CHAPTER 4 BUSINESS PLAN

1. What is a business plan?

A business plan is a document that defines in detail a company’s objectives and how it plans
to achieves its goal.

2. What is the importance of a business plan?

- Evaluate business ideas objectively.
- Determine project viability.
- Assist with project implementation challenges.
- Create sales forecasts and expense analyses.
- Define staff duties and responsibilities.
- Evaluate market performance.
- Aid in new product development design.

3. Who will use business plan?

- Entrepreneurs
- Financial Institutions
- Supplier
- Staff
- Tender/Contract Producer
- Investor

4. State and explain the key elements in a business plan

Executive Summary:

- Provides an overview of the entire plan.

- Allows quick understanding without reading the entire document.
- Should be concise, positive, and clear about the project's potential for success.

Business Description:

- Legal Structure & Ownership: Describes business entity and ownership percentages.
- Company History: Covers founding, growth, and key milestones.
- Location & Facilities: Details where the business operates, ownership or leasing status, and
future facility plans.

Market Analysis:

- Industry analysis: Examines the general industry environment.

- Target market analysis: Identifies and quantifies potential customers.
- Competitive analysis: Evaluates competitors' strengths and weaknesses.
Organization Management:

- Describes corporate structure and hierarchy of management.

- Highlights expertise and qualifications of team members.

Sales Strategies:

- Focuses on selling products/services to generate revenue.

- Concentrates on repeated successful sales and continuous optimization.

Financial Projections:

- Uses financial data to forecast future income and expenses.

- Helps plan startup budget, set financial goals, and attract investors.

5. Define risk management

Risk management refers to the practice of identifying potential risks in advance, analysing
them, and taking precautionary steps to reduce or curb the risk.

6. Identify and explain the different risk management categories

General Business Risk: all companies face

- Effects vary by company.

- Startups need experience in managing various issues.
- Early-stage companies must attract customers from competitors.

Industry Specific Risk: affect businesses within specific industries

- Unique challenges exist in each industry.

- Industry competition is a major challenge.
- Business plans should outline effective industry competition strategies

Company Specific Risk:

- Stem from internal and external factors.

- Internal issues affect efficiency. Example: Failing to patent a new product leads to loss of
competitive advantage.
- External issues impact success. Example: FDA banning a product affects business

7. Define risk response strategies for threats

For Threats (Negative Risks):
Avoid: Eliminate the threat
Transfer: Shift the impact to a third party
Mitigate: Act to reduce the risk
Accept: Acknowledge the risk without action
 8. Define risk response strategies for opportunities
For Opportunities (Positive Risks):
Exploit: Ensure the opportunity occurs
Share: Allocate ownership to a third party
Enhance: Increase the probability of success

9. What is the purpose of a disaster recovery plan?

A Disaster Recovery Plan is a process used by organizations to restore access to critical
software, data, and hardware following natural or human-caused disasters.

CHAPTER 13 DEMAND IN AGRICULTURAL MARKETING

1. State the definition of demand

Demand is the customers desire and willingness to pay a price for a specific good/service.

2. Explain the law of demand

The law of demand states that the quantity demanded of a good shows an inverse
relationship with the price of a good when other factors are held constant

3. What are the main demand determinants. Explain your answer.

- Number of buyers = When the number of buyers increase the demand increases
- Income = Higher income increases demand for normal goods and reduces demand for
inferior goods. (opposite for lower income)
- Prices of other products = -Complementary products: When the price increases for one
product a leftward demand shift occurs. Eg: Wheat price
bread price , demand

-Supplementary products: When the prices increases in one

product a rightward demand shift occurs. Coffee price , tea
demand

4. Consider a hypothetical demand curve for laser printer market. Show graphically what
happens if the following market changes occur:
a) The price of laser printers goes down

b) The average income of the population increases

 c) The price of ink cartridges increases

d) Consumers prefer to keep their photographs and documents in digital format rather in
paper format

5. The price of televisions will increase two months from now. What happens to the demand
curve?
6. The price of tea increases a rm10 price increase on all tea boxes sold. What happens to the
demand curve?

7. Weather forecast predicts heavy rain for the next month. What happens to the demand
curve of sunglasses?

8. Margarine is on sale. What happens to the demand curve of butter?

9. A new study shows that having a cup of coffee a day increases the chances of developing
heart issues. What happens to the demand curve for tea?
 10. Instant noodle is an inferior good. Hence, draw the graph on what will occur if people’s
incomes decrease.

C14 SUPPLY IN AGRICULTURE PRODUCTS

1. What is the definition of supply?

Supply is the amount of product available at a specific time and price.

2. State the law of supply

The law of supply states that when all other factors are equal, as the price of a good/service
increases, the quantity of goods/services that suppliers offer will increase.

