International Business Plan for Medican - Essay Example

International Business Plan for Medican (Canada) Table of Content Table of Content 2 Executive Summary 3 Corporate Profile and Nature of the Business 4 Company Profile 4 Product description 5 Management and Human Resources 6 HR of Medican Canada 6 Structure of foreign offices 8 Target Market and Environmental Scan 9 Country profile 9 Taxation 11 Customers 11 Market Entry and Marketing Strategy 13 General strategy and objectives 13 Place 14 Promotion 14 Implementation of campaign 17 People 17 After-sales service 17 Operations overview 18 Financial and Risk Management Strategy 19 Conclusion and Recommendation 20 Bibliography 22 Appendixes 23 Executive Summary MediCan (Canadian Medical Equipment) is a fictitious Canadian company which manufactures high-tech medical equipment for hospitals, laboratories and individual patients. It operates on the market for 90 years as a medical equipment manufacture and became a leader in this industry. From the 1990s, MediCan has started its global expansion and successfully penetrates into 50 countries selling its products. The rage of products includes laboratory and dental equipment, etc. MediCan is originated manufacture of the equipment and has all the rights of ownership. MediCan decides to penetrate into Asia market, and China was selected as the most promising country. The product for promotion is inexpensive and portable glucose test device for people with diabetics. This product combines the properties of high effective glucose test device with low cost production proposed by MediCan. In order to penetrate into Chinese market environmental scanning was made. The results shows that China proposes great opportunities for the company and can be valued as potential market for this type of equipment. In large, multidivisional corporations like MediCan company strategic planning can become complex and time-consuming. It often takes slightly more than 12 months for a large company like this to become profitable. The strategy includes the determination of the basic long-term goals concerns the conceptualization of coherent and attainable strategic objectives. Marketing plan includes the main aspect of market penetration such as: location, target audience, HR, product modification, advertising and promotion activities. The research suggests that the real value of strategic planning may be more in the future orientation of the planning process itself than in any resulting written strategic plan. The research also includes analysis of the financial data and recommendations for further market penetration of MediCan. Corporate Profile and Nature of the Business MediCan (fictitious company) is a manufacture and distributor of high-tech medical equipment. Medical equipment industry is one of the profitable industries today and, as predicted, in future. An industry with this kind of rapid change presents several challenges for medical equipment and, namely production costs, property owners, and monopolies. Customers and technology are the primary driving factors of this industry. Company profile The company was founded in 1913 in Calgary as a private owned business. In 1990, the company owners identified the need for simple, inexpensive and portable blood test equipment which could be marketed to the medical profession. A device was developed cheaply. Sales did not come easily at first, but the breakthrough came in March 1993 when the first electronic blood test was delivered to a hospital. With orders flowing in, the present company, MediCan concentrates on manufacturing and marketing the new electronic medical devices. More routine production had been relocated to a new factory near Calgary in response to local planning restrictions, and for many years it benefited from low wage rates and tax concessions. No tax was payable for the first five years, after which the rate was only 10 per cent. The Calgary's factory initially cost 0.3m. Today, MadiCan is a proprietorship company. This form helps to think of as arrangements where organisations remain independent. Though still small in terms of its 200 or so employees, MediCan had also become internationally based. The company sells high-tech medical equipment for hospitals and individual patients. The basic equipment is intended for laboratories (chemical analyzers, calibrators, etc), anesthesiology and dental equipment, monitors etc. During the late 1990s the company had expanded considerably and its blood test equipment is being used in 50 countries around the world in hospitals, general practices, company health-care services and specialist testing laboratories. It has five factories located around the country. A program to develop new technology was undertaken at 1990s. MediCan had own research department. In some years a new part-electronic blood test was developed. MediCan is a manufacture of all the equipment it sells through the distributors and agents around the world. In 1999 the group was reorganized on a divisional basis. There are six divisions as outlined below: Services was responsible for the design and development of products; the product division is responsible for all the group's manufacturing activities, for the purchase of products obtained from outside the group and for the distribution of products to the buyers. The three subsidiary divisions, the United Kingdom, North America and continental Europe, are responsible for all sales in their regions. The local retail management of the Pacific Basin area reported to the group managing director. Group Services is responsible for group finance, accounting, legal and secretarial matters, as well as for group informatics. Each division has a managing director who is also on the board of the joint venture. The other members of the divisional boards are the senior management of each division together with some main board directors. The retail and product divisions have, within the constraints of the group's marketing and design policy, the greatest possible trading autonomy. The group structure is designed to allow effective communication between the six divisions and provided a responsive and market-sensitive management control system. The product division made extensive use of on-line data-processing systems in such areas as