1

TOPIC TWO
BUSINESS ENVIRONMENT

2.1 Business Opportunities and Business Development

2.1.1 Business Opportunity
Business opportunity (bizopp) refers to the chance to take advantage of an occurrence in the
market for business gain. It is a packaged business investment that allows the buyer to begin a
business. It is a concept that has been proven severally in the marketplace with the presence of
several or many successful businesses doing the same or similar things. It involves some kind of
favourable condition which exists in the market. It is what makes some businesses succeed while
others fail. It serves as the basis for any action that results in profit and business growth. It allows
businesses to create and implement ideas and innovations and improve their performance. It is
only those who spot opportunities early can take the best advantage of them and capitalise on
them. It is everywhere, and it is important for businesses to identify and tap into it. A good example
of a business opportunity in the market today is e-books. Generally, business opportunities are
taken advantage of by entrepreneurs because the risks are far much lower than an unproven
business idea, and they create greater chances of success for the entrepreneurs. It provides an
individual or a company with an amazing chance to expand their current operations, initiate new
offerings, and turn a profit. It can be found in any industry and often exists due to factors such as
technology advancements, product development, market changes, skill gaps, and even financial
benefits. Identification of entrepreneurial opportunities is an effective way to jumpstart your
business endeavors. In summary, a business opportunity = a validated business idea = business
idea + customers

Characteristics of a Good Business Opportunities

[1] Clarity: good opportunities are clear, well defined, and straightforward
[2] Relevance: good opportunities are relevant to the scenario in which they exist e.g. provide
added value to customers, markets, and industries.

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[3] Feasibility: good opportunities are realistic and feasible i.e. they help businesses achieve their
goals while making them more efficient, productive, and profitable.
[4] Profitable: good opportunities are capable of providing returns on investment i.e. they are able
to achieve its objectives while capitalising on the available resources, strategies, and assets
more efficiently.
[5] Scalable: good opportunities can be expanded to a big or a wide scale. They can extend to
various markets and industries while maximising the results of investments in terms of time,
human resources, and money.
[6] No or Few Competition: good opportunities which Lack of competition in the market will enable
you win over your targeted persons in the market wholly. With this you will be able to gain
much profit. However, the more innovative the product or service you offer the fewer the
competitors you get and the higher the price you will be able to charge hence more profit (Mole,
2017). In some cases it is possible to have no competitors because the market is not viable.
[7] Identifiable Risks: good opportunities have easily identifiable risks: The future of a startup is
always uncertain, therefore identifying a risk is the first step to understanding how they can be
monitored and then mitigated. The more strategic options you have identified, the greater your
chance of success. (Entrepreneurship Hub)
[8] Adequate Skill: good opportunities are the ones from which the entrepreneur has enough skills
and experience to deal with: You need to have the experience required to tap into that
particular business opportunity. If the skills required to execute the business plays to the
strength of the team, execution risk should be less. For example, if you want to start a bakery
but don’t know a thing about baking them that is not a viable business opportunity. An
entrepreneur would start a business with a sales distribution strategy of his or her knowledge.
He or she would want to start a business that requires skills that he or she has. One can learn,
but it becomes an extra cost, time constraint and extra risk. (Mole, 2017).
[9] Supportive Government Policies: good opportunities are the ones which are friendly to the
government policies. Policies of a government can impact businesses directly or indirectly and
so when the government puts in place policies that are favorable, for example low interest

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rates, low exchange rates and low taxation, it encourages investment by making these business
friendly decisions to strengthen local businesses. (Mole, 2017).
[10] Cultural and Ethnic Dynamics: good opportunities are the ones that match with cultural and
ethical dynamics. The first main area of opportunity is the market provided by an ethnic group’s
own consumption patterns. This assumes of course that there are sufficient openings in the
labor market to create a large enough demand for the provision of ethnic products and services
for this to be a viable form of business. It is also wise to create something that may also be
attractive to outsiders as this may spell the difference between survival and prosperity in
business. (Mole, 2017).
In summary, a business opportunity can only be considered as one when it has met some or all of
the following criteria:
It must be a proven concept with several successful businesses using the same model; the gross
margins of the business must be high; the business must have the potential to reach a break-even
point within 12 months – 36 months; the capital or investment required to start up must be realistic
and within what you can raise; you have the skills or people needed to make the business successful;
it must have the potential to keep on improving with time; and the risk level must be many times
lower than an unproven idea.
The world best business opportunity offers advantages that include better access to resources,
relatively easy entry into competitive markets, lower start-up costs, and the potential for significant
profits. Whether you are a budding entrepreneur or an established business owner, exploring
opportunities can open the door to increased success.

