THE FIELD PROJECT - Business 302
Purpose
The purpose of having you prepare an environment report for an industry is to give you
experience in applying the concepts of this course to an actual business situation. When the
environment remains stable, the importance of an environment analysis is minimal. However,
when faced with a dynamic environment the analysis of the environment and the
corresponding report are extremely important. An analysis of the environment is the basis for
developing a strategic plan and a marketing plan, which are required components for business
loans. A firm that does not constantly monitor its future environment for salient changes is
more likely to find itself out of step and ultimately, out of business.
The environment analysis of the Strategic Business Area (SBA) you prepare is to be
written from the perspective of an outside business consultant as an objective report on the
aspects of a firm’s environment. The report should provide insights that would enable a
management team or others in a firm to evaluate any proposed strategy. The report is not to
include any strategy, evaluation or strategy, or response.
Topics and Nature of Report
The basis of your report is concentrating in the Task Environment elements of the Griffin Model
and the Five Forces of the Porter Model. As you discover more about the environment, new
issues may be discovered about salient aspects of the environment that may lead to different
emphases. The first step is to identify five major trends, threats, and opportunities that will
exist in the SBA. The second step is to conduct an overview of the different aspects of the
environment (General: Economic, Social-Cultural, Political-Legal, Technological, and
International; Task: Competition, Customers, Regulators, Unions/Labor, Suppliers, Strategic
Allies, and Owners; Porter’s Industry Competitive Model). Jot down things about each
factor/dimension that you initially think may be important to the organization. Then conduct a
more in-depth research in each of the areas.
Throughout the course, material has been presented on each facet of the environment.
The Case Guide Analyses and class lectures give information on the General Environment as
well as information on task factors. Most of these overheads identify different types of
information that one could/should examine and/or include on each of these factors.
For each task factor it is important to identify 1) Who they are, and 2) What are their
characteristics, orientation, behaviors, etc. which make (or potentially make) them important to
a firm doing business in the SBA. Importance is determined by the potential to serve as a
stimulus (positive or negative/opportunity, threat or trend) for some type of firm response.
Conclude by outlining your general recommendation(s) about the industry sector.
Strategic Business Area (SBA) Identification
For all firms.
Z Score,T Score, Percential Rank and Box Plot Graph
THE FIELD PROJECT - Business 302 Purpose The purpose o.docx
1. THE FIELD PROJECT - Business 302
Purpose
The purpose of having you prepare an environment report for an
industry is to give you
experience in applying the concepts of this course to an actual
business situation. When the
environment remains stable, the importance of an environment
analysis is minimal. However,
when faced with a dynamic environment the analysis of the
environment and the
corresponding report are extremely important. An analysis of
the environment is the basis for
developing a strategic plan and a marketing plan, which are
required components for business
loans. A firm that does not constantly monitor its future
environment for salient changes is
more likely to find itself out of step and ultimately, out of
business.
The environment analysis of the Strategic Business Area (SBA)
you prepare is to be
written from the perspective of an outside business consultant
2. as an objective report on the
aspects of a firm’s environment. The report should provide
insights that would enable a
management team or others in a firm to evaluate any proposed
strategy. The report is not to
include any strategy, evaluation or strategy, or response.
Topics and Nature of Report
The basis of your report is concentrating in the Task
Environment elements of the Griffin Model
and the Five Forces of the Porter Model. As you discover more
about the environment, new
issues may be discovered about salient aspects of the
environment that may lead to different
emphases. The first step is to identify five major trends,
threats, and opportunities that will
exist in the SBA. The second step is to conduct an overview of
the different aspects of the
environment (General: Economic, Social-Cultural, Political-
Legal, Technological, and
International; Task: Competition, Customers, Regulators,
Unions/Labor, Suppliers, Strategic
Allies, and Owners; Porter’s Industry Competitive Model). Jot
down things about each
3. factor/dimension that you initially think may be important to the
organization. Then conduct a
more in-depth research in each of the areas.
Throughout the course, material has been presented on each
facet of the environment.
The Case Guide Analyses and class lectures give information on
the General Environment as
well as information on task factors. Most of these overheads
identify different types of
information that one could/should examine and/or include on
each of these factors.
For each task factor it is important to identify 1) Who they are,
and 2) What are their
characteristics, orientation, behaviors, etc. which make (or
potentially make) them important to
a firm doing business in the SBA. Importance is determined by
the potential to serve as a
stimulus (positive or negative/opportunity, threat or trend) for
some type of firm response.
Conclude by outlining your general recommendation(s) about
the industry sector.
4. Strategic Business Area (SBA) Identification
For all firms the need/demand is the important factor. You are
expected to develop an
identification of the future needs of the SBA, the technology
that will be utilized to satisfy the
need, the geographical area and the client type you will try to
satisfy. The concept of Strategic
Business Area and the Strategic Segmentation Tree are attached
at the end of the report. Start
your report by describing which of the SBA you will be
concentrating on and the future Time
Target.
You are expected to develop a customer profile (of the
businesses, individuals, or
families) for the organization. This will include their
demographics/psychographics and other
characteristics, buying patterns, or buying behaviors that are
relevant. For all SBAs there must
be some consideration of the competitive environment. Even if
a firm has a monopoly,
consider if there is the threat of substitute products or other
competitive forces on the horizon.
Identify the different types of competitors (brand, product, or
generic competitors), their
5. strengths or weaknesses, and anything you can determine about
their strategies.
Time Target and Life Span
At this stage you need to estimate the time period you will
focus your analysis into the future.
Attention: the immediate “future” environment is not of
particular help since by the time the
firm develops a response plan the immediate future will have
passed. You need to
concentrate your research in assessing the SBA’s potential
during the life span period.
Level of Future Turbulence of the SBA
Using tables H-1-1 and H-1-2 assess the level of future
turbulence of the SBA. You can assess
the level of turbulence by:
a. asking experts in the field, and
b. using reference information on the SBA.
Construct the future level of turbulence by circling the relevant
columns for each attribute in
Tables H-1-1 and H-1-2. Average the result and come up with a
single number of turbulence
level for each one of the tables.
6. Since managers typically find it difficult to fill out complex
tables, it is recommended
that you “translate” them into a questionnaire format. An
example is attached at the end of
the report. However, you can also have them fill in the tables
directly.
Sources of Information
This project is designed to be a research/field project. You will
need to talk with people who
can provide you some of the needed background information,
e.g. people in the industry or
people knowledgeable about different aspects of the SBA.
Other needed information will be
found through secondary sources. The Business Librarian holds
sessions on how to use the
library resources and how to find various types of business
information. You may wish to use
on-line services, industry reports, or other published reports.
Several local organizations
publish reports and information on the business environment in
the San Diego and other areas.
The Economic Development Corporation (EDC); local Chamber
7. of Commerce, Private Industry
Council (PIC), and others will be able to glean a great amount
of information as well as direct
through electronic media. Many reports are also published in
local publications as the San
Diego Business Journal, The San Diego Transcript or the
business section of local papers.
Writing the Report
The writing style should be terse and to the point. Write
objectively and avoid using “loaded”
or “value laden” words or terms. While you may feel
emotionally about an issue, try and keep
your writing objective. What a firm “should” or “should not”
do. An analysis of the
environment, as it will exist is to be written descriptively, not
in a prescriptive manner.
The analysis is to be double-spaced, using a font no smaller
than 12 pt. The maximum
number of pages to be submitted is 15, including references and
any appended material. The
report format and style must be consistent throughout the paper.
Please use an “accepted”
style, such as Chicago Manual of Style, Writing Research
Papers: A Complete Guide, The
8. American Psychological Association (APA) Style, or any other
style manual that is accessible to
you from the library or other source.
The report is to be organized in a logical sequence. Within each
dimension or factor you
may wish to have sub-sections concerning different customer
segments or sections concerning
demographic characteristics (age, income, education, marital
status, ethnic background, etc.),
one concerning buying patterns, and perhaps another about what
they value of the benefits
they are seeking.
Your report should have an appropriate title page. At minimum
the title page is to
include the title of your paper, the course information, your
team’s names, and date. There
should be page numbers on each page (not including title page).
Headings and sub-headings
should be used to identify different sections and topics. When
double-spacing text, it is
appropriate to indent the first line of each new paragraph. Each
report is expected to have a
Bibliography, Sources, or Reference section. You should also
9. list the full names, company
affiliation, and titles of the people you interview. Consult a
style manual for the appropriate
format. There is no need to have a report cover; a report
stapled in the upper left corner is
preferred.
Remember that I am available to answer questions and can be
used as a resource;
however, I do not read drafts of your paper. Final projects may
be submitted at any time prior
to or during designated time period.
PROJECTS WILL NOT BE ACCEPTED AFTER THE
DESIGNATED TIME.
CONCEPT OF STRATEGIC BUSINESS AREA
In strategic decision making in turbulent environments, the
commonly used marketing concept
of Market Segmentation is replaced by the concept of Strategic
Segmentation.
Strategic Segmentation subdivides the environment into
Strategic Business Areas
10. (SBAs) which offer distinctive future
growth/profitability/turbulence prospects and/or require
distinctive success strategies.
