Unit 19 Pitching for a New Business Lesson 2
Natalie Hopkins
index
Models for Business Opportunities
Business Processes
Channels to Market
Structure
Decision Matrix
01
Models for business opportunities
Business Activity
Business activity falls into three different categories. This depends on the nature and structure of the business. Some will be focused on the main activity. Sometimes it can be a combination of all three. An example could be where business diversifies or expands to remain successful. Example: a farmer may decide to make their own cheese and other dairy products which can be sold in a farm shop they create. An entrepreneur needs to understand and know how each of the three different activities contribute to a business. This enables them to focus on what's important to them, opportunities that are available and/or to diversify their business.
Tertiary
Secondary
Primary
Businesses that offer services. Businesses in this sector rely on interaction directly with customers and/or other businesses.
Buinesses use natural resources as their main product
Manufacturing and/or construction is the main activity of a business.
quiz time
quiz time
quiz time
More info...
Primary / Secondary / tertiary uk trends since 1800 (%)
02
Business Processes
Processes
It is important to be aware of the processes that are involved in specific businesses. These are:
Sourcing
Outsourcing
Manufacturing
All businesses have a level of sourcing that they need to undertake. They research and find the products they need in order to operate. Even if a business is manufacturing its own products, it still needs to source the raw materials.
An organisation uses other businesses and individuals to supply them with products and/or services rather than manufacturing their own.
Manufacturing takes place when raw materials, ready made components and/or parts are made into finished products or products on a large scale, using a production line that involves machinery.
+ INFO
+ INFO
+ INFO
03
Channels to Market
Channels to Market
direct distribution
Producer
Consumer
Info
Businesses need to consider how they will get their goods and/or services from producing them to the customer. They may sell directly to the customer, but they still need to think about how they will do this, e.g. face to face in a shop, over the phone at a call centre or using a website. Many businesses will need to use a supply chain - the sequence of processes to get a product or service from production to the consumer. This is likely to involve a network of businesses
indirect distribution options
Producer
Consumer
Retailer
Wholesaler
Info
Producer
Consumer
Retailer
Info
Producer
Consumer
Agent or other third party
Info
04
Structure
organisational form
Businesses need to have a structure outlining the lines of authority and communication channels. The size of the business is likely to be a large contributing factor to its structure. A small, family-run business is less likely to have a formal and complicated structure, but, a large multi-national Public Limited Company (PLC), such as Tesco, BP or Microsoft, will need structure in order to operate effectively. The structure of a business will depend on many other factors than just its size - including life cycle, strategy, business, environment and even values.
Life cycle
Size
+ INFO
+ INFO
Business Environment
Strategy
+ INFO
+ INFO
roles and responsibilities
Whether the business is large or small, there is likely to be some kind of a structure. Within this structure, the roles and responsibilities of each level of management and job role must be clearly defined so that everyone is clear on what is expected of them in terms of performance, skills and behaviour. These roles and responsibilities are likely to be written down in larger organisations, and to be part of the job description for each role within the organisation.
In smaller organisations, roles and responsibilities are less likely to be so-defined, as employees may be asked to undertake a variety of tasks as the need arises. In these situations, the employee is likely to be much closer to the senior manager or owner of the business and so communication channels remain open and accessible to raise any concerns around roles and responsibilities.
This ensures transparency and fairness when dealing with promotions, staff development and any concerns that a manager may have about the performance of one of their team.
05
Decision Making
watch this video to see how it works...
Your turnComplete a decision matrix based on holidays you want to go on. Once complete upload to the assignment set up under 'classwork lesson 2' on the unit teams channel.
Decision matrix information guide
Click on the 'i' icons to find out more about each section of the matrix.
From the matrix above, which option is the most viable to make in the new soft furnishings business? Give reasons. Are there more factors that could be considered and added to the decision matrix? What additional value would your additional suggestions give to the overall results?
your turn...
This is Money
Start-Up Donut
Click on the title above (link) and scroll down to find examples of busineses that have been set-up. Pick one of the examples and find out more about that idea. Can you make a note of the business idea, where the idea came from, how much money did they have to start and why do you think it was successful?
Click on the title above (link) and find one of the examples of someone who started with a small amount of money and became successful. Who are they, what did they start with, what is their product and how much are they worth now?
The weighted ranking for each of the factors must be made according the needs of the business and the importance they will have to the overall success. In the example shown, the most important factor that has been taken into consideration is space in the stockroom and, therefore, it has been given a low weighting. This would be because space is limited and many large items would be difficult to store, so the weighting reflects this.
Once you have your Options, factors and weightages, you then need to score each of the options according to the different factors, based on the knowledge of the individual who is creating the new business, or on their research if they do not already know. These scores are based on a scale of 1 to 5. These scores are then multiplied by the weighted ranking to give an overall score. The higher the score, the more viable the product/service, the lower the score, the less viable the product/service.
