. This will give an idea of the
business’s current standing.
 The fourth component is – operational tactics which refer to how the
company will achieve the defined objectives efficiently and effectively.
 The fifth component is – resource procurement and allocation. It will
provide answers about how many resources are needed, how will they
be distributed, etc.
 The sixth component is – measurement, which refers to how every
activity of the business will be kept on track and measured against
milestones that have been set.

Entry & Exit Strategy

Entry Strategy:

MARKET ENTRY STRATEGIES

There are a variety of ways in which a company can enter a foreign market. No
one market entry strategy works for all international markets. Direct exporting
may be the most appropriate strategy in one market while in another you may
need to set up a joint venture and in another you may well license your
manufacturing. There will be a number of factors that will influence your
choice of strategy, including, but not limited to, tariff rates, the degree of
adaptation of your product required, marketing and transportation costs.
While these factors may well increase your costs it is expected the increase in
sales will offset these costs.
The following strategies are the main entry options open to you.
Direct Exporting
Direct exporting is selling directly into the market you have chosen using in the
first instance you own resources. Many companies, once they have established
a sales program turn to agents and/or distributors to represent them further in
that market. Agents and distributors work closely with you in representing
your interests. They become the face of your company and thus it is important
that your choice of agents and distributors is handled in much the same way
you would hire a key staff person.
Licensing
Licensing is a relatively sophisticated arrangement where a firm transfers the
rights to the use of a product or service to another firm. It is a particularly
useful strategy if the purchaser of the license has a relatively large market
share in the market you want to enter. Licenses can be for marketing or
production. licensing).
Franchising
Franchising is a typical North American process for rapid market expansion but
it is gaining traction in other parts of the world. Franchising works well for
firms that have a repeatable business model (eg. food outlets) that can be
easily transferred into other markets. Two caveats are required when
considering using the franchise model. The first is that your business model
should either be very unique or have strong brand recognition that can be
utilized internationally and secondly you may be creating your future
competition in your franchisee.
Partnering
Partnering is almost a necessity when entering foreign markets and in some
parts of the world (e.g. Asia) it may be required. Partnering can take a variety
of forms from a simple co-marketing arrangement to a sophisticated strategic
alliance for manufacturing. Partnering is a particularly useful strategy in those
markets where the culture, both business and social, is substantively different
than your own as local partners bring local market knowledge, contacts and if
chosen wisely customers.
Joint Ventures
Joint ventures are a particular form of partnership that involves the creation of
a third independently managed company. It is the 1+1=3 process. Two
companies agree to work together in a particular market, either geographic or
product, and create a third company to undertake this. Risks and profits are
normally shared equally. The best example of a joint venture is Sony/Ericsson
Cell Phone.
Buying a Company
In some markets buying an existing local company may be the most
appropriate entry strategy. This may be because the company has substantial
market share, are a direct competitor to you or due to government regulations
this is the only option for your firm to enter the market. It is certainly the most
costly and determining the true value of a firm in a foreign market will require
substantial due diligence. On the plus side this entry strategy will immediately
provide you the status of being a local company and you will receive the
benefits of local market knowledge, an established customer base and be
treated by the local government as a local firm.
Piggybacking
Piggybacking is a particularly unique way of entering the international arena. If
you have a particularly interesting and unique product or service that you sell
to large domestic firms that are currently involved in foreign markets you may
want to approach them to see if your product or service can be included in
their inventory for international markets. This reduces your risk and costs
because you are essentially selling domestically and the larger firm is
marketing your product or service for you internationally.
Turnkey Projects
Turnkey projects are particular to companies that provide services such as
environmental consulting, architecture, construction and engineering. A
turnkey project is where the facility is built from the ground up and turned
over to the client ready to go – turn the key and the plant is operational. This is
a very good way to enter foreign markets as the client is normally a
government and often the project is being financed by an international
financial agency such as the World Bank so the risk of not being paid is
eliminated.
Greenfield Investments
Greenfield investments require the greatest involvement in international
business. A greenfield investment is where you buy the land, build the facility
and operate the business on an ongoing basis in a foreign market. It is certainly
the most costly and holds the highest risk but some markets may require you
to undertake the cost and risk due to government regulations, transportation
costs, and the ability to access technology or skilled labour.
Exit Strategy

A business exit strategy is a plan for the transition of business ownership

either to another company or investors. Even if an entrepreneur is enjoying
good proceeds from his firm, there may come a time when he wants to leave
and venture into something different.

