Creating New Ventures Business Plan

Building CNVs 1. Identify Opportunities Create vision, designate venture champion, identify entrepreneurial team 2. Refine Concept Prepare concept and vision statement, draft business plan summary 3. Business Plan 4. Determine Form for CNV CNV, Spin-off, subsidiary, internal project 5. Establish CNV Talent, resources, capabilities transfer from parent company

Non-Profit / Public Sector May generate financial surplus but may not distribute surplus to officers, investors, employees Vision is to create social value vs economic value Gugenheim Museum ( ) Consumer Cooperative REI began with 23 fellow climbers in Pacific NW REI has 2 million active members w/63 outlets and direct sales ( )

Family Owned 80% of businesses in U.S. are family owned 25% of Fortune 1,000 are family controlled Anheuser-Busch Cargill Ford Motor Gallo Archer Daniels Midland NASCAR Pruitt

Family Owned Advantages Disadvantages

Family Owned Advantages Long-term orientation Independence Resilience Family Culture Natural Succession Disadvantages Nepotism Family Strife Financial Strains Succession Problems Limited access to Capital Concentrated Risk

Franchises / Direct Selling Business Format Franchise Wendy’s, Holiday Inn, My Girlfriend’s Kitchen Trade-name Franchise Ace Hardware Product Distribution Franchise Auto Dealers, Caterpillar

Franchisee Advantages Disadvantages

Franchisee Advantages Training Business advice Proven bus. Format Brand appeal National advertising Disadvantages Franchise fees Control of bus format Unfulfilled promises High start-up costs Restrictions on vendor supplies Financial failure of franchisor

Franchisor Advantages Disadvantages

Franchisor Advantages Enhanced ability to expand Expanded geographic reach New capital from franchisee Attracts owner-managers for franchise chain Disadvantages Potential for uncooperative franchisees Varying regulations from state to state Unable to innovate quickly

Direct Sales (DSOs) Family focused business Works with part-time operation Tupperware Mary Kay Cosmetics Amway Direct Selling Association

Clusters Geographic concentration of interconnected companies in a particular field Hollywood Silicon Valley Napa, Sonoma Valley Likely to find both complementary and competitive capabilities/resources Employees Infrastructure Kissimee – Disney World, Epcot, Universal,

Social Responsibility: Johnson & Johnson Chicago residents died from cyanide laced Tylenol Managers overrode FDA & recalled at cost of $100 million 3 months, 93% felt J&J had done a good job J&J rated #1 in Fortune’s 300 most admired U.S. corporations

Manufacturers kept Dalkon Shield on market after product difficulties discovered 9,000 claims involving serious injury Robins eventually filed for bankruptcy Social Responsibility: A. H. Robins

Social Responsibility: Statistics National poll - 58% rated ethical standards of business executives as fair or poor Time - 76% saw lack of ethics in business as contributing to tumbling moral standards Street crime costs U.S. $4 billion per year White collar crime costs U.S. $40 billion per year

Organizational Culture CEO Senior Mgmt Middle Mgmt Line Workers Middle Mgmt Senior Mgmt CEO

Organizational Culture Flexibility Stability Needs of the Environment External Strategic Focus Internal Adaptability Culture Mission Culture Clan Culture Bureaucratic Culture

Organizational Culture Adaptability Culture Focus on external environment and change to meet customer needs 3M – individual initiative and entrepreneurship

Organizational Culture Mission Culture Concerned with serving customers in a specific market but without the need for rapid change Harley Davidson

Organizational Culture Clan Culture Focus on involvement and participation of the organization’s members Needs of employees is the best route to productivity Ben & Jerry’s Starbucks

Organizational Culture Bureaucratic Culture Internal focus and a consistency orientation for a stable environment symbols, heroes, ceremonies Marine Corps, SDSM&T

Learning Organizations Strong adaptive culture the whole is more important than the parts equality and trust are primary values culture encourages risk taking, change and improvement

Social Responsibilities Economic responsibilities Legal responsibilities Ethical responsibilities Discretionary responsibilities Free Market Hand of Government Hand of Management

Social Stakeholders Shareholders primary role of mgmt is to earn profit and dividends for shareholders Employees managers from Film Recovery Systems found guilty of murder in death of employee from cyanide poisoning DuPont spent $1.5 million to renovate child-care facilities Customers product liability issues (has pendulum swung too far?) quality is the name of the game

Social Stakeholders Local Community businesses and community are interdependent and have complementary needs both may function more effectively with high level of mutual support Society many business leaders involved in educational reform Nabisco - $30 million to 45 schools with innovative programs International Community Union of International Associations in Brussels list of 10,000 world problems

Vanguard Companies try to satisfy all stakeholders are committed to a higher purpose value continuous learning aim high Atlantic Richfield, Dayton Hudson, John Deere, Honeywell, Levi Strauss, Motorola, Weyerhaeuser James O’Toole, Vanguard Management: Redesigning the Corporate Future, 1986.

Monitoring Social Demands Social forecasting systematic process of identifying social trends Opinion surveys Social audits systematic evaluation of social performance of an organization (Ben & Jerrys) Issues management process of identifying emerging social issues of particular relevance to the organization Social scanning informal issues management

Business Plan Cover page Table of contents Executive summary OpportunityCh 2 StrategyCh 3, 4 Business Concept5.3, 6.4, Ch 10 Marketing PlanCh 11 Organizational Structure Ch 12, 14.3, 5.2 OperationsCh 13, 15 Financial PlanCh 16, 17 Risks/MilestonesCh 6

Common Mistakes Technologies looking for a problem Unclear business model or value proposition Incomplete market analysis Inadequate assessment of risks Gaps in capabilities of management team Lack of focus or sound mission Too many top-down assumptions (1% of market) Limited confirmation of customer demand Limited performance metrics (ROI, Market Share) Poor description of revenue and profit drivers

New Business Venture People Team, capabilities, commitment Opportunity Customers, Strategy Business Model Resources Financial, Physical Intellectual Deal Risk vs Reward, Incentives, Ownership Business Plan +

Question Green Marketplace has positioned its activities in an environmentally friendly niche. Visit this firm and describe its social venture.

Question Dangdang.com is China’s biggest online bookseller. Peggy Yu moved from New York to Beijing to co-found the online book store. Dangdang.come is a shameless imitation of Amazon.com, offering 210,000 titles. Visit this site and determine its business model.

Question A partnership between Stanford University’s Social Entrepreneurship Startup Course and the nonprofit Light Up the World Foundation is working to bring safe, affordable lighting to people in Mexico, China, and India. Students in engineering and business work to design a lamp appropriate to the needs of villagers. Develop a brief plan for a similar social entrepreneurship project for your organization.