A Way of Building a Business Plan

Create a Business Plan as the first step on your path to success
Learning Objectives
At the end of this module, you will be able to:
– Identify the essential elements of a Business Plan.
– Identify how a good Business Plan can create an anchor for continued success.
– List additional resources that can help you develop an effective Business Plan.

About FDIC Small Business Resource Effort
 The Federal Deposit Insurance Corporation (“FDIC”) recognizes the important contributions made by small, veteran, and minority and women-owned businesses to our economy. For that reason, we strive to provide small businesses with opportunities to contract with the FDIC. In furtherance of this goal, the FDIC has initiated the FDIC Small Business Resource Effort to assist the small vendors that provide products, services, and solutions to the FDIC.

 The objective of the Small Business Resource Effort is to provide information and the tools small vendors need to become better positioned to compete for contracts and subcontracts at the FDIC. To achieve this objective, the Small Business Resource Effort references outside resources critical for qualified vendors, leverages technology to provide education according to perceived needs, and offers connectivity through resourcing, accessibility, counseling, coaching, and guidance where applicable.

 This product was developed by the FDIC Office of Minority and Women Inclusion (OMWI). OMWI has responsibility for oversight of the Small Business Resource Effort.

Executive Summary
 A Business Plan identifies key areas of your business so you can maximize the time you spend on generating income.
 Key investors will want to look at your Business Plan before providing capital.
 A Business Plan helps you start and keep your business on a successful path.
 You should prepare a Business Plan, although, in reality, many small business owners do not.

What is a Business Plan?
 A Business Plan is a written document that defines the goals of your business and describes how you will attain those goals.
 A Business Plan is worth your considerable investment of time, effort, and energy.
 A Business Plan sets objectives, defines budgets, engages partners, and anticipates problems before they occur.
10 Reasons Why You Need a Strong Business Plan
1. To attract investors.
2. To see if your business ideas will work.
3. To outline each area of the business.
4. To set up milestones.
5. To learn about the market.
6. To secure additional funding or loans.
7. To determine your financial needs.
8. To attract top-level people.
9. To monitor your business.
10. To devise contingency plans.

How Detailed Should
Your Plan Be?
 Business plans differ widely in their length, appearance, content, and the emphasis placed on different aspects of the business.
 Depending on your business and your intended use, you may need a very different type of Business Plan:
– Mini-plan: Less emphasis on critical details. Used to test your assumptions, concept, and measure the interest of potential investors.
– Working Plan: Almost total emphasis on details. Used continuously to review business operations and progress.
– Presentation Plan: Emphasis on marketability of the business concept. Used to give information about the business to bankers, venture capitalists, and other external resources.

Assembling a Business Plan
Every Business Plan should include some essential components:
– Overview of the Business: Describes the business, including its products and services.
– The Marketing Plan: Describes the target market for your product and explains how you will reach that market.
– The Financial Management Plan: Details the costs associated with operating your business and explains how you will pay for those costs, including the amount of financing you may need.
– The Operations and Management Plan: Describes how you will manage the core processes of your business, including use of human resources.

Seven Common Parts of a
Good Business Plan
 Business plans must help investors understand and gain confidence on how you will meet your customers’ needs.

 Seven common parts of a good Business Plan are:
1. Executive Summary
2. Business Concept
3. Market Analysis
4. Management Team
5. Marketing Plan
6. Financial Plan
7. Operations and Management Plan

Part 1: Executive Summary
 The Executive Summary of a Business Plan is a 3-5 page introduction to your Business Plan.
 The Executive Summary is critical, because many individuals (including venture capitalists) only read the summary.

 The Executive Summary section includes:
– A first paragraph that introduces your business.
• Your business name and location.
• A brief explanation of customer needs and your products or services.
• The ways that the product or service meets or exceeds the customer needs.
• An introduction of the team that will execute the Business Plan.
– Subsequent paragraphs that provide key details about your business, including projected sales and profits, unit sales, profitability, and keys to success.

– Visuals that help the reader see important information, including highlight charts, market share projections, and customer demand charts.

Part 2: Business Concept
 The business concept shows evidence that a product or service is viable and capable of fulfilling an organization's particular needs.

 The Business Concept section:
– Articulates the vision of the company, how you plan to meet the unique needs of your customer, and how you plan to make money doing that.
– Discusses feasibility studies that you have conducted for your products.
– Discusses diagnostics sessions you had with prospective customers for your services.
– Captures and highlights the value proposition in your product or service offerings.

Part 3: Market Analysis
 A Market Analysis defines the target market so that you can position your business to get its share of sales.

 A Market Analysis section:
– Defines your market.
– Segments your customers.
– Projects your market share.
– Positions your products and services.
– Discusses pricing and promotions.
– Identifies communication, sales, and distribution channels.

Part 4: Management Team
The Management Team section outlines:
– Organizational Structure: Highlights the hierarchy and outlines responsibilities and decision-making powers.
– Management Team: Highlights the track record of the company’s managers. You may also offer details about key employees including qualifications, experiences, or outstanding skills, which could add a competitive edge to the image of the business.

– Working Structure: Highlights how your management team will operate within your defined organizational structure.
– Expertise: Highlights the business expertise of your management and senior team. You may also include special knowledge of budget control, personnel management, public relations, and strategic planning.

– Skills Gap: Highlights plans to improve your company’s overall skills or expertise. In this section, you should discuss opportunities and plans to acquire new information and knowledge that will add value.

– Personnel Plan: Highlights current and future staffing requirements and related costs.

Part 5: Marketing Plan
 The Marketing Plan section details what you propose to accomplish, and is critical in obtaining funding to pursue new initiatives.

 The Marketing Plan section:
 Explains (from an internal perspective) the impacts and results of past marketing decisions.
 Explains the external market in which the business is competing.
 Sets goals to direct future marketing efforts.
 Sets clear, realistic, and measurable targets.
 Includes deadlines for meeting those targets.
 Provides a budget for all marketing activities.
 Specifies accountability and measures for all activities.

Part 6: Financial Plan (Slide 1 of 2)
 The Financial Plan translates your company's goals into specific financial targets.

 The Financial Plan section:
– Clearly defines what a successful outcome entails. The plan isn't merely a prediction; it implies a commitment to making the targeted results happen and establishes milestones for gauging progress.

– Provides you with a vital feedback-and-control tool. Variances from projections provide early warnings of problems. When variances occur, the plan can provide a framework for determining the financial impact and the effects of various corrective actions.

– Anticipate problems. If rapid growth creates a cash shortage due to investment in receivables and inventory, the forecast should show this. If next year's projections depend on certain milestones this year, the assumptions should spell this out.

Part 6: Financial Plan (Slide 2 of 2)
 The Financial Plan is the most essential part of your Business Plan. It shows investors the timeframes you have scheduled to make profits.

 Some elements of the Financial Plan include:
– Important Assumptions
– Key Financial Indicators
– Break-even Analysis
– Projected Profit and Loss
– Projected Cash Flow
– Projected Balance Sheet
– Business Ratios
– Long-term Plan

Different Financial Planning Options (Slide 1 of 2)
 Short-term Forecast: Projects either the current year or a rolling 12-month period by month. This type of forecast should be updated at least monthly and become the main planning and monitoring vehicle.

 Budget: Translates goals into detailed actions and interim targets. A budget should provide details, such as specific staffing plans and line-item expenditures.

– The size of a company may determine whether the same model used to prepare the 12-month forecast can be appropriate for budgeting.

– In any case, unlike the 12-month forecast, a budget should generally be frozen at the time they are approved.

Different Financial Planning Options (Slide 2 of 2)
 Strategic Forecast: Incorporates the strategic goals of the company into the projections. For startup companies, the initial Business Plan should include a month-by-month projection for the first year, followed by annual projections for a minimum of three years.

 Cash Forecast: Breaks down the budget and 12-month forecast into more detail. The focus of these forecasts is on cash flow, rather than accounting profit, and periods may be as short as a week in order to capture fluctuations.

Part 7: Operations and Management
 The Operations and Management section outlines how your company will operate.

 The Operations and Management section includes:
– Organizational structure of the company. Provides a basis for projected operating expenses and financial statements. Because these statements are heavily scrutinized by investors, the organizational structure has to be well-defined and realistic within the parameters of the business.

– Expense and capital requirements to support the organizational structure. Provides a basis to identify personnel expenses, overhead expenses, and costs of products/services sold. These expenses/costs can then be matched with capital requirements.

Key Takeaways From This Module
 Business Plans are critical for the success of a company.
 Different businesses will require different types of Business Plans.
 All Business Plans have some essential sections that explain the core aspects of the company.

