Business Strategies for Mindshaker and ProTrax - Case Study Example

Table of Contents I.Introduction 2 II.Introduction to the Companies 3 A.Introduction to the “Mindshaker” 3 B.Introduction to ProTrax, Inc. 4 A.Strengths of Business Plans 6 B.Weaknesses of Business Plans 7 IV.Recommendations for Improvement 8 V.Evaluation Challenges and Competencies 9 VI.Lessons Learnt 10 VII.Conclusion 11 VIII. References 11 I. Introduction Planning is the essence of every activity either it is a business activity or a routine life activity. Proper planning can enhance the success rate. From the business point of view, strategic planning is of greater significance in order to find out, what a business can payback in return of the investment. Strategic planning is defined as, def. “It is a disciplined effort to produce fundamenta1 decisions and actions shaping the nature and direction of an organization’s (or other entity’s) activities within legal bounds”[Bry88]. Lacking strategic planning, businesses only go with the flow and are always reacting to the routine circumstances. On the other hand, Strategic Planning enable managers to use a proactive approach, where the managers can forecast and identify many risks and uncertainties, and can make strategies before they happen[Joh101]. It has much relevancy in the management process, where it provides long-term strategy or a road-map to attain the objectives[Geo96]. For that purpose, every organization develops a business plan which serves as a roadmap to realize the objectives as well as a sales tool for attracting the investors to gain financing. Business plan have some components to serve its purpose. It is vital to provide the significant information which includes all important elements to make it an effective plan. This report is aimed at evaluating the business plans of two companies, Mindshaker and ProTrax, Inc., in order to gain insights of business plans’ important elements. The report is divided into different sections; first section has introduced the two business plans to be compared, second section has evaluated the plans in terms of strengths and weaknesses of plans, third section has provided some recommendations to improve the plans, next section has explained the challenges a faced and competencies used for evaluation, further section has described five lessons learnt, and at the end, the conclusion is made. II. Introduction to the Companies This section has provided a brief introduction to the selected businesses of two companies; Mindshaker and ProTrax, Inc. Both of the chosen companies are operating over the internet. A. Introduction to the “Mindshaker” The business plan of Mindshaker is the comprehensive one, where there are nine elements to explain the purpose of their business and all necessary information needed. The first component is the Executive Summary, which has summarized the information given in the whole plan, and highlights the anticipated revenues that would be generated through this business and how it has minimized the cost. Then the next element is “the market”, in which the industry is analyzed in terms of the new trends and preferences by the consumers, the target market is defined, and the competition in market with highlighting the major competitors. The next section has described about the Company, its main business, its website, how it will serve the target market etc. After this, the “marketing and sales” element is included, where the marketing and sales activities to be performed, in order to attract the customers and enhance the awareness of their business is explained, such as they have pointed towards the ways like direct mail flyers, advertising, and many other. This component also includes the distribution to explain how the product would be delivered, and services’ pricing and packages. The Product and Service section, then, has explained the main characteristics and description of the product being offered, how it will be tailored according to the different target markets, and the key benefits of its products and services. In addition to these, this section has described the forecasted growth and expansion with minimal cost, and the competition expansion as there are many technological advancements. Then the important section of “operations” have explained that how the company will start and maintain the operations, as it involves the development of software, thus, it has described the subcontractor and its capability as well, and how they will be maintaining the operations. But it lacks proper action plan. The next component has described the management team and board of directors, their qualifications, skills, and capabilities, without going into too much detail. After that the plan has included a very significant element of Financial Projections, where the forecasted revenues and costs for the next five years are estimated, and the ways the funds will be utilized along with their valuation and exit strategies, in order to save the investors from huge losses in any opposite case. Exit strategy also serve positively in any business plan. In the end, Annexure includes the industry and competitor’s analysis and the initial programs initiated by the company[Min14]. B. Introduction to ProTrax, Inc. ProTrax, Inc.’s business plan is comprised over the ten elements, but these are different from the Mindshakers. The business plan is started with the Executive Summary, where the whole plan is summed up, along with that, it has explained the mission and vision set by the company, and highlighted the benefits of investors in case, if they invests. The