20091019 EFREI 1Copyright A.B. Teoh 2009. Lecture on Accounting TPM L 1-6 Time: 1415 to 1615 hr. Date: Wed. 21 Oct 2009 Name of Lecturer: Mr. Kumaraseh

Copyright A.B. Teoh 2009 1

20091019 EFREI


Lecture on Accounting

• TPM L 1-6• Time: 1415 to 1615 hr.• Date: Wed. 21 Oct 2009• Name of Lecturer: Mr. Kumaraseh


1. Q1. What are the 6 (six) limitations of desk research

using secondary data?


Q 2.List and briefly explain any 17 different types of secondary research sources available.


Q 3. Identify five simple rules for designing an effective questionnaire


The Answers


Q1. What are the 6 (six) limitations of desk research

using secondary data?

Answer1. From the viewpoint of would-be entrepreneurs, secondary data has some

important limitations:2. The data provided is often at too general a level, and does not answer the

specific questions that are vital to the new business.3. It may well be several years out of date, as a result of the time lag in

collecting, processing and publishing the information.4. Data on the same market from different sources often conflict, because of

different ways of defining the relevant concept or the relevant population.5. The information may well indicate the type of potential customer for the

business, but not who they are specifically.6. And it may not answer the practical, detailed questions of how the

entrepreneur can reach his target market, the buying habits of potential customers, the pricing policy, and so forth.



• Answer• Secondary data: market research that has been previously undertaken.

1. Publications — books, magazines and industry journals.2. Universities and tertiary institutions — for independently refereed

(validated) research, as well as a source of new business ideas.3. Private market researchers — compile their own databases of

company and industry information, which can be purchased.4. Telephone and business directories — can provide data on company

backgrounds, trading activities, business locations, office holders, staff size, and history.

5. Consumer database vendors — provide lists of consumers, suppliers, distributors and other groups.


Answer7. Government bodies — such as statistical authorities, departments of

commerce or trade. 8. Parliamentary reports and committees — studies into particular industries;

parliamentary debates (Hansard) for details about future government intentions and policies of other political parties; and annual reports tabled by government departments.

9. Websites — show competitor products, prices, location and operations.10. Virtual communities — online forums in which people with a common

interest in a particular topic discuss issues, share ideas and pass on information.

11. Trade shows — meetings that bring together manufacturers, distributors, competitors and regulators.

12. Internal organisational information — the firm’s own financial records, staff knowledge and previous studies.



Answer13. Company annual reports — publicly-published information about major

firms (such as those listed on a Stock Exchange), which often discusses their financial performance, goals, directors, key senior staff, and the products or services that they offer.

14. Business benchmarks — information about key performance indicators in certain industries, such as typical expenditure, income and profitability.

15. Trade or industry associations — organisations which undertake research, survey their members, publish data and try to promote a greater public knowledge about a particular industry and its significance.

16. Business benchmarks — information about key performance indicators in certain industries, such as typical expenditure, income and profitability.

17. Trade or industry associations — organisations which undertake research, survey their members, publish data and try to promote a greater public knowledge about a particular industry and its significance.



Q 3. Identify any five simple rules for designing an effective questionnaire

1. Keep the number of questions to the minimum — ‘vital to know’ is more important than ‘nice to know’.

2. Start by asking straightforward, easily answered, factual information. Capture demographic data such sex, age, location that you may need to refer to later. Progress to opinion once you have established the ‘facts’.

3. Where possible, the answers should be closed question, that is either ‘Yes / No / Don’t Know’ or consist of prompted alternatives, which can be ranked in order of importance (1–5).

4. Avoid ambiguity ― make sure that the respondent really understands the questions ― and that interpreting the answers will be equally unambiguous.

5. Make sure that at the beginning you have a cut-out question to eliminate unsuitable respondents (such as those who never use the product or service in question).


Business Plan


QUESTIONS ON BUSINESS PLANS

• Q1.List any 6 different types of potential audience for a firm’s business plan.

• Q2. If you were the owner of a business, but employed a

full-time manager to run your firm, who would be best placed to write up the plan?

• Q3. What is the difference between a strategic plan and a business plan?

• Q 4. Why is it necessary to include so much detail in a business plan?


Q1.List any 6 different types of potential audience for a firm’s business plan.

• There are several individuals, groups or organisations to whom the plan may be addressed. Some of these are internal to the business and others are external. These could include:

• The firm’s owners — who will want to clarify the goals of the venture, expected return, risk factors, etc.

• Firm employees — who will want to know how the business is (or should be) structured, and the roles and responsibilities of staff members within it.

• External investors (such as venture capitalists or business angels) — who will want to know how the business is set up, the expected financial commitment being sought from them, and their eventual return on investment.