 In order to help your company have a better chance of gaining interest and investors, a Business Plan should include seven essential sections:
1. Executive Summary
2. Business Concept
3. Market Analysis
4. Management Team
5. Marketing Plan
6. Financial Plan
7. Operations and Management Plan

Sources and Citations
 Small Business Administration, Business Planning, How To Prepare a Business Plan
 Gary Cadenhead, No Longer Moot
 Shirleen Glasin, ProSidian Consulting, Building a Business Plan
 Entrepreneur.com, Small Business Encyclopedia, Business Plans
 AllBusiness, A D&B Company, 10 Reasons Why You Need a Strong Business Plan
 Business Owners Toolkit, Total Know-How for Small Businesses

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Audit Report

What is audit report?
Audit report is the communication of audit conclusion after the completion of the audit process according to the audit plan. It is the summarized expression of certain facts and findings, opinions regarding conducting audit and it is the final product of auditors to the users or clients of accounting information. It is a certificate about the accuracy and reliability of the financial statement of the company.

01) What are the components of an audit report?
Ans: Generally, the Audit Report contains the following contents:
1) Title
2) Address
3) Introductory paragraph
4) Scope paragraph
5) Opinion paragraph
6) Date of the report
7) Place of signature
8) Auditor’s signature.

They are being described below:
1) Title: The title indicates the name or nature of the report. It is entitled as “Auditor’s Report”.
2) Address: The auditor’s report should address the person to whom it is meant to be forwarded. It means the address of the employee or company. For example:
AB Bank Limited
38, Dilkush, Dhaka.
3) Introductory paragraph: It includes the identification of financial statements which have been audited by the auditor. Here also “the clarification of responsibility of the auditor means” auditor have been audited the financial statements but they do not prepare those.
4) Scope paragraph: It indicates that auditors are planned obtained the reasonable assurance whether the financial statements are materially misstatements. Generally, it includes:
(a) Examining on a test basis, nature of evidence, disclosures in financial statements.
(b) Assessing accounting principles used in the preparation of financial statements.
(c) Estimation made by management.
(d) Evaluating the overall financial statement presentation.
5) Opinion paragraph: It is the opinion of the auditor about the overall accuracy and reliability of the financial statements of the company.
6) Date of the report: It indicates the date on which the auditor signs his report.
7) Place of signature: The town or the auditor’s full address in which the audit report is signed should be indicated.
8) Auditor’s signature: The report should be signed by the auditor in his personal name.
02) What is a clean report?
Answer: A clean or unqualified report is issued by the auditor when he is fully satisfied about the financial statements of the company. In this report, he concluded that, the financial statements give true and fair view in accordance to financial reporting framework used in preparing the financial statements. Generally, this type of report indicates that:
(a) The financial statements have been prepared using the generally accepted accounting principle (GAAP).
(b) The financial statements have been prepared complying the relevant statutory requirements and regulations.
(c) The financial statements disclosed all the material matters relevant to the proper presentation of financial information.
(d) Statement of changes in accounting methods and policies.
3. What are “other than unqualified” opinions?
Ans: Other than unqualified opinion: On the other hand, when the auditor is not satisfied in material respects with matters concerning proper and consistent application of accounting policies, conventions, adherence to disclosure-requirement specified in the Act, truth and fairness of financial information reported in the statements, or compliance to the provisions of stature memorandum of association or articles of association, he may give ‘other than unqualified opinion’ are categorized into

(a) Limitations in scope of audit (b) Disagreement with management (c) Uncertainty affecting financial statements (IAG13). For example, the accounting system or records may not be adequate for the auditor to conduct the audit in a manner which he feels necessary and thereby his scope of work may have to be curtailed. Or the auditor cannot agree with the management in certain respects concerning financial information. The selection of particular accounting policy or estimate made for provisions, or the manner of disclosing information in financial statements by the management-in such of those matters, for instance, the auditor may have valid grounds to disagree with the view points of management. Similarly the financial information disclosed in statements may be subject to serious uncertainty which will be cleared in future only. Therefore, when the auditor is not satisfied with the financial statements in respect of matters of reporting in material respects due to limitation of scope of audit work, disagreement with management or uncertainty, he giver ‘other than an unqualified opinion’. Depending on the nature if circumstance forcing forming up of an other than unqualified opinion, the opinion may be “qualified” or “disclaimer”.

04) When a qualified opinion is and is not sufficient?
Ans: Modified opinion for emphasis and not affecting auditor’s opinion:
Sometimes, the auditor may find it incorporate reference to certain matters which have been properly disclosed in the financial statements for the benefit of the readers. Such reference is indicated before opinion paragraph. The mentioning of such matters in auditor’s report is to highlight the importance of such facts the conjoint reading of which will be beneficial for the better understanding of the report. It is no to be taken as any reservation on the part of auditor in relation to the opinion he expresses beneath. AAS requires two items to be highlighted as modified opinion for emphasis. When there is “going concern problem”* (*i. e generally accounts are prepared based on the concept of going concern. That is, the entry will be carried out in future. This implies current assets are held for realization and hence are to be valued at lower of cost or market price; fixed assets are held for carrying operations on them and hence they are to be valued at cost less deprecation. But when the going concern concept is impaired due to imminent threat to continuity of the entity, the accounting of transactions and balances would require consequent changes. For e, g all asset are to be valued at realizable values). And it is not resolved as to the appropriateness or otherwise of the going concern, the fact should be indicated in the report about the doubt. Again, when there is an uncertainty about a matter, which has been disclosed in the financial statements and about the effect of which, it is not possible to determine and which is beyond the control of the management, the same should be emphasized in the audit report. But if the effects of uncertainties are of multiple nature and the magnitude may be such (of course uncertain) as to vitiate the opinion, the auditor may choose, instead of reporting it as a matter of emphasis, to mention it by way of declaimer.

The auditor issues qualified opinion when
(a) He is satisfied in material respects with matters concerning the areas of his repot. (i. e truth
and fairness of financial information, proper disclosure of information, compliance to
provisions of stature etc.).
(b) His non-satisfaction is due to circumstances such as limitations imposed on his scope of audit work, disagreement with management or uncertainty over financial information.
(c) The effect of his disagreement, uncertainly or limitation is not so material as to compel the auditor to give an adverse opinion or to state a disclaimer.

The auditor must be very clear as to when he should qualify his report and how he should qualify the report. The directors sometimes, try to persuade the auditor to desist from giving qualified report as it is a slur on the work of the directors for the year under review. Moreover, a qualified report leads to bad consequences e. g., fall in value of shares in the market, non-renewal of appointment of directors, appointment of investigation etc. Unconcerned to these, the auditor must set out his qualifications to the report if it is necessary according to his professional Judgment of circumstances.

5. When a qualified opinion is not sufficient, but an adverse opinion is necessary?
Ans: A qualified opinion should be expressed when the when the auditor concludes that an unqualified cannot be expressed but the effect of disagreement with management is not so material. If the disagreement with management is material and pervasive as to require an adverse opinion then a qualified opinion is not sufficient. In this case an adverse opinion is necessary. Because An adverse opinion is expressed when the effect of disagreement is so material and pervasive to the financial statements that the auditor concludes that a qualification of the report is not adequate to disclose the misleading or incomplete nature of the financial statements.

06) What is the significance of dating of the report?
Ans: Significant of the dating of the report: Significant of the dating report means the importance of the date of the report. The date of the report indicates that the date on which the auditor signs his report. It indicates that the auditor has considered the effect on the financial statement and also on his report of event occurred unto that date. Again this date should not precede the date on which the financial statements were approved by the management. Because the auditor responsibility to express opinion on the financial statements as prepared by the management.

07) Distinguish between the scope portions of the report from opinion portion
Ans : Scope portion: The scope portion specifies the work performed by auditor .scope portion indicate that auditors have plant and obtained the reasonable assurance weather the financial statements are materially misstatement generally includes:

·Examining on test basis, evidence to support the accounts, disclosure in financial statement.
·Assessing accounting principles used in the preparation of financial statement.
·Assessing the significant estimates made by management in preparation of financial statement.
·Presentation of financial statement.

Opinion portion: It is the opinion of the auditor about the overall accuracy and reliability of the financial statement of the company. The opinion portion of the report should indicate the financial reporting framework used to prepare the financial statement. In addition to the opinion on the true and fair view of the financial statements, the auditor may be express opinion on specific matter required by statue.

08) What is a modified opinion without affecting auditor’s opinion?
Ans: The auditor may find it useful to incorporate reference to certain matters which have been properly disclosed in the financial statement for the benefit of the readers. Such reference is indicated before opinion paragraph. The mentioning of such matter in auditor’s report is highlight the importance of such facts the conjoint reading of which will be beneficial for the better understanding of the report. It is not to be taken as any reservation on the part of auditor in relation to the opinion he expresses beneath AAS requires two items to be highlighted as modified opinion for emphasis. When there is “going concern problem” (i.e. generally accounts are prepared basis on the concept of going concern. That is, the entity will be carried out in future. This implies current assets are held for realization and hence are to be valued at lower of cost or market price fixed assets are held for carrying operation on them and hence the are to be valued at cost depreciation. But when the going concern concept is impaired due to imminent threat to continuous of the entity, the accounting of transaction and balances would require consequent changes. Fixed (e.g. all assets are to be valued at realizable values. ) and it is not resolved as to the appropriateness or otherwise of the going concern, the fact should be indicated in the report about the doubt. Again when there is an uncertainty about a matter, which has been disclosed in the financial statement and about the effect of which, it is not possible to determine and which is beyond the control of the management, the same should be emphasized in the audit report. But if the effects of uncertainties are of multiple nature and the magnitude may be such (of course uncertain) as to vitiate the opinion the auditor may choose, instead of reporting it as a matter of emphasis, to mention it by way disclaimer.

