Business Plan Proposal

for
Business Name

Participants Names
Date
MGT 300 Section x

Executive Summary
Onetotwopageexecutivesummary.

Overview
Mission
Themissionisanorganizationsfundamentalpurpose,articulatedtodefinethenatureofthe
businessandunifyhumanandotherresources.Awellframedmissionprovidesasenseof
purposeandestablishesparametersthatfocuseffortandresources.Itanswersthequestionswhy
doweexistandwhatdowedo?Whoareweandwhereareweheaded?Tobeusefulamission
statementshould:

Articulatethevisionthatdefinesthebusiness,whatitis,whatitisnot,andwhatitshould
beinthefuture.

Communicatetointernalmembersandexternalconstituenciesaclearsenseofmeaning
anddirectionthatismotivatingandenergizing

Conveywhichcustomerwantsandneedsitwillseektosatisfy,andthetargetmarketsit
willserve

Identifythevalueaddingfunctionsitwillperform,realizingitsspecificenablingactions
willchangeovertimewhilethepurposeendures.

Beofbumperstickerlengthbriefenoughtobeincorporatedintocorporate
communicationsandeasilyremembered

Key Stakeholders
Stakeholdersaremembersofidentifiableclustersofpeoplewhohaveeconomicand/orsocial
interestsinthebehaviorsandperformanceoftheorganization.Whoarethekeystakeholdersand
howwilltheirinterestsbemanagedandservedbythefirm?

Vision
Avisionisadesiredfutureimageoftheorganizationanditsprocessesandproductsthat
integratescurrentrealitiesandexpectedfutureconditionswithinaspecifictimeframe.
Threeelementsarefundamentaltoacomprehensive,meaningfulvision:

Astatementofpurposeitshouldinspireandmotivateinsiders

Atangiblegoalframingaclear,specificandcompellinggoalthatfocusespeoples
efforts.Awellframedgoalhasatargetandatimeframeforitsattainment.

Animageofresultstheimageshouldpaintacompellingpictureusingcrisplanguage

Culture and Values

Organizationalcultureisthefundamentalassumptionspeopleshareaboutanorganizations
values,beliefs,norms,symbols,language,rituals,andmythsalltheexpressiveelementsthat
givemeaningtoorganizationalmembershipandareacceptedasguidestobehavior.
Valuesaretheenduringbeliefsandexpectationsthatapersonorgroupholdtobeimportant
guidestobehavior.
Thetopfiveorganizationalvaluesare:
1.
2.
3.
4.
5.

Provideexcellentservicetocustomers.
Operateinahighlyethicalmanneratalltimes.
Provideproductsand/orservicesofexcellentquality.
Consistentlymakeafairandreasonableprofit(notmaximizeprofits).
Stafftheorganizationwithhighcaliberemployeesfromtoptobottom.

Describethetypeofcultureandvaluesyouwishtohaveinthefirm.Howwillyouhelptocreate
andnurturethatculture?

Competition and Strategy

Competitive Environment
Descriptionofthecompetitiveenvironmentofthecompany.

Five Forces Analysis

StateofIndustryCompetition(Rivalry)
Describethestateofindustrycompetition.
ThreatofNewEntrants(BarrierstoEntry)
Describethethreatofnewentrants.
ThreatofSubstituteProducts
Describethethreatofsubstituteproducts.
BargainingPowerofSuppliers
Describethebargainingpowerofsuppliers.
BargainingPowerofBuyers
Describethebargainingpowerofbuyers(customers).

SWOT Analysis
Strengths
Internalstrengths.

Weaknesses
Internalweaknesses.
Opportunities
Externalopportunities.
Threats
Externalthreats.

