Reference no: EM131027520

Background information.

As a UniSA business student you have been asked to be part of a new small-business venture start-up in Adelaide. The exact nature of the business is for you and your partner to decide.

Your task is to examine the issues of supply and deman that are likely to affect your start-up business, and decide

(i) how the different elements of supply and demand impact on the start-up business;

(ii) how the start-upbusiness might respond .

You are required to write a report, that contains: an executive summary; responses to set questions (given below) and an appendix which outlines the business selected and the market it is in (ie a company and market information page). The bulk of your report consists of the answers to the economic questions outlined below. You must provide a response to each question.The Appendix should also be no more than two pages, and this should include amaximum of 6 references. The 1000 word limit includes everything except the Appendix (which should be no more than two pages).

Approach:

You should begin by examining some of the initiatives, suggestions and support given to entrepreneurs and start-upbusinesses in Adelaide.

Step 1.

Look at: https://www.startupadelaide.com.au/explore

Step 2.

Decide on a small business you and your partnerswill be involved with.
(Hint: For some ideas, try looking at the following- although you are not confined to any of the businesses /ideas shown here. Better to think of your own business idea if you can. Second tip- think of a business which realistically could be started as a smallbusiness).
https://business-sa.com/business-support/sa-young-entrepreneur-scheme

Step 3.

Select your business, and do some background research into the market you will operate in. (Hint 1: The important thing is that you need to know enough about the business you are researching, that you can respond to the questions listed below. It may help if you look at similar businesses in other places, to help you get a ‘feel' for the issues. Hint 2: Complete the Appendix page before attempting either the set questions or the executive summary).

Step 4.

Write your report.

Presentation information.

Your report should be compiled as follows:

• Title page

• Executive summary:[suggested 200-250 words]

This should identify the business name and product, address [suburb] and summarise your conclusions as to the main market challenges facing the start-up business, the main uncertainties and any relevant economic issues.

Hint: You should use your answers to the set questions to guide the content of this section.

• Middle section of the report - which answers the set questions. [suggested maximum of 750- 800 words in total]

• Appendix [excluded from word count - but an absolute maximum of two pages].

This should containinformation about the business that helps you respond to the set questions. To help you, and the reader understand your new business , consider responding to at least some of the following headings (not all are relevant for every business).

Market position: [Where do your products/services fit in the market? Are they high-end, competitive or budget? How does this compare to your competitors?] ;

Unique selling position: [How will your products/services succeed in the market where others may have failed? What gives your products/services the edge?];

Anticipated demand: [What is the anticipated quantity of products/services your customers are likely to purchase? For example, how much will an individual customer buy in 12 months?];

Pricing strategy: [Do you have a particular pricing strategy? Why have you chosen this strategy?]; Value to customer: [How do your customers view your products/services? Are they a necessity, luxury or something in between?]

Market targets[Outline your planned sales targets. What quantity of your products/services do you plan to sell in a planned timeframe? Are they monthly or yearly targets?]

Environmental/industry analysis

[Detail the results of the market research you have performed. Is the area experiencing population growth? Are there long-term employers in the area? Is the region's economy stable?

Are there seasonal variations?

What is the size of the market? What recent trends have emerged in the market? What growth potential is available; where do you fit in? How will the marketchange when you enter the market?]

Your customersCustomer demographics

[Define who your target customers are and how they behave. You can include age, gender, social status, education, tastes and attitudes.]

Customer management

[How will you maintain a good relationship with your customers? What techniques will you use? How will you keep your customers coming back?

[How do you rate against your competitors? How can your business improve on what they offer?]

Competitor details

[Identify up to 5 potential competitors]

Source:

These headings are originally taken from the Australian Government Template for business. Copies of the template and the guide can be downloaded from www.business.gov.au/businessplan.

Presentation issues:

Your company information page and concluding page should be carefully written to a professional level of presentation (Ie to standard you would submit to a client). It is not necessary to integrate your answers in the middle section of the report into a complete ‘text'. Direct responses to each question are fine. You should answer the questions in order, and ensure the reader can identify which answer corresponds to which question.

