Lesson 12 of 28
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Critical Issues in Business Success and Failure

Overview

  • Importance of a business plan
  • Management – staffing and teams
  • Trend analysis
  • Identifying and sustaining competitive advantage
  • Avoiding over-extension of finance and other resources
  • Using technology
  • Economic conditions

Importance of a business plan

It is a blueprint for future growth, so it is beneficial in keeping the business on track for its objectives.

Management

  • Staffing: staff are the business biggest asset
  • Teams: behavioural approach can lead to superior performance for some businesses.

Trend analysis

  • Idea that the past can repeat itself
  • Provides success by forecasting factors such as:
    • Potential sales
    • Total revenue
    • Total operating costs
    • Gross and net profits
    • Availability of labour
  • Leads to effective planning

Identifying and sustaining competitive advantage

Businesses need to develop strategies to gain an advantage over competitors, such as:

  • Offer customers something no one offers
  • Differentiation by product quality, innovative design, positive brand image or top-quality service
  • Sustaining a competitive advantage

Avoiding over-extension of finance and other resources

Should start small and gradually expand.

Over-extension of finances

  • Purchasing excess stock
  • Leasing commitment
  • Committing to fixed contracts can lead to fees if not paid
  • Purchase of business premises – unable to pay mortgage

Over-extension of resources

  • Stock – too much money invested in goods or raw materials
  • Staff – too much staff due to optimism. Need to reduce dependence.

Using technology

  • Changing workplace environment and making these more convenient and cheaper
  • E-business: use internet to find information, email, work online, marketing, research, lodge forms and apply for licenses
  • E-commerce: buying and selling of goods and services via the internet

Economic conditions

Apart of external environment

  • Strong economy: consumer spending is high, unemployment rate is low, increased production
  • Falling economy: less consumer spending, rising unemployment, decreased production