Analysing a competitor by malj


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Developing a business idea
0(origin). (The idea/an enterprise)
Name: Choose the name carefully, simple, descriptive name is memorable, it is your identity and useful branding tool, don’t
be another NISSAN Qashqai.

Legal STRUCTURE business type (form):
Sole, partnership, limited company (private/plc)
Number of employees: State the number of employees.
Annual turnover: Estimate your annual turnover
these two factors will determine what your enterprise is, that is, micro, small, medium or large.

Your Products/services:
‘’If you can’t describe what you are doing as a process you don’t know what you are doing’’.
                              –W. Edward Deming’’.
Describe what is it you do, what product or service you are offering the consumers?
Its features and benefits.
USP (Unique Selling Proposition)?
Why is it better than competitors?
Intellectual property
is your product protected from intellectual crimes? It is vital especially if your product or service is in creativity or new
knowledge category.

The first thing you must do before you start trading is
Market research
the process of systematically gathering, recording and analyzing data and information about consumers, competitors and
the market of your products/services. Its uses include to help create a business plan, launch a new product or service,
fine tune existing products and services, and expand into new markets. Market research can be used to determine which
portion of the population (demographic profile) will purchase a product/service, based on variables like age, gender,
location and income level.
Demographic profile is the most important tool for marketing. The following subheadings have been arranged in a
chronological sequence, one must be fulfilled before the other is tackled.

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Your business (name) and its consumers
I used consumers instead of customers as it is an inclusive term, customers strictly refers to the buyers of goods or services,
the individuals who make purchasing decisions.
You must group your Customers by type, quantity and size, it will assist you in analysing them, determine whether your
business is B2C or B2B.
  individuals       households         small         medium             large

Individuals and Households as consumers (Business to Consumer – B2C)
    Which consumer demographic group are you targeting (market segment)?
    REMEMBER goods/services are produced to meet the need of specific consumer groups.
    How much of your product or service is demanded for your target market segment?
    How is the market? Emerging, growing, mature (saturated) or declining?
    (Use industry profiles to determine the nature of the industry your enterprise is in.)
    How much is their spending power (income/credit)?
    How are their consumption patterns?
    What price are your customers think is reasonable and prepared to pay?

Firms as consumers (Business to Business – B2B)
It is paramount to understand the difference between what firms buy to consume, convert and what they buy to sell.
Firms have similarities in terms of capital and employees, however they differ in sizes.
You can not have a one size fits all approach, every firm size must be treated as an individual demography with individual

    Your business (name)                    Business plan                                       2
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Your business (name) and its inputs (resources/factors of production)
Demand of your products or services will determine the demand for factors of production.
Location or positioning of resources is a matter of logistics.

built (premises) and non built will depend on your enterprise needs.
Ways to acquire
renting, leasing, buying outright

Labour (personnel/human resources)
Division of labour/organisation structure (who does what) will determine
Competences (knowledge, skills and experience, and behaviour) needed for an enterprise’s specific duties. If you expect to be running the business
entirely yourself, just include your C.V.

Capital (finance)
Initial Capital Outlay
Corporate expenditure
Capital expenditure
Money needed for acquisition of (fixed assets)
      Property, Plant and Equipment (P,P &E) and
      Software, Domain names e.t.c.
You must carefully identify the need at present and future.

Ways to acquire
   Buying outright new, reconditioned or used
Other ways
   Hire purchase, rent, lease, contract hire

Revenue (working capital) expenditure
Money needed for day to day activities, all expenditures that lasts a trading period, that is, 12 months.
Fixed (capacity) costs
Semi variable costs
     Utility bills
Variable costs
     Professional fees
     Promotion (advertising, leaflets, flyers, business cards e.t.c)

How will it be generated? Sale of (stock inventory) or service provision, is cash only, cash and credit, credit only?

Financial requirements
Sources of finance
     Own funds
Short term
the need will depend on your cash conversion cycles and frequency of purchase/replacement rate.
     Bank Overdrafts, trade credit, invoice discounting, debt factoring
     Long term
     Loan capital, share capital
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Your business (name) and its suppliers
Number of suppliers:
small, medium and large, where are they?
You must group your suppliers by size, name, it will assist you in analysing the competitive environment.
 small            medium            large

The Supply chain
(an enterprise, its suppliers, distribution channels and customers)
How much, when to buy?

Factors to be considered
    Materials management
    Packaging (Primary, Secondary, Tertiary)
    Waste management

Storage and distribution
Materials handling
Tangible goods
stockyards, warehouse, Pallets, crates, boxes

Intangible goods Storage
DVDs, HDDs, Flash memories

Distribution (direct/indirect)
    Distribution (marketing) channels
    Reverse logistics/returns management.

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Your enterprise (name) and its competitor’s
small, medium, or large enterprises?
You must group your competitors by size, name, it will assist you in analysing the competitive environment.
 Small                Medium           large

    Your business (name)                   Business plan                                      5
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Your business (name) and the competitive environment
(an enterprise its customers, suppliers and competitors)
the market structures

Porter’s five forces
   Buyer power
   Supplier Power
   Barriers to entry/exit
   Threat of new entrants
   Industry rivalry

Competitive strategy
Two strategies for micro and small enterprises

    Your business (name)                   Business plan                               6
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Your business (name) and the general public
Local governments
Any objections to open a business must be resolved prior to launching.
You must always remember anything that involves public sector has public accountability hence, bureaucracy and red tape.

    Your business (name)                  Business plan                                    7
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Your business (name) and the macro environment
Social and demographic
   Skills shortage
   Tradition and customs
   what type of crime will your enterprise likely to experience? The probability will determine the measures needed to
   minimize the risk or counter the crime. Internet, shoplifting, e.t.c
   Ways to counter crime: Security, Insurance
   Population distribution
   Population distribution determines where demand for goods/services will be the biggest

Economic environment
   Circular flow of income.
   Sectors of economy and employment
   Interest rates and borrowing
   International trade (import/export).
   Foreign exchange

Legal and political
   WTO import and export
   EU Regulations and Directives

   UK Business LAW
   Consumer law
   Employment law
   Local governments

Ecological (natural) environment
Environmental issues
   Energy (renewable/non renewable)
   Draughts, famine, CFC emissions, flooding

   Your business (name)                   Business plan                                      8
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Technological environment
Technology analysis
The impact of technology on economy and the choice of appropriate technology for your enterprise and the future of it.

SWOT analysis
Is simply going through all sections of your business and see what is likely going to happen and any effect it may have on
your business.
For example
Economic environment
What if the Bank of England raises interest to 5.9%? If your business sales depend on whether your customers need credit
to afford to buy or you need to borrow money from a high street bank, your borrowing rate is unlikely to be less than 6.9%,
an expensive loan. If you don’t have enough money then, that is an obvious weakness.
Or Say you have creative team as your strength; however, they can be poached by a competitor, which is your weakness.
The purpose of SWOT analysis is to clearly identify what is a situation and look for ways to minimise their impact.

This is where you include your evidence of the things that prove your business is viable.
Financial documents
    Cash-flow projections
    Profit and loss account
    Balance Sheet
    Market research reports
    Intellectual property certificates

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