The Ultimate Middle East Business Resource - Case Study Example

Executive Summary Our purpose to enter the Iraqi market is to fulfill the electrical power requirements by the country and to help boost its inthe world's electric industry. We are a new company started in order to meet customer requirements and expand our services countrywide. Set up in the capital city of Iraq in Baghdad, we provide expedient and convenient electric supplies, and focus in data, communication, installation and maintenance of electric supply. Our business strategy is to provide an eco-friendly system by generating power at the minimum rates possible without affecting the quality or the amount of resources used. We will provide electricity to all the localities including industries, hospitals, parks, houses etc. Our distribution would be as follows Financial summary Our start up expenses would be as follows (all in million). Total start up expenses $103 Total requirements $620 Start up expenses $103 Startup funds $517 Total funding required $620 Total Assets $57 Total liabilities $22 Capital $10 Total capital & liabilities $32 Total funding $620 Mission Our mission is to provide customers highest quality electrical services; our focus is on personalized services by offering convenient and rapid services. We have strong vendor relationship with most service conscious vendors, capable of shipping major parts rapidly (overnight too) minimizing the system downtime for the premiere electric customers. Market Analysis Iraq is an oil producing country situated in the Middle East, with the population of 28,945,657 (July 2009.est).the population growth rate is 2.507%. Its economy is mainly dominated by the oil sector, which provides 90% of foreign exchange earnings. Total government revenues have benefited from high oil prices in recent years; however, revenues have declined significantly since the oil price drop in fall 2008. Iraq is making some progress in building the institutions needed to implement economic policy. In March 2009 Iraq concluded a Stand-By Arrangement (SBA) with the IMF that details economic reforms. Its GDP per capita is $4000. Its composition by sector is Agriculture Industry Services 5% 68% 27% Present electric consumption is 39.88 billion kWh, electric production is 36.92 kWh. Electricity imports are 2.95 billion kWh. The exchange rates to US$ amount to 1,176 Iraqi Dinar NID per US$. Nowadays the electric shortage in Iraq has become a problem and there are frequent blackouts. Due to the war there is much loss done and many of the power generation cables have been cut down posing a problem for the people. It needs new industries to be set up in various areas to solve the problem. At present electricity is provided only 8 hours a day at free of charge. The energy needs of Kurdish region have been ignored; it is working independently to electrical energy output through foreign assistance and private investment projects. The minister expects that by 2009 the region will produce enough energy to keep the lights on 24 hours a day. Vision Statement In 5 years it will become the major company generating electrical power to the country and establish its name in the whole of Middle East Mission Statement Earn people trust, be honest and lighten up Iraq. Engineering plan We will deal with generation, transmission and distribution of electric power as well as electrical devices connected to the system including generator, motors and transformers. Different forms of energies are converted to electrical energy. The transmission subsystem transmits the electricity to the load centers. The distribution subsystem continues to transmit the power to the customers. Generation of electrical power is a process whereby energy is transformed into an electrical form. Several different transformation processes, among which are chemical, photo-voltaic, and electromechanical will be taking place. AC syncronized machines would be used for generation of electricity. Then it will be transmitted to transmition subsystems. The transmission system will be subdivided into the bulk transmission system and the sub-transmission system. Transmition circuits would be both overhead and underground. The substation equipment would contain the transformers, relays, and circuit breakers. A change in the status of any one component can significantly affect the operation of the entire system. There are three possible causes for power flow limitations to a transmission line. These causes are thermal overload, voltage instability, and rotor angle instability. Thermal overload is caused by excessive current