ED - Unit 3

Entrepreneurship
Development
Saket Jeswani
MBA Sem - 2 RCET, Bhilai

[SAKET JESWANI]
Business
Opportunities
&
Business Planning
Unit - III [2014]
Saket Jeswani,
Saket Jeswani, Associate Professor, Professor,
Associate MBA, RCET, Bhilai Page 1
MBA, RCET, Bhilai
Business
Opportunities
&
Business Planning
Unit – 3
Index
1. Business Opportunities
2. Business Planning
3. Business Promotion
4. Creating Entrepreneurial Venture
5. Environmental Analysis
6. Business Idea
7. Preparation of Project Report
Saket Jeswani, Associate Professor, MBA, RCET

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Unit - 3
Saket Jeswani, Associate Professor, MBA, RCET, Bhilai Page 2

Business Opportunity
1. Business opportunity can be described as an economic idea
which can be implemented to create a business enterprise and
earn profits.
2. Opportunity does not come to anyone by chance, but the
entrepreneur has to struggle for it.
3. Before selecting an opportunity, the entrepreneur has to ensure
two things:
1) There is a good market for the product he is going to
produce.
2) The rate of return on the investment is attractive to be
accepted by him.

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Business Opportunity
4. To sense an entrepreneurial opportunity, an entrepreneur
employs his sharpened skills of observation, analysis and
synthesis to identify an opening.
5. An entrepreneur is an opportunity seeker, who is supposed to
identify, explore various opportunities in the environment and
then select a viable business opportunity.
6. Entrepreneurs generally evaluate different opportunities and
select only highest reward paying opportunity for execution.
7. Thus, a business opportunity may take the shape of business
only when that opportunity is commercially feasible.

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Idea Vs Opportunity
1. Business ideas based on customers’ needs and problems

they are facing, becomes an opportunity if it is commercially
feasible.
2. Launching of a business on a mere ‘idea’ and not
‘opportunity’ is not likely to be successful.
3. There are a lot of business ideas and a person has to identify
them, study them, analyze them, compare their merits and
demerits and finally select a suitable one to initiate
appropriate action to convert it into a successful economic
venture.
4. All ideas are not opportunities but all opportunities are
ideas.
5. A particular business opportunity may be suitable for a
particular type of entrepreneur and not to any type of
entrepreneur. Saket Jeswani, Associate Professor, MBA, RCET
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Elements of Business Opportunity

• A business opportunity has five elements which are as
follows:
1. Assured market scope

2. An attractive and acceptable rate of return on
investment
3. Practicability of the idea
4. Competence of the entrepreneur
5. Potential of future growth

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Exploring Opportunities in the Environment
• Entrepreneurial opportunities exist in the environment and
entrepreneurs sense them through a dynamic process of receiving
and harnessing ideas from different sources. Their vision and
creativity develop these ideas into viable and successful projects.

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Steps of Exploring Opportunities in the

Environment
1. Opportunity scouting by analyzing the needs and

problems that exist in the environment.
2. Evaluating the ideas received from different
sources to find a creative solution.
3. Identifying a product or service through
innovation.
4. Setting up a project and nurturing it to success.

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Perceiving & Sensing Opportunities
• Sensing- entrepreneurial opportunities is a process of
perceiving the needs and problems of people and society and
arriving at creative solutions.
Entrepreneurial Opportunities

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The Five Steps to Analyze Market Opportunity
1. Identify the business environmental forces.

1) Economic conditions and trends
2) Legal and regulatory situations and trends
3) Technological positioning and trends (state of the art;
related R&D)
4) Relevant social changes
5) Natural environment (shortages ? vulnerabilities ?)
2. Describe the industry and its outlook.

1) Type of industry
2) Size -now and in 3-5 years
3) Types of marketing practices
4) Major trends
5) Implications for opportunity
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3. Analyze the key competitors

1) Product description
2) Market positioning (relative strength and weaknesses,
as seen by customers)
3) Market practices: channels, pricing, promotion, service
4) Estimated market share (if relevant)
5) Reactions to competition
6) Implications for opportunity

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4. Create a target market profile.
1) Levels: generic needs, product type, specific brands
2) End-user focus; also channel members
3) Targeted customer profiles
4) Who are my potential customers ?
5) What are they like as consumers/businesspeople
6) How do they decide to buy / not buy ?
7) Importance of different product attributes ?
8) What outside influences affect buying decisions?
9) Implications for opportunity ?
5. Set sales projections

1) As many formal or intuitive approaches as possible
2) Comparison of results
3) Go/ no go Saket Jeswani, Associate Professor, MBA, RCET
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Sources of Information for
Market Opportunity Analysis (MOAS)
1. Published Sources
1) Periodicals and newspapers
2) Trade association reports
3) Standardized information service reports
4) Government documents
5) Company reports
2. Personal observation
1) Of customers
2) Of competitors
3) Of macro environmental influences

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Sources of Information for

Market Opportunity Analysis (MOAS)
3. Interviews with experts
1) Managers of suppliers
2) Managers of trade companies
3) Managers of trade associations
4) Consultants
5) Salespersons
4. Primary marketing research

1) Cross-sectional surveys
2) Longitudinal panels
3) Experiments

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Market Opportunity Analysis
• How? Using a market opportunity analysis framework that revolves
around four key elements:
 Analysis of the customer environment uncovers unmet or

Customer underserved customer needs, as well as the market they occupy
 Analysis of the technology environment reveals the readiness of

Technology the particular technology, as well as any alternative technologies,
on which the manager anticipates deploying the firm’s offering
 Analysis of the company environment provides the current state of

Company
the company’s resources
 Analysis of the competition environment reveal the structure of the

Competition industry and market, key competitors in the marketplace, and the
firm’s relative advantage to each of the key players
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Assess Opportunity's Attractiveness

1. What? Attractiveness = f(long-term profitability, relative
competitiveness)
2. How? Determine the magnitude & character of the
opportunity:
1) Level of unmet need and the magnitude of

unconstrained opportunity
2) Level of interaction between major customer segments
3) Likely rate of growth
4) Size/volume of the market
5) Level of profitability

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Assess Opportunity's Attractiveness
• Five attractiveness factors:
1. Unconstrained opportunity, e.g., eBay

2. Segment interaction, e.g., Zoomerang.com
3. Growth rate: 30-50% annual growth of customer market
4. Market size, e.g., pet food and supplies market generates
$23 billion of sales
5. Profitability, e.g., profit margin at eBay’s auction market
is 80%

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Index
6. Business Idea

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Introduction
1. A Business Plan identifies key areas of your business so you

can maximize the time you spend on generating income.
2. Key investors will want to look at your Business Plan before
providing capital.
3. A Business Plan helps you start and keep your business on a
successful path.
4. Business plans must help investors understand and gain
confidence on how you will meet your customers’ needs.
5. A “Business Plan” is a “Selling Document” that conveys the
excitement and promise of your business to any potential
stakeholders .