09) Distinguish a qualified opinion from an adverse opinion.
Ans: A qualified opinion should be expressed when the auditor concludes that an unqualified cannot be expressed but that the effect of disagreement with management is not so material and pervasive as to require an adverse opinion or the limitation on the scope is not so material and pervasive as to require disclaimer of opinion. A qualified opinion is expressed as being “except for’’ the effect of the matter to which the qualification relates. An adverse opinion is expressed when the effect of disagreement is so material and pervasive to the financial statement that the auditor concludes that a qualification of the report is not adequate to disclose the misleading or incomplete nature of the financial statement.

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Assessing Service Quality Dimensions of Standard Chartered Bank

Service Quality:
The service quality means to customer’s satisfaction, which leads to customer loyalty, considerable practitioner interest has focused on programs to improve service quality. Service quality involves a comparison of expectations with performance. Service quality is a measure of how well a delivered service matches the customers’ expectations.

"Service quality is a focused evaluation that reflects the customer's perception of specific dimensions of service: reliability, responsiveness, assurance, Empathy, tangibles. Service quality affects customer satisfaction by providing performance. For example, if consumers believe they have entered the McDonald's restaurant, they will get food, service, high quality everywhere the same, no matter the location of the restaurant.

Service Quality Dimensions:
Customers do not perceive quality in a unidimensional way. The dimensions of service quality have been identified through the pioneering research of Parsu Parasuraman, Valarie zeithaml, and leonard Berry. After extensive research, they found five dimensions that customers use when evaluating service quality. They named their survey instrument SERVQUAL.

Providers get the SERVQUAL dimensions right, customers will hand over the keys to their loyalty. Because they’ll have received service excellence. Each of the 5 Service Quality Dimensions makes an extra addition to the level and quality of service which the company offers their customers. It also makes the service far more unique and satisfying.

The five SERVQUAL dimensions are:
o Reliability: Ability to perform the promised service dependably and accurately.
o Responsiveness: Willingness to help customers and provide prompt services.
o Assurance: Employees knowledge and courtesy and their ability to inspire trust and confidence.
o Empathy: caring, individualized attention given to customers.
o Tangibles: appearance of physical facilities, equipment, personnel, and written materials.

Customers’ expectations and perceptions are measured across these five dimensions. These five dimensions help to better visualize and analyze the services provided to customers. They make the term “service” less ambiguous.
Dimension 1- Reliability; Delivering on promises
Reliability is defined as the ability to perform the promised service dependably and accurately. In broadest sense, reliability means that the company delivers on its promises- promises about delivery, service provision, problem resolution and pricing. Customers want to do business with companies that keep their promises, particularly their promises about the service outcomes and core services attributes. Reliability is just as important as a goof first hand impression, because every customer want to know if their supplier is reliable and fulfill the set requirements with satisfaction.
Dimension 2- Responsiveness; Being willing to help
The responsiveness Service Quality Dimension refers to the willingness of the company to help its customers in providing them with a good, quality and fast service. This dimension emphasizes attentiveness and promptness in dealing with customer requests, questions, complaints and problems. Responsiveness also captures the notion of flexibility and ability to customize the service to customer needs. This is also a very important dimension, because every customer feels more valued if they get the best possible quality in the service.
Dimension 3- Assurance; Inspiring trust and confidence
Assurance is defined as employees’ knowledge and courtesy and the ability of the firm and is employees to inspire trust and confidence. This dimension is likely to be particularly important for services that customers perceive as high risk or for services of which they feel uncertain about their ability to evaluate outcomes- for example; banking, insurance, brokerage, medical and legal services. If the customers are not comfortable with the employees, there are a rather large chance that the customers will not return to do further business with the company.
Dimension 4- Empathy; treating customers as individuals
The empathy Service Quality Dimension refers to how the company cares and gives individualized attention to their customers, to make the customers feeling extra valued and special. The essence of empathy is conveying, through personalized or customized services, that customers are unique and special and that their needs are understood. Customers want to feel understood by and important to firms that provide service to them. Personnel at small services firm often know customers by name and build relationships that reflect their personal knowledge of customer requirements and preferences. When such a small firm competes with large firms, the ability to be empathetic may give the small firma clear advantage.
Dimension 5- Tangibles; representing the service physically
The tangible Service Quality Dimension refers to the appearance of the physical surroundings and facilities, equipment, personnel and the way of communication. Tangible provide physical representations or images of the service that customers, particularly new customers, will use to evaluate quality. Service industries that emphasize tangibles in their strategies include hospitality services in which the customer visits the establishment to receive the service, such as restaurants and hotels, retail stores and entertainment companies. In other words, the tangible dimension is about creating first hand impressions. A company should want all their customers to get a unique positive and never forgetting first hand impression, this would make them more likely to return in the future.

Service Quality Dimensions of Standard Chartered Bank:
Organizational Background
Standard Chartered Bank has a history of over 150 years in banking and is in many of the world’s fastest growing markets. It has an extensive global network of over 1,200 branches (including subsidiaries, associates, and joint ventures) in 56 countries in the Asia Pacific Region, Africa, the United States and the United Kingdom. As one of the world’s most international banks, Standard Chartered employs over 44,000 people, representing 89 nationalities, worldwide.

Standard Chartered Bank started its business in Bangladesh in 1948, operating its first branch in the port city of Chittagong. The bank increasingly invested in people, technology and premises as its business grew in relation to the country’s thriving economy. AT the bank have 6 offices in Dhaka, Chittagong, and Sylhey. Extensive knowledge of the market and essential expertise in a wide range of financial services underline strength to build business opportunities for corporate and institutional clients at home and abroad.

Service Quality dimensions:
Customer perception is very important factor to measure service quality. Quality of service is the main determinant factor when clients consider a bank’s standard. Standard Chartered bank, the top banking service provider in Bangladesh provide customers different dimensions of service quality such as responsiveness, tangibility, assurance, empathy, reliability and other service quality. Serving both consumer and wholesale banking customers, the bank combines deep local knowledge with global capability to offer a wide range of innovative products and services as well as award winning solutions. Standard Chartered Bank is committed to be the right partner to all the stakeholders by living its values in its approach to managing its people, exceeding expectations of its customers, making a difference in the communities that operate in and working with its regulators. The bank is trusted across its network for its standard of governance and corporate responsibility.

Reliability:
The reliability Service Quality Dimension refers to how the company are performing and completing their promised service, quality and accuracy within the given set requirements between the company and the customer. Standard Chartered Bank act accordingly to promises. The bank should deliver the statements, solvency certificates, debit cards and other documents at the promised time and date. They always sincere in problem solving and perform the services at time promised.

Responsiveness:
A bank service can also be measured by the willingness and readiness of service availability. The greater the bank employees responsiveness, the higher will be satisfaction. Standard Chartered Bank helps its customers by prompt and quick service, quick response to customer requests. They informed clients about various services and reduced waiting time. The banks with highly responsive employees facilitate to create strong customer bondage. If the customers find any difficulties, employees are always willing to help them. They have 24- hour contact center to help customers and provide them quick services.

Assurance:
Assurance denotes the ability of bank to make the clients assured about their deposit and transaction. It includes employees’ knowledge, courtesy and ability to convey trust and confidence to the clients and all concerned parties. Standard Chartered bank provides assurance, empathy and offer secured atmosphere for their clients enhance customer satisfied. Their employees’ behaviors inspire customers and they feel safe in transactions. Employees have the knowledge to answer customers’ questions. The bank encourages those employees who have the ability to inspire trust and confidence to build long term relationships with customers.

Empathy:
This dimension refers to the level of caring and individual attention to special customers’ concerns. Dealing with care and giving special attention make customers bonded with a bank. Standard Chartered Bank gives customers special attention; their employees understand the customers’ specific need. The bank has also suitable operating hours and place for customers.

Tangibles
This includes modern equipment, appealing decoration, employee tables and professional, well-dressed employees. It refers to the visible elements of bank and its surroundings. Standard chartered Bank use modern looking equipment. They have also smart and well dressed employees. Their well-decorated office affects the perception of clients. Customers used lounge for waiting area.

