Study Archives - BOLLYWOOD SURKHIYAN

How To Raise Money For Your High School Study Abroad Experience

With the advent of social networking and the rise of online-based businesses, the opportunities for people to find careers around the world has greatly increased. Foreign language classes are commonly available for children as young as elementary school age, and it’s not out of the ordinary for high-schoolers to want to spend up to a year as a study abroad student. The choices that face young people today are astoundingly diverse and exciting.

Transitions Abroad is both a print magazine, as well as an online portal that provides in-depth information on issues related to studying, living, and working abroad. In their surveys of American foreign exchange students, the following traits have been reported in significant percentages:

Increased self-confidence
Increased maturity
Lasting impact on world view
Enhanced interest in academic study
Influenced subsequent educational experiences
Reinforced commitment to foreign language study
Helped foster a better understand cultural values and biases
Influenced a desire to seek out a greater diversity of friends
Continues to influence interactions with people from different cultures
Acquired skill sets that influenced career path
Ignited an interest in a career direction pursued after the experience

With these kind of life-changing properties, it is no wonder that so many young people want to spend time studying in a foreign country. However, such an experience can be very costly, and financial aid can be difficult to find. This presents a problem for many would-be adventurers.

Is It Really In You?

Before venturing down this path too far, however, the student needs to be sure he or she is ready to totally commit to this process. A two to three week program overseas can cost up to $6,000 itself, so the student needs to realize this is serious business. It is going to take hard work and great sacrifice to make this opportunity possible.

It is also important for a student to decide what kind of program will best serve his or her interests. While study programs have great value, perhaps a volunteer work program is a better fit. Or, maybe a church-oriented mission program would be appealing. Not everything has to be academically based. In fact, if you pick a non-academic type of program, you might find alternate means of funding. So, please do thorough research not only on where you want to go, but also what you want to accomplish. It could help you focus your efforts.

Step 1- Personal Commitment or “Digging in your Own Pockets”

I think that there are some preliminary steps that should be accomplished early in this process that will reveal just how serious the student is about making sacrifices for this adventure. If any of these suggestions turn the student off, I would question the decision to move forward.

Control Spending Habits

The first thing a student must do is look at his or her own spending habits. If a weekly movie, music downloads, clothes shopping, and other incidentals are a higher priority than the study abroad trip, saving thousands of dollars is going to be difficult. Therefore, the student will have to create a strict budget and slash those expenditures that will keep him or her from reaching the goal.

Sell Your Stuff

Secondly, it would be wise for a student to assess what items he or she could sell to earn money for the experience. eBay and other online auction houses are a great way to unload un-used or unnecessary items and earn pretty good cash for them.

A garage sale, held at the right time of year, can also be lucrative. You might even get your parents to “donate” all the proceeds to your study abroad fund. Perhaps friends and relatives would also be willing to give you their belongings to sell and keep the money.

Trade Your Stuff Up

Next, I know this may sound like an unusual suggestion, but in this age of email and cell phones, it might actually prove very profitable. I think the student should embark on a “Red Paperclip” project. I wrote a blog post about this on Top School Fundraisers. In essence, the student would choose an inexpensive item of his or her own and attempt to trade it to friends, families, co-workers, fellow students, or anyone willing to trade something of slightly higher value for it. Once the first trade is made, the student will immediately try to trade the second item for something of yet a higher value still. And so on. Eventually, once the student has traded for a significantly valuable item, he or she can sell it for cash and put that toward the trip.

I lead a class of adults once that undertook this experiment, and one woman ended up making a trade for an old car that had the original chrome on it. She took the chrome off, polished it, and sold it on eBay for $1,300! All this money-making opportunity takes is a cheap item to start with and the courage to ask people to trade. Who knows how far you could take this?

Blog Your Way to RichesAnother way to generate some revenue is to learn how to blog for money. There are a number of websites that will instruct you how to “monetize” your blog. You may not get rich from doing this, but incomes of $50 to $60 per month are pretty easy to set up and don’t require a lot of hard work. Just a little creativity and attention should get the job done. I would suggest looking at the websites called Problogger or Shoemoney for ideas.