Types of Business Opportunities

a) New market opportunity: involves an untapped market, which gives businesses the chance to
create and implement ideas and innovations without facing much competition.
b) Untapped resource opportunity: business opportunity that involves underutilised or unexploited
resources that can be used to create added value.

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c) Repressed demand opportunity: capitalises on existing demands that the current offerings
don’t cater to. For example, Uber capitalised on a repressed demand for an on-demand cab
system in the existing cab industry.
d) Technology opportunity: allows businesses to introduce new technologies that can be used in
existing markets.
e) Competitive opportunity: allows businesses to introduce new products or services that can
provide more value than their competitors while solving the problems of the target market
better.
f) Strategic partnership opportunity: involves the chance to collaborate with businesses from
complementary industries, allowing them to access new resources, strengthen their product
offerings, and increase their competitive advantage.
g) Distributorship: For business owners looking to generate business growth, a distributorship
business opportunity can prove to be an invaluable asset. Distributors sell products for
manufacturers, thus giving them access to a wider customer base with less effort.
h) Franchising: provides an innovative way to start and expand a business. It allows an individual
or business to leverage the proven business model of another company and grow their business
quickly while typically involving fewer risks.
i) Licensing: it is a business opportunity that offers the perfect balance of autonomy and support.
Through licensing agreements, business owners join forces with existing business entities to
share branding, resources, and customer bases. This offers the chance to benefit from the
existing strength of a business without having to build up your market presence from scratch
j) Niche Opportunity: by honing in on a particular market or demographic, you can identify needs
that would not be apparent in heavily saturated business arenas. Focusing on niche markets
allows for the development of customized approaches to business success with greater
precision and accuracy than the traditional business model.
k) Business Opportunities from Home: business opportunities from home are increasingly popular
in opportunities identification, allowing entrepreneurs to start and maintain their businesses
without having to leave the comfort of their own homes. From freelance writing to web design,
business owners can take advantage of the various opportunities available through a home-

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based business model. This way they can have more control over their working hours, benefit
from lower overhead costs and develop something that would bring flexible financial success.
By taking control of your business operations in the comfort of your own home, you'll be better
positioned to increase productivity while making firm strides toward growth and prosperity.
l) Online Business Opportunity: it provides entrepreneurs a chance to leverage their business
ideas, develop their business plans, and launch their companies into the global marketplace
without the traditional overhead cost of renting commercial space. A business opportunity
example of this kind would be setting up an online retail store that will allow customers to
purchase products with ease and convenience.
m) Drop shipping business opportunity: it is another best business opportunity example to consider
with low risk and investment costs. These opportunities provide access to products and services
for business owners who are looking for faster and more efficient ways to reach potential
customers. It also allows business owners to customize their offerings with creative marketing
solutions and to have better control of business operations.

Importance of Business Opportunities

Business opportunities are essential for business growth and success. Having the right
opportunities gives business owners, entrepreneurs, and investors the ability to maximize their
potential and create a successful business enterprise. Identifying business opportunities can allow
companies to increase their revenue streams by providing unique products, services, or an
innovative approach to a problem.
Identification of business opportunities in entrepreneurship is an important step to kickstarting
your career as an entrepreneur. There are numerous possibilities for entrepreneurs to explore,
including harnessing technology or creating a new niche in an industry or sector, as well as
identifying opportunities that involve taking advantage of changes in consumer behavior or
leveraging resources from other businesses. By correctly following well-defined steps in the
identification of business opportunities, anyone has the potential to find success in
entrepreneurship and create lucrative business ventures.

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Having new business opportunities also provides access to increased capital resources, enabling
businesses to invest in employee development, technology upgrades, and other growth strategies
that can help propel business objectives. Therefore, paying close attention to available
entrepreneurial opportunities is incredibly important for any business, regardless of size or
industry.

Here are some reasons why a business opportunity is important:

i. The chance to build a business: A business opportunity can be an existing unsolved problem
in the market or a new problem arising from current trends, which is the chance to build a
business.
ii. The chance to avoid failure: a business is likely to fail without opportunities. This is because
they are essential for implementing ideas and innovations that can make a business
successful. They allow businesses to take the right decision at the right time.
iii. The chance to grow: opportunities allow businesses to create and implement ideas and
innovations. It is also a chance to improve performance by solving existing problems better,
providing a more refined value proposition to the target market, and building a more efficient
business model.
iv. The chance to maximise profits: a business opportunity involves favourable conditions that
can be used to increase profits. These conditions include but are not limited to the availability
of resources, the existence of market demand, and the presence of favourable competition.
The goal is to find solutions that can potentially maximise profits while solving problems.