3. Explain the supply determinants

- Price expectation: If suppliers believe price will go down soon, they may try to sell all
they have currently. If suppliers believer prices will rise soon, they
may hold on to their supply until prices rise.
- Price of other goods: If a business can produce more than one product with the same
equipment and labour, they will produce more of the things for
which it receives a higher profit.
- Number of sellers/producers: If they number of sellers increases, the supply increases
- State of technology: Technology advancement will improve the quality of goods. It will
cause consumers demand to increase. Consumers are then willing
to pay a higher price. Production will increase.
- Resources Prices: If the prices of resources increase, the supply decreases
- Changes in Nature: For example, drought may destroy paddy crops causing a decrease in
paddy supplied.

4. Producers believe the price of laptops will increase in 6 months. Consider the supply curve
for luggage. What happens?
5. The government provides subsidies to firms involved in medicine production. Consider the
supply curve for medicines. What happens?

6. The price of burgers decreases due to consumers turning to healthier alternatives. What
happens to the supply curve for burgers?

7. The price of dumbbells increases because consumers shift away from gyms to home exercise.
What happens to the supply curve for dumbbells?

8. In the market for strawberries, the following table represents the quantity supplied
and demanded at various price levels:
Quantity Demanded
Price (P) Quantity Supplied (Qs)
(Qd)
RM 1 30 145
RM 2 60 140
RM 3 90 135
RM 4 120 130
RM 5 150 125
(i) Plot the supply and demand curves on the same graph

Price Supply
 Demand

Quantity

(ii) Determine the equilibrium price

RM 4.25

9. How is surplus overcome?

Surplus is overcome by sellers reducing the price of their goods/service to clear inventory.
The low prices will entice more people to buy reducing the supply. This will cause an increase
in demand while supply decreases until market price equals equilibrium price.

10. How is shortage overcome?

Buyers will bid up the price of the good/service to obtain it. This will cause some buyers to
quit trying as they don’t want to/can’t afford to. The increase in demand will make sellers
happy thus they will start to increase supply. The upward pressure n price and supply will
stabilize at market equilibrium.

11. What is the importance of supply chain market?

-Reduce operating cost
-Improve customer service

12. State the current marketing and distributing system

- Insufficient marketing infrastructural facilities
- Insufficient Quality, Reliable Production & Market Information
- Multi-Channel Distribution System
- Production is not market driven
- Private sector dominated market

13. State the strategies to improve the current distribution system and marketing system
- Marketing support
- Direct selling
- Integrated Marketing
- Upgrading market information
 - Affecting quality assurance
- Provision of marketing infrastructural facilities
- Production to meet market demand

CHAPTER 17 PRICE BEHAVIOUR OF MARKETING AGRICULTURAL PRODUCTS

Multiple Choice Questions with Answers

1. Which of the following factors does NOT influence the supply of agricultural products?
a) Weather
b) Income
c) Diseases
d) Harvested acreage

2. What is a common characteristic of farm products that affects their price behavior?
a) Uniform quality
b) Perishability
c) Consistent supply
d) Fixed prices

3. Which government policy helps in curbing inflation and creating balance in the market?
a) Trade policy
b) Price control
c) Agricultural subsidies
d) Value-adding activities

4. During which stage of the business cycle is there a rapid decline in the demand for goods
and services?
a) Expansion
b) Peak
c) Recession
d) Recovery

5. What is the purpose of agricultural commodity price hedging?

a) To increase market prices
b) To stabilize income for farmers
c) To reduce production costs
d) To enhance product quality
6. What are the two main sectors into which agricultural commodities are divided?
The two main sectors are farm activities (including agriculture, plantation, animal
husbandry, forestry & logging, and fishing) and non-farming activities (including agro-
processing industries, wholesalers and retailers, storage and communication, transport,
education, health industries, and other service-related activities).

7. How does the perishability of agricultural products affect their price behavior?
The perishability of agricultural products means they require fast handling and often special
refrigeration, which raises the cost. This induces the seller to raise the price of more
perishable products.

8. What factors influence the price behaviour of agricultural products?

Factors influencing supply include supply, demand, food marketing sectors, government and
business cycle

9. How do government policies impact the price behaviour of agricultural products?

Government policies, such as price supports and controls, trade policies, and subsidies, can
stabilize prices, make goods more affordable, and support farmers' incomes, thereby
impacting the overall price behaviour of agricultural products.

10. Describe the different stages of the business cycle.

Expansion (increase in positive economic indicators), peak (maximum growth limit),
recession (decline in demand and excess supply), depression (negative growth and high
unemployment), trough (lowest point of demand and supply), and recovery (positive
turnaround in economic growth).