1. business and industrial

BUSINESS
START-UP
SYLLABUS

1.
THE BUSINESS ENVIRONMENT
Meaning – Scope and Characteristics – Importance
for economic policies and decisions in the
Organisation - Types of business environment
2.
THE
INDIVIDUAL
AS
AN
ENTREPRENEUR
Definition- The qualities and skills of a successful
entrepreneur


3. STARTING AND RUNNING A
BUSINESS - Business plan - definition- How to
write a business plan
4. RISKS IN A NEW BUSINESS
Definition – Types

5. BUSINESS ETHICS
Meaning – Scope and Characteristics – Importance

Business Environment
What is Business..??

Business
may
be
understood as the organised
efforts of enterprises to
supply
consumers
with
goods and services for a
profit
Purpose of a business
All businesses share the same
purpose: TO EARN PROFITS
 But other purposes are:
Supplying goods and services
to the society; creating job
opportunities; offer of better
quality of life; contributing to the
economic growth of the country.

Business objectives
Before we describe business
objectives, it is desirable to be clear
about related concepts
 Vision
 Mission &Objectives
VISION:
A Vision is a broad
explanation of why the firm exists
and where it is trying to lead.
A vision gives the organisation a
sense of purpose and a set of
values that unite employees in a
common destiny.
Creating the Vision

Establishing Goals
Visioning
One of the most important things to do
in the preparation stage is to
VISUALIZE things in your mind
Mayor Rudolph Giuliani
Visioning vs Planning
Visioning
Planning

proactive plan for
the future

It is a view of the
future that
everyone can
believe in.
-
-
process that
provides specific
direction and
meaning to the
day-to-day
activities.
strategic planning
places the
strategic vision
into motion.
A Vision Statement
- Says what you want out of Business.
- Details principles and beliefs.
- Gives you the power to create and
design your business around your
values.
In Summary
You have to have a plan for success
!!!
It starts with a vision
You get the vision by reaching each
goal.
You reach goals by hard work,
dedication, and perseverance.
Objectives



Objectives render mission
statements more concrete.
Mission statements seek to make a
vision more specific and Objectives
are attempts to make mission
statements more concrete.
Objectives therefore, represent the
operational side of an organisation.

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Profit: Profit is the main incentive,
motivator, strong sustainer, judicious
allocator of resources, objective indicator of
productivity and a solid basis for growth,
expansion and survival.
Growth: Business should grow in all
directions over a period of time. The
strategies adopted to achieve growth are:
(a) add more products/markets;
(b) diversify into new areas;
(c) increase market share;
(d)
cut down costs and increase
productivity.
Power: Business houses have vast
resources at its command. These
resources confer enormous economic and
political power on owners and managers of
business ventures.
Employee satisfaction & Development:
Concern for employees continues to be an
important aspect of management
Quality products & services: Those who
insisted on and persisted in quality
survived competition and stayed ahead of
others in the market. Persistent quality of
products earns brand loyalty, a vital
ingredient of success.
Market Leadership:
To earn market
leadership, innovation is the key factor.
Innovation may be in product, advertising,
distribution, finance or in any other field.
Challenging: Business offers vast scope
and poses formidable challenges.
Joy of creation: It is through business
strategies new ideas and innovations are
given a shape and are converted into
useful products and services for the benefit
of customers.
Service to society: Business is a part of
society and has several obligations
towards it.
Good Corporate citizenship: It implies that
the business unit complies with the rules of
the land, pays taxes to the government
regularly, discharges its obligations to
society and cares for its employees and
customers.
What is environment..??

Circumstances, influences, stresses,
and competitive, cultural,
demographic, economic, natural, political,
regulatory, and
technological factors (called environmental
factors) that effect the survival, operations,
and growth of an organization.
Business Environment


Definition of Business environment by
Davis Keith “ The Aggregate of all
conditions events and influences that
surround and affect business.”
Business environment refers to all those
internal and external factors that have a
bearing on the business.
Characteristics of
Business environment.

Business is the surrounding situation that
affect the business.

Business environment is very Complex and
needs a deep study.

Dynamic nature is one of the part of business
environment. Study of changes is very
important for the business.

Environment = Opportunities & Threats

Environment is very complicated and Hence it
needs minute study.
Characteristics of
Business environment.



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Changes in the environment cant be done by
one businessman. Businessman has to
adjust to the environment.
Creates framework for business.
It’s a challenge and an opportunity for the
business man and its study can help make or
brake the business.
As the business environment is very complex
and cannot be changed hence It needs
adaptability.
Need & Importance of
Business Environment.

