FD-301_vsyo / Subj / 746-Entrepreneurship. Предпринимательство

3.Mutually exclusive strategies and preferred one

1.____________________________________________________________

2.____________________________________________________________

4.SWOT analysis

4.1.Perceived strengths:

a)_____________________________________________________________

b)_____________________________________________________________

4.2. Perceived weaknesses:

a)_____________________________________________________________

b)____________________________________________________________

4.3. Perceived opportunities:

a)_____________________________________________________________

b)_____________________________________________________________

4.4. Perceived threats:

a)_____________________________________________________________

b)____________________________________________________________

5. Action plan

No	Task	Duration	Assgd. resources

6. Expected financial impact

Year	Cash inflow	Cash outflow	Net cash flow	Remarks
2005
2006
2007
2008

Rate of return:

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7. Risk and contingencies

Year	2005	2006	2007	2008
Capital
Recurrent

8. Overall prospects

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

9.Endorsement by

proponents ___________________________________________________

(Names, Positions, Signatures)

Endorsement by

C.E.O. _______________________________________________________

(Name, Title, Signature)

Text 8. Language Focus. Your own business.

1. Present your business in pairs. Add some questions.

a) Many people are in business these days. Most probably you will be in business

yourself some day. .

1.What kind of company would you like to organize?

2.Will you make goods or provide services?

3.Will it be a private company?

4.Will it be a small company or a large-scale company?

5.Will you run the company yourself?

6.What will the full name of your company be?

b)Suppose you produce electronic musical instruments for pop-groups.

1.What kind of instruments do you manufacture?

2.What are their main characteristics?

3.How many checking operations does every instrument pass?

4.What would you do to beat your competitors?

c)Suppose you own a shop selling leather footwear.

1.What season sales do you conduct?

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2.How much do you cut your prices at the sales?

3.Do you still make a profit when you lower your prices?

4.How high is your mark-up when you sell highly - fashionable items?

5.How often do you check your competitors’ quotations?

d)Suppose you sell pet products.

1.Why did you start this business?

2.What is the name of your shop?

3.How do you stock your shop?

4.How do you advertise the products you are selling?

5.Who are your main customers?

e)Suppose you are the owner of a small factory producing chocolate candies for children.

1.Who supplies you with the main ingredients of chocolate candies (chocolate, condensed milk, peanuts)?

2.Where do you import cocoa butter from?

3.What will you do if your sweet life comes to an end one day, when your customers are no longer satisfied with the quality of your candies?

4.Have you had any offers from major companies to start joint production?

f)Suppose you are the owner of a factory producing fashionable clothes.

1.Do you know the costs of the materials for the products you make?

2.What is the cost of labour at your enterprise?

3.What are the typical losses of the total working time at your enterprise?

4.Do you know the costs of the main operations?

5.How great are the losses through break-downs of equipment and machines?

2.Read the following quotations and comment on them.

a)“Business is more exciting than any game” (Lord Beaver-brock).

b)“Profitability is a sovereign criterion of the e nterprise” (R. Drucker).

c)“Whenever you see a successful business, someone once made a courageous decision” (P. Drucker).

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d) “It is not the employer who pays wages – he only handles the money. It is the product that pays wages” (H. Ford)

f) “When two men in business always agree, one of t hem is unnecessary” (Jr. W. Wrigly).

Part II

Supplementary reading

1. Forms of business organizations

A business may be privately owned in three different forms. These forms are a sole proprietorship, a partnership and a corporation. A sole proprietorship is the most common in many western countries. For example, more than 80 per cent of all businesses in the United States are sole proprietorships.

But it is evident that sole proprietorships do not do the greatest volume of business. They account for only 16 percent of all business receipts, for example, in the USA. What kind of business is likely to be a sole proprietorship? First of all, service industries such as laundromats, beauty shops, different repair shops and restaurants.

A partnership is an association of two or more persons to carry on a business for profit. When the owners of the partnership have unlimited liability they are called general partners. If partners have limited liability they are "limited partners". There may be a silent partner as well - a person who is known to the public as a member of the firm but without authority in management. The reverse of the silent partner is a secret partner - a person who takes part in management but who is not known to the public.

Any business may have the form of the partnership, for example, in such professional fields as medicine, law, accounting, insurance and stockbrokerage. Limited partnerships are a common form of ownership in real estate, oil prospecting, quarrying industries, etc.

Partnerships have more advantages than sole proprietorships if one needs a big capital or diversified management. Like sole proprietorships they are easy to form and often get tax benefits from the government.

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Partnerships have certain disadvantages too. One is unlimited liability. It means that each partner is responsible for all debts and is legally responsible for the whole business. Another disadvantage is that partners may disagree with each other.