Competitive Strategy
Competitiveadvantageoccurswheneverabusinessisabletosustainanedgeoveritsrivalsby
attractingcustomersanddefendingitselfagainstcompetitiveforces.
Toachieveastrategiccompetitiveadvantage,allenterprisesbuildtheirstrategiesaroundacore
ofphysicalassets,businessprocesses,andtheskillsandtalentsofitspeople.Corecapabilities
providethekeystolongtermsuccessbyenablingthefirmtocombineassetsandskillstodo
certainthingsbetterthancompetitors.Howwillyourfirmachievecompetitiveadvantage?
Selectyourcompanysapproachtostrategy:
AlowcostleadershipstrategyAppealingtoabroadspectrumofcustomersbasedonbeingthe
overalllowcostproviderofaproductorservice.
AbroaddifferentiationstrategySeekingtodifferentiatethecompanysproductofferingfrom
rivalsinwaysthatwillappealtoabroadspectrumofbuyers.
AbestcostproviderstrategyGivingcustomersmorevalueforthemoneybycombiningan
emphasisonlowcostwithanemphasisonupscaledifferentiation;thetargetistohavethebest
(lowest)costsandpricesrelativetoproducersofproductswithcomparablequalityandfeatures.
AfocusedormarketnichestrategybasedonlowercostConcentratingonanarrowbuyer
segmentandoutcompetingrivalsbyservingnichemembersatalowercostthanrivals.
AfocusedormarketnichestrategybasedondifferentiationConcentratingonanarrowbuyer
segmentandoutcompetingrivalsbyofferingnichemembersacustomizedproductorservice
thatmeetstheirtastesandrequirementsbetterthanrivalsoffering.
Type of Competitive Advantage Being Pursued
Lower Cost
Overall Low-Cost

Differentiation

Broad
Differentiation
Strategy
Best-Cost
Provider
Strategy
Market Target
Focused
Focused LowDifferentiation
Buyer Cost Strategy
Segment
A Narrow
Strategy
Leadership
CrossBuyers
A Broad
Strategy
Section of

Howdoesyourfirmsstrategycomparetoyourcompetitorsstrategies?

Objectives / Balanced Scorecard

Objectivesconvertvisionaryintentionsintospecificperformancetargetsthatcanbemeasuredat
designatedpointsintime.Benchmarkingcanbeusedtocompareaunitsperformanceto
outcomesachievedinotheroutstandingorganizations.
ABalancedScorecardisamanagementtoolthatencapsulatesthestrategyofthebusinessand
providesfeedbackonthesuccessofthestrategyinfourperspectives:Financial,Customer,
InternalBusinessProcess,andCorporateLearningandGrowth.Properlyconstructed,the
BalancedScorecardidentifiesandcommunicatesthecauseandeffectrelationshipsbetweenthe
strategicobjectives,theoutcomemeasures(laggingindicators)andtheperformancedrivers
(leadingindicators).Italsomakescleartheassumptionsbehindthestrategyandthecauseand
effectrelationshipsandenablesthecontinualvalidationoftheseassumptions.Agood
benchmarkistokeepitsimpleandhavenotmorethan35measuresperperspective.

Financial Objectives
Examplemeasures:salesgrowthrate,%revenuefromnewproducts,crossselling,
revenue/employee,indirectexpenses%ofsales,investment%ofsales,R&D%ofsales,return
oninvestment,economicvalueadded,profitability,revenuegrowth/mix,costreduction.

Customer Objectives
Examplemeasures:Productattributes(quality,price,time),companyimageandreputation,
customerrelationship,strategicrelationships,marketshare,customeracquisition,customer
retention,customerprofitability,customersatisfaction.

Business Process Objectives

Examplemeasures:Yields,cycletime,timetomarket,designmodifications,breakeventime,
productdevelopment,salesfromnewproducts,operations(time,cost,quality),service(time,
cost,quality).

Learning & Growth (Employee) Objectives

Examplemeasures:Employeecapabilities,employeesuggestions,goalsalignment,employee
satisfaction,employeeretention,employeeproductivity.

Marketing Plan
Yourproductshouldbederivedfromamarketneed.Whatmarketneeddoyousee?Discussthe
elementsofyourmarketingmixtofillthisneed:

Product
Descriptionofyourproduct.

Price
Whatisyourpricingstrategy?

Place
Wherewillcustomersfindyourproduct?

Promotion
Howwillyoupromoteyourproduct?