The dimensions of an SBA are the following:
1. A NEED which will exist in the environment
For example: Need for personal urban transportation
2. A TECHNOLOGY which will serve this need in the future.
Examples:
1) Automobile powered by an internal combustion engine
2) Automobile powered by an electric motor
3) A suburban train powered by a super conductive electric
motor
4) Bus powered by electric motor
5) Bus powered by natural gas
3. A GEOGRAPHIC LOCATION in which this need will exist.
Examples:
1) USA (or east coast of USA)
2) Japan
11. 3) Russia
4) European Union
4. A TYPE OF CUSTOMER which will have the need.
Examples:
1) Individuals commuting to work
2) Families
3) Tradesmen
4) Auto rental firms
5. In some instances, a fifth segmentation dimension becomes
necessary. This
dimension is the CHANNEL OF DISTRIBUTION through which
the need is served.
Examples:
1) Direct from manufacturer to customer
2) Through intermediate distributors
3) Through retail stores
AN SBA IS A COMBINATION OF
NEED/TECHNOLOGY/LOCATION/CUSTOMER TYPE
12. The distinctive characteristics of an SBA which are important in
strategic decision making are:
1. GROWTH/PROFITABILITY which the SBA will offer to
successful competitors.
2. Level of TURBULENCE AND UNCERTAINTY which
competitors will encounter in the
SBA.
3. STRATEGIES which are going to be successful in the SBA.
4. ORGANIZATIONAL CAPABILITY which the competitors
will need to have in order to
succeed in the SBA.
5. STRATEGIC INVESTMENT which a firm will have to make
into the SBA in order to
succeed.
In today’s and future environments, a need is likely to be served
by more than one technology,
exist in different geographic settings, and possessed by more
than one type of customer.
The process of Strategic Segmentation consists of constructing
a SEGMENTATION TREE
which is illustrated in the following figure.
As the Figure bellow shows, a single NEED can generate a large
13. number of SBAs.
STRATEGIC SEGMENTATION TREE
TIME TARGET AND LIFE SPAN
Estimate the number of T1 it takes from start to finish in your
chosen SBA to develop and
launch a new generation of products/services based on a new
technology. We will call T1 the
TIME TARGET.
Enter T1 below.
Estimate the number of years from launching time T1 to time T2
during which the new
generation of products/services will remain profitable. We will
call T1 to T2 person the
profitable LIFE SPAN of the next generation of
products/services based on a new technology.
Enter T2 below.
14. You are writing the project for a manager who needs to know
what the environment will look
like when is ready to launch the product/service in the industry
on T1. This is the soonest
possible time that one can prepare a product/service and bring
to market.
THE ANALYSIS OF THE ENVIRONMENT IN THIS
PROCEDURE MUST BE FOCUSED ON
THE TIME TARGET
ADDITIONAL QUESTIONS FOR THE QUESTIONNAIRE
Remember, you will have to know what all these terms and
concepts mean, as well as be able
to explain their meaning to managers in their language.
In addition to the general questions shown in the tables, you
may find additional
questions which will be important for the evaluation of the
SBAs. Before executing the forms
with the client, determine such additional questions and
construct the answers for each of the
15. levels specific in the table.
Translation of the Tables in Questionnaire
Since managers typically find it difficult to fill out complex
tables (such as tables H-1), before
executing the questionnaire, translate the tables into convention
form. A questionnaire
example of this translation is shown below:
From Figure H-1-1
1. How would you assess the pressure your firm will receive
from your customers in the
next 5-7 years?
a. None
b. Weak
c. Strong
d. Demanding
e. Threatening
2. In your view, what will be the critical marketing success
factors in your industry during
the next 5-7 years?
a. Control of the Market
16. b. Dominant market Share/Low Production Costs
c. Product Appeal/Responsiveness to Customer Needs
d. Anticipation of Changes in Customer Needs/Responsiveness
to Changing
Customer Values
e. Identification of Latent Customer Needs
From Figure H-1-2
3. In your view, how frequent will new products be introduced
in your industry during the
next 5-7 years?
a. Infrequent (every 5 or more years)
b. Low
c. Moderate
d. High
e. Very High (several per year)
FIGURE H-1-1 LEVELS OF MARKETING TURBULENCE
28. Reactive
product
improvement
Aggressive
product
improvement
Related new
product
innovation
Creation of
radically new
products
Your main assessment.
Submissions are softcopy (Word doc and docx files only) via
Turnitin. 'Max' means it can be shorter, 'deadline' means you
can submit before the date. Submissions after the deadline are
marked LATE and will be capped unless you can prove
Mitigating Circumstances. Submissions more than a week after
the deadline without MC will be marked at zero for feedback
only.
29. Make very sure that you upload the right file, anyone claiming
to have uploaded the wrong file will not be allowed to change
after the due date and will be penalized accordingly. By
uploading a file you confirm that the content is all your own
individual work and not plagiarized from internet or other
sources, this includes the examples you have been given.
If you are interested to see your score independently of this
system, then various systems are available e.g: Ithenticate,
SafeAssign, Ephorus, Urkund, Crot (Moodle), CopyKiller,
Farejador, Viper and Compilatio.
Rubric
CI7600 2018-19
Criteria
Ratings
Pts
This criterion is linked to a learning outcomeUnderstand what
different business vehicles are available in the UK, the relative
merits of different business vehicles and the various corporate
and personal taxation issues that may apply. Understand in
broad strokes the process of new venture formation and the role
of Companies House.
12.5 Pts
A coherent review of the landscape of possible business
constitutions, how these are set up and financed, with a closely
argued case for a vehicle selected to optimise the opportunities,
and minimise the risks, for the case study.
10.0 Pts
Considers all relevant business vehicles in detail, discusses the
tax and legal arguments for and against each. Uses this as the
basis for a reasoned recommendation for the company
constitution and financing.
8.0 Pts
Considers the main business vehicles in detail, outlines the tax
and legal advantages of each, with citations. Makes a clear case
for the selected company format.
5.0 Pts
30. Demonstrates familiarity with available business vehicles and
justifies a choice for the case study business.
3.0 Pts
Identifies business vehicles, and may express a preference, but
fails to relate these analytically to the case study.
0.0 Pts
Available business vehicles may be mentioned, but no
discussion of their importance is presented.
12.5 pts
This criterion is linked to a learning outcomeThe need for
obtaining adequate investment and working capital finance, the
various financing options available like debentures, shares,
options and warrants – both now and for the future. How to
attract investment from e.g. Business Angels or Venture
Capital.
12.5 Pts
excellent
of publishable standard
10.0 Pts
Potential opportunities and threats to the case study business
presented by changes in the external environment are discussed
in detail, with reference to the case study. Possible
countermeasures like further issues of shares etc may be
suggested.
8.0 Pts
At least two sources of finance are describe, some differences
are noted and the consequences for the case study business are
discussed.
5.0 Pts
Financing is mentioned, but not clearly related to the case
study.
2.0 Pts
There is a weak description of the range of options available
and a poor understanding of financing, management forecasting
and budgeting.
31. 0.0 Pts
The economic environment and sources of finance are
mentioned only in passing or not at all.
12.5 pts
This criterion is linked to a learning outcomeConsider
alternative management structures and how operations might be
organised, a brief demonstration of understanding of some
analysis tools.
12.5 Pts
A coherent model for management and organisation of
operations is presented in the context of reported experience.
Particular attention is paid to the need for these to evolve with
changes in the environment.
10.0 Pts
The organisational requirements of the case study are identified,
particularly resilience to change. Alternative management and
operational structures are considered, and recommendations
proposed.
8.0 Pts
Alternative modes of management and operations organisation
are outlined and compared. Recommendations for the case study
are proposed and justified.
5.0 Pts
Management and organisation are addressed, but only
adequately or tangentially, for example, under other headings.
Suitable structures for management and operations are proposed
for the case study.
3.0 Pts
Mention is made of management and operational issues, but no
overview of the alternatives is offered. Where proposals for the
case study are suggested they are not substantiated
0.0 Pts
Negligible mention, or none, of management and operational
issues.
32. 12.5 pts
This criterion is linked to a learning outcomeHow to formulate
a marketing and sales strategy – particularly with regard to the
markets and services and the resources required to achieve the
desired level of revenue and profit
12.5 Pts
A coherent policy for a marketing and sales strategy is proposed
for the case study. The resources are estimated which will be
needed to provision markets and services so as to deliver
planned revenue levels. Change of strategy over time, with
maturity and evolving technology is considered.
10.0 Pts
Provides clear guidance to setting targets, and formulating a
marketing and sales strategy to achieve these. The importance
of markets and services, and resourcing these adequately, is
recognised. Discussions are related to the needs of the case
study business.
8.0 Pts
Ways of formulating a marketing and sales strategy are
explored. The importance of markets and services is recognised.
Discussions are related to the needs of the case study business
5.0 Pts
The importance of formulating and monitoring a marketing and
sales strategy is established. Marketing and sales approaches are
outlined along with tactics and ways of formulating a strategy
from these.
