Business Plan Proposal
for
Business Name
Participants’ Names
Date
MGT 300 – Section x
Executive Summary
One to two page executive summary.
Overview
Mission
The mission is an organization’s fundamental purpose, articulated to define the nature of the
business and unify human and other resources. A well-framed mission provides a sense of
purpose and establishes parameters that focus effort and resources. It answers the questions why
do we exist and what do we do? Who are we and where are we headed? To be useful a mission
statement should:

Articulate the vision that defines the business, what it is, what it is not, and what it should
be in the future.

Communicate to internal members and external constituencies a clear sense of meaning
and direction that is motivating and energizing

Convey which customer wants and needs it will seek to satisfy, and the target markets it
will serve

Identify the value-adding functions it will perform, realizing its specific enabling actions
will change over time while the purpose endures.

Be of bumper-sticker length – brief enough to be incorporated into corporate
communications and easily remembered
Key Stakeholders
Stakeholders are members of identifiable clusters of people who have economic and/or social
interests in the behaviors and performance of the organization. Who are the key stakeholders and
how will their interests be managed and served by the firm?
Vision
A vision is a desired future image of the organization and its processes and products that
integrates current realities and expected future conditions within a specific time frame.
Three elements are fundamental to a comprehensive, meaningful vision:

A statement of purpose – it should inspire and motivate insiders

A tangible goal – framing a clear, specific and compelling goal that focuses people’s
efforts. A well-framed goal has a target and a time frame for its attainment.

An image of results – the image should paint a compelling picture using crisp language
Culture and Values
Organizational culture is the fundamental assumptions people share about an organization’s
values, beliefs, norms, symbols, language, rituals, and myths – all the expressive elements that
give meaning to organizational membership and are accepted as guides to behavior.
Values are the enduring beliefs and expectations that a person or group hold to be important
guides to behavior.
The top five organizational values are:
1.
2.
3.
4.
5.
Provide excellent service to customers.
Operate in a highly ethical manner at all times.
Provide products and/or services of excellent quality.
Consistently make a fair and reasonable profit (not maximize profits).
Staff the organization with high-caliber employees from top to bottom.
Describe the type of culture and values you wish to have in the firm. How will you help to create
and nurture that culture?
Competition and Strategy
Competitive Environment
Description of the competitive environment of the company.
Five Forces Analysis
State of Industry Competition (Rivalry)
Describe the state of industry competition.
Threat of New Entrants (Barriers to Entry)
Describe the threat of new entrants.
Threat of Substitute Products
Describe the threat of substitute products.
Bargaining Power of Suppliers
Describe the bargaining power of suppliers.
Bargaining Power of Buyers
Describe the bargaining power of buyers (customers).
SWOT Analysis
Strengths
Internal strengths.
Weaknesses
Internal weaknesses.
Opportunities
External opportunities.
Threats
External threats.
Competitive Strategy
Competitive advantage occurs whenever a business is able to sustain an edge over its rivals by
attracting customers and defending itself against competitive forces.
To achieve a strategic competitive advantage, all enterprises build their strategies around a core
of physical assets, business processes, and the skills and talents of its people. Core capabilities
provide the keys to long-term success by enabling the firm to combine assets and skills to do
certain things better than competitors. How will your firm achieve competitive advantage?
Select your company’s approach to strategy:
A low-cost leadership strategy – Appealing to a broad spectrum of customers based on being the
overall low cost provider of a product or service.
A broad differentiation strategy – Seeking to differentiate the company’s product offering from
rivals’ in ways that will appeal to a broad spectrum of buyers.
A best-cost provider strategy – Giving customers more value for the money by combining an
emphasis on low cost with an emphasis on upscale differentiation; the target is to have the best
(lowest) costs and prices relative to producers of products with comparable quality and features.
A focused or market niche strategy based on lower cost – Concentrating on a narrow buyer
segment and outcompeting rivals by serving niche members at a lower cost than rivals.
A focused or market niche strategy based on differentiation – Concentrating on a narrow buyer
segment and outcompeting rivals by offering niche members a customized product or service
that meets their tastes and requirements better than rivals’ offering.
Type of Competitive Advantage Being Pursued
A Broad
CrossSection of
Buyers
A Narrow
Buyer
Segment
Market Target
Lower Cost
Differentiation
Overall Low-Cost
Broad
Leadership
Differentiation
Strategy
Strategy
Best-Cost
Provider
Strategy
Focused
Focused LowDifferentiation
Cost Strategy
Strategy
How does your firm’s strategy compare to your competitor’s strategies?
Objectives / Balanced Scorecard
Objectives convert visionary intentions into specific performance targets that can be measured at
designated points in time. Benchmarking can be used to compare a unit’s performance to
outcomes achieved in other outstanding organizations.
A Balanced Scorecard is a management tool that encapsulates the strategy of the business and
provides feedback on the success of the strategy in four perspectives: Financial, Customer,
Internal Business Process, and Corporate Learning and Growth. Properly constructed, the
Balanced Scorecard identifies and communicates the cause and effect relationships between the
strategic objectives, the outcome measures (lagging indicators) and the performance drivers
(leading indicators). It also makes clear the assumptions behind the strategy and the cause and
effect relationships and enables the continual validation of these assumptions. A good
benchmark is to keep it simple and have not more than 3-5 measures per perspective.
Financial Objectives
Example measures: sales growth rate, % revenue from new products, cross-selling,
revenue/employee, indirect expenses % of sales, investment % of sales, R&D % of sales, return
on investment, economic value added, profitability, revenue growth/mix, cost reduction.
Customer Objectives
Example measures: Product attributes (quality, price, time), company image and reputation,
customer relationship, strategic relationships, market share, customer acquisition, customer
retention, customer profitability, customer satisfaction.
Business Process Objectives
Example measures: Yields, cycle time, time to market, design modifications, break-even time,
product development, sales from new products, operations (time, cost, quality), service (time,
cost, quality).
Learning & Growth (Employee) Objectives
Example measures: Employee capabilities, employee suggestions, goals alignment, employee
satisfaction, employee retention, employee productivity.
Marketing Plan
Your product should be derived from a market need. What market need do you see? Discuss the
elements of your marketing mix to fill this need:
Product
Description of your product.
Price
What is your pricing strategy?
Place
Where will customers find your product?
Promotion
How will you promote your product?
Organization
How will you organize the firm? What organizational structure will you use? Keep in mind that
your organizational structure should be in alignment with your stated mission, vision, culture,
strategy and objectives.
Keep in mind the fundamental trade-offs for balancing organizational design.
Draw an organizational chart to depict the different organizational units in the firm. What span of
control will your firm employ? Will you use self-managed teams? If so, does the span of control
reflect this? What functions will the teams perform and what will the role of managers be? Will
you use cross-functional teams? If so, when and for what?
The basic organizational structures are:
Design by Function – grouping people into departments or subunits based on similar skills,
expertise, and functions performed – such as product design, production, and marketing.