control of work in progress and stock management, as well as computer-aided design and computer-aided manufacturing. Product description The product, company wants to promote, is a device for diabetics which integrates a glucose meter and an insulin pump with a dose calculator into one device. It combines an insulin pump with a glucose monitor and facilitates data interchange between the two. The use of the integrated system is expected to make it more convenient for people to manage their diabetes. The device is small. It weights about 200 gr. (see Appendix 1) The sensor of the device penetrates the skin easily and painlessly so users may insert or reinsert it themselves when needed and can be operational at least for several days at a time. To test for glucose with a typical glucose meter, place a small sample of blood on a disposable "test strip" and place the strip in the meter. The test strips are coated with chemicals that combine with glucose in blood, and than measures the level of glucose. This device can be connected to PC in order to store the results of the tests. The benefits of the device is that it does not require a battery, With no wires across the skin, there is no deterioration of the skin surface or other areas inside the skin and no danger of track infection. The device also is advantageous because no electrical currents are going through the body (Bellis, 2001). MediCan is originated manufacture of the equipment and has all the rights of ownership. More expensive equipment offered more substantial computational capacity, and both graphical and digital displays and print-outs. Associated instruments were also available and employed similar principles. As it was mentioned above, company operates in 50 countries around the world and proves its brand image. The previous results shows that international activity of the company is successfully organized which brings it high rate of revenue and annual growth. Management and Human Resources Successful International activity is closely connected with Human Resource Management (HRM) and concepts and methods it employs. Present day situation in medical industry is marked by two factor - specification, which is to do with the "design quality" of service, and conformity, which is to do with the 'process' quality which is achieved are of particular importance to customers. For MediCan service concepts are based on understanding the unique environment in which it operates. This includes improvement of communication, and the environment composed of all the individual services used for implementation of the group communication primitives (Boone, Kurtz, 1992). HR of MediCan, Canada The HRM of MediCan is based on "best practice" approach helps to ensure customers satisfaction and improve product quality uses a set of best HRM practices and that adopting them to superior organizational performance. It helps MediCan to achieve its goals through the people who are employed in the sphere and their training. That is why maximizing each employee's potential as an individual and as a team member will be a key to maximizing the profitability of each hotel. To improve operations, an administration introduces employee bonus programs and support continuing education programs for all of its employees. These and other programs will improve and bring advantages in recruiting and retaining employees. MediCan employs resource-based view to gain competitive advantage by developing resources, which add unique value, which can't be adopted by another company. Human capital adds value to the company and it cannot be imitated. The added value that people can contribute to an organization is emphasized by human capital theory. It regards people as assets and stresses that investment by organizations in people will generate worthwhile returns. The usual methods of boosting performance - process rationalization and automation - haven't yielded the dramatic improvements for MediCan need. In particular, heavy investments in information technology have delivered disappointing results - largely because companies tend to use technology to mechanize old ways of doing business. Training benefit MediCan helping to reduce skills shortages. The Company's management group examined the relationship between training provision and the extent of skills shortages. In the modern era of rapidly changing technology with increased emphasis on flexible working attitudes, job seekers are searching for employers who will offer them continued opportunities to develop and update their skills and experiences. This trend is found in MediCan's subsidiaries located in the USA and Europe (Hodgetts, 1986). Except HR mentioned above, MediCan employs international advertising agencies and bankers to support the main activity of MediCan in foreign country. A special role is played by international lawyers as they help to regulate the activity of the company in accordance with legislation changes. The company does not employ translators as the main requirement for all personal of foreign subsidiaries if foreign language knowledge (English or French). Structure of foreign offices The structure of the foreign representatives varied by country. The UK position is strong and is handled direct from head office. In Germany, the company maintains a fairly autonomous marketing subsidiary and its agents successfully maintainsits position of market leadership. This employs eight full-time staff, handling marketing and a small distribution facility which included a warehouse. In the main, however, the company makes use of the independent distribution system, which comprised about a hundred medical dealerships, serviced by about twenty commission agents. In Italy it uses an exclusive arrangement with a distributor which commanded a high percentage of the market. The success of any company is closely connected with its management team, structure of the company and people work with it. The structure of MediCan in Germany is appropriate for the company of this type. It has a general a manager on the top who coordinates the work of the division and reported to the main office. Two groups (customer service and fright forwarders) report only to him. The senior management team is responsible for advertising and promotional activities, customers' support