The Business Opportunity Identification

Whether it is new business opportunities or entrepreneurial opportunities, there are many ways
to identify business opportunities. Society is a living organism changing with time and space.
Therefore, observing the social, political, economic and technological changes in the Environment
is relevant in the identification of business opportunities. Generally, the major way of business
identification is observing changes in the environment

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Ways of Business Opportunity Identification

[1] Social changes: are crucial for the inception of new business opportunities. For instance, the

merging perspective on beauty and cosmetic industry has paved the way for clean and guilt-

free products. Many brands have taken advantage of this and launched their niche products to

compete with the ever-dominant brands.

[2] Political Changes: you should keep a keen eye on the political changes as well. Introducing new

government policies can impact market behavior and expand the scope of various sectors as

we know. For instance, the economic policy introduced in 1992 liberalized the Indian market to

enhance free trade.

[3] Economic changes: are highly relevant to business opportunities identification. Many factors

can contribute to economic changes, social, and technological, policies, and regulations. It's all

interconnected and who knows, it could lead to the identification of business opportunities in

entrepreneurship.

[4] Technological Changes: most technological changes pave the way for entrepreneurial

opportunities and new business opportunities. Some of the world best business opportunities

have been a result of the technological impact, like AI's penetration.

[5] Identify Unsatisfied Need: often unsatisfied needs give birth to world best business opportunity.

Listen to your customers and identify problems that need solving, and potentially identify

opportunities. Malls came into existence, replacing the traditional marketplace and

highlighting convenient shopping under one roof. Now online business opportunity like E-

commerce is challenging the mall culture.

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[6] Understand Problems: another way for identifying business opportunities is to understand the

problems faced by people. Understand what they want and how they want their needs met.

For how people needed groceries delivered at home, and now we do.

[7] Find Solution: often finding a solution to the problems faced by people presents innovative and

new business opportunities. For instance, instant grocery delivery services like Swiggy

Instamart or Blink are thriving.

The Steps/Stages of Business Opportunity Identification (Process)

1) The Customer Research Stage
It involves collecting, organising, and analysing information about customers’ behaviour as well as
their needs. The objective is to identify potential business opportunities that can help the business
create value for its customers.
2) Problem Hypothesis Stage
It involves search for problems by identifying issues and concerns from customer feedback and
other sources of market research. Search for the root cause of the problem and explore possible
solutions. The goal is to formulate a well-focused hypothesis that can be tested with market
research.
3) Product/Service Hypothesis Stage
It involves determine what kind of product or service will solve customers’ problems or address
their needs. The product or service should target specific customers based on the information
gathered during the customer research stage.

4) Market Hypothesis Stage

It involves testing certain key assumptions about the business opportunity with customers to
determine the demand for a particular product or service in the real world, and how it solves
problems in the specified market. It also involves doing in-depth research to identify existing
players in the targeted market, and determining customer expectations for the product or service.

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5) Product Development Stage

It involves develop a product or service that will solve the problem. The product or service should
be designed and tested using various methods to ensure its viability and effectiveness. In
developing the product, the business should take into account its target market, competitive
threats, and business models as they develop the product or service

2.1.2 Business Development

2.2 Business Development
Business development is defined as the activity of pursuing strategic opportunities for a particular
business or organization e.g. cultivating partnerships or other commercial relationships, or
identifying new markets for its products or services. It entails tasks and processes to develop and
implement growth opportunities within and between businesses. It is the creation of long-term
value for a business from customers, markets and relationships. It is a process aimed at growing a
business and making it more successful. It includes seeking new business opportunities, building
and sustaining connections with existing clients, entering strategic partnerships, and devising
other plans to boost profits and market share. It is a subset of the fields of business, commerce
and organizational theory.

Stages of Business Development

There are different schools of thoughts regarding business development process hence different
stages (steps) and even different number of stages for business development.
First School of Thought (General)
i. Pre-venture Stage: nonexistent or nascent product or service, identification of new
products/services however, the activities include writing a business plan, and finding start-
up funding.
ii. The Start-up Stage: launching the business, establishing products, building a customer base,
perhaps hiring the first employee(s), setting up organizational systems, achieving break-
even sales targets, and establishing a track record for product quality and service.

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This stage of development can last many years depending on how long it takes to firmly
establish the business in the marketplace.
iii. Growth Stage: experience a significant expansion in overall sales volume and in the number
and variety of customers or markets.
iv. Mature Stage: businesses have achieved a solid business model that, because of either
market conditions or the preferences of owners, appears sustainable.
v. Revitalization Stage: arises when external or internal activities (or both) force a mature
business to a tipping point.

