Business Plan

Introduction:

The paper presents the strategic audit of a business plan (hypothetical) made for a previous entrepreneurial course.

The paper discusses various aspects of the business to determine how is it performing and will perform in future aligning with its plan initially made.

The very first paragraph of the report provides a short synopsis of the business idea which has been analyzed in several components throughout the paper in a sequential and professional manner.

Business Summary:

Twist Tech is a mobile immersive application development company. It creates open collaboration platform for building exciting mobile applications. Its mission is to delight its customers with superb user experience.

Ownership Form: Twist Techis a private limited company of five aspiring entrepreneurs holding equal share of equity and the owners are serving various responsible managerial positions of the company.     

Industry History: The Company falls into the growing mobile app industry. We particularly focus on iphone and android based applications. We specialize on 3D apps development.

Legal Form of Ownership: Twist Tech is a partnership company of five aspiring entrepreneurs holding equal share of equity and the owners will be serving various responsible managerial positions of the company.

Location and Facilities: The head quarter of the company will be located at San Francisco, USA. Our target market will be throughout the world and later on if we need expansion we will have regional office at other countries.       

I. Current Situation

A. Current Performance

Twist Techis is now focusing in iPhone and Android mobile applications. It works hard to delight its users with complete engaging experience, using exciting designs, robust engines, great functions and smooth performance.

            Its content and engine teams seamlessly work with its creative heads to develop these innovative and engaging applications. The company works towards creating an open collaboration platform not only for developing its own products but also excel in joint products development and off-shore sourcing projects.

B. Strategic Posture

What are the corporation’s current mission, objectives, strategies, and policies?

1. The company’s current mission, objectives, strategies, and policies are clearly stated.

2. Mission:

‘To be one of the top valued 3D apps developing companies for mobile platform’ 

The company’s mission is to be the one of the top valued 3D app developing companies because the development of 3D-App is a new and recent addition in the mobile application market. The company initially focuses this niche to penetrate into the market which is almost untapped right now.   

3. Objectives:

1. Make 100,000 loyal premium customers within first 2 years.

2. Provide a unique and awesome 3D experience to the users by providing exclusive features and design.

These objectives are fully aligned with company’s mission to be one of the top valued 3D app developing companies. These objectives also comply in terms of its internal strengths and resources as it has some extraordinary talented and passionate engineers in its team.  

4. Strategies:

1.      Twist Tech plans to position itself in a niche segment targeting mostly high quality 3D apps and charge a premium for their superior quality.

2.      Twist Tech plans to offer a trial version of its apps to all its clients for few months to get them acquainted with the apps and after that period if a user wants to continue using that app he/she have to go for the paid version of that apps. This way it penetrates into the market through its free versions.

3.      Selling Strategies: To boost the sales it has the following selling strategies:

§  Free app to first 100 premium customers of any particular apps: Twist Tech offers free access to another premium app to its first 100 premium users of any particular apps.

§  Referral bonus to our present customers: Twist Tech offers a referral bonus if the present users of our apps refer it to a third one. This bonus they could use in using that apps for some extra periods apart they have paid for. 

5. The current mission, objectives, strategies, and policies reflect the corporation’s global nature of the business as the apps developed by the company could be downloaded and use from any parts of the world.

II. Corporate Governance

A. Board of Directors

1. All the 5 shareholders of the venture are in the board of directors there is not external party in the board.

2. Owners of stock: All the board members of the company owns equal amount of stock of the company.

3. Nature of the stocks: Twist Tech is a private limited company; where all the directors hold equal amount of shares. Its shares are privately held.  

4. Contribution of the board members: The board members are responsible for the internal management of the firm. They lead different functional departments. The company plans to partner with some local company in case of expanding its operation to some foreign countries.

5. Duration of the existing board members:  Existing board members are in position for last one year and they will be leading the firm until its going public and there are new stockholders in the firm.

6. The existing board of directors actively participates in the management and suggests future directions.

B. Top Management

The entrepreneurs are responsible for the internal management of the company. The five entrepreneurs hold the following important positions of the company:

Each director is responsible for that particular department. The other engineers and developers report to the director of that particular department and the directors then collaborate the whole process through the operation wings which is also responsible for the finance and regular business issues.

III. External Environment: Opportunities and Threats (SWOT)

A. Natural Physical Environment: Sustainability Issues

• 1. What forces from the natural physical environmental are currently affecting the corporation and the industries in which it competes? Which present current or future threats? Opportunities?
• a. Climate, including global temperature, sea level, and fresh water availability
• b. Weather-related events, such as severe storms, floods, and droughts
• c. Solar phenomena, such as sun spots and solar wind

• 2. Do these forces have different effects in other regions of the world?