and delivery. Each foreign representative office has a after sale service department as an obligatory requirement of the MediCan policy. Target Market and Environmental Scan The initial assessment of the market conditions involves screening of foreign markets in order to discover the potential areas. This process includes economic growth rates, new markets in developing countries, technical changes which propose new opportunities to sell products, and identification of long-term economic and demographic factors influenced the demand patterns. It should be mentioned that most firms will be reluctant to enter countries with high political risks unless the potential returns are high. Failure to carry out market investigations can lead to costly mistakes as was discovered by many of the firms that entered the Russian and Korean markets in the belief that the fell of communism and the introduction of free market economy had led to favourable political and legal conditions. Country Profile China is located in Eastern Asia between North Korea and Vietnam and borders the East China Sea, Korea Bay, Yellow Sea, and South China Sea. China is a diverse land including deserts, mountains and fertile river basins. Most of lands lie along the two major rivers: the Yangtze and the Huang He. Its terrirory is covered by mostly mountains, high plateaus, deserts in west; plains, and hills in east. The climate is tropical in south and subarctic in north. Chinese culture is a highly complex subject which interacts with business in the way of socialization (the influences which shape behaviour in a particular social setting, will determine individual orientations to work). At its deepest level, however, Chinese culture comprises a set of basic assumptions that operate automatically to enable groups of people to solve the problems of daily life without thinking about them. In this way, culture is that which causes one group of people to act collectively in a way that is different from another group of people. The combination of Chinese language and religion creates a unique culture and traditions which differ greatly from the Canadian traditions and should be taken into account by MediCan management team. Taoism and Buddhism are the main forms of religion in China. The official language, Chinese, has many variations and dialects. Mandarin is considred the official spoken standard of Chinese language. The population of China is about 1315.84 million people with 0,7% of average population growth rate. This is about one-fifth of the world's population. The economic health of China was also assessed to determine macroeconomic conditions. Thus, inflation rates, balance of payments, exchange rate stability, government budgets and the record of growth was considered to evaluate the prospects for economic instability or crisis. For instance, GDP per capita growth rate is the highest in China (8.8%) in contrast to other countries (GDP per capita, 2001). The average rate of population growth is a lower than in India and Indonesia, nevertheless, it is expected to be about 1,476.0 ml in 2025 (2004 World Population Data Sheet, 2005). Demographic factors, taken into account together with measures such as disposable income per head, show that China and India are two potential markets for the proposed product. According to the statistical results, China expects liberalization of market, and that is why the possible economic risks will be minimized. China has a stable political situation and high rates of economic growth. According to the survey, "China was the largest FDI destination in the world in 2003, overtaking the US" (FDI Confidence Index, 2004). Geographically FDI covers Russia, India, South America (Brazil), Middle East and North Africa. Nevertheless, China remains the leader in FDI. For instance, in 2003, FDI inflows in China were over $53.5 billion. The economic prognosis says that 40% of the world's investors "expected a more positive outlook on China's economy" (FDI Confidences Index, 2004). Taxation According to the legislation, the tax rate of incomes for domestic-funded and foreign-funded companies in China is 33%, but the actual average tax burden of foreign-funded enterprises is 11-13%. So, it is evident that the tax rate for foreign enterprises like MediCan is favorable. Customers The market segmentation is similar in every country of the world and falls neatly into three main user groups: hospitals (since there are many departments within hospitals using devices for diabetics), general practitioners and individual patients. General practitioners segment displays much greater variability by country because of different methods of payment for health care. Large practitioners practices are sometimes almost indistinguishable from small hospitals and clinics. The main difference from competitors' products is that device proposed by MediCan is easy to use; it has a smaller size and lower cost while keeping all the basic characteristics of similar products. The basic advantage of this product is absence of seasonality in purchases, which allows the company to calculate revenue growth and the degree of market penetration. In China, MediCan will focus on three distinct customer segments. The first group is hospitals: this segment is growing at 9% a year with 400 potential customers. The second niche involves clinical and medical research laboratories (this segment is also growing at 5% a year). The last group is the patients needed this device at home. This group is growing at 12% a year. The main purchased criterion are high quality of products and the cost of the device (similar products have a high cost and many patients cannot afford them). China's ageing population faces the lowest medical costs in the world and falls real incomes. The new insulin device will benefit Chinese patients as China has a comparatively low level of medical services which prevents many patients from qualitative treatment. MediCan aims to be a cornerstone in the community creating a neighborhood atmosphere where customers feel comfortable and become instant regulars. Strengths of the company include knowledge, relationship selling and history. MediCan gets to know its customers one by one. The weakness of MediCan is that its brand is not well known in China, and the