Advantages: Works best when a company has a single line of business and/or is relatively
small. Ideally suited to encourage specialization and prompt people to keep up with the
latest technical developments in their specialty field. If departmental tasks are relatively
independent, a high level of functional efficiency is possible. Because of departmental
specialization, the functional form relies on pushing decisions to a higher level of
management for control and coordination, which may not be an efficient use of
managerial time.

Disadvantages: Extreme specialization creates tunnel vision. People tend to perceive
multifunctional problems from the vantage point of their narrow area of expertise. This
leads to conflict and turf protecting, which can strain the process of communication and
coordination in the absence of a decisive leader. Decisions that are complex, or span two
or more functions tend to get pushed to the top for resolution, slowing decision
responsiveness as the organization becomes larger and more layered. Maintaining quality
becomes difficult, since few people genuinely feel responsible for customer satisfaction
or the acceptance of decisions. A functional design also complicates the process of
developing broad-based general managerial skills, because functional managers have a
limited range of specialized experiences.
Design by Geography – with organizational growth, this design creates units focused on serving
the needs of a region or territory, which could include organizing by country or hemisphere.

Advantages: Emphasizes local adaptation to market and/or supplier conditions.
Especially well suited to retain chains, the U.S. Postal Service, public accounting
partnerships, urban police departments, and fast-food restaurants. For organizations
engaged in customer service, a regional structure allows local personnel and managers to
be responsive to pressures and opportunities in their region. It promotes competitiveness
and quality. Geographic design also makes it possible to create many profit centers where
local general managers are responsible for both revenues and expenses.

Disadvantages: Maintaining consistency of image and service can be compromised by a
geographic design. The dilemma faced by headquarters managers is how much freedom
to allow local managers versus how much control to exercise centrally. This decision
typically depends on the size and complexity of the territory to be managed locally. A
multi-national firm will grant greater autonomy to its business unit managers in foreign
countries than national (or regional) firms within a single region.
Design by Product Line – A structural grouping on the basis of the unique product or service
each activity center provides.

Advantages: Promotes entrepreneurial behavior. Product-line executives typically have
profit center responsibility to reinforce accountability.