A business corporation is an institution established for the purpose of making profit. It is operated by individuals. Their shares of ownership are represented by stock certificates. A person who owns a stock certificate is called a stock-holder.

There are several advantages of the corporate form of ownership.

The first is the ability to attract financial resources. The next advantage is that the corporation attracts a large amount of capital and can invest it in plants, equipment and research. And the third advantage is that a corporation can offer higher salaries and thus attract talented managers and specialists.

The privately owned business corporation is one type of corporation. There are some other types too. Educational, religious, charitable institutions can also incorporate. Usually such corporation does not issue stocks and is nonprofit. If there is a profit, it is reinvested in the institution rather than distributed to private stock holders.

In some western countries, cities, states federal government and special agencies can establish governmental corporations. A few examples of these governmental corporations are state universities, state hospitals and city owned utilities. Governmental corporations are non-profit as a rule and usually they do not issue stock certificates.

2. Small Firms. Advantages and disadvantages.

Small firms actually have advantages over large firms in many cases. One advantage of small firms is that they often grow into large firms. Many of today's small firms will become giants in tomorrow's business world.

Some of the situations in which small firms have distinct advantages are the following:

1. When new products or ideas are being tried. Small firms have much flexibility. Decisions can be made and implemented quickly.

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2. When the personal attention of the owner is essential to daily operations. If the owner's presence is important to the growth of the business, it will be more successful if the business is small enough for one person to supervise.

3.Where personal services, either professional or skilled, are dominant. Examples of this include beauty parlors, real estate offices, interior-decorating firms, TV repair shops. Medical and dental services are also usually rendered by small firms. Any possible advantages of large size in these areas are usually offset by greatly enlarged overheads of less efficiency on the job, and the loss of the personal touch of the smaller firm.

4.When the market for the product or service is mainly local. In some types of firms, it is not economical to attempt a scale of operations that exceeds the local market demand. The making of bricks or concrete blocks for the construction industry is an example. Transportation costs are prohibitive for moving such products.

5.When the industry is characterized by wide variations in demand or in styles. Examples of these include ladies' dress lines, ornamental candles, and custom-made chandeliers and lamp shades. These types of products just do not invite large firm development in most cases. The small, flexible firm usually can adjust to the necessary variations of specialized products more easily.

6.When close rapport with personnel is essential. Small firm owners usually have the advantage of being close to employees. They know problems from daily conversations and can adjust employment to a person's abilities better because of this close association. As a result, they are usually able to maintain better morale and efficiency in the firm, which is important in any business.

Small firms are often said to labor under such disadvantages as the inability to secure competent employees, the inability to cope with monopolistic practices, the inability to finance expansion when it has been proved to be practicable, tax burdens'',

limited vendor goodwill, discriminatory practices by large shopping-center developers, lack of time for the small proprietor to handle multiple assignment, lack of research facilities, and the problems of making a new firm or product known in its market.

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Many of the disadvantages of small firms could be overcome with positive planning. An ill-conceived business, whether large or small, has little chance of success if its operation has not been properly planned. Good research in the planning stage can reveal opportunities for success. It can also indicate when a business that is contemplated should not be undertaken.

3) The rewards for successful small firm ownership can be significant. The personal satisfaction will vary with the individual owner. Good profits, satisfying employment, being one's own boss, community status, family pride and tradition, and having an outlet for one's creativity are some of them.

But these rewards are never automatic or guaranteed. Success makes many demands upon the operator of the firm. The requirements for successful ownership of small business firms can be summarized as follows: personal characteristics, good customer relations and knowledge of consumerism, good community relations, business ethics and social responsibility, compliance with government regulations. But sound business knowledge and willingness to work hard stand at the head of any list. Knowing the causes of failure can protect the owner against them.

The individual firm has benefited from having these and other advantages. In addition to the types of firms cited, small firms in such fields as construction, wholesaling, retailing, and the service industries have faced up well to their larger firm competition. Insurance and small finance firms have also been very successful. The profitable firms have not relied on the inherent advantages of small firms as such, but have combined these advantages with alert and competent management to achieve their success.

3. Development of Russian Entrepreneurship

In Imperial Russia, the Soviet Union, and post Socialist Russia there was and still is a great amount of entrepreneurial potential. In the medieval Russian cities of Kiev and Novgorod not only merchants and artisans had political power and wealth, but almost everyone above the lowest level of peasants was engaged in entrepreneurial activities. Entrepreneurs in the time of Peter the Great were traders who created Europe's strongest

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military-industrial complex for Imperial Russia. Only the Industrial Revolution (which started in Russia half a century later than it started in England) brought the real spirit of private entrepreneurship to Russia. In the late nineteenth and early twentieth centuries talented businessmen like S. Morozov were successful entrepreneurs in Russia.