Organization
Howwillyouorganizethefirm?Whatorganizationalstructurewillyouuse?Keepinmindthat
yourorganizationalstructureshouldbeinalignmentwithyourstatedmission,vision,culture,
strategyandobjectives.
Keepinmindthefundamentaltradeoffsforbalancingorganizationaldesign.
Drawanorganizationalcharttodepictthedifferentorganizationalunitsinthefirm.Whatspanof
controlwillyourfirmemploy?Willyouuseselfmanagedteams?Ifso,doesthespanofcontrol
reflectthis?Whatfunctionswilltheteamsperformandwhatwilltheroleofmanagersbe?Will
youusecrossfunctionalteams?Ifso,whenandforwhat?
Thebasicorganizationalstructuresare:
DesignbyFunctiongroupingpeopleintodepartmentsorsubunitsbasedonsimilarskills,
expertise,andfunctionsperformedsuchasproductdesign,production,andmarketing.

Advantages:Worksbestwhenacompanyhasasinglelineofbusinessand/orisrelatively
small.Ideallysuitedtoencouragespecializationandpromptpeopletokeepupwiththe
latesttechnicaldevelopmentsintheirspecialtyfield.Ifdepartmentaltasksarerelatively
independent,ahighleveloffunctionalefficiencyispossible.Becauseofdepartmental
specialization,thefunctionalformreliesonpushingdecisionstoahigherlevelof
managementforcontrolandcoordination,whichmaynotbeanefficientuseof
managerialtime.

Disadvantages:Extremespecializationcreatestunnelvision.Peopletendtoperceive
multifunctionalproblemsfromthevantagepointoftheirnarrowareaofexpertise.This
leadstoconflictandturfprotecting,whichcanstraintheprocessofcommunicationand
coordinationintheabsenceofadecisiveleader.Decisionsthatarecomplex,orspantwo
ormorefunctionstendtogetpushedtothetopforresolution,slowingdecision
responsivenessastheorganizationbecomeslargerandmorelayered.Maintainingquality
becomesdifficult,sincefewpeoplegenuinelyfeelresponsibleforcustomersatisfaction
ortheacceptanceofdecisions.Afunctionaldesignalsocomplicatestheprocessof
developingbroadbasedgeneralmanagerialskills,becausefunctionalmanagershavea
limitedrangeofspecializedexperiences.

DesignbyGeographywithorganizationalgrowth,thisdesigncreatesunitsfocusedonserving
theneedsofaregionorterritory,whichcouldincludeorganizingbycountryorhemisphere.

Advantages:Emphasizeslocaladaptationtomarketand/orsupplierconditions.
Especiallywellsuitedtoretainchains,theU.S.PostalService,publicaccounting
partnerships,urbanpolicedepartments,andfastfoodrestaurants.Fororganizations
engagedincustomerservice,aregionalstructureallowslocalpersonnelandmanagersto
beresponsivetopressuresandopportunitiesintheirregion.Itpromotescompetitiveness
andquality.Geographicdesignalsomakesitpossibletocreatemanyprofitcenterswhere
localgeneralmanagersareresponsibleforbothrevenuesandexpenses.

Disadvantages:Maintainingconsistencyofimageandservicecanbecompromisedbya
geographicdesign.Thedilemmafacedbyheadquartersmanagersishowmuchfreedom
toallowlocalmanagersversushowmuchcontroltoexercisecentrally.Thisdecision
typicallydependsonthesizeandcomplexityoftheterritorytobemanagedlocally.A
multinationalfirmwillgrantgreaterautonomytoitsbusinessunitmanagersinforeign
countriesthannational(orregional)firmswithinasingleregion.

DesignbyProductLineAstructuralgroupingonthebasisoftheuniqueproductorservice
eachactivitycenterprovides.

Advantages:Promotesentrepreneurialbehavior.Productlineexecutivestypicallyhave
profitcenterresponsibilitytoreinforceaccountability.

Disadvantages:Thedifficultyofcoordinatingrelatedactivitiesacrossbusinessunits.
Rivalryislikelytoexistrivalrynotonlyforcustomersforalsoforcorporateresources.
Ifseveralbusinessunitsseparatelydrawonsimilarcoretechnologiesfortheresearchand
designofproducts,theylikelyforgoeconomyofscalesavingsandmaybeslowtoshare
withotherunitsthetechnologicalbreakthroughsdiscoveredinoneunit.Someduplication
offunctionspecializationisalmostinevitable.