Second School of Thought (Small Business Development i.e. Company)

i. Existence Stage: the main problems of the business are obtaining customers and delivering the
product or service contracted for; the business is a simple one—the owner does everything
and directly supervises subordinates; the business systems and formal planning are minimal
to nonexistent; and many businesses never gain sufficient customer acceptance or product
capability to become viable. The key questions (issues) in this stage are:
 Can the business get enough customers, deliver products, and provide services well
enough to become a viable business?
 Can the business expand from that one key customer or pilot production process to a
much broader sales base?
 Does the business have enough money to cover the considerable cash demands of this
start-up phase?
ii. Survival Stage: the business has demonstrated that it is a workable business entity. It has
enough customers and satisfies them sufficiently with its products or services to keep them.
The key problem thus shifts from mere existence to the relationship between revenues and
expenses.
The business is still simple (have a limited number of employees supervised by a sales manager
or a general foreman i.e. Neither of them makes major decisions independently but instead
carries out the rather well-defined orders of the owner); systems development is minimal;
formal planning is, at best, cash forecasting; the major goal is still survival, and the owner is

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still synonymous with the business; the enterprise may grow in size and profitability and move
on to Stage III.
The key questions (issues) in this stage are:
 Can the business generate enough cash to break even and to cover the costs?
 Can we, at a minimum, generate enough cash flow to stay in business and to finance
growth to a size that is sufficiently large?
iii. Success Stage: The decision facing owners at this stage is whether to exploit the business’s
accomplishments and expand or keep the business stable and profitable, providing a base for
alternative owner activities.
Its key issues are demonstrated through sub-stages:
Sub-stage III-G: a key issue is whether to use the business as a platform for growth
or as a means of support for the owners as they completely or partially disengage
from the business
Sub-stage III-D: the business has attained true economic health, has sufficient size
and product-market penetration to ensure economic success, and earns average or
above-average profits. The business can stay at this stage indefinitely, provided
environmental change does not destroy its market niche or ineffective management
reduce its competitive abilities.

Sub-stage III-G: the owner consolidates the business and marshals resources for
growth. The owner takes the cash and the established borrowing power of the
business and risks it all in financing growth. Among the important tasks are to make
sure the basic business stays profitable so that it will not outrun its source of cash
and to develop managers to meet the needs of the growing business. This second
task requires hiring managers with an eye to the business’s future rather than its
current condition.
iv. Take-Off Stage: the key problems are how to grow rapidly and how to finance that growth. The
most important questions, then, are in the following areas:

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 Delegation: can the owner delegate responsibility to others to improve the

managerial effectiveness of a fast-growing and increasingly complex enterprise?
Further, will the action be true delegation with controls on performance and a
willingness to see mistakes made, or will it be abdication, as is so often the case?
 Cash: will there be enough to satisfy the great demands growth brings (often
requiring a willingness on the owner’s part to tolerate a high debt-equity ratio) and
a cash flow that is not eroded by inadequate expense controls or ill-advised
investments brought about by owner impatience?
 Business is Decentralized and Divisionalized: the business is decentralized and, at
least in part, divisionalized—usually in either sales or production. The key managers
must be very competent to handle a growing and complex business environment.
The systems, strained by growth, are becoming more refined and extensive.
Both operational and strategic planning are being done and involve specific
managers. The owner and the business have become reasonably separate, yet the
company is still dominated by both the owner’s presence and stock control.
NB: This is a pivotal period in a business’s life. If the owner rises to the challenges of
a growing business, both financially and managerially, it can become a big business.
If not, it can usually be sold—at a profit—provided the owner recognizes his or her
limitations soon enough.
Too often, those who bring the business to the Success Stage are unsuccessful in Stage IV, either
because they try to grow too fast and run out of cash (the owner falls victim to the omnipotence
syndrome), or they are unable to delegate effectively enough to make the company work (the
omniscience syndrome).
It is, of course, possible for the company to traverse this high-growth stage without the original
management. Often the entrepreneur who founded the company and brought it to the Success
Stage is replaced either voluntarily or involuntarily by the company’s investors or creditors.
If the company fails to make the big time, it may be able to retrench and continue as a successful
and substantial company at a state of equilibrium; or it may drop back to Stage III, if the problems
are too extensive, it may drop all the way back to the Survival Stage or even fail.

