Five Critical Steps Guide for a Successful Business

1. Idea Assessment

   • The Reality Test
   • The Competitive Test
   • The Value Test

   Idea Sketch Pad → Five Key Parameters

   • Customers
   • Offering
   • Value Proposition
   • Core Competencies
   • People

2. Feasibility Study

   • Industry & Market Analysis
     • Sociocultural
     • Technological
     • Demographic
     • Economic
     • Political and Legal
     • Global trends (international market)
   • Product & Service Analysis
     • Are customers willing to purchase our goods or services?
     • Can we provide the product or service to customers at a profit?
   • Financial Analysis
     • The initial Capital Requirement
     • Estimated Earnings
     • Time Out Of Cash, And
     • Resulting Return On Investment
   • Entrepreneur Analysis
     • Assessing entrepreneurial readiness
     • Environment Analysis
     • Industry Analysis

3. Business Model

4. Business Plan, and

5. Strategic Plan

Environment

• The only unchanging phenomenon of an environment ( business environment ) is change
• Changing environment can create new opportunities, and new threats and at the same time destroy old opportunities and threats.

Industry

• An industry is a group of firms that produces a similar product or service.
• Industry → Substitutes
• Coca-Cola CEO → We are not in a “cola industry”, we are in a “nonalcoholic beverages industry”.

Porter’s Five Forces Model

1. The threat of new entrants (barriers to entry)

   • Entry Barrier

     Some of the possible barriers to entry are as follows:

     • Economies of scale
     • Product differentiation
     • Capital requirements
     • Switching costs
     • Access to distribution channels
     • Cost disadvantages independent of size
     • Government policy
2. The rivalry among competing firms
   • Intense rivalry is related to the presence of several factors
     • Number of competitors
     • Product or service characteristics
     • Height of exit barriers
     • Rate of industry growth
     • Amount of fixed costs
     • Diversity of rivals
3. The threat of substitute products or services
4. The bargaining power of buyers, and
5. The bargaining power of suppliers.

Developing and Testing a Business Model