Evaluation Report for

MedComm Business Plan

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 1. Table of contents
1. Table of contents ........................................................................................................ 2

2. Table of Figures.......................................................................................................... 3

3. Executive Summary .................................................................................................... 5

4. Analysis of Current Business Plan .............................................................................. 6

The People...................................................................................................................... 8

The opportunity ............................................................................................................. 10

The external context...................................................................................................... 17

The deal ........................................................................................................................ 17

The Fit ........................................................................................................................... 20

5. New Entrepreneurial Strategic Options and Suggestions for New Deals ................. 21

6. Appendices ............................................................................................................... 25

Appendix a: ................................................................................................................... 25

Appendix b .................................................................................................................... 26

7. References ............................................................................................................... 27

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 2. Table of Figures

Figure 1 The value Chain for pharmaceutical industry (Frost Sullivan, 2011) .................. 13
Figure 2- Pharmaceutical Sales by Region 2004 ............................................................. 14
Figure 3 Meta Strategy ..................................................................................................... 19
Figure 4 Bottlenecks in value chain (Dew, 2009) ............................................................. 22
Figure 5 Ansoff’s Growth Matrix ....................................................................................... 24
Figure 6 The Concept of Fit (Sahlman, 1996) .................................................................. 25
Figure 7 Dynamic Fit Management (Sahlman, 1996) ....................................................... 26

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 “The problem is to judge ideas and men and the value of the possible
combination - a very difficult task.”

General Doriot

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 3. Executive Summary
MedComm’s business plan has been evaluated. To analyse it the Sahlman’s framework
(Sahlman, 1996) including four dynamic components of people, opportunity, external context
and deal is used as the base framework. Subsequently, the concept of fit among different
components is employed to assess the probability of the success of venture. Finally, using
the frameworks in EPS, a portfolio of strategic options with the potential to result
in profitable growth for MedComm in the current economic climate is proposed meanwhile,
some suggestions for structuring new deal with MedComm are presented.

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 4. Analysis of Current Business Plan
To be practical and informative, a business plan must provide reasonable answers to the
questions mentioned in Table 1.

1. Who are the people involved? What have they done in the past that would
lead one to believe that they will be successful in the future? Who is missing
from the team and how will they be attracted?
2. What is the nature of the opportunity? How will the company make money?
How is the opportunity likely to evolve? Can entry barriers be built and
maintained?
3. What contextual factors will affect the venture? What contextual changes
are likely to occur, and how can management respond to those changes?
4. What deals have been or are likely to be struck inside and outside the
venture? Do the deals struck increase the likelihood of success? How will
those deals and the implicit incentives evolve over time?
5. What decisions have been made (or can be made) to increase the ratio of
reward to risk?
Table 1
Each of these issues will be tackled in the following sections.

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The People
The following table includes the questions concerning people involved in the venture directly
and the relevant answers from business plan:

1. Who are the founders?

Led by Matt Stanton: overall management responsibility head up MedComm
marketing.
Louise Alder editorial/scientific support and head up and develop MedComm
bioscience
Caroline Cook will provide overall office management and compliment the team
with her project/event management expertise.

2. What have they accomplished in the past?

a. Matt’s background is 13 years in pharmaceutical marketing:
i. Senior International Product Manager at Boehringer Ingelheim
ii. sales management role for Bayer
iii. Medical representative for Bayer
iv. MBA from NIMBAS Graduate School of Management

b. Caroline has an administrative background within the pharmaceutical

industry and med comms agencies.
i. Event Manager for Schering AG in the European Business Unit
- Oncology based Berlin.
ii. medical communications sector as an event specialist for
Darwin Grey Communications and CBC Oxford.

c. Louise’s background is in medical writing

i. Working for both Royal Pharmaceutical Society of Great Britain
and IMS World Publications as editorial assistant and then on
to assistant editor.