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v. Resource Maturity Stage: The greatest concerns of a business here is first, to consolidate and
control the financial gains brought on by rapid growth and, second, to retain the advantages
of small size, including flexibility of response and the entrepreneurial spirit. The business must
expand the management force fast enough to eliminate the inefficiencies that growth can
produce and professionalize the business by use of such tools as budgets, strategic planning,
management by objectives, and standard cost systems—and do this without stifling its
entrepreneurial qualities.
 A company in Stage V has the staff and financial resources to engage in detailed
operational and strategic planning
 The management is decentralized, adequately staffed, and experienced
 The systems are extensive and well-developed
 The owner and the business are quite separate, both financially and operationally
 The company has now arrived i.e. has the advantages of size, financial resources, and
managerial talent.
vi. Ossification Stage: If the business can preserve its entrepreneurial spirit, it will be a formidable
(challenging) force in the market. If not, it may enter a sixth stage of sorts: ossification.
Ossification is characterized by a lack of innovative decision-making and the avoidance of risks.
It seems most common in large corporations whose sizable market share, buying power, and
financial resources keep them viable until there is a major change in the environment.
Unfortunately for these businesses, it is usually their rapidly growing competitors that notice
the environmental change first.

Factors which Determine Ultimate Success or Failure of the Business

This section addresses the several key management factors which change in importance as the
business grows and develops (through given stages) and eventually the given factors become
prominent in determining ultimate success or failure.

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Factors Related to Business (Company)

a) Financial resources: cash and borrowing power
b) Personnel resources: relating to numbers, depth, and quality of people, particularly at the
management and staff levels
c) Systems resources: the degree of sophistication of both information and planning and control
systems
d) Business resources: customer relations, market share, supplier relations, manufacturing and
distribution processes, technology, and reputation, all of which give the company a position in
its industry and market.
e) Time and timeline
f) Physical resources
Factors Related to Owner
a) Owner’s goals for himself or herself and for the business
b) Owner’s operational abilities in doing important jobs such as marketing, inventing, producing,
and managing distribution
c) Owner’s managerial ability and willingness to delegate responsibility and to manage the
activities of others
d) Owner’s strategic abilities for looking beyond the present and matching the strengths and
weaknesses of the company with his or her goals

Types of Business Development

Here are the main tactics businesses can use to expand their market share, revenues and internal
processes:
[1] Market penetration
Market penetration occurs when a business tries to generate further growth within their current
market. To do this they may try to lower prices or increase marketing efforts to gain more market
share. Increasing brand awareness can be an effective way to implement this strategy.

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[2] Product development

Businesses may choose a growth strategy that involves innovating current products or creating
new ones to increase revenue. Some companies choose to take existing inventory and add new
features to attract more customers. Investing in the design and creation of new products is one
way businesses foster growth.
[3] Market expansion
In the market expansion method, a business tries to expand in their current market by reaching
untapped customer bases. For example, an office supply company may try to gain market share
by selling to educational institutions, healthcare organizations and government agencies instead
of strictly selling to corporate office clients.
[4] Vertical integration
Companies who decide to growth through vertical integration strategies take on another part of
the manufacturing or distribution process. This may mean that a company begins to produce their
own packaging materials or buys a factory that produces a key item for a product.
[5] Productivity and efficiency
Some businesses grow by changing their processes to increase productivity. Efficient production
methods can help cut costs and increase revenue. A business may choose to conduct an audit of
their manufacturing processes, distribution methods and other parts of their production chain.
[6] New geographies
Investing marketing efforts into expansion in other locations can also be a growth strategy for
businesses. This can mean regional, national or even worldwide expansion of product offerings
and distribution. Offering products outside of a current geographical area can generate new
revenue streams if distribution is also handled effectively.
[7] Share of wallet
By focusing on customer retention and quality service, companies can initiate growth by
expanding sales to current customers. Selling to existing customers typically costs less than other
marketing efforts. This strategy can be effective for companies with excellent customer service
practices and a loyal customer base.

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[8] Diversification
Companies that choose to grow through diversification create new products for a completely new
market. This kind of growth may mean moving into international markets or areas where the
company has no prior sales history. Some companies do this by looking for areas of large-scale
expansion, hoping to gain market share. Diversified companies may own a stake in multiple
industries through a range of product offerings.
[9] Acquisitions
Companies may implement a growth strategy by buying another business. A company might buy
out a competitor to absorb their market share and acquire their assets. The parent company will
then experience growth in sales and revenue. This strategy encourages more immediate growth
because a business is essentially buying into a market instead of having to invest time in organic
growth methods.
[10] New channels
Offering products through new distribution channels is another way for businesses to expand. For
example, a company may decide to offer product in retail stores after operating exclusively online.
A company may also decide to work with consumers instead of selling just business to business.
[11] New business models
Changing the way you do business can affect growth patterns in a company. When a business
decides to make operational changes, they have the chance to create more growth opportunities
using other strategies.
[12] Investment
Owning shares and investing in other companies may be a way to expand business growth. When
a company uses their revenue to increase the assets of another business, they have the
opportunity to receive benefits as a stakeholder. This may include dividends, stock options or
other investment earnings.
[13] Market segmentation
By focusing on a small segment of industry and growing specifically in that area, businesses often
find growth opportunities. Small businesses can benefit from this strategy in markets where big
businesses already dominate a large portion of the market share.

