Unit 2: The Business Plan

Lesson 1
Definition, Purpose, and Market
Need Identification
Have you ever
wondered how a
certain business is
established?

Is it easy to establish
one?

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 ● Define what is a business
Learning plan.
Objective ● Identify the purposes of a
s business plan.
At the end of the
lesson, you ● Identify market needs.
should be able to
do the following:

ENGAG EXPLO EXPLAI EXTEN EVALUA 33

Which of the stalls in
your favorite mall has a
lot of students
patronizing their
product or service?

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What do you think are
the reasons why that
certain stall in your
favorite mall attracts
more students to
patronize their product
or service?

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 The Business Plan

A business plan is a
written description of
the business that you
will establish in the
future.

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 The Business Plan
A business plan can be written before or
during the first few years of the
enterprise.

This is to guide the entrepreneur on

which strategies would be most beneficial
for the enterprise to take.
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Why should an
entrepreneur
need to prepare
a very good
business plan?

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 Why prepare a business plan?

The business plan is the blueprint of your

proposed business.

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 Why prepare a business plan?
1. To test the feasibility of your business
idea
2. To give your new business the best
chance of success
3. To secure funding
4. To make business planning more
effective
5. To attract investors
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Composing a business plan is
tedious, however it's basic if you
want to have an effective business
that will endure the startup stage.

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Three Factors of a Good Business Plan

1.It’s realistic
2.It’s specific
3.It’s followed through
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A realistic business plan accounts for
the feasibility of implementation. If
the business plan is not practical or too
good to be true, then, no operational
method can be devised to achieve the
strategy.

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How will you identify the needs of
your target market?

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Identifying Customer Needs

Identifying customer
needs is the method of
determining what a client
needs from a product.

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Customer needs are
non-technical, and they
reflect the customers’
perception of the
merchandise, not the
particular style or
specifications, though
oftentimes they're
closely connected.

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Identifying Customer Needs

Attractive Quality
One-Dimensional Quality
Must-Be Quality
Indifferent Quality
Reverse Quality
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 What is Kano Model Analysis?

● The Kano Model of product development

and customer satisfaction was published
in 1984 by Dr Noriaki Kano, professor of
quality management at the Tokyo
University of Science.

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● Kano says that a product or service is
about much more than just functionality.
It is also about customers' emotions
● . For example, all customers who buy a
new car expect it to stop when they hit
the brakes, but many will be delighted
by its voice-activated parking-assist
system.
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● Adding one particularly attractive feature
like this could delight customers and
increase sales without costing
significantly more. On the other hand,
constantly introducing new features to a
product can be expensive and may just
add to its complexity without boosting
customer satisfaction.
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Identifying Customer Needs

1. Gather raw data

2. Interpreting data
3. Organizing the data
4. Reflect the process

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It’s all too easy to collect data about everything
you can, but it’s important to only collect the
data that you actually need.

Consider these 3 questions:

● What information do you actually need?

● What information is available?
● What information will be useful?

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Customer Needs Identification Using the 4-step Method

Situationer
A group of students is going to identify
customer needs, specifically, the food inside
the school premises.

They conducted a survey and come up with

the following answers in the 4-step method.

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Customer Needs Identification Using the 4-step Method

Step Example

Gather Raw The students gathered

data using interviews to
Data
identify their needs.
They have 100
respondents.

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Customer Needs Identification Using the 4-step Method

Step Example

Interpreting The students analyze

the data and omit
Data
data that are not
essential and aligned
with their research.

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Customer Needs Identification Using the 4-step Method

Step Example

Organizing They categorized the

data gathered based
Data
on its nature. For
instance, junk foods,
beverages, main
dishes, side dishes,
etc.
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Customer Needs Identification Using the 4-step Method

Step Example

Reflect the They will decide if the

Process process is enough for
the business plan.

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Formulating your Vision, Mission, Goals and Objective

VISION DEFINITION
● Vision statements describe ● A vision statement is a
your company’s “why”. written declaration clarifying
● Vision statements are your business’s meaning and
essential because they reveal purpose for stakeholders,
a common goal and direction especially employees. It
for your employees. describes the desired long-
● You can craft a compelling term results of your
vision statement by infusing company’s efforts. For
it with passion, making it example, an early Microsoft
inspiring, and aligning it with vision statement was “a
your business’s values and computer on every desk and
goals. in every home.” 28
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 VISION VISION
● “A company vision statement ● A vision statement
reveals, at the highest levels, matters because it
what an organization most outlines the common goal
hopes to be and achieve in of everyone in the
the long term,” said Katie
company. Businesses that
Trauth Taylor, owner and CEO
of Untold Content, a writing are working toward a
consultancy. “It serves a higher aspiration are more
somewhat lofty purpose – to appealing to current and
harness all the company’s future employees.
foresight into one impactful
statement.” 29
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 DIFFERENCE
MISSION VISION
● Mission statements ● Vision statements are
are based in the future-based, and
present and convey to they are meant to
stakeholders and inspire and give
community members direction to
why a business exists employees.
and where it currently
stands.
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said Paige Arnof-Fenn, founder and CEO of Mavens & Moguls, a global strategic marketing
consulting firm.

