Business

Business:
Business means all those human activities organized and operated freely and regularly to provide the goods and services to society for the sake of profit. A Business (also known as enterprise or firm) is an organization engaged in trade of goods, services or both to consumers. Businesses are predominant in Capitalisteconomies , where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit or state-owned. A business owned by multiple individuals may be referred to as a company, although that term also has a more precise meaning.

The "business" relates to the state of being busy either as an individual or society as a whole, doing commercially viable and profitable work. The term "business" has at least three usages, depending on the scope the singular usage to mean a particular organization; the generalized usage to refer to a particular market sector, "the music business" and compound forms such as Agribusiness; and the broadest meaning, which encompasses all activity by the community of suppliers of goods and services. However, the exact definition of business, like much else in the philosophy of business, is a matter of debate and complexity of meanings.

4 Factors of Production:
Factors of production means inputs and finish goods means output.Iinputs decides the quantity of output i.e. output depends upon inputs.Input is the starting point and output is the ending point of production process and input-output relationship is called as Production Function. All factors of production like land, labour,capital and entrepreneur are required altogather at a time to produce a commodity.

In economics, production means creation or an addition of utility. Factors of production refers to inputs required for conducting production. Input is the starting point of every production activity.

Business Model:
The plan implemented by a company to generate revenue and make a profit from operations. The model includes the components and functions of the business, as well as the revenues it generates and the expenses it incurs. A business model describes the rationale of how your organization creates, delivers and captures value. Your organization needs a business model concept that everybody understands; one that facilitates description and discussion. People need to start from the same point, and talk about the same thing. The challenge is that the concept of your business model must be simple, relevant, and intuitively understandable. Following Geoffrey A. Moores theory of innovation vectors, we believe that any enterprise needs to make fundamental decisions in the choice of the business model needed to support their key business purpose, their core values and brand promise, and their strategic goals.

Following Moores theory, we distinguish four different business models: Model 1: The Disruptive Innovation Business Model (Red) A disruptive innovation oriented strategy initiates a growth market by creating a new category through one of two mechanisms: Discontinuous technology: creates new standards incompatible with currently prevailing standards, forcing those who adopt it to displace their existing systems, e.g. Apple; Value-chain discontinuity: destabilizes the value chain in an existing market by challenging existing business models, e.g. Southwest Airlines. The preferred organizational structure for the red strategy is a skunk work structure, creating innovations, improvements and plans in spontaneous and often temporary entities with subjectively defined (or even undefined) metrics. The best culture for this strategy is a cultivation culture, where self-actualization, individual accountability and empowerment are key contributors.. Examples of red companies are Google (however slowly losing its color and turning green), Apple, Southwest Airlines (with a touch of yellow see here), and Virgin. Model 2: The Customer Intimacy Business Model (Yellow) The customer intimacy oriented strategy focuses on making flexible and differentiated value propositions by aligning them more precisely with target customers needs and values. This strategy requires close customer proximity, and relies heavily on accurate market- and customer intelligence. Customer intimacy does not necessarily call for increasing customer satisfaction. It requires taking responsibility for customer results. It does not impose arm's length goodwill. It requires down-in-the-trenches solidarity, the exchange of useful information, and a collaborative pursuit of results. The preferred organizational structure for this strategy is a matrix structure, where different disciplines are closely collaborating in a matrix model, providing the best possible individually tailored customer offerings. The best culture for this strategy is a culture of collaboration, rooted in th e need for affiliation, and characterized by team-level accountability to subjectively determined metrix Model 3: The Product Leadership Business Model (Green) The product leadership oriented strategy focuses on differentiating market offerings by creating more desirable features, better performance, or lower market price. It mainly creates a growth market position by using research and development to improve features, performance, or market price in an established product category. The preferred organizational structure for this business model is a project structure. In this structure, officially appointed project teams and departments work along objectively defined metrics. The best culture for this business model is a competence culture. Examples of green companies are Bayer, Hewlett Packard, Microsoft, Philips, and Syngenta. Model 4: The Operational Excellence Business Model (Blue) The operational excellence oriented strategy focuses on optimizing processes and systems to differentiate offerings by lower cost, higher quality, or faster time to market. The preferred organizational structure for this business model is the hierarchical structure, in which processes and systems are fixed in protocols, the following of which is mandatory. The best culture for this business model is a control culture. The control culture is rooted in the need for order and security and characterized by team-level accountability to objectively defined metrics.