The study of Business Environment helps
keeping the business flexible.

To exploit business opportunities fully.
need & Importance of
Business Environment.

To make business socially acceptable.

To keep the business enterprise alert.

To maintain adaptability to socio-economic
changes.

To understand future problems and prospects.

To ensure optimum utilization of resources.
Types of Business
Environment.
Three different levels of Business
Environment are as follows:



Internal Environment
Micro Environment
Macro Environment
INTERNAL ENVIRONMENT
The important internal factors which have a
bearing on the strategy and other
decisions are:
1.
Value system
2.
Mission & Objectives
3.
Management Structure & Nature
4.
Internal Power relationship
5.
Human resources
6.
Company image & Brand equity
MICRO ENVIRONMENT
The micro environment consists of the actors in the
company’s immediate environment that affect the
performance of the company.

Suppliers: Suppliers are the important force in the
task environment of a business. Multiple sources of
supply often help to reduce risks.

Customers: To succeed in capturing customers, a
business must try its best to know what people want
and will buy.

Labour: The labour force is organised in the form
of trade unions. The trade unions interact with the
management & pressurise the management for the
fulfilment of their demands.
Competitors: Competitors play a vital role in
running the business enterprise. There are
various types of competitions:
 Desire competition: Under this type of
competition the primary task is to influence
the basic desire of the customer.
 Generic competition: The competition
among alternatives which satisfy a
particular category of desire is called
generic competition.
 Product form competition: In this type of
competition, the consumer has to choose
between different forms of the product.
Brand competition:
The competition
between different brands of the same
product.
Taking into consideration these different
factors every marketer should strive to
create primary and relative demand for his
product.
Regulating agencies: The regulators include
government departments and other
organizations which monitor the activities
of business.

MACRO ENVIRONMENT
Political
Demographic
International
Economic
Business
Environment
Natural
Technological
Social
Types of Business
Environment

The macro forces are, generally, more
uncontrollable than the micro forces.
Important macro environment factors
includes:

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Political Environment.
Economic Environment.
Social Environment.
Technological Environment.
Natural Environment.
International Environment.
Demographic Environment.
ECONOMIC ENVIRONMENT
The survival & success of a business
enterprise is finally decided by the
economic environment & various market
conditions. The important external
factors that affect the economic
environment of a business are as
follows:

Economic conditions

Economic policies

Economic growth

Interest rates

Currency exchange rates.
SOCIO-CULTURAL
ENVIRONMENT
It is very comprehensive because it may
include the total social factors within
which an organisation operates.

Socio-cultural environment may include
expectations of the society from
business, attitudes of society towards
business & its management, views
towards achievement of work, views
towards structure, responsibility &
organisational positions, views towards
customs, & labour mobility & level of
education.
NATURAL ENVIRONMENT
It includes geographical & ecological factors.
Almost every aspect of business
depends upon natural environment.

Manufacturing depends on physical
inputs.

Mining depends on nature

Agriculture depends on nature.

Trade between two regions depends on
geographical factors.

Topographical factors may affect the
demand pattern.
DEMOGRAPHIC
ENVIRONMENT
It includes:

Size, growth rate, age composition, sex
composition etc., of population

Family size

Caste, religion,

Educational level...etc
TECHNOLOGICAL
ENVIRONMENT
Business has to adopt technological changes
from time to time. Every business
enterprise has two basic functions i.e.,

Marketing &

Innovation.
Technological environment also includes
research base decisions.
The fast changes in technology also create
problems for enterprises as these render
plants and products obsolete quickly.
International Environment
Implications of global or international
environment are as follows:

Companies are forced to view business
issues from a global perspective.

Safe & protected markets are no longer
there.

Learning of foreign languages is a must
for every business manager.

Acquiring familiarity with foreign
currencies is also a must.
THE INDIVIDUAL AS
AN ENTREPRENEUR

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What is “entrepreneurship”?
Why be an entrepreneur? Why not?
Categories of Entrepreneurs
Characteristics and Skills of an
Entrepreneur
Entrepreneurship - Some
Modern Definitions


Scott Shane (Case Western) –
“Entrepreneurship is an activity that
involves the discovery, evaluation and
exploitation of opportunities to introduce
new goods and services, ways of
organizing, markets, processes, and new
materials through organizing efforts that
previously had not existed.”
Howard Stevenson (Harvard) – “.. The
pursuit of opportunity without regard to
resources currently controlled.”
•
An entrepreneur is a person who seeks a
profitable opportunity and takes the
necessary risks to set up and operate a
business.
•
Differ from many small-business owners in
their strong desire to make their
business grow.
•
Differ from managers through their
overriding responsibility to use the
resources of the organization to
accomplish their goals.
•
Willing to take risks.
QUESTION

Why be an entrepreneur?

