Business Plan For Ex-Steam Boat Willie Entreprises - Assignment Example

Supervisor Business Plan For Ex-Steam Boat Willie Entreprises March, 2009 Table of Contents 0.00Executive Summary 1.0Introduction 1.1 Ex-steam boat Willie enterprises is aimed at specialising in the design, marketing and distribution of steam boats and accessories. The business which expected to begin its operations in London by the 1st of January 2010, is expected to expand its operations to the entire country in the subsequent five years. Expected to be equipped with management information system and other technological tool, Ex-steam boat Willie Entreprise is expected to be a unique business of it kind with its own proprietary right, brand within the boat design production and marketing industry, trademark and suppliers etc. Ex-steam boat is not expected to distribute cash, pay dividend to shareholders or share repurchases over the next five years as it expects to expand its activities and invest in all positive net present value (NPV) projects. One of the priorities will be, creating an online database for customer's interaction, queries, purchases and free-draw. Consequently, all profits will be re-invested into its expansion program (Opening of new stores, extending its product line) as well as any profitable venture that the company may come across supported by the shareholders. Based on feasibility studies, the partners, of Ex-steam has targeted the outskirt of London, (Luton) to be used as its administrative office, warehousing, design and production unit for online purchases. This area is unique because of its accessibility to other cities, and European countries. The partners intend to use the London Olympic to promote some of their brand, and to benefit from ancillary auxiliary activities and industry. Rent for the building stands at $10000 per annum for the first two years. Initial funding for the project is expected to be $1000,000. Of this amount, the principal shareholder has contributed 40%, that is, $400,000 while a bank loan of $600,000 has been secured to cover the remaining 60% of the funding requirements. One of the proprietors placed his three apartments flat as collateral for the loan. Sales for the first year are expected to amount to about $2000,000 and are expected to grow at an annual rate of 30%. Gross profit is expected to be $475,102 against which expenses for rents, depreciation of factory equipment, wages and salaries, overhead expenses and miscellaneous expenses will be charged. Expenses during the second, third, fourth and fifth year are expected to witness increases as the company plans to increase expenditure on advertising, research and development, staff, and office and factory equipment. More branches will be created within this period, to facilitate dispatch of goods and services. About 80% of sales will be generated online. To minimize theft, customer loyalty card will be provided, to facilitate online purchases. Constant growth is expected to come from an aggressive marketing strategy that will be adopted by the company. Ex-steam entreprises also expects to develop its strength base on its product quality, network of suppliers. The company will also do everything necessary to protect the environment it which it operates such as improving its waste management activities as well becoming ISO1400 certified. Objectives To open and operate a successful Ex-steam boat's online design production and marketing / distribution stores in the UK area market, employing three to fifteen employees in the first year. To make at least 1000 sales in the customer loyalty register and card within UK and European Union in the first year of operation. Achieve first year sales of $30000,000. Maintain an average gross margin of 25 percent. To produce a net profit of at least $4000,000 by the end of the third year of operation. 1.1Market Segmentation for Ex-steam boat Company The purpose of this section is to discuss the various ways through which the new markets for the new business Ex-steam boat Willie Entreprises could be segmented. The section first of all discusses the strategies of business to business marketing and there after the three methods to segment the market. For the greatest communication impact, Kotler (2003) argued that the entire marketing mix (promotion, product, price, and place) must be carefully coordinated for greatest success. 1.1.1Demographic Segment Indicator Sommers & Barnes (2004) stated that, some variables needed for demographic segmentation include, age, income, lifestyle, education, occupation, family size and family lifestyle etc. Sommers & Barnes (2004) further show how, family lifecycle often is expressed as bachelor, married with no children (DINKS: Double Income, No Kids), full-nest, empty-nest, or solitary survivor. At Wal-Mart, this will mean classifying it products into different category, for example, furniture's for DINKS, bachelors etc. Management can also, fit in this into several categories. 1.1.2Psychographic Segment Indicator Sommers & Barnes (2004) stipulated that, behavioral segmentation is focused on actual customer behavior toward products. Behavioralistic variables include; usage rate, benefits sought, brand loyalty, user status, readiness to buy. This method of market segmentation has been largely applauded because of its advantage of using variables that are closely related to the product itself. In addition, it is a fairly direct starting point for market segmentation. Thus, within each of the existing divisions customers and would be customers could be classified within these characteristics. 1.1.3 Geographic Segment-What is this Indicators According to Peter (2007), a market segment consists of individuals, groups or organizations with one or more characteristics that cause them to have relatively similar product needs (Sommers & Barnes 2004). Here the management of Ex-steam boat Willie entreprise has chosen the countries where it plans to market it products. It will have to segment the European market, by countries, such as the Danish segment, being catered for in Copenhagen, the French market segment being catered for in Paris, while the United Kingdom segment having the head office catering for the English population. Management will also need information such as population size. Because of regional differences in consumer's preferences, this kind of segmentation will provide the basis for geographic specialization (Sommers & Barnes 2004). The market could also be segmented into north, south, west and East Europe, with others taking care of the rest of the world. 