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What is Business Plan?

1. A Business Plan is a written document that defines the goals of your
business and describes how you will attain those goals.
2. A Business Plan is worth your considerable investment of time, effort, and
energy.
3. A Business Plan sets objectives, defines budgets, engage partners, and
anticipates problems before they occur.
4. A document that sets out the basic idea underlying a business and related
start-up considerations
1) Identifies the nature and context of the business opportunity
2) Presents the entrepreneur’s approach to exploiting the opportunity
3) Identifies factors affecting the venture’s success
4) Serves as the entrepreneur’s tool for raising capital
Writing a business plan is an ongoing process, not just the means to an end product or outcome

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Business Planning
1. Planning is the first and the most crucial step for starting a
business.
2. The entrepreneur prepares a suitable business plan to give

shape to his ideas.
3. A carefully charted and meticulously designed business plan

can convert a simple idea/ innovation into a successful
business venture.
4. A business plan is the blueprint of the step-by-step

procedure that would be followed to convert a business idea
into a successful business venture.

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Business Planning
5. A business plan is a document which describes various elements
involved in starting a new enterprise.
6. A well-crafted business plan identifies opportunities, scans the

external environment and internal environment to assess the
feasibility of business and allocates resources in the best possible
way, which finally leads to the success of the plan.
7. It provides information about the various functional

requirements (marketing, finance, operations and human
resources) for running a business.
8. It lists the owners and various stakeholders (investors, suppliers,

employees etc.) of the business and also describes its
organizational plan. Saket Jeswani, Associate Professor, MBA, RCET
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Objectives of a Business Planning
1. To give directions to the vision formulated by entrepreneur.

2. To objectively evaluate the prospects of business.
3. To monitor the progress after implementing the plan.
4. To persuade others to join the business.
5. To seek loans from financial institutions.
6. To visualize the concept in terms of market availability,
organizational, operational and financial feasibility.
7. To guide the entrepreneur in the actual implementation of the
plan.
8. To identify the strength and weakness of the plan.

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Objectives of a Business Planning
9. To identify challenges in terms of opportunities and threats

from the external markets.
10. To clarify ideas and identify gaps in management information
about their business, competitors and the market.
11. To identify the resources that would be required to implement
the plan.
12. To document ownership arrangements, future prospects and
projected growths of the business venture.

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Need of Business Planning
• An entrepreneur needs a project plan because of
following reasons:
1. Idea of resources required

2. Portrayal of position
3. Help in planning
4. Help in execution
5. Help in monitoring the project

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Users of Business Plan

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Need for a Strong Business Plan
1. To attract investors.
2. To see if your business ideas will work.
3. To outline each area of the business.
4. To set up milestones.
5. To learn about the market.
6. To secure additional funding or loans.
7. To determine your financial needs.
8. To attract top-level people.
9. To monitor your business.
10. To devise contingency plans.

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Business Plan Flaws
1. Overly optimistic financial projections, inadequate

competitive analysis and/or weak environmental
assessments
2. Vague marketing strategies
3. Lack of research
4. Unprofessional presentation
5. Hazy timelines, vague risk assessment

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Types of Business Plan
1. Business plans differ widely in their length, appearance, content, and the
emphasis placed on different aspects of the business.
2. Depending on your business and your intended use, you may need a very
different type of Business Plan:
1) Mini-plan: Less emphasis on critical details. Used to test your

assumptions, concept, and measure the interest of potential investors.
2) Working Plan: Almost total emphasis on details. Used continuously to
review business operations and progress.
3) Presentation Plan: Emphasis on marketability of the business concept.
Used to give information about the business to bankers, venture
capitalists, and other external resources.

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Assembling a Business Plan

Every Business Plan should include some essential components:
1. Overview of the Business: Describes the business, including its

products and services.
2. The Marketing Plan: Describes the target market for your

product and explains how you will reach that market.
3. The Financial Management Plan: Details the costs associated

with operating your business and explains how you will pay for
those costs, including the amount of financing you may need.
4. The Operations and Management Plan: Describes how you will

manage the core processes of your business, including use of
human resources.

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Index
6. Business Idea

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Business Promotion
1. Promotion is the method you use to spread the word about
your product or service to customers, stakeholders and the
broader public.
2. Promotion includes all activities designed to inform, persuade
and influence people when they are making the decision to
buy.
3. Promotion is the communication method to achieve firm’s
promotional objectives.
4. Strategies to make the consumer aware of the existence of a
product or service.

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Objectives of Business Promotion
1. To create product awareness

2. To provide information
3. To generate enquiries
4. To evoke desire for a product
5. To remind people of product’s benefits
6. To allay “cognitive dissonance” e.g. reassure
7. To overcome prejudices/ perceptions

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Business Promotion Techniques
1. Promoting your business can take many different forms.

You can promote it online and offline.
2. Promotion is a very important part of every business
imaginable.
3. If you don't promote it, how are customers supposed to
know about it? Here are some very effective ways to
promote your product or service.
1) Business Cards
2) Press Releases
3) Organizations
4) News Letters
5) Free Stuff
6) Website
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Promotion Mix
• Promotion mix is the specific combination of promotional
methods such as print or broadcast advertising, direct
marketing, personal selling, point of sale display,
merchandising, etc., used for one product or a family of
products.
Six main Promotion Tactics
1. Advertising
2. Sales Promotion
3. Public Relations
4. Personal Selling
5. Publicity
6. Direct Marketing

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Advertising
1. Advertising is a form of communication designed to persuade
potential customers to choose your product or service over
that of a competitor.
2. Successful advertising involves making your products or

services positively known by that section of the public most
likely to purchase them.
3. It should be a planned, consistent activity that keeps the

name of your business and the benefits of your products or
services uppermost in the mind of the consumer.

