Market Types, Business Location Factors, and the Business Plan

Market Types

Companies market their products on the market.

Market: Consists of a set of buyers and sellers of a product. There are different types of markets. Each of these conditions in a particular way the work of the Commercial Department.

Main Forms of Market

• Features Buyers:
  • Consumer Market: Products purchased by individual buyers or families. Distinguish between immediate consumption, when consumed frequently; lasting, if consumed in different periods of time; and services, if they are immaterial.
  • Industrial Market: Products purchased by companies for incorporation into the production process or for sale. Examples: Wood for furniture factories.
• Number and Types of Competitors:
  • Monopoly: There is only one company operating in the market. Example: A business owner of a patent.
  • Oligopoly: There are few companies for the same product. Example: Telephone companies.
  • Monopolistic Competition: Multiplicity of vendors who sell similar products, differentiated by factors such as brand, model, or design. Example: Manufacturers of sneakers or cars.
  • Perfect Competition: There are many buyers and sellers who trade in a homogeneous product. Example: Primary sector products.
• Relationship with the Company:
  • Current: Made by customers to the company; made its sales in a given time. Example: Customers of a phone company.
  • Potential: This consists of the maximum amount of sales that could reach the company. Includes, among others, customers who buy its product from other companies, and those who have not been aware of the existence of the product. Example: A set of telephone customers.
  • Trend: The market is expected in the future. Example: Future of mobile users.

Public Administration

• State (Central State Administration): Offers design and development of legal regulations, grants, advice to entrepreneurs.
• Autonomous (Autonomous Government): Offers many business incubators and business service centers, programs, information on access to grants and subsidies.
• Local (Your Local Council): Similar to the autonomous government.

Factors Affecting Business Location

• Proximity to Raw Materials: Some activities require a large volume of raw materials for production, so they can incur high transport costs. Examples: Extractive industries, canneries, dealing with perishable products.
• Proximity to the Markets: In some cases, the location is suitable in places where there is demand. Examples: Hotel industry, banks, retail.
• Proximity to the Communications Network: A good network of roads, highways, railways, and air transport will mean significant cost savings for the company, and simplify procurement and distribution. Examples: Industrial enterprises, such as the automotive industry, tourism companies.
• Availability of Skilled Labor: Many activities require staff with technical training tailored to the needs of the company. Examples: Electronics, IT.
• Waste Disposal: Waste generated by many business activities should receive appropriate treatment, so you have to consider the proximity of treatment plants or industrial landfills and avoid the vicinity of populated areas. Examples: Pharmacy, chemistry.
• Low-Cost: Location in an area where costs are lower, that is, where wages, taxes, raw material prices, or rents are low.
• Other Factors: Home-based businesses can be significant; other factors such as the characteristics of the natural or industrial environment.

The Business Plan

Objectives

• Internally: Facilitating the identification of viable business objectives, checking the consistency of the project, and evaluating it as it is being implemented.
• Externally: Facilitating obtaining grants and funding, such as banks and public administration, or membership recruitment.

Recommendations to Prepare the Business Plan

• It has to be based on recent data.
• It must consider all relevant aspects.
• It must be realistic.
• It must be clear and understandable.
• The presentation has to be brief and direct.
• It must be free of grammatical errors.
• It must be flexible.