Comparative study of One Bank And Sonali Bank

CHAPTER­-1 ( INTRODUCTION )
1.1 STATEMENT:
By communication we mean the process of transmitting meanings ideas and understanding of a person or a group to another person or a group. The topic of our survey is communication practices in sylhet region and we have selected the prime bank ltd as our field. For our survey we have visited the subid bazar branch of this bank,which had established on 1995. In sylhet division prime bank has 11 branches and they has 83 branches all over the country.
1.2 OBJECTIVE OF THE STUDY:
Here we keep focusing on two objective of study. One is general and another one is specific objective. The objectives are folliws:
GENERAL OBJECTIVES:
1 To learn more about business communication.
2 To know the present condition of the Prime bank.
3 To know the position of the bank by communication .
SPECIFIC OBJECTIVES:
1 For knowing the overall performation of Prime Bank.
2 To know the communication quality of Prime Bank.
3 To know the communication process of Prime Bank.
4 To know their external and internal relations.
5 To know about the effectiveness of their communication process.
1.3 Literature Review:
1.3.1 Main forms of communication in business:
The importance of communication in business becomes even more apparent when we consider the communication activities of an organization from an overall point of view. These activities fall into three broad categories: internal operational, external operational and personal.
Internal operational communication: All the communication that occurs in conducting work within a business is classified as internal operational. It takes many forms includes orders and instructions that supervisors give workers, as well as oral exchanges among workers about work matters. Reports and records that workers prepare concerning sales, production, inventories, finance, maintenance and so on. Also memorendums, email messages etc.
External operational communication: The work releted communicting that a business does with people and groups outside the business is external service companies, customers and the general public. The importance of external communication to a business hardly requires supporting comments. Every business depends on outside people and group for its sucess.
Personal communication: Not all communication occurs in business is operational. Personal communication is the exchange of information and feelings in which human beings engage whenever they come together. We are social or nothing to say.
1.3.2 Communication network of an orgnization: Looking overall flow of informations there are two main types of communication network:
The formal network: The main lines of flow are like the network of arteries in the body. Just like business has major and well-established channels of information flow. This are the formal channels, the main lines of operational communication. The flow includes the movements of information by reports, memorendums, records, and such within the organization; of orders, instructions, and messages down the authority structure of working information through the organization's computer network, and of extrenally directed letters, sales presentations, advertising and publicity. Prescribed rules and procedures is called informal communication. It follows no set rules non adheres to the organization's hierarchy. Rather it take places ooutside the chain of command. Grapevine and rumor is the types.
1.3.3 Purposes of business communication:
Generally people communicate for three basic purposes: to inform, to persuade, and to certain. The elaborate purposes of business communication are discussed below:
1. To arrive at a common maening of a message mutually understood from the sender to reciever.
2. To exchange business messages between businessmen or business enterprise.
3. To bring about changes providing favourable informatin about risks and opportunities.
4. To manage organization by planning, organizing, leading, and controlling of organizational resources.
5. To establish and mantain relations with actors of business environment.
6. To ceate image in market acceptability of organization and its products.
7. To facilitate joint ventures by globalization for the development of the economies of the world.
8. To raise employees enthusiasm, morality, and resistence to frustration.
9. To discipline employees to don't abide by the norms of organization, or violate the rules and regulations.
10. To counsel people for the retirement, alternative job selection, and relieving, career anchoring, adjusting with new environment, etc.
1.3.4 Importance of business communication:
Communication is lifeblood of business. No business can develop and sustain in the absence of communication. The importance of business communication is given below:
1. Linking pin: Business communication links together the people in the organization to achieve the common purpose of business organigation. It binds them together as a concerted team and acts as the linking pin among them to work as a socil unit.
2. Promotion of managerial efficiency: Managers perform certain roles to maximize the use of organizational scarce resources. These roles are interpersonal roles, informational roles and decisional roles.
3. Leadership execution: Leadership is the process of directing and influencing a group of people toward organizational goals. It requires communication to exert influence or to direct workforce so that they can understand the view of the leadership and act accordingly.
4. Investigation and research: Investigation and research is a general phenomenon of organizational management. Research and investigation explore the opportunity and identify threats.
5. Business promotion: Promotion is a strategic function that develops image, information, and loyalty in the market and expands market of the product of the organization.
6. Negotiation: Negotiation is regularly done with vendors, channel members, trade unions, small groups, and other interested parties to make contacts or to settle issue of difference.
7. Performance of managerial functions: Managers perform the functions of planning, organizing, leading, and controlling. These functions are performed through communicating with people working in various positions in an organization.
8. Promotion of innovation: Innovation is a new idea applied to initiating or improving a process, product, or service. It gives a new dimensional use of existing product or process.
9. Promotion and collaboration: Joint ventures, strategic alliances, merger, pool etc are the demands of the day. Globalization makes those actions more essential for survival of a firm in increasingly free economy.
10. Bringing change: Change is inevitable for every company. No change can bring up without communication.
1.3.5 Barriers to effective communication:
Effective communication is a dream of every communicator. Barriers are classified intonfollowing categories:
1. Process barriers: Sender barrier, encoding barrier, message barrier, medium barrier, decoding barrier, receiver barrier, feedback barrier, etc are process barriers.
2. Personal barriers: Inability of a person to communicate, interpretation of information, interpersonal trust between people, stereotypes and prejudices, peoples ego, poor listening skill, natural tendency to judge or evaluate senders message, etc are the common personal barriers.
3. Physical barriers: Any physical obststruction that cause disturbance in the communication process is physical barrier. The distance between employees can interfere with effective communication.
4. Semantic barriers: Semantic is the study of the words. This barriers show up as encoding and decoding errors because these phases of comunication involve transmitting and receiving words and symbols.
5. Defensive provoking communication: The style of communication used by managers or people itself act as a barrier to communication. That is, when a manager sends a message in a way that provokes defensiveness, he or she contributes to the poor inter personal relationship.
6. organizational barrier: The barries that are originated from organizational environvent are organigational problems. It affects human relation and deters communication effectiveness.
1.3.6 Medium of business communication:
1. Oral communication: When communication takes place orally it is called oral communication. Oral communication can be mechanical or non-machanical.
Telephone, radio, tv, microphone are example of mechanical oral communication.
Conversation, interview, group discussion, counseling, conference are examples of non-mechanical oral communication.
2. Written communication: A message communicated in a written form is known as written communication. Written communication can be for management or for employees.
Special management bulletin, management news letter, formal mgt report, policy statement, supervisors handbook, special publication for supervisors, reports, are the example of communication for management.
Employee bulletin, employee nwespaper, question box, complaint box, leaflet, circular notice, annual financial statement, etc are examples written communication for employees.
3. Computer based communication: The communication which occurs by electrnic devices it is called computer based communication. E-mail, V-mail, teleconferencing, video conferencing, cellular phone, facsimile, electronic bulletin doard, etc are some example of computer based communication. 1.4 IMPORTANCE OF THE STUDY:
It is a field study for our course recuirement.Research at an organigation like The Prime Bank on the basis of business communication reveal important inter relation and procedures for effective communication.We have studied about the topic business communication in term of Prime Bank, which has provided us with much necessary information about communication. We have also acknowledged with the core concept of such an organization. We think their communication process is open and inter relation between various section are very strong, which can be a model for this kind of organigation. We have already understood that how an organization like this bank manages their external,internal and online communication. Study like this is very important for comparing and understanding the present situation of this bank.
1.5 OPERATIONAL DEFINATION:
COMMUNICATION:
According to O.W. Baskin and Craig E.Aronoff- Communication is the exchange of message between people for the purpose of achieving common meanings.
BUSINESS COMMUNICATION:
According to prof J Haste - Communication occured between two or more businessmen for organiging and administering business efficiently is business communication.
According to Brennan- the exchange of information or ideas in the field of commerce and industry is called business communication.
ORGANIGATION:
A group of people who form a business, club, etc. togwther in order to achieve a particular aim to work for a business, political or, voluntary activity.
PERSONAL:
GRAPEVINE: The grapevine is a major informal communication pathway in an organization. It consists of several informal communication networks in an organization. It is quite natural that whenever people congregate into groups, they are interested to know eachother more closely.
RUMOUR: Rumour is a kind of mejor manifesto of the informal cmmunication, the word rumour is used to mean a message that is transmitted without secure standards of evidence being present.
CHAPTER-2 ( METHODOLOGY )
2.1 RESEARCH METHOD:
We have used Qualitative method to collect the data. As it is business communication so that we can't make it count that's why we use here qualitative method. Here we can't express the communication information in numerical terms thet's why the qualitative method has been used for reseach.
2.2 RESEARCH AREA:
The research area means the area on which the research work has done. Broadly, any specific place or region where the survey will be effective and the information will be collected frem this place. Our research area is The Prime Bank, Subidbazar.
2.3 Sources of data:
The can be collected by two ways, one is primary and another one is secondery source.
PRIMARY SOURCES:
Primary source means the sources from where we can collect data directly, which means the collection of data from the root level informant.In this process the investigators meets the informant or respondent for the collection of data. For our presentation report we went there physically and collected data from some trusted suppliers.
SECONDARY SOURCES:
For the requirement of data collection we used the secondary source also, which means we haven't collected it directly or physically. We used secondary source like:
1 Books and
2 website.
2.4 METHOD OF DATA COLLECTION:
Method of data collection means the process which we have used for the collection of data for our research. We have used case study method. Because we specifically worked for a particular organization's communication as a case study.
2.5 LIMITATION OF DATA COLLECTION:
Any information of an organization is confidential for them specially if it is a banking organigation.They don't want to share any information with others.Though Prime Bank is a banking organization they hesitated to provide us with such personal communication information. Although we had ensured them that we will not disclose any information, as it is only for our course study.
2.6 LIMITATION OF RESEARCH:
Every research faces some limitations, which are releted to the topic or not. The limitations that we have faced are:
1 Time limit,
2 Budget limit.
CHAPTER-3 ( DATA PRESENTATION AND CONCLUSION )
3.1 DATA ANALYSIS:
3.2 PERSONAL EVALUTION:
3.3 REFERENCES:
1. Mohiuddin Mohammad, 2005,Business Communication,New age publications,dhaka,second edition.
2. Lesikar V. Raympond, Pettit D. John, Flatley E. Marie, Lesikar's Basic business communication, Tata Mc-Graw-Hill Publishing Company Limited,New Dhelhi,eight edition.

