Q1. Rodrigues made the same mistake that many people make when they decide whether or not to produce a business plan: he assumed that business plans center around arranging financing. His entire point in not having a business plan for the toy business was that he did not need outside funding, so there was no need for a plan. He did not recognize that a well-written business plan is much more than just a tool for obtaining financing. Instead, a good business plan forces a company to take a detailed look at its operations, its market, financing and many other internal and external factors in order to form both short term and long-term goals and objectives. With a good business plan, all members of an organization understand what the company is trying to achieve and can work toward a common goal. When the goals and objectives are not written down, it becomes much more difficult to communicate the vision of the company effectively to all parties.
The publishing business might be ongoing and even thriving today if Rodrigues had a business plan for his operation. The problem that Rodrigues had was that advertising revenue dropped by one-quarter as generic prescriptions became increasingly populart. Driven by health management organizations and cost-conscious insurance companies, doctors have shifted their prescribing strategies from discrete (branded) pharmaceuticals to the generic drugs. As a result of this, the advertising from major drug companies also dropped.
A good business plan identifies external opportunities and threats as they exist at a particular point in time, and it is likely that a business plan would have helped Rodrigues identify the trend toward increased generic drugs. This would have been viewed as a threat to his advertising revenue. At the same time, the generic companies themselves might well have been targeted as advertisers, or Rodrigues might have shifted his selling strategy to include the name dr...