A business exit strategy is an entrepreneur's strategic plan to sell his or

her ownership in a company to investors or another company. An exit strategy
gives a business owner a way to reduce or liquidate his stake in a business
and, if the business is successful, make a substantial profit. If the business is
not successful, an exit strategy (or "exit plan") enables the entrepreneur to
limit losses. An exit strategy may also be used by an investor such as a venture
capitalist in order to plan for a cash-out of an investment.

Ideally, an entrepreneur will develop an exit strategy in their initial business

plan before actually going into business. The choice of exit plan can influence
business development decisions. Common types of exit strategies
include initial public offerings (IPO), strategic acquisitions, and management
buyouts (MBO). Which exit strategy an entrepreneur chooses depends on
many factors, such as how much control or involvement (if any) they want to
retain in the business, whether they want the company to be run in the same
way after their departure, or whether they're willing to see it shift, provided
they are paid well to sign off.

A strategic acquisition, for example, will relieve the founder of his or her
ownership responsibilities, but will also mean the founder is giving up control.
IPOs are often seen as the holy grail of exit strategies since they often bring
along the greatest prestige and highest payoff. On the other hand, bankruptcy
is seen as the least desirable way to exit a business.

Pricing Strategy

A winning pricing strategy:

Portrays value

The word cheap has two meanings. It can mean a lower price, but it can also
mean poorly made. There's a reason people associate cheaply priced products
with cheaply made ones. Built into the higher price of a product is the
assumption that it's of higher value.
Convinces customers to buy
A high price may convey value, but if that price is more than a potential
customer is willing to pay, it won't matter. A low price will seem cheap and get
your product passed over. The ideal price is one that convinces people to
purchase your offering over the similar products that your competitors have to
offer.
Gives your customers confidence in your product
If higher-priced products portray value and exclusivity, then the opposite
follows as well. Prices that are too low will make it seem as though your
product isn't well made.

Top 7 pricing strategies

Let's now take a closer look at the seven most common pricing strategies that
were outlined above. Click on any of the links below for a more in-depth guide
to that particular pricing strategy.

1. Value-based pricing

With value-based pricing, you set your prices according to what

consumers think your product is worth. We're big fans of this pricing
strategy for SaaS businesses.
2. Competitive pricing
When you use a competitive pricing strategy, you're setting your prices
based on what the competition is charging. This can be a good strategy
in the right circumstances, such as a business just starting out, but it
doesn't leave a lot of room for growth.
3. Price skimming
If you set your prices as high as the market will possibly tolerate and
then lower them over time, you'll be using the price skimming strategy.
The goal is to skim the top off the market and the lower prices to reach
everyone else. With the right product it can work, but you should be
very cautious using it.
 4. Cost-plus pricing
This is one of the simplest pricing strategies. You just take the product
production cost and add a certain percentage to it. While simple, it is
less than ideal for anything but physical products.

5. Penetration pricing
In highly competitive markets, it can be hard for new companies to get a
foothold. One way some companies attempt to push new products is by
offering prices that are much lower than the competition. This is
penetration pricing. While it may get you customers and decent sales
volume, you'll need a lot of them and you'll need them to be very
loyal to stick around when the price increases in the future.

6. Economy pricing
This strategy is popular in the commodity goods sector. The goal is to
price a product cheaper than the competition and make the money back
with increased volume. While it's a good method to get people to buy
your generic soda, it's not a great fit for SaaS and subscription
businesses.