What do you think?
Why should you be
interested?


Many young people have succeeded:
 Michael Dell - Dell Computers
 Frank Carney - Pizza Hut
 Fred De Luca - Subway.
 Kristy Taylor - SkinCareRx.com
Opportunity to reap large profits
Why should you be
interested?



Invulnerability of Youth
 Confident, resilient, and ignorant
 Minimum exposure to failure
Limited Responsibility
 Marriage, children, car, home, etc.
suggest higher opportunity costs if
failure
Physical and Emotional Strength
 Better ability to burn the candle at both
ends
Why should you be
interested?


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Available Resources
 Many are waiting for you to ask for help.
 Take advantage of your “harmless”
appearance
Opportunity to control own destiny
Opportunity to reach your full potential
Opportunity to make a difference
Why NOT to be an
Entrepreneur

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Uncertainty of income
Risk of losing entire invested capital
Lower quality of life until business gets
established
High levels of stress
Complete responsibility
Why People Become
Entrepreneurs
Why People Become
Entrepreneurs




Being your Own Boss
 Self-management is the motivation that
drives many entrepreneurs.
Financial Success
 Entrepreneurs are wealth creators.
Job Security
 Over the past ten years, large
companies have eliminated more jobs
than they have created.
Quality of Life
 Starting a business gives the founder
some choice over when, where, and
how to work.
The Environment for
Entrepreneurship
Globalization
The rapid globalization of business has created many
opportunities for entrepreneurs
Characteristics of
Entrepreneurs
Characteristics of
Entrepreneurs
Not everyone wants to be an entrepreneur
and run their own business. Being an
entrepreneur requires specific characteristics
and skills that are often achieved through
education, hard work, and planning.
Risk Taker - Businesses face risk.
Entrepreneurs
minimize
risk
through
research, planning, and skill development.
Perceptive - Entrepreneurs view problems as
opportunities and challenges.
Curious- Entrepreneurs like to know how
things work. They take the time and initiative
to pursue the unknown.
Imaginative - Entrepreneurs are creative.
They imagine solutions to problems that
encourage them to create new products and
generate ideas.
Persistent- True entrepreneurs face
bureaucracy, make mistakes, receive
criticism, and deal with money, family, or
stress problems. But they still stick to their
dreams of seeing the venture succeed.
Goal-setting - Entrepreneurs are motivated
by the excitement of staring a new business.
Once achieved, they seek out new goals or
ventures to try.
Hardworking - Entrepreneurs need a great
deal of energy to see a venture start and
succeed. Yet they are not deterred by the
long hours to achieve their goal.
Self-confident - Entrepreneurs believe in
themselves. Their self-confidence takes care
of any doubts they may have.
Flexible - Entrepreneurs must be flexible in
order to adapt to changing trends, markets,
technologies, rules, and economic
environments.
Independent - An entrepreneur’s desire for
control and the ability to make decisions often
makes it difficult for them to work in a
controlled environment.
Entrepreneurial Skills
A skill is the ability to do something specific or
to translate knowledge into action.
Research Skills: Entrepreneurs need to
identify what they need to know and use
research techniques to obtain it.
Gathering Information
• Reliable and relevant sources of
information may include: books,
periodicals, indexes and databases, the
Internet, consultants, professionals,
schools.
Relationship Skills: Running a business means
building good relationships with staff, suppliers,
and customers.
Staff Relationships : Employees need to feel
that they are treated fairly, are rewarded for their
efforts, and have their needs met.
Supplier Relationships: Communication is the
most important relationship skill required to deal
with suppliers. They act as sources of
information for the new business. Suppliers also
require feedback to know how to improve their
service.
Customer Relationships: In an entrepreneurial
business, the customer is the “boss” and the key
to the business’ success. Therefore, the
entrepreneur and his or her staff must develop a
positive relationship with the customer
STARTING AND
RUNNING A
BUSINESS
Entrepreneurs Start
Businesses:

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To Capitalize on an Invention
To Pursue a Passion
To Be Their Own Boss
To Get Rich
---All Need an Exit Strategy
Why develop a
Business Plan?
“All the work you do in thinking up your idea,
testing it, studying it, and producing it, has
been for nothing if you can’t sell it.
Whether you start you own business to
produce and sell your invention,
subcontract out the manufacturing part, or
sell your rights in return for a percentage of
the proceeds, you need a business plan.”
- Pamela Riddle Bird, PhD, Inventing
For Dummies
Why develop a
Business Plan?
“A
business plan is vital for enterprises
needing investment, grant funding or
significant borrowing; more so for
innovation ventures, as the greater number
of ‘unknowns’ makes it even harder to
attract backing.
But don’t make the
mistake of thinking that only other people
need your business plan. It’s primarily a
tool to reveal possibly awkward truths
about your business to you.”
- a Creative Investor
Definition:
A business plan is a formal statement of a
set of business goals, the reasons you
believed they are attainable, and the plan
for reaching those goals. It may also
contain background information about the
organization or team attempting to reach
those goals.
Types of Plans

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Summary Plan
 10 pages, 3 important points
Comprehensive Plan
 10-40 pages, seeking capital or
alliances
Operational Plan
 40+ pages, for going concerns, part of
an annual process
The Summary Plan



The Business
 Legal Structure, Products or Services,
Management, Personnel, Record
Keeping
Marketing
 Target Market, Competition, Advertising
Financials
 Summary of Needs, Use of Funds, 3
Year Cash Flow Projections, Income
Projections
Business Plan Content
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Executive Summary
Company Description
Product/Services Description
Industry Overview
Market Analysis
Competitors
Business Plan Content
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Customers
Marketing and Sales Plans
Development
Operations
Management
Business Plan Content

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Personnel
Financial Summary
Financials
Offering
Appendices
Executive Summary




A mini-business plan in one or two pages
Highlights the most important points of your
business plan
It is NOT an introduction to the plan
It must grab your reader, and entice
him/her to read further
Executive Summary



Identify the company, its background,
structure and location
Describe what the company does, and the
market it serves
Describe the market potential for the
company’s products and services, market
trends, etc.
Executive Summary

Outline the backgrounds and experience of
the top management team

Describe the funding required, the
purposes for which it will be used, the
collateral available (if for a lender), and the
expected outcomes
Company Overview

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Brief Company Introduction
Mission statement
Location, size, history
Market and products
Overview of company capabilities
Objectives
Products/Services

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
Products / Services
 What does it do?
 Uniqueness
 Competitive Advantage
Technology
 Brief description
 Applications
Commercialization Status
 Brief overview
Industry Overview




Set The Stage
Industry Definition and Description
 Major players within the industry
 Factors driving dynamics
 New products and developments
Legislation and Policies Driving the
Industry
Historical and Future Trends
Market Analysis

Market Definition
 Primary Market
 Secondary Markets

Market Size and Trends
 Current total revenues
 Predicted annual growth rate
Competitors

Direct Competitors
 Who are they?
 Size and product breadth
 Revenues and profitability
 Strengths and weaknesses
 Market shares

Indirect Competitors
Marketing Strategies

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Product/Service Strategy
Pricing Strategy
Distribution Strategy
Advertising and Promotion Strategy
Sales Strategy
Marketing and Sales Forecasts
Marketing and Sales Plans

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Statement of Opportunity
Marketing and Sales Objectives
Existing Customers
Potential Customers
 Prospects targeted
 How prospects will be targeted and
qualified
Marketing and Sales Plans


Marketing Programs
 Direct Mail
 Trade Shows
 Advertising
 Internet
 Publicity/Public Relations
 Marketing Budget
Pricing
 Basis for targeted price point
 Margins and profitability by volume
levels
Marketing and Sales Plans

Sales Plan
 Sales force structure – (direct or reps)
 Sales expectations/quotas
 Margins given to intermediaries
 Service and warranties
 Sales Budget
 Organizational chart indicating planned
growth
Development

R & D Plan
 Objectives
 Milestones and current status
 Difficulties and risks
 Staffing
 R & D Budget and assumptions
Operations

Manufacturing/Production Plan
 Objectives
 Facilities
 Staffing
 Subcontractors
 Quality Control
 Budget / Operating Expenses
Management

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Company Organization
Management Team
Administrative Expenses
Personnel