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[14] Business partnerships

Strategic partnerships can increase business growth by leveraging the key elements of two or more
brands. In this strategy, businesses often create a contract with clear terms outlining the
agreement for both parties. Companies from different industries or markets benefit from gaining
the attention of another consumer group.

2.3 Business Environment in Tanzania

It is a set of factors and actors which can affect the performance of entrepreneurial activities. They
are the forces/factors which have a bearing on the functioning of entrepreneurial activities. They
are the conditions favourable to the growth of business. They are present opportunities and
challenges enhancing individuals to start and succeed in business.

2.3.1 Types of Business Environment

i. External Environment
These are factors and actors from outside the entrepreneurial firm which can affect its
performance. They can be macro environmental factors: political, economic, cultural,
legal and technological factors or micro environmental factors: competitors, suppliers,
distributors, customers, and community.
ii. Internal Environment
The internal environment consist of factors from within the entrepreneurial firm which
affect performance. Example: financial resources, human resources, physical resources,
and intangibles like image, patents and organisation culture.
2.3.2 Support in Enabling Business Environment (EBE)
Tanzanian government in supporting EBE can be traced back to broad range of reforms
undertaken since 1990. The reforms in improving EBE have been done by various
stakeholders which include (but not limited) to:
i. Ministries: e.g. Ministry of Industry, Trade and Investment, Agriculture, tourisms etc.
ii. Local Government Authorities

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iii. Regulatory Agencies such as TRA, BRELA, TBS, Weights and Measures Agency
(WMA), TMDA
iv. Social Security Schemes and labor related issues
v. Health and safety of workers through Occupational Health and Safety Agency (OSHA)
etc.
vi. offering a wide range of supportive services collectively termed as Business
Development Services (BDS)
vii. offering external supports to small business owners to enable them reach their full
potential

2.3.3 Business Development Services (BDS)

Tanzanian government likewise offers supportive services collectively termed as BDS:
i. Business consultancy services e.g. developing business plans, organizational
structure, etc. through BRELA, BET, financial institutions, SIDO, TRA, etc.
ii. Assistance with market access e.g. establishing trading relationships, providing
market information, facilitating promotion (exhibitions/fairs) through NGOs and
government agencies
iii. Input supply and linkages with other entrepreneurs e.g. providing information about
suppliers, facilitating negotiations with suppliers, facilitating joint procurement, etc.
iv. Technology development and transfer e.g. develop, distribute, promote, and install
appropriate technologies through SIDO
v. Training, education and technical assistance e.g. developing business or technical
knowledge, skills, changing attitudes/mindset, bias or cultural values (e.g. gender
bias), enhancing awareness on policies, laws, regulations, etc. through trade
associations, cooperative unions, educational institutions, public and private training
centers, etc.
vi. Professional services e.g. legal, accounting and auditing, engineering, architectural,
ICT services, etc. through professional boards and consultants

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2.4 Business Feasibility Study

The main aim of this sub-topic is to enable you conduct feasibility study for viable and feasible
business ideas and opportunities.

2.4.1 Overview
A business feasibility study is an assessment of the practicality of a proposed business. It analyzes
the viability of a business to determine whether the business is likely to succeed. It is also
designed to identify potential issues and problems that could arise while pursuing the business.
It aims at identifying viable and feasible business opportunities.

2.4.2 Types of Business Feasibility Study

These are as well termed as components of business feasibility study. Each type considers different
aspects of the business project. Therefore, it is important to consider all types when deciding
which route to take moving forward. With research and data-driven insights, these types provide
decision-makers with valuable insight into their options for success in any endeavor.
a) Technical feasibility
A study reviews the technical resources available for the business. This study determines if an
entrepreneur have the right technology in terms of right equipment and the right technical
knowledge to complete her/his business objectives.
b) Financial Feasibility
A study that includes a cost/benefit analysis of the business. It also forecasts an expected return
on investment (ROI), as well as outlines any financial risks. The goal at the end of the financial
feasibility study is to understand the economic benefits the business opportunity an entrepreneur
wants to pursue. It is called economic feasibility study.
c) Market feasibility
A study that refers to an evaluation of how the entrepreneur expects the business’s deliverables
to perform in the market. This part of the feasibility includes a market analysis (customers,
consuming behaviour, etc.), market competition breakdown, and sales projections.

