Part I: Organization of a Business Planning A Business Copyright © 2004 South-Western All rights reserved Introduction to J eff Madura Business 3e Organization of a Business Copyright © 2004 South-Western All rights reserved 1–2 Learning Goals • Identify key business stakeholders • Describe key business functions • Explain how to develop a business plan Copyright © 2004 South-Western All rights reserved 1–3 Business Defined A business is an enterprise that provides products or services desired by customers Copyright © 2004 South-Western All rights reserved 1–4 Key Business Decisions • Product – What type of product should be produced? • Production – How should the product be produced? • Promotion – How should the product be promoted? • Financing – How should the company obtain funds to finance the cost of producing the product? Copyright © 2004 South-Western All rights reserved 1–5 Business Decisions Copyright © 2004 South-Western All rights reserved 1–6 Key Stakeholders • Owners – Entrepreneurs – Co-owners – Stockholders • Creditors • Employees – Managers • Suppliers Customers Copyright â 2004 South-Western All rights reserved 1–7 Interaction among Owners, Employees, Customers, Suppliers, and Creditors Copyright © 2004 South-Western All rights reserved Exhibit 1.1 1–8 Creating a Business Idea • Identify a competitive advantage • Differentiate the product or service from competitors • Determine necessary resources • Assess feasibility of the idea Copyright © 2004 South-Western All rights reserved 1–9 Copyright © 2004 South-Western All rights reserved e-business business online 1–10 Key Partners For Air Asia Hotels and budget airports Key Activities Value Proposition Maintanence And Flight Speed Cost Accessibility Convenience IT System Customer Relationships Key Resources Friendly and Open Digital Channels And Traditional Channels Online System Flexible Employees Online Ticketing Cost Structure Revenue Streams Leasing and Operations Tickets and Hotels Customer Segments Lower and Medium Income People who travel by bus or train Key Functions of Business • Management – Means by which employees and other resources are used by the firm • Marketing – Means by which products and services are developed, priced, distributed, and promoted to customers • Finance – Means by which firms obtain and use funds for their business operations Copyright © 2004 South-Western All rights reserved 1–20 Key Functions of Business • Accounting – Summary and analysis of the firm’s financial condition – Used to make various business decisions • Information systems – Information technology, people, and procedures that provide appropriate information to make effective decisions Copyright © 2004 South-Western All rights reserved 1–21 How Business Decisions Affect a Firm’s Earnings Copyright © 2004 South-Western All rights reserved Exhibit 1.4 1–22 Common Business Decisions • Management Decisions – What equipment is needed? – How many employees should be hired? – How can employees be motivated to perform well? Copyright © 2004 South-Western All rights reserved 1–23 Common Business Decisions • Marketing Decisions – What price should be charged? – Should the product be changed to be more appealing to customers? – Should the firm use advertising or some other strategy to promote its product? Copyright © 2004 South-Western All rights reserved 1–24 Common Business Decisions • Finance Decisions – Should financial support come from the sale of stock or from borrowing money or some combination? – Should the firm attempt to obtain borrowed funds for a short-term or long-term period? – Should the firm invest funds in a new business project? Copyright © 2004 South-Western All rights reserved 1–25 A Business Plan • Detailed description of the proposed business – Description of the product or service – Types of customers the business would attract – Competition – Facilities needed for production Copyright © 2004 South-Western All rights reserved 1–26 Developing a Business Plan • Assess the Business Environment – Social environment – Economic environment – Industry environment – Global environment • Develop Management Plan – Organizational Structure – Production – Human Resources Copyright © 2004 South-Western All rights reserved 1–27 Social Trends • How is Vietnam Changing? – Love, sex and relationships – Education – Work Life – Entertainment – Work Life – Family Life – Health, Drink and Diet Copyright © 2004 South-Western All rights reserved 1–28 Developing a Business Plan • Marketing Plan – – – – – • Target Market Product Characteristics Pricing Distribution Promotion Financial Plan – Financing – Feasibility Copyright © 2004 South-Western All rights reserved 1–29 Online Resources • Advice and basic information – Yahoo’s Small Business site – American Express – Small Business Administration • Financing Options – Quicken Small Business – Garage.com The Elevator Business Planning Software Copyright â 2004 South-Western All rights reserved 1–30 Assessing a Business Plan • Potential revenue • Potential demand for product or service • Potential expenses Profit potential Copyright â 2004 South-Western All rights reserved 1–31 Expected Monthly Expenses of CHC Copyright © 2004 South-Western All rights reserved Exhibit 1.6 1–32 Expected Performance of CHC in the First Year Copyright © 2004 South-Western All rights reserved Exhibit 1.7 1–33