Get a J-O-B

Ok, this is a boring one: find a job. Committing to a part-time job, if you haven’t done this before, can be a major step. It can intrude upon your studies and your personal life. But, if you want this overseas experience badly enough, you might be willing to work a few hours per week. If you make $7 per hour and work 15 hours per week for 36 weeks (an average school year) you could earn $3,780.

In the summer, you could even earn more. If you plan far enough ahead, you could really take a chunk out of the total bill this way. You won’t be doing anything glamorous for $7 per hour, but remember your goal. Of course, you can’t spend any of this income. Put it right in the ol’ savings account.

Ford Motor Company – Case Study

Background (General Facts)

Ford Motors is one of three leading automotive manufacturing companies in the United States. Based in Michigan in 1903 by Henry ford and grew to reach revenue of $150 billion and more than 370,000 employees by 1996 [1]. In the 1970’s, the automobile market for the major auto makers – General Motors (GM), Ford, and Chrysler- was crunched by competition from foreign manufactures such as Toyota and Honda. In 1999, Ford acquired the Swedish Volvo model in an attempt to compete in the foreign market and expand to other regions. Furthermore, Ford launched a full organization re-engineering business process plan called “Ford 2000” aiming at reestablishing the company’s infrastructure. The process meant reduction in their Vehicle Centers (VCs) to only five covering the operations that spanned 200 countries. It also meant cutting redundancies and requiring Information Technology (IT) to be the driving force and the link between Ford centers worldwide.

In building Ford’s IT infrastructure, the company focused on implementing a setup that supported the TCP/IP communication protocol based on the U.S. department of Defense requirements. At those days, Ford internal network was meant to serve files transfer unlike most companies that used the network mainly for email communications. Throughout the 1990’s, Ford developed a cost effective Global Enterprise Network Integration (GENI) process to link all its locations compromising on the type of the connection and the cabling in favor of full coverage. During the same time, Ford started building its Web Farm, which was basically a set of hardware and software managed by a team for building Ford’s public website. The work started by publishing documents for technical references and moved to more advanced images from a live auto show. As a result, the website received 1 million visits a day in less than 2 years after its official launch. Throughout the end of the 90’s, Ford established its web services by increasing the amount of information published, building more intelligent and standard web application in 12 weeks period, purchasing more Netscape browsers for setup on its users’ machines, and creating a B2B server to allow the suppliers secured access to Ford’s Intranet.

In the path towards service cost reduction and bringing more business through the web, Ford worked closely with its competitors in the U.S. market GM and Chrysler to establish what came to be known as “Automotive Network Exchange” (ANX) certificate. The protocols aimed at providing a unified communications standard through the Internet to enable suppliers to provide common technology for all manufacturers. Moreover, Ford focused on making information on its web site more accessible and useful by deploying a team to manage the process of adding and updating information based on an analysis of how humans deal with information. One final aspect of Fords endeavor was to try to build a model through its infrastructure that benefited from the model implemented by Dell computers to improve their supply chain and delivery process. The direct model would not work well for automotives as it would with computers, as a result Ford worked on its retailing network remodeling and identifying what would eventually give it the extra edge in delivery time.

Enterprise Architecture Issues

Ford’s regional expansion to address the competition for market shares demanded cost management for the infrastructure upgrades
IT infrastructure places limitations on the type of application development based on the platforms
Easy access to information and prompt delivery of vital data to key individuals requires proper knowledge managementOrganizations reengineering and process remodeling is necessary when adapting new technologies to maintain the cost and increase efficiency
Supply chain errors and delays can severely affect the progress of the business and the market value of the corporation

Analysis

Infrastructure Upgrade

Since the inception of the Internet in the 1960’s, much effort has been made in standardizing how computers connect to it. In 1982, the International Organization for Standards (ISO) realized that during that period many ad hoc networking systems were already using the TCP/IP protocol for communications and thus adapted it as a standard in its model for the Internet network [2]. The main driver for IP convergence, at that period, was the growth in data traffic through wide area networks (WANs) established by local companies. Furthermore, in 1991, the Internet was open for commercial use, and that demanded a reduction in the total cost of operating the network to cope with 1 million Internet hosts that materialized in only 1-year time. Telecommunications companies like AT&T understood the potential and worked on standardizing the network offering voice services over IP networks that managed the separation between voice and data transmission [3].

