Transcript The Systems Development Life Cycle (SDLC)

Entrepreneurship
for MBA Students
Business Plan
Lecture 6
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[Company Name]
Business Plan
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Mission Statement
• A clear statement of your company’s longterm mission. Try to use words that will help
direct the growth of your company, but be as
concise as possible.
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The Team
• List CEO and key management by name
• Include previous accomplishments to show
these are people with a record of success
• Summarize number of years of experience in
this field
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Market Summary
• Market: past, present, & future:
– Review those changes in market share,
leadership, players, market shifts, costs, pricing,
or competition that provide the opportunity for
your company’s success.
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Opportunities
• Problems and opportunities:
– State consumer problems, and define nature of
product/service opportunities created by those
problems.
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Business Concept
• Summarize key technology, concept or
strategy on which your business is based
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Competition
• Summarize competition
• Outline your company’s competitive
advantage
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Goals & Objectives
• Five-year goals
– State specific measurable objectives
– State market share objectives
– State revenue/profitability objectives
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Financial Plan
• High-level financial plan that defines pricing
assumptions, and reviews yearly expected
sales and profits for the next three years.
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Resource
Requirements
• Technology requirements
• Personnel requirements
• Resource requirements
– Financial, distribution, promotion, etc.
• External requirements
– Products/services/technology required to be
purchased outside company
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Risks & Rewards
• Risks
– Summarize risks of proposed project
• Addressing risk
– Summarize how risks will be addressed
• Rewards
– Estimate expected pay-off, particularly if seeking
funding
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Key Issues
• Near term
– Isolate key decisions and issues that need
immediate or near-term resolution
• Long term
– Isolate issues needing long-term resolution
– State consequences of decision postponement
• If you are seeking funding, state specifics
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PLANNING AND STRATEGY
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Organizational Goals
• Purposes of Goals
– Provide guidance and a unified direction for people in the
organization.
– Have a strong effect on the quality of other
aspects of planning.
– Serve as a source of
motivation for
employees of the
organization.
– Provide an effective
mechanism for evaluation
and control of the organization.
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Kinds of Goals
• By Level
– Mission statement is a statement of an organization’s
fundamental purpose.
– Strategic goals are goals set by and for top
management of the organization that addresses broad,
general issues.
– Tactical goals are set by and for middle managers; their
focus is on how to operationalize actions to strategic
goals.
– Operational goals are set by and for lower-level
managers to address issues associated with tactical
goals.
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Different Goal Setting Processes in
Organizations
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Source: Barney, Jay B. and Ricky W. Griffin.
The Management of Organizations. Copyright © 1992 by Houghton Mifflin Company. Used with permissions.
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Kinds of Plans
• Strategic Plans
– A general plan outlining resource allocation, priorities,
and action steps to achieve strategic goals. The plans
are set by and for top management.
• Tactical Plans
– A plan aimed at achieving the
tactical goals set by and for
middle management.
• Operational Plans
– Plans that have a short-term focus.
These plans are set by and for lower-level managers.
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The Nature of Strategic
Management
• Strategy
– A comprehensive plan for accomplishing an
organization’s goals.
• Strategic Management
– A way of approaching business opportunities and
challenges–a comprehensive and ongoing management
process aimed at formulating and implementing effective
strategies.
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The Components of
Strategy
• Distinctive Competence
– Something an organization does exceptionally well.
• Scope
– Range of markets in which an organization will compete.
• Resource Deployment
– How an organization will
distribute its resources
across the areas in
which it competes.
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Types of Strategic
Alternatives
• Business-level Strategy
– The set of strategic alternatives that an organization
chooses from as it conducts business in a particular
industry or a particular market.
• Corporate-level Strategy
– The set of strategic alternatives that an
organization chooses from as it manages
its operations simultaneously
across several industries
and several markets.
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Types of Strategic
Alternatives (cont’d)
• Strategy Formulation
– The set of processes involved in creating or determining
the organization’s strategies; it focuses on the content of
strategies.
• Strategy Implementation
– The methods by which strategies are executed within the
organization;
it focuses on the processes
through which strategies
are achieved.
