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Business Plan Outline
• Executive Summary
• Company Description
– Including product/service
& technology/core
knowledge
• Industry Analysis & Trends
• Target Market
• Competition
• Strategy/Business Model
• Marketing and Sales Plan
• Production/Operations Plan
Technology Plan
Management & Organization
Social Responsibility
Development & Milestones
Financials
Including Capital
Requirements & Financial
Statements
Appendix
http://www.fox.temple.edu/cms_research/institutes-and-centers/innovation-entrepreneurship-institute/
http://www.fox.temple.edu/cms/wp-content/uploads/2012/03/2011BYOBBTemplate.pdf
Write a Business Plan…In No Time by Frank Fiore
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Opening Discussion
• Do you really know what makes a product or service unique in a
market? Do you think customers know the difference?
• What market would you like to compete in? How well do you know
that market? Who are the key players in that market?
• Do you know all the possible places you might get your raw
materials, supplies, data, etc.? Do you know who or where your
competition might get theirs from and at what cost, time or
quality?
• Do you have a roadmap for products, services, features, etc.? If so,
what justification(s) did you use to generate the list? How does this
compare with others in that market or industry?
• Does the Internet change anything in regard to these questions?
• Pick a business… articulate who their competition is and what you
think they are doing to compete. Do you think they could do
better? If so, how? Why? Why not?
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Strategy Funnel
This has been in Fox decks for a while. I stared at this for a long
time and didn’t understand it for a long time. Now I get it
Environmental Trends
Customer &
Benefits
Market
Industry
Structure
Segment, Size
Channels
Competitive
Space
Perceptual
Space
Competitive
Dynamics
Value
Proposition
Strategic
Positioning
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Industry
Why Strategy Funnel
Competitive Analysis
COMPETITION
INDUSTRY
Industry
Structure
Competitive
Space
Competitive
Dynamics
Define
Understand
Address
Customer
Segment, Size,
Channel
Perceptual
Space
Value
Proposition
Who
Where
How
What &
How Much
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Strategic
Position
POSITION
Develop
Market vs. Industry
INDUSTRY
• MARKET: the area of economic activity in
which buyers and sellers come together and
the forces of supply and demand affect prices
• INDUSTRY: a distinct group of productive or
profit-making enterprises
Discussion: Compare / contrast
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Market Structures
INDUSTRY
Seller
Market
Structure
Entry Barriers
Buyer
Number
Entry Barriers
Number
Perfect
No
Many
No
Many
Monopolistic
No
Many
No
Many
Oligopoly
Yes
Few
No
Many
Oligopsony
No
Many
Yes
Few
Monopoly
Yes
One
No
Many
Monopsony
No
Many
Yes
One
Why are we talking about this?
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Porter’s Generic Value Chain
INDUSTRY
Primary Activities
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
& Sales
Support Activities
Firm Infrastructure
Human Resource Management
Technology Development
Procurement
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Service
More Simply…
INDUSTRY
Suppliers
Company
Customers
Improving the chain…
Sample Inputs:
Technology / Purchasing / Product
People / Management
Infrastructure / Logistics / Distribution
Service
•Can your suppliers add value?
•Can you add value to supply?
• If so, where?
•Can you add more?
• If so, where?
•Will your customers notice?
Does your product or service add value sufficient to justify the margin?
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From Value Chains to Markets
INDUSTRY
Suppliers
Company
Customers
Value
• As underlying processes become more complex, supply chains
often evolve into chains of firms that interact through
negotiated transactions or markets - rather than chains of
functions managed internally
• Note how the margin divides (and multiplies)
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Markets & Industries
INDUSTRY
• Each cluster of competitors is an industry, industry segment or
strategic group
• Supply chains and industries evolve over time – as do their
rules, cultures, technologies and sources of value
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Book Selling Commerce Chain
INDUSTRY
Promotions
Packager
Author
Agent
Sales Groups
Publisher
Wholesaler
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Retailer
Book Selling Commerce Chain
INDUSTRY
$0.375
Promotions
$0.45
$0.375
Packager
Author
$0.50
Agent
$0.05
Sales Groups
Publisher
Wholesaler
$3.50
$1.00
Retailer
$5.50
$12.00
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Book Selling Commerce Chain
INDUSTRY
Packager
Author
Agent
Sales Groups
Publisher
Wholesaler
Retailer
Direct Marketing
Harper & Row
Barnes & Nobel
Ingram
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Industry Structure
INDUSTRY
• Industries are clusters of firms that serve the same function
in a commerce chain. These sets of firms operate in the
same space and compete to control enough space to
capture value.
• Industries all have structure, history, trajectories and
competitive dynamics that constrain entry options – and
are shaped in part by macro-environmental conditions.