3.0 Pts
Some marketing and sales approaches are listed, but not
coherently. There may be no discussion, or only a weak
treatment, of how to develop a strategy
0.0 Pts
Marketing and sales strategy is not covered, or its formulation
is not addressed.
12.5 pts
This criterion is linked to a learning outcomeLabour and human
33. resources issues – With particular emphasis on the ability to
retain and incentivise key members of the team who are critical
to the future success of the business, but also to other “publics”.
12.5 Pts
Imaginative proposals for retention and incentivisation of staff
are included in a comprehensive review of labour and HR
requirements for the case study. The review reflects how these
needs will change over time, as the business matures and
technology evolves.
10.0 Pts
Presents an overview of the close relationship between company
performance and careful HR management. Discusses possible
means for the case study business to retain and incentivise key
members of staff.
8.0 Pts
The staffing and HR requirements of the case study are
examined and related to the dynamics of the labour market. The
importance of good HR in retaining and encouraging key staff is
discussed.
5.0 Pts
The importance of planning and managing human resources is
discussed. The need to keep key staff may also be recognised.
3.0 Pts
The issues of labour and HR are raised, but discussion of their
management is confused or inadequate.
0.0 Pts
Labour and HR issues receive only token recognition, or no
mention.
12.5 pts
This criterion is linked to a learning outcomeHow to plan the
relevant knowledge management and information management
systems for “knowledge workers” and the possible impact of the
digital revolution on future trading.
12.5 Pts
This gives a succinct, up-to-date overview of evolving digital
34. technology relevant to the strategy and operations of the case
study business and how these could fit with other discussions -
marketing, HR, compliance etc. There are strong proposals for
planning effective KM and IM systems, showing mature insight
into the potentials of leveraging corporate knowledge.
10.0 Pts
Shows a clear understanding of the strategic benefit of KM/IM
systems. Recognises the problems of incentivising staff to
populate and use a KM system. Provides a clear and informative
summary of current and predicted technological developments.
Discusses how these will present opportunities and threats to
the case study business, including how its strategy and
operations may change fundamentally.
8.0 Pts
Analyses the information and knowledge requirements of the
case study business and considers how these might be fulfilled.
Mentions some of the known difficulties in developing a
KM/IM system and identifies people and sources who should be
involved. Suggests an outline plan.
5.0 Pts
Demonstrates a basic understanding of the application of KM
and IM systems. Discusses some criteria for planning a KM/IM
system and links these to the case study business.
3.0 Pts
The use of KM and IM is mentioned but no clear indication of
how they may be used. The discussion may also fail to relate to
the case study.
0.0 Pts
No significant consideration of KM or IM systems.
12.5 pts
This criterion is linked to a learning outcomeLegal, ethical,
regulatory, professional and compliance issues.
12.5 Pts
Presents an overview of the problem of conforming to LERC
requirements. Discusses the advantages of having a consolidated
35. set of controls to ensure efficient compliance with diverse
governance requirements. Proposes a policy for the case study
business, allowing for change in requirements over time.
10.0 Pts
Considers the liabilities to meet LERC requirements which the
case study business may face. Discusses the range of authorities
which may impose laws, standards and regulations. Recognises
that companies operating globally will need to meet LERC
requirements in multiple supervisory regimes. May provide
examples of this.
8.0 Pts
Discusses the range of authorities which may impose laws,
standards and regulations. Considers the liabilities to meet
LERC requirements which the case study business may face
within its home regime.
5.0 Pts
Describes some of the liabilities to meet LERC requirements
which a company may face. Suggests some means for the case
study business to ensure compliance.
3.0 Pts
The need to meet legal, regulatory and compliance issues is
mentioned, but there is no serious consideration of how this will
be ensured.
0.0 Pts
Legal, regulatory and compliance issues are barely mentioned or
not considered at all
12.5 pts
This criterion is linked to a learning outcomePresentation:
References, grammar, clarity and style.
12.5 Pts
The presentation is of such a high quality as to meet the
requirements of a professional publication.
10.0 Pts
The report is very well presented. Residual points which may
need attention include: Title page, Contents page, Introduction,
36. Synopsis, Section numbers, Section headings, Paragraphs,
Coherent style throughout (fonts, borders, etc.), Citations,
Illustrations, Numbers and Captions to illustrations, Separate
(headed) section for references, Clear layout to references
8.0 Pts
The presentation is supportive of the reader. Points, some of
which may need attention include: Title page, Contents page,
Introduction, Synopsis, Section numbers, Section headings,
Paragraphs, Coherent style throughout (fonts, borders, etc.),
Citations, Illustrations, Numbers and Captions to illustrations,
Separate (headed) section for references, Clear layout to
references.
5.0 Pts
There are some weaknesses in presentation but these are
irritants to the reader rather than preventing comprehension of
the report. Missing features may include: Title page, Contents
page, Introduction, Synopsis, Section numbers, Section
headings, Paragraphs, Coherent style throughout (fonts, borders,
etc.), Citations, Illustrations, Numbers and Captions to
illustrations, Separate (headed) section for references, Clear
layout to references.
3.0 Pts
Presentation is sufficiently weak as to hinder comprehension of
the report. Missing features may include: Title page, Contents
page, Introduction, Synopsis, Section numbers, Section
headings, Paragraphs, Coherent style throughout (fonts, borders,
etc.), Citations, Illustrations, Captions to illustrations, Separate
(headed) section for references, Poor or incorrect referencing
0.0 Pts
Presentation is extremely weak. Missing features may include:
Title page, Contents page, Introduction, Synopsis, Section
numbers, Section headings, Paragraphs, Coherent style
throughout (fonts, borders, etc.), Citations, Illustrations,
Captions to illustrations. Poor, incorrect or lacking referencing
12.5 pts
37. Total points: 100.0
CI7600 2018-19
CI7600
Business in Practice
BUSINESS STRUCTURE ANALYSIS
FOR A
DRUG REGULATORY AFFAIRS CONSULTANCY COMPANY
SOLE TRADER VS PRIVATE LIMITED COMPANY
This is a sample script
This script is provided for illustrative purposes only
Copying any part of this work will be detected on Turnitin and
will incur heavy penalties
BUSINESS STRUCTURE ANALYSIS FOR A DRUG
REGULATORY AFFAIRS CONSULTANCY COMPANY
SOLE TRADER VS PRIVATE LIMITED COMPANY
38. There are various model structures that may be considered when
setting up a new business. The four main vehicles for small
start-up companies include: sole trader, partnership, limited
liability company and limited liability partnership. It is
important to choose the right legal structure to suit one’s
company so as to ensure the successful growth of the business.
Restructuring of a business is possible and in certain cases
necessary due to growth. Nevertheless, it would be best to take
all options into careful consideration at an early stage so as to
avoid unnecessary upheaval and costs in the future. This
assignment shall seek to compare and critically analyze the
various business and managerial aspects of a sole trader and a
privatelimited liability company.
It is essential that a director of any small business understands
the economic factors that are responsible for increasing
aggregate demand so that he/she may plan for growth and future
opportunities. There are a number of direct and indirect factors
which may affect this demand including wealth, inflation,
expectations, interest, taxes and government expenditures.
There has been a dramatic change in inflation during the past
few years, starting from the global financial crisis in 2008. The
change in inflation for the UK is graphically represented in
Figure 1. The global recession led to a decrease in inflation in
2009. Following this drastic drop, a gradual increase in
inflation was observed peaking in 2011 at 5.2% (CPI) and
decreasing once again in 2012 and 2013 due to weak demand.
39. Figure 1: Inflation 2000-2013. Percentage change over 12
months (ONS 2013a, quoted in BBC 2013)
According to the Office for National Statistics (ONS 2013b, 1)
the inflation rate, measured by the consumer prices index (CPI),
is currently at 2.1% - the closest it has been to the Bank of
England’s (BoE) target of 2% in months. The pressure for
policymakers to raise interest rates has therefore been reduced.
During the last meeting held in September, the Monetary Policy
Committee (MPC) of the BoE kept the interestrate at 0.5%
(BBC 2013a). This rate has not changed since March 2009.
Furthermore, Mark Carney, governor of BoE, stated that the
bank will consider maintaining the rate as such until
unemployment has fallen below 7% (BBC 2013a). The interest
rates are therefore not expected to vary for the next few years.
However, a recent study carried out by Markit has shown that
activity in the service industries has risen at a fast rate this past
year both in the UK and globally (BBC 2013a, Markit 2013, 1).
As depicted in Figure 2, activity in companies providing
business support services such as consultancy has risen
significantly.
Figure 2: Global Industrials PMI: Detailed Sectors (Markit
2013, 1)
As a result, James Knightley from ING suggested that the
interest rates in the UK may subsequently increase sooner than
planned (BBC 2013a). Moreover, wage growth is still lagging
behind the rate of inflation during the past four years (ONS
2012, 11). Consequently, consumers cannot afford to buy as
much with the current income, leading to a further reduction in
40. purchasing power.
The change in inflation and interests rates will have an effect on
both the consumer as well as the start-up business regardless of
the business structure. At entry, the two business vehicles will
be affected in a similar manner as both structures will be
dependent on some form of borrowing or asset-based lending.
