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Evaluate the different aspects of starting up a business and examine how businesses can develop a new opportunity to prevent the threat of competitors [17 out of 18, 2001]
Two factors that could be considered are sources of finance and developing an export model. With reference to the case study, “the exchange rate was being pushed up and was reducing their ability to gain export orders”, and “it has been company policy to… appeal to as wide a customer base as possible”.
In analysis, financial sourcing will be required to ensure a smooth entrance into the market. Too little financing increases the chances of the business not being accepted onto the market due to insufficient customer awareness/poor product or service quality. In exploiting a new opportunity in the export market, a company can increase their customer base significantly as well as offsetting increased competition.
In evaluation, insufficient funding leads to an increased chance that the company will not be successful because inadequate amounts of money will have been spent on ensuring consumer awareness and satisfaction. This will compromise profits, as potential customers will not buy the products, thus decreasing sales revenue. Initial start-up costs will not be recovered, leading to liquidity problems and decreased survival chances. As the company fails to achieve its implicit long-term survival aim, growth chances are extinguished.
A new opportunity in the export market could lead to a larger consumer base. The more people that buy the product, the higher profit margins are likely to be as sales revenue increases. Higher profits and better cash flow will free up money, which can be reinvested in the business. This will ensure growth chances are maximized, as fixed assets and better working practices increase productivity – this should ensure the company meets its survival goal.