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 ii. Louise has spent the past 16 years within the med comms
industry progressing from medical writer to group editorial lead
and scientific director for Ogilvy Healthworld where she
provides key strategic and scientific input for their medical
educational offering.
iii. Louise holds a BSc Hons in Microbiology from the
University of Liverpool and a master’s degree in evidence-
based medicine.
3. What directly relevant experience do they have for the opportunity they are
pursuing? See above
4. What skills do they have? See above
5. Whom do they know and who knows them? Not mentioned specifically. But
it can be assumed they know people in the industry considering their
background but the quality of relations is not clear.
6. What is their reputation? There is no explicit information in the case.
How realistic are they? Not mentioned specifically. Form their financial
projections, it could be said they are very optimistic and not so much realistic. The
company’s mid-term financial target is to generate >£3m in fee revenue by
2010/2011.
7. Can they adapt as circumstances warrant? No information.
8. Who else needs to be on the team? Are the founders prepared to recruit high
quality people? They need people with agency experience but they are going
to use Mudskipper‘s management group experience and guidance. However,
they seem to have different experience. Low awareness of MedComm’s
offering in the marketplace is another problem. However, there is no
evidence of plan for recruiting high quality people.

9. How will the team respond to adversity? No information

10. Can they make the inevitable hard choices that have to be made? No
information

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 11. What are their motivations? No information
12. How committed are they to this venture? No information.
13. How can we gain objective information about each member of the team
including how they will work together? Checking their pervious jobs or their
clients. Not from their proposed list
14. What are the possible consequences if one or more of the team members
leave? No specific information, but it seems Stanton and Cook are the key
people, and we don’t know if there is a backup plan for them leaving.
Table 2 People
The research suggests that successful venture founders have two characteristics: they are
“known” and they “know.” Tackling the latter first, the founders know the industry for which they
propose to raise capital and launch a venture - they know the key suppliers, the customers,
and the competitors. They also know who the talented individuals are who can contribute to
the team. At the same time, they are known in the industry: people can comment on their
capabilities and can provide objective referrals to resource suppliers like professional venture
capitalists. Suppliers, customers, and employees are willing to work with them in spite of the
obvious risks of dealing with a new company. (Sahlman, 1996). This team looks have some
good experiences and suitable skills, but there are many questions which are not answered in
business plan (Table 2) more importantly none of them has a start-up background which shows
the need for having people with this experience.

The opportunity
To assess the opportunity, the rationale of business, competitive advantage, entry wedges
and market and industry attractiveness are going to be evaluated in this section.

The rationale of business: The rationale for establishing a second agency is that the
expertise and knowledge establish within Mudskipper can be shared across the new company.
Additionally, communicate a distinct value proposition compared to Mudskipper in that it shall
reflect the different skill set of its management team with the focus more on marketing services
in contrast with Mudskipper which is positioned more at the high publication arena. The
business model therefore exploits the synergies of the two organizations in sharing expertise,

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allowing for business to be passé interest and the utilization of the back office functions which
are shared across the two companies. The target audience for the two companies is similar but
their propositions to client are different and therefore the additional benefits from Mudskipper’s
support such as accounting, IT & legal will allow for an accelerated revenue forecast as
increased time and energy can be spent on establishing development and the selling in of
services.

Venture type: Based on Bhide’s there are five new venture types:

 Revolutionary – offers the ‘big win’

 Niche – achieve self-sufficiency quickly
 Propagator – race for market share
 Hustle – entrepreneur is the business
 Speculative – outwit or gamble the market.

Type of opportunity Key Issue Attraction Downside

Revolution Technique Big win Investment
Niche Endurance Lifestyle Living Dead
Propagate Idea Lights Lose Control
Hustle Skill Easy entry No Exit
Speculate Timing Gamble Volatility

Table 3 Venture types (Dew, 2009)

Based on above and business plan, this venture is more likely to be a Niche one which is
concentrated on pharmaceutical companies.

Competitive advantage: Deliver a unique offering which is linked into the current needs of
customer. Utilization of the 2 x companies skills and resources by offering a ‘client-centric’
approach to new business opportunities.

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Here the business’s competitive advantage and its sustainability is assessed. The main
resources in the venture are introduced as Mudskipper’s valuable customer list and using its
resources to handle back office and being customer centric. Via using VRHN;

 V Valuable: Having Mudskipper as support in back office and customer list could be
considered rather valuable however, not highly.
 R Rare: The business model and its main resources are available for many
companies.
 H Hard to copy: it is not hard to copy everybody in the same business background
can establish the same pattern.
 N Non-substitutable: the business model can be substitute with pharma companies
internal resources and other agencies.