In a large organisation sourcing will be carried out by a dedicated department, e.g. buying/purchasing. In a smaller organisation the owner or senior manager might source what is required.Sourcing can be done by researching online or travelling overseas to see, touch or experience the product before deciding to purchase.When sourcing products you need to consider:
- suitability
- price
- value for money
- colour
- feel
- touch
- functionality
- ethics
- how popular it will be
- ability to get supplies of it
The fewer employees in an organisation, the fewer levels of management there are likely to be, making the company structure 'flat'.
A decision matrix requires to list all the options you have within your business idea. Options can be seen on the matrix, in the first column.
In fast-paced sectors, it will be important to have a smaller, slicker structure to ensure that the business can react to any market changes, whether expected or unexpected. The demands of the customer may also influence the structure of a business, based on the business enviroment.
People are employed to operate the machinery, although more recently robotics are being used on the production line.They include consumer goods raning from food and drinks to technology (mobile phones and tablets). Milk is an example that has used production lines and robotics for many years. The milk containers are not touched by human hands, from when the cow is milked to when the carton is delivered to the supermarket.
Businesses that develop and continue to grow are likely to go through a series of structural developments, creating life cycles that they are continuously going through and emerging from. Large and small organisations are affected by life cycle structures that are influenced by factors such as business growth, a need to save costs, to become more effective or to reflect industry changes, such as becoming more mechanised and therefore requiring fewer managers.
A decision matrix requires to list all the factors you need to take into consideration. Factors can be seen on the table, along the top row. Each of your factors need to be weighted in order of importance.
Organisations may use a combination of their own products and services as well as outsourcing to meet demand and respond to changes in the business.Examples
- Car rescue organisations such as the AA and RAC have their own mechanics and rescue vehicles. They also use a network of local garages and rescue services across the country
- Marks and Specer have their own clothing range, but they don't manufacture any of their clothing, household goods or food. They outsource it all to a variety of specialised companies chosen for their ability and expertise.
Outsourcing is used by businesses for services that are necessary for the smooth running of their own business, e.g. payroll or an employee support line. It allows the business to focus on the demands of the business rather than a complex area they may have no employees skilled or experienced in.
A business may decide to have a smaller structure so that it can react quickly to market changes and keep ahead of its competitors. Another organisation, however, may decide to have a larger structure so that each area or department can become specialists in different areas of the business.
Decision Matrix:
Generation of Selection Criteria and Scoring for Business Opportunities
As you try to come up with an idea for a new business, many ideas will pop into your head, some of which will be relevant and some which will be less important. There may be things you have not even thought about in these early stages that you will need to consider. These ideas need to be organised and a decision matrix is a good way to do this.
A decision matrix is a tool that helps you to weigh up the different factors that need to be considered before taking a micro-business from the initial ideas stage into something that you can use to work on and then develop into a serious proposition and, ultimately, into a business plan.
19 Lesson 2 LOA Decision Matrix & Models for Business Opportunities
Natalie Hopkins
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Transcript
Unit 19 Pitching for a New Business Lesson 2
Natalie Hopkins
index
Models for Business Opportunities
Business Processes
Channels to Market
Structure
Decision Matrix
01
Models for business opportunities
Business Activity
Business activity falls into three different categories. This depends on the nature and structure of the business. Some will be focused on the main activity. Sometimes it can be a combination of all three. An example could be where business diversifies or expands to remain successful. Example: a farmer may decide to make their own cheese and other dairy products which can be sold in a farm shop they create. An entrepreneur needs to understand and know how each of the three different activities contribute to a business. This enables them to focus on what's important to them, opportunities that are available and/or to diversify their business.
Tertiary
Secondary
Primary
Businesses that offer services. Businesses in this sector rely on interaction directly with customers and/or other businesses.
Buinesses use natural resources as their main product
Manufacturing and/or construction is the main activity of a business.
quiz time
quiz time
quiz time
More info...
Primary / Secondary / tertiary uk trends since 1800 (%)
02
Business Processes
Processes
It is important to be aware of the processes that are involved in specific businesses. These are:
Sourcing
Outsourcing
Manufacturing
All businesses have a level of sourcing that they need to undertake. They research and find the products they need in order to operate. Even if a business is manufacturing its own products, it still needs to source the raw materials.
An organisation uses other businesses and individuals to supply them with products and/or services rather than manufacturing their own.
Manufacturing takes place when raw materials, ready made components and/or parts are made into finished products or products on a large scale, using a production line that involves machinery.
+ INFO
+ INFO
+ INFO
03
Channels to Market
Channels to Market
direct distribution
Producer
Consumer
Info
Businesses need to consider how they will get their goods and/or services from producing them to the customer. They may sell directly to the customer, but they still need to think about how they will do this, e.g. face to face in a shop, over the phone at a call centre or using a website. Many businesses will need to use a supply chain - the sequence of processes to get a product or service from production to the consumer. This is likely to involve a network of businesses
indirect distribution options
Producer
Consumer
Retailer
Wholesaler
Info
Producer
Consumer
Retailer
Info
Producer
Consumer
Agent or other third party
Info
04
Structure
organisational form
Businesses need to have a structure outlining the lines of authority and communication channels. The size of the business is likely to be a large contributing factor to its structure. A small, family-run business is less likely to have a formal and complicated structure, but, a large multi-national Public Limited Company (PLC), such as Tesco, BP or Microsoft, will need structure in order to operate effectively. The structure of a business will depend on many other factors than just its size - including life cycle, strategy, business, environment and even values.