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Objectives of Advertising
1. To increase your profit by increasing your sales

2. Make your business and product name familiar to the public
3. Create goodwill and build a favourable image
4. Educate and inform the public
5. Offer specific products or services
6. Attract customers to find out more about your product or
service

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Rules of Advertising
• There are four rules to consider when planning any advertising
activity – i.e. before you prepare and book any form of advertising.
1. Aim - What is the primary purpose of the advertisement? Is it to
inform, sell, produce listings or improve the image of your
business?
2. Target - Who is the target? From which sector of the public are
you trying to achieve a response? For example is it male, female,
adult, teenager, child, mother, father etc.
3. Media – Bearing the aim and target in mind, which of the media
available to you is the most suitable – i.e. TV, radio, press or
Internet?
4. Competitors – What are your competitors doing? Which media
channel do they use? Are they successful? Can you improve on
their approach and beat them in competition?
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Effective Advertising
• Good advertising generally elicits the following four responses:
1. Attention – It catches the eye or ear and stands out amid the
clutter of competing advertisements.
2. Interest – It arouses interest and delivers sufficient impact in
the message or offering.
3. Desire –It creates a desire to learn more about the product/
service.
4. Action – It spurs an action which leads to achievement of the
ad’s original objective – i.e. it prompts potential customers to
purchase or use your product or service.

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Advertising Decisions

Unit 3
16- 40

Types of Advertising Media
News
papers
Internet Television
Advert
ising
Outdoor Media Direct
Mail
Magazines Radio

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Sales Promotion
1. Sales promotion relates to short term incentives or activities that encourage
the purchase or sale of a product or service. Sales promotions initiatives are
often referred to as “below the line” activities.
2. “An activity designed to boost the sales of a product or service. It may include
an advertising campaign, increased PR activity, a free-sample campaign,
offering free gifts or trading stamps, arranging demonstrations or exhibitions,
setting up competitions with attractive prizes, temporary price reductions,
door-to-door calling, telemarketing, personal letters on other methods”.
3. More than any other element of the promotional mix, sales promotion is
about “action”. It is about stimulating customers to buy a product. It is not
designed to be informative – a role which advertising is much better suited
to.
4. Some typical sales promotion activities:
1) Consumer promotions
i. Point of purchase display material
ii. In-store demonstrations, samplings and celebrity appearances
iii. Competitions, coupons, sweepstakes and games
iv. On-pack offers, multi-packs and bonuses
v. Loyalty reward programs

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Sales Promotion
2) - Business promotions
i. Seminars and workshops
ii. Conference presentations
iii. Telemarketing and direct mail campaigns
iv. Newsletters
v. Event sponsorship
3) - Trade promotions
i. Reward incentives linked to purchases or sales
ii. Competition
iii. Bonus stock
4) - Sales Force Promotions

i. Commissions
ii. Sales competitions with prizes or awards
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Personal Selling
1. Personal selling is oral communication with potential buyers

of a product with the intention of making a sale. The
personal selling may focus initially on developing a
relationship with the potential buyer, but will always
ultimately end with an attempt to "close the sale“
2. Personal selling is one of the oldest forms of promotion. It

involves the use of a sales force to support a push strategy
(encouraging intermediaries to buy the product) or a pull
strategy (where the role of the sales force may be limited to
supporting retailers and providing after-sales service).

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Personal Selling
• Steps in personal selling are
1. Prospecting and qualifying – identifying qualified prospects i.e. those
that are likely to want or need your product or service and can afford to
pay for it.
2. Pre-approach – undertaking research about prospects to assist in the
actual selling process.
3. Approach – making actual contact with the prospect in person, by
phone or in writing.
4. Presentation and demonstration – presenting and demonstrating the
features and benefits of your product or service in order to convince the
prospect that their want or need can be satisfied.
5. Handling objections – demonstrating the product or service value to
overcome real or perceived objections or misunderstandings that are
impeding the purchase decision.
6. Closing – bringing the selling process to a successful conclusion by
either asking for the order or responding to a positive decision from the
prospect.
7. Follow-up – proactive or reactive contact with the purchaser to
establish their satisfaction level and to address any problems that may
exist. Saket Jeswani, Associate Professor, MBA, RCET
Unit - 3
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Public Relations
1. The Public Relations Institute of Australia (PRIA) defines
Public Relations (PR) as: “The deliberate, planned and
sustained effort to establish and maintain mutual
understanding between an organisation (or individual) and its
(or their) publics”.
2. Public relations is about building good relations with the

stakeholders (publics) of your business by obtaining
favourable publicity, building a good corporate image and
handling or heading off unfavourable rumours, stories and
events.
3. By building good relationships with your stakeholders,

particularly customers, you can generate positive word of
mouth and referrals from satisfied customers.
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Public Relations Tools
• Typical PR tools include:
1. News creation and distribution (media releases)

2. Special events such as news conferences, grand openings and
product launches
3. Speeches and presentations
4. Educational programs
5. Annual reports, brochures, newsletters, magazines and AV
presentations
6. Community activities and sponsorships

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Steps for Implementation of PR

• Implementing effective public relations activities requires careful
planning. The three major steps are outlined below:
1. Setting the objectives – what is it you want to achieve and

who do you want to reach? Is it to create awareness of a
new product or service to your existing clients, to
overcome community misconceptions about your business
or to create a positive impression with your bank
manager?
2. Deciding on the message and the vehicle – what is the
major thing you want to communicate and what public
relations tools will you use to get the message to its target?
3. Evaluating the results – did you achieve the desired result
and did it lead to a positive outcome?

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Publicity
1. Publicity refers to nonpersonal communications regarding

an organization, product, service or idea not directly paid
for or run under identified sponsorship .it usually comes in
the form of news story, editorial, or announcement about
an organization and/or its products and services.
2. Techniques used to gain publicity include news releases,

press conferences, feature articles, photographs, films,
and videotapes.