At the same time, Ford had launched its plan to update its infrastructure, and seized the opportunity brought by the global movement of integrating the voice, fax transmission network with data transmission and expanded its WAN to include its offices in Europe and elsewhere. The financial benefits also came from the fact that Ford adapted the TCP/IP protocol from the beginning and made sure that all its technical infrastructure upgrades adhere to the standards. This made the transition of its system to the Internet as cost effective as it could be.

Web Technologies

Intranets employ the hypertext and multimedia technology used on the Internet. Prior to 1989, when Tim burners-Lee invented the Web [4], most applications used standard development languages such as C and C++ to create desktop applications that were proprietary and dependent on the platform. For example, applications running on a command-based operating system such as UNIX would not run under Windows, and those working for PCs might not work on Apple computers and vice versa [5]. The invention of HTML (Hyper-Text Markup Language) introduced a new model for applications that conform to the standards provided by a single program, the “Web Browser”. Unlike standard applications, the browser brought a unified interface that had a very fast learning curve. Users seem to require no additional training to work with web browsers. Furthermore, system administrators did not have to spend time installing upgrades on users’ machines, since the Intranet client/server architecture facilitated all the updates through the connection with the web server [6].

Since Ford established its Intranet, it was aiming at building web applications through the initial analysis of “Mosaic”, the early form of web browsers. The technical department at Ford used web languages to create the first web site in 1995. In 1996, the team started building applications making use of the unified “Netscape” browser that was deployed on all machines at the company, and working on a standard template to cut on the development life cycle. There was a substantial cut in training cost due to the user-friendly interface of web applications. Furthermore, the speed of development made vital applications available to different individuals across the company. For example, the B2B site allowed suppliers remote and secured access to various sections of Ford’s Intranet. In addition, the development team created an application as a virtual teardown on Ford’s website where Ford’s engineers could examine parts of competitors’ cars and evaluate any new technologies. The alternative would have been an actual trip to a physical location where Ford tears down cars to examine the parts.

Knowledge Management

While there are many definitions for knowledge, each company might adapt its own based on how it analysis data and information to acquire knowledge. The University of Kentucky, for example, defines knowledge as “a vital organization resource. It is the raw material, work-in process, and finished good of decision-making. Distinct types of knowledge used by decision makers include information, procedures, and heuristics, among others… ” [7].

Organizations go through different activities to manage the amount of information they collect to form the knowledge base of the company. Activities include creating databases of best practices and market intelligence analysis, gathering filtering and classifying data, incorporating knowledge into business applications used by employees, and developing focal points for facilitating knowledge flow and building skills [8].

Ford was excited about the traffic it was receiving on the Web site and everyone was publishing all the material they have on desk on the Intranet. Nevertheless, there was a growing concern about the usability and usefulness of the material people were adding. As a result, Ford created a “Knowledge Domain Team” to build complete information in nine areas that were identified as vital to the business. The process Ford took was based on surveys and specialists input in how people perceive information, and what is considered vital and what is distracting in the structure of Ford’s website. The aim behind the initiative was to reduce the time individuals spent in searching for information through proper indexing of the website content, and making sure that what was important could be accessed in due time, and what is trivial did not overwhelm the researcher with thousands of results.

Business Re-engineering

In the area of organization’s re-engineering process innovation is the set of activities that achieve substantial business improvements. Companies seeking to benefit from process innovation go through the regime of identifying the processes, the factors for change, developing the vision, understanding the current process, and building a prototype for the new organization. History shows that organizations who define their processes properly will not have problems managing the issues and developing the change factors [9]. When introducing technology, business redesign is necessary. The industrial fields have been using Information Technology to remodel processes, control production, and manage material for generations. However, it is only recently that companies recognized that the fusion of IT and business would go beyond automation to fundamentally reshaping how business processes are undertaken [10].

When foreign companies were allowed to compete in the U.S. market, Ford understood that to succeed in business in a competitive arena it needed to implement strategies that competitors find difficult to imitate [11]. As a result, Ford bought Sweden Volvo to enter the European market, and partially owned Mazda to have a competitive edge with Japanese cars1 [12]. To achieve that it re-engineered its production development activities and global corporate organization and processes for dramatic cost reduction. Furthermore, it understood that expansion requires collaboration and alignment, and thus planned to establish the IT infrastructure through a WAN that connected all the offices. In the process of innovation and re-engineering, Ford has set policies to manage the cost of establishing the network, built models for continuous implementation, and organized global meetings to align all parties with the process. Adding to that, when it came to managing the website, Ford facilitated an awareness campaign for all the branches to understand that Ford is using the web to collaborate and research and adapting information technology as a way to maximize its business value. The goal for Ford was to maintain its leadership in the market and to do that in the most efficient and cost effective method that is there.