7. Dynamic pricing
In some industries, you can get away with constantly changing your
prices to match the current demand for the item. This doesn't work well
for subscription and SaaS business, because customers expect consistent
monthly or yearly expenses.

Negotiations with financiers

Negotiation: Communication with others for the purposes of reaching

agreement. Financial negotiation involves reaching agreement about money.
Negotiation is a part of our daily life. It is the way people get what they want
from others. Negotiation occurs between those whose interests overlap but
are not entirely the same.

2. It works best if participants see themselves as problem-solvers instead of

adversaries. In negotiation there are four possible outcomes.

❚ Win-Win. Both participants in the negotiation get something they want or

need, if not everything. They both have a positive feeling and are willing to
negotiate again. This is the preferable outcome of negotiation.
❚ Lose-Lose. Neither person involved in the negotiation gets what they want.

❚ Lose-Win and Win-Lose. One participant gets what she wants and the other
gets nothing. The participant who loses is likely to be unwilling to negotiate
with the winner again.

❚ No Outcome. Neither person wins nor loses. They decide not to negotiate.

How can you prepare for negotiation? Here are some questions that can guide
you.

1. What do you want and why? Think about your wants, needs, interests
and concerns. Why do you want this? For what purpose?

EXAMPLE: I want to get a good price when I purchase food in the market
place. I have a limited amount of money to feed and care for my family
and I must make it go a long way. If I can pay a little less for food today, I
will have some money to put into savings to manage emergencies.

2. What are the interests and motivations of the other person? Knowing
what the other person wants will help you find a “win-win” solution. A
common mistake in negotiation is to neglect to think about the position
of the other person; understanding only your own point of view and
your own interests can lead to failure. It is important to work alongside
those with whom you are negotiating to find a suitable agreement for
all. Question the person with whom you are negotiating to understand
her position and underlying interests.

EXAMPLE: The seller also wants to get a good price. He has to cover his
costs of supplies and running a business. He wants to make a profit so he
can meet the needs of his own family.

3. What are the possible agreements that will satisfy all parties in the
negotiation? Recognize that you and the other person have differences.
Think about all the possible options that will result in a positive outcome
for both sides.

EXAMPLE: The buyer wants a good price, but she is also concerned with quality
and availability of the product, ease of purchase and transportation. The seller
wants to do a good business by having regular clients, beating the competition,
getting paid in cash and reducing the time for each transaction. Some areas of
agreement might be as follows: ➤ If the seller lowers the price, the buyer will
pay in cash instead of on credit. ➤ The seller offers to lower the price if the
buyer purchases more each time she buys.

4. What will you do if you cannot agree? Negotiation does not always
result in agreement. You should identify what alternatives you have if
this happens. Knowing what your options are will make it easier for you
to decide when you should give up the negotiation and walk away. The
alternatives may not be as desirable, but sometimes the only agreement
possible is too unsatisfactory to accept and an alternative solution may
be more appropriate.

EXAMPLE: The buyer thinks the price is too high and the seller does not offer
any acceptable alternatives. Resolutions include the following: ➤ The buyer
goes to a different seller (perhaps sacrificing on preferences for product
quality, variety or appearance). ➤ The seller chooses not to sell to this
customer.

5. How can you use other experiences to support your points or ensure
fairness? Can you think of examples of commonly accepted solutions in
similar situations? Introducing guidelines drawn from other situations
can be persuasive. To do this effectively, you must do some research to
find the right information and relevant examples. This takes time, but
information is a powerful tool in negotiation.

EXAMPLE: The buyer shares the prices offered by other sellers for the
same product. Or she shares information about the actual price of
producing the product and the generally accepted profit margin.