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Direct Marketing
1. Direct marketing is concerned with establishing an individual
relationship between the business offering a product or
service and the final customer.
2. Direct marketing has been defined by the Institute of Direct
Marketing as “The planned recording, analysis and tracking
of customer behaviour to develop a relational marketing
strategies”.
3. The process of direct marketing covers a wide range of
promotional activities, These include:
1) Direct-response adverts on television and radio
2) Mail order catalogues
3) E-commerce
4) Magazine inserts
5) Direct mail
6) Telemarketing
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Types of Direct Marketing

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Index
6. Business Idea

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Entrepreneurial Ventures
1. Entrepreneurial Venture is a process of identifying and

starting a business venture, sourcing and organizing the
required resources and taking both the risks and rewards
associated with the venture.
2. Organizations that pursue opportunities, are characterized
by innovative practices, and have growth and profitability as
their main goals.

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Components of Successful Entrepreneurial

Ventures
1. The entrepreneur
2. Opportunity
3. Organization
4. Resources
5. Strategy

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Requisites of Success In Business
1. Clear cut objectives

2. Location, layout and size
3. Effective business planning
4. Financial planning
5. Efficient marketing
6. Dynamic management
7. Human relations
8. Research and innovation

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Creating an Entrepreneurial Venture
1. Scanning the environment for identification of

business opportunity.
2. Development of product/service
3. Assessment of feasibility of the idea
4. Preparation of business plan.
5. Appraisal by finding agencies
6. Resource mobilization
7. Project commissioning and launch

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Index
6. Business Idea

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Environmental Analysis
1. Environmental analysis is the process of monitoring the
economic and non economic environment to determine the
opportunities for and threats to a enterprise.
2. Environmental analysis would enables the entrepreneur to
predict future developments and take timely actions to
made a constructive use of these developments
3. Environmental analysis is the study of venture’s
environment to identify and indicate those environmental
factors that can significantly influence venture’s operations
and strategic decision making.
4. It helps in anticipating opportunities and to plan alternative
responses to those opportunities

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Environmental Analysis
1. Business decisions are influenced by two sets of factors
1) Internal factors (The Internal Environment
2) External Factors( The External Environment)
2. Business Environment presents two challenges to the

enterprise
1) The challenge to combat the environmental threats
2) Exploit the business opportunities
3. Environmental Analysis is one of the first steps in Strategic

Management

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Definition of Environmental Analysis

1. The process by which strategists monitor the economic,
governmental/legal, market/competitive, supplier/technological,
geographic and social settings to determine opportunities and
threats to their firms.
2. Environmental diagnosis consists of managerial decisions made by

analysing the significance of data (opportunities and threats) of
the environmental analysis.
3. Environmental Scanning is the monitoring, evaluating and

disseminating of information from the external and internal
environments to key people within the corporation.
4. A corporation uses this tool to avoid strategic surprise and to

ensure its long-term health.
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Importance of Environment Analysis
1. Identification of opportunities to get first mover
advantage.
2. Formulation of strategies and policies
3. Tapping useful resources
4. Better performance
5. Sensation of entrepreneurs to cope up with rapid
changes
6. Image building

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Business Environment Analysis Process
1. Monitoring or identifying environmental factors,

2. Scanning and selecting the relevant factors and grouping them,
3. Defining variables for analysis,
4. Using different methods, tools, and techniques for analysis,
5. Analyzing environmental factors and forecasting,
6. Designing profiles, and
7. Strategic positioning and writing a report

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Types of Business Environment
Types of Business
Environment
Internal
External Environment
Environment
Micro Macro
Man Material Environment Environment
Machinery Money Economic Non-Economic

Environment Environment
Management
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Internal Environment
Important internal factors are
1. Value System: The value system of founders and those at

the helm of affairs has important bearing on the choice of
business, the mission and objectives of the organization,
business policies and practices.
2. Mission and Objectives: The business domain of the

company , priorities , direction of development, business
philosophy, business policy etc. are guided by the mission
and objectives of the company
3. Management Structure and Nature: The organizational

structure, the composition of the Board of Directors,
extent of professionalization of management etc. are
important factors influencing business decisions.

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4. Internal Power Relationship: Factors like the amount of
support the top management enjoys from lower levels and
workers, share holders and Board of Directors have
important influence on the decisions and their
implementation. The relationship between the members of
Board of Directors is also a critical factor.
5. Human Resources: The characteristics of the human

resources like skill, quality, morale, commitment, attitudes
etc. could contribute to the strength and weakness of the
organization. The involvement, initiative etc. of the people at
different levels may vary from organization to organization.
6. Company Image and Brand Equity: The image of the

company matters while raising finance, forming joint
ventures or other alliances, soliciting market intermediaries,
entering purchase or sale contracts , launching new products
etc.
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Other Factors
1. Physical Assets and Facilities

2. R&D and Technological Capabilities
3. Marketing Resources
4. Financial Factors

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External Environment
External Environment includes
1. MICRO ENVIRONMENT Consists of actors in the company’s

immediate environment, that affects the performance of the
company. Eg - Suppliers, customers, intermediaries,
competitors, general public.
2. MACRO ENVIRONMENT Consists of larger societal forces that

affect all the actors in company’s micro environment.
Eg - Economic, sociocultural, political, legal, technological,
natural environment

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Microenvironment
1. Also known as task environment and operating
environment include
1) The suppliers
2) Marketing intermediaries
3) Competitors
4) Customers
5) Publics
2. More intimately linked with the company than macro

factors
3. The micro forces need not necessarily affect all the firms
in a particular industry in the same way.
4. Some of the micro factors are particular to a firm

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Suppliers
1. Those who supply the inputs to the company.
2. Source/Sources should be Reliable
3. Uncertainty regarding the supply or other supply
constraints compel companies to maintain high
inventories causing cost increases.
4. Very risky to depend on a single supplier
5. The purchasing department should “market” itself to
suppliers, to obtain favourable treatment during the
periods of shortages.