second component is regarded as, “the company”, where the main business in which the company is involved, the key services it is offering, and the current status of the company in the incorporation process has enlightened. The Market Opportunity is the next section which is different from the standard components of the business plan. In this section the plan has highlighted the consumer surveys and the market analysis in order to ensure the company’s service potential in the end consumers, as well as how the previous recruiters have been satisfied with their services. This is an important aspect to highlight the need for the business. The competitors and other influences has explained the further section of competition analysis, which explains how they will be facing competition and effects from other market influencers, as well as the strategy is set to combat the competition. The next component has provided the positioning strategy, in which the company has planned about the way it will position itself in the consumers’ minds. It has explained this by positioning diagrams in terms for flexibility and reach, and time and cost. Then, the marketing strategy involves further two subsections, the pricing strategy in order to provide information about how the services will be priced, and the marketing communications to bring awareness about the business among consumers. Operational Plan includes three precise stages to be carried on; the product development, services and support, and staffing or recruiting. After this, the management team section is a detailed section where the skills, capabilities, and qualifications of the management team is comprehensively explained. Next, the financial statements are given to see the company’s revenues forecasts, its investment, and exit strategy. Moreover, at the end, the future growth prospects are also explained which shows the company’s envision capability[Pro14]. III. Evaluating the Two Business Plans This section has provided three strengths and weaknesses of both the business plans discussed above. A. Strengths of Business Plans The Mindshaker Inc.’s business plan has three major strong components that distinguishes it from others. a) Financial projections; Mindshaker business plan has provided financial projections which are quite realistic in terms of the net income estimations. In the first year, they have shown the negative balance, as at this point, the company would only be able to start the operations, not generating the revenues. So, it adds in the planning strengths, if the projections seem to be realistic[Abr03]. b) Industry Analysis; It has provided a comprehensive and detailed analysis of the industry and market. This provides an additional benefit, as the investors would consider the potential in the product or services from the customer’s side. So, it must serve as a sales tool as well[Ste04]. c) Exit Strategy; the major strength of any business plan is when they also provide the exit strategy, as if the venture failed, then how to escape from big losses. Mindshaker business plan has also provided the exit strategy, which is a plus-point from the investors’ perspective[Ste04]. The ProTrax Inc. has following three major strengths; a) Executive Summary; It can be best source for investors’ attention. The executive summary is not made for management, rather it serves as a sales device[Ste04], where the potential investors would likely to see that what this plan provides in favor of their interests. So, it could be the major source of financing the business. ProTrax Inc. business plan has described this in detail[Abr03]. b) Vision and Mission; the ProTrax business plan has mentioned the very important aspect in any effective business plan, which is a Vision and a Mission. They have set their vision with respect to time and clearly explains their mission, which serves as the inspiration for readers[Ste04]. c) Consumer Survey; the ProTrax business plan has conducted the consumer survey and has mentioned it in their business plan, which can provide the realistic idea for the product potential in the market. B. Weaknesses of Business Plans The Mindshaker Inc.’s business plan has following weaknesses. a) Firstly, the Mindshaker business plan is lacking a very essential components in any effective business plan, as these would affect the readers’ interest in the plan. They have not set any proper vision for future, and the mission statement as well, which would help in attracting the readers’ attention for knowing the main purpose of the company[Abr03]. b) Secondly, the business plan is important to provide an action plan, where the whole development plan, the financial and operational plan are needed, and the milestones are set to be achieved[Ste04]. Mindshaker lacks presentation of these plans, for instance the action plan must include the work breakdown structure and all the activities to be performed and who will perform those. This must be developed in a presentable form. c) Thirdly, the Mindshaker has not identified the risks and uncertainties and also the risk management techniques to combat such hazards[Ste04]. It is very crucial aspect in the business planning to identify the risks and threats proactively. There are following three weaknesses in the ProTrax Inc.’s business plan. a) Firstly, the company has not provided a detailed analysis of market and industry where it will be operating. There is a need to apply some suitable frameworks, as Mindshaker has applied Porters’ five forces model, so a proper analysis tool is missing in the plan. It would be effective to analyze