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Thread: Mgt601 Assignment No. 2 idea solution Fall 21 December 2011

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    Yelp 32 Mgt601 Assignment No. 2 idea solution Fall 21 December 2011

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    SME Management (MGT601)

    Fall 2011

    Assignment 02 Phase 01

    The Business Idea

    Marks: 15 Due date: December 20, 2011, Bonus day: 21 Dec 2011

    Conceptual Background

    There is no doubt that entrepreneur in any society plays the role of engine of growth and development. It is also true that SMEs serve as the seed bed for entrepreneurship development in any society. Success of any new business depends on the business idea and a good business idea is one which is derived from the needs of the market and aims at adding value to the life of people.

    A business idea is simply a concept of the business to be started for earning profit by fulfilling the needs of society. In business idea it is described that which product to deal in and whom to offer it. The better way of finding good business idea is to first find out the unmet or poorly met needs of any segment of the market and then to develop a product or service for meeting the needs better than competitors do. Innovative business idea can increase the possibility of the success of the potential business if it can solve the customer problem in a better way.

    While developing business idea business market should also be focused as there are good potential opportunities existing in this segment. This has been emphasized because most of the beginners remain focused on consumer market and ignore the business segment. Another important aspect should be kept in view while developing business idea that it should be well within the resources of the potential entrepreneur.

    Task (phase 1)

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    We consider you all as potential entrepreneurs and want you to start preparing for the purpose before entering into the practical life. Therefore you are assigned the task to describe your business idea in one page. Your business idea should be original and market oriented. Do keep it in view that you have to develop a comprehensive business plan based on this business idea in the phase two of this assignment.

    Basic Questions

    While describing your business idea, following questions must be addressed in complete but concise manner.

    1. What is the need to be addressed by the potential business?

    2. How is this need not currently being served?

    3. What is the sector in which business will be launched?

    4. What is the product or service?

    5. How the proposed product or service will meet the need of the customer?

    6. How this business will add value to society?

    7. Will the business be profitable?

    8. How this business will be profitable?

    9. How have you come to have this idea?

    10. How this business matches with your interest and personality?

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    idea solution


    MGT601 Solution:


    Keeping in view the above mentioned scenario, you are required to answer the following questions.

    1. Are the current economic conditions of Pakistan conducive for Small and medium enterprises?

    Give at least 5 arguments in the favor of your answer. (5 marks)


    The current economical conditions of Pakistan are not suitable or conductive for small and medium enterprises, because:


    In Pakistan economy, inflation is increasing is increasing day by day due to price of raw materials and labor increasing which affect consumer purchasing power.

    Less number of Buyer:-

    Due to bad economical situation and increasing inflation, there are not large number of buyer in markets which mostly affect medium business and enterprises.

    Unsuitable social, economical and political situation:-

    Unsuitable social conditions such as terrorism attacked, bad economical situation such as increasing rate of inflation and uncertain political situation such as strikes and shutter down are all dangerous for both small and medium business.

    No involvement of E-commerce

    In Pakistan the ratio of E commerce is very low specially in small business whereas so many medium size business uses e commerce but this has not been prove profitable for such enterprises because of manual purchasing customer nature.

    Increasing tax rate

    Increasing tax rate affect every single type of business in Pakistan.


    2. In your opinion, being an owner of a small firm, how Mr. Malik Amjad can face the challenge of rising cost of doing business?

    Answer: Question:

    2. In your opinion, being an owner of a small firm, how Mr. Malik Amjad can face the challenge of rising cost of doing business?


    Mr. Amjad can adopt following techniques while doing his contracts:

    This is just idea make extensions of the points given below:

    • He should incorporate price protection clauses while making contracts.

    • He should delay the manufacturing process until the prices reduce.

    • He should make contracts with other small firms owners

    • For financial feasibility

    • Method of reducing the staff(Downsizing)

    You should search some references for the economic condition of the country and about the hiking prices from the web

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