Supply chain management

Supply chain management (SCM) is about coordinating between suppliers, manufactures, distributors, retailers, and customers [13]. The basic idea that SCM applications revolve around is providing information to all those who are involved in making decisions about the product or goods to manage delivery from the supplier to the consumer [14]. Studies show that reducing errors in supply chain distribution, increases revenue, enhances productivity, and reduces the order-to-fulfillment period [15].

Ford often compared its supply chain process to that of Dell’s, in an attempt to close the gaps in its own process and reach the level of success Dell has reached. The difference in the distribution model between Dell and Ford lies in the middle link of using retail shops. Since Ford cannot skip retail as a focal distribution point, it worked on establishing a network of retail shops that it owned. Ford made sure shops are not affecting each other in terms of sales, and gave them all a standard look and feel to establish itself in the consumer’s market as a prestigious cars sales retail company. Furthermore, extensive re-engineering initiatives were undertaken to enhance Ford external network by eliminating the correlation with smaller suppliers. In that way, Ford made sure that key suppliers have access to forecasting data from customers’ purchasing trends and production information to enable a faster order-to-delivery cycle. Ford vision was to create a model that allowed flexibility, predicable processes and delivered the product at the right time to the right consumer.

Conclusions

Ford is an example of how traditional organizations can mature to adapt what is current and maximizes the business value. The process that Ford went through necessitated the continuous support from management. In addition, it depended on alignment between those involved as a key for success. The correlation was not restricted to internal staff; it extended to cover competitors to reach mutual benefits, to work with suppliers to maintain similar grounds and adequate infrastructure, and to create training programs to educate all on the vision and organization’s objectives.

Ford technical progress came at a time where the Internet was yet to reach its full potential. The introduction of Fiber-optic cables in the late 90’s and the substantial increase in bandwidth would have helped Ford and cut on the cost in endured connecting its own offices. Furthermore, the ISP services that provided hosting servers were limited to only few players, which explained why Ford preferred to manage its own web server and maintain the overhead of the 24 hours uptime and backup.

From this case study, I understood the level of commitment large firms have to maintaining their position in the market. These companies know the revolving nature of business in the sense of how easy it is to fall back if they did not keep up with the change. The Ford process also shows the need for quick and resourceful thinking when faced with situations that might seem to be unfavorable. The way Ford ventured into the foreign market by acquiring local manufacturers was a strategic decision that did not only enabled Ford to merge with different technologies, but it also saved it the additional cost of establishing production centers in Japan and Europe.

Recommendations

Maintaining leadership in the market requires innovative organizations willing to reengineer to succeed.
IT fusion with the business means restructuring and remodeling to understand the role IT would play to meet the business objectives
Planning and modeling is vital when coordinating work with large teams.
Constructing websites is not about content; it is about understanding what adds value and how humans interact with information.
Knowledge management is a plan that companies need to develop as part of their initial business process modeling
It is not wrong for large firms to try to adapt to successful processes implemented by other firms.