flow in a circuit causing overheating. Voltage instabiliy is said to occur when the power required to maintain voltages at or above acceptable levels exceeds the available power. Rotor angle instability is a dynamic problem that may occur following faults, such as short circuit, in the transmission system. It may also occur tens of seconds after a fault due to poorly damped or undamped oscillatory response of the rotor motion. Finally the distribution system will transmit the power to the customers. Procurement Plan Description and specification Quantity units Month of quotation Month of delivery Water turbines, Generators and their accessories Stator coil for 9,000 kVA, vertical shaft, three phase synchronous Generator 1 Set Jul-2009 Apr-2010 Water turbines, Generators and their accessories Electrical Governor 1 Set Jun-2010 Jan-2011 Water turbines, Generators and their accessories Underwater Turbine generator unit 1 Set May-2009 Oct-2010 Water turbines, Generators and their accessories Control panels for Hydro turbine generator 1 Set Jul-2009 Oct-2010 Water turbines, Generators and their accessories Control panels for Hydro turbine generator 1 Set Apr-2010 Oct-2010 Water turbines, Generators and their accessories Seal water strainer for main shaft 1 Set Jun-2010 Jan-2011 Water turbines, Generators and their accessories Main feed water pump 1 Set May-2009 Oct-2010 Water turbines, Generators and their accessories Runner 1 Set Apr-2010 Oct-2010 Water turbines, Generators and their accessories Disassembling and repairing materials for generator and other materials 1 Set Jul-2009 Apr-2010 Circuit breakers DC distribution panel 1 Set Apr-2010 Jan-2011 Circuit breakers DC distribution panel, AC distribution panel ( for normal supply ), AC distribution panel ( for standby 1 Set Jun-2010 Jan-2011 Switch panels Generator protection panel 1 panel Oyodo River No. 2 Hydro Power Station May-2009 Feb-2010 Switch panels AVR and Governor control panels 1 Set May-2009 Oct-2010 Switch panels Generator protection panel 1 panel Oyodo River No. 2 Hydro Power Station May-2009 Feb-2010 Switch panels AVR and Governor control panels 1 Set Apr-2010 Oct-2010 Switch panels Generator protection panel 1 panel Oyodo River No. 2 Hydro Power Station May-2009 Feb-2010 Switch panels AVR and Governor control panels 1 Set Jul-2009 Oct-2010 Switch panels Generator protection panel 1 panel Oyodo River No. 2 Hydro Power Station May-2009 Feb-2010 Switch panels AVR and Governor control panels 1 Set Jun-2010 Jan-2011 Switch panels AVR and Governor control panels with phase control 1 Set May-2009 Apr-2010 Switch panels Automatic voltage regulator panel (Vertical, self-standing type) 1 Set Jul-2009 Jan-2011 Substation servers Server frame 1 Set May-2009 Apr-2010 Excitation system Excitation system for 9,000 kVA, vertical shaft, three phase synchronous Generator (360 rpm) 1 Set Jun-2010 Jan-2011 Construction and Infrastructure for the power plant We have developed a power transmission network that connects the power plant to multiple substations near the populated areas. We will use coal and hydroelectric as energy sources for power transmission. Electricity will be transmitted at high voltage to reduce energy lost in transmission. Multiple redundant lines are provided between points so that power can be routed from any power plant to any load center, through a variety of routes, based on the economics of the transmission path and the cost of power.Aluminium alloys are to be used in conductor materials and aluminium will be used in overhead cables. Underground cables will be used in densely populated areas, areas where place is unavailable, river or natural obstacles, and similar. Underground cables will need a narrower surrounding strip of about 1- 10 meters to install, whereas an overhead line requires a surrounding strip of about 20- 200 meters wide to be kept permanently clear for safety, maintenance and repair. Considering the introduction of the new company the electric power generation cells will need the necessary power infrastructure. In response to this demand we have we have provided increased technical assistance, missions, workshops, and with new and updated technical publications.we have developed multiple mission, arranged meetings and made documents.we have done planning and arranged for management tools and specific equipment including simulators for training that aim to assist in the building of the country's electric power infrastructure. Marketing Plan SWOT Analysis Strengths would be personalized, convenient and rapid services to customers and fastest delivery of spare parts