B. Societal Environment

• 1. What general environmental forces are currently affecting both the corporation and the industries in which it competes? Which present current or future threats? Opportunities?
• a. Economic
• b. Technological
• c. Political–legal
• d. Sociocultural
• 2. Are these forces different in other regions of the world?

C. Task Environment

Competitiveness of the market:

Driven by technology and innovation, the mobile app industry can be considered a “sexy industry” that attracts competitors and lowers profitability quickly.

Between August 2010 and February 2011 the number of developers, i.e, companies publishing apps, grew with 48% in Apples App Store from around 49,000 to 72,000  (Security, 2011). Developers have equal access to the distribution channel and compete on similar terms within the marketplace with their product’s relevance, diversity and feedback from consumers. Capital requirements to enter the industry are relatively low although it varies with the complexity of design and development, but no inventory is needed and fixed costs for having products on the market is very low. Switching costs for consumers are low or non-existent, usually there are a number of similar products available for the same price or for free.

Although it is easy to enter the mobile app industry, it is harder to get to the top. With the huge amount of apps available in the major app stores, the competition for consumer attention is fierce. According to ACT, an international advocacy and education organization for information technology tech firms and app developers, 80% of the apps are made by small businesses that often supplement their revenue by selling apps.

In the mobile app industry, developers are numerous. Since many developers are small businesses or in some cases sole individuals that don’t earn their living from the industry because they are often highly committed to their products which also intensifies rivalry. For example, a developer can enter the market with a free app out of a personal interest or for the benefit of the user community.

To a certain degree it can also be related to a gradually maturing industry. When Apple introduced the App Store, many developers were able to sell relatively simple apps that today few consumers would pay for, such as a torch or a fake beer drinking app. In parts, it was because they were first out on the market and had few competitors, it could also be related to a curiosity amongst consumers and the newness of the concept of apps. Gradually, competitors entered the market and drove down prices and consumer’s expectations got higher and their habits more sophisticated. This forced competitors to differentiate and constantly innovate with new and better apps at lower prices.

Another aspect is that competition in the mobile app industry is very segmented. For example, the gaming app Fruit Ninja, where users slice flying fruits to gain maximum points, does not really compete with the utility app “Vem ringde”, a Top Paid app on the Swedish Apple App Store in February 2012 that checks up unknown numbers calling your phone. In this sense, the breadth and diversity of apps can be argued to attract more customers to the platform generating more revenue for developers in total in all segments and giving higher value and more options for the consumers. (Suter)

In brief we get the overall competition as follows:

• 2. What key factors in the immediate environment (that is, customers, competitors, suppliers, creditors, labor unions, governments, trade associations, interest groups, local communities, and shareholders) are currently affecting the corporation? Which are current or future Threats? Opportunities?

D. Summary of External Factors (List in the EFAS Table 4–5, p. 126)

Which of these forces and factors are the most important to the corporation and to the industries in which it competes at the present time? Which will be important in the future?

IV. Internal Environment: Strengths and Weaknesses (SWOT)

A. Corporate Structure

• 1. How is the corporation structured at present?
• a. Is the decision-making authority centralized around one group or decentralized to many units?
• b. Is the corporation organized on the basis of functions, projects, geography, or some combination of these?

• 2. Is the structure clearly understood by everyone in the corporation?
• 3. Is the present structure consistent with current corporate objectives, strategies, policies, and programs, as well as with the firm’s international operations?
• 4. In what ways does this structure compare with those of similar corporations?

B. Corporate Culture

• 1. Is there a well-defined or emerging culture composed of shared beliefs, expectations, and values?
• 2. Is the culture consistent with the current objectives, strategies, policies, and programs?
• 3. What is the culture’s position on environmental sustainability?
• 4. What is the culture’s position on other important issues facing the corporation (that is, on productivity, quality of performance, adaptability to changing conditions, and internationalization)?
• 5. Is the culture compatible with the employees’ diversity of backgrounds?
• 6. Does the company take into consideration the values of the culture of each nation in which the firm operates?

C. Corporate Resources

1. Marketing

4Ps:

Product Strategy:

Though Twist Tech offers a wide range of IT solutions including Graphic Design, Computer based Customized Applications etc., its main product is mobile app for iOS and Android.

 The company will develop both free and paid apps. Free apps will serve the purpose of introducing and branding the company to the target customers. In most the cases the upgraded version/ premium version of our app will need to be paid. While developing apps Twist Tech focuses the young generations as they are the next big market. The main focus of our apps will be:

1. 3D Games: Our expert engineers teams along with our design teams are capable of developing high quality 3D Games. And this is our prime products.