Considering above their proposed completive advantage cannot be considered as

sustainable one.

Entry wedge: MedComm marketing shall be used to help differentiate the company and
importantly act as an ‘entry wedge’ for business development purposes. The primary focus
shall be based around brand communications and services with the focus on three distinctive
entry wedges;

 War Gaming (competitive simulations)

 Brand Experience
 Marketing Projects

Industry attractiveness: The problem with Medcomms, is that the industry is not
structurally attractive, nor is it ever likely to be, because using Porter’s 5 forces:

 Buyers: The customers are large companies

 Rivalry: The rivalry is intense –there are lots of companies in the business-.
 New Entry: Not so expensive to enter, No IP, No barriers to entry, Experience needed
but there are many people who works in industry or pharma,

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  Substitutes: Big pharma companies -considering their financial strength- can easily
use their own staff.
 Suppliers: as this is a service industry, suppliers could be assumed as staff and their
personal network which are important if they leave they could hurt the business.

Figure 1 The value Chain for pharmaceutical industry (Frost Sullivan, 2011)

Selling to big pharma companies is complicated and often has low margins. There are lots
of competitors, each with high quality offerings in the same market segment. Because there
are so many competitors rivalry is intense which also leads to lower prices and hence, lower
margins. In the end, it is extremely difficult to build and sustain a profitable business.

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 Market attractiveness: Entrepreneurs and investors look for large or rapidly growing
markets for a variety of reasons. Because it is often easier to obtain a share of a growing market
than to fight with entrenched competitors for a share of a mature or stagnant market. To restate,
the goal is to pick industries that have lots of potential to create and protect value. Growth in
sales is not equivalent to growth in value. Also, marrying great management to such markets
is the primary tool for increasing the likelihood of success.

2004 % Growth
Global Sales Constant $
World Audited Market US$ BN % Global sales 2004 CAGR 99-03
North America 248 47.8 7.8 13.7
European Union 144 27.8 5.7 8.8
Rest of the Europe 9 1.8 12.4 10.9
Japan 58 11.1 1.5 3.3
Asia/Africa/Australia 40 7.7 13.0 10.3
Latin America 19 3.8 13.4 1.5
Total $ 518 100% 7.1 % 10.0 %

Figure 2- Pharmaceutical Sales by Region 2004

As can be seen from Figure 2 the size of the global pharmaceutical market reached $550bn in
2004, and the market should be worth approximately $605 billion in 2007 assuming a 5%
annual growth rate. Estimations of around 1.0% - 1.25% of sales is assumed the amount spent
on all outside agency support which gives an estimated market size of approximately $650-
975m globally which includes all various types of agency services and includes a percentage
of costs which are classed as ‘expenses’ and therefore artificially inflates the total market size.

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The market is under one billion dollar besides there are many competitors and considering
volatility in world economy –for example recent recession- it cannot be considered as attractive
one.

The next major issue in evaluating a venture is the customer side; a good business plan
shall have reasonable answers to the questions mentioned in Table 4. The table shows if the
business plan has answered the questions or not.

Question If it is answered in
business plan
1. Who is the customer? YES
2. How does the customer make decisions YES
3. To what degree is the product or service a compelling YES
purchase for the customer?
4. How will the product or service be priced? YES
5. How will the venture reach the identified customer NO
segments?
6. How much does it cost (time and resources) to acquire a NO
customer?
7. How much does it cost to produce and deliver the product or NO
service?
8. How much does it cost to support a customer? NO
9. How easy is it to retain a customer? NO
Table 4 Customers and opportunity

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 It should be noted that in the business plan there is a table titled Customer Need Analysis
in which there is no US-based contact. Considering the US is the biggest market, this could be
considered a big flaw.

Competition: A business plan shall address the current competitors and the potential
competitors in a sensible way. Among the specific issues a plan should cover the questions
mentioned in Table 5. The table shows if the business plan has answered the questions or not.