6. How will you communicate effectively?

Remember the two sides of communication: speaking clearly and
listening carefully. Decide what you want and clearly state your
interests. Think about how you want to say these things and use words
that the other person will hear and understand. Then, listen closely to
the other person. Sometimes it is difficult to really hear what he is saying
because you are absorbed by your own ideas, or think you already know
what his intentions are, or are distracted by your emotions. You can
confirm that you heard a person correctly by restating back to him in
 your own words what he said. Keep the discussion focused on the issue.
Don’t let yourself get sidetracked in the negotiations by returning to
points of conflict. Try not to react to something the other person said
that is not relevant. Bring the conversation back to what you want by
restating the issue.

EXAMPLE: Wife: I am worried that we do not have extra money to deal with
emergencies. I would like to save more money with my women’s group.

Husband: You just want to hide money away to buy new clothes.

Wife (acknowledges his feelings but sticks to what she wants): I see you are
upset about my saving with the group. I want to find a way to help us avoid
expensive loans from the moneylender like we had to get last year when our
daughter got sick. The group has an account at the bank. I can save small
amounts and the money will be safe.

Husband: You are just changing the subject!! Pretty soon you will be buying
jewellery with our money.

Wife (not reacting to his outburst, staying on message): I love you and our
family. I want to set aside some money for security. I see other families so in
debt they have to cut back on what they eat. I don’t want this for us if the
flood or sickness comes. Perhaps I can take a few pennies each week from the
house money that I would normally spend for tea and keep it in the group
savings account.

Husband: Oh, all right. We can try it and see what happens.

NEGOTIATION SKILLS

1. Communication

To achieve your ideal outcome at the bargaining table, it’s essential to clearly
communicate what you’re hoping to walk away with and where your
boundaries lie.

Effective communication skills allow you to engage in a civil discussion with

other negotiators and work toward an agreeable solution. Deal-making
naturally requires give and take, so it’s important to articulate your thoughts
and actively listen to others’ ideas and needs. Without this skill, key
components of the discussion can be overlooked, making it impossible for
everyone to leave the negotiation satisfied.

2. Emotional Intelligence

Emotions play a role in negotiation, for better or worse. While it’s important
not to let them get in the way of reaching a mutually beneficial deal, you can
use them to your advantage. For example, positive emotions have been shown
to increase feelings of trust at the bargaining table, while feelings of anxiety or
nervousness can be channelled into excitement.

A high degree of emotional intelligence is needed to read other parties’

emotions. This can enable you to more easily pick up on what they’re implying
rather than explicitly stating. In addition to understanding what you and others
are experiencing throughout a negotiation, emotional intelligence can help you
advantageously manage and use emotions.

3. Planning

Planning ahead with a clear idea of what you hope to achieve and where your
boundaries lie is an essential step in any negotiation. Without adequate
preparation, it’s possible to overlook important terms of your deal.

First, consider the zone of possible agreement (ZOPA) between you and the
other negotiating parties. ZOPA, sometimes called the bargaining zone, refers
to the range in a negotiation in which two or more parties can find common
ground. A positive bargaining zone exists when the terms that both parties are
willing to agree to overlap. On the other hand, a negative bargaining zone
exists when neither party’s terms overlap.

Next, it’s beneficial to understand your best alternative to a negotiated

agreement (BATNA). If your discussion lands in a negative bargaining zone,
your BATNA is the course of action you plan to take if the negotiation is
unsuccessful. Knowing your BATNA ahead of time can help ensure you have a
backup plan in case an agreement can’t be reached and avoid leaving the table
empty-handed.
4. Value Creation

Creating value in a negotiation is one of the most powerful skills you can add to
your toolkit.

To illustrate its importance, consider this analogy: When participating in a

negotiation, each party is typically concerned with obtaining the biggest “slice
of the pie” possible. With each party vying to maximize their slice, this
inherently means some will be forced to leave with a much smaller piece.

To break free of this traditional idea of negotiation, experts suggest shifting

your goals from growing your slice to growing the whole pie. The benefits are
twofold: First, each party can realize greater value; second, a sense of rapport
and trust is established, which can benefit future discussions.

5. Strategy

In addition to thorough preparation and the ability to create value, you need a
clear understanding of effective negotiation tactics. Knowing what works and
what doesn’t can allow you to create a tailored strategy for every negotiation
you participate in.