With high inflation and interest rates, consumers will have less
money at hand to purchase medicines. This will also negatively
affect the percentage investment that is put into research and
development of new drugs thus resulting in a lower demand for
Regulatory Affairs Consultancy. The increase in cost of
borrowing and the need to reduce price levels to maintain a
competitive streak will result in lower confidence levels for
start-up and growth of small businesses such as the company
being discussed.
A business director must therefore keep a close eye on such
trends to ensure the company makes the right strategy shift. In a
rising-rate environment, the company will have to cut costs and
forecast the robustness of the firm. The directors should strive
to keep borrowings and cash on the balance sheet to a minimum
so that in high-rate environments, the company will be able to
outflank rivals. Conversely, if the rate of inflation and interest
is to remain low as originally forecasted, then the firm must
ensure that it has the right capacity and work force to deal with
the demand and to provide an efficient service.
In May 2012, the European Commission concluded that the UK
was “experiencing macroeconomic imbalances” (European
Union 2013, 15) particularly in regards to external
competitiveness. A closer look at the pharmaceutical industry
shows that this market is expected to grow in the coming years
(IMARC Group 2013). However the developed markets, namely
the US, UK and EU are now facing increased levels of
competition as new pharmaceutical economies such as India,
41. Brazil and China emerge (ABPI 2013; EFPIA 2013, 4; IMARC
Group 2013). There has been a gradual shift of research-based
activity from the EU to these markets. This may negatively
impact the Regulatory Affairs Consultancy firm, both as a sole
trader and as a limited company, since the business will initially
be targeting UK research and development companies seeking to
launch their products nationally.
Apart from the economic factors, a potential business owner
must consider the merits of the different business vehicles
before registration of the company. As the business vehicle
title suggests, all official documentation of a sole trader shall
contain the name of the ‘trader’ or business owner. This implies
that the assets/liabilities etc of the trader and the business are
indistinguishable. Such a business structure would involve
fewer legal responsibilities and tax payments. Any profits
obtained are taxed by the HM Revenue and Customs as income.
The business owner would effectively be self-employed and the
business finances are treated as such. This vehicle may seem
ideal during start-up of a business since certain costs such as
business travel and some premises costs may be tax-deductible
(Startups 2013). Having said that, once the business starts to
grow, tax rates for a sole trader will increase considerably from
20% (basic rate) to 40% and 45% tax rate is applied once profits
top £32,011 and £150,000 respectively in 2013-2014 (Crown
2013a). Moreover, should the business fail, any debts are paid
off using the owner’s personal assets. Fortunately, since setting
up of a Regulatory Affairs Consultancy would not incur
extensive start-up costs, the risk of financial liability is quite
low and may therefore be outweighed.
Although staff may be employed in a sole trader business, in
most cases, especially in the service sectors, the business is
operated by a one man/woman band. This business vehicle is
ideal for Regulatory Affairs Consultancy as the company may
start off at anytime without having to search for potential
partners and deal with additional bureaucratic procedures.
42. Furthermore, any decisions taken are instant as no consultation
with other board members is required.
Alternatively, owners of a potentially fast-growing business
may decide to start-up as a limitedcompany. The main reasons
for this would be to take advantage of the limited liability status
as well as the trust and credibility which is implicated by the
word ‘Limited’ in the company name as this creates the
impression of a larger and sound organisation. A limited
company may start operating once it has been registered with
Company House. Such a business vehicle will have both
directors as well as shareholders. In the case of a private limited
company, these shareholders can be partners in the business and
cannot be offered to the general public at large. The
appointment of a company secretary is not a legal requirement;
however a number of companies still opt to do so as the
secretary may take up some of the administrative
responsibilities such as preparing and submitting the business
accounts to Companies House. As opposed to a sole trader, the
company is considered as a separate entity to the business
owners. Therefore the business directors are somewhat
protected from financial risk as they are not personally liable
for the company’s debts on insolvency unless a personal
guarantee has been made on a bank loan or the ‘trading’
continues after dissolution of the company. Table 1 provides a
comparison of the varying responsibilities involved in the two
business organisations.
Table 1: Comparison of the responsibilities involved between a
Sole Trader and a Limited Liability Company (Bytestart Limited
2013; Crown n.d.a; Crown 2013a-c; Startups 2013)
Sole Trader
Limited Liability Company
Business director’s/company’s responsibilities:
1. Fill in a self-assessment form annually containing the
business income and expenses.
43. 2. Pay Income Tax as a self-employed worker
Basic rate (£0-£32,010): 20%
Higher rate (£32,011 to £150,000): 40%
Additional rate (>£150,000): 45%
3. Pay National Insurance as a self-employed worker
Class 2 NIC’s: £2.70 per week for those earning £5,725 per
annum
Class 4 NIC’s: 9% of earnings of £7,755 - £41,450 per annum;
2% above £41,450 per annum
4. Voluntary register for VAT regardless of the turnover value –
returns may be favourable for the business cashflow. However if
the taxable turnover received is greater than the VAT threshold
(£79,000) in the previous 12 months, then a sole trader is
legally bound to register for VAT.
The limited company’s responsibilities:
1. Prepare statutory accounts.
2. Provide Company House with an annual return each year
(SMEs with a turnover of <£5.6m may submit an abbreviated
version).
3. Provide HMRC a Company Tax Return.
4. Register for VAT if the turnover value is expected to be or
was (within the past 12 months) more than £79,000.
Business directors’ responsibilities:
1. Fill in a self-assessment form annually containing the
business income and expenses.
2. Pay tax and National Insurance via the Pay-as-you-earn
(PAYE) systems assuming the director’s salary is taken from
the company.
Tax
‘Small profit rate’ (≤£300,000): 20%
‘Main rate’ (>£1.5 million): 23%
Gradual increments from 20% to 23% for profits between
£300,000 and £1.5m if Marginal relief is claimed.
44. NI
Secondary Class 1 NIC’s: 13.8% on earnings above £148 per
week.
Class 1A NIC’s: on any benefits such as a company car.
NOTE: Rates quoted are applicable for 2013/2014
The Consultancy firm will start off as a very flat structure for
both a sole trader and a limited company since the workforce
will be highly restricted and the number of divisions required
would be minimal. This will later gradually transition to a more
traditional hierarchical structure to accommodate expansion.
Both a sole trader and a limited company will require a more
structured management organisation once the company is
established; however this will be particularly important for a
limited company. Once the business branches out to other
markets, the number of projects taken on by the firm will
increase, resulting in the need to strengthen workforce as well
as expertise to adequately meet client requests. Consequently, a
business director may consideralternative management
structures.
The best structure for this small but fast-growing firm would be
the matrix model, depicted in Figure 3, which combines the
advantages of functional and project structures resulting in a
flexible system that uses small, self-managed teams. These
teams will resolve work-related issues with the departmental
manager and report other administrative matters to the corporate
manager ensuring tight control of the business whilst retaining
the flexibility and fluidity to adapt to market changes.
Information sharing is horizontal within the team, across task
boundaries. Employees will be encouraged to collaborate, share
ideas and expertise as well as to empower themselves. Dividing
the employees into teams to work on particular projects will
allow for specialisation and strengthen in-depth knowledge. Due
to the increase in workforce other departments, namely human
resources, finance, marketing, legal and IT will also be
introduced to ensure smooth running of the business.
45. Figure 3: Matrix Model for the Regulatory Affairs Consultancy
Firm
One of the main concerns during start-up and growth of a
business is finance. The Regulatory Affairs company will need
office equipment and upon growth, a building to operate –
hence the need for investment capital. It will also require
adequate working capital to ensure smooth running of the
company with sufficient funds to cover short-term and future
expenses. Attracting capital is not easy especially at start-up for
both a sole trader and limited company during the current
economic climate. However, there are a number of sources of
funding and financing options that may be considered. The legal
structure adopted by the business will largely determine the
financial options available. Although costs at start-up will be
more or less comparable, a limited liability company will have
higher running costs due to certain legal requirements such as
audits. This vehicle however has a greater borrowing potential
and may have more funding options. Financing options for a
sole trader especially of a knowledge-based business may, at a
pre-revenue stage, find it easier to access equity finance rather
than debt finance. Eventually, a company generating turnover
and making a profit will use a mix of financing sources
(ICAEW 2012, 5).
Loans – Loans are credits that are borrowed and later repaid
together with interest after a set period of time. These are
usually provided by banks or other financial institutions. More
often than not, banks require personal guarantees from the
directors as well as security over the company’s assets
(Companyregistry.eu 2013). A limited company will have a
greater chance of being granted a loan due to the increased
security this vehicle provides. A sole trader with exactly the
46. same assets as a limited company will not be able to create a
floating charge and therefore will not have this form of security
for a bank loan. Moreover, as depicted in Figure 4, the post-
crisis financial constraints have led to a decrease in access to
bank loans as these institutions have become more cautious with
regards to lending money to high-risk businesses.