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Human Resource Plan
Staffing Objectives
Organizational Structure
 3-5 year growth plan
 Budget
Summary of Financials
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Financial Objectives
 Time to Cash Flow Positive
 Time to profitability
Financial Assumptions
Capital Requirements
Exit Scenario
Appendices
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Resumes of Key Management
Patent Information
Customer List
Testimonials
Supplemental Financial Spreadsheets
References
Risks in a new business
Kinds of Risks
3 Types
 Economic
 Natural
 Human
Financial Risks
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These risks occur from changes in overall
business conditions.
This can include:
amount or type of competitor(s)
changing consumer lifestyle
population changes
government regulations
inflation
recession
Natural Risks
Natural risks are result from natural disasters
or disruptions
 floods
 tornadoes
 hurricanes
 fires
 droughts
 lightning
 earthquakes
 even sudden abnormal weather conditions
Human Risks
These are caused by human mistakes and
errors, as well as the unpredictability of
customers, employees, or the work
environment
This could include:
 Theft
 injury on the job
 bad checks
 employee error
 Negligence
 Incompetence
BUSINESS ETHICS
Ethics and Ethos

The word “ethics” is derived from the Greek
ethos, meaning “customary” or
“conventional.”

To be ethical in the sense of ethos is to
conform to what is typically done, to obey
the conventions and rules of one’s society
and religion.
What is ethics?
Ethics is the branch of philosophy that
focuses on morality and the way in which
moral principles are applied to everyday
life. Ethics has to do with fundamental
questions such as “What is fair?” “What is
just?” “What is the right thing to do in this
situation?”
Ethics involves an active
process of applying values, which may
range from religious principles to customs
and traditions.
What is business ethics?

Business ethics focuses on what
constitutes right or wrong behavior in the
world of business. Corporate business
executives have a responsibility to their
shareholders and employees to make
decisions that will help their business make
a profit. But in doing so, businesspeople
also have a responsibility to the public and
themselves to maintain ethical principles.

Although ethics provides moral guidelines,
individuals must apply these guidelines in
making decisions. Ethics that applies to
business (business ethics) is not a
separate theory of ethics; rather, it is an
application of ethics to business situations.
Although
all
people
have
ethical
responsibilities, higher ethical standards
are imposed upon professionals who serve
as social models, such as physicians,
attorneys, and business people.
The Nature & Goals of
Business Ethics

Business ethics refers to those values,
standards and principles that operate
within business.

Business ethics is also an academic
discipline that studies those standards,
values and principles while seeking to
articulate and defend the ones that ought
or should operate in business.
Ethical Judgment vs. Behavior



From the time of Aristotle we have noticed
a discontinuity between judging some act
as right and behaving rightly.
Knowing what is right is different from
doing what is right.
People vary in strength of character and
motivation and fortitude.
Reasoning and Business
Ethics


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The process of ethical reasoning must be
emphasized.
Reasoning is distinct from answers.
Begin with an accurate and fair account of
the facts from all “sides”.
Be objective and open-minded.
Analyze each issue fully and rigorously.
The Relationship Between
Law and Ethics


The law is an expression of the ethical
beliefs of our society.
Law and ethics are not the same thing.
The question, “Is an act legal?” is different
from the question, “Is an act ethical?” The
law cannot codify all ethical requirements.
Therefore, an action might be unethical, yet
not necessarily illegal. For example, it
might be unethical to lie to your family, but
it is not necessary illegal.
Ethical perspectives



Managerial ethics: What should a business
manager do in various situations?
The types of questions asked will vary from
perspective to perspective.
All decisions faced by business managers,
from finance to marketing to ethics and
human resources, exist in a social and
legal context.
Ethics as Good Business
Unethical business practices include:

Lying

Offering merchandise known to be
substandard

Treating customers or employees unfairly
Conflicts of Interest

Conflict of interest is a major ethical
question that is generally not illegal
conflict of interest
a conflict between self-interest and
professional obligation
Ethical Questions



Is it against the law? Does it violate
company or professional policies?
Even if everyone is doing it, how would I
feel if someone did this to me?
Am I sacrificing long-term benefits for
short-term gains?
Reflections on the chapter



A wide range of people can be adversely
affected by the decision made within
contemporary business.
There are many roles to play within the
economic system to insure integrity of that
system and to prevent fraud and abuse.
Business operates within a social context
and has duties to a wide range of people
beyond those people who own a
company’s stock.
Thank you!
Multumesc!