Price Strategy:

As we already know that the market we are going to target is a highly competitive one. However, due to the presence of a large number of buyers in the market, the price competition is not as significant as competition for quality. The consumers of this market are ready to pay for better quality. Thus Twist Tech will offer value based pricing which means we’ll provide high valued apps and will charge a higher amount than the average price. Though for our every apps there’ll be a free version/trial version so that our customers get an idea regarding its superior qualities before making the final purchase. Our pricing strategies would be as follows:

Promotion Strategy:        

In a highly competitive industry like this one promotion is the most important thing to sustain in the market. We will also focus on promoting our company vigorously. We’ll create our own brand name.

Positioning Strategy: As already mentioned Twist Tech will position itself in a niche segment targeting mostly high quality 3D apps and charge a premium for their superior quality. The positioning graph will be as follows:

Marketing Communication Tools:

1. Social Media: As our prime target is young generation and they pass most of their time in various social media networking sites, Twist Tech will use the social media marketing tools centering on efforts to create content that attracts attention and encourages readers to share it with their social networks. The following social media platforms will be utilized through their specific kinds of promotion tools and mechanisms:

Twitter: We will use Twitter to promote our apps on an individual level through explaining the special features in short messages that followers are more likely to read. Messages will link to our products’ website, Facebook profile, photos, videos, etc.

Facebook: Through Twist Tech’s Facebook profile, we will provide videos, photos, and other engaging contents to our fan base. Strategies to extend the reach with promoting Free Trial Versions and acquire new fans with Facebook ads will be undertaken. It will help us promote the specific region based apps in a cost effective way. We will also conduct the popularity rating of our apps through Facebook.

Google+: Google+, in addition to providing the profiles and features of Facebook, will also give Twist Tech the chance to integrate with the Google search engine and other Google products such as Google Adwords and Google Play. Using Google+, we will take the strategy of targeted advertising, navigation services, and other forms of location-based marketing and promotion.

Other social media tools will include:

Blogs

Yelp

YouTube

2. Video Marketing: As the name suggests, video contents will be created and promoted through the top video sharing sites in the Web. Youtube, Vimeo etc. are two good routes to gain attention from the prospective customers.

D3: Selling Strategies:  

As previously mentioned we will offer a free trial version of our apps to the customers and subsequently they will require paying for the app if they want to continue or upgrade to the premium version. To boost the sales we will have the following selling strategies:

§  Free app to first 100 premium customers of any particular apps: We will offer free access to another premium app to our first 100 premium users of any particular apps. This way we motivate people to purchase our premium apps.    

§  Referral bonus to our present customers: We will offer a referral bonus if the present users of our apps refer it to a third one. This bonus they could use in using that apps for some extra periods apart they have paid for. 

2. Finance

• a. What are the corporation’s current financial objectives, strategies, and policies and programs?
• i. Are they clearly stated or merely implied from performance and/or budgets?
• ii. Are they consistent with the corporation’s mission, objectives, strategies, and policies and with internal and external environments?
• b. How well is the corporation performing in terms of financial analysis? (Consider ratio analysis, common size statements, and capitalization structure.) How balanced, in terms of cash flow, is the company’s portfolio of products and businesses? What are investor expectations in terms of share price?
• i. What trends emerge from this analysis?
• ii. Are there any significant differences when statements are calculated in constant versus reported dollars?
• iii. What impact have these trends had on past performance and how might these trends affect future performance?
• iv. Does this analysis support the corporation’s past and pending strategic decisions?
• v. Does finance provide the company with a competitive advantage?
• c. How well does the corporation’s financial performance compare with that of similar corporations?
• d. Are financial managers using accepted financial concepts and techniques to evaluate and improve current corporate and divisional performance? (Consider financial leverage, capital budgeting, ratio analysis, and managing foreign currencies.)
• e. Does finance adjust to the conditions in each country in which the company operates?
• f. Does finance cope with global financial issues?
• g. What is the role of the financial manager in the strategic management process?
• 3. Research and Development (R&D)
• a. What are the corporation’s current R&D objectives, strategies, policies, and programs?
• i. Are they clearly stated or merely implied from performance or budgets?
• ii. Are they consistent with the corporation’s mission, objectives, strategies and policies and with internal and external environments?
• iii. What is the role of technology in corporate performance?
• iv. Is the mix of basic, applied, and engineering research appropriate given the corporate mission and strategies?
• b. What return is the corporation receiving from its investment in R&D?
• c. Is the corporation competent in technology transfer? Does it use concurrent engineering and cross-functional work teams in product and process design?
• d. What role does technological discontinuity play in the company’s products?
• e. How well does the corporation’s investment in R&D compare with the investments of similar corporations? How much R&D is being outsourced? Is the corporation using value-chain alliances appropriately for innovation and competitive advantage?
• f. Does R&D adjust to the conditions in each country in which the company operates?
• g. Does R&D consider environmental sustainability in product development and packaging?
• h. What is the role of the R&D manager in the strategic management process?
• 4. Operations and Logistics
• a. What are the corporation’s current manufacturing/service objectives, strategies, policies, and programs?
• i. Are they clearly stated or merely implied from performance or budgets?
• ii. Are they consistent with the corporation’s mission, objectives, strategies, and policies and with internal and external environments?

