Developing International Business Strategies - Assignment Example

Developing International Business Strategies Introduction For any entrepreneurial venture, the most vital factor is to put together a formal business plan for various reasons. First of all it gives direction and structure to the thinking process, ensures that all the important areas have been covered, and prompts the entrepreneur to consider all future implications. Most importantly, a business plan serves as an essential document since it helps the businessperson communicate their idea, not only to financers, but also to potential suppliers, employees, and customers. A more successful venture could be developed by making use of the insights from these stakeholders. A business plan should be complete, integrated, comprehensive and needs to be framed keeping the audience in mind (Ehmke and Akridge, 2005). The basic purpose of a business is to completely scrutinize the potential of an opportunity; ascertain chief success and critical risk factors; raise capital; and most importantly guide the entrepreneur in his or her start-up. The business plan consists of elements, each of which has its own significance. Adequate information must be covered for these elements. The essentials for each elements and their respective importance towards building a successful succinct business plan are discussed as under: Idea Generation: The first step here is to brainstorm new product innovations, and then screen multiple ideas for opportunity, and market and financial forecasts. Opportunities should be dug through recognizing changing circumstances and science and technology advancements; vacuum in the industry; demographical, societal, and political changes; and/or knowledge and information gaps. Idea generation, or brainstorming, is a critical element for a business plan because there could only be one or two real opportunities out of the hundreds brainstormed. And some only possible ways an idea could have the potential to become an opportunity are if the idea is deemed to solve a significant problem or meet a major need or want (Lilien et al, 2002); it can generate or add essential value to the customer; and has a strong market, profit margin, and profit-making features. Strategic Objectives: This element should provide essential details of the company’s expectations in order to meet its identified goals. Even though goals are broad, objectives need to be well-defined, visionary, and SMART, i.e. Specific: they should be clear; Measurable: they should be obtainable;Achievable: there should be a genuine path to achieving these goals;Realistic: they should revolve around the availability of resources and knowledge; and Timely: there should be enough time to achieve these goals and objectives (Management for Performance, 2010). The importance of strategic objectives in a business plan is that they provide a framework for future decision-making, secure a basis for more in-depth planning, help in benchmarking, monitor performance, and communicate the business information to others. They should not necessarily indicate to achieve profits, but should be in connection to the requisites and expectation of all the chief stakeholders, and should reveal the basic purpose(s) of running the business. Market Analysis and Research: In this section of the business plan, the entrepreneur should convince the readers that s/he has a complete understanding of the market and that s/he can recognize and deal withproblems emerging from competitors or market constraints within their market. This step is essential because it provides a basis for developing the marketing strategy as well as for the preparation of sales forecasts. With analysis and research, the entrepreneur determines about their main products and/or services, customers, as well as their competitors and their strengths and weaknesses. Hence, this section should give insight into the market’s characteristics, the entrepreneur’s target customers’ profile, the competitors and how s/he plans to attain advantage over them in order to establish a prosperous venture (Ehmke and Akridge, 2005). Understanding Competition: Every business has competitors in some form; whether it is the one that sells similar products, or one that sells products serving the same function. Understanding competition or competitive analysis is an essential element in a business plan as it basically defines and profiles the competitors within the entrepreneur’s market, and critically gauges their strengths and weaknesses. This part should address the entrepreneur’s strategy, considering a competitor has a strong competitive advantage; how does the competitor address the needs of the same customer segmentthat is the target segment of the entrepreneur. The importance of this element lies in the fact that it aids the entrepreneur gain an understanding of the competitor’s operations so that the former may know where they relatively stand and formulate their strategy accordingly. Cash Flow Projection: This element is critical to a business plan as it determines the cash flow management, or in other words, the expected business inflow and outflow of cash. For the entrepreneur, this part should consist of graphical illustrations to depict the points where expenditures are expected to be too high, or where there is cash inflow in which case the entrepreneur should know whether to make small investments with the surplus or use it back into the company’s expenses. The cash flow projection is supposed to give an improved idea of how much capital investment the business idea requires. Business plans with confused or non-illustrative projections are often considered to be vague, hence it is imperative that graphs or stats be used and the projections are shown for every month over a whole year period. This should be a vital sub-section under the Financial Plan section of the business plan. An acute concern for this part is the overoptimistic or over-pessimistic approach by some entrepreneurs