company will need time to obtain a strong market position. Market Entry and Marketing Strategy General strategy and objectives The objectives for the MediCan in China are: to initiate co-operative marketing with medical centers and hospitals in the big cities around the country, to hire sales staff both currently identified and unidentified to implement sales lead follow-up strategy, to increase market share, to expand regionally with both media and sales personnel, to constantly achieve cost benefit through an expanding provider network while not compromising patient care. Porter's five "competitive forces" include: the threat of entry of new competitors (new entrants); the threat of substitutes; the bargaining power of customers; the bargaining power of suppliers; the degree of rivalry between existing competitors, it is possible to evaluate the effectiveness of marketing plan (Porter, 1985). New entrants to an industry can raise the level of competition, thereby reducing its attractiveness. MediCan has competitors, but they will not have a great influence on the company's revenue. The presence of substitute products can lower MediCan attractiveness and profitability because they can limit price level. Place The products will be shipped by air, because this is the most economizing way for the company to deliver the goods. There are no transit points needed. The shipping will be 4 times a month. The products will be packed in Canada including an instruction on the Chinese language. Outside resources and customs brokers will be unnecessary as the company covers all the areas of delivery. Warehousing is required and needs approximately 100 m2. The physical location of the company will be in Peking which allows it to access to all the territories in China and have communication facilities. MediCan will be one of the largest medical equipment companies in China, and its approach of mainly independent distributors would continue to serve it well against other large rivals. Advertising campaign proposed by MediCan will be thoroughly planned and help the company to get its brand recognition in a year. Promotion Direct marketing refers to the marketing operations where the sale is made directly to the purchaser without any conventional distributors being involved. Applied to the MediCan consumer market, direct marketing refers to consumers being able to order products from their home. Direct marketing involves a number of different methods which can be used in order to reach, communicate, interest and encourage consumers to buy. The methods are: direct response advertisements direct mail and mail drops personal (direct) selling Catalogue selling (McDonald, Christopher, 2003). Direct mail involves the posting (mailing via the normal postal service) of promotional literature, designed to sell a product or service direct to a potential customer's home. Direct mail may involve posting through letter boxes, handing promotion literature out in the streets, or placing advertisements at hospitals. Direct mail will help MediCan to reach a widely dispersed target market. Consumers may treat it as something specially selected for them or for their needs (Crawford, 2003). Advertisements will be placed in the local and national Press, on TV and radio, and consumers will be encouraged to order directly by telephoning or writing to the supplier of the goods or by filling in a coupon which may be incorporated in a Press advertisement. 'Off-the-page' purchasing of this nature relies on impulse, and there is a need to present an attractive proposition. The advertisement must be informative enough to enable potential customers to make a decision to purchase. The use of demographic descriptors can be helpful in identifying commonalities. For consumer markets, these will include age, sex, education, stage in the family, life-cycle, and socio-economic group. The Choice of Press issues should be based on readership. It refers to the total number of people who probably will read the publication. For example, Sunday newspapers and colour supplements are invariably passed around the family for reading. Therefore, for maximum penetration it may help to select primary (first choice) media that interlock or cross support each other. If deeper penetration into the same target market, for example, is required, then vertical advertising in the media that reach the same target market will be sought. For example, advertising on commercial television may be linked with advertising in the magazine that provides the program schedules for viewers, or local radio advertising in a particular area may be accompanied by direct mail or press advertising. The outlet for communicating and selling in this case is a producer's own catalogue of the MediCan products and after- sale services. Catalogues have to be kept exciting and they should be able to appeal to highly diversified audiences with ever changing needs. They may sometimes be added to by simply sending pages with additional products for sale to the customers who have already received the initial catalogue. Implementation of the first campaign Send Direct mail - twice on September and October and one on November; Cinema ad - 7 times a day starting from the 20th of September to end of November; Radio ad - 10 times a day from the 5th of September to end of November; Advertising in local Press - once a week from the 5th of September to end of November; TV ad - 3 times in the evening starting from the 5th of September to end of November; Posters in transport; Display stands; Calendars and wallcharts. MediCan should employ professionals in medical equipment industry who are able to achieve specific organizational objectives and concerned with the co-ordination of work activities on the Chinese market. In this company people will be brought together on the basis of defined roles within the structure of the organization. The nature of the tasks to be undertaken is a predominant feature of MediCan. The demand from the clients and the procurement of highly professional staff to support the service has made this business one of the great potential. Product The product proposed for the Chinese market will not differ from a standard one selling around the world. There are two modifications of the product: blood test and glucose meter