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Customers
1. Major task of business is to create and sustain
customers
2. Different categories of consumers
1) Individuals
2) Households
3) Industries and other commercial establishments
4) Government and other institutions
3. Depending on single customer is too risky
4. Choice of customer should be done by considering
1) Relative profitability
2) dependability
3) stability of demand
4) growth prospectus
5) extent of competition

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Competitors
1. A firm’s competitors include not only the other firms which
market the same or similar product but also all those who
compete for the income of the consumers
1) Desire competition
2) Generic competition
3) Product form competition
4) Brand competition

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Marketing Intermediaries
1. Firms that aid the company in promoting, selling and

distributing its goods to final buyers include
1) the middlemen and merchants who “help the company find

customers or close sales with them”
2) Physical distribution firms which “ assist the company in
stocking and moving goods from their origin to their
destinations”
3) Marketing service agencies which “assist the company in
targeting and promoting its products to the right markets”
4) Financial intermediaries which “finance marketing activities
and insure business risks”
2. Vital links between the company and the final consumers.

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Publics
1. Any group that has an actual or potential interest in or
impact on an organization’s ability to achieve its interests
E.g. Media publics, citizens action publics, local publics
2. Media attack on any company can influence the

government decisions affecting the company.
3. Environmental pollution is an issue often taken up by

number of local publics.
4. Publics are not always threat to the business.
5. Fruitful cooperation between a company and the local

publics may be established for the mutual benefit.

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Unit - 3
Macro Environment
1. Consists of larger societal forces that affect all the actors
in company’s micro environment-namely
1) the demographic,
2) economic,
3) natural,
4) technological,
5) political and
6) cultural forces
2. Also known as Societal Environment
3. The Societal Environment includes general forces that do

not directly touch on short-run activities of the
organization but that can, and often do, influence its long-
run decisions.
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Unit - 3

Economic Environment
1. Important factors are:
1. Economic conditions
2. Economic policies
3. Economic systems
4. Economic condition
2. The economic conditions of a country –for example, the nature of the
economy, the stage of development of the economy, economic
resources, the level of income, the distribution of income and assets,
etc.- are among the very important determinants of business
strategies. In a developing country, the low income may be the reason
for the very low demand for the product.
3. Economic policies
1. Some types or categories of business are favourably affected by
government policy, some adversely affected, while it is neutral to
some others.
2. E.g. a restrictive import policy may greatly help the import
competing industries, while a liberalisation of the import policy
may create difficulties for such industries

75
Unit - 3
Political & Government Environment

1. Has close relationship with the economic system and
economic policy.
2. In many countries regulations to protect consumer

interests have become stronger.
3. Some governments specify certain standards for the

products to be marketed in the country; some even
prohibit the marketing of certain products.
4. Promotional activities are subject to various types of

controls.
5. Eg: In India, Advertisement of alcoholic product is

prohibited and the packages must carry “injurious to
health” warnings
76
Unit - 3

Socio-cultural Environment
1. Major factors are:
1) the buying and consumption habits of people,
2) their language beliefs and values,
3) customs and traditions,
4) tastes and preferences,
5) Education
2. Strategy should be appropriate in the socio-cultural environment.

Eg: nestle brews a very large variety of instant coffee to satisfy
different national tastes.
3. Even when people of different cultures use the same product; the
mod of consumption, conditions of use, purpose of use or the
perceptions of the product attributes may vary so much so that
the product attributes, method of presentation, positioning or
method of promoting the product may have to be varied to suit
the characteristics of different markets. E.g.: Vicks Vaporub, the
popular pain balm is used as mosquito repellent in some tropical
countries.
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Unit - 3
Demographic Environment
1. Factors include:
2. Size, growth rate, age composition, sex composition of

population, family size, educational levels, economic
stratification of the population, language, caste, religion, etc.
3. E.g. - Decline in birth rates in USA have affected the demand for
baby products. So Johnson &Johnson repositioned their
products like baby shampoo and baby oil, to the adult segment,
particularly to females.

78
Unit - 3

Natural Environment
1. Geological and ecological factors, such as natural resources
endowments, weather and climatic conditions, topographical
factors, location aspects in the global context, port facilities etc.,
are relevant to business.
2. Differences in geographical conditions between markets may some

times call for changes in the marketing mix. Geographical and
Ecological factors also influence the location of certain industries.
E.g. industries with high material index tend to be located near the
raw material sources.
3. Topographical factors may affect the demand pattern
4. E.g.. In hilly areas with difficult terrain, jeeps may be in a greater

demand than cars.
5. Ecological factors have recently assumed great importance. The

depletion of natural resources, environmental pollution and the
disturbance of ecological balance have caused great concern.
79
Unit - 3
Physical & Technological Environment

1. Business prospects demands availability of certain physical facilities
1) E.g. demand for electrical appliances is affected by the extent of
electrification and the reliability of power supply.
2) Demand for LPG stoves depend on rate of growth of gas connections
2. differing technological environment of different markets may call for

product modifications
1) E.g. Many appliances are designed for 110 V in USA. They should be
converted for 240v in India
3. Technological developments may increase or decrease the demand for

some existing products
1) E.g. voltage stabilizers help increase in sale of electrical appliances in
markets characterised by frequent voltage fluctuations
4. Introduction of TVs, Refrigerators, etc. with in-built stabilizers adversely

affects the demand for voltage stabilizers.

80
Unit - 3

International Environment
1. Particularly important for the industries directly depending
on imports or exports and import-competing industries.
2. Recession, economic boom, liberalization.
3. Major international developments have their spread effects

on domestic business.
1) E.g. Oil price hikes increased the cost of production and

the prices of certain products such as fertilizers , synthetic
fibres. So usually, the demand for natural fibres and
manures increased.
2) Also demand for automobiles that economise energy
consumption got increased.

81
Unit - 3
Environment Scanning

82
Unit - 3

What is PEST Analysis?
1. PEST analysis is very important tool through which an
organization considers its environment and influences there
of particularly in past, the extent to which the changes
occurring are significant for future. The organization is made
up of following key environments:
1) The internal environment e.g. staff (or internal

customers), office technology, wages and finance, etc.
2) The micro-environment e.g. our external customers,
agents and distributors, suppliers, our competitors, etc.
3) The macro-environment e.g. Political (and legal) forces,
Economic forces, Sociocultural forces, and Technological
forces. These are known as PEST factors

83
Unit - 3
Importance of PEST Analysis

PEST Analysis ( or sometimes called as STEP analysis) is a simple
but important and widely-used tool that helps you to understand
the big picture of the environment comprising of environments
you are operating in. PEST is used by business leaders worldwide
to build their vision of the future.