Examples of blue companies are General Motors, Compaq (before the takeover by HP), Eastman Kodak, General Electric, TNT. Below you see a diagram with some of the typical behaviors in the different business models:

In order to assure long-term success, organizations need to align their strategy, their organizational structure, and their organizational culture into one color; combining a strategy of customer intimacy (yellow) with a project structure (green) and a control culture (blue) obviously is not a good idea.

Objectives of Business:
Business objectives are the goals, aims or purpose of the business. The business tries to achieve these goals. Profit is the main objective of business. However, the business cannot have only one objective. This is because it has to satisfy different groups such as shareholders, employees, customers, creditors, etc. So, it has to fix objectives for each group.

Types of Business Objectives

There are five types of business objectives, viz., 1. Economic Objectives, 2. Social Objectives, 3. Organic Objectives, 4. Human Objectives, and 5. National Objectives These types of business objectives are depicted in the following picture.

Objective gives direction to the business. It motivates the owners, managers and employees to work hard. It helps in planning and decision-making. It is used to evaluate (measure) the performance of the employees.

Definition of Objectives
According to Louis Allen, "Objectives are goals established to guide the efforts of the company and each of its components." According to Dalton E. McFarland, "Objectives are the goals, aims or purposes that organisation wish to achieve over varying period of time."

Nature Characteristics of Business Objectives

The features or characteristics of business objectives are depicted below.

1. Multiplicity of Objectives
Business objectives are multiple in character. That is, a business does not have only one objective. It has many or multiple objectives. This is because a business has to satisfy different groups, i.e. shareholders, employees, customers, creditors, vendors, society, etc. The business has to fix different objectives for each group.

2. Hierarchy of Objectives
Hierarchy means to write down the objectives according to their importance. The most important objective is written first, and the least important objective is written last. All objectives are important. However, some objectives are more important than others. Some objectives need immediate action while others can be kept aside for some time.

3. Periodicity of Objectives

Based on period, business objectives can be classified into two types, viz., 1. Short-term objectives, and 2. Long-term objectives. The short-term objectives are made for a short-period, i.e. maximum one year. Short-term objectives are more specific. The long-term objectives are made for a long-period, i.e. for five years or more. Long-term objectives are more general. They are like a Master Plan.

4. Flexibility of Objectives
The business is flexible. Therefore, the business objectives must also be flexible. If the objectives are rigid, the business will not survive. This is because the business environment keeps on changing. There are continuous changes in the technical, social, economic and political environment. The business has to change its objectives according to the changes in the business environment. The hierarchy of objectives must also be changed from time to time.

5. Qualitative and Quantitative Objectives

There are two types of objectives, viz., Quantitative and Qualitative objectives. 1. Quantitative objectives are easy to measure. It is expressed in numbers. For e.g. in Dollars, Rupees, Percentage, etc. Quantitative objectives are visible, tangible and countable. 2. Qualitative objectives are not easy to measure. It is not expressed in numbers. For e.g. Employee performance, employee satisfaction, etc. These objectives cannot be measured. Qualitative objectives are invisible, intangible and uncountable. Today modern methods are used to measure qualitative objectives. A business must have both quantitative and qualitative objectives.

6. Measurability of Objectives
The objectives must be clear and specific. It must be easy to measure. For e.g. Each salesman must sell 100 units of water purifier per month. This is a clear and specific objective. It is easy to measure the performance of the salesman. If a salesman sells 200 units of water purifier in a month then his performance is good. He can be given bonus and promotion. However, if a salesman sells only 10 units of water purifier in a month then his performance is bad. He needs more training. Measurable

objectives motivate the employees to work hard. This is because they know their target clearly. Their performance can also be measured easily.

7. Network of Objectives
Network means an interconnection between different objectives. A business has many different objectives, viz., corporate objectives, departmental objectives, sectional objectives and individual objectives. It also has objectives for shareholders, customers, employees, etc. All these objectives must be interconnected. They must support each other. They must not clash with each other. They must move in the same direction. If not, the business will not survive. Similarly, the objectives of all the departments, must support each other. They must not clash or conflict will each other.