within the frameworks[Del03]. b) Secondly, the ProTrax Inc.’s business plan has also not attended the elements of risks, such as financial risks, credit risks, and operational risks, which are very important during the planning phase. Planning is basically done to proactively analyze these risks and uncertainties[Del03]. c) Thirdly, company must develop some milestones to be achieved within the planning phase[Ste04]. But the ProTrax Inc., like the Mindshaker, has not developed milestone plan, which is helpful in achieving their targets. Moreover, it also lacks the proper action plan, when, how, who will do what. IV. Recommendations for Improvement By contrasting the two business plans of ProTrax, Inc. and the Mindshaker, some recommendations can be made for the further improvement. As there are some weaknesses in their business plans, so to overcome these, following set of recommendations can be helpful; a) In a business plan to be successful, the market and industry analysis is essential in a comprehensive manner. These should be performed in systematic way, which entails to use some analysis tools, in order to justify the comprehensive analysis. For that purpose, companies should perform, SWOT (strengths, weaknesses, opportunities, threats) analysis, PEST (political, environmental, social, and technological) analysis, and Porter’s Five Forces model. These are some of the tools, but these tools help the companies to better analyze the company’s inner and outer environment[Byg97]. b) The vision and mission are the essential components of the business plan which can provide the investors to seek better understanding about the company’s aim and its future. The plan must develop a proper vision in terms of the time that where it will be after certain number of years. c) Strategic Planning is concerned with the identification of risks and uncertainties in any course of action. For that purpose, a business plan must forecast and analyze the risks and threats, it would face in real environment, rather than relying over the set of unrealistic and impractical assumptions. In addition to this, during the identification of risks and uncertain events, the plan must address the possible solutions and methods to overcome these risks[Bue8a]. To do this, there are number of risk management techniques which could be adopted. So, a strategic management planning is important to analyze the plan with the proactive approach. d) Every business plan must set some milestones to be achieved. As during the implementation phase, most of the time, the things go off the track. So, if they milestones and some targets are set within the planning phase with the inclusion of risks, then the investors would see the seriousness and clarity in fulfilling the objectives of the company. So, these recommendations can be helpful, as the business plan is the sales tool, which can be helpful for the companies in financing the venture by attracting the investors. V. Evaluation Challenges and Competencies In evaluation of these two business plans, the challenges faced are the proper analytical tool or a benchmark business plan, which would guide in evaluations. For that purpose, a book written by Lawrence & Moyes (2004) has provided much of the important components which must be included in any business plan. In addition to this, the book also gave the comprehensive view of a business plan components, their purpose and examples. So, by using other books, the plans were analyzed using the benchmark insights[Abr03]. For business planning in a strategic way, there are some competencies which must be used, such as scenario planning skills to see what would happen if some assumptions come true[Rin98], strategic thinking skills for forecasting and analysing the future as well as centering on a direction[Wel98], and a proactive approach fro identification of risks. VI. Lessons Learnt By analyzing the business plans, five lessons are learnt as outlined below; a) Vision and mission are the most important components which must be addressed in the Executive Summary. b) Proper Frameworks and Tools must be employed for analysis of markets, industry and competitive environment. c) Risk management must be given a proper attention and should be the major part of a business plan. d) An action plan should address the financial plan and operational plan, in order to provide a realistic view to investors that how this business is actionable. e) It should be focused that business plan is not merely for the management or executives, rather it is purposed to attract more investors. VII. Conclusion This report is aimed at providing the importance of strategic planning while starting a business. It has evaluated two business plans of ProTrax and Mindshakers, which has offered a detailed analysis and insights in the effective business planning. It can be concluded that business planning has much significance, as it serves to be an action plan, a sales tool, and a road map to do business. Investors would be willing to invest more, if they see the potential in the targeted market. So, an effective business plan give much benefits. VIII. References Bry88: , (Bryson, 1988, p. 74), Joh101: , (Lawlor, 2010), Geo96: , (Steiner, 1996), Min14: , (MindShaker, 2014), Pro14: , (ProTrax Inc. , 2014), Abr03: , (Abrams, 2003), Ste04: , (Lawrence & Moyes, 2004), Del03: , (Deloitte & Touche LLP, 2003), Byg97: , (Bygrave, 1997), Bue8a: , (Buehler, Freeman, & Hulme, 2008a), Abr03: , (Abrams, 2003; Deloitte & Touche LLP, 2003; Lawrence & Moyes, 2004), Rin98: , (Ringland, 1998), Wel98: , (Wells, 1998), Read More