Life cycle
Size
+ INFO
+ INFO
Business Environment
Strategy
+ INFO
+ INFO
roles and responsibilities
Whether the business is large or small, there is likely to be some kind of a structure. Within this structure, the roles and responsibilities of each level of management and job role must be clearly defined so that everyone is clear on what is expected of them in terms of performance, skills and behaviour. These roles and responsibilities are likely to be written down in larger organisations, and to be part of the job description for each role within the organisation.
In smaller organisations, roles and responsibilities are less likely to be so-defined, as employees may be asked to undertake a variety of tasks as the need arises. In these situations, the employee is likely to be much closer to the senior manager or owner of the business and so communication channels remain open and accessible to raise any concerns around roles and responsibilities.
This ensures transparency and fairness when dealing with promotions, staff development and any concerns that a manager may have about the performance of one of their team.
05
Decision Making
watch this video to see how it works...
Your turnComplete a decision matrix based on holidays you want to go on. Once complete upload to the assignment set up under 'classwork lesson 2' on the unit teams channel.
Decision matrix information guide
Click on the 'i' icons to find out more about each section of the matrix.
From the matrix above, which option is the most viable to make in the new soft furnishings business? Give reasons. Are there more factors that could be considered and added to the decision matrix? What additional value would your additional suggestions give to the overall results?
your turn...
This is Money
Start-Up Donut
Click on the title above (link) and scroll down to find examples of busineses that have been set-up. Pick one of the examples and find out more about that idea. Can you make a note of the business idea, where the idea came from, how much money did they have to start and why do you think it was successful?
Click on the title above (link) and find one of the examples of someone who started with a small amount of money and became successful. Who are they, what did they start with, what is their product and how much are they worth now?
The weighted ranking for each of the factors must be made according the needs of the business and the importance they will have to the overall success. In the example shown, the most important factor that has been taken into consideration is space in the stockroom and, therefore, it has been given a low weighting. This would be because space is limited and many large items would be difficult to store, so the weighting reflects this.
Once you have your Options, factors and weightages, you then need to score each of the options according to the different factors, based on the knowledge of the individual who is creating the new business, or on their research if they do not already know. These scores are based on a scale of 1 to 5. These scores are then multiplied by the weighted ranking to give an overall score. The higher the score, the more viable the product/service, the lower the score, the less viable the product/service.
In a large organisation sourcing will be carried out by a dedicated department, e.g. buying/purchasing. In a smaller organisation the owner or senior manager might source what is required.Sourcing can be done by researching online or travelling overseas to see, touch or experience the product before deciding to purchase.When sourcing products you need to consider:
The fewer employees in an organisation, the fewer levels of management there are likely to be, making the company structure 'flat'.
A decision matrix requires to list all the options you have within your business idea. Options can be seen on the matrix, in the first column.
In fast-paced sectors, it will be important to have a smaller, slicker structure to ensure that the business can react to any market changes, whether expected or unexpected. The demands of the customer may also influence the structure of a business, based on the business enviroment.
People are employed to operate the machinery, although more recently robotics are being used on the production line.They include consumer goods raning from food and drinks to technology (mobile phones and tablets). Milk is an example that has used production lines and robotics for many years. The milk containers are not touched by human hands, from when the cow is milked to when the carton is delivered to the supermarket.
Businesses that develop and continue to grow are likely to go through a series of structural developments, creating life cycles that they are continuously going through and emerging from. Large and small organisations are affected by life cycle structures that are influenced by factors such as business growth, a need to save costs, to become more effective or to reflect industry changes, such as becoming more mechanised and therefore requiring fewer managers.
A decision matrix requires to list all the factors you need to take into consideration. Factors can be seen on the table, along the top row. Each of your factors need to be weighted in order of importance.
Organisations may use a combination of their own products and services as well as outsourcing to meet demand and respond to changes in the business.Examples
Outsourcing is used by businesses for services that are necessary for the smooth running of their own business, e.g. payroll or an employee support line. It allows the business to focus on the demands of the business rather than a complex area they may have no employees skilled or experienced in.
A business may decide to have a smaller structure so that it can react quickly to market changes and keep ahead of its competitors. Another organisation, however, may decide to have a larger structure so that each area or department can become specialists in different areas of the business.
Decision Matrix:
Generation of Selection Criteria and Scoring for Business Opportunities
As you try to come up with an idea for a new business, many ideas will pop into your head, some of which will be relevant and some which will be less important. There may be things you have not even thought about in these early stages that you will need to consider. These ideas need to be organised and a decision matrix is a good way to do this.
A decision matrix is a tool that helps you to weigh up the different factors that need to be considered before taking a micro-business from the initial ideas stage into something that you can use to work on and then develop into a serious proposition and, ultimately, into a business plan.