P. Stolypin and Witte were bright members of government who initiated economic reforms. After the Revolution, except for a short period of NEP, most entrepreneurial activities were destroyed. A transformation of the labor market and its monopolization occurred. The state was the only recognized legal employer and they did not provide the environment for entrepreneurship.

Russian entrepreneurship as a phenomenon does not differ much from what is occurring in other countries. In Russia entrepreneurs desire economic freedom, innovations, and organizational creativity. The transition to a full-fledged market-based economy will give birth to a great diversity of entrepreneurial profiles, different forms of ownership, and a variety of strategies. The business activity and the business mentality of Russian entrepreneurs have been strongly influenced by the country's historic heritage (state-centered country, multi-cultural society, and weak middle class), the communist ideology, and the absence of reliable business laws.

It is impossible to create successful small and mediumsize businesses, to develop financial infrastructure, and transform large industrial businesses without high quality management and entrepreneurship.

Business people are still in search of the best strategy for entrepreneurship development in Russia - the country of opportunities and human potential, but also the country of risks.

History has been so cruel to the Russians that their ability to endure - to suffer - has become a cultural cliche. The optimist about Russia says: hope for the best.

4. Planning is the key to success for new firms. How to write a convincing

business plan.

So you‘ve got the brilliant idea, you’ve researched your market and you are convinced your business will be a winner.

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Now get a blank piece of paper and a pen, close the door and sit down in a quiet room. You have a business plan to write.

There are four main reasons for writing a business plan: to provide information about your business and your intentions; to persuade a third party to provide resources or assistance; to develop your strategic thinking so you are clear about what you are trying to achieve and how you are going to achieve it; and to set financial targets so you can control costs.

So where do you start? You should aim for 12 pages of clear, concise information, typed on one side only and well laid out so it is easy to read. Keep it simple — you can include additional details in an appendix. Quantify as much as you can — your business plan is likely to be read by people used to dealing with figures.

To get an idea of what it should look like, check Business Link's website (www.businesslink.org) or one of the books mentioned below. Alternatively, the highstreet banks provide business-plan outlines in their small-business packs.

Peter Leach, head of growth service at the accountant BDO Stoy Hayward which specialises in helping small firms, says it is worth remembering that a business plan is not set in stone.

It should be regarded as a work in progress that will change as new opportunities open up. In other words, be flexible.

He says: "You are not necessarily going to get it right first time because the more you go out and tell people what you are doing, the more ideas and other opportunities start to manifest themselves. The discussions you have will continually challenge the plan. If you change it as a result of the discussions, it wasn't the right plan in the first place. There is no point in flogging a dead horse. In business things either work or they don't. The trick is learning to recognise when something doesn't work and fixing it quickly."

Finally, remember that writing a convincing business plan will make you more confident about what you are trying to achieve, and that will rub off on other people. A plan will help you identify obstacles so you can think about how to turn those obstacles into opportunities.

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Top Advice

Tips on writing and research

∙If an empty computer screen or blank sheet of paper is too daunting for you to get started, talk your plan onto a recorder and transcribe it

∙Be realistic. If it doesn't work on paper it is not going to work in real life, so don't waste time pursuing dead ends

∙Do as much research as possible into every aspect of the business. If you are not totally convinced, there is little chance anyone else will be

∙Make a list of all the resources you need to make your plan work, including premises, equipment, raw materials and labour

∙Seek advice from as many other entrepreneurs as you can and learn from their mistakes

∙Make sure you have thoroughly researched the financial side of the business. Don't underestimate the amount of money you will need

5.Britain is not going to have many entrepreneurs

A recent survey of 6,000 people aged between 16 and 19 claims to reveal that Britain

is not going to have many entrepreneurs. This was deduced partly from the information that only 6 per cent wanted to bear responsibility, and a mere 5 per cent believed they could use their initiative.

One of the "experts" analysing these results commented:

"Entrepreneurship is not for these youngsters. It is quite depressing that a lot of them are being turned out without much ambition."

This is very much in line with the current fashion that everyone ought to be an entrepreneur with enormous ambition. It shows how foolish fashion is. It only requires a moment's thought to realize what a bad idea it would be if everyone wished to be an entrepreneur.

A successful entrepreneur will be an employer rather than an employee. This means that, in a nation of entrepreneurs, either all will be self-employed with no additional staff, or a few will succeed and the majority will be disappointed failures.

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