* * *

Some Key Question of Business Level Strategy

Question 1. What are the generic strategies as identified by Michael porter?

Answer:
Introduction: Michael porter originally identified three types of competitive strategies. That can be applied in any business organization.
Michael porter identified three strategies for business organization these three are as follows
1. Cost leadership
2. Differentiation
3. Focus strategy
Conclusion: These three types of strategy can be applied in any business organization irrespective of size and nature of products because of their susceptibility to common use by all business enterprise they are leveled as generic strategy.
Question 2. Explain the meaning of low cost strategy?
Answer:
Introduction:- when a company adopts the strategy of selling its products at a price lower than its competitors this strategy known as low cost strategy.
Meanings of low cost strategy: Low cost leadership strategy is known as low cost provider strategy; cost leadership strategy or simply low cost strategy. A company strategy intends to become the overall low cost provider in the industry in which the company operates its business. A company strategy of selling its products at a lower price than its competitors is known as low cost strategy.
Conclusion: The strategic target of this strategy is a board section of the market where the company offers economical prices. The company emphasizes on cost reduction without reducing quality.
Question 3. Discuss the benefits of low cost strategy to the business organization?
Answer:
Introduction: A business organization may derive various benefits from low cost strategy. To better maintenance an organization pursuing a low cost strategy followings are the benefits :-
1. Overcoming threats from the competitors : Because of its cost advantages a company can protect itself from the business attacks of the competitors .If competitors enter into market with low cost the company can even further cut down its prices.
2. Effective dealing with powerful suppliers:- when suppliers are in few in number as well as powerful they may try to increase prices of raw materials . The company with a low cost strategy can endure such price increases.
3. Facing powerful buyers effectively:- Powerful big buyers may dictate prices of a company products. A company that follows a cost leadership is less affected by such action of buyers.
4. Encountering threats from substitute products:- A low cost leader is able to overcome threats from substitute products. Low cost leadership helps the company retain its market share.
5. Overcoming threats from the entry of potential competitors:- A company with a low cost strategy can discourage other potential investors to come to the market.
Conclusion: - These are the benefits to business organization to pursue a low cost strategy. Every business organization wants to get these benefits from low cost strategy.
Question 4. Discuss the market situations favorable for low cost strategy?
Answer: - A low cost provider strategy works best under the following situations;-
1. When the brand differences from company to company are minor, and at the same time the products are standardized and readily available.
2. When the market is composed of a large number of price sensitive buyers who wants to buy products at lowest possible rate.
3. When there are few ways to achieve product differentiation it means that it’s difficult to differentiate the company products from those of competitors due to nature of products. In such a situation they will go for the lowest price.
4. When switching costs from the company buyers brand to competitors brand are low or zero ten they are likely to opt for lower price.
5. When there are a large number of buyers with significant bargaining power.
6. When price competitors among the sellers / suppliers are very tough then the low cost helps.
7. When the company is in a position to use the lower cost edge to attract price sensitive buyers in great enough numbers to influence total profits.
Question 5. When does a low cost strategy fail?
Answer: -
Introduction:- low cost strategy has some shortcomings or pitfalls. Managers need to take care of this pitfalls so that they can undertake appropriate measures to be successful with this strategy.The shortcomings are as follows:-
1. It may be invite aggressive price cutting by competitors. It may lead to price war that may lead to power profitability.
2. A low cost product does not contain enough attributes to be attractive to prospective buyers then the strategy may fail.
3. Cost advantages may not sustain if competitors can easily imitate the strategy when the competitors are able to copy the cost advantages low cost strategy will fail.
4. The low cost strategy may become ineffective when ther are technological breakthroughs by the competitors in the industry.
Conclusion:- low cost is not always appealing to buyers the ways to achieve cost advantages need to be difficult for others to copy.
Question 6 . Define differentiations strategy?
Answer :-
Introduction: - Differentiation strategy is concerned with product differentiation. It refers to making a company product different from the similar products of the competitors. Although there can be differentiation in services too.
As marketing terminology differentiation means making a product different from the similar products of the competitors. According to Philip kotler, differentiation is the act of designing a set of meaningful differences to distinguish the company offerings from competitor’s offerings. A differentiated product is unique by itself. A product can be differentiated on the basis of its form, shape , quality, durability , reliability, reparability , style design or some other features of the product. A product would become differentiated from that of the competitors if its form (Size, shape or physical structure) is changed.
The goal of differentiation strategy is to achieve a competitive advantage by offerings product customers that is considered as unique in some important ways. The differences made in the product must be of value to customers. A product with differentiated features can command premium prices.
A differentiation strategy may be either ‘board, or, focused. A board differentiation strategy is adopted by a company to be unique in ways that are valuable to a wide range of customers.
Conclusion: A differentiation strategy is called a focused differentiation strategy when the differentiator company goes for segmenting its market into several small segments and then offers a product designed for each market segment. Coca cola follows a broad differentiation strategy in that it offers normal bottled cola can cola, and diet-cola for different segments.
Question 7. What are the different ways for achieving product differentiation?
Answer:-
Introduction:- There are various types of differentiation themes. These themes provide the ways to achieve differentiation. A company can pursue differentiation on the basis of these themes. Hill and jones suggested several ways to achieve differentiation in a company’s products.
Ways of achieve product differentiation ----
1. Differences in quality: A company may differentiate its product simply by incressing quality and reliability. Otobi in furniture and Aziz pipes in PVC products have sometimes followed differentiation strategy based on quality.
2. Innovation:- For highly technologically complex products innovation is an important source for differentiation. Computers, stereos, television sets and refrigerators require differentiation based on new innovated features. When products include innovated/valuable features, customers agree to pay for it.
3. Responsiveness to customers:- a company may differentiate a product based on responsive necessary to customers. When this becomes the basis for differentiation, the company offers comprehensive after-sales services including repair. This sort of differentiation is highly workable in the case of products which require frequent after-sales services.
4. Responding to customers psychological desires:- an important source of product differentiation is a company response to the psychological desires of customers. Customers may desire to have a special status or unique prestige from using a product.
5. Wide choice of customers: - Differentiation of a product may be done by making available items of any kind in the same product line instantly to customers as per their demand.
Conclusion:- It is thus obvious that based on the nature/use of the product and the nature of the target customers, products can be differentiated along various themes.
Question 8. Make a list of the themes for the differentiation of various products?
Answer :
Themes of differentiate various products are as follows :-
- Unique taste
- Multiple features
- Wide selection/one stop shopping
- Special features
- Superior services
- Prestige and distinctiveness
- Product reliability
- Full range of services
- Availability of spare parts
- Complete line of products
Question 9. A product can be differentiated in different ways also the themes are not same for all types of products. Discuss at least five themes for differentiation of five different types of products?
Answer :- The themes for differentiation of different product are as follows :-
- Unique taste Food products such as bread, drink, juice, chocolates etc
- Multiple features Automobiles such as BMW and Mercedes –Benz, and soft ware such as Microsoft office 2000,
- Wide selection/one stop shopping Retail chain shops such Agora and Meena Bazaar, and online bookstore such as Amazon.com
- Special features transparent ball pen or transparent soap or halal soap.
- Superior services Overnight delivery of packets by a courier service company.
- Prestige and distinctiveness 56-inchies television set or Sony home theater, Rolex watch.
Question 10.Discuss the issues that need to be addressed for achieving sustainability of differentiation strategy?
Answer:-
Introduction: - Sustainability of differentiation strategy is an important issue for a company.
If a product differentiation cannot be sustained, the company may incur huge losses.This necessities conducting of consumer survey to determine the needs and preferences of buyers.
A company needs to follow the following issues to achieve sustainability.
1. The company must try to adopt those differentiation approaches that would be hard or expensive for the competitors to copy. However, strong competitors might be able to clone any features of a product over a period of time.
2. Differentiation has to be linked to core competencies , unique competitive capabilities and superior management of value chain activities The basis for a company products differentiation would be sustainable if the competitors cannot readily match their competencies with those of the company.
3. A company may ensure sustainability of differentiation when it can base its differentiation on new product innovation, technological superiority, quality, reliability, unique competitive capabilities and superior as well as comprehensive customer service. This issue is very important because it would be tough for the competitors to easily copy these differencing attributes.
4. The differentiation attributes must be of value to customers. A particular differencing attribute may seem to the company very valuable and appealing but if it is viewed by customers as having no or little value, the differentiation strategy will never sustain.