“The vision is about your goals

for the future and how you will
get there, whereas the mission
is about where you are now and
why you exist,”

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GOALS AND OBJECTIVES:

● Goals are short-term directions, often

stated in specific metrics such as
geographic, periodic, and other numerical
terms.

● Objectives are specific targets set by

entrepreneurs and businessmen to direct
them from achieving their goals.

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Porter's Five Forces Model

● Porter's Five Forces is a model that identifies and

analyzes five competitive forces that shape every
industry and helps determine an industry's
weaknesses and strengths. Five Forces analysis is
frequently used to identify an industry's structure
to determine corporate strategy.

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Porter's 5 forces are:

1. Competition in the industry

2. Potential of new entrants into the industry
3. Power of suppliers
4. Power of customers
5. Threat of substitute products

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1. Competition in the Industry

● The first of the Five Forces refers to the number of competitors

and their ability to undercut a company. The larger the number
of competitors, along with the number of equivalent products
and services they offer, the lesser the power of a company.
● Suppliers and buyers seek out a company's competition if they
are able to offer a better deal or lower prices. Conversely, when
competitive rivalry is low, a company has greater power to
charge higher prices and set the terms of deals to achieve
higher sales and profits.

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2. Potential of New Entrants Into an Industry

● A company's power is also affected by the force of new entrants

into its market. The less time and money it costs for a
competitor to enter a company's market and be an effective
competitor, the more an established company's position could
be significantly weakened.
● An industry with strong barriers to entry is ideal for existing
companies within that industry since the company would be
able to charge higher prices and negotiate better terms.

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3. Power of Suppliers
● The next factor in the Porter model addresses how easily suppliers
can drive up the cost of inputs. It is affected by the number of
suppliers of key inputs of a good or service, how unique these
inputs are, and how much it would cost a company to switch to
another supplier. The fewer suppliers to an industry, the more a
company would depend on a supplier.

● As a result, the supplier has more power and can drive up input costs
and push for other advantages in trade. On the other hand, when
there are many suppliers or low switching costs between rival
suppliers, a company can keep its input costs lower and enhance its
profits.
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4. Power of Customers

● The ability that customers have to drive prices

lower or their level of power is one of the Five
Forces. It is affected by how many buyers or
customers a company has, how significant
each customer is, and how much it would
cost a company to find new customers or
markets for its output.

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5. Threat of Substitutes
● The last of the Five Forces focuses on substitutes. Substitute goods
or services that can be used in place of a company's products or
services pose a threat. Companies that produce goods or services
for which there are no close substitutes will have more power to
increase prices and lock in favorable terms. When close
substitutes are available, customers will have the option to forgo
buying a company's product, and a company's power can be
weakened.
● Understanding Porter's Five Forces and how they apply to an
industry, can enable a company to adjust its business strategy to
better use its resources to generate higher earnings for its investors.

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 Activity

If you will identify your customer needs,

how will you implement the four steps of
Customer Needs Identification?

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 Questions
Part A.
1. Why do you need to test the feasibility of your business
before implementing it?
2. If your group will propose a business, how will you make sure
that it will be successful?
3. How should a business plan should be written and prepared?
4. What can be the hindrances or challenges in identifying your
customer needs?
5. Why is it essential to have a business plan before opening a
business? 43
 Questions
Part B. Using the Kano Technique of organizing data, give an
example of a situation that best applies the five (5) qualities.

Quality Example

Attractive Quality

One-Dimensional
Quality

Must-Be Quality

Indifferent Quality

Reverse Quality
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A business plan is a written description of
the business that you will establish in the
future.

You can either write a business plan in the

early stage of your business or for the
growth of your established business.

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Identifying customer needs is the method of
determining what a client needs from a
product.

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Cooper, R. “Winning at New Products : Accelerating the Process from Idea to Launch.”
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Griffin, A., and J.R. Haussen. “The Voice of the Customer.” Marketing Science Vol. 12 No.1
(1993).
Accessed March 18, 2020. http://www.jstor.org/stable/183735.

“Three Qualities of a Good Business Plan.” Organizers Direct. Accessed March 19,2020.
https://organizersdirect.com/blog/three-qualities-of-a-good-business-plan/.

Ulrich, K. T., and Eppinger S. D. “Product Design and Development.” OCLC WorldCat
Permalink.
McGraw-Hill, 2012. Accessed March 20, 2020.
http://www.worldcat.org/oclc/706677610.

Wolf, Andres Simpson. “Customer Needs Identification.” Electrical and Computer

Engineering
Design Handbook. Accessed March 19,2020.
https://sites.tufts.edu/eeseniordesignhandbook/2013/customer-needs-identification-2/.
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