required in power generation. Weaknesses would be a new company to enter the strong market and limited number of work force at beginning years. Opportunities are it is situated in a country which is itself oil producing nation and the damage due to the war has affected many old power generation industries so place for new ones in market. Threats are due to the political conditions in the country people have lost hopes and have been surrounded by hatred with nations especially USA, which is the main nation to provide funds to Iraq. Competitive Analysis The commission of electricity CoE is responsible for the supervision and management of all electricity related activities in Iraq. Currently CoE overseas the operation of three regional generation and transmission companies, four regional distribution companies and four companies responsible for construction and manufacturing of electrical equipment. Prior to the first Gulf War, Iraq had 120 power generating plants with a total installed capacity of approximately 9,500 megawatts, with a peak demand of about 5,100 megawatts. Most of these plants were damaged or completely destroyed during the conflict reducing the total generated capacity to 2,325 megawatts. While some of the damage was repaired the Iraq invasion, in 2003, deteriorated progress, further reducing the generating capacity to 3,300 megawatts. Now is the time to enter this market as due to war and heavy losses country needs new investment in power sector. The competitors include General Company of Electricity distribution Middle/ North/ South, General Company of Electricity production Middle/ South, General Company of Electricity Projects, General Company of Electricity for manufactory of electricity equipments General Company of Electricity distribution Baghdad, General Company of Electricity production North, General Company for rehabilitation of electricity station, Rafidian general company for IT Market Potential Company focuses to meet demands of the customers. Our estimation of revenues generated city wise for the first five years is as follows Market Analysis electricity generation Cities Population year 1 year 2 year 3 year 4 year 5 Ad-Diwaniyah 300000 25 20 28 38 60 Al-Amarah 325000 25 25 38 65 80 Al-Basrah 825000 25 59 62 75 95 Al-Hillah 350000 25 35 65 70 95 Al-Kut 300000 25 30 45 65 70 Al-Mawsil 1100000 25 60 65 70 100 An-Najaf 500000 25 55 75 85 90 An-Nasiriyah 400000 25 50 65 86 99 Ar-Ramadi 300000 25 45 76 87 100 As-Samawah 125000 25 30 45 65 80 As- Sulaimaniy 825000 25 55 76 80 85 Baghdad 5750000 25 65 68 95 120 Baqubah 160000 25 36 80 85 100 Irbil 1100000 25 60 65 70 100 Karbala 475000 25 45 55 75 95 Kirkuk 600000 25 55 60 68 95 Total 13435000 400 725 968 1179 1464 Investment Proposal Company has planned to have a broad market exposure occupying a large segment of Iraq cities. It will start working in July 2009, after its inauguration on 30th June. It has an initial capital of $10 million. Our plan is to generate maximum amount of energy possible to cities in Iraq, to both commercial and non commercial units. Although a new company we have a number of competitors which are old and experienced in the business but we come with the new technology, skilled workforce and latest equipments. We have strong infrastructure and well equipped power generation cells which have capacities to produce million tons of electricity in less time. The net margins in the business are in excess of 20% in Iraq. The break even analysis Further the pro forma profit and loss show that the net profit/ sales for the 1st three years range from -23% to 0.51% to 10.09%. The pro forma balance sheet for 1st year is as follows (all units in millions); Total Assets $48 Total liabilities $35 Capital $10 Total liabilities and capital $45 Net Margin 20% Summary Our company would be successful; we have documented a realistic and feasible business plan. All of the critical factors such as industry trends, marketing analysis, competitive analysis, management expertise, and financial analysis support this conclusion. References AME info; the ultimate Middle East business resource, Economic review, Power generation in Iraq. Updated on 9th Feb 2004 http://www.ameinfo.com/34537.html Central intelligence Agency, The World Fact book, Iraq, updated on 14th May 2009, https://www.cia.gov/library/publications/the-world-factbook/geos/iz.html Unite for children UNICEF, Iraq. http://www.unicef.org/infobycountry/iraq_statistics.html Zawya BD, Ministry of Electricity Iraq, Electric utilities, reviewed on Wednesday 3rd June, 2009. http://www.zawya.com/cm/profile.cfm/cid1002172 Read More