To develop a strong negotiation strategy, consider the following steps:

 Define your role

 Understand your value
 Understand your counterpart’s vantage point
 Check in with yourself
Following this process ahead of each negotiation can enable you to formulate a
clear plan of action for the bargaining table. By understanding the roles of
those involved, the value each party offers, and your counterpart’s advantages,
you can better prepare to work toward a common goal. Checking in with
yourself throughout the discussion can also help ensure you stay on the path
to success.

6. Reflection

Finally, to round out your negotiation skills and develop your proficiency, you
need to reflect on past negotiations and identify areas for improvement. After
each negotiation—successful or not—reflect on what went well and what
could have gone better. Doing so can allow you to evaluate the tactics that
worked in your favor and those that fell short.

After evaluating your strengths and weaknesses, identify areas you want to
work on and create a plan of action. For example, if you had trouble aligning
your goals with your counterpart’s, consider reviewing concepts like ZOPA and
BATNA. Or, if your negotiations often leave you feeling dissatisfied, you could
benefit from learning new ways to create value.

Alternative Dispute Resolution (ADR). ADR refers to any method of conflict

resolution that takes place outside of the courtroom. It involves processes and
techniques of conflict resolution without litigation and empowers parties to work
together using a framework to amicably settle complex issues. The most common
ADR methods are negotiation, mediation, conciliation, arbitration, and private
judging.

Negotiation
Negotiation is usually the first approach to take before resorting to other ADR
methods. It is more informal and affords the parties flexibility. Essentially,
negotiation is simply parties identifying an issue and meeting to fix it—they control
the process and the solution.

This may seem obvious, as negotiating relationships and disagreements is

something that business owners do all day, every day. However, when a problem
gets serious enough, it can sometimes be helpful to recognize an informal
negotiation as the first stage in a potential ADR process.

One of the fundamental aspects of a successful negotiation is transparency.

Personal or relational family tensions can cloud the negotiations. It is essential to
be clear about the potential challenges and problems that might come up during
the negotiations. Addressing the intense family tensions might feel overwhelming,
but it will prevent you from feeling stuck during the process.

Mediation
Mediation is a type of assisted negotiation. During mediation, parties obtain the
help of a neutral third party (the mediator) to help them resolve the dispute.
Importantly, mediation requires a lot of involvement from both sides.

Mediation can be informal, where the mediator is a friend, family member, or

trusted advisor. In the case of an informal mediation, it is key to select a person
who both parties can agree on and who brings some form of expertise to bear on
the situation.

The process can also be formal, where the parties hire a professional, neutral third
party. Formal mediators are trained in negotiations and help parties solve the issue
to satisfy both sides. In either case, the purpose of a mediator is not to decide
whether a party is wrong or right—the goal is to help the parties find a mutually
acceptable resolution.

While conversations during mediation are confidential, it is usually possible for the
written agreement that results from mediation to be made legally binding.
Mediation is particularly useful if parties believe that they cannot resolve a dispute
on their own.

Conciliation
Conciliation, like mediation, is confidential, voluntary, and flexible. It is also
facilitated by a neutral third party (a conciliator) and focused on reaching a dispute
resolution that both parties consider satisfactory.

Unlike in mediation, the conciliator provides parties with a proposal to resolve the
issue, and the parties work from there. The presented proposal is non-binding—
although, like in mediation, any formal agreements struck after conciliation can be
made legally binding.

Arbitration
Arbitration is more formal than negotiation, mediation, or conciliation, and can
look more like litigation. Parties submit their dispute to an arbitrator who renders a
decision following the process. Parties can agree to arbitrate before or after a
conflict occurs.

The real benefit over formal litigation (in addition to cost and efficiency) is that the
parties in an arbitration have the freedom to set the rules of arbitration, which can
be much more flexible than formal civil procedure required in court. For example,
parties can select the number of arbitrators, the forum, and fees.