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d) Product/service feasibility
This is an assessment of the overall appeal of the product or service being proposed for the
particular business opportunity. Although there are many important things to consider when
launching a new venture/business, nothing else matters if the product/service itself doesn't sell.
The product/service proposed should therefore be unique.
It is sometimes related to operational business feasibility i.e. assesses how well a proposed
business plan fits within the existing business environment, and if developed, whether current
purchasers will use it. Some variables that affect the outcome of this analysis are whether
management support, how buyers feel about the current system in place and if the proposed
system will benefit the organization.
e) Ecological Feasibility
This is an environmental feasibility which assesses the viability of a proposed business opportunity
from an environmental and social perspective, identifying potential issues and threats to the
successful completion of the proposed business. The purpose of the analysis is to evaluate
potential risks and liabilities of the business opportunity with regards to environmental and health
and safety issues such as land contamination, before pursuing the given business opportunity. This
is vital as these risks may translate into financial liabilities for the business opportunity to be
exploited.
f) Legal/Administrative Feasibility
This assessment investigates whether any aspect of the proposed business opportunity conflicts
with legal requirements like zoning laws, data protection acts or social media laws. It is a process
of checking an intended business opportunity for potential issues from a legal perspective, and
preparing a plan of implementation entailing a consolidated and integrated tax and legal
assessment.
g) Schedule Feasibility
It is the study for the schedule check. It estimates how much time a team needs to complete the
business project. It is usually recognized and agreed by all invested groups when a particular
business project is finished depending upon an agreed-upon timeframe.

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2.4.3 Elements of Business Feasibility Study

i. The business scope
In addressing the business problem/opportunity clearly, the scope should be clearly
defined. Define the business components that would be either directly or indirectly
affected, including business project participants and end-users.
ii. The current analysis
It is used to evaluate the current method of implementation like a new product or system.
It discovers the strengths and weaknesses of the current approach. It identifies the pros
and cons of the current system/product which in turn helps you save both money and time.
iii. The requirements
Define the requirements as per the objective of the business project. How accurately your
requirements are defined is a significant factor in a business feasibility study.
iv. The approach
Choose the recommended solution or course of action to meet your requirements.
Consider various alternatives and then choose a solution that is the most preferable.
Before you finalize the approach, ask yourself the following questions:
 Does the approach meet my requirements?
 Is the approach taken a practical and viable solution?
v. Evaluation
Examine the cost-effectiveness of the selected approach and the estimated total cost of
the business project. Other alternatives will also be estimated for comparison purposes.
After the total cost of the project has been calculated, an evaluation and cost summary
will be prepared to include a return on investment, cost/benefit analysis, etc.
vi. Review
Conduct a formal review on all the above elements. Use the review to verify the accuracy
of the feasibility study and to make a project decision. At this stage, you can approve, reject
or even revise the study for making a decision. If the feasibility study is approved, make
sure that all the involved parties sign the document.

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2.4.4 Summary of the Questions on Business Feasibility Study

a) What is the main objective of a feasibility study?
 It helps decision makers to determine the success or failure of a proposed business. It
evaluates the predicted cost and benefits of the proposed business.
b) What are the steps in a feasibility study?
 Step1: conduct the primary analysis and create the projected income statement.
 Step2: do a market survey and accordingly planning business operations.
 Step3: create a balance sheet to review and analyze data. The analysis will help you to
decide whether to go or not go ahead with the proposed business.
c) Who conducts a feasibility study?
 It is done by the senior management of the business but sometimes with the help from
mid-senior employees to complete the analysis in short span of time.
d) What are the types of feasibility?
 As explained above in 2.4.2
e) Why is a feasibility study important?
 It helps in identifying the financial, market and logistical challenges of a proposed
business. It is done by evaluating the estimated funds for the business and return of
investment.
f) When is the Feasibility Study Done?
 It is done before the business plan is created.
g) What is the primary purpose of conducting a feasibility analysis?
 It is to assess the financial viability of developed plan and whether it will be successful
or not.

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TOPIC THREE
BUSINESS PLANNING
3.1 Defining Business Plan
It refers to a detailed document that outlines the business's goals, and objectives and how
(strategies) it plans to achieve them. It is a document that contains the operational and financial
plan of a business and entails how its objectives will be achieved. It is a written document prepared
by an entrepreneur that describe all relevant internal and external elements and strategies for
starting or expanding a venture.
It is a compass of the business showing entrepreneurs and business owners how to succeed. It is
a roadmap which help to guide decision-making and action, figure out how to reach profitability,
growth, and sustainability. It is a must (needed) whether a business is starting out, expanding or
looking for investors.
It covers all important aspects of the business and the key factors that affect its performance. It is
used to increase the opportunities for development, growth and raise additional capital. It
provides information which demonstrate a clear picture of what that venture is, where it is
projected to go, and how the entrepreneur proposes it will get there. It explains where the
entrepreneur is now, where does s/he wants to go and how to go there (Strategies). Summarily, it
can be for internal or external use.