Figure 4: Index of SME access to bank loans (European
Commission 2013, 37)
A number of governmental finance policies have now been
established with the aim to enhance credit to firms. In fact, in
July 2012, the government together with the BoE introduced the
Funding for Lending Scheme (FLS) which allows banks to
borrow money at a lower cost thus increasing corporate lending
(European Commission 2013, 42). This scheme has been
extended to January 2015 (Bank of England n.d.). A limited
company may also consider turning to the bond market to raise
capital.
Some governmental schemes such as the Enterprise Finance
Guarantee (EFG) offer loans to those businesses that were not
granted a commercial loan. The British Business Bank is a
governmental programme that supports the UK’s economic
growth by creating new lending and investment schemes for
small businesses wishing to expand or to unlock finance for
start-up companies (British Business Bank 2013).
Loans may also be provided by friends and family. This in fact
is usually the first financing option to be considered during the
early stages of start-up for either business vehicle. Such an
option provides flexibility in terms of repayment and low (if
any) interest rates depending on the agreement made between
both parties. A formal contract should be drawn up so as to
reduce the risk of damaging personal relationships.
Overdraft – A second financing option that may be used to
cover short-term working capital costs is an overdraft. This may
47. be a cheaper option than a loan however it must be repaid,
together with interest, on demand. Although it is relatively
accessible to both business vehicles, it is easier to obtain when
trading performance is positive.
Grants – There are a range of grants under the Government
Solution
s for Business Scheme. These grants need not be repaid and will
not have a negative effect on cashflow. However the
requirements for eligibility may be quite strict. Businesses
looking to expand a few years down the line may also consider
applying for grants such as the Growing Places Fund and the
Regional Growth Fund.
Selling of shares – The selling of shares may be a financing
option on expansion of the company. This will only be an option
for the limited company. However a sole trader may choose to
change the business structure to a limited company once the
business has been established. Shares of a private limited
company may not be sold to the public at large; however friends
and family may have the opportunity to invest in the firm.
Asset Based Lending – Both business vehicles may benefit from
leasing and asset financing. This form of funding has become
quite popular amongst small businesses over the past few years
(Financial Times 2013). This type of funding will save the
company from having to fork out the full initial costs outright
48. and involves a lower risk than a loan.
Sales factoring/Invoice financing – This financing option may
be considered once the firm has starting ‘trading’. Third parties
may agree to ‘buy’ the clients’ unpaid invoices (usually around
85%) via factoring or invoice financing. The latter will require
a good credit control system so as to ensure all debts are repaid.
Therefore such an option may be more suitable upon growth of
the firm as this may involve extra costs in terms of time and
human resources.
Equity Funding – Another option for a business is to seek out
private investors interested in funding the business. Private
investors, also known as business angels offer seed capital or
venture capital. In certain cases investors may also provide
networking opportunities, experience and guidance. Although
private investors tend to take more risks on new start-up
companies than banks, a limited company is more likely to
receive funding from such investors. There are also a number of
companies, known as venture capitalists or private equity
companies that invest large sums of money in small businesses
that they believe will grow quickly. It is important to note
however that any outside investors will have a joint ownership
together with the business directors. Consequently, they will
have a say in the business decisions and are entitled to
dividends. Venture capitalist/private equity funding is better-
suited for a fast-growing limited company as it appears to
49. contain lower risks and is therefore more likely to secure
investors. In fact, according to the European Commission (2013,
43) such lending remains largely restricted to bigger companies
and will therefore better suited to the Regulatory Affairs
Consultancy upon growth of the firm.
A governmental scheme known as the Seed Enterprise
Investment (SEIS) is ideal to attract investors to invest in early-
stage companies as it offers a range of tax-reliefs for individual
investors (Crown 2013e). There are two other similar schemes,
namely the Venture Capital Trust (VCT) and the Enterprise
Investment Scheme that are also designed to help small
companies raise finance by offering tax relief to those who
invest in the new shares of the small high-risk enterprises
(Mullen 2012, 11).
Crowdfunding and Peer-to-peer funding – These are two
innovative options as a result of digital revolution, whereby the
public or potential lenders pool in their resources to invest in a
business idea. This usually takes place via the internet.
As previously discussed, details of share ownerships and
financial records of a limited liability company must be
submitted to Companies House and are placed in the public file.
This may be viewed as an inconvenience to some businesses
however such information may make it easier for a company to
get credit once it is established (Companyregistry.eu 2013).
Furthermore, although a sole trader need not publicly report the
50. business financial records, such information should still be
recorded for internal reference. Additionally, both business
structure owners should regularly review and update
management accounting records such as performance, costing
and pricing, budgeting and forecasting so as to make informed
decisions for the company, devise organisation strategy,
business plans and performance management systems.
Any business must have the following two main elements for
success: direction and focus i.e. short- and long-term goals and
a plan to achieve them. This requires careful planning,
strategising and management of resources to reach client and
stakeholder expectations. The business planning process for
both business structures is dynamic and should involve all
employees to achieve a feeling of “our plan” as opposed to “the
plan imposed on us”. This is possible since at start-up both
companies will have a very small workforce. Table 2 describes
the steps involved in strategic business planning using Ackoff’s
Corporate Planning model.
Table 2: Ackoff’s Corporate Planning
Steps to Corporate Planning
Notes
Formulating the mess
Taking into consideration the threats and opportunities using
51. models such as the Porter’s 5 Forces and PESTL analysis to
analyse the micro- and macro- external environment
respectively. Models such as the SWOT analysis may be used to
analyse the internal environment of the firm.
Ends Planning
Setting the short-term (1-3 years) and long-term goals (5 years)
of the firm. Example:
Short-term goals - to reach out to other global clients who
would like to obtain marketing authorisations in the UK and
possibly EU.
Long-term goals - to offer drug regulatory services for those
pharmaceutical companies looking to launch their drug in other
markets such as Japan, US and Australia.
Means Planning
Analysing the current internal resources such as human
resources and expertise as well as financial documentation.
Resource Planning
Analysing what is required to achieve the future goals, such as:
· larger workforce with increased specialisation;
· more departments including IT, health and safety, finance,
marketing and human resources;
· larger building and more office equipment;
· training of employees;
· business trips, meetings and teleconferences
· funding
52. Design, Implementation and Control
Once the firm and its external environment have been analysed,
a strategy may be formulated and the necessary organizational
changes implemented. Directors must continuously monitor the
Key Performance Indicators (KPIs) so that alternative routes
may be explored to ensure success. These performance measures
of both internal resources and external environment should be
reviewed formally on a biannual or quarterly basis.
There are a number of strategic factors that must be taken into
consideration by any business owner when preparing a business
plan. Figure 5 describes the strategic vision and objectives of
the Regulatory Affairs Consultancy firm.
Figure 5: Strategic Vision and Objectives to be considered in
the Regulatory Affairs Consultancy Firm
Whilst preparing the business plan, it is essential that the
financial impact of the strategy being proposed is taken into
account such as the cost of training, salaries etc. Apart from the
external funding described above, financial requirements may
be satisfied using the return on investment. Careful
consideration of fixed and variable costs is important when
pricing. Although both business structures may cater for
growth, a limited company has a greater chance of expanding in
53. the market as it will have a greater access to various financial
options. Growth for a sole trader may be restricted and it may
be advisable to consider transitioning to an incorporation should
the director wish to take the business to another level.
Marketing is imperative for any business vehicle, particularly at
start-up but also once the company is well-established so as to
retain clients and keep them informed about new services being
offered. The firm must have clear marketing objectives and a
route to achieve the marketing goals. “Marketing can thus be
seen as the process of developing and implementing a strategy
to plan and coordinate ways of identifying, anticipating and
satisfying consumer demands, in such a way as to make profits”
(Business Case Studies LLP 2014). Apart from making a profit,
a business should aim to establish its market share by
anticipating trends and monitoring rival companies.
Marketing for a Regulatory Affairs Consultancy firm is based
on B2B i.e. business to business. The firm will therefore have
few clients; however the buyer-seller relationship will be close
and after-sales is extremely important. The volume of sales will
also be low albeit the unit price for each service high. A
consultancy company need not invest much in media advertising
unless it is in trade journals and directories; however these tend
to be very expensive (Simply Business n.d., 24). Most of the
54. promotion takes place via networking and personal selling
(interactive marketing) to key companies. This will incur costs
as marketing and sales personnel will be required to visit
pharmaceutical companies, attend seminars, meetings and
events to promote the business. Travelling costs, company car
and fuel must also be included in the profit and loss accounts.
Due to the greater financial options available, a limited
company will have a larger marketing budget. It will also have
a larger marketing power due to the increased credibility that
comes with an incorporation.
The client is valuable to the business as it is through the client
that profit may be maximized. Therefore for a service industry
that is intangible, variable, perishable and inseparable, the
marketing strategy should begin with the Customer Perspective
(4C) depicted in Figure 6. The customer perspective is essential
to ensure loyalty, retention, acquisition and profitability.
Communication is key and buyer-seller relationships are
imperative. In fact, a lot of importance is now given to
Customer Relationship Management (Figure 6). Directors of a
limited company must ensure a good CRM system is set up more
so than for a sole trader as a limited company will most likely
have a larger client database and possibly a larger workforce.