References

Robert D. Austin and Mark Cotteleer,”Ford Motor Co.: Maximizing the Business Value of Web Technologies.” Harvard Business Publishing. July 10, 1997. harvardbusinessonline.hbsp.harvard.edu/b02/en/common/item_detail.jhtml;jsessionid=WDARNHINBSYKSAKRGWCB5VQBKE0YOISW?id=198006 (accessed July 30, 2008).
Computer History Museum, Internet History 80’s. 2006. computerhistory.org/internet_history/internet_history_80s.shtml (accessed July 30, 2008).
Darren Wilksch and Peter Shoubridge, “IP Convergence in Global Telecommunications.” Defense Science & Technology Organization. March 2001. http://www.dsto.defence.gov.au/publications/2400/DSTO-TR-1046.pdf (accessed July 30, 2008).
Computer History Museum, Internet History 80’s.
H. Joseph Wen, “From client/server to intranet.” Information Management & Computer Security (MCB UP Ltd) 6, no. 1 (1998): 15-20.
R. Boutaba, K. El Guemioui, and P. Dini, “An outlook on intranet management.” Communications Magazine (IEEE), October 1997: 92-99.
Joseph M. Firestone, Enterprise Information Portals and Knowledge Management (OXFORD: Butterworth-Heinemann, 2002), 169.
David J. Skyrme, “Knowledge management solutions – the IT contribution.” ACM SIGGROUP Bulletin (ACM) 19, no. 1 (April 1998): 34 – 39, 34.
Thomas H. Davenport, Process Innovation: Reengineering Work Through Information Technology (Watertown,MA: Harvard Business Press, 1993), 28.
Thomas H. Davenport “The New Industrial Engineering: Information Technology and Business Process Redesign.” Sloan Management Review 31, no. 4 (Summer 1990): 11-28, 12
Gary M. Erickson, Robert Jacobson, and Johny K. Johansson, “Competition for market share in the presence of strategic invisible assets: The US automobile market, 1971-1981.” International Journal of Research in Marketing (Elsevier Science) 9, no. 1 (March 1992): 23-37, 23.
Austin and Cotteleer, “Ford Motor ” , 2.
Henk A. Akkermans, et al. “The impact of ERP on supply chain management: Exploratory findings from a European Delphi study.” European Journal of Operational Research 146 (2003): 284-301, 286
Thomas H. Davenport and Jeffrey D. Brooks, “Enterprise systems and the supply chain.” Journal of Enterprise Information Management 17, no. 1 (2004): 8-19, 9.
Kevin B. Hendricks, Vinod R. Singhal, and Jeff K. Stratman. “The impact of enterprise systems on corporate performance:A study of ERP, SCM, and CRM system implementations.” Journal of Operations Management 25, no. 1 (January 2007): 65-82.

Truck Wash Business Case Study

Often smart entrepreneurs look for out of the way businesses, things out of the mainstream but businesses, which have a good customer base and steady incomes. This is an extremely interesting story. I had always considered the mobile truck washing efforts to be very profitable and believed that fixed truck washes were a big waste of money. That was until one year when a new franchisee joined our team from Oklahoma City. I run a franchise company called the Car Wash Guys; http://www.carwashguys.com. Turns out the franchisee was formerly employed by Blue Beacon Truck Washes the largest chain of truck washes in the US. They do about $138,000,000 per year with 80 truck washes and the company is very closely held. Tim our franchisee was a truck manager for them and before buying into our franchise and started washing cars in OKC even though he knows truck washing best. He had a two-year non-compete with his old company, which we have honored in OKC. He has tons of experience and had indicated to me that the business is sound and we should really get into it. Later that year I sold a franchise to a person in WA State who owned car washes (5) and he made a deal with a truck stop on an Indian Reservation, he never started the plan, but the numbers we ran on the spreadsheet looked great and very profitable.

Even as a serial entrepreneur, I had never considered the fixed site truck wash business, as the mobile truck wash business seemed so much more efficient and so little over head; http://www.truckwashguy.com . So even with all this knowledge on the team we still did not enter that market. One of our competitors in the car washing industry bought up two

truck washing chains for a total of fourteen truck washes and proclaimed it more profitable than his other car washes by 5 times as much money. They now own nearly 100 locations of truck and car washes nationwide. After looking into it some more a franchise buyer who owned Fuel MAN, an East coast Fuel Card for fleet owners approached us in South Carolina to use the Truck Wash Guys name and develop a truck wash mid state. At that point we decided to start working on the details. Then a franchisee in OH made a deal with a truck stop between Columbus OH and Pittsburgh, to operate a 24 hour truck wash and de-ice business. He thought how easy this is and now so we have made deal in WV at a truck wash as well. Our Ohio Franchisee at the time took on another partner in WV.

