- Situational Analysis Prior to starting a business
Prior to starting a business, it is necessary to carry out a situational analysis, in order to gains proper perspective on the potential market or lack thereof. This can be done using a SWOT analysis, or using Porter’s five forces analysis. For instance, within the fast food industry, prior to starting up a business, it would be necessary to carry out an analysis of the business situation in order to be able to identify potential pitfalls as well as opportunities, in terms of the business as well as its environment. The best tool for evaluation in this case, especially considering the fact that the business is yet to launch would be Porters five forces analysis
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Get Help Now!Threat of new competition
The market is open in nature, and does not really have any barriers to entry, it is also fairly easy to start a business within the industry TACO is aiming to enter into, as capital requirements are not really very discouraging. On the other hand, industry profitability is dependent upon the individual effort as well as the ability of a business to establish unique distribution systems.
Threat of Substitute Products
The market is a difficult one to penetrate due to the fact that a number of substitutes may exist in the market, as there is a great degree of product differentiation, as there is a huge number of substitute products within the market.
Bargaining Power of Customers
Due to the nature of products, the lack of differential advantage, buyer price sensitivity and the levels of buyer concentration compared to firm concentration, there is no denying that the bargaining power of customers the ability of customers to put the business under pressure to reduce prices will be quite high.
Bargaining Power of Suppliers
Due to the wide array of potential suppliers, as well as the presence of substitute inputs as well as a great degree of differentiation when it comes to inputs, the ability of suppliers to dictate pricing will be reduced.
- Objective Setting
The decision over how big TACOS would like to grow is dependent upon the model that the business is borrowing from. Seeing as the concept of outdoor dining on the cheap is fairly new to the target market, the initial targeted growth is to create a market for the one Truck. Following the achievement of the initial desired level of business, the number of trucks serving food will increase and become nationwide, with the targeted growth being at least ten trucks within the first two years. Further, the business hopes to improve on the catering front in order to progressively expand to the catering market steadily over the next 5 years. This growth it is hoped will also signal similar growth within the local market, in tandem with the business itself.
- Planning
Strategic Objective Plan
The company aims to achieve such exponential growth through offering a unique eating experience for the customer and as a result achieving differentiation. Such product differentiation and the offering of quality and courteous service will result in the establishment of a loyal customer base that will then provide a basis upon which the targeted growth can be achieved.
In terms of footing the costs that will accompany such an expansion drive; TACOS will aim to plough back any profits made within the first six months followed by a carefully thought out plan over how to spread the profits amongst the four partners, while still being able to balance between doing so and ploughing back sufficient remaining profits to continue the same rate of growth.
Financial Objective/Plan
The initial capital will be raised equally amongst the four partners, as the business picks up, profits made will then be reinvested back into the business at least for the first six months before the partners are able to craft a criteria for the sharing of the profits, both on the basis of capital raised, as well as on the basis of the degree of involvement in the running of the business. Further, based on the initial performance of the business, the business will also source for funding, as well as further investment from banks as well as interested parties.
Operations Objective/Plan
The initial management of the business at start up will be left to one of the partners, with the other three partners’ involvement purely being logistical and helping with the initial set up. As the business expands, a professional management team will be set up, and although the trucks will be serving different locations, guidelines to pricing as well as menus will be common for all TACOS trucks. Further, a central management point will be set up to organize aspects such as company colors, uniform, as well as the truck designs. Other matters that will be dealt with from the central offices include reservations as well as catering appointments. In order to facilitate the expansion as well as management of the potentially rapid growth, the initial structure to be adopted will be that of franchising, as obtaining sufficient capital to drive such rapid expansion might be difficult. As such, the business will attract interested parties and convince them to invest in the company to obtain their own individual trucks that can then be linked to the TACOS brand, with individual management problems being solved by the proprietors themselves, with a slight commission being charged by the company on sales made.
Learning and Growth Objective Plan
The initial management team will attempt to keep abreast of any new developments within the industry by conducting constant research as well as maintaining open channels of communications with the customers in order to facilitate further improvement. As such, the company will be carrying out periodic market evaluations to survey where exactly the brand stands within the market, as well as what can be done to ensure further market penetration as well as a further rise in market share for TACOS. This research will also allow for the identification of potential markets as well as areas for further improvement. Allowing for constant communication with the customers will ensure that services and products being delivered by TACOS are tailor made to suit market needs and demands, as gleaned from appraisals by the customers.
- Ensuring we are on track
The best way to judge whether or not the company is on the right track will be an evaluation of profit margins as well as whether or not the profit margins are remaining constant, or growing. In addition, in order to judge progress, the growth must be tied to goals set at the beginning, as meeting these target goals or even surpassing them if combined with sustained good profit margins, will be an indicator that the entrepreneurs are indeed on the right track.
Question 2
FACETS of the Entrepreneur
Focus: The Entrepreneur under this aspect displays an ability to focus on their target, the time it will take to achieve it as well as the course of action required. The entrepreneur therefore proceeds to take the necessary action to realize their target.
Advantage: The entrepreneur is capable of displaying an orientation towards performance as well as towards benefits that can be derived from a particular business opportunity. In order to realize the benefits, the entrepreneur displays vision and an ability to secure resources that can be used towards achieving such an end. Further, the entrepreneur displays a keen eye for opportunity identification and selection, choosing only those opportunities that provide maximum potential for benefit.
Creative: In order maximize on opportunities that present themselves, the entrepreneur displays an ability to marry ideas and solutions effectively to realize the preset targets or goals.
Ego: The ideal entrepreneur is capable of achieving the delicate balance between being self assured and taking responsibility, showing a high level of dedication while still remaining capable of taking responsibility. The entrepreneur is not only motivated to explore opportunities that present themselves, but is also courageous enough to take risks and pursue their target.
Team: An entrepreneur must have certain social skills that they exploit to achieve teamwork, they must be capable of establishing effective networks, knowing when to use an expert, as well as knowing how to pick a winning team.
Social: An entrepreneur must be humble and ready to serve others, as well as have a mission, as well as strong values and beliefs that guide the given mission and their service to others.
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