Arbitrators also have a great deal of flexibility to work with the parties in front of
them in a way even a judge may not. This type of process can help parties save
time and expense associated with litigation.

Private Judging
In private judging, parties authorize an expert in their legal dispute to resolve the
issue. The parties hire a private judge, often a former judge or an attorney. The
parties take turns presenting their case to the judge, after which the judge issues a
legally binding decision.

The court appoints a private judge. A private judge can help move the case along
faster and enable parties to avoid airing their family business matters publicly.

Conclusion
Parties often use multiple ADR methods to meet their needs, and the methods can
be more efficient and less expensive than litigation. In addition to the economic
benefits of ADR, it can help family members who are deeply invested in the issue
find solutions amicably. That being said, ADR still requires parties to voluntarily
examine the disputes and work together to arrive at a solution.

10 Types of External Environment Factors

Some of the ten types of external environmental factors are as follows;

Political Factors
Every new political party comes to the government with its new policies and
gets rid of old policies, and their change in policies would impact relevant
businesses and companies. With the inconsistencies in the political
environment of the country, businesses and companies have to pay heed to
the legislation and the upcoming bills in order to prepare themselves for the
potential changes. Some of the policies that could influence the business are as
follows;
 Intellect Property Rights

 Import Restrictions
 Competition Regulations
 Employment Laws
 Tariffs
 Taxation
The political regulations have a great impact on the company’s operations, and
the business has to comply with the new legislation in order to keep things
going.

Economic Factors
The economic factors play a significant role in terms of impacting our daily life
to the growth of the company. When the country’s economy is in recession,
then the unemployment rate would be higher. Companies have to work extra
hard in order to retain their workforce and make changes in order to maintain
their revenue stream. If the company is in the business of manufacturing retail
products, then it has to decrease its prices to amplify the sale to maintain its
profitability.
Social Factors
When people live together in a society, then their social status and personal
choices would influence their purchase decision in terms of what and where
they should buy. While developing the product/service, companies keep in
mind various social factors because various social issues, events, and
movements impact their decision.
For instance, a feminist organization that endorses the women’s cause and
movement would earn the trust and loyalty to the women’s customer market.
When you’re targeting a specific segment of the market, then you should keep
in mind their preference and potential influences on them in recent years. You
can use such factors for your business growth and satisfy the needs of
customers.
Technological Factors
Technological developments are making significant changes in every industry,
and companies need to adopt technology to gain a competitive edge in the
market. For instance, a GPS manufacturing company for the vehicle would
have to face decreasing sales because of the integration of mobile devices with
GPS. But it can deal with this challenge by launching new integrated products.
Healthcare companies should come up with the latest methods and techniques
in terms of gathering information from the patients. The patient record and
care system should be in alignment.

Legal Factors
Legal factors comprise the law of the country impacting the company that how
it should operate its business and behaviour of customers. Some of the main
areas that fall under its category are the viability of the certain product in
certain markets, profit margin, and product transportation.
When it comes to the sale of sharp objects, drugs, and others; the legal factors
help you to decide whether the company should offer it or not. Some main
laws that fall under its category are as follows;

 Import and Export Laws

 The legality of Pyramid Scheme
 Fraud Law
 Employment Law
 Health and Safety Laws
 Copyrights Laws
 Discrimination Laws
  Consumer Laws
Demographic Factors
Many companies conduct a demographic analysis to evaluate their target
market to make sure whether it’s meeting their needs or not. It allows them to
understand their target market and find ways to serve customers better. The
demographic could impact your business process and decision. It comprises of
following elements;
 Education level
 Income
 Occupation
 Marital Status
 Belief System
 Nationality
 Race
 Gender
 Age
Many telecom companies became operational in the 1990s, and their target
market is young professionals that are succeeding in their lives. Nowadays,
people from various backgrounds all use mobile devices daily. That’s why
telecom companies have been modifying the products/services in terms of
features and using various marketing approaches to target them.