3.2 Types of Business Plans

There are different types of business plans depending on the purpose and scope of that business
plan. However, this study presents briefly only on types of business plans according to size and
scope.
i. Dehydrated Plan
A short form of a business plan that presents only the most important issues and projections.
ii. Comprehensive Plan
A full business plan that provides an in-depth analysis of the critical factors that will determine a
firm’s success or failure, along with all the underlying assumptions.

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The following are the factors which determine whether to have the above or any other types of
business plans:
i. Cost in time and money to prepare the plan
ii. Management style and ability
iii. Preferences of the management team
iv. Complexity of the business
v. Competitive environment
vi. Level of uncertainty
Briefly, the other types of business plans are one page business plan, startup business plan, small
business plan, non-profit business plan, feasibility study business plans, internal/external business
plan use, strategic initiatives business plan, business acquisition or repositioning business plan,
growth business plan, etc. The other more types of business are according to the components of
the business plan.
3.3 Structure of Business Plan
It is also called components of business plan or business plan format or elements of the business
plan.
i. Cover Page/Introductory Page
It presents the first impression by giving quick information which help the reader to decide
whether to read the complete document or not. The page include information such as
name and address of the business, name and address(es) of entrepreneurs, nature of
business, business logo (if any), name and designation of the contact person (if apply),
statement of financial needed, statement of confidentiality of report/plan.
ii. Table of Contents
It provides a sequential listing of the sections of the plan, with page numbers. This element
is important for easy navigation to the rest of the plan.
iii. Executive Summary
This part summarizes the business plan. It is normally done at the end. It summarizes the
key points of the business plan. It gives a brief overview of what, how, why, where, etc. The
specific content will be highly dependent on the core purpose and target audience. It is the

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window to your business plan. Any stakeholder will decide to read the rest of the plan
based on this section. Be concise, clear, enthusiastic and professional, and keep it at 1-2
pages maximum in this component.
iv. The industry, the business and its Model/design
The purpose of this section is to assist entrepreneurs in describing the business venture in
a detailed but in concise manner. The description normally starts with the name of the
business, vision, mission, goals and objectives, products, location, form, size, etc. then other
issues like why do you think your business will be successful(Competitive
advantage/information from feasibility study).
In defining business model consider the factors such as purpose, type (service, products,
etc.); focus (traditional, technological, etc.); stage of enterprises (start-ups, early growth,
matured etc.); funding model (how the business will be funded-whether by donors,
government, partners/shareholders or a combination); operational model (the way in
which the business will be organized and operated); management team (role and
responsibilities, skills, organizational structure etc.); location, ownership and legal status
of the business
v. Marketing Analysis/Plan
Description of customers’ characteristics, market size and trends, competitive analysis,
demand analysis, distribution analysis, promotion analysis, sales forecast, marketing
strategies, customer care, marketing mix, etc.
vi. Operations Plan
It describes location, facilities, space requirements, capital equipment, and labour force
that are required to provide the company’s product or service.
vii. Organization and Management (O & M) Plan
Bankers and investors look for a committed management team with a balanced technical,
managerial, and business skills. It provides a description of the key staffing positions of the
business, and their qualities, how they will be obtained, their roles and responsibilities,
reporting relationships, how they will be compensated, motivated and disciplined. It also
shows contingency plans in case one of the key persons in the business is temporarily or

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permanently unable to attend the business. Also, this section is where the entrepreneur’s
role in the venture should be clearly outlined. Finally, any advisors, consultants, or
members of the board should be identified and discussed.
NB: Visit and download “B. Plan-Crn” to see how to draft the business plan for the business.

3.4 Drafting a Business Plan Based on the Field of Specialization

Think of and choose the business idea and opportunity in your field of specialization in the
context of Arusha Technical College. Please prepare the business plan showing if the chosen
idea is viable and feasible.

Instructions:
Nature of Assignment Individual
Issuing Date 03/01/2024 at 16:00 hours
Submission Date 17/01/2024 before 15:30 Sharp
Type Face Calibri Light
Font Size 12
Line Spacing 1.5 lines
Paragraph Spacing Enter Twice
Number of Pages 10

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