Establishing a good feedback system is essential but will also
target costs. Marketing analysis may then focus on the
55. enterprise perspective i.e. 7Ps of the marketing mix i.e. product,
price, place, promotion, people, process and physical evidence.
Figure 6: The Customer Perspective Mix Strategy for the
Regulatory Affairs Consultancy firm
The process of developing a marketing strategy is similarto the
business planning process and must also take into account the
micro- and macro-economic environment. This may be done by
analyzing the opportunitiesand threats of the firm such as the
threat of new entrants and substitutes. The bargaining power of
buyers is also important as is largely affected by inflation and
the economy as discussed above.
When formulating a market strategy, it is imperative that a
business owner considers the cost-effective and competitive
advantages offered by IT. Due to the digital revolution, a lot of
marketing is carried out online. The Regulatory Affairs
Consultancy will make use of the internet and other computer
networking systems to provide a major part of its service on the
World Wide Web. E-commerce may help to improve and speed
up the transaction process resulting in increased customer
satisfaction. It also reduces management expenditure and
56. provides a strategy for market differentiation. The website
must have good visibility and must be designed around
customer journeys so as to increase rankings for search engine
optimisation. Although a number of Regulatory Agencies
already provide their services online, one may consider taking it
a further step to set up a time-saver App for providing
regulatory advice – thus introducing new opportunities for the
company. However, a secure system will be required due to the
sensitive nature of the data being shared. Setting up of such a
system will most certainly incur costs but may be considered for
future plans of firm, particularly for a limited company.
Cloud computing can enable businesses to run software online
without actually having to install or own the software. Business
owners and employees may therefore work from home and may
access data outside the office. This is ideal for business
meetings and presentations and provides quick access of client
information. The cloud service also offers security as it reduces
the risk of data loss and improves speed of disaster recovery.
One of the 7Ps of the Marketing mix model is ‘People’ i.e. the
employees. Due to the inseparable nature of the service
employees may have a profound positive or negative effect on
customer satisfaction. Since this service-based firm largely
depends on retaining high-value customers, it is essential that
all employees are trained, empowered and incentivised. Using a
number of motivation theories such as Hertzberg’s Two-factor
57. Theory of Hygiene and Motivator Factors and Maslow’s
Hierarchy of Needs and personal experience, one may draw up a
diagram such as that in Figure 7 which lists a number of
motivational factors that will help retain and incentivise
employees.
Figure 7: Possible Motivators for the Regulatory Affairs
Consultancy firm
Many of the perks mentioned in Figure 7incur costs and will not
be feasible for a start-up company or a sole trader; albeit there
are a number of tax-free benefits such as pension and child-care
that may be included as part of a Salary Sacrifice Scheme.
Other motivational factors such as good communication i.e.
having an effective horizontal alignment and an open-door
policy are feasible, if not more effective in small firms. Due to
the nature of the work, employees may also work part-time,
flexible hours and use VPN or Cloud to work from home – this
is a major perk forpotential female employees. Employment of
female employees may also trigger tax-incentives.
When considering human resources, one must not forget the
58. value of diversity. Apart from being illegal, discrimination is
unprofessional. Managing diversity may gain a competitive
advantage as insignificant measures such as sex, ethnic origin,
religion and sexual orientation are put aside and focus is given
to the quality of work.
Communication within a firm’s workforce is often enhanced
using knowledge and information management systems. The
latter helps to store and retrieve data such as client details
efficiently. This system therefore supports operation
management, information-sharing and continuous improvement
(in the case of IPO systems)of the business. Knowledge
management is different from information management in that it
is not about storing data but rather enhancing skills and
expertise. It ensures that knowledge-based assets such as those
saved on electronic repositories (ex: manuals, SOPs) and those
held by the employees (ex: problem-solving experiences) are
used efficiently to improve the company’s behaviours, decision-
making, services and consequently, performance (King n.d., 4-
5). Such systems may include “points to remember” or “lessons
learned” repositories and directories.
The systems described above, although efficient, involve extra
costs for labour, system set-up, maintenance, audits and system
updates. These systems are therefore more commonly used in a
59. limited company. Although these are costly to set up and
maintain, they are essential for a limited company to ensure
organisational efficiency. Moreover such systems promote a
proactive business attitude in the eyes of clients and
shareholders alike.
Credit or record management systems are often used by
companies to keep track of debts owed to the business. This is
essential to the company as such debts may have a negative
impact on cash flow and as a result will affect profits (Simply
Business n.d.). Accounting and CRM software systems are also
more likely to be of use to a limited company where finance
issues are more complex and the client-base is potentially larger
than those of a sole trader, in which case manual input of data
into an excel database may suffice.
As previously discussed, the business director of a limited
liability company has more responsibilities set by the law as
opposed to a sole trader. The process by which one may set up a
limited company is regulated by the Companies Act 2006
(including 2013 amendments to Part 25 of the Act). The legal
responsibilities of a director of a limited company include, but
are not limited to two core principles (Crown 2011, 4-5; Crown
2013d):
· To act in the interest of the business and its members.
60. · To provide accountability and transparency of the company’s
financial records (annual accounts and return) and updates
thereof to both the shareholders as well as the public.
According to Companies Act (2006, 179), all accounting records
must be kept for at least 3 years in a private limited company.
These records must sufficiently describe the financial
transactions and position of the company at any given time.
Such documentation would include the balance sheet, profit and
loss account, director’s and auditor’s report (Companies Act of
2006, 183). A ‘small’ company with a turnover of not more than
£5.6 million and a balance sheet of not more than £2.8 million,
may simply file a modified balance sheet and need not sign up
for an audit.
However, there are certain legal regulations such as
employment, tax, health and safety laws that may be applicable
to both business vehicles once the company invests in a larger
workforce. Some of the relevant Acts include the Health and
Safety at Work Act 1974 , Management of Health and Safety at
Work Regulations 1999, Trade Descriptions Act 1972, Supply
of Goods and Services Act 1982 and the Data Protection Act
1998. For both business structures, it is essential that the
company has adequate insurance cover for professional risks.
Although this may be seen as an extra burden in terms of cost,
61. this is essential especially during the early stages of start-up
when business owners have a lot to lose. The Professional
Indemnity Insurance (although not a legal requirementfor a sole
trader) is a commercial and personal safety investment. Two
other forms of insurance that may be applicable to the firm are
the Third Party Liability and the Employer’s Liability
Insurance. A Limited Company is legally-bound to provide
Employer’s Liability Insurance for any employee, including
those that work on a part-time or temporary basis.
The decision as to which vehicle best suits the company would
depend on the foreseen capabilities of the director and the level
of confidence in the business’ potential success. Setting-up of a
Regulatory Affairs Consultancy company has a relatively low
capital involved as it needs little or no assistance and can be run
from home without expensive capital equipment. However,
growth of the business will most definitely incur more costs due
to the need of increased human resources, skills and expertise,
office space and equipment and more efficient operation,
knowledge and information management systems.
Consequently, one may consider starting off as a sole trader and
eventually updating registration to a limited company once the
firm is well established. In this way the company will have
more financing options available and may expand services to
other markets.
62. REFERENCES
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ABPI Bringing Medicine to Life. Accessed
January 05, 2014. http://www.abpi.org.uk/industry-
info/knowledge-hub/global-
industry/Pages/industry-market-.aspx
Bank of England. n.d. “Funding for Lending Scheme”. Bank of
England. Accessed January 05, 2014.
http://www.bankofengland.co.uk/markets/Pages/FLS/default.asp
x
BBC. 2013a. “Bank of England Maintains Interest Rates at
0.5%”. BBC News Business, September 05.
http://www.bbc.co.uk/news/business-23968862
BBC. 2013b. “Economy Tracker: Inflation”. BBC News
Business, December 17.
http://www.bbc.co.uk/news/10612209
Bounds, A. 2013. “Non-bank Lending to Small Businesses at
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11e3-9603-00144feab7de.html?siteedition=uk#axzz2pvOsCuCf
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Bank. Accessed January 11, 2014.
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Times 100 Business Case Studies. Accessed
January 09, 2014. http://businesscasestudies.co.uk/business-
theory/marketing/marketing-strategy.html#axzz2qDlxEiNF
Byestart Limited. 2013. “Guide to National Insurance
Contributions”. How to Set Up and Run a Small
Business. Accessed January 1, 2013.
http://www.bytestart.co.uk/national-insurance.html
Companyregistry.eu. 2013. “Pros and Cons of Going Limited”.
Companyregistry.eu. Accessed
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as-a-limited-company?
Companies Act of 2006. U.K. (2006). P. 15, C. 2, §388.
Companies Act of 2006. U.K. (2006). P. 15, C. 4, §396.
Crown. n.d.a. “Introduction to VAT”. HM Revenue and
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Crown. n.d.b. “Capital Allowances: The Basics”. HM Revenue
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GOV.UK. Accessed December 18, 2013.
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Crown. 2013b. “Corporation Tax Rates”. GOV.UK. Accessed
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Crown. 2013d. “Running a Limited Company”. GOV.UK.
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http://startups.co.uk/choosing-the-right-business-structure/
APPENDIX
The report relates to a fictional Regulatory Affairs Consultancy
firm. A number of large pharmaceutical companies have their
own Regulatory Affairs Department; however there is a growing
67. trend for companies to contract out Regulatory Affairs tasks to
smaller specialist companies or freelance consultants.