Ethical Factors
Different people have different concepts of morality and ethics, and it has
become challenging for companies to maintain a balance between staff
expectation and their personal lives. It’s the responsibility of the company’s
sales staff to avoid such activities that would have a negative impact on the
company. The managers should address workplace ethical issues like
harassment and sharing the company’s confidential information and take
disciplinary actions against them.

Natural Factors
The customer market has cautious about the planet earth and the impact of
businesses practices on the natural environment. Some customers support
such companies that promote eco-friendly practices and products. The
conscious choice of eco-friendly products has created a lot of opportunities
and challenges for businesses. The goal is to amplify revenue, retain
customers, and protect the environment.
Global Factors
If the company is launching its product in the international market, then it
should keep in mind various global and local issues. The company should keep
on analyzing the economic status, consumer trends, cultural norms, and social
issues; and offer training to deal with such issues. It allows them to develop
such products that would meet their needs and requirements.

Competitive Factors
Companies could amplify their market share and profitability if they keep on
tracking the market trends and competitors. It would allow them to recognize
the challenges and find ways to deal with them in order to deal with loss.
Final Thoughts
After the study of external environment factors; we’ve learned that they play a
significant role in a company’s growth. If you’re developing a company’s
strategy, then you should keep in mind the external factors and their impact
on the business.

Mergers & Acquisitions

A merger occurs when two separate entities combine forces to create a new,
joint organization. Meanwhile, an acquisition refers to the takeover of one
entity by another. Mergers and acquisitions may be completed to expand a
company’s reach or gain market share in an attempt to create shareholder
value.

Mergers and acquisitions, or M&A for short, involves the process of combining
two companies into one. The goal of combining two or more businesses is to
try and achieve synergy – where the whole (new company) is greater than the
sum of its parts (the former two separate entities).

Mergers occur when two companies join forces. Such transactions typically
happen between two businesses that are about the same size and which
recognize advantages the other offers in terms of increasing sales, efficiencies,
and capabilities. The terms of the merger are often fairly friendly and mutually
agreed to and the two companies become equal partners in the new venture.

Acquisitions occur when one company buys another company and folds it into
its operations. Sometimes the purchase is friendly and sometimes it is hostile,
depending on whether the company being acquired believes it is better off as
an operating unit of a larger venture.
The end result of both processes is the same, but the relationship between the
two companies differs based on whether a merger or acquisition occurred.

Benefits of Combining Forces

Some of the benefits of M&A deals have to do with efficiencies and others
have to do with capabilities, such as:

 Improved economies of scale. By being able to purchase raw materials in

greater quantities, for example, costs can be reduced.
 Increasedmarket share. Assuming the two companies are in the same
industry, bringing their resources together may result in larger market
share.
 Increaseddistribution capabilities. By expanding geographically,
companies may be able to add to their distribution network or expand
its geographic service area.
 Reduced labour costs. Eliminating staffing redundancies can help reduce
costs.
 Improved labour talent. Expanding the labour pool from which the new,
larger company can draw can aid in growth and development.
 Enhancedfinancial resources. The financial wherewithal of two
companies is generally greater than one alone, making new
investments possible.

Potential Drawbacks

Although mergers and acquisitions are expensive undertakings, there are

potential rewards. And there are disadvantages, or reasons not to purchase an
acquisition, including:

 Largeexpenses associated with buying a company, especially if it does

not want to be acquired. (If an investor has a controlling interest in
another company, however, it may not have a choice regarding
whether it is acquired.)
 Higherlegal costs, which can be exorbitant if a company does not want
to be acquired.
 Theopportunity cost of having to forego other deals in order to focus on
bringing two companies together.
  Thepossibility of a negative reaction to a merger or acquisition, which
drives the company’s stock price lower.
M&A is growth strategy corporations often use to quickly increase its size,
service area, talent pool, customer base, and resources in one fell swoop. The
process is costly, however, so the businesses need to be sure the advantage to
be gained is substantial.