84
Unit - 3

How to use the tool
PEST is a simple mnemonic standing for Political, Economic,
Socio-Cultural and Technological.

85
Unit - 3
Political Environment
1. Government type and stability

2. Freedom of press, rule of law and levels of bureaucracy and
corruption
3. Regulation and de-regulation trends
4. Social and employment legislation
5. Tax policy, and trade and tariff controls
6. Environmental and consumer-protection legislation
7. Likely changes in the political environment

86
Unit - 3

Economic Environment
1. Stage of business cycle
2. Current and project economic growth, inflation and
interest rates
3. Unemployment and labor supply
4. Labor costs
5. Levels of disposable income and income distribution
6. Impact of globalization
7. Likely impact of technological or other change on the
economy
8. Likely changes in the economic environment

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Unit - 3
Socio-Cultural Environment
1. Population growth rate and age profile
2. Population health, education and social mobility, and
attitudes to these
3. Population employment patterns, job market freedom and
attitudes to work
4. Press attitudes, public opinion, social attitudes and social
taboos
5. Lifestyle choices and attitudes to these
6. Socio-Cultural changes

88
Unit - 3

Technological Environment
1. Impact of emerging technologies

2. Impact of Internet, reduction in communications costs and
increased remote working
3. Research & Development activity
4. Impact of technology transfer

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Unit - 3
Key Points
1. PEST Analysis is a useful tool for understanding the “big
picture” of the environment in which you are operating, and
the opportunities and threats that lie within it. By
understanding your environment, you can take advantage of
the opportunities and minimize the threats.
2. PEST is a mnemonic standing for Political, Economic, Social

and Technological. These headings are used firstly to
brainstorm the characteristics of a country or region and,
from this, draw conclusions as to the significant forces of
change operating within it.
3. This provides the context within which more detailed

planning can take place to take full advantage of the
opportunities that present themselves.
90
Unit - 3

Porter’s Five Force Analysis Model

91
Unit - 3

Rivalry Among Competing Firm
1. Competitors are considered as external factor in environmental

analysis
2. The strategies pursued by one firm can be successful only to
the extent that they provide competitive advantage over the
strategies pursued by rival firms.
3. This rivalry is created because firms feel threatened or see an
opportunity to improve position in the market.
4. When the product or service provided in the industry is the
same for all companies creating it, then competition rises
between firms trying to differentiate themselves based on
price and customers service

92
Unit - 3

Threats Of New Firm In The Market
1. Some markets are easy to get into. These markets do not

require major investments and unit cost changes little as
quantities go up.
2. The firms that already exist in a market such as this might feel
threatened by another company entering the market.
3. The level of competition could go up dramatically to try to
capture market share and maintain that market share before
any new firms enter the market.

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Unit - 3

Threat Of Substitute Products
1. A substitute product or service is another product or service

that can do the same thing that the original product or service
does.
2. Industries that do not have a threat of a substitute product
taking over have the intensity of competition remain
unchanged
3. The firms originally in the market may begin to fight for their
existence and attack the new firms that market the substitute.

94
Unit - 3

Bargaining Power Of Buyers
1. Buyers can play a huge part in affecting the competition

level of an industry.
2. Once a small number of buyers purchase large quantities of
goods from the industry, then the buyers have substantial
power over the firms in the industry. Buyers can demand
lower prices from existing suppliers or the buyers will find
another supplier.
3. This raises the level of competition because the firm
supplying the goods will need to reduce costs to meet the
demand of the buyers but the firm's competitors will also
seek to grab the buyer's business.

95
Unit - 3

Bargaining Power Of Suppliers
1. Sometimes the firms supplying materials to the industry can

exert pressure and increase the intensity of competition
2. When there are only a few suppliers and there is no threat of
substitutes for the supplied materials, firms in an industry
might fight over keeping certain suppliers, particularly if the
materials are highly differentiated. This naturally raises the
competition intensity in an industry.
3. Competition increases over who can cut costs the most and
raise sales prices the least.

96
Unit - 3

SWOT Analysis

97
Unit - 3
SWOT Matrix

98
Unit - 3

Index
6. Business Idea

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Unit - 3
Meaning
1. The foremost task of a dynamic entrepreneur is the
generation of an idea that is new and appears to be
worthwhile for further use.
2. This involves a lot of creativity on the part of the
entrepreneur.
3. The business idea arises from an opportunity in the market.
4. A business idea only has commercial value when the
“market” accepts it.
5. The second principle of a successful business idea, therefore,
is that it shows how large the market is for the product or
service offered, for which target group(s) it is meant and how
it differentiates itself from the competition.

100
Unit - 3

Categories of Business Ideas
Basic ideas emerge from different sources which can be
categorized as follows:
1. Problems. When an idea is revolved around a problem that exists the

solution is most often a business opportunity, e.g., razor blade was
invented with an intention of sharp, nick free and quick shaving.
2. Changes. Any kind of change like social, legal, technological, political, etc.
introduce in new business opportunities e.g., computer institutes in the
present world.
3. Inventions. These involve new things of value and creative processes that
add value to the already prevalent brands or products e.g., change over
from audio and video cassette player to CD players.
4. Competition. Whenever someone tries to beat the competition, he
resorts to new and improved ideas, e.g., free cup with a new brand of
tea.

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Unit - 3
Examples of Business Ideas

1. Industrial Sector Ideas. Production of stationery
items(notebooks, diaries, pens, pencils, etc.) hosiery items,
spare parts to be used in autos (clutch wires, gears, bulbs,
etc.)
2. Commercial Sector Ideas. Trading in goods like cloth,

readymade garments, books, medicines, utensils, spare
parts, etc.
3. Service Sector Ideas. Transport service (three-wheeler, taxi,

bus, tempo, etc.), workshop (repair of TV, VCD and other
electronic goods), security, catering, cyber café, maintenance
of computers, air-conditioners, etc. on site.