Page [removed]Go to the specified printed page number

• v. Does R&D provide the company with a competitive advantage?

• b. What are the type and extent of operations capabilities of the corporation? How much is done domestically versus internationally? Is the amount of outsourcing appropriate to be competitive? Is purchasing being handled appropriately? Are suppliers and distributors operating in an environmentally sustainable manner? Which products have the highest and lowest profit margins?
• i. If the corporation is product oriented, consider plant facilities, type of manufacturing system (continuous mass production, intermittent job shop, or flexible manufacturing), age and type of equipment, degree and role of automation and/or robots, plant capacities and utilization, productivity ratings, and availability and type of transportation.
• ii. If the corporation is service oriented, consider service facilities (hospital, theater, or school buildings), type of operations systems (continuous service over time to same clientele or intermittent service over time to varied clientele), age and type of supporting equipment, degree and role of automation and use of mass communication devices (diagnostic machinery, video machines), facility capacities and utilization rates, efficiency ratings of professional and service personnel, and availability and type of transportation to bring service staff and clientele together.
• c. Are manufacturing or service facilities vulnerable to natural disasters, local or national strikes, reduction or limitation of resources from suppliers, substantial cost increases of materials, or nationalization by governments?
• d. Is there an appropriate mix of people and machines (in manufacturing firms) or of support staff to professionals (in service firms)?
• e. How well does the corporation perform relative to the competition? Is it balancing inventory costs (warehousing) with logistical costs (just-in-time)? Consider costs per unit of labor, material, and overhead; downtime; inventory control management and scheduling of service staff; production ratings; facility utilization percentages; and number of clients successfully treated by category (if service firm) or percentage of orders shipped on time (if product firm).
• i. What trends emerge from this analysis?
• ii. What impact have these trends had on past performance and how might these trends affect future performance?
• iii. Does this analysis support the corporation’s past and pending strategic decisions?
• iv. Does operations provide the company with a competitive advantage?

Page [removed]Go to the specified printed page number

• f. Are operations managers using appropriate concepts and techniques to evaluate and improve current performance? Consider cost systems, quality control and reliability systems, inventory control management, personnel scheduling, TQM, learning curves, safety programs, and engineering programs that can improve efficiency of manufacturing or of service.
• g. Do operations adjust to the conditions in each country in which it has facilities?
• h. Do operations consider environmental sustainability when making decisions?
• i. What is the role of the operations manager in the strategic management process?
• 5. Human Resources Management (HRM)
• a. What are the corporation’s current HRM objectives, strategies, policies, and programs?
• i. Are they clearly stated or merely implied from performance and/or budgets?
• ii. Are they consistent with the corporation’s mission, objectives, strategies, and policies and with internal and external environments?
• b. How well is the corporation’s HRM performing in terms of improving the fit between the individual employee and the job? Consider turnover, grievances, strikes, layoffs, employee training, and quality of work life.
• i. What trends emerge from this analysis?
• ii. What impact have these trends had on past performance and how might these trends affect future performance?
• iii. Does this analysis support the corporation’s past and pending strategic decisions?
• iv. Does HRM provide the company with a competitive advantage?

Page [removed]Go to the specified printed page number

• c. How does this corporation’s HRM performance compare with that of similar corporations?
• d. Are HRM managers using appropriate concepts and techniques to evaluate and improve corporate performance? Consider the job analysis program, performance appraisal system, up-to-date job descriptions, training and development programs, attitude surveys, job design programs, quality of relationships with unions, and use of autonomous work teams.
• e. How well is the company managing the diversity of its workforce? What is the company’s record on human rights? Does the company monitor the human rights record of key suppliers and distributors?
• f. Does HRM adjust to the conditions in each country in which the company operates? Does the company have a code of conduct for HRM for itself and key suppliers in developing nations? Are employees receiving international assignments to prepare them for managerial positions?
• g. What is the role of outsourcing in HRM planning?
• h. What is the role of the HRM manager in the strategic management process?
• 6. Information Technology (IT)
• a. What are the corporation’s current IT objectives, strategies, policies, and programs?
• i. Are they clearly stated or merely implied from performance and/or budgets?
• ii. Are they consistent with the corporation’s mission, objectives, strategies, and policies and with internal and external environments?

