Business Strategy and Planning

Question 1

What is a Business Plan ?

Answer 1

• A business plan is a plan of action prepared by the business entity for a future time period. This document will summarise the key assumptions and decisions that are likely to be made by the management team going forward into the future.

Question 2

What are the benefits of having a business plan ?

Answer 2

• There are many benefits to creating and managing a realistic business plan. Even if you just use it in house, it can:
• help you spot potential pitfalls before they happen;
• structure the financial side of the business efficiently;
• focus your development efforts;
• work as a measure of your success.

Question 3

Who may want to see your Business Plan ?

Answer 3

• Banks
• External investors – friends, venture capitalist firm or business angels.
• Grant providers – InvestNI
• Anyone interested in buying your business

Question 5

What are the Contents of a Business Plan ?

Answer 5

• The Business Background
• Product / Service
• Resources
• Financial

Question 6

What is The Business Background in the Business Plan ?

Answer 6

• This section will summarise the name / address of the business; the aims of the business; type of business entity established

Question 7

What is the Product / Service in the Business Plan ?

Answer 7

• This section will describe in summary format, the product / service being provided to the market; the quantities to be provided; the proposed sales price.

Question 8

What is the Market in the Business Plan ?

Answer 8

• This section will summarise the results of market research or pilots; estimates of market size; likely growth estimates of the market, identification of likely competitiors and their strengths / weaknesses and challenges posed by them; alternative methods of promotion / advertising.

Question 9

What is the Resources in the Business Plan ?

Answer 9

• Staff – this section will summarise the key personnel required to operate the business; the experience and skills likely to be possessed by the workforce; details of working arrangements and compensation packages.
• Operational – this section will summarise the key decisions / issues to be taken in relation to functional areas of the business; types of premises required; likely location of the business; likely types, specifications and age of equipment required (fixed assets); policies to manage growth in business operations / market demand.

Question 10

What is the Financial in a Business Plan ?

Answer 10

• This section will summarise the key financial projections related to the business; likely profit based on sales quantities / revenues; anticipated breakeven point in terms of quantities / revenues; cashflow forecast summarising cashflows in/out and respective timing; banking arrangements; capital required; investment in fixed assets required; likely levels of debt.

Question 11

What is a SWOT analyis ?

Answer 11

• A SWOT analysis involves the examination of the strengths and weaknesses of a business and a review of the opportunities and threats facing a business. The strengths and weaknesses tend to be issues ‘internal’ to a business, whilst opportunities and threats tend to focus on issues ‘external’ to a business entity.
• A SWOT analysis is meant to provide an in-depth identification, explanation and analysis of the various issues facing a business, in order to provide a reference point for decision making in pursuit of key business objectives.

Question 12

What is a PESTEL analysis ?

Answer 12

• A PESTEL analysis involves the examination of the salient features of the external environment in which the business operates.
• A PESTEL analysis is meant to provide, in summary form an identification, explanation and analysis of the various external or environmental issues facing a business, in order to provide a reference point for decision making in pursuit of key business objectives – such issues which should receive consideration in the analysis include political, economic, social, technological, environmental and legal matters.

Question 13

What are the advantages of a SWOT analysis

Answer 13

• understand your business better
• address weaknesses
• determine threats
• capitalise on opportunities
• take advantage of your strengths
• Develop business goals and strategies for achieving them

Question 14

What are the disadvantages of a SWOT analysis ?

Answer 14

• Doesn’t prioritise issues
• Doesn’t provide solutions or offer alternative decisions
• Can generate too many ideas but not help you choose which one is best
• Can be time consuming to gather all the necessary information.

Question 15

Explain PESTEL ?

Answer 15

• Political: These factors determine the extent to which a government may influence the economy or a certain industry. [For example] a government may impose a new tax or duty due to which entire revenue generating structures of organizations might change. Political factors include tax policies, Fiscal policy, trade tariffs etc. that a government may levy around the fiscal year and it may affect the business environment (economic environment) to a great extent.
• Economic: These factors are determinants of an economy’s performance that directly impacts a company and have resonating long term effects. [For example] a rise in the inflation rate of any economy would affect the way companies’ price their products and services. Adding to that, it would affect the purchasing power of a consumer and change demand/supply models for that economy. Economic factors include inflation rate, interest rates, foreign exchange rates, economic growth patterns etc. It also accounts for the FDI (foreign direct investment) depending on certain specific industries who’re undergoing this analysis.
• Social: These factors scrutinize the social environment of the market, and gauge determinants like cultural trends, demographics, population analytics etc. An example for this can be buying trends for Western countries like the US where there is high demand during the Holiday season.
• Technological: These factors pertain to innovations in technology that may affect the operations of the industry and the market favorably or unfavorably. This refers to automation, research and development and the amount of technological awareness that a market possesses.
• Environmental: These factors include all those that influence or are determined by the surrounding environment. This aspect of the PESTEL is crucial for certain industries particularly for example tourism, farming, agriculture etc. Factors of a business environmental analysis include but are not limited to climate, weather, geographical location, global changes in climate, environmental offsets etc.
• Legal: These factors have both external and internal sides. There are certain laws that affect the business environment in a certain country while there are certain policies that companies maintain for themselves. Legal analysis takes into account both of these angles and then charts out the strategies in light of these legislations. For example, consumer laws, safety standards, labor laws etc.