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Unit - 3

Selection of a Business Idea
While selecting a business idea, the following points need
adequate consideration:
1. Utilisation of Skills. The business idea should enable the

entrepreneur to utilise his technical and professional skills. If an
entrepreneur has knowledge of some special manufacturing
techniques, because of previous experience or otherwise, it would
be easier for the entrepreneur to manage such techniques
effectively.
2. Utilisation of Local Materials. It should enable the use of locally
available raw materials for product or service. As compared to
imported materials, local materials are easy to procure.
3. Strong Demand of Product. It should ensure making products that
have a demand, but are not freely available in the market. It is
potentially a good idea to start with a product that could be sold.
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Unit - 3
Selection of a Business Idea

4. Institutions. Several organisations set up by the government
and chambers of commerce and industry provide help to
entrepreneurs in discovering and evaluating business ideas.
They also provide advice and assistance in technical,
financial, marketing and other areas of various business
ideas.
5. Study of Global Trends. Everyday new products and

technologies are introduced in different parts of the world.
One can get information about these through newspapers,
business magazines and other publication. Such information
is also available on the internet.

104
Unit - 3

Approaches to Generating Ideas
• While exploring different sources of business ideas, an

entrepreneur can use the following approaches to generate
ideas:
1. New Ways of Doing Old Things.
 A large number of products are being made and provided in the market
using traditional methods and practices.
 One approaches can be to examine if these could be made by a different
and newer method that would give the entrepreneur an advantages over
the older methods.

105
Unit - 3

2. Improving an Existing Product.
 An existing product can be improved by using old techniques with more
care or using newly developed technology.
3. Utilising Waste Material.
 Conservation and environment protections are presently getting a lot of
attention.
 Recycling waste or turning them into useful products are good product
ideas.
 Presently, energy conservation products also have good potential.
4. Converting Hobby into Business.
 Some people are adept at doing something or the other as a hobby or
for use in the house only.
 It is possible to use such skills to set up an enterprise.
 Hobbies like photography, interior decoration, fashion designing etc. are
often developed as business ventures
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Unit - 3

5. Seminars and Conferences.

 A number of seminars and conferences are periodically held to
discuss the emerging challenges and opportunities of business.
 A young entrepreneur can obtain lots of tips from such
seminars and conferences.
6. Day Dreaming and Fantasizing.

 Business opportunities are created when entrepreneurs
fantasize about products and services they would love to
have in their lives.
 Yesterday’s fantasies about space tourism are today’s reality.
 Many inventions are born out of such dreams.
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Unit - 3
Selection of Business Idea

Before launching an enterprise, all the project ideas are screened on
the basis of well defined criteria to eliminate ideas which are not
promising and select the best idea. While selecting the idea, the
following factors should be considered:
1. The project should be compatible with the objectives and

resources of the entrepreneur. It should also match his capabilities
and skills.
2. The resources required for the project such as capital
requirements, technical know-how, raw materials, power supply
etc. must be reasonably assured.
3. The cost structure of the proposed project must enable it to realise
reasonable returns on investment.
4. The effect of external environmental factors such as
technological changes, state of economy, competition, etc. should
be considered.
5. The project idea should be consistent with the government
policies, licensing requirements, environmental regulations,
foreign exchange regulations, etc.
108
Unit - 3

Idea Fields
• Idea fields can be described as convenient frames of reference

for streamlining the process of generation of ideas as discussed
below:
1. Natural Resources Based Ideas.

 Ideas can be generated based on natural resources.
 For example, if a person getting ideas in the field of forest resources, he can
think of forest produce, wood-based product, bio-fertilizer etc.
 Similarly if it is horticulture, he generates a number of ideas for food
preservation, canning, freezing, juices, squashes, pulp, jam, pickles etc.

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Unit - 3
Idea Fields
2. Existing Products or Services Based Ideas.
There is a constant and consistent effort on the part of many entrepreneurs
to improve the products and services already in the market.
When black and white TV came into use, many entrepreneurs started
thinking of introducing colour screen.
For example, when a perfume unit starts functioning, there is scope for
growing and supplying aromatic plants.
Or essential oils can be purchased from existing units and final products
(such as cosmetic products) may be manufactured.
3. Market Driven Ideas.

As we know, one important method for generating ideas is to carry out a
market research. Such a study yields valuable data about trends of supply,
demand consumer preferences etc.

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Idea Fields
4. Service Sector Ideas.
Service sector is the most growing field these days.
So new opportunities can be identified by understanding the linkages to
different business activities.
For instance, with the existing industrial enterprises an entrepreneur think
of several service-based units like transport, workshop, maintenance,
security, catering, recruitment, training, communication etc.
Similarly, he can get ideas about linkages with commercial establishments
like photocopy, courier services, printing etc.
5. Creative Efforts of the Entrepreneur.

Ways of generating Creative Ideas
i. Develop a new product or service.
ii. Improve an existing product or service.

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Idea Fields
iii. Find a new process or resource for manufacturing a product.
iv. Find a new use for a product or service.
v. Find new markets for existing products or services.
6. Other Considerations Selecting a Products/Service idea.

While selecting a project, an entrepreneur may also have other
considerations in mind.
These includes employment generation, area development, community
upliftment, environment preservation, poverty alleviation, empowerment of
women and so on.
If most of the entrepreneurs follow these considerations, the result will be
sustainable development.

1
Unit - 3

Index
4. Creating Ent. Venture
5. Envi. Analysis
6. Business idea

2
Unit - 3
Business Plan Report

1. Business plans must help investors understand and gain confidence on
how you will meet your customers’ needs.
2. Common parts of a good Business Plan report are:
1) Title Page
2) Table of Contents
3) Executive Summary
4) Mission Statement & Goals
5) Company Overview/Management Team
6) Business Concept
7) Market Analysis
8) Marketing Plan
9) Financial Plan
10) Operations and Management Plan
11) Appendix of Supporting Documents

3
Unit - 3

What Should a Business Plan Contain?
1. Letter of Transmittal
2.Title Page
3.Table of Contents
4.Executive Summary and Fact Sheet
5.Body of the Plan
The Company and Industry
The Product/Service Offering
Market Analysis
The Marketing Plan
The Development Plan
The Production/Operations Plan
The Management Team
Implementation Schedule and Risks Associated with the Venture
The Financial Plan
6.Appendices
4
Unit - 3
A Typical Business Plan