Conclusion:- Based on the survey results, the company should undertake initiatives to incorporate unique attributes in its products.
Question 11. State the shortcomings of differentiation strategy?
Answer:- The common shortcomings and mistakes in pursuing differentiation strategy include:-
1. Attributes with little value:- While differentiating a product the company may fail to adequately consider the buyers perspective in terms of value of the attributes is of little value to them.
2. Easy to copy:- differentiation strategy will fail if the competitors can quickly copy or imitate the differentiated features. In that case buyers will find no differences among the products of competitors.
3. Inability to benefit buyers:- Differentiation does not work when buyers perceive that it could not reduce their cost or increase their well-being.
4. Over differentiation:- over differentiation occurs in a product when differentiation leads to much higher price than the competitors, or differentiation causes product quality to exceed buyers needs.
5. Failure to understand buyers: - Differentiation obviously fails if the company cannot understand what buyers consider as of value. Every differentiation must be done based on buyer’s viewpoint- not the view point of company.
6. Buyers satisfaction with basic product:- when buyers are satisfied with a basic product, differentiation strategy may fail. Because buyers don’t like to have any extra attributes in the products that will increase.
Conclusion: - It thus appears that differentiation strategy may not always work. It is difficult to give any guarantee that differentiation of a product would result in competitive advantage in the market. Success depends on careful analysis of buyer’s needs and their perceptions.
Question 12.Clarify the meaning of market –niche strategy or focus strategy?
Answer:-
Focus strategy concerns itself with the identification of a niche-market and launching a unique product or service in that market. A niche market is a narrow segment of a total market. Niche can be identified on the basis of certain issues. (a) Particular buyer group (b) Geographic uniqueness (3) special product attributes that appeal only to niche members (d) a particular product line.
After identifying the niche market a company can decide to enter into one or more of the niches with its products. When the products decide to lunches its products in the niche market its strategy is also known as niche strategy. Since the focus of the company is on a niche market. It becomes a focus strategy. Focus strategy involves offering the niche customers a product customized to their taste and requirements. It is directed towards serving the needs of a limited customer group.
According to Hitt, Ireland and Hoskinsson, a niche strategy /focus strategy is an integrated set of actions designed to produce or deliver goods and services that serve the needs of a particular competitive segment.
Conclusion:- A company usually follows focus strategy when it is able to serve a narrow piece of the market better than competitors.
Q13. What are the common requirements for successful implementation of focus strategy?
Ans: A company requires unique skills, capabilities and resources for successful implementation of focus strategy. Some of these are:
· Manager’s ability to explore a well-defined but narrow market segment.
· Clear identification of competitors who serve a market broader than the niche market but are unable of disinterested to serve the niche for some reasons.
· Firm’s ability to provide adequate capital.
· Designing and maintaining a low-cost distribution system, with strong cooperation from the channel members.
· Strong marketing ability and creative flair.
Favorable Market Situations for Focus Strategy
A focus strategy does not work well in all situations. it becomes an attractive strategic option usually in the following situations.
01. Consumer’s distinctive preferences: Focus strategy is especially effective when consumers have distinctive preferences and the competitors are not offering products to satisfy those preferences.
02. Competitors apathy: If competitors are not trying to specialize in the same target niche market, a company’s focus strategy is likely to be effective.
03. Profitable niche: The focus strategy is expected to be highly workable when the market-niche is big enough to be profitable. Very small niche may not bring enough profit for the marketers.
04. High growth potential: Market niche becomes attractive when its growth potential is high. In order to be profitable, the market-niche must be able to offer good growth potential.
05. Availability of different niches in the industry: When an industry has different niches/market segments, the marketer can pick up the attractive niche (s) based on its strengths.
06. Inability or unwillingness of competitors to serve niche market: The competitors who sell their products in many segments of the market may find it costly to operate in a need for specialized products. In such a situation, the focus marketer ( market-focuser) may do well with customized products. Also, market leaders may not like to enter into a niche market as they do not consider it important to be a niche marketer for their business success.
07. No risk of segment overcrowding: A company may find it useful to follow a focus strategy if rival companies avoid specializing in the same segment. This attitude of rivals reduces the risk of overcrowding in the niche market. Overcrowding occurs when many producers operate in a narrow market segment. Few players in the market-niche always reduce competitive risk.
08. Focuser’s competitive ability: To be successful with focus strategy to a large extent depends on the ability of the focuser-company to compete effectively in the market. Effective competition is possible when the company has enough resources, capabilities and market image.
09. Company’s farsightedness: To be successful with focus strategy, the focuser-company must have the farsightedness to pick up those niches that match with its specialized competencies and capabilities as well as attractive by all standards.
Q14. What are they different types of focus strategy? Discuss the risks associated with focus strategy?
Ans: A company can pursue a focus strategy either with a low-cost approach or a differentiation approach. There can, thus can, thus, be two
Types of focus strategy.
a) Focuses Low-Cost Strategy
b) Focused Differentiation Strategy
c) Favorable Market Situations for Focus Strategy
d) Risks Associated with Focused Strategy
Risks Associated with Focused Strategy
Several risks are associated with a focus strategy. These risks originate mainly from more appealing products by rivals, shifting of product-preferences of customers, and high attractiveness of the niche –market. Managers should have a clear idea about these risks so that they can consider them before deciding on the adoption of niche strategy.
01. Risk from more appealing products: If the competitors come up with such products that are more attractive to the customers. There is then a risk of losing the market. Example includes MUM (bottled drinking water) of partex Group. Many rivals have gone out of the market because of the appealing attributes of MUM.
02. Shifting of customers’ preferences: Another risk emanates from the possibilities of shifting customer’s preferences and needs for a particular product in the niche-market. Over time, customers’ preferences may change or they may need a product with different attributes. Such a situation may allure other producers to enter the niche-market. This would intensify competition in the niche-market.
03. High attractiveness of the niche-market: The third risk may come from the niche itself. The niche-market may become so highly attractive that the rivals would jump into the segment and finally it may be flooded with so many competitors. Thus, niche-market profits will slide down. This happened in the garments sector in Bangladesh in 1980s and in accounting software in 1990s.
04. Universality of customers needs: Another risk that the needs of focused customers in the niche-market may become similar to those of customers in a market as a whole. If this happens, the advantages of focus strategy may be reduced of eliminated.
05. Price-war: It may invite aggressive price cutting by competitors, which may eventually lead to price-war that may lead to low profitability.
06. Withering cost advantages: Cost advantages of the company may not sustain for a long period of time if the competitors can copy them easily. So, the ways to achieve cost advantage must be difficult for others to copy.
07. Fear of low attractiveness: If low-cost product does not contain enough attributes to be attractive to prospective buyers, the strategy may fail. Low price is not always appealing to buyers. Attractiveness may be lost if the product is feature-poor or quality-deficient.
Q15. What do you mean by best-cost strategy?
Ans: Best-Cost Provider Strategy Defined
As a concept best-cost means high quality and low price of a This term is used to indicate a situation where the company to achieve lowest cost relative to the competitors who offer simpler products and simultaneously tries to improve quality. Best-cost provider strategy is often called best-cost strategy’, which we would use frequently in this book. Best-cost strategy is the strategy of increasing quality of products while reducing costs. This strategy is applied to give customers’ reducing costs. This strategy is applied to give customers more value for the money.’’ It is achieved by satisfying customers’ expectations on key attributes of products. At the same time, prices are charged lower than that of the competitors. By following the best-cost strategy, the company attempts to attract the value-conscious buyers’ (those buyers who want superior product with lower price)
Best-cost strategy is a hybrid. It balances a strategic emphasis on low-cost against a strategic emphasis on differentiation. It is considered as the most powerful competitive strategy of all. It presupposes relentlessly striving to become a lower-and-lower cost provider of higher-and-higher caliber product.’ Toyota Company of Japan followed best-cost strategy for its Lexus cars to beat Mercedes-Benz and BMW cars.
Q16. What are the preconditions for a company to be successful as a best-cost provider?
Ans: Preconditions for Becoming a Best-Cost Provider
It is easy to say to be a best-cost provider, but it is really a tough job to really become a best-cost provider in the marketplace. In order to be successful, the company must have the following resources and capabilities to simultaneously lower costs and improve quality:
· It must have the resources and competitive capabilities to achieve high quality at a lower cost than the competitors.
· It must be able to incorporate appealing (attractive) features at a lower cost than competitors (such good as-to-excellent product performance or quality).
· It must provide good-to-excellent customer service at a lower cost than competitors.
Q17. What are the preconditions for a company to be successful as a best-cost provider?
Ans: Market Situations Where Best-Cost Strategy Works Best :
A number of factors affect the successful implementation of best-cost strategy. These market-related factors need to be attended properly by the marketers. We present here some of the most dominant market-related issue or market situation where best-cost strategy is likely to work best.