Q1.List any 6 different types of potential audience for a firm’s business plan.

• External lenders (such as banks or finance companies) — like other external investors, they will want to know the amount of funds being sought, as well as the security being offered and the firm’s ability to service the debt.

• Government agencies — if financial or other assistance is being sought.

• Business advisers (such as external accountants, management consultants, mentors) - this will help the adviser understand the business’s current and future activities, and make their own contribution more relevant.


Q2. If you were the owner of a business, but employed a full-time manager to run your firm, who

would be best placed to write up the plan?

• The advantage of preparing the plan yourself is that it gives you the key role in final decision-making regarding the firm, allows the owner to collect and research all issues (thus deepening your own knowledge about the industry), and ensures that the owner’s goals are incorporated into the business objectives.


Q2. If you were the owner of a business, but employed a full-time manager to run your firm, who

would be best placed to write up the plan?

• Delegating the task out to a manager is not preferred may mean that the manager has better knowledge about day-to-day operations, production, competitors and customers, but could lead to a conflict between owner and manager over priorities and targets.


Q3. What is the difference between a strategic plan and a business plan?

There is often considerable conceptual overlap between these two types of plans. • A strategic plan is a document which sets out the long-term

focus of the business, its mission and its vision, and attempts to understand the environment in which the business operates.

• The strategic plan sets out the long-term focus of the business, its mission and vision, and attempts to understand the environment in which the business operates.

• It does not tend to deal with the daily operational matters.


Q3. What is the difference between a strategic plan and a business plan?

• A business plan is a written document that explains and analyses an existing or proposed business venture.

• A business plan tends to cover most of the practical day-to-day issues involved in business creation, growth and management.

• Goals and strategy are still relevant, but are not necessarily the whole focus of the document.

• In reality, there is often some overlap between the two: after all, most business plans can be devised only if the owner or entrepreneur has a long-range vision for the venture, and an understanding of the external environment in which it will operate.


Q 4. Why is it necessary to include so much detail in a business plan?

• A plan that is simply a statement of intent is not really a plan; it is more like a rhetorical statement. Without a holistic, detailed view of the business (i.e. one that covers all areas of its activities), the plan may be inaccurate.

• A lack of detail will also make it hard to determine if the business goals really can be achieved, what finances are needed, what tasks staff must do, and so forth.

• Finally, without detailed expectations about what must be done, then it will be hard to measure what is actually achieved.


Structure of a Business Plan1. Table of contents2. Preliminary details3. Executive summary4. Current situation5. Industry analysis6. Description of your project or venture7. Operational and production plan8. Marketing plan9. Human resource plan10. Assessment of risks11. Financial plan12. Bibliography13. Appendix


Structure of an International Business Plan1.0 Table of contents A list of the contents, headings and sub-headings


Structure of an International Business Plan

2.0 Preliminary DetailsName and address of company,

Identification of partners or principal shareholders

Authority of principal shareholders

Statement of financing needed

Definitions [e.g. technical terms or that are specific to your business]

Statement of confidentiality of report


Structure of an International Business Plan3.0 Executive summaryOne page summary of the business planAn Executive Summary is….. • NOT an introduction• NOT a preface• NOT a random collection of highlights

An Executive Summary IS the business plan in miniature


Structure of an International Business Plan4.0 Current situation analysis

Basic company’s information and structure

Company’s Vision and Mission

Goals and objectives

Products and services

Core competencies



5.0 Industry analysis

Political, Economic, Socio and Technological Legal and Environmental analysis – of the international business situation , the industry and the relevant country/countries

Trade barriers and tariffs

Degree of government control

Describe the laws that affect the proposed business

Geographic and demographics

Important customs, traditions and cultures

Future outlook and trends

Analysis of competitors

Industry and market forecasts



6.0 Description of your project or ventureType of ownership structure and rationale

Level of foreign investment in that country

Type of investment – equity or non-equity based

Proposed product or service

Information that is important to the proposed business

Competitive advantages and disadvantages of the proposed business

A description of the planned growth of the business including the required resources and needs


Structure of an International Business Plan7.0 Operational and Production planManufacturing processTechnology utilisationDegree of outsourcing – if anyPhysical location of factory

Machinery and equipment

Inventory policies

Names and sources of suppliers of raw materials



8.0 Marketing planProductPricePlace [Distribution]Pricing and margin

Distribution must match strategy/pricing PromotionMarketing strategiesForecastsCurrencies to be usedIdentification of research resources and interviewsHow will you reach the customer?

Who will be the first customer, second customer etc.?