Still reluctant to fully dive into the subcategory of full service truck washes we found our Ohio Franchisee going full guns to put together a deal with Pilot Truck Stops. Pilot Truck Stop has the most Truck Stops on the Planet and sells 8% of all the diesel fuel in the United States. So we planned a pilot program at pilot. Our temporary set up is a trailer unit, which sits at the truck stops and washes made sense. We then worked on plans for a building to submit them to the Building dept. for approval, meanwhile the deals in

OH and WV and SC were suddenly in the works. We figured if our deal with the truck stops worked well, the Truck Stops will get more traffic and fuel sales while we generate

revenue and a percentage of the total take for the truck stop for the privilege of working there. We are so use to washing trucks and have on our team a gentleman who sells simonize truck wash and has been in the car washing and pressure washing equipment business for 20 years. By using the fuel man fuel cards as currency on the east coast and name recognition of Pilot we figured we could move into this industry and pick up the slack.

There is a shortage of truck washes across the country and also a shortage of oil change facilities for trucks. A franchisee could be trained by our truck wash prototypes and probably on the top performing franchisee in our mobile truck wash

division; then quickly set up in their own markets. Pressure Washing companies which specialize in fleet truck washing should in fact consider this type of strategy for moving into the fixed site truck washing business.

If you study entrepreneurial companies you will in fact see that many companies fall into markets due to opportunities which present themselves, it is amazing the opportunities which exist out there and how fast companies can grow when they can handle the demand of those markets. Think on this.

Integrative Business Planning – A Case Study On Insufficient Planning

Introduction

Entrepreneurs would always do some form of business planning before they start a new venture. Quite often this will result in a formal business plan. The format will probably be determined by one of the following:

A business planning software package;
A guidebook on business planning;
Another business plan;
An external consultant.

Although all the above can have satisfactory results, they all have potential pitfalls. One serious pitfall (when using one of the first three methods) is the way that the entrepreneurs tackle the problem. Although all of the methods cater for the addressing of the apparent salient features and even for the interdependence between them, they can not cater for all the intricacies and multi-directional relationships that exist between various features in a business.

Outsourcing the whole business planning process to a consultant also does not solve all the problems. A consultant would need to work quite interactively with the entrepreneurs to be of real value.

Over more than a decade Ventex Corporation advised and assisted companies from business planning right up to harvesting and beyond. This case study highlights the importance of having a well thought-out and executed integrative business planning process. It shows how apparent small issues, that are neglected in the planning process, can have grave consequences for the entrepreneurs.

Salient Features in an Integrative Business Planning Process

The first aspect of integrative business planning is to ensure that all the salient features are catered for. These features can differ drastically from one business to another. Some of the more general features are:

The Business – The opportunity, the business concept, products and services and growth strategy.
Marketing – Marketing strategy (price, promotion, etc.).
Market Research – Customers, market size, trends and competition.
Development – New products, services, markets and facilities.
Operations – All aspects.
The Team – Management team, skills needed, training, board composition and organisms.
Finances – Investment-, financing- and dividend decisions and policies. Also cashflows, profit margins, costs and growth.
Risk Management – Business-, operational- and financial risks as well as potential fatal flaws.

Multi-Directional Relations to Keep in Mind in Business Planning

Unfortunately the salient features can not be seen in isolation. Every feature impacts on various other features and are also impacted by many other features. These multi-directional relationships occur within each individual broader feature (e.g. finances) as well as between different features (e.g. between finances and marketing).

Higher profit margins can for instance decrease the volumes sold, but increase the net profitability. On the other hand can higher volumes (with lower gross margins) increase the volumes sold, but decrease the profitability.

Higher volumes on the other hand can increase the stress factor in production personnel (that already work at maximum human capacity), causing higher absenteeism, lower production levels, extra hiring costs and a corresponding decrease in profitability. Unfortunately these intricacies can not be ignored and an integrative approach of business planning goes a long way in handling it.

An Example of Things that can go Wrong

Ultimate Holidays had a very ambitious business concept in the tourism industry. The industry was booming at the time and they planned in detail to build a luxury lodge that would combine a health hydro, hotel school, conference facilities, adventure center and eco-cultural tourism. (Details are changed for confidential purposes – all the detail does, however, simulate the real-life scenarios close enough to demonstrate the actual learnings).The experience of the entrepreneurs includes business, entrepreneurship, tourism, archeology, law and politics. This project of around $320 million was a life-long passion for all of them. They covered in-depth the architectural designs, legal requirements, development and operational planning issues, the marketing plan and personnel development policies. They also ensured that they had senior politicians and excellent service providers on board.