· Buyer diversity: Best-cost strategy will work very well in a market where product definition becomes the norm because of buyer diversity, and also a substantial number of buyers are sensitive to price and quality.
· Positioning advantage: A company with best-cost strategy can position itself near the middle of the market- with a medium-quality product at a below-average price, or with a very good product at a medium price. Many buyers may prefer mid-range products. They avoid cheap, basic products of low-cost producers. They also avoid expensive products of top quality.
· Resources and capabilities: Best-cost strategy will work best when the company has the resources, know-how and capabilities to incorporate upscale product attributes at lower cost. This strategy is ill advised if the resources and capabilities do not permit the company to manage costs down and product caliber up.
Q18. Discuss the strategic advantages and disadvantages to vertical integration ?
Ans: Strategic Advantages of Vertical Integration :
Companies involve themselves in vertical integration basically for gaining competitive position in the market. Vertical integration becomes attractive when it can strengthen a company’s competitive position. Either profit-wise or strategy-wise, vertical integration is likely to be a flop if it fails to produce sufficient cost savings and / or substantially improve company’s technological and competitive strengths. Let us discuss the strategic advantages of vertical integration first for backward integration and then for forward integration.
Q19. Why do some companies follow backward integration strategy?
Ans: A firm can accomplish backward integration by starting its own operations in the production of raw materials or components, or by acquiring a firm already performing the same activities. When the suppliers of a firm are unreliable, or when purchasing from suppliers is too costly, or when the suppliers cannot meet the needs of the firm, it is wise to go for backward integration. More specifically, backward integration for a firm may be suitable when16
· The firm’s present suppliers are especially expensive, or unreliable or incapable of meeting the needs.
· The number of suppliers is small.
· The firm is competing in an industry that is growing rapidly.
· The firm has the resources to manage the new business of supplying its own raw materials.
· Advantages of stable prices are particularly important.
· The firm needs to acquire a needed resource quickly.
Q20. What are your arguments in favor of forward integration strategy for a company that produces perishable products?
Ans: Advantages of Forward Integration
a. The main sprit of forward integration is to enhance a company’s competitiveness.
b. A company achieves greater control over distribution of products. It may at least partially. Lose control over distribution when products are sold through intermediaries.
c. A company can increase sales by avoiding dealers wholesalers, and retailers who may not wholeheartedly push the sales of the company’s products. These intermediaries may be more interested to sell the products of the competitors who offer commissions.
d. When a company integrates forward and directly sells products to end-users, it con reduces distribution costs and even lower selling prices.
e. Because of lower distribution costs, the company can produce a relative cost advantage over certain competitors.
Strategic Disadvantages of Vertical Integration
1. It increases business risk because of diversification and more investments in the other stages of business activities.
2. It may block scare financial resources in some value chain activities of the industry and thus prevents the firm from investing in otherwise profitable ventures.
3. As the vertically integrated firms have the tendency to jealously protect their present investment in the backward and forward activities they slow down investing in research and development.
4. Even if there is cope to procure materials at cheaper cost from outside vendors, vertically integrated firms cannot avail of this opportunity. Because they have already locked themselves into in-house activities.
5. As the vertically integrated firms becomes less flexible due to reliance on in-house activities and own sources of supply, they may eventually face problems in responding to buyer demand for a variety of products.
6. When a firm goes for forward or backward integration or both, they require different skills and capabilities to manage the integrated business activities. Fulfillment of this requirement is always costly and may not finally be worthwhile.
7. Backward integration into production of components and parts may reduce the flexibility of a firm in its manufacturing activity. In technologically sophisticated industries (such as computers) outsourcing component production is often cheaper than producing by a firm itself.
Q21. What do you mean by unbundling strategy? Has it any relationship with outsourcing strategy?
Ans: Unbundling Strategy : When vertical integration does not pay, a company may decide to abandon the strategy of vertical integration and adopt the strategy of de-integration. That is, the company withdraws from the backward or forward integration. It stops selling directly to consumers through own stores. This action of de-integration is know as unbundling strategy. According to Thompson and Strickland, a number of US companies over the past decade have found vertical integration so competitively burdensome that they have adopted vertical de-integration or unbundling strategies.
Q22. What is outsourcing strategy? State the instances that make outsourcing a good strategic sense.
Ans: Outsourcing Strategy
Outsourcing strategy refers to a strategy of procuring raw materials or parts and components from suppliers or having any value chain activities performed by outsiders. When a firm adopts outsourcing strategy, it relies on outside vendors to supply products, support services or functional activities. A firm may outsource production, assembling, marketing, delivery, accounting and finance, warehousing or any other function o other business firms who can do them cost-effectively or better than the firm itself. Many software companies in Bangladesh are using outsourcing strategy in security-guard services. 3M Corp. has outsourced its manifesting operations to a Singapore-based company. Many American firms have outsourced their computer operations to IBM.
The Instances That Make Outsourcing a Good Strategic Sense
Outsourcing strategy is useful under the following circumstances:
ü When an activity can be performed better or more cheaply by outside specialists.
ü When the firm intends to give more concentration on the core business
ü When the activity is not crucial to the firm’s ability to achieve sustainable competitive advantage. For example, because of relatively less crucial importance of them, maintenance activities, cleaning activities, accounting, data processing and some other administrative support activities can be safely and cheaply outsourced.
ü When it reduces the firm’s risk exposure to changing technology and changing buyer preferences.
ü When the firm adopts a policy of providing better customer services.
ü When it allows a company to concentrate on its core business and do what it does best.
Q23. When does a company adopt growth strategy?
Ans: Growth Strategy
A company may adopt a growth strategy when it wants to expand its market and thereby improve profitability. Usually this strategy is undertaken when a company has enough resources to expand business and is capable to manage the new complicacies and risks involves with expansion.
Vehicles for Implementing Growth Strategy
Growth strategy can be implemented in various ways. It can usually be implemented through :
ð Internal Growth (using own resources)
ð Acquisition (one company purchases assets of another company and absorbs them into its own operations)
ð Merger ( two or more companies combine into one company)
ð Joint Ventures (Two or more organizations pool their resources for a given project or business product, on temporary or permanent basis)
ð Horizontal Integration (Adding one more businesses that produce similar products, usually buying another organization in the same business)
Question 24. What are the reasons for the formation of strategic alliances?
Ans- Major reasons for the formation of strategic alliance within the national boundary:
1. To substantially improve competitiveness.
2.To collaborate on technology or development of a new product.
3.To acquire altogether new competencies.
4.To improve supply chain efficiency
5.To gain economics of scale in production and distribution
Major reasons for the formation of strategic alliance outside the national boundary:
1.To build a market presence in the foreign markets.
2.To assemble more diverse skills, resources, technological expertise and competitive capabilities than a company can assemble alone.
3.To acquire valuable resources/capabilities through alliances that a company could not otherwise obtain on its own.
4.To gain `inside technology’ about unfamiliar markets and cultures in foreign countries.
Question 25. Discuss the major reasons for the failure of strategic alliances?
Ans- Major Reasons for the failure of strategic alliances are as follow:
1. Inability of the partners to work together.
2. Failure or delay in responding and adapting to changes in the internal and external environment.
3. Lack of willingness on the part of the partners to renegotiate the terms and conditions of alliances.\
4. Failure of he partners to value the skills and resources each partner brings to the alliances.
5. Rivalry between partners in the marketplace.
6. Inability of the partners to ensure win-win outcomes from the co-operative agreements.
Question 26. what do you mean by joint venture? Discuss the situations that are suitable for joint venture more business?
Ans-A joint venture refers to a new organization established by two or more organization.\it is an agreement where two or more films capital in a venture.
Situation suitable for joint venture
The following situations are suitable for joint venture:
1. All the situations suitable for strategic partnerships.
2. A business activity where pursuing an opportunity is complex or risky, a joint venture is a good way to undertake that opportunity,
3. A situation where pursuing an opportunity requires unique competencies. when a firm does not have s
4. where entry to a foreign market needs local foreign partner. The difficulty in entry may arise from restrictions by the government or local culture and socio-political situations.
Question 27. What are the difficulties that may arise when two or more firms form joint venture?
Ans- the difficulties that may arise when two or more firms form joint venture are as follow:
1. Complications arise in dividing the share of control between the partners. The partners in joint venture may have controversies over the role each would play in the organization.
2. The partner companies run the risk of giving technical know how away to their counterparts.
3. Conflict over how to run the joint venture can tear it apart and result in business failure,
4. In case of international joint venture, conflicts may arise over the use of local resources, local technology, local employees, compliance with local standard and policies, export volume, use of intellectual property and technology etc.