DesignbyCustomer/MarketChannelClusteringhumantalentandresourcessothateach
organizationalunitfocusesontheuniquesales/servicerequirementsforeachtypeofcustomer
orchannelofdistributionsuchasthehomemarket,commercialaccounts,orresellers.

Advantages:Usuallyusedincombinationwithoneormoreotherdesigns.Theyserve
welltheneedsofthebusinesswhenproductlinescanbemarketedtoverydistinct
customersegments.Theiradvantageisthatspecialcustomerneedscanfocusquality
servicethroughouteachorganizationalunit.Tocreatehighemployeeinvolvement,
EdwardLawlerbelievesthatcustomerbaseddesignisoptimum.Focusingonthe
customerenablesthecompetitivemarketnothierarchicalcontrolsorsupervisorwhims
toaffirmormodifyemployeebehavior.

Disadvantages:Thechallengeforcompaniesofferingseverallinesofproductstothe
samecustomeristobalanceproductexpertise(abenefitofproductfocuseddesigns)with
thesimplicityofhavingonevoicespeaktothecustomer.Marketfocuseddesignsalso
tendstorequireduplicationofsalesandmarketingstaff,withtwoormoregroupsselling
thesameproductline.

Human Resources
Staffing
Howwillyoustaffthefirm?Wherewillemployeescomefrom?Whatisthecurrentlabormarket
forthetypesofemployeesyouwillneed?Willyouusepersonalitytests?Ifso,forwhat
purpose?

Motivation
Motivational Models
Howwillyoumotivatetheemployees?Whichmotivationalmodelswillyouemployandwhich
employeeneedswillyouattempttosatisfyandfocusontoobtainmotivation?Howwillyou
satisfythoseneeds?Isthisapproachinalignmentwiththerestofyourplan?

MaslowsHierarchyofNeedsafivelevelneedtheoryproposedbyMaslowinwhich
lowerlevelbasicneedsmustbesatisfiedbeforeadvancingtoahigherlevelneed.Oncea
lowerlevelneedhasbeenlargelysatisfied,itsimpactonbehaviordiminishesanda
personcanactivatethenexthigherlevelneed.
o Selfactualizationneedsthepeakofhumanexistencetheabilitytodevelop
latentcapabilitiesandrealizefullestpotential.
o EsteemneedsPsychologicalwellbeing,builtontheperceptionofoneselfas
worthyandrecognizedbyothers.
o LoveorbelongingneedsBeyondexistenceneedsliesthedesirefornurturing,
acceptance,respect,andcaringrelationships.
o SafetyneedsNeedtobefreefromharmordanger,tohaveasecureand
predictablelife.
o PhysicalneedsMostbasicistheneedforrelieffromthirst,hunger,andphysical
drives.

ERGTheoryAlderferssimplifiedcontenttheorythatidentifiesexistence,relatedness,
andgrowthasneedcategories,andacknowledgesmultipleneedsmaybeoperatingatone
timewithoutbeinghierarchicallydetermined.

HerzbergsDualFactorTheoryjobsatisfactionandjobdissatisfactionderivefrom
differentsourcesandsimplyremovingthesourcesofdissatisfactionwillnotcausea
persontobemotivatedtoproducebetterresults.Thetheoryisbasedontwoindependent
needs:hygieneandmotivatorfactors.
o Hygienefactorsarejobcontextfactorssuchasworkingconditionsandbenefits
thattriggerdissatisfactionifinadequate.Suchfactorsarelargelyextrinsic,or
externaltothenatureofthejobitself;thustheycanbethoughtofasjobcontext
factors.Ifadequate,theysimplyproduceneutralfeelingswiththerealizationthat
basicmaintenanceneedsaretakencareof.

o Motivatorfactorsarejobcontentfactorssuchasjobchallenge,responsibility,
opportunityforadvancement,achievementandrecognitionthatwhichoriginate
fromthenatureofthejobitselfandthatprovidefeelingsofsatisfactionwhen
experienced.Suchfactorsareintrinsictothejoboruniquetoeachindividual.