The business did, however, never got of the ground. What did the experienced entrepreneurs not see? What could they have done differently? They thought they had covered all the various aspects of the business. Analyzing the facts, the following major problems stood out:

The entrepreneurs were not flexible – they had strong pre-conceived ideas;
No detailed market research was done. Specifically not on occupancy rates in the niche industry and on critical investment criteria that investors are looking for;
All the planning was done on individual aspects that were optimized as far as possible. The way that these factors might have effected other factors were never considered.

The entrepreneurs were quite arrogant. They believed that any entrepreneur would be stupid not to invest and they would typically say that they only want investors that share their dreams and that the finances will sort itself out.

The business plan promised a “conservative” 22% internal rate of return (IRR) over a seven-year period. This included the expected capital growth of the facility. Expected occupancy rates were given as 50% in year one, rising to more than 75% by year four. The IRR and occupancy rates were much lower initially and were purely based on thumb-suck. The entrepreneurs then just chanced the figures to make financial sense without changing any of the other related factors.

Investors were often very keen on the concept, until they realized that the occupancy rates were inflated. The real figures based on realistic values indicated an IRR of only 15% – at least five percent below what the investors expected. The financial risk was just too high. Furthermore a breach of trust occurred.From the entrepreneurs’ viewpoint this was an insurmountable problem – they wanted it their way. In the end nobody invested. Much effort was applied and personal expenditures were sky-high. A high visibility in the business and tourism industry was also created. In the end some of the entrepreneurs were financially (and emotionally ruined) and all of them lost credibility.

The important questions in hind-sight are: Could the entrepreneurs saved this project? Could they have included all the features and genuinely expected an IRR of above 20%?

If the entrepreneurs used an integrative business planning process, they would have first ensured that all the salient features were examined. Secondly they would have ensured that all the multi-directional relationships (causality) between the different features were balanced.

By mapping the relationships between the various salient features it showed for instance that:

Occupancy rates are caused by service levels, product offering, marketing and price.
Occupancy rates on the other hand can affect the turnover, profitability and marketing (through word-of-mouth).
Profitability is caused by turnover (through occupants and outside guests), occupancy and cost of doing business (cost of sales and other expenses).
Profitability on the other hand have a direct bearing on the IRR, cashflow and sustainable growth of the business.

Only a very small portion of the multi-directional relationships that exist within and between the various salient features are shown above.

The entrepreneurs should have asked more in-depth “what-if” type of questions. They could start with questions such as: What would happen to the occupancy rate if the price per night increase by 10%? What would happen if the various aspects of the business are phased- in? Would it be possible to cut marketing costs and increase the occupancy rate? The last question typically seems like an oxymoron. This is part of integrative business planning – to look at the two opposites and try and find a solution where both aspects are catered for. In practice this can probably be achieved by using more free advertising in newspapers, internet articles and blogs and by working directly with the tourism associations of the region.

A major aspect (constraint) of this whole new venture was the high capital lay-out. By concentrating on this salient feature it was shown that costs could have been drastically reduced without having any detrimental effect on the occupancy rate. By using a light steel frame construction instead of the normal brick could have caused tremendous savings. The erection time could have been halved with savings in labor and interim interest. The long distances would have resulted in much less transport costs (light steel frames are much lighter than brick). Additional savings are also possible due to other construction benefits and different finishes. No negative effects would have been foreseen.

The building costs of the health hydro was 50% of that of the main complex, but the projected figures showed that it would only produce 33% of the turnover of the main complex (at much lower gross profit margins). This component could have been phased-in at a later stage when the complex was already in full production and when the potential occupancy and profits were much higher.

The analysis of the business showed, that by just changing these two factors (construction method and phased-in hydro) and by using a realistic occupancy rate, that the expected IRR will be in excess of 21%. Further solutions to decrease capital expenditure could have been explored and this could have resulted in a further increase of the IRR. The high road building costs (to the complex) could possibly have been shared with the government and other potential developers (e.g. of a shopping complex or a time-share game farm close by).

Summary

By neglecting some of the salient features or by not acknowledging and planning for important casualties can be problematic or even fatal for a new business. All the salient features need to be covered and at the same time the multi-directional relationships between them need to be balanced. One aspect of the business can not be optimized to the detriment of some of the others. An integrative business planning approach is needed to find the optimum balance for the company as a whole.