Feasibilty

Feasibility:
A feasibility study is performed by a company when they want to know whether a project is possible given certain circumstances. Feasibility studies are undertaken under many circumstances - to find out whether a company has enough money for a project, to find out whether the product being created will sell, or to see if there are enough human resources for the project. A good feasibility study will show the strengths and deficits before the project is planned or budgeted for. By doing the research beforehand, companies can save money and resources in the long run by avoiding projects that are not feasible.

Types of feasibility studies:

There are many different types of feasibility studies; here is a list of some of the most common:

Technical Feasibility - does the company have the technological resources to undertake the project? Are the processes and procedures conducive to project success?

Schedule Feasibility - does the company currently have the time resources to undertake the project? Is the project completable in the available time?

Economic Feasibility - given the financial resources of the company, is the project something that can be completed? The economic feasibility study is more commonly called the cost/benefit analysis.

Cultural Feasibility - what will the impact on both local and general cultures be? What sort of environmental implications does the feasibility study have?

Legal/Ethical Feasibility - what are the legal implications of the project? What sort of ethical considerations are there? You need to make sure that any project undertaken will meet all legal and ethical requirements before the project is on the table.

Resource Feasibility - do you have enough resources, what resources will be required, what facilities will be required for the project, etc.

Operational Feasibility - this measures how well your company will be able to solve problems and take advantage of opportunities that are presented during the course of the project

Marketing Feasibility - will anyone want the product once its done? What is the target demographic? Should there be a test run? Is there enough buzz that can be created for the product?

Real Estate Feasibility - what kind of land or property will be required to undertake the project? What is the market like? What are the zoning laws? How will the business impact the area?

Comprehensive Feasibility - this takes a look at the various aspects involved in the project - marketing, real estate, cultural, economic, etc. When undertaking a new business venture, this is the most common type of feasibility study performed.

Importance of Business Feasibility Study:

Most organisations, businesses, developers and charities make the mistake of steam rolling into a project without a sound feasibility study. The importance of one cannot be underestimated. The information you gather and present in your feasibility study will help you:

List in detail all the things you need to make the idea work; Identify logistical and other problems and solutions; Develop marketing strategies to convince a donor, bank or investor that your idea is worth considering as an investment; and Serve as a solid foundation for developing your business plan.

Even if you have a great idea you still have to find a cost-effective way to market and sell your products and services. This is especially important for store-front retail businesses where location could make or break your business. For example, most commercial space leases place restrictions on businesses that can have a dramatic impact on income. A lease may limit business hours/days, parking spaces, restrict the product or service you can offer, and in some cases, even limit the number of customers a business can receive each day. If you need a feasibility study- we can produce the most effective one for your organisation's needs. Our feasibility studies have brought in 37 million for our clients. Three things are crucial when doing a feasibility study: 1. It must be fully comprehensive- leaving no stone unturned 2. The consultant preparing it needs to have an expert understanding of what the funding requirements are- to ensure synergy between the feasibility report and the funding application forms. If he/she doesn't- you've wasted your money. 3. It must be complemented by a GOOD and THOROUGH business plan

So, do you want to take your project to the next level? If the answer is yes- then you need a feasibility study- an effective one that can deliver for your organisation. Did you know that applying for funding without a feasibility study for a project that is linked to a building can ruin your chances of success- in fact most funders won't consider your project without one. This could damage your organisation's credibility. If you are planning an important project or a capital development for your organisation, you will need to have Feasibility Study and Business Plan to support your bids. Your project's feasibility study and business plan both need to be effective and geared towards meeting the criteria of funding bodies. As well as ensuring that your project meets the requirements of the Disability Discrimination Act the feasibility study must include the following key areas: Ensure that the objectives of the project match the economic development needs of the local area and are compatible with the wider county and regional economic development plans and strategies. This is important to ensure success in funding bids and to ensure that your idea fits into the wider master plan for the area.