regarding their projected sales. Since sales forecasting is tricky for a new business, the entrepreneur must know this art, or s/he may hire a professional sales forecaster to help with this portion of the financial plan. Profit and Loss Forecast: This is another sub-section of the Financial Plan: known as Income statement projections. Through this part, the entrepreneur is able to determine an estimate of their profit potential. For better illustration, a proper forecast sheet has to be developed with all-encompassing figures and a sound forecast regarding sales projections. In case the entrepreneur wants to use this business plan to seek financing, s/he may use an optimistic approach to project a positive balance at the end, but it is critical that the projections should never be misleading. This section in the business plan has its importance in the sense that it paints a realistic picture for the venture in terms of its financial standing. Some small ventures are prone to make no profit in its initial years. This part signifies the importance of financing, and thepersuasive use of business plan to gain capital to get through the tough years (Ehmke and Akridge, 2005). Competitive strategy and scenario analysis: This part should outline the strategies that will take effect in response to the strengths and weaknesses of the competitors within the same market. The significance of this section lies in the fact that it will enable the entrepreneur to build an approach that will provide him or her with an advantage in the market, or develop essential barriers that could be used to prevent competitors from entering the market. This part is also used to identify any flaws that could be exploited in the product development cycle. In order to work out an effective competitive analysis for the business plan, it is imperative that the entrepreneur identifies the current and potential competition. Essentially there are two ways to identify competitors; first is to delve into the market from the customers’ point of view and assemble all competitors by the extent to which they vie for the buyer's dollar. The second mode is to make a group of competitors on the basis of their various competitive strategies so that their motivating factors are well-comprehended. After this stage, the competitive analysis in the business plan should set out their strategies and determine places where they are most prone to risk. This is where the entrepreneur examines his or her competitors’ weaknesses and strengths. “A competitor’s strengths and weaknesses are usually based on the presence and absence of key assets and skills needed to compete in the market” (Competitive Analysis, 2006). In order to determine just what makes up a fundamental asset or skill in an industry,Aaker (2001)suggests that an entrepreneur must concentrate his or her efforts in determining: the reasons behind prosperous firms as well as the firms in vain; primary customer motivators; chief component costs; and the obstacles in the industry’s mobility. It is asserted that a company’s performance within a market is directly associated to possessing the vital skills and assets. Hence, a scrutiny of robust performers must bring to light the reasons and success factors behind such a prosperous track record. Such an analysis, in combination with an inspection of failed ventures and the causes of their failure, should give a sound idea of the vital skills and assets that are required to become prosperous within the particular market segment and industry. PART TWO Entrepreneurial characteristics Considerable theories underpin that point that entrepreneurial skills and motivation are the chief stimuli on a new firm’s characteristics. In his research, Barkham (1994) demonstrates a strong link between the characteristics of the entrepreneur and the size of a new firm and its subsequent performance. Entrepreneurial motivation is deemed as an imperative characteristic. There is achievement motivation, power motivation, and the motivation to attain economic independence that drive the entrepreneur or firm founder to work on creating a large business enterprise. High motivation affects in a way that it stimulates the entrepreneur to draw resources together, increases the entrepreneur’s persistence in the capital markets and increase his or her ability to obtain loan finance. The self-employed mindset is another driving characteristic of an entrepreneur that ignites the desire to gain greater control over life, career, and destiny so as to set their own stage for working on their business. The ingredients for an entrepreneurial success recipe have been explained by a business coaching franchise Action-COACH (n.d.), that the entrepreneur’s ability to stay open-minded and rely on a work-force instead of being a solo-performer are major contributing factors for a business system to be a success. The principle of formulating a venture that works for its owner, instead of the owner working for it the entire time, is imperative for becoming anactual entrepreneur versus becoming merely the chief employee of one’s own self-employed business. Hadzima (2005) refers to the characteristics of entrepreneurs by using the term ‘Right Stuff’ for individuals who possess a blend of highly effective entrepreneurial traits. He states that an entrepreneur must have the ability to cope with risk and uncertainty; even if there’s a severe lacking of one or multiple critical resources, the entrepreneur is still able to make his or her way towards the goals. Moreover, another trait is for anentrepreneur to be result-oriented, take control of ownership, and get the task done with sound decision-making skills and a ‘can-do’ attitude. With rigorous business judgment, the ‘Right Stuff’ entrepreneur has growth potential so much so that s/he is ready to accept much higher levels of responsibility and begins to undertake supervisory duties much sooner. Herron & Robinson (2002) are of the view that entrepreneurial qualities have been