TheoryXandTheoryYFromwhichassumptionaboutpeopleisyourfirmdesigned?
Yourchoicemaybeaffectedbythetypesofemployeesyouexpecttohave.
o TheoryXassumptionsabouthumanbehaviorpostulatesthatpeopleactonlyto
realizetheirbasicneedsandthereforedonotvoluntarilycontributeto
organizationalaims.Managersbelievetheirtaskistodirectandmodifyhuman
behaviortofittheneedsoftheorganization.Managersmustpersuade,reward,
punish,andcontrolthosewhodontnaturallystrivetolearnandgrow.
o TheoryYviewsofhumanbehaviorseespeoplemotivatedbyhigherordergrowth
needsandtheywillthereforeactresponsiblytoaccomplishorganizational
objectives.Managementstaskistoenablepeopletoactontheseneedsandto
growintheirjobs;Tostructuretheworkenvironmentsothatpeoplecanbest
achievetheirhigherorderpersonalgoalsbyaccomplishingorganizational
objectives.

Expectancytheoryisatheoryofmotivationbasedonapersonsbeliefsabouteffort
performanceoutcomerelationships.Thethreevariablesofexpectancytheory:
o ExpectancyTheprobability(from0to1)thatanindividualbelieveshisorher
workeffortdirectlyaffectstheperformanceoutcomeofatask.DoeshowhardI
tryreallyaffectmyperformance?Tobemotivated,youmusthaveapositive
answertothisexpectancyquestion.Positivetaskmotivationbeginswhenyousee
alinkbetweenpersonaleffortandtaskperformance.
o InstrumentalityTheprobability(from0to1)thatanindividualanticipatesthat
anattainedleveloftaskperformancewillhavepersonalconsequences.Are
personalconsequenceslinkedtomyperformance?Toanswerthisinstrumentality
question,youmustbelievethattaskperformanceresults(afirstorderoutcome)
servetoobtainsecondorderpersonalconsequencesorpayoffs.Increased
motivationispossiblewhenyouperceiveapositivepersonalconsequencearising
fromsatisfactorytaskperformance.
o ValenceThevalue(frompositivetonegative)thatapersonassignstothe
personalconsequencesthatfollowworkperformance.DoIvaluethe
consequencesavailabletome?Answerstothisvalencequestiondependonhow
muchyouvalueaparticularexpectedpersonaloutcomeorpayoff.Apersonmust
valuethepayoffiftheexpectancyloopistobepositiveandmotivational.

Job Design
Whattypesofjobswillperformthemainfunctionofthefirm?Howwillthesejobsbestructedin
scopeanddepth?

Taskscopeisthedegreeoftaskvarietybuiltintoajob,typicallycalledhorizontaljobloading
whenjobsareformallydesigned.Ajobnarrowinscopehasfewactivities.

TaskDepth(responsibility)
VerticalJobLoading

Taskdepthaddresseshowmuchverticalresponsibility,individualaccountability,and
autonomousdecisionauthorityisexpectedinajob,oftenthoughtofasverticaljobloadingwhen
formallydesigned.