Question If it is answered in
business plan
1. Who are the current competitors? NOT SPECIFICALLY
2. What resources do they control? What are their strengths NO
and weaknesses?
3. How will they respond to our decision to enter the business? NO

4. How can we respond to their response? YES

5. Who else might be able to observe and exploit the same NO
opportunity?
6. Are there ways to co-opt potential or actual competitors by NO
forming alliance?

Table 5 Competitors

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 There is a section concerning completion but in this section, subject has been dealt with in
a general manner and no specifically.

The external context

Two pieces of evidence related to context should be looked for. First, whether
entrepreneurial team is aware of the context and how it helps or hinders their specific proposal.
Second and more importantly, review of sensitivity to the fact that the context will inevitably
change. If so, how might the changes affect the business? And, what can management do in
the event the context worsens? Finally, are there ways in which management can affect context
in a positive way? For example, can management have an impact on regulation or on setting
industry standards?

In the MedComm business, a vast analysis has been done on context; PESTEL,
opportunities and threats and relevant implications which satisfy the first part. However, the
second part (the review of sensitivity) has not been addressed comprehensively (there is a
table in appendix which is very brief).

The deal
Considering Peter’s comments, proposed deal - £ 250,000 loan- is not a viable one. In
addition, the whole business plan seems to be designed not to give clear information which
could be intentionally. And asking for loan shows the current partners do not want new dilution
in their shares and perhaps losing their full autonomy. These issues can be analyzed through
investor-Entrepreneur Conflict box (Table 6)

Timing
Entrepreneur wants it in advance, Investor wants JIT
Magnitude
‘E’ wants lots, ‘I’ wants to give the bare minimum
Independence

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 ‘E’ wants autonomy, ‘I’ wants to look after their money
Results
‘E’ may be happy with moderation, ‘I’ wants home run
Strategic Direction
‘E’ wants flexibility, ‘I’ wants to follow agreed path.
Table 6 Investor-Entrepreneur Conflict

For this part, TERMS can be used as well to reach a Meta Strategy (Dew, 2009). However,
considering lack of information we have to wait for next round of negotiations and more
information. To make the venture more attractive some alterations in the deal are suggested in
the coming sections.

Meta Strategy

Us Them
Time List our TERMS Time

Emotion Learn Their TERMS Emotion

Risks Link together Risks

Money Look for the leverage Money

Situation Last the distance Situation

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 Figure 3 Meta Strategy

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The Fit
The degrees of fits are depicted in the Table 7. A diagram of the basic framework (the
Concept of fit) is provided in Appendix a.

To what degree do the people have the People have good backgrounds in the
right experience, skills and attitudes, business and they do not overlap one
given the nature of the opportunity, the another, but they lack startup experience.
context and the deals struck? Furthermore, more information about people
is needed. So It could be said Partial Fit
To what degree does the opportunity In general business makes sense in the
make sense, given the people involved, context; however it is not so much attractive.
the context and the deals struck? Poor Fit.

To what degree is the context favorable Based on PESTEL and other performed
for the venture, given the people involved, analysis Partial Fit
the nature of the opportunity and the
deals struck?

To what degree do the deals involved in The suggested deal is not appropriate
the venture make sense, given the people considering other components. No Fit.
involved, the nature of the opportunity,
and the context?

Table 7 Fit Analysis

Considering the general poor fit among different components of

the venture MedComm’s current business model is not sustainable.
As the components and the relationship among them are all likely to change over time, it is
not sensible to see them from a static perspective In short, the venture is characterized by a
high degree of dynamic fit (see Appendix b)

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 5. New Entrepreneurial Strategic Options and Suggestions
for New Deals
True entrepreneurs want to capture all of the reward and give all of the risk to others, the matter
which is missed in the business plan and to cover it some options are proposed (items 4, 5, 6).
Considering above and using the frameworks in EPS, portfolio of strategic options with the
potential to result in profitable growth for MedComm in the current economic climate and some
suggestions for new deal structures are proposed as the following:

Note: To propose portfolio SCAMPER -which is a way of prompting ideas- has been used:

 S Substitute
 C Combine
 A Adapt
 M Magnify, Modify or Add
 P Put to other uses
 E Eliminate or Reduce
 R Reverse or Rearrange
Table 8 SCAMPER
1- Considering many unclear parts –refer to people, customers, competition- current deal
(loan) is not a prudent option and any approach would rather be via equity investment.
2- As key people do not have any startup experience, having Rob as a partner –bearing in
mind his valuable experience and knowledge in entrepreneurship- would be a
tremendous asset to the company, and in bad situations he would not panic and roll up
his sleeves and help company solves its problems. Furthermore, if he works with the
company, he will not work with the competitors. In fact, the name of the game is not to
minimize dilution at each stage of a company’s existence but rather to maximize the
value of each partner’s share at the end of the process.