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The
Relationships
of
Strategies
by
Organizational
Level
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SWOT
Analysis
Mission
An organization’s fundamental purpose
SWOT Analysis
•
•
•
•
Strengths
Weaknesses
Opportunities
Threats
To formulate strategies that support the mission
Internal Analysis
Strengths
(distinctive
competencies)
External Analysis
Opportunities
Weaknesses
Threats
Best Strategies
Those that support the mission and
• exploit opportunities and strengths
• neutralize threats
• avoid (or correct) weaknesses
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Figure 3.2
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Using SWOT Analysis
to Formulate Strategy (cont’d)
• Evaluating Organizational Weaknesses
– Organizational weaknesses are skills and capabilities
that do not enable an organization to choose and
implement strategies that support its mission.
– Weaknesses can be overcome by:
• investments to obtain the strengths needed.
• modification of the organization’s mission
so it can be accomplished with the current
workforce.
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Using SWOT Analysis to
Formulate Strategy (cont’d)
• Evaluating Organizational Weaknesses
(cont’d)
– Competitive disadvantage is a situation
in which an organization fails to implement
strategies being implemented
by competitors.
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Using SWOT Analysis to
Formulate Strategy (cont’d)
• Evaluating an Organization’s
Opportunities and Threats
– Organizational opportunities
are areas in the organization’s
environment that may generate
high performance.
– Organizational threats are areas
in the organization’s environment
that make it difficult for the
organization
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to achieve high performance.
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Porter’s Generic
Strategies
• Differentiation strategy
– An organization seeks to distinguish itself from
competitors through the quality of its products or
services.
• Overall cost leadership strategy
– An organization attempts to gain competitive advantage
by reducing its costs below the costs of competing firms.
• Focus strategy
– An organization concentrates on a specific regional
market, product line, or group of buyers.
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Strategies Based on
Product Life Cycle
• The Product Life Cycle
High
Stages
Growth
Maturity
Decline
Sales Volume
Introduction
Low
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Time
Figure 3.3
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Formulating Corporate-Level
Strategies
• Strategic Business Units
– Each business or group of businesses within an
organization engaged in serving the same markets,
customers, or products.
• Diversification
– The number of businesses an organization is engaged in
and the extent to which these businesses are related to
one another.
• Single Product Strategy
– A strategy in which an organization manufactures one
product or service and sells it in a single geographic
market.
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Related Diversification
• Related Diversification
– A strategy in which an organization operates in
several different businesses, industries, or
markets that are somehow linked.
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Related Diversification
(cont’d)
• Advantages of Related Diversification
– Reduces organization’s dependence on any one
of its business activities and thus reduces
economic risk.
– Reduces overhead costs associated with
managing any one business through economies
of scale and economies of scope.
– Allows an organization to exploit its strengths
and capabilities in more than one business.
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Formulating Corporate-Level
Strategies (cont’d)
• Unrelated Diversification
– A strategy in which an organization operates
multiple businesses that are not logically
associated with one another.
– Advantages
• Stable corporate-level performance over time due to
business cycle differences among the multiple
businesses.
• Resources can be allocated to areas with the highest
return potentials to maximize corporate performance.
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Formulating Corporate-Level
Strategies (cont’d)
• Unrelated Diversification (cont’d)
– Disadvantages
• Strategy does not usually lead to high performance
due to the complexity of managing a diversity of
businesses.
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Managing
Diversification
• Major Tools for Managing Diversification
– Portfolio management techniques
• Methods that diversified organizations use to make
decisions about what businesses to engage in and
how to manage these multiple businesses to
maximize corporate performance.
– Two important portfolio management techniques
• The BCG Matrix
• The GE Business Screen
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Managing Diversification (cont’d)
• BCG Matrix
– A method of evaluating businesses relative to the growth
rate of their market and the organization’s share of the
market.
– The matrix classifies the types of businesses that a
diversified organization can engage as:
• “Dogs” have small market shares and no growth
prospects.
• “Cash cows” have large shares of mature markets.
• “Question marks” have small market shares in quickly
growing markets.
• “Stars” have large shares of rapidly growing markets.
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The BCG Matrix
Market growth rate
High
Stars
Question
marks
Cash cows
Dogs
Low
High
Relative market share
Low
Source: Perspectives, No. 66, “The Product Portfolio,” Adapted by
permission from The Boston Consulting Group, Inc., 1970.
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Figure 3.4
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