The long-term vision of this fictional company is to build a
strong link between the Medicinal Authorities and
pharmaceutical companies across the globe so as to increase
efficiency of the drug approval and market launch process, thus
making new medicines widely available to those that need them.
Prior to market launch of a new drug, a pharmaceutical
company must compile the drug dossier. This dossier consists of
data proving that the drug meets the safety, quality and efficacy
standards set by the authorities. It is submitted to the medicinal
authority in the country concerned. The dossier is then assessed
and a Marketing Authorization (i.e. a product license) is granted
if all regulations and requirements are met. The Regulatory
Affairs Consultancy firm may be involved in the whole drug
product development process up until the marketing
authorization has been granted. However, services may also be
extended to the post-authorisation stage for maintenance of the
drug dossier.
At start-up, operations will be carried out in the UK and
services will be offered to the UK-based pharmaceutical
companies that wish to obtain a national marketing
68. authorisation for their new drug. Future plans for the fictional
company include branching out to reach other clients across the
globe and prepare documentation for drug approvals in other
markets such as Australia, Japan, US and Canada. These
countries tend to have different requirements and legislations to
those of the UK and EU.
The team working in the Regulatory Affairs Consultancy firm
must to keep up to date with the ever-changing requirements
and legislations set out by the Medicinal Authorities. Their
tasks will include but not limited to the following:
· Provide expertise, support and advice on the legal and
scientific requirements and specifications for the drug from the
start of development and throughout the life cycle of the drug.
· Collect and evaluate the data generated by the R&D team of
the pharmaceutical client.
· Compile the dossier for presentation to the regulatory
authorities, ensuring that it meets the current requirements.
· Respond to any queries that may arise from the authorities or
clients concerning the dossier.
· Ensure that dossier documentation is kept up to date post-
approval.
2
69. Second summative assessment, an individual essay
(coursework)
Apply the basic principles of personal and corporate taxation.
Create and interpret financial statements including balance
sheets, profit and loss account statements; budgets; and cash
flow statements for single entities
Compare and contrast different types of business entities such
as sole trader, partnership, limited liability partnership, and
limited company and alternative methods of financing.
Develop a sound marketing strategy based on investigation and
critical evaluation of existing markets that realises opportunity
and maximises profit and business reputation.
Demonstrate Leadership through a range of professional skills
including communication; motivation; decision-making and
managing organisational politics.
Assessment Brief
You will individually (and all your own work, avoiding
plagiarism) write an essay on the following:
70. From the range of UK business vehicles available, e.g. public
company, private company, partnership, sole trader etc you
should choose two and compare and contrast these two different
types of business structure for suitability for a new but
potentially fast growing start up. You could e.g. justify why you
have chosen these two from the range available using the
techniques learnt in your formative exercise (decision matrix or
similar).
Your theoretical startup will probably be active in a Technical
(“STEM”) area. If you wish to describe a start up in a non-
STEM area, then you are recommended to discuss this with your
lecturer first.
It is advised that you do not describe actual companies, but
rather consider an abstract scenario. However you are welcome
to illustrate specific points in your essay with reference to a
real-life example and at each point you may give brief
supporting details of your “case study” examples in an
appendix.
The factors you should consider include a range of economic,
international, technological, commercial and management issues
which will influence the choice of business structure, especially
if the activity is transnational. You have covered all these
topics in the module and the coursework will test if you have
followed the lectures.
Your report body should not exceed 6,000 words and any
71. appendix not more than 1,000 words. Each of the 8 criteria
listed below is worth up to 12.5% of your final mark. The marks
you receive for each one is determined by the official KU
grading criteria A-F with finer marking within each grade
category.
Criteria
1
Understand what different business vehicles are available in the
UK, the relative merits of different business vehicles and the
various corporate and personal taxation issues that may apply.
Understand in broad strokes the process of new venture
formation and the role of Companies House.
A
A coherent review of the landscape of possible business
constitutions, how these are set up and financed, with a closely
argued case for a vehicle selected to optimise the opportunities,
and minimise the risks, for the case study.
B
Considers all relevant business vehicles in detail, discusses the
tax and legal arguments for and against each. Uses this as the
basis for a reasoned recommendation for the company
constitution and financing.
C
Considers the main business vehicles in detail, outlines the tax
72. and legal advantages of each, with citations. Makes a clear case
for the selected company format.
D
Demonstrates familiarity with available business vehicles and
justifies a choice for the case study business.
MF
Identifies business vehicles, and may express a preference, but
fails to relate these analytically to the case study.
F
Available business vehicles may be mentioned, but no
discussion of their importance is presented.
2
The need for obtaining adequate investment and working capital
finance, the various financing options available like debentures,
shares, options and warrants – both now and for the future. How
to attract investment from e.g. Business Angels or Venture
Capital.
A
Realistic opportunities and threats to the case study business
presented by changes in the external environment are identified
and discussed in detail. Historical examples of such effects are
cited, from experience, or from the literature. Notions of
sources of money and associated risk management are indicated.
B
73. Potential opportunities and threats to the case study business
presented by changes in the external environment are discussed
in detail, with reference to the case study. Possible
countermeasures like further issues of shares etc may be
suggested.
C
At least two sources of finance are describe, some differences
are noted and the consequences for the case study business are
discussed.
D
Financing is mentioned, but not clearly related to the case
study.
MF
There is a weak description of the range of options available
and a poor understanding of financing, management forecasting
and budgeting.
F
The economic environment and sources of finance are
mentioned only in passing or not at all.
3
Consider alternative management structures and how operations
might be organised, a brief demonstration of understanding of
some analysis tools.
A
74. A coherent model for management and organisation of
operations is presented in the context of reported experience.
Particular attention is paid to the need for these to evolve with
changes in the environment.
B
The organisational requirements of the case study are identified,
particularly resilience to change. Alternative management and
operational structures are considered, and recommendations
proposed.
C
Alternative modes of management and operations organisation
are outlined and compared. Recommendations for the case
study are proposed and justified.
D
Management and organisation are addressed, but only
adequately or tangentially, for example, under other headings.
Suitable structures for management and operations are
proposed for the case study.
MF
Mention is made of management and operational issues, but no
overview of the alternatives is offered. Where proposals for the
case study are suggested they are not substantiated
F
Negligible mention, or none, of management and operational
issues.
75. 4
How to formulate a marketing and sales strategy – particularly
with regard to the markets and services and the resources
required to achieve the desired level of revenue and profit
A
A coherent policy for a marketing and sales strategy is proposed
for the case study. The resources are estimated which will be
needed to provision markets and services so as to deliver
planned revenue levels. Change of strategy over time, with
maturity and evolving technology is considered.
B
Provides clear guidance to setting targets, and formulating a
marketing and sales strategy to achieve these. The importance
of markets and services, and resourcing these adequately, is
recognised. Discussions are related to the needs of the case
study business.
C
Ways of formulating a marketing and sales strategy are
explored. The importance of markets and services is
recognised. Discussions are related to the needs of the case
study business
D
The importance of formulating and monitoring a marketing and
sales strategy is established. Marketing and sales approaches
76. are outlined along with tactics and ways of formulating a
strategy from these.
MF
Some marketing and sales approaches are listed, but not
coherently. There may be no discussion, or only a weak
treatment, of how to develop a strategy
F
Marketing and sales strategy is not covered, or its formulation
is not addressed.
5
Labour and human resources issues – With particular emphasis
on the ability to retain and incentivise key members of the team
who are critical to the future success of the business, but also to
other “publics”.
A
Imaginative proposals for retention and incentivisation of staff
are included in a comprehensive review of labour and HR
requirements for the case study. The review reflects how these
needs will change over time, as the business matures and
technology evolves.
B
Presents an overview of the close relationship between company
performance and careful HR management. Discusses possible
means for the case study business to retain and incentivise key
77. members of staff.
C
The staffing and HR requirements of the case study are
examined and related to the dynamics of the labour market. The
importance of good HR in retaining and encouraging key staff is
discussed.
D
The importance of planning and managing human resources is
discussed. The need to keep key staff may also be recognised.
MF
The issues of labour and HR are raised, but discussion of their
management is confused or inadequate.
F
Labour and HR issues receive only token recognition, or no
mention.
6
How to plan the relevant knowledge management and
information management systems for “knowledge workers” and
the possible impact of the digital revolution on future trading.
A
This gives a succinct, up-to-date overview of evolving digital
technology relevant to the strategy and operations of the case
study business and how these could fit with other discussions -
marketing, HR, compliance etc. There are strong proposals for
78. planning effective KM and IM systems, showing mature insight
into the potentials of leveraging corporate knowledge.
B
Shows a clear understanding of the strategic benefit of KM/IM
systems. Recognises the problems of incentivising staff to
populate and use a KM system. Provides a clear and informative
summary of current and predicted technological developments.
Discusses how these will present opportunities and threats to
the case study business, including how its strategy and
operations may change fundamentally.
C
Analyses the information and knowledge requirements of the
case study business and considers how these might be fulfilled.