unsuccessful in demonstrating substantial links ‘with entrepreneurial states of being new venture performance (NVP). They note a problem in using personality characteristics to explicate job performance in that these characteristics are facilitated by motivation and diluted by abilities in their connecting linkage to performance. Thus personality characteristics are rather removed from performance in the underlying chain of events. The authors have based their research on the study of the entrepreneur, suggesting that apreliminary model of the “entrepreneurial characteristics → NVP” connectionshouldcompriseof the mediating part of motivation and the moderating role of entrepreneurial capabilities. According to a research by Begley & Boyd (2002) the linkage between entrepreneur’s psychological traits and his or her firm’s financial performance are very few, but suggestive. A psychological characteristic relates with the venture performance only to a particular level; beyond this optimal level, the psychological configurationbarely functions and financial returns weaken. Some entrepreneurs are founders; others are non-founders. In founders, for instance, the attribute of adequate risk-taking is related with increased return on assets. However, the return on assets of these firms lessens when there is too much risk-taking. Similarly, founders may recognize their firms’return on assetsthrivein case this trait exists and is exercised to a reasonable extent. “When too pronounced, the profitability of the firm may deteriorate.” In evaluating the management of recognized ventures, it might be wise for investors, bankers, and entrepreneurs themselves to mind the blend of these attributes. Learning about the several entrepreneurial traits has provided me a fresher perspective and given me hope and impetus and resonated in me to explore my potential in entrepreneurial terms. It has driven me to develop a checklist of precise desirable qualities and gauge my disposition against the several entrepreneurial traits mentioned above. I find in myself the ability to transfer my knowledge to others, which I term as my training and/or coaching skills. I have the capacity to take on more responsibilities and manage them effectively and efficiently. I find myself a team player such that I can recognize how my role contributes to the whole effort and achievement of my team. I have an aptitude to accept accountability and ownership of my zone of responsibility and expect from my team members to do the same.  I’m not self-centered; I also acknowledge others’ contributions and tend to applaud their efforts candidly. I’m gregarious, and feel excited about sharing my ideas with friends and family. I seek fun and enjoyment out of the tasks that others find boring. I’m flexible in the sense that I’m open to accept new responsibilities, tasks and assignments.  I have a tendency toexecute more than one role till the incremental responsibilities and tasks assumed can be given to co-workers in newly distinctduties.  Iam also eager to dig in and see to grunt work tasks which at the end of the day will be executed by lower level workers. I am not afraid of risks nor am I immune to fear; I take chances but at the same time stay vigilant for any possible repercussions. I could categorize myself as the‘Right Stuff Employee’as I feel more than willing to challenge the standing procedures systems in a productiveand practical way; to me the state of status quo is brief.  I’m always on my toes, suggestingmodifications and improvements regularly and encouraging others to do the same.I am result oriented and able to produce results in lesser amount of time. But like any other employees, I need proper motivation and inspiration to be consistent in my performance. I find myself possessing the basic skill set of sound business judgment, applied and concrete hands-on understanding and skills, general management skills and common sense.  I amgoal-oriented; committed to work long hours. I also hold an understanding, awareness, and concern in the technology trends that would affect my short-term and long-term goals. I am able to ascertain and build ingenious strategic relationships, in particular for associating opportunities in regions of inadequate resources. I am also capable of effectively not only managing, but producing change as the atmosphere evolves and requires;I gain enthusiastic support for change and improvements from my fellows. References Acker, D. A. 2001,Developing Business Strategies, 6thedn. Wiley Action-COACH,n.d. 12 Essential Characteristics of an Entrepreneur, Accessed November 11, 2011 from: http://www.actioncoach.com/_downloads/whitepaper-FranchiseRep5.pdf Barkham, R. J. 1994,Entrepreneurial Characteristics and the Size of the New Firm: A Model and an Econometric Test, Small Business Economics, Vol. 6 P. 118 Begley T. M. & Boyd, D. P. 2002, Psychological characteristics associated with performance in entrepreneurial firms and small businesses, Journal of Business Venturing, Vol. 2 Issue 1. Ehmke, C &Akridge, J. 2005.The Elements of a Business Plan: First Steps for New Entrepreneurs, Purdue Extensions, Accessed November 11, 2011 from: http://www.ces.purdue.edu/extmedia/ec/ec-735.pdf Hadzima, J. 2005.‘Seven Characteristics of Highly Effective Entrepreneurial Employees’, Boston Business Journal, Accessed November 11, 2011 from: http://web.mit.edu/e-club/hadzima/seven-characteristics-of-highly-effective-entrepreneurial-employees.html Herron, L. & Robinson, R. B. 2002.‘A structural model of the effects of entrepreneurial characteristics on venture performance’, Journal of Business Venturing, Vol. 8 Issue 3 P. 281-294 Lilien et al. 2002.‘Performance Assessment of the Lead User Idea-Generation Process for New Product Development’, Management Science, Vol. 48 No. 8 P. 1042 Management for Performance, 2010.How to set and write SMART objectives, Human Resources Service Centre, Accessed November 11, 2011 from: http://www.hr.ecu.edu.au/mps/html/mps-smart.cfm Read More