Chapter Five

Operations of Business Startups

By: Admas T.

Wednesday, May 8, 2024 Admas Tseganew 1

5.1 Introduction
Business operations are those activities involved in the running of a
business for the purpose of producing value for the stakeholder.
Generally business operations lay their foundation on
management functions.

Wednesday, May 8, 2024 Admas Tseganew 2

5.2. Strategic Planning
Everyone who starts an entrepreneurial venture wants to be successful.
Planning is the process of determining specified objectives and how to
accomplish them.
It is the process by which managers set objectives, assess the future and
develop courses of action to accomplish these objectives.
 It is deciding in advance
I. What to do it,
II. How to do it,
III. When to do it and
IV. Who is to do it

Wednesday, May 8, 2024 Admas Tseganew 3

A sound plan should:

Serve as a framework for decisions or for securing support/approval.

Provide a basis for more detailed planning.
Explain the business to others in order to inform, motivate & involve.
Assist benchmarking & performance monitoring.
Stimulate change and become building block for next plan.

Wednesday, May 8, 2024 Admas Tseganew 4

 5.3. Business physical operations
 Business operations include the location of your business and the processes,
resources, and other tools you will need to transform inputs (raw materials,
labor, and capital) into outputs (goods or services).

 Location and Facility

 Operational / Production Equipment and Maintenance

 Employees

 Business Regulations and Guidelines

Wednesday, May 8, 2024 Admas Tseganew 5

 Location and Facility
Which of the following physical operations do you need to consider for your
business?

 Should I lease or buy my physical facility?

 Should I build a new facility or buy an existing one?
 Where should I locate my business to reach the greatest number of customers
and to provide efficient access to employees and vendors?
 Factors such as visibility, traffic flow, parking, and tenant compatibility are
also important
Wednesday, May 8, 2024 Admas Tseganew 6
Operational / Production Equipment and Maintenance
 Should I lease or buy my office equipment?
 If I do lease, should I lease all of the equipment or only certain pieces?
Employees
 If I need employees, how many and in what job functions?
 Should I hire the employees full-time or part-time?
What are the advantages and disadvantages of the various options?

Wednesday, May 8, 2024 Admas Tseganew 7

5.4. Marketing Operations

Market is a group of potential customers having needs to satisfy, ability to

buy & willingness to pay in order to satisfy these needs.

The main concepts of marketing include:

Marketing starts early before production & continues after selling.

Customer satisfaction is the core of marketin g

Wednesday, May 8, 2024 Admas Tseganew 8

The Marketing Mix
The basic task of marketing involves the identification of the needs
of the customer and then the manufacturing and marketing of a
product or service that satisfies this need.
In order to do this a marketing organization has to concentrate on four
important aspects known as the 4P’s of marketing.
The marketing manager has to combine these 4 P’s in such a way
that the combination provides satisfaction to the customer and profit
to the manufacturer.
When these elements (4 P’s) are combined together they are called as
The Marketing Mix‖.
The marketing mix of an organization is made up of four elements
Wednesday, May 8, 2024 Admas Tseganew 9
THE PRODUCT MIX
A product is taken as any physical, tangible, and functional characteristics of a
good
The product mix includes:
Product planning and development: Product planning is the entire process of
deciding what type of product to produce for which target customer.
Product planning includes three major types of decisions:
1. Development and introduction of new products
2. Modifications of existing products in keeping with the changing tastes and
preferences of the target customers and
3. Elimination of unprofitable or obsolete products

Wednesday, May 8, 2024 Admas Tseganew 10

Branding: A brand is a name, term, symbol, design or combination of
these, used to identify the products; Brand name: Eg. OMO;
Brand mark: appear in the form of symbol, design, distinctive coloring
or lettering.
 Trademark: legal protection so that the owner has exclusive rights to its
use
Packaging: Packaging is a marketing process concerned with the design
and production of the container for a product.
Labeling: Label is part of a product that carries verbal information about
the product of the seller.

Wednesday, May 8, 2024 Admas Tseganew 11

Importance of a brand
1. The brand makes it easier for the seller to process orders and track down
problems.
2. The seller’s brand name and trademark provide legal protection of unique
product features.
3. Branding helps the seller to segment markets and expand the product mix.
4. Good brand help to build the corporate image because it advertises the
quality and size of the company.
5. Brands make it easy for customers to identify products or services.
Wednesday, May 8, 2024 Admas Tseganew 12
Requirements of a good brand
Be easy to pronounce, recognize and remember

Be distinctive.

Suggest something about the product’s benefits or characteristics

Suggest about the product qualities such as action or use.

Have a possibility of registration and legal protection.

Wednesday, May 8, 2024 Admas Tseganew 13

The price Mix
Price is the amount of money consumers have to pay to obtain the
product.
Price has operated as the major determinant of user choice
traditionally.
 Four common methods of pricing
a. Cost plus pricing/ Mark Up pricing/ : fixed percentage of
profit is added to the unit cost.
b. Skimming pricing: Pricing above the market
c. Penetration pricing: Setting lower prices, Pricing below the
market
d. Premium pricing-Pricing with the market.

Wednesday, May 8, 2024 Admas Tseganew 14

The Place Mix
Place (Physical distribution) : Includes company activities that make the
product available to target consumers.

Physical distribution includes:Channels of distribution, Transportation,

and Warehousing/ storing goods/

Distribution is to move the right amount of the right products using the
right channel to the right place to the right time.

Wednesday, May 8, 2024 Admas Tseganew 15

Channel levels

Wednesday, May 8, 2024 Admas Tseganew 16

Zero-level channels (M C)
This is a direct channel where a producer uses no intermediaries.
 Manufacturers of heavy installations like airplanes, ships may use such channels where
buyers need a lot of services from manufacturers.
 It is not commonly used in consumers market.
One-level channel (MRC)
Under this channel an intermediary is used.
Therefore, it is an indirect channel of distribution.
Two-level channel (MWRC)
This is the traditional channel of distribution, which is most commonly used in consumer
Wednesday, May 8, 2024 Admas Tseganew 17
goods market
The Promotion Mix
It is sometimes known as marketing communication

Means activities that communicate the merits of the product & target
customers to buy it
Promotional objectives:
- Informing the product
- Increasing sales
- Stabilizing sales / profit
- Building public image

Wednesday, May 8, 2024 Admas Tseganew 18

The promotional mix consists of four major tools
Advertising: such as informative Ad, Persuasive Ad and Reminder Ad
Personal selling – Oral presentation in conversation with one / more
consumers for the purpose of making sale.
Sales promotion – Includes: gifts, sampling, coupons, and window displays.
Publicity – Any information about the organization, its personnel or its
products that appears in any medium on a non - paid basis.

Wednesday, May 8, 2024 Admas Tseganew 19

 Thank you!

Wednesday, May 8, 2024 Admas Tseganew 20

QUIZ#2

1. Explain the 4 types of management functions.(1.5pts)

2. Explain the business physical operations.(1.5pts)
3. What is the importance of brand.(1.5pts)
4. What is the objective of promotion(0.5pts)

Wednesday, May 8, 2024 Admas Tseganew 21