Enrichedenableanindividualtofeel
independentthinkinganddecidingwhattodo
responsibleforwholetasks.Mostprofessional
when,butprovideemployeeswithlittlevariety
jobsthatrequireanalysisandmanipulationof
intheirdailytasks.Thetechnicianmayhavea
symbolicdataareenrichedtogivethe
universityeducationorneedprofessional
individualresponsibilityfordoingwhateveris
trainingtolearnhowtoperformthejob.The
necessarytogetthejobdone.Thework
workmaybevaluedbytheclient,burresearch
presentschallengesandnovelty,withthe
suggeststhatpeoplefindtheirjobsbecome
incumbentempoweredtosolveproblemsand
meaninglessovertimebecausetheirjobtasks
findinnovativesolutionstoshifting
arerepetitiveandthereislittlegrowth
performancedemands.
Empowermentwillyouutilizesomesortofempowerment?Ifso,what,andwithwho?How
opportunity.
willthisaffecttheirjobs?
RoutineProgrammedtoberepetitiveand
EnlargedProvidesanexpandedvarietyor
narrowinscopeandareoftenrestrictedby
diversityoftasks.Attimesjobsaredeliberately
technology.Peopleinthesesimplisticand
expanded,eitherbyaddingonsequentialtasks
Reward Systems
repetitivejobsareexpectednottodomuch
orbyallowingemployeestorotateamong
independentthinking,justpayattentionto
differentjobs.Decreasingthenumberof
Whattypeofrewardsystemwillyouutilize?
detail.Skillsaremasteredinamatterofhours
separatejobclassificationsortitlesina
ordays;thereisnoexpectationofcareergrowth traditionalindustrytypicallyaffordsemployees
PayforPerformanceUniformsystemsofpaymayseemequitable.Butfroma
unlessonebecomesasupervisoroverthose
enlargedvarietyorachangeofpace.
motivationalperspective,suchnonperformancepaymentsdonotnecessarilyencourage
performingtheseroutinejobs.
High

Technicianoffersgreateropportunitiesfor

stellarperformance.Now,thenormforsystemsofrewardsincorporatemorepayfor
performancefactors.Performancebasedcompensationschemesareconsistentwiththe
Low
High
expectancytheoryofmotivation.Employeescomparerewardsreceivedforperformance
TaskScope(variety)
withwhattheyexpecttoreceive.Theyalsocomparewhattheyreceivewithwhatothers
HorizontalJobLoading
receive(equityfactor).Overallsatisfactionislikelyacompositeofhowtheemployee
perceivesboththeextrinsicandintrinsicrewardsfromthejob.

Pieceworktheclassicperformancebasedrewardsystem,whichisthepracticeof
rewardingperformancebypayingfortheamountproducedconsistentwithquality

standards.Thedifficultiesaretwofold:Oneisevaluatingworkmethodstoarriveatan
equitablestandardandrate.Thesecondconcernisthequalityquantitytradeoff.

MeritPay(BasePlusMerit)Ratherthantiepayonlytooutput,analternativeisto
provideabasesalaryorhourlywageandthenanincentiveorbonusbasedonoutput.The
performancebasedportiondependsonsomemeasurablelevelofoutputoverwhichthe
employeehascontrol(quantity,quality,costsavings).

BonusandProfitSharingPlansCompensationplansthatarebasedontheoverall
performanceoftheenterpriseratherthantheindividualscontribution.Apoolofmoney
isdividedamongeligibleemployeesbasedonsomeperformanceevaluationorrating
system.Theobjectiveofmeritplanssuchasprofitsharing,bonuses,andstockoptionsis
tolinkeveryonesfatetooverallperformance,reinforcingcorporateculturesthat
emphasizegroupresultsoverindividualperformance.

GainsharingPlansApayforperformancesystemthatsharesfinancialrewardsamong
allemployeesbasedonperformanceimprovementsfortheentirebusinessunit.

RewardsasaCafeteriaofBenefitsAllowingpeopletoselectfromaportfolioormenu
ofbenefits.

ConsequencesofIncentivesandRewardsExceptincaseswhereperformancecanbe
easilymeasured,employeesoftenbelievethatthepersonevaluatingthemreliestoomuch
onsubjectivejudgment(theyquestionthefairnessoftheplan).Whilegoals,incentives,
andrewardscanenergizeandfocusbehaviorinsomecountries,therearepotential
pitfallsinusingthemasmotivationalsystems:Qualitymaybetradedoffforquantityand
viceversa.

Communication
Whatformalcommunicationchannelswillyouemploytofacilitatecommunicationupwards,
downwards,andhorizontally?
DoyouplanonusinganyconceptsofOpenBookManagement?Ifso,how?Whatwillyou
share?

Financial Plan
Discusshowmuchcapitalwillberequiredtostartupthebusiness.Describeyoursourceofstart
upcapital.
Whatareyourestimatedfiveyearrevenues,expensesandprofits?(nodetailneeded).
Whenwillyoubreakeven?