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Stakeholder Analysis
INDUSTRY
• Stakeholder
– Any person or organization that is impacted
• Analysis
– Who/what is impacted and by how much
• Who
– Customers, suppliers, owners, workers, community groups,
government
• What
– Finance, time, product, supply, margin, market share
• When
– How often is the impact felt and for how long
• Response
– What can/should/will they do about it
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Exercise
Draw the chain, Identify your industry…
INDUSTRY
COMPETITION
• Who sells what to whom?
– Ask industry informants, look at customer and supplier
lists, read trade journals, search the Internet
• Draw what you see
• Circle your industry
– Be sure to include a functional cluster of firms
• Identify sources of competition
– Direct competitors from within the industry
– Indirect competitors from related supply chains or industry
• Note the supply market
• Note the demand market
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Porter’s Rivalry
COMPETITION
• How are you
positioned as
compared to:
New
Entrants
Suppliers
Industry
Rivalry
Buyers
Substitutes
– Possible new
entrants
– Existing suppliers
– Likely substitutes for
your product
– Buyers that (don’t)
know what they
want
• How will customers
react to changes?
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Rivalry Example: Physical Bookstores
COMPETITION
• New Entry is local
– Store locations
– Warehousing costs
• Suppliers can be locked up
– Exclusivity arrangements
– Direct from authors or printers
• Substitutes abound
What has happened to
this industry? Why?
What would you have
done?
– Amazon
– Electronic books
– Library
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New Entrants
COMPETITION
• Industries that are hard to enter are cozy for
insiders, but also often attractive to outsiders
longing for the value being shared by so few.
• Barriers to entry make it harder for newcomers to
play.
–
–
–
–
–
Fierce reaction by incumbents (e.g. lawsuits over IP)
Capital (e.g. building a chip foundry)
Economies of scale (e.g. building a sales network)
Existing customer loyalty (e.g. Coke)
Application stickiness (e.g. learning curve or cost)
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Buyer Power
COMPETITION
• Some attractive industries feature disorganized,
small customers, with little purchasing and
negotiating power
– How has the Internet changed this?
– What about a niche?
• Buyers gain power when:
– They are large, relative to the seller (e.g. superstores)
– They are organized (e.g., a coop)
– It is easy to switch to another supplier (e.g., when
products are standard… try comparing mattresses or house brands)
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Substitutes
COMPETITION
• Number
– Industries with few substitute products are more attractive
than those with many substitutes
• Opportunity
– Effective substitutes can often provide opportunities for
upstarts
• Threat
– Just the threat has impact…weakest of the forces – except
during times of high demand or fast change, when
interlopers may see opportunities
• Industry killers
– Netflix to video store, Amazon to book stores
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Supplier Power
COMPETITION
• Attractive industries feature small and
disorganized suppliers
• Suppliers gain power when:
– They are large, relative to the buyers. (e.g. Alcoa).
– It is difficult for buyers to switch to competing
suppliers. (e.g. custom products, proprietary
information)
– They pose a credible threat of integrating forward
and taking over the buyers’ functions (e.g. direct
sale or drop ship)
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Rivalry
COMPETITION
• Attractive industries are controlled by monopolies or
gentlemanly oligopolies.
– On the other hand, the more the players, and the more
equally matched, the closer the industry approximates
“perfect competition” and minimum profits.
• Rivalry is reduced when:
–
–
–
–
–
Power is concentrated
Competitors can truly differentiate.
It is easy to exit.
Demand is stable and predictable.
Regulation takes the edge off.
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STEEP Analysis
COMPETITION
Social
• How do these forces
effect your business?
• Understand your
operating environment
Operating
Environment
Technical
– Community, local
politics, unions
Organization
Economic
• How is your
organization positioned
to handle this
Ecologic
– Structure,
competencies, finance
Political
• How do you compare
with your competition?
Also:
PEST: Political, Economic, Social, Technology
SLEPT: Social, Legal, Economic, Political, Technology
STEER: Social, Technology, Economic, Ecologic, Regulatory
STEEPLE: Social, Technology, Economic, Environmental, Political, Legal, Ethical
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Profit Pools: Retail Bookselling
COMPETITION
What do we learn?
•
•
•
Author
Paper
Operating Margin
40%
Where would you like to compete?
Who makes the most?
What else do we need to know?
Distributor
* completely made up #’s / %’s
Retailer
Publisher
Share of Industry Revenue
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100%
Competitive Analysis
POSITION
• Competitors are the firms that compete to serve
the same customers in the same marketplace.
• Competitors can compete directly (cars) or
indirectly (bicycles, mass transit).
• Competition happens on two levels:
– Product or service competition
• Competition at the level of the value proposition and
marketing (covered in the first workshop)
– Company competition
• Competition at the level of company strategy
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Company Competitive Analysis
POSITION
• How does each firm compete
– Ex. quality, service, price, features
• How effective is each
– Ex. feature list, comparative quality
Think back to
the value
chain!