1.1.4 How we intend to SEGMENT the Market of Ex-team boat In the current phase of fierce competition, managers are constantly seeking for various ways to classify their customers and get their products easily to them. Today, cultures have moved together due to increase travel, better communication and more efficient transportation opportunities. Ex-steam boat management should try and anticipate these changes through the offering standardized products to a global audience. From, information collected about the company, I will present the various ways through which each of the two divisions could be segmented. These attributes call for the division to be segmented using behavioralistic and Psychographic Segmentation. Segmenting customers into behavioralistic market will require classifying customers in terms of the benefit sought, brand loyalty and lifestyle. 2.0Industry Analysis The Five Forces Framework-The Market of Ex-steam boat Competition and the present market situation of the steam boat business can be diagnosed in relation to the five forces. Having four divisions, (production, design, warehousing and marketing each of this division is affected differently by the market forces. Porters Five Forces Approach Application to the Ex-steam boat Business Relationship with suppliers The suppliers constitute independent , wood farmers, designers, customers and employees Bargaining power of buyers High switching cost due to few options available to buyers. There other numerous boat manufacturer such as Yamaha, Volvo, Toyota, is a global market player with cost focus Threats of new entrants Low threats of new entrants because of the human, time, material and financial resources necessary to set up a promotional and contract furniture company. However, an entry of a new entrant from other continent like Asia remains a big threat. With individual designers and niche players increasing everyday. China is an emerging world power. Yatch prices are now collapsing Threats of substitutes products or services The industry is characterized with many niche players. Increasing number of brand imitating. it appears similar to the original brand, consumers will then transfer attributes of the original brand to the brand imitator, thereby affecting evaluations and purchase decisions Rivalry amongst established firms Fierce competition with flat cost. No major player able to dominate the market. How ever with continuous innovation and design of new products, Yamaha and Volvo has taken over the lead in the furniture divisions. Figure:1 Porter (1985:4) contends that the Five Forces define the rules of competition in any industry and at the same time marks the bases for understanding a company's success. Porter (1985) went further and argues that, competitive strategy must grow out of a sophisticated understanding of the rules of competition that determine an industry's attractiveness. The researcher further claims that, "The ultimate aim of competitive strategy is to cope with and, ideally, to change those rules in the firm's behaviour." (1985: 4) and through their own strategy a firm can take hold of these five forces. 3.0SWOT Analysis of the Business Strengths include such things as technical competence of proprietors, enough financial resources, good network of contacts for potential clients, suppliers and target market. Weaknesses include lack of management skills, no business track record, and no current plan for management succession in the short-term for our proposed partners. Opportunities include rapidly growing market, poor reputation of existing businesses, large number of old yet valuable boats, availability of casual staff and tradespersons, availability of display and manufacturing premises within the area, high disposable income within the target market, potential for future expansion of the business. Threats include poor reputation of the industry, potential for economic downturn, natural disasters and catastrophes, wars, existence of competitors rising cost of raw materials, rising cost of real wages, government regulation. The war on terror and the global financial crisis provide another area of concern. As far as Ex-steam boat Willies Enterprise is concerned, the main strengths of the company include the its strategic location, a pool of designers and suppliers with sound technical basis in solving production problems as they arise and in proposing innovative strategies for growth. The managerial skills and sound business knowledge of the managing partners, with knowledge of financial, managerial and marketing skills which makes it possible for it to overcome management problems and thus increases its ability to succeed in the industry. Some of the weaknesses of the company are that it is new in the industry with little knowledge concerning the Ex-steam boat market. The business model is relatively new and unique in its kind However; Ex-steam boat Willies Enterprise has budgeted to carry out an extensive research to better understand the boat design and manufacturing market. The company has to source its own labour force, but it is putting everything in place to train and retain competent labour force. As far as its opportunities are concerned, the target market segment is a growing and has ever increasing opportunities. The company plans to benefit from its future reputation of cost leadership and product differentiation profitable niche by supplying its customers with high quality steam boat. The location is a great opportunity, The population of London, network facility and infrastructure, pool of financial companies, etc.The main threats to the company are government regulations, and for example, the government may levy high taxes on the company which may negatively affect earnings. Environmental regulations may also significantly affect the company and its entire operations. In addition, some of the suppliers of fashion have sole distributive right with some customers, which might hampered Ex-steam boat Willies Enterprises competitive position. Marketing Analysis and Plan The market for EX-steam boat industry is continuously growing, with suppliers coming up with new models everyday. Presently the demand in this sector is less than the supply and the situation is expected to continue in the near future. Customers continue to increase their demand for new models while supply often takes time to adjust. This represents a profitable niche for any serious company. The company intends to capitalise on this opportunity by providing customers with high quality Yatch and boat, with some of its leading brand supplemented by value-adding