Page [removed]Go to the specified printed page number

• b. How well is the corporation’s IT performing in terms of providing a useful database, automating routine clerical operations, assisting managers in making routine decisions, and providing information necessary for strategic decisions?
• i. What trends emerge from this analysis?
• ii. What impact have these trends had on past performance and how might these trends affect future performance?
• iii. Does this analysis support the corporation’s past and pending strategic decisions?
• iv. Does IT provide the company with a competitive advantage?
• c. How does this corporation’s IT performance and stage of development compare with that of similar corporations? Is it appropriately using the Internet, intranet, and extranets?
• d. Are IT managers using appropriate concepts and techniques to evaluate and improve corporate performance? Do they know how to build and manage a complex database, establish Web sites with firewalls and virus protection, conduct system analyses, and implement interactive decision-support systems?
• e. Does the company have a global IT and Internet presence? Does it have difficulty with getting data across national boundaries?
• f. What is the role of the IT manager in the strategic management process?

Page

D. Summary of Internal Factors (List in the IFAS Table 5–2, p. 164)

Which of these factors are core competencies? Which, if any, are distinctive competencies? Which of these factors are the most important to the corporation and to the industries in which it competes at the present time? Which might be important in the future? Which functions or activities are candidates for outsourcing?

V. Analysis of Strategic Factors (SWOT)

A. Situational Analysis (List in SFAS Matrix, Figure 6–1, p. 179)

Of the external (EFAS) and internal (IFAS) factors listed in III.D and IV.D, which are the strategic (most important) factors that strongly affect the corporation’s present and future performance?

B. Review of Mission and Objectives

• 1. Are the current mission and objectives appropriate in light of the key strategic factors and problems?
• 2. Should the mission and objectives be changed? If so, how?
• 3. If they are changed, what will be the effects on the firm?

VI. Strategic Alternatives and Recommended Strategy

A. Strategic Alternatives (See the TOWS Matrix, Figure 6–3, p. 182)

• 1. Can the current or revised objectives be met through more careful implementation of those strategies presently in use (for example, fine-tuning the strategies)?
• 2. What are the major feasible alternative strategies available to the corporation? What are the pros and cons of each? Can corporate scenarios be developed and agreed on? (Alternatives must fit the natural physical environment, societal environment, industry, and corporation for the next three to five years.)
• a. Consider stability, growth, and retrenchment as corporate strategies.
• b. Consider cost leadership and differentiation as business strategies.
• c. Consider any functional strategic alternatives that might be needed for reinforcement of an important corporate or business strategic alternative.

Page [removed]Go to the specified printed page number

B. Recommended Strategy

• 1. Specify which of the strategic alternatives you are recommending for the corporate, business, and functional levels of the corporation. Do you recommend different business or functional strategies for different units of the corporation?
• 2. Justify your recommendation in terms of its ability to resolve both long- and short-term problems and effectively deal with the strategic factors.
• 3. What policies should be developed or revised to guide effective implementation?
• 4. What is the impact of your recommended strategy on the company’s core and distinctive competencies?

VII. Implementation

A. What Kinds of Programs (for Example, Restructuring the Corporation or Instituting TQM) Should Be Developed to Implement the Recommended Strategy?

• 1. Who should develop these programs?
• 2. Who should be in charge of these programs?

B. Are the Programs Financially Feasible? Can Pro Forma Budgets Be Developed and Agreed On? Are Priorities and Timetables Appropriate to Individual Programs?

C. Will New Standard Operating Procedures Need to Be Developed?

VIII. Evaluation and Control

A. Is the Current Information System Capable of Providing Sufficient Feedback on Implementation Activities and Performance? Can It Measure Strategic Factors?

• 1. Can performance results be pinpointed by area, unit, project, or function?
• 2. Is the information timely?
• 3. Is the corporation using benchmarking to evaluate its functions and activities?

B. Are Adequate Control Measures in Place to Ensure Conformance with the Recommended Strategic Plan?

• 1. Are appropriate standards and measures being used?
• 2. Are reward systems capable of recognizing and rewarding good performance?