• How strong or powerful
– What resources do they control? Are other’s able to
compete? (e.g. market structure, exclusivity)
• How aggressive
– How hard do they compete? What’s their trajectory?
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Competitors Table
Organizes competitors using crucial dimensions of
competition, plus effectiveness, power, trajectory, likely
changes...
Market
Share
Quality
Cost
Effectiveness
Power
Competitor 1
15%
H
H
M
M
Competitor 2
25%
L
L
H
H
Competitor 3
5%
M
M
L
L
Competitor 4
20%
L
L
H
H
Competitor 5
15%
M
M
H
L
What other variables might you use?
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Aggressiveness
very
slipping
POSITION
Competitor Response Profile
POSITION
Drivers
Abilities
Future Goals
Vision statement
Managerial
behavior
Current Strategy
Price, quality,
distribution,
resources
Critical
Assumptions
Key beliefs
Blind spots
Response Profile
Satisfied or ambitious?
Likely next moves?
Vulnerabilities?
Sensitive spots?
(What will provoke
retaliation?)
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Capabilities
Strengths &
weaknesses
Strategic Groups
Groups of firms that pursue similar strategies with
similar resources
Price
Upscale Chains
Diners/Family Style
Fast Food
Selection
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POSITION
Gartner’s Magic Quadrant
POSITION
Leaders
Execution
Challengers
Niche Players
Visionaries
Other Possible Quadrants…
•Satisfaction vs. Importance
•Urgent vs. Importance
•Quality vs. Cost
•Risk vs. Value
Vision
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GARTNER MAGIC QUADRANT
POSITION
• Gartner rates vendors upon two criteria: completeness of
vision and ability to execute.
– Leaders score higher on both criteria; the ability to execute and
completeness of vision. Typically larger industry developed
businesses with vision and potential for expansion.
– Challengers score higher the ability to execute and lower on the
completeness of vision. Typically larger, settled businesses with
minimal future plans for that industry.
– Visionaries score lower on the ability to execute and higher on
the completeness of vision. Typically smaller companies that are
unloading their planned potential.
– Niche players score lower on both criteria: the ability to execute
and completeness of vision. Typically new additions to the
Magic Quadrant, or market fledglings.
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Dynamic Competitor Analysis
POSITION
• While useful, the competitor table and the strategic
groups are essentially static.
• It is critical to make guesses about the future -especially about when trends might stop and the
ground might shift, and when new competitors
might rise, or existing ones die.
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Exercise: Competitor Analysis
POSITION
• Make a competitors table, including:
–
–
–
–
–
market share
how they stack up on crucial dimensions of value
effectiveness (star the most competent ones)
resources (underline richest ones)
aggressiveness (arrows to indicate trajectories)
• Note any natural groupings
• Note any likely changes
– New entrants, mergers, exits?
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Review
• Industry
– How is it structured, where is the value created
and at what margins?
• Competition
– Who are they, what value to their bring and how
strong is the competition?
• Position
– Where do you fit and on what criteria will you
compete?
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BIBLIOGRAPHY
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Andersen Business Consulting interview, Summer 2001.
Richard D’Aveni, Hypercompetition (Free Press: 1994).
Craig Fleisher & Babette Bensoussan, Strategic & Competitive Analysis: Methods & Techniques
for Analyzing Business Competition (Upper Saddle River, NJ: Prentice Hall, 2003)
Jay Galbraith, “Strategy & Organization Planning” in Human Resource Management (SpringSummer 1983) for Supply Chain.
Pankaj Ghemawat, Strategy and the Business Landscape (Prentice Hall, 2001).
Robert Hamilton lecture notes, 1998.
Robert Hamilton, E. Eskin, M. Michael, "Assessing Competitors: The Gap between Strategic Intent
and Core Capability", International Journal of Strategic Management-Long Range Planning,
Vol. 31, No. 3, pp. 406-417, 1998
TL Hill lecture notes, 1999, 2001, 2002.
J. D. Hunger & T.L. Wheelan, Essentials of Strategic Management (Prentice Hall, 2001).
Philip Kotler, Marketing Management, 9th Edition, (Prentice Hall, 1997).
Sharon Oster, Modern Competitive Analysis, 2nd Edition (Oxford University Press, 1994), for Porter
and other economics-based strategy.
Henry Mintzberg & James Brian Quinn, Readings in the Strategy Process, 3rd Edition (Prentice Hall,
1998).
Michael Porter, Competitive Advantage (Free Press, 1985).
Michael Porter, “What is Strategy?” Harvard Business Review (November-December 1996).
Wikipedia, Gartner Magic Quadrants, Market Definitions February 2011
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