, PLEASE USE THIS DOCUMENT AS A GUIDE ONLY
QUESTION 1
1. The formulation of comprehensive business plans typically constitutes a fundamental initial
stage in the development of new venture concepts. Drawing on the arguments and evidence
presented in Article 1, critically examine five distinct value-creating functions of a business plan
in the context of new venture formation and early-stage development. This discussion should not
merely list functions but should incorporate both theoretical perspectives and any empirical
findings reported in Article 1.
The Value-Creating Functions of a Business Plan in New Venture Formation
The formulation of comprehensive business plans is a fundamental initial stage in developing new
venture concepts. While some entrepreneurs may succeed without a formal plan, the process of
creating one serves several critical value-creating functions. This essay, drawing on the arguments
and evidence presented in Article 1 (Becherer & Helms, 2009), examines five distinct functions of a
business plan in the context of new venture formation and early-stage development, integrating both
theoretical perspectives and the study's empirical findings.
1. Providing an Internal Strategic Roadmap and Fostering Clarity
A primary function of a business plan is to serve as an internal strategic document that crystallizes
the entrepreneur's vision. It acts as a "game plan" that helps founders and their teams align on the
venture's core objectives, market positioning, and operational approach (Longenecker et al., 2017, p.
146). The business plan sharpens the focus of those involved in the start-up by detailing the problem
to be solved, the specific solution, and the strategy to execute it (MNE3701, 2017, p. 7). By forcing
the entrepreneur to think through the "logistics, pitfalls and possibilities" of the business (Becherer &
Helms, 2009, p. 3), the plan helps define the 'where, what, and how,' creating a coherent roadmap for
the future. Article 1 emphasizes that a good plan is not just about seeking finance, but about
"visualizing the dream" and ensuring the internal team is aligned (Becherer & Helms, 2009, p. 150).
2. Mitigating Risk and Identifying Fatal Flaws
The business plan acts as a crucial risk management tool. By requiring the entrepreneur to conduct a
thorough analysis of the industry, target customers, and competition, the planning process helps
uncover potential challenges that could threaten the venture. The plan encourages "candour about the
risks, gaps and assumptions," which is essential for identifying 'fatal flaws' that could doom the
enterprise (Longenecker et al., 2017, p. 148). Article 1 highlights that a good business plan requires
one to "not hide weaknesses—identify potential fatal flaws," emphasizing that ignoring or glossing
over negative issues can be "damaging, even fatal" (Becherer & Helms, 2009, p. 165). By
systematically analyzing the market and its own capabilities, an entrepreneur can develop mitigation
strategies, thereby increasing the venture's chance of survival. This function is also highlighted in the
study guide, which notes the importance of "identifying primary risks that may lead to failure"
(MNE3701, 2017, p. 7).
QUESTION 1
1. The formulation of comprehensive business plans typically constitutes a fundamental initial
stage in the development of new venture concepts. Drawing on the arguments and evidence
presented in Article 1, critically examine five distinct value-creating functions of a business plan
in the context of new venture formation and early-stage development. This discussion should not
merely list functions but should incorporate both theoretical perspectives and any empirical
findings reported in Article 1.
The Value-Creating Functions of a Business Plan in New Venture Formation
The formulation of comprehensive business plans is a fundamental initial stage in developing new
venture concepts. While some entrepreneurs may succeed without a formal plan, the process of
creating one serves several critical value-creating functions. This essay, drawing on the arguments
and evidence presented in Article 1 (Becherer & Helms, 2009), examines five distinct functions of a
business plan in the context of new venture formation and early-stage development, integrating both
theoretical perspectives and the study's empirical findings.
1. Providing an Internal Strategic Roadmap and Fostering Clarity
A primary function of a business plan is to serve as an internal strategic document that crystallizes
the entrepreneur's vision. It acts as a "game plan" that helps founders and their teams align on the
venture's core objectives, market positioning, and operational approach (Longenecker et al., 2017, p.
146). The business plan sharpens the focus of those involved in the start-up by detailing the problem
to be solved, the specific solution, and the strategy to execute it (MNE3701, 2017, p. 7). By forcing
the entrepreneur to think through the "logistics, pitfalls and possibilities" of the business (Becherer &
Helms, 2009, p. 3), the plan helps define the 'where, what, and how,' creating a coherent roadmap for
the future. Article 1 emphasizes that a good plan is not just about seeking finance, but about
"visualizing the dream" and ensuring the internal team is aligned (Becherer & Helms, 2009, p. 150).
2. Mitigating Risk and Identifying Fatal Flaws
The business plan acts as a crucial risk management tool. By requiring the entrepreneur to conduct a
thorough analysis of the industry, target customers, and competition, the planning process helps
uncover potential challenges that could threaten the venture. The plan encourages "candour about the
risks, gaps and assumptions," which is essential for identifying 'fatal flaws' that could doom the
enterprise (Longenecker et al., 2017, p. 148). Article 1 highlights that a good business plan requires
one to "not hide weaknesses—identify potential fatal flaws," emphasizing that ignoring or glossing
over negative issues can be "damaging, even fatal" (Becherer & Helms, 2009, p. 165). By
systematically analyzing the market and its own capabilities, an entrepreneur can develop mitigation
strategies, thereby increasing the venture's chance of survival. This function is also highlighted in the
study guide, which notes the importance of "identifying primary risks that may lead to failure"
(MNE3701, 2017, p. 7).