Business Plan Contents
1. Introduce your business plan to the reader

Letter of Transmittal Outline the major features that may be of
interest
Provide identifying information about you and

2. your proposed business. Name, address and
Title Page contact numbers for the business as well as
key company contacts
3. A list of the major headings and sub-

Table of Contents headings contained in your plan.
A 1-2 page summary of the most important

4. points in your plan
May be the most important part of your
Executive Summary business plan
and Fact Sheet Your Fact Sheet summarizes the basic
information that relates to the venture
5
Unit - 3

(Continued)
5.
Body of the Plan
History and current situation of your company
Goals and objectives for the business
Company and the Industry
Principal characteristics and trends in the
industry
Detailed description of your product or service

Product-Service Offering Outline stage of development and proprietary
position
Describe the profile of your principal target

customers
Indicate current market size, trends, and
Market Analysis seasonal patterns
Assess the nature of your competition
Estimate your expected sales and market share

6
Unit - 3

(Continued)
5.
Body of the Plan
(Continued)
Detail the marketing strategy you plan to use
Describe your marketing plan insofar as your
Your Marketing Plan
sales strategy, advertising and promotion plans,
pricing policy, and channels of distribution
Outline of the development status of your

product and what is still required to get it to a
Your Development Plan market-ready state
Are there regulatory, testing or other
requirements that still have to be met?
Outline the operating side of your business

Your
Describe your location, kind of facilities, space
Production/Operations
requirements, capital equipment needs, and
Plan
labour requirements

7
Unit - 3

(Continued)
5.
Body of the Plan
(Continued)
Identify your key management people, their
responsibilities and their qualifications
Your Management
Indicate the principal shareholders of the
Team
business, your principal advisors and the
members of your Board of Directors
Present an overall schedule indicating what

needs to be done to launch your business and
Your Implementation
the timing required to bring it about
Schedule
Discuss the major problems and risks that you
will have to deal with as well
Continued

8
Unit - 3

(Continued)
5.
Body of the Plan
(Continued) Indicate the type and amount of financing you
are looking for and how the funds will be used
Outline your proposed terms of investment, the
potential return to the investor, and what
benefit is being provided
Provide an overview of the current financial
Your Financial Plan structure of your business
Prepare realistic financial projections that
reflect the effect of financing. Include:
Cash flow forecasts
Pro forma profit and loss statements
Pro forma balance sheet
Breakeven analysis

9
Unit - 3

(Continued)
Supporting material for your plan including:

Detailed resumes of the management team
Product literature and photographs
Names of possible customers and suppliers
6. Consulting reports and market surveys
Appendices Copies of legal documents
Publicity material
Letters of reference

10
Unit - 3
Resources for Business Plan Preparation

1. Computer-Aided Business Planning
1) Word-processing
2) Spreadsheets
2. Specialized Business Plan Software Packages (BizPlan)
3. Professional Assistance
1) Lawyers
2) Marketing specialists
3) Engineering and production experts
4) Accounting firms
5) Incubator organizations
6) Small business development agencies

11
Unit - 3

Research to Support the Plan
1. Both primary and secondary research must be carried out by
the writer of the business plan.
2. Secondary Research
1) secondary published sources
2) books, published reports, newspaper, journal articles,
statistics databases, and Internet sites
3. Primary Research
1) derived directly from people
2) experts in the field, professionals such as lawyers and
accountants, industry contacts such as trade association
representatives or suppliers and potential customers
12
Unit - 3

13
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Entrepreneurship

MBA Sem - 2 RCET, Bhilai

Unit - III [2014]

Saket Jeswani, Associate Professor, MBA, RCET

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai Page 2

Saket Jeswani, Associate Professor, MBA, RCET

Saket Jeswani, Associate Professor, MBA, RCET

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai Page 3

1. Business ideas based on customers’ needs and problems

Elements of Business Opportunity

1. Assured market scope

Saket Jeswani, Associate Professor, MBA, RCET

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai Page 4

Saket Jeswani, Associate Professor, MBA, RCET

Steps of Exploring Opportunities in the

1. Opportunity scouting by analyzing the needs and

Saket Jeswani, Associate Professor, MBA, RCET

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai Page 5

Saket Jeswani, Associate Professor, MBA, RCET

The Five Steps to Analyze Market Opportunity

1. Identify the business environmental forces.

2. Describe the industry and its outlook.

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai Page 6

3. Analyze the key competitors

Saket Jeswani, Associate Professor, MBA, RCET

The Five Steps to Analyze Market Opportunity

5. Set sales projections

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai Page 7

Saket Jeswani, Associate Professor, MBA, RCET

Sources of Information for

4. Primary marketing research

Saket Jeswani, Associate Professor, MBA, RCET

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai Page 8

 Analysis of the customer environment uncovers unmet or

 Analysis of the technology environment reveals the readiness of

 Analysis of the company environment provides the current state of

 Analysis of the competition environment reveal the structure of the

Assess Opportunity's Attractiveness

1) Level of unmet need and the magnitude of

Saket Jeswani, Associate Professor, MBA, RCET

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1. Unconstrained opportunity, e.g., eBay

Saket Jeswani, Associate Professor, MBA, RCET

Saket Jeswani, Associate Professor, MBA, RCET

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1. A Business Plan identifies key areas of your business so you

Saket Jeswani, Associate Professor, MBA, RCET

What is Business Plan?

Saket Jeswani, Associate Professor, MBA, RCET

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai Page 11

2. The entrepreneur prepares a suitable business plan to give

3. A carefully charted and meticulously designed business plan

4. A business plan is the blueprint of the step-by-step

Saket Jeswani, Associate Professor, MBA, RCET

6. A well-crafted business plan identifies opportunities, scans the

7. It provides information about the various functional

8. It lists the owners and various stakeholders (investors, suppliers,

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai Page 12

1. To give directions to the vision formulated by entrepreneur.

Saket Jeswani, Associate Professor, MBA, RCET

Objectives of a Business Planning

9. To identify challenges in terms of opportunities and threats

Saket Jeswani, Associate Professor, MBA, RCET

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