DEVELOP ABROAD: REASONS FOR THE INTERNATIONALISATION
- survive;
- reach the best dimension;
- optimise investments;
- support competition;
- find new places.
INTERNATIONALISATION OPPORTUNITIES
- There are always fewer customs barriers;
- Consumption tends to be global;
- People are always more interested in the “Made in Italy”;
-There are new emerging countries which will be possible customers.
INTERNATIONALISATION RISKS
- Financial risks for the company;
- New competitors;
- Company process become more complex;
- Domestic market may be overlooked transferring resources
- The personnel doesn’t always perceive positively the change.
WHICH IS THE PURPOSE OF THE EXPORT BUSINESS PLAN OR FDI?
The key points while drafting a Business Plan are geographical market analysis, trends, competition, targets, substitute goods, partners, pricing, suppliers, financial analysis, a study on fixed and variable costs, a team, technologies. In order to draft an efficient Business Plan it is important to start with a Business Model.
It is useful for the domestic market, to support and guide the company activities such as export activities or FDI ( open new factories and transfer there the company processes, create a joint venture, establish new agreements with suppliers on behalf of third party).
REASONS WHY A BUSINESS PLAN IS USEFUL
In activities such as export, international operational marketing, internationalisation the focus is on:
- how to enter a foreign market;
- supply;
- development steps
The internationalisation process is less taken into consideration:
- check carefully the situation of the company;
- imagine different situations;
- check the resources at disposal and the achievable goals.
Internationalisation is important for commercial functions and:
- for organisation because it requires new roles in the company, new competences for human resources, movements, skills for distance relationships;
- for production, because of the increasing amount and new productions;
- for financial resources management, whose needs could quickly increase;
- for logistics, in order to supply different territories.
IT REQUIRES TO ALLOCATE RESOURCES FOR DIFFERENT GOALS IN PARTICULAR:
- financial resources;
- human resources;
- time;
- technical resources.
BUSINESS PLAN AS STRATEGIC AND OPERATIVE PLANNING SYSTEM:
- to define vision and business goals;
- understand the external environment of the company;
- analyse if the project is financially and economically possible;
- planning the operative strategy;
- use budgeting and deviation analysis in order to control results;
- define the organisational set-up;
- accede to financial funds.
BUSINESS PLAN TO SUBMIT A PROJECT BUT ALSO AS MANAGEMENT TOOL:
» Internal function: Economic and financial feasibility plan; in case of a potentiality evaluation for an investment project (for a start-up) or to support the current business management (for going concerns). Measuring the financial and economical sustainability of the business, guiding the implementation of the company operative plan, stimulating contribution and the mission acceptance by the personnel.
» External function: : submission scheme (asking for funds too) and project development, “external” because it is referred to people who didn’t follow the plan in order to evaluate it.
» Operative plan
The business plan is used for the following business activities:
- investment feasibility;
- ask for funds;
- market analysis (supply and demand);
- evaluate a company;
- strategic planning;
- budgeting;
- operative planning.
HOW TO CREATE A BUSINESS PLAN
- essential and simple style;
- few graphics and charts;
- attach documents which widely explain different aspects (generally technical);
- direct participation of the entrepreneur, managers, or board of directors;
- write truthful information, accurate and useful.
BUSINESS PLAN STRUCTURE
Descriptive section: explain the aim of the project and its nature, business vision, market analysis and competition, description of goods and and services offered, strategic and operative plan of the investment;
Economic and financial section: : evaluation projections, that are output esteemed and financial results of the project, the return of the capital invested, both for project promoters and financiers.
In detail:
INTRODUCTION AND MISSION : Describes goals fixed following study data. It is based on the business statement, which are goals and nature of the company. It contains supply advantages, target customers, pricing policy adopted.
BUSINESS DESCRIPTION : Describes the field where the company works or will work and how it wants to settle in the market in terms of supply and competitive position. It considers the following aspects: company analysis, goods analysis, market analysis, sector analysis and company strategies.
COMPANY ANALYSIS: If it is a going concern, it is important to describe its history, write about its establishment year, ownership structure (during the years), business entity, acquired competences, usual activity, etc…extraordinary events (transfers, board of directors changes) in the company, and if the company is part of an industrial or financial group.
MARKETING MANAGEMENT : how to increase your value for customers, analysis, decisions and relations between three fundamental steps:
GOODS ANALYSIS AND MARKETING: Describes the offer behind the business idea, linking goods and services to their target.
It is important to consider the offer as an instrument to satisfy market needs, avoid considering your offer suitable for everyone, interesting for many consumers with different characteristics and needs.
Proceed with the segmentation of the demand, analyse suitable consumers, identify useful parameters in order to analyse their needs and reasons to purchase.