Outline of Business Feasibility Study:

Because putting together a business plan is a significant investment of time and money, the entrepreneur should make sure that there are no major roadblock in their road of business success.the following repreasent s a structural outline of business feasibility study:

Cover Sheet Executive Summary Table of Contents

Introduction Product and services Technology Market environment Competition Industry Business model Market ing and sales strategy Production / Operating requirements Management and Personnel requirements Intellectual property Regulations/ Environmental Issues Critical Risk Factors

Financial Projection:
Balance Sheet Projections Income Statement Projections Cash Flow Projections Break-even Analysis Capital requirement & Strategy Recommendations & Findings Conclusion

Executive Summary:
The executive summary is a summary of all the key sections of the business feasibilty study and should work as a separate, stand-alone document interested parties will read this section first in conjunction with a grance at the financial section. When deciding whether or not they read the rest of the plan. Key points to remember includes Write this document after the contant section of the business feasibility study is completed :although the executive summary is written last, it is presented first The executive summary should be no more than one page long

Product/ Service:
Describe the enterprises, product or services in simple language. Give product mix if the enterprise will initially be focusing on more than one product. Describe how customers would use and buy the product & services. Give enough detail to help the reader judge the effectiveness of your marketing and positioning plans Describe key components or raw materials that will be used in the product, how the enterprise will source these and how available they are Describe plans to test the product to ensure it works as planned and is sufficiently durable, rugged secure etc Describe plans to upgrade product or expand product line

Technology:
As necessary provide further technical information about product & services Describe additional or ongoing research and development needs Keep the description in lay terms and explain technical terms enough to be understood by business-savvy but not necessarily technology expert readers

Intended Market Environment:

Target Market:
Define and describe the target market distinguish between users and customers Be clear how end users and customers benefit. How and why would they buy the product or services? What is the projected need your product or services fulfill. So beautifully? How big is the opportunity? What level of actual market demand can be measured verses projected?

For Business-To-Business Market include:

What industry is the target market in, who are the key players, frequency of product purchase, replacement needs versus expansion, purchasing process

For Business-To-Consumer Market include:

Psychographic factors Relevant behavioural factors such as frequency of product purchase and shopping behavior

Competition:
Describe direct and indirect competition pertains to the target markets only List all key barriers to entry State how difficult it will be for the competitor to copy the enterprises product and service

Industry:
Describe demand and supply factors and trends Describe or clesrly define the industry in which the enterprise operates include the size, growth, rate and outlook

Business Model:
Describe the proposed enterprises business model. How will the business generate revenue Describe the model enough detail to support financial projections presented later

Marketing & Sales Strategy:

Lay out the basic marketing and sales strategies Discuss any strategy partnership the enterprise has or is planning to form Describe the pricing strategy and justification include the expected gross profit margin Describe intended typical payment terms for customers Quantify the marketing budget for at least the first year

Production / Operating Requirements:

Describe enough of how and where the enterprise will manufacture sources or create and deliver the final product or service to estimate costs Will space be owned or leased? How complex is the manufacturing process? Describe equipment needed and costs

Management and Personnel:

List the proposed key managers, titles, responsibility relevant background experience, skills and costs Sketch personnel requirements, what people will be needed now in a year in the long term?

Intellectual Property :
Briefly discuss patents, copy right and trade marks obtained and in process If enterprise is operating order a licensing agreement or patent assignment, give name of license Describe key terms and give termination or renewal date

Regulations / Environmental Issues:

Outline non-economic forces that might affect the prospect of the firm: Key government regulations and the enterprises plans for compliance

Any environmental problems on property, plans to address the problems and their cost Environmental factors i.e. waste disposal plans if needed Political stability, if applicable

Critical Risk Factors:

Describe critical risk faced by the enterprise much of their components will arise from the SWOT, Porters five forces and PEST analysis. Example include internal characteristics, uniqueness investment, economics forecasts, change in regulations and technical obsolescence etc.

Financial Projections :
Balance sheet projection- three years and highlights inflow of capital Income projection- year 1( month or quarterly) year 2 and 3 annually Cash flow projection year 1 (month or quarterly) year 2 and annually Break-even analysis- when will the firm begin to turn a profit Cost benefit analysis- will the business provide a vible return on investment for the owner or the investor

Capital Requirement & strategy:

How much funding will the firm need and when? What projected revenue or assets does the proposed business have to secure the financing What sources will provide the funding i.e. investors, lending institutions What radio of debt to equity financing will occur?

Final Findings & Recommendations:

Recommendations from the feasibility study regarding the viability of putting the business idea into practice should be honest, short and direct Market viability Technical viability Business model viability Management model viability Economic & financial model viability Exit strategy