Important comments

The aim of this assignment is to apply some simple economic principles to a real world scenario- NOT to write a business plan.

Do NOT consider problems of

• Obtaining finance to start up the company;

• Obtaining planning permissions, licences, permits, or government approvals in order to operate;

• How to link up with other businesses to supply you with your inputs;

• Problems of advertising, insurance, taxation, legislated requirements (ie occupational health and safety; labour laws etc);

• production (ie ‘how much' electricity; water; and other specific inputs you need)

Do consider

• Plausible start-up businesses that could begin operating in a relatively short time frame;

• Who will buy your product; why; how significant a part of your consumers' income, is your product; likely compliments and substitutes for your product; consumer tastes,

• In broad terms, whether your product or service relies mostly on labour, capital or land for inputs (and how and why that might affect the supply of your product or service)

Middle Section

Economic Questions to answer in your report.

You should, where possible, use diagrams to illustrate your answers. On average, your answers should be around 100 words for each question (not including figures). Where figures are used, they must be explained in the text.

1. Use a diagram and words to describe the likely demand for your product. [Hint you should relate your answer to the type of market the company will operate in, the number of competitors etc]

2. What is the demand elasticity of your product likely to be? Explain why you anticipate the elasticity of your product to be what it is. [Hint: You may find the answer by looking at other small businesses of a similar type. Your answer should include a discussion of the nature of the good being produced, whether there are substitutes or complements for the good, the share of the good in your customer's income etc].

3. Assume that before your start-up company opens, the market it will enter has a normal demand and supply schedule (both upward sloping). Outline what will happen to prices and quantities in the market when your company opens.

4. Assume your start-up company is operating in a market with a relatively inelasticsupply schedule, and that demand is reasonably elastic. The government introduces a 10% tax on your industry. Outline what will happen to prices and quantities. Who will bear most of the tax burden?

5. If again you assume supply is relatively inelastic, and you start from a position of equilibrium,before a new firm from interstate opens up a competing company in the same area, with the same products, explain whether the consumer surplus in your market increases or decreases as a result of the new competitor.

6. Assume your firm has become established, and that equilibrium exists in the market place. Outline what is likely to happen in the market if land rents increase for all small businesses.

7. Assume that the market is at equilibrium, but because of the turn down in the economy, people's income is reduced. As you are a start-up company with many start-up costs, your elasticity of supply is relatively inelastic. Comment on how the down turn is likely to affect you, compared to other competitors whose elasticity of supply is more elastic.

Assessment Criteria:

Markers will be asked to assess your project by assessing your assignment against the following criteria.

First issues

Has the student attempted to respond to task as requested- or has he/she missed the main point of the task?

Has the student followed the guidelines?

Is the report (and especially the executive summary and Appendix) written to a professional level?

Is their evidence of some independent research in deciding on the business and its market?

Executive summary

Does the summary have a clear statement as to whether or not the business start-up should proceed, and why? Does it identify any significant issues and uncertainties faced by the company.

Does it evaluate (ie demonstrate a considered judgment of) the elements of the market that will affect the business?

Does it provide enough information to allow the reader to understand why the writer has reached his/her conclusion as to the likely success/challenges faced by the business?

Is the summary written succinctly and clearly?

Middle section

Do the responses to the set questions answer each question?

Does the student properly apply economicmodels and concepts to the business/market under analysis?

Do the answers demonstrate a depth of understanding of the question/problem; or do they simply repeat information from the text?

Are the diagrams (if any) correctly and accurately drawn, properly explained, and correctly applied?

Are the answers to the set questions clearly written?

Appendix

Is the conclusion written succinctly and clearly?

Does it provide enough information to allow the reader to understand the business and the market?

Does it respond to at least some of the suggested headings listed in the instructions?

Does it:

- identify the business and product? (ie the type of product, the nature of the product, service or activity provided, complements, substitutes)

- the type of market it will operate in? (number, size of likely competitors)

- the likely consumers of the product or service?

- the product's projected price in the market?

- the major factors that go into its production?

Overall

Has the student followed the instructions as outlined?

Is the whole assignment presented to a professional level?

Have all sections of the assignment been attempted?