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 3- In entrepreneurial finance, the usual expression gets turned around: “money is time.”
Since there are many vague areas in this business, Investment should be as staged
one, via this money buys time for the venture to find the right combination of people,
strategy, and tactics to succeed. Each chunk of money buys an additional chunk of
time. (Sahlman, 1996)

Drug Discovery R&D

Width=Rivals+Subs+NE
Drug Development
LessWidth=More profits

Production

Distribution

Marketing & Sales

Figure 4 Bottlenecks in value chain (Dew, 2009)

Note: The widths are assume and are related to supporting activities as motioned in Figure
1.

4- Product development (Figure 5) and Combine: Considering value chain Figure 1 and
bottlenecks in Figure 4, the products can be extended to other parts for example
Enterprise resource planning, Supply chain management, knowledge management, etc.
via this firm could be a full service company.
5- Raising money from customers via prepaid orders: we could ask the company find
customers –for example via Mudskipper- who are willing to pay in advance some

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 amount. Even we could ask the customers –especially the big ones- to become equity
partners in this way even they could help the firm via their network. To prevent conflict
of interest among customers –because there are good reasons that other customer do
not want to work with a company with a competitor as a partner- other firms could be
established with partnership of other big customers and knowledge and experience
could be shared among this group of companies.
6- Even potential competitors are on the list of possible investors; even by investing they
forgo the option of entering the business directly. Raising money from these non-
traditional sources might seem to create conflicts of interest. As Howard Stevenson
says, however, “without conflict, there is no interest.”
7- Adding new companies with the different subjects especially through partnership with
customers or even competitors to diversify (Figure 5). For example, we can ask high
tech customers –for example Nanotech- to be equity partners in this venture or new
ones as a group and in this way we can diversify in other subjects as mentioned in item4-
with guaranteed sales.
8- Using government grants: the company could get involved in promotion of
governmental healthcare plans or state-owned healthcare organizations and enjoy the
benefits of this kind of grants.
9- Exit options: When professionals invest, they particularly like companies with a wide
range of exit options. In this business plan there is no exit option. So the following
recommendations are suggested:
a. Preparing a plan for IPO.
b. Finding suitable companies as potential buyers of shares or company as a whole
and preparing them for acquisition of company on the specific date.
10- To focus attention on the dynamic aspects of the process (Refer to Appendix b), a
scenario analysis answering the following three related questions in a comprehensive
manner should be provided:
a. What can go wrong?
b. • What can go right?

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 c. • What decisions can management make today and in the future to ensure that
what can go right" does go right, and "what can go wrong" is avoided, or failing
that, is prevented from critically damaging the enterprise? Phrased another way,
what decisions can be made to tilt the reward to risk ratio in favor of the venture?

Ansoff ‘s Growth Matrix

Markets
Current New

Market Market
Current
penetration development

Products

Product
New Diversification
development

Figure 5 Ansoff’s Growth Matrix

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 6. Appendices

Appendix a:

Figure 6 The Concept of Fit (Sahlman, 1996)

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Appendix b

Figure 7 Dynamic Fit Management (Sahlman, 1996)

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 7. References
Barney, J. (1991). Firm Resources and Sustained Competitive Advantage . Journal of
Mnagement , 99-120.

Dew, R. (2009). Module's Handouts. The Netherlands: Coriolis Pty Ltd.

Frost Sullivan. (2011). Retrieved 2011, from http://www.frost.com/prod/servlet/market-

insight-top.pag?docid=68419421

Sahlman, W. (1996). Some Thoughts on Business Plan. Boston : Harvard Business School.

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