activities such as attractive baby boat toys. It will strive at having partners not customers. The value of the steam boat industry is currently estimated at billions of dollars. It is estimated that the average price for a steam boat cost about $110000. A value adding and marketing strategy is proposed for increasing yields to the company for the benefits of the entire European Community. It will take approximately five years for projected sales to reach about $200million per annum. The company expects to target a high yielding niche market (smaller steam power boat) not leaving out it location at London. It will also identify suppliers of leading steam ship to form a partnership with the indigenous industry, be environmentally-friendly, practice sustainable production. These factors are considered market advantages to the company. Building long-term relationship and remaining competitive, requires being active in implementing and maintaining new technologies. Ex-steam boat business concepts involve an integration of its supplier and customer base through an information network using technology. This has the effect of establishing along term contract with the customers which is a big advantage. Key success factors within the market will be Unique Willies Entreprise brand of innovative quality steam boat. Individualized customer services - tailor made custom design providing customers with what they want, when and how they want it. One of the market leading full service steam boat company in the UK Fully integrated programs to help customers increase sales through menu development, creative promotions, advertising, and custom marketing material Exclusive distribution rights to ground-breaking suppliers in our market. The combined experience of the principal owners brings upper office management skills, high levels of customer service, and years in distribution and sales management. Advertisement Expenditure Our advertising expenditure will be 5% of our annual budget. Ex-steam boat adopting an integrated marketing, E-marketing in integrated marketing will strive to offer you (1) something new and surprising, (2) something useful or essential, and (3) something that touches your emotions. Failure to do this, all the company's effort will end up wasted. E-communication changes everything. Management Team In our proposed team, we will make use of diversity with majority of its personnel source from its local environment. Our Marketing slogan in London will be " Ex-steam boat enterprise plc the company for all" Though, the timing might not be the best for starting this venture due to the current phase of the global crisis, our resources coupled with our expertise in risk management gives us an Added advantage. Johnson et al (2005) argue that, according to the resource-based view, in order to develop a competitive advantage the firm must have resources and capabilities that are superior to those of its competitors. Ex-steam boat Willies enterprise has access to a host of experts drawn from different professions. This is a network of preferred suppliers that will keep content and design, relevant and impartial. It will be a superior offering and one of the major business that will differentiate the proposition. This will be a difficult element to replicate by competitors. Resources are specific assets and will allow a differentiation advantage and that few competitors can easily acquire. The following are some examples of such resources: 1. Patents and trademarks 2. Proprietary know-how 3. Networked Team 4. Suppliers and resources from the UK 5. Reputation of the firm and alliances Conclusion Strategic advantages are not always achieved by competition alone. Collaboration between potential buyers and sellers and some other dealers turn to be very beneficial and advantageous when negotiation and contracting costs reduces (JSW: 2005:261). I believe by developing and capitalizing on its service minded employees and reliable service, the company stands a better chance to sail through the five forces framework. The company will increasingly use partners worldwide to benefit from generic focus and cost leadership strategy. By working with partners in different locations, can gain lasting competitive advantage over its competitors. Because of synergistic gains resulting from such partnership, the company as a whole is greater than the sum of its parts. This study examined market analysis and marketing segmentation and put in place a marketing plan for Ex-steam Willies enterprise. For the greatest communication impact, Kotler (2002) argued that the entire marketing mix (promotion, product, price, and place) must be carefully coordinated for greatest success. This is so because, the product designs, the price, the shape and colour of its package and others within the chain communicate something to buyers. Thus, for consistency and uniformity all these aspects of marketing should be integrated. After this process, some members of the target market might be convinced about the product or services being offered but will want to wait and not quite get around in making an immediate purchase. Some will want to wait and get more information about the product or for their situation to improve. The challenge now at the level of the firm is to be able to provoke this group of consumers into making final steps. References Hamel, G. and Prahalad, C. K. (1994). Competing for the Future. Boston, MA: Harvard Business School Press. Johnson, G., Scholes, K., & Whittington (2005). Exploring Corporate Strategy, Prentice-Hall, Europe Kanter, R. M. 1995. "Mastering Change." Pp. 71-83 in Learning Organizations: Developing Cultures for Tomorrow's Workplace, edited by Chawla and Renesch.Portland, OR: Productivity Press Kitchen, P. (1993) 'Marketing communications renaissance', International Journal of Advertising, 12: 367-86. Peter, J. Paul & Donnelly, James H. Jr. (2007). Marketing Management - Knowledge & Skills, 8th edition, McGraw Hill. Porter, M.E. (1985). Competitive advantage: Creating and sustaining superior performance. New York, NY: Free Press. Prahalad, C. K. & Hamel, G. (1990). "The Core Competence of the Corporation." HarvardBusiness Review 67(3): 79-91. Sommers & Barnes (2004) "Marketing, 10th Edition"chpt 4, page 98/99 Wonglimpiyarat, J. (2004). Amex's strategies for launching the smart card innovation. Technovation 24 (2004) 773-777 Wu, S. & Chien, F. C. (2006). Building Core competences through operational Excellence. International Journal of Production Economics special issue on ''Building Core-competence through Operational Excellence'. Read More