Disadvantages: The difficulty of coordinating related activities across business units.
Rivalry is likely to exist – rivalry not only for customers for also for corporate resources.
If several business units separately draw on similar core technologies for the research and
design of products, they likely forgo economy of scale savings and may be slow to share
with other units the technological breakthroughs discovered in one unit. Some duplication
of function specialization is almost inevitable.
Design by Customer/Market Channel – Clustering human talent and resources so that each
organizational unit focuses on the unique sales/service requirements for each type of customer
or channel of distribution – such as the home market, commercial accounts, or resellers.

Advantages: Usually used in combination with one or more other designs. They serve
well the needs of the business when product lines can be marketed to very distinct
customer segments. Their advantage is that special customer needs can focus quality
service throughout each organizational unit. To create high employee involvement,
Edward Lawler believes that customer-based design is optimum. Focusing on the
customer enables the competitive market – not hierarchical controls or supervisor whims
– to affirm or modify employee behavior.

Disadvantages: The challenge for companies offering several lines of products to the
same customer is to balance product expertise (a benefit of product-focused designs) with
the simplicity of having one voice speak to the customer. Market focused designs also
tends to require duplication of sales and marketing staff, with two or more groups selling
the same product line.
Human Resources
Staffing
How will you staff the firm? Where will employees come from? What is the current labor market
for the types of employees you will need? Will you use personality tests? If so, for what
purpose?
Motivation
Motivational Models
How will you motivate the employees? Which motivational models will you employ and which
employee needs will you attempt to satisfy and focus on to obtain motivation? How will you
satisfy those needs? Is this approach in alignment with the rest of your plan?

Maslow’s Hierarchy of Needs - a five-level need theory proposed by Maslow in which
lower-level basic needs must be satisfied before advancing to a higher-level need. Once a
lower-level need has been largely satisfied, its impact on behavior diminishes and a
person can activate the next higher-level need.
o Self-actualization needs – the peak of human existence – the ability to develop
latent capabilities and realize fullest potential.
o Esteem needs – Psychological well-being, built on the perception of oneself as
worthy and recognized by others.
o Love or belonging needs – Beyond existence needs lies the desire for nurturing,
acceptance, respect, and caring relationships.
o Safety needs – Need to be free from harm or danger, to have a secure and
predictable life.
o Physical needs – Most basic is the need for relief from thirst, hunger, and physical
drives.

ERG Theory – Alderfer’s simplified content theory that identifies existence, relatedness,
and growth as need categories, and acknowledges multiple needs may be operating at one
time without being hierarchically determined.

Herzberg’s Dual-Factor Theory – job satisfaction and job dissatisfaction derive from
different sources and simply removing the sources of dissatisfaction will not cause a
person to be motivated to produce better results. The theory is based on two independent
needs: hygiene and motivator factors.
o Hygiene factors are job context factors such as working conditions and benefits
that trigger dissatisfaction if inadequate. Such factors are largely extrinsic, or
external to the nature of the job itself; thus they can be thought of as job context
factors. If adequate, they simply produce neutral feelings with the realization that
basic maintenance needs are taken care of.
o Motivator factors are job content factors such as job challenge, responsibility,
opportunity for advancement, achievement and recognition that which originate
from the nature of the job itself and that provide feelings of satisfaction when
experienced. Such factors are intrinsic to the job or unique to each individual.

Theory X and Theory Y – From which assumption about people is your firm designed?
Your choice may be affected by the types of employees you expect to have.
o Theory X assumptions about human behavior postulates that people act only to
realize their basic needs and therefore do not voluntarily contribute to
organizational aims. Managers believe their task is to direct and modify human
behavior to fit the needs of the organization. Managers must persuade, reward,
punish, and control those who don’t naturally strive to learn and grow.
o Theory Y views of human behavior sees people motivated by higher-order growth
needs and they will therefore act responsibly to accomplish organizational
objectives. Management’s task is to enable people to act on these needs and to
grow in their jobs; To structure the work environment so that people can best
achieve their higher-order personal goals by accomplishing organizational
objectives.