5. Disputes may stem when foreign partners start neglecting the local partner after the foreign partner has overcome the difficulties.
6. Local partners may start own business by seeding their relationship with joint venture.
7. The joint venture firm may begin to compete more with one of the partners than the other.
8. Problems may arise when the sponsoring firms do not provide support to the joint venture equally.
9. Although the partnering companies may not have problems, they may face problems due to complaints from the customers about poorer service or about issues,
Question 28. Discuss the purposes of both merger and acquisition strategies?
Ans- The purposes of merger and acquisition are primarily similar.They can-
* Dramatically strengthen a company`s market position.
* Open new opportunities for competitive advantages.
* Fill resource gaps and allow the new company to do things which the prior companies could not do alone.
* Combine the skills and competitive capabilities of the merged companies.
* Achieve wider geographical coverage and greater financial resources.
* Add production capacity and expand into new areas; and/or
* Censure considerable cost-saving through combining operations of a number of companies.
Question 29. Distinguish between merger and acquisition?
Ans-Difference between merger and acquisition are given below:
1) Merger takes a place when two or more organizations merge together and their operations are absorbed by a new organization.
2) Merger can take place among organizations within the same country or among organizations across the national borders.
3) In the business world, a merger is a combination of two or more companies. When combined together, a new company is created.
4) Their assets and liabilities are combined. Merger can take place among organizations within the same country or among organizations across the national borders.
Acquisition-
1) Acquisition is a strategy through which one firm buys a controlling or 100 percent interest in another firm.
2) An acquisition occurs when one company purchases another company.
3) It is an strategy through which one firm buys a controlling or 100 percent in another firm by making the acquired firm a subsidiary business within its portfolio.
4) The acquired company’s legal identity is lost. The acquirer company remains independent and operates its business as it is.
Question 30. What are the reasons for which the need for cooperative strategies has been heightened in the recent years?
Ans- In the recent years, the need for cooperative strategies has been heightened because of the following:
1. Intensified competition in the domestic market.
2. Opening up of a vast market in different parts of the world.
3. Advances in telecommunication and information technology.
4. Development of transportation across the world by roads, air and sea.
5. Globalization of business.
6. Trade liberation in many countries since the emergence of the world trade organization(WTO).
Question 31. ‘cooperative strategies are prevalent in those industries where there are rapid changes in technology, business environment and customer needs.’ Explain the significance of this statement with an example of a relevant industry in bangladesh.
Ans- ‘cooperative strategies are prevalent in those industries where there are rapid changes in technology, business environment and customer needs.’ An example of such an industry is computer industry. The computer components and software are produced by a number of companies. Producers are mostly different for microprocessors, motherboards, monitors, disk drives, memory chips, keyboards, mouse, sound cards, multimedia components etc, Thus, there is a need for close collaboration among the producers of all these diverse products.
Question 32. Explain the significance of harvest strategy. When should a company follow harvest strategy?
Answer:-
When future growth appears doubtful or not cost-effective, companies want to 'harvest' as much they can from the product. It limits additional investment and expenses and maximizes short-term profit and cash flow. When a company adopts harvest strategy, it deliberately sacrifices its market position in return for near-term cash flows or current profitability. The intention of the company in such a strategy is to earn immediate cash from, the existing business and use the cash in other more profitable business activities. Usually, a diversified company having various lines of businesses deploys harvest strategy (also known as end­game strategy, or asset reduction strategy) for non-core business units in weak competitive positions.
Question 33. What are the preconditions for success wilh offensive strategy?
Answer:-
In order to be successful with offensive strategies a company must ensure that it has been able to -
Win customer acceptance of its product with a reasonably short period of time (if it is not a highly innovative or first-time-in-the-world product).
Accumulate requisite resources and capabilities for deployment;
Discourage the competitors through offensive actions to launch counter-offensives;
Come up with follow-on offensive and defensive moves one after another to protect its market position.
Question 34. What is meant by defensive strategy? What kind of strategies can be considered as defensive strategies?"
Answer:-
A defensive strategy consists of a company's actions directed for protecting its competitive advantage. A company pursues defensive strategies to protect competitive 'advantage through protecting existing market share. Companies usually follow defensive strategies primarily to 'lower the risk of being attacked' and influence the competitors lo aim their efforts at other competitors.
A company's defensive strategies may include:
· Offering dealers/distributors special discount or better financing terms just to discourage them not to carry competitors' production.
· Entering into agreement with dealers/distributors to work as the company’s exclusive dealers/distributors.
· Extending the warranty period or offering free training to the customers to discourage them from buying competitors' products.
· Making sustainable arrangement for delivery of spare parts or after-sales service faster than the competitors.
· Making early announcement about launching a new product so that potential customers postpone buying from competitors.
· Introducing new features of products or new version or new model and enter into niche markets, which would create obstacles to competitors to enter the niches.
Question 35. What are the first-mover advantages and late-mover disadvantages?
Answer:-
Several advantages emerge when a firm takes a strategic move as the first-mover- The first-mover becomes the pioneer. Pioneering helps the firm to:
build reputation in the marketplace;
attract buyers to the products and the firm;
gain new knowledge of the industry's key success factors
comprehend the critical issues in the market
Produce an absolute cost advantage over the competitors because of its early commitments to supplies of raw materials, new technologies and distribution channels'
create a pool of loyal customers who are likely to repeat purchasers of products of the firm; and
discourage potential new entrants to refrain from entering into the marks through creation of strong entry barriers.
Question 36. What are the first-mover disadvantages?
Answer:-
Making a first-move has mixed blessings. It may be very risky to initiate a strategic move first. The following are some of the disadvantages of first-mover strategy (these are advantages of being late-mover):
It is highly costly to become the first-mover, because the firm has to create demand in the market for the product and so it needs to spend huge amount of money for promotion.
It may invite serious adverse effects on operations of the firm if the industry is such that there are frequent changes in technology (such as in the software industry or in the telecommunications industry). In such a situation, the late-movers gain the advantage of using latest technology.
The late-movers can copy/imitate the technical-how easily and eventually may be able to oust the first-mover from the market.
The late-movers may become so powerful because of their ability to bypass the first-mover in developing skills and technology that they can snatch-away the customers of the first-mover.
Question 37. What do you mean by unbundling strategy? Has it any relationship with outsourcing strategy?
Answer:-
The company withdraws from the backward or forward integration. It stops producing parts and components or stops selling directly to consumers through own stores. This action of de-integration is known as unbundling strategy. According to Thompson and Strickland, a number of US companies over the past decade have found vertical integration so competitively burdensome that they have adopted vertical de-integration or unbundling strategies.
Question 38. What is outsourcing strategy? State the instances that make outsourcing a good strategic sense.
Answer:-
Outsourcing strategy refers to a strategy of procuring raw materials or parts and components from suppliers or having any value chain activities performed by outsiders. When a firm adopts outsourcing strategy, it relies on outside vendors to supply products, support services pr functional activities. A firm may outsource production, assembling, marketing, delivery, accounting and finance, warehousing or any other function to other business firms who can do them cost-effectively or better than the firm itself.
The Instances That Make Outsourcing a Good Strategic Sense Outsourcing strategy is useful under the following circumstances;
· When an activity can be performed better or more cheaply by outside specialists.
· When the firm intends to give more concentration on the core business.
· When the activity is not crucial to the firm's ability to achieve sustainable competitive advantage. For example, because of relatively less crucial importance of them, maintenance activities, cleaning activities, accounting, data processing and some other administrative support activities can be safely and cheaply outsourced.
· When it reduces the firm's risk exposure to changing technology and changing buyer preferences.
· When the firm adopts a policy of providing better customer services.
· When it allows a company to concentrate on its core business and do what it does best.
Question 39. When does a company adopt growth strategy?
Answer:-
A company may adopt a growth strategy when it wants to expand its market and thereby improve profitability. Usually this strategy is undertaken when a company has enough resources to expand business and is capable to manage the new complicacies and risks involved with expansion.
Question 40. Growth strategies can be implemented in various ways? What are those ways? Discuss.
Answer:-
Growth strategy can be implemented in various ways. It can usually be implemented through:
· Internal Growth: (using own-re sources)
· Acquisition: (one company purchases assets of (another company and absorbs them into its own operations)
· Merger: (two or more companies combine into one company)
· Joint Ventures: (Two or more organizations pool their resources for .a given project or business product, on temporary or permanent basis)
· Horizontal Integration: (Adding one or more businesses that produce similar products, usually buying another organization in the same business)