Feasibility Study – Securing the Funds You Need For Expanding Your Business

There is nothing quite like owning your own business. It can give you not only a lot of satisfaction and with the proper care and attention grow into one that will take care of your financial needs. When the time comes for growth you might find that you have to seek the help of a set of financial investors. If you have to present your expansion plans to them in order to secure the money you need, you best chances of success are likely to come if show them a well documented feasibility study.

What is a Feasibility Study?

If you have never worked with a feasibility study then you may not understand what one is let alone how to use it to your advantage. This type of study is undertaken when a business needs to make changes or grow and needs t show its investors that the ideas presented are sound. Considering the current economic climate most businesses are shrinking rather than growing and you will have to work hard to prove that yours can sustain the growth.

If you have never written one of these studies you can use a template that will help you to understand what information you will need and where it should be placed in your report. Essentially your study intended to help show your potential investors that your ideas and plans for expansion can and will work as long as you have the financial backing to follow through with them.

What Information Should be Included?

If you are using a template for your feasibility study you will see that there are specific areas assigned to cover each aspect of your reports. You will need to provide a complete description of what your plans for the future changes are. Your report should also include any research that you have completed in order to verify the feasibility of the project and the expected outcome of your project. You must include figures that show how much you expect your projected changes to cost and approximately how much your changes will affect the profit level of your company.

In essence a feasibility study is designed to show your investors that you have taken into consideration the costs, potential pitfalls and any risks you expect to see. Your template will also have an area dedicated to showing how you plan to deal with any problems that are likely to crop up along the way. This is the one chance you have to show your potential investors that you have thought of every eventuality and that your plans for expansion are solid. A well thought out and written report is far more likely to secure the finances you need for your project than any other means and is an industry standard.

Study Finds Strong Majority of Content Marketers Use Social Media Sharing

A research study conducted by Unisphere Research, a division of Information Today, and sponsored by Skyword titled “Content Marketing Gets Social: 2013 Survey on Content Marketing Trends” found that a strong majority of content marketers are using social media outlets to share their information.

The report states that nearly three-quarters (71 percent) of content marketers publish their content to their websites and then promote it on their social networks. Surprisingly, close to one-quarter (21 percent) did not utilize the powerful tool of social media; while a mere eight percent were unsure.

What social media outlets are being utilized? Well, it’s the usual networks that dominate the headlines: Facebook (84 percent), Twitter (79 percent) and LinkedIn (64 percent). In addition, the largest amount of reader activity came from those social media venues: Facebook pegged 55 percent, Twitter posted 45 percent and LinkedIn had 39 percent.

A large majority of content marketers say their primary objectives are to engage both clients and prospects, enhance brand awareness and acquire leads – improving search rankings and increasing web traffic were the least likely goals.

However, these are not their biggest hurdles. Exactly two-thirds say the biggest challenge is creating content that is relevant and targeted to various Internet audiences. Incidentally, content marketers are producing their own content as 87 percent said they write their own.

Is the practice working? It’s still unknown as only 46 percent of respondents said yes and 37 percent noted that the content is currently under development or being planned. Meanwhile, 15 percent gave a definitive no and two percent didn’t know.
“There is a high expectation regarding social media but a very low understanding around measures to determine ROI versus activity,” said one survey participant, while a separate participant noted: “We don’t do as good a job at tracking the value of our efforts as we should be.”

The online study was conducted in August with 217 respondents from the reader base of Information Today’s CRM and EContent magazines.

Indeed, the business of social media marketing is astronomical. The Business Insider published an in-depth report recently that analyzed just how immense the industry is. For instance, to an outsider, it might appear that brands are wasting their money on advertising on social media websites considering how crowded it is. However, since Americans spend an estimated 12 to 20 hours per month on social media – most likely higher – companies can gauge a higher audience for their content.

Looking ahead, social media advertising, though in its infancy period, is forecasted to be an $11 billion industry as brands either allocate or increase their marketing budgets to include this form of advertising. Also, this could be a lot higher because of mobile device usage; half of Facebook and Twitter’s traffic already comes from smartphones and tablets.

It has been suggested by industry insiders that the primary trends to observe for the remainder of this year and into next year are increased budgets, gamification, community content, brand new corporate roles (I.E. social business manager, content strategist) and staff blogging.