The following levels are taken into consideration for consumer goods:
- socio-demographic : age, sex, revenue, geographical position, etc..;
- psychographic : needs, purchase reasons, values;
- aimed benefits : product benefits perceived by the consumer;
- behavioural : purchase behaviour of different consumers groups.
Study how your offer is able to satisfy market expectations (demand) and who it is oriented to (target). Linking goods and services to a specific consumers segment, it is possible to identify business units, in order to divide business activities.
However, to be efficient it is fundamental to have important business activities, with economic dimensions that justify the business focus. They must be accessible, easy to reach (economically) by the company.
SECTOR ANALYSIS : it is focused on the offer characteristics, namely, competitors, distribution channels structure and supply market. The analysis has to be carried out both in an historical and prospective basis: indeed study the evolution of the offer (related to demand) provides useful information about the competitive scenarios expected.
First of all it is important to ask yourself in which sector you are working or you are going to work on, in order to understand its life cycle. Indeed sectors have different life cycles such as: launch, development, maturity and decline. Each step needs different competitive logics.
Moreover it is important to carry out a study on business positioning, using:
- analysis variables divide the structure of the offer (specialisation, commercial brand, vertical integration, etc…);
- a matrix (technology pervasiveness, commercial value) which clarify the impact of new technologies on existing players and competitiveness problems.
MATRIX
Technology pervasiveness : production, logistics, marketing, trade;
Commercial value: purchase reasons, trust, offer characteristics;
After having analysed structure and characteristic of the sector, it is important to analyse competitors, dividing them according to their proximity to target market:
- direct and indirect competitors , whether they aim to satisfy needs similar or different from the target;
- primary or secondary direct competitors …classified according to their proximity to user market;
- inter-channel or intra-channel competitors , players focused on concrete or digital activities.
In order to complete the analysis, it is important to focus on supply and target markets, studying structure and characteristic of suppliers and then distribution channels.
At this step it is possible to draft competitive maps , choosing suitable classification variables, in order to identify competitors strategy market characteristics.
In this way the company can verify suitability and efficiency of a strategy in addition to latent markets opportunities.
EVALUATION TOOLS FOR CORPORATE FINANCE : the corporate finance goal is to provide the business decision maker tools for an efficient planning of business financial resources.
IN BIRIEF, THE BUSINESS PLAN WILL INCLUDE A SYNTHETIC DESCRIPTION OF THE FOLLOWING CHAPTERS:
- business mission and strategic orientation;
- needs analysis;
- market segmentation;
- potential market quantification;
- analysis of competitors;
- goods and services description;
- marketing policy;
- productive process description;
- internal organisation;
- external coalitions and co-operations;
- authorisations and registrations;
- business entity choice;
- headquarter location and characteristics;
- economic and financial plans, synthetic information of basis hypothesis:
- forecasted income statement ( 3 years);
- balance sheet and planned investments identification;
- financial budget, identifying financial requirements and its collaterals.
FUNDAMENTAL STEPS WHILE DRAFTING A BUSINESS PLAN:
Index
It has to be clear, synthetic, it has to include the following parts:
Summary
- company goals;
- mission;
- key success factors.
General and legal information
- information about how the property is divided, company shares distribution;
- information about company history (for existing companies)
- information about company location, existence and subsidiary companies.
Goods and Services
- goods and services description from the consumer point of view;
- competitors description form the consumer point of view;
- sales trends data of a specific sector;
- first materials supply modalities;
- criticality and opportunities of goods and services and potential evolutions.
Market analysis
- aim to a market segmentation;
- describe the strategy chose for the target market;
- identify market needs and trends, and evaluate its growth rate;
- analyse the production chain, its structure and main actors;
- analyse supply methods of the sector;
- identify main competitors.
Market analysis strategy and implementation
- business values identification;
- writing general strategy, tactics for specific problems, process new steps and action plans;
- define your competitive advantage;
- set a marketing strategy and how you want to position in the market, set a price policy, goods promotion, set a distribution channel and sale strategy;
- evaluate the possibility of operative and strategic alliances;
- identify the main steps of business development.
Legal aspects and project participants
- clear identification of organisational structure, managers, how to improve lacks of knowledge;
- quantify the involved personnel, tasks and responsibilities.
Financial plan
- describe hypothesis underlying the financial plan;
- financial break-even analysis;
- analysis of profits and losses expected on a changing temporary horizon with respect to the business plan goals;
- cash flows analysis on the long term;
- draft a forecast balance;
Plan
- financial break-even;
- profit and losses expected;
- cash flows expected;
- other specific plans.
Ideally, the document drafted has to be 40/50 pages long and you have to be able to present it through an Executive Summary in a power point file no longer than 15 slides.
FOR FURTHER INFORMATION ABOUT TO THE BUSINESS PLAN OR FOR A FREE CONSULTATION, WRITE A QUESTION IN SECTION, THE EXPERT WILL ANSWER OR CONTACT US VIA E-MAIL IN THE LINK BELOW