Structure of an International Business Plan9.0 Human resource planStructure of the management teamBackground information and experience of the management teamRoles and responsibilities of the team members

10.0 Assessment of risksEvaluate weakness[es] of business

New technologies

Plan B - contingencies



11.0 Financial planAssumptions

Pro forma profit and loss [P & L] statement

Pro forma cash flow

Pro forma balance sheet

Break even analysis

Projected income and expenses up to 3 years



12.0 Bibliography

13.0 AppendixMarket research data interviews

Leases or contracts

Product brochures

Suppliers’ quotations and prices

Other pertinent documents e.g. impending incoming orders , L.I. or contracts


International Business Plan



Importance of having an export business plan• Other uses for a business plan – equity, working capital• Plan by country



Who needs business planning?• Management Team• The Shareholders• Bankers or Creditors• Customers• Suppliers• The employees


Internaltional Business Plan

What is a business plan• A business plan is a written document, which describes in detail the

overall plans of a business in which an entrepreneur aims to get involved

What should be in a business plan?• A plan should include three things

– Evidence of focus– Understanding of target market– Fulfils investor’s needs



Importance of business planning

• Increase Opportunity for Success• Develop Business Mission• Determine the Main Competitor/s• Determine the Right Way of Managing the Business• Increase the Stakeholders Confidence• Determine Barrier in Business• As a Performance Tool


Preparing business plans

• Keep business plan short• Be focused• Reveal people Involved and their roles• Avoid the use of jargon language• Information should be based on study• Be realistic and objective




• No realistic goals• Failure to anticipate obstacles • No commitment of dedication • Lack of business or technical experience • No market niche



Suggested business models and tools for analysis

1. SWOT analysis

2. PESTLE

3. Porter’s Five Forces



What changes are occurring in the market arena

• Where we operate and what implications do these changes have for the direction in which we need to move

• What new or different customer needs should we be moving to satisfy

• What geographic or product markets it should we be pursuing• What should the company’s business make-up look like in 5 years• What kind of company should we be trying to become



Comments on the Vision

• clear and specific• achievable? • if so how? • if not why not?• Broad or narrow and the underlying reasons



Definition: Mission

• The purpose or rationale for an organisation’s existence• Gives the organisation its own special identity, business, empahasis

and path for development• Mission statements provide boundaries and focus for organisations

and the concept around which the firm can rally



Mission

• Its identity• Where are you now and where you intend to go hereon• Unique to the organisation• Highly personalised• Customer needs or what is being satisfied• How the organisation goes about creating and delivering value to

customers and satisfying their needs



Definition: Strategy

• How an organisation expects to achieve its missions and goals• Strategy is an organisation’s action plan to achieve the mission.• Each functional area [production, marketing etc] has a strategy for

achieving its mission and for helping the organisation reach the overall mission.

• These strategies exploit opportunities and strengths, neutralise treats and avoid weaknesses.



• A Strategy is a long term plan of action designed to achieve a particular goal, most often "winning."

• Strategy is differentiated from tactics or immediate actions with resources at hand by its nature of being extensively premeditated, and often practically rehearsed.

• Strategies are used to make the problem easier to understand and solve.

Mission and Strategies• Mission defines a company’s identity and purpose, the value it

wishes to achieve so it knows where it is going. Strategy describes how to get there.



Tactic

• A tactic is a conceptual action to implement a specific mission and achieve a specific objective, or to advance toward a specific goal.

• A tactic is implemented as one or more tasks. These concepts can be defined as a hierarchy:• Strategy• Operational objective• Tactic [slight adjustments to strategy]• Task



Vision and Mission[the differences]

Vision Mission

About the future business scope About the present business scope

Deals with “where are we going” Deals with “who are we” and “what we do” and “where are we now”

What kind of enterprise the company is try to become

Element of time horizon

About what the company’s present products and servicesIts present activities and the types of customers it presently servesWhat technological and business capabilities it presently has

Future dream of the organisation, its roadmap, direction it intends to pursue

Is the starting point for forming a vision



. Explain the difference between mission statement, aims, goal objectives, strategy and tactics.

• Mission statement – its identity, aspirations aims –overall long term

goal

• Objectives – short term goal,

• Strategy – plan,

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Outline of a Business Plan1. Table of contents2. Preliminary details3. Executive summary4. Current situation5. Industry analysis6. Description of your project or venture7. Operational and production plan8. Marketing plan9. Human resource plan10. Assessment of risks11. Financial plan12. Bibliography13. Appendix

Copyright © 2009 AB Teoh

Documents

20091019 EFREI 1Copyright A.B. Teoh 2009. Lecture on Accounting TPM L 1-6 Time: 1415 to 1615 hr. Date: Wed. 21 Oct 2009 Name of Lecturer: Mr. Kumaraseh