Expectancy theory is a theory of motivation based on a person’s beliefs about effortperformance-outcome relationships. The three variables of expectancy theory:
o Expectancy - The probability (from 0 to 1) that an individual believes his or her
work effort directly affects the performance outcome of a task. Does how hard I
try really affect my performance? To be motivated, you must have a positive
answer to this expectancy question. Positive task motivation begins when you see
a link between personal effort and task performance.
o Instrumentality - The probability (from 0 to 1) that an individual anticipates that
an attained level of task performance will have personal consequences. Are
personal consequences linked to my performance? To answer this instrumentality
question, you must believe that task performance results (a first order outcome)
serve to obtain second-order personal consequences or payoffs. Increased
motivation is possible when you perceive a positive personal consequence arising
from satisfactory task performance.
o Valence - The value (from positive to negative) that a person assigns to the
personal consequences that follow work performance. Do I value the
consequences available to me? Answers to this valence question depend on how
much you value a particular expected personal outcome or payoff. A person must
value the payoff if the expectancy loop is to be positive and motivational.
Job Design
What types of jobs will perform the main function of the firm? How will these jobs be structed in
scope and depth?
Task scope is the degree of task variety built into a job, typically called horizontal job loading
when jobs are formally designed. A job narrow in scope has few activities.
Task depth addresses how much vertical responsibility, individual accountability, and
autonomous decision authority is expected in a job, often thought of as vertical job loading when
formally designed.
Task Depth (responsibility)
Vertical Job Loading
High
Technician – offers greater opportunities for
Enriched – enable an individual to feel
independent thinking and deciding what to do
when, but provide employees with little variety
in their daily tasks. The technician may have a
university education or need professional
training to learn how to perform the job. The
work may be valued by the client, bur research
suggests that people find their jobs become
meaningless over time because their job tasks
are repetitive and there is little growth
opportunity.
Routine – Programmed to be repetitive and
narrow in scope and are often restricted by
technology. People in these simplistic and
repetitive jobs are expected not to do much
independent thinking, just pay attention to
detail. Skills are mastered in a matter of hours
or days; there is no expectation of career
growth unless one becomes a supervisor over
those performing these routine jobs.
responsible for whole tasks. Most professional
jobs that require analysis and manipulation of
symbolic data are enriched to give the
individual responsibility for doing whatever is
necessary to get the job done. The work
presents challenges and novelty, with the
incumbent empowered to solve problems and
find innovative solutions to shifting
performance demands.
Low
Enlarged – Provides an expanded variety or
diversity of tasks. At times jobs are deliberately
expanded, either by adding on sequential tasks
or by allowing employees to rotate among
different jobs. Decreasing the number of
separate job classifications or titles in a
traditional industry typically affords employees
enlarged variety or a change of pace.
Task Scope (variety)
Horizontal Job Loading
High
Empowerment – will you utilize some sort of empowerment? If so, what, and with who? How
will this affect their jobs?
Reward Systems
What type of reward system will you utilize?

Pay for Performance – Uniform systems of pay may seem equitable. But from a
motivational perspective, such nonperformance payments do not necessarily encourage
stellar performance. Now, the norm for systems of rewards incorporate more pay-forperformance factors. Performance-based compensation schemes are consistent with the
expectancy theory of motivation. Employees compare rewards received for performance
with what they expect to receive. They also compare what they receive with what others
receive (equity factor). Overall satisfaction is likely a composite of how the employee
perceives both the extrinsic and intrinsic rewards from the job.

Piecework – the classic performance-based reward system, which is the practice of
rewarding performance by paying for the amount produced consistent with quality
standards. The difficulties are twofold: One is evaluating work methods to arrive at an
equitable standard and rate. The second concern is the quality-quantity trade-off.

Merit Pay (Base Plus Merit) – Rather than tie pay only to output, an alternative is to
provide a base salary or hourly wage and then an incentive or bonus based on output. The
performance-based portion depends on some measurable level of output over which the
employee has control (quantity, quality, cost savings).

Bonus and Profit-Sharing Plans – Compensation plans that are based on the overall
performance of the enterprise rather than the individual’s contribution. A pool of money
is divided among eligible employees based on some performance evaluation or rating
system. The objective of merit plans such as profit sharing, bonuses, and stock options is
to link everyone’s fate to overall performance, reinforcing corporate cultures that
emphasize group results over individual performance.

Gainsharing Plans – A pay-for-performance system that shares financial rewards among
all employees based on performance improvements for the entire business unit.

Rewards as a Cafeteria of Benefits – Allowing people to select from a portfolio or menu
of benefits.

Consequences of Incentives and Rewards – Except in cases where performance can be
easily measured, employees often believe that the person evaluating them relies too much
on subjective judgment (they question the fairness of the plan). While goals, incentives,
and rewards can energize and focus behavior in some countries, there are potential
pitfalls in using them as motivational systems: Quality may be traded off for quantity and
vice versa.
Communication
What formal communication channels will you employ to facilitate communication upwards,
downwards, and horizontally?
Do you plan on using any concepts of Open Book Management? If so, how? What will you
share?
Financial Plan
Discuss how much capital will be required to start up the business. Describe your source of start
up capital.
What are your estimated five-year revenues, expenses and profits? (no detail needed).
When will you break-even?