Mentions some of the known difficulties in developing a
KM/IM system and identifies people and sources who should be
involved. Suggests an outline plan.
D
Demonstrates a basic understanding of the application of KM
and IM systems. Discusses some criteria for planning a KM/IM
system and links these to the case study business.
MF
The use of KM and IM is mentioned but no clear indication of
how they may be used. The discussion may also fail to relate to
the case study.
F
79. No significant consideration of KM or IM systems.
7
Legal, ethical, regulatory, (professional) and compliance
("LERC") issues.
A
Presents an overview of the problem of conforming to LERC
requirements. Discusses the advantages of having a
consolidated set of controls to ensure efficient compliance with
diverse governance requirements. Proposes a policy for the case
study business, allowing for change in requirements over time.
B
Considers the liabilities to meet LERC requirements which the
case study business may face. Discusses the range of
authorities which may impose laws, standards and regulations.
Recognises that companies operating globally will need to meet
LRC requirements in multiple supervisory regimes. May
provide examples of this.
C
Discusses the range of authorities which may impose laws,
standards and regulations. Considers the liabilities to meet
LERC requirements which the case study business may face
within its home regime.
D
Describes some of the liabilities to meet LERC requirements
80. which a company may face. Suggests some means for the case
study business to ensure compliance.
MF
The need to meet legal, regulatory and compliance issues is
mentioned, but there is no serious consideration of how this will
be ensured.
F
Legal, regulatory and compliance issues are barely mentioned or
not considered at all.
8
Presentation: Referencing (Click here for a guide), grammar,
clarity and style.
A
The presentation is of such a high quality as to meet the
requirements of a professional publication.
B
The report is very well presented. Residual points which may
need attention include: Title page, Contents page, Introduction,
Synopsis, Section numbers, Section headings, Paragraphs,
Coherent style throughout (fonts, borders, etc.), Citations,
Illustrations, Numbers and Captions to illustrations, Separate
(headed) section for references, Clear layout to references.
C
The presentation is supportive of the reader. Points, some of
81. which may need attention include: Title page, Contents page,
Introduction, Synopsis, Section numbers, Section headings,
Paragraphs, Coherent style throughout (fonts, borders, etc.),
Citations, Illustrations, Numbers and Captions to illustrations,
Separate (headed) section for references, Clear layout to
references.
D
There are some weaknesses in presentation but these are
irritants to the reader rather than preventing comprehension of
the report. Missing features may include: Title page, Contents
page, Introduction, Synopsis, Section numbers, Section
headings, Paragraphs, Coherent style throughout (fonts, borders,
etc.), Citations, Illustrations, Numbers and Captions to
illustrations, Separate (headed) section for references, Clear
layout to references.
MF
Presentation is sufficiently weak as to hinder comprehension of
the report. Missing features may include: Title page, Contents
page, Introduction, Synopsis, Section numbers, Section
headings, Paragraphs, Coherent style throughout (fonts, borders,
etc.), Citations, Illustrations, Captions to illustrations, Separate
(headed) section for references, Clear layout to references
F
Presentation is extremely weak. Missing features may include:
Title page, Contents page, Introduction, Synopsis, Section
82. numbers, Section headings, Paragraphs, Coherent style
throughout (fonts, borders, etc.), Citations, Illustrations,
Captions to illustrations, Separate (headed) section for
references, Clear layout to references.
Business 302
Information on Developing and Writing
The Final Project Report
Purpose
The purpose of having you prepare selected aspects of an
environment report for a local organization is to give you
experience in applying the concepts of this course to an actual
business situation. When the environment remains stable, the
importance of an environmental analysis is minimal. However,
when faced with a dynamic environment such as has existed in
recent years, the analysis of the environment and corresponding
report are extremely important. An analysis of the environment
83. is the basis for developing a business plan, for deciding on a
strategy, for writing a marketing plan, and is a required
component of many applications for business loans. During this
decade, a firm that does not constantly monitor its environment
for salient changes is more likely to find itself out of step and
ultimately, out of business.
The analysis you prepare is to be written from the perspective
of an outside business consultant as an objective report on the
salient aspects of the organization's environment. Do not focus
on the past --- that is not relevant. The report should provide
insights and projection (forecasts) that would enable a
management team or others in the organization to evaluate any
proposed strategy within the context of its environment. The
report is not to include any strategy, evaluation of strategy, or
response.
Industry Approval
The industry chosen as the focus of the report must be
submitted for approval. The submission must contain the SBA
tree.
Topics and Nature of Report
The topics and emphasis of the report will depend on the nature
of the product/service or business that is the focus of your
analysis. No two environmental reports for different
84. organizations, different products, different locations, or done at
different times will ever look the same. As you discover more
about the environment, new issues may be discovered about
salient aspects of the environment that may lead to different
emphases or foci. The first step in the process is to conduct a
quick overview of the different aspects of the environment
(General: Economic, Social-Cultural, Political-Legal,
Technology, International; Task: Competitors, Customers,
Regulators, Unions/Labor issues, Suppliers, Strategic Allies,
and Owners. Jot down things about each factor/dimension that
you initially think may be important to the organization. Based
on this preliminary analysis you are select the two (2)
dimensions of the general and the two (2) aspects of the task
environment that your preliminary investigation leads you to
believe are most salient to the organization.
However, others may be more comfortable looking at the more
general trends first, then discerning how these trends in the
General Environment may impact the organization, through its
task factors. Either approach is acceptable.
The analysis may include a brief (one or two paragraphs)
overview of the industry. The focus of this report is to
emphasize the external environment in which the firm operates.
Remember that this is to be a report about the organization's
environment, not a report about any organization.
85. The model to also use is Porter’s 5 forces in order to determine
the components of the industry and its future potential.
There are some duplicate parts of the Porter and Griffin models.
Make sure to combine what you need from either of the model
in order for you to have all the elements that you need.
In addition, you will need to identify Opportunities, Threats and
Trends that will affect the industry in the identified time frame.
Throughout the course, material has been presented on each
facet of the environment. The Guide for Case Analyses, in-
class overheads, and class lectures all provided information on
the environment. Many overheads identify the different types
of information that one could/should examine or include on
each of the factors. Keep in mind that if a firm has adopted a
technology and is currently using it - this technology is not a
salient aspect of the general environment. In the technology
section, include only technologies on the horizon, or ones to
which the firm has not already responded.
For each of the two task factors it is important to identify 1)
Who they are, and 2) What are their characteristics,
orientations, behaviors, etc. that make or potentially make them
86. important to the organization. Importance is determined by the
potential to serve as a stimulus (positive or negative/
opportunity or threat) for some type of firm response. If you
write on competitors, you are expected to profile at least 2
direct competitors. If you select suppliers, you are expected to
profile at least 2 suppliers to the industry. If you selected
customers, you are expected to profile the customers identified
in the SBA – this usually consists of their demographics,
psychographics, buyer behavior, etc. If regulators are selected,
you need to talk about at least two – who they are, etc
Sources of Information
This project is designed to be a research/field project. I hope
you will talk with people who can provide you some of the
needed background information, e.g. people in the industry or
people knowledgeable about different aspects of the
environment. Other needed information will be found through
the library and on-line. There will be an in-class presentation
on using library and on-line sources by Ann Fiegen, Business
Librarian, CSUSM. Librarians also hold information sessions
on how to use the library resources and how to find various
types of business information. Check with the library as to the
times these sessions are offered.
You may wish to use on-line services industry reports, or other
87. published reports. Several local organizations publish reports
and information on the business environment in the San Diego
area. The Economic Development Corporation (EDC); local
Chamber of Commerce, Private Industry Council (PIC), and the
San Diego Association of Governments (SANDAG) among
others. Several of these organizations have Web pages and you
will be able to glean a great amount of information from the
Internet. Many reports are also published in local newspapers
such as the San Diego Business Journal,The San Diego Daily
Transcript or the business section of local newspapers.
Writing the Report
The writing style should be terse and to the point. However,
you are required to use complete sentences and paragraphs in
your report. Incomplete sentences in bullet form are not
appropriate. Write objectively and avoid using "loaded" or
"value laden" works or terms. You should write a formal report
in the 3rd person and colloquialisms should not be used. Avoid
all "shoulds." - what the organization "should" or "should not"
do. An analysis of the environment, as it currently exists and as
it is anticipated to be, is to be written descriptively, not in a
prescriptive manner.
The report format and style must be consistent throughout the
88. paper. Please use, the American Psychological Association
(APA) Style. Information on APA style can be found on the
library homepage. There is also a link on the course website
regarding in-text citations. All information in the report that
you got from another source must have appropriate source
citation.
Your report should have an appropriate title page. At minimum
the title page is to include the title of your paper, the course
information, your name and date. There should be page
numbers on each page (not including title page). Headings and
sub-headings should be used to identify different sections and
topics. When double-spacing text, it is appropriate to indent the
first line of each new paragraph. Each report is expected to
have a Bibliography, Sources, or Reference section. Consult a
style manual for appropriate format.
Remember that I am available to answer questions and can be
used as a resource; however, I do not read drafts of your paper.