What is the relevance of research in business organisation?

Answer 1

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1.Why research

While many business ideas blossom into

successful businesses, there are many others

that did not move beyond the business plan

or offering memorandum. And among those

that get funded and started, many fail

eventually. While there can be many reasons

for business failures, often these were due to

flaws in the business concept or the business

model that rendered them vulnerable to the

difficulties encountered. Recognizing the

relevance of research in business planning

has become even more crucial in the current

economic scenario with funding getting

difficult as banks, other financial institutions

and venture capitalists are bound to put

business propositions through a most

rigorous assessment process.

Research indicates that many ventures fail on

account of market and industry factors. Yet,

very often we come across ambitious

entrepreneurs starting ventures without

having researched the market and industry to

determine the viability and sustainability of

the business concept.

The significance of research stems from the

fact the success of a business does not depend

only on the entrepreneur's perspective on the

service or product offered. It also depends

greatly on what the customers want or need.

And here the customers to be considered are

the target customers and how they would

respond to your product or service. The

litmus test to success will be to how well you

can differentiate your product or service and

provide benefits that can bring customers to

you.

2 Differentiate between industry

and market

Research for a business plan needs to be done

both for the industry and market. It is

necessary to appreciate in this regard the

differences between the two terms, i.e.,

market and industry as often these two terms

are used interchangeably or in a composite

way which is quite erroneous.

The industry in which you plan to operate is

made up of all the sellers of the products and

services that compete with your product or

service.

Market comprises of all actual and potential

customers for your product or service. To fine

tune the concept further, the available market

comprises of those potential customers who

have both interest and ability to buy and your

target market is the part of the available

market that you decide to pursue due to

limitations that may get imposed due to

geographical or other constraints or even by

design to cater to a niche market.

3 What to seek from industry

research

First and foremost, it is necessary to define

clearly the industry in which you will be

competing, whether it would be with the

manufacturers, the distributors or retailers.

Having defined the industry, some of the key

questions market research should seek

answers to are the following:

• What is the current size of the

industry?

• What trends are being observed?

• Where does it fall from an industry

life cycle perspective?

• How does the industry relate to the

five competitive forces, i.e., new

entrants, buyers, suppliers,

substitutes, rivalry among firms?

4 What to seek from market

research

Analyzing the market and potential

customers is necessary in order to be able to

position the product or service in a way it can

meet buyer needs also recognizing buyer

attitudes and behavior.

Some of the key questions market research

should seek answers to are the following:

• What needs of the customer will the

business address?

• What benefits will your product and

service provide that others don't?

• What evidence exists that customers

will buy your product or service?

• How large is the market you are

targeting and is it likely to grow?

5 Assessing research findings

Research often provides new insights on the

business concept. It could also bring up flaws

in the business concept that were not evident

earlier. It may be possible to fix the flaws by

adopting the idea to market needs. On the

other hand if that appears to be not possible,

one should explore other business

opportunities