device with an insulin pump and a dose calculator in one device. The other modification is the choice of colour (5 colours are available). Detailed characteristics of the product were given above. People Customer profile was given above (See p.11). After-sale service After-sale service will address repairing of minor defects or malfunction of the device. The pricing of after-sale service will be $10-20, and will take a day or two. It is expected that all necessary spare parts will be delivered to China with ready-made products. After-sale services will be provided in the premise of the company in Peking. It is planned that in two years MediCan will open two new offices and after-sale services in two big cities in China. As any product of MediCan, a glucose meter device has a 12-month guarantee period. Operations Overview MediCan has a highly automated factory at Calgary. The devices for diabetics are produced using Masak machine tools. In 1996, the company policy had changed to using Flexible Manufacturing Systems and had pioneered FMS involving Computer Integrated Manufacture. The system operates at three levels, scheduling, process control and specific machine tools. An IBM mainframe computer processes orders entered in the Sales Department into a sequence of operations involving the purchase of required components and the insertion of the quantity of orders into the master schedule. Information updates are received twice daily from the factory floor and this enables the arrival of the required components to be monitored and the initiation of the machining process. Data on current progress is received and it distributes instructions based upon optimizing the product mix via three DEC computers. One computer is in charge of the automatic warehouse and the movements of four auto-guided vehicles. Another channels instructions towards three computer controlled automatic lines. The third computer is dedicated to tool management, the creation and maintenance of a life-cycle for each device and the scheduling of automatic replacement. Only the machining areas run on total CIM systems with the automatic feeding of CNC machines from banks of pallets continuing throughout the unmanned night shifts. It also programs and monitors the feed and speed to ensure a standard repeatable performance. A vital element in the group's organisation was its major commitment to information technology in all areas of its operations. All components produced by the machine section or fitted in the assembly section are inspected by the individuals themselves. Then, the products are packed and delivered to the country of destination. The good are checked on arrival and stored in the most suitable space according to the documents. There is no need to buy additional equipment as all the parts for the glucose meter devices are produced by MediCan itself. The key posts of managing director, plant production manager and total quality control manager are held by experienced staff. The responsibility of the total quality control manager includes, human resource aspects, such as training and job motivation, customer feedback and physical control systems. The aim is to ensure that the devices purchased by the customer will never break down (See, Appendix, 2). ISO 9000 are concerned with Quality Systems. The product manufactured by MediCan meets the standards of ISO 9000. The aim is to define all relevant aspects of an organization's operations, procedures and systems concerned with identifying and meeting customers' requirements for quality products and services. Thus the standards aim to give customers an assurance that the quality of goods and services supplied to them meets their requirements, by specifying and regulating all the procedures which contribute to or affect quality. The standards are of value in assisting organizations develop quality systems for use by organizations to help ensure quality inputs from suppliers, and as means for assessment for use by 'third parties'. Both standards were developed initially for engineering and manufacture, so the terminology relates to products, materials and items. Financial and Risk Management Strategy To achieve the objectives, the Medican is needed to invest 24, 000 dollars approximately. The objectives for MediCan are: To be viewed as a premium Medican in the particular region. Expand to one locationafter first year of operation, and two locations after the third year of operation. Rent on the location has been negotiated and will be $1,000 per month.In addition, insurance for the business will be approximately $150 per month and will be paid by direct debit on a monthly basis. All of the equipment will bedepreciated over three years. Financial data shows that the Medican company will be profitable and will receive high revenue a year (see Appendixes 3,4,5). In addition, it will be possible to open new stores (one store in the next year, and two in two years after successful market activity). MediCan services operate in the local market. Sensitivity analysis. The appraisal of almost any investment project in the real world will involve the making of a great number of estimates. For example, the outlay required to undertake the project, its life, the annual cash inflows and outflows it will generate, the scrap value it will have, and even the correct rate of discount to reduce the cash flows to present values. Estimates will be made for all these factors and the project will then be appraised by calculating an expected net present value. If this NPV is positive then the appraisal is in favour of acceptance. But, in terms of down-side risk, the decision maker is also interested in how sensitive the advice is to changes in the estimates made about the project. In other words, he is likely to be interested in the margin of error that there can be in the estimates made about the individual components of the project (i.e., outlay, life, etc.) before the advice that the appraisal gives (in this case to accept) becomes incorrect. The advice to management is that the decision given by the NPV calculation s insensitive to changes in most of the estimated variables. However, if the revenues were the fall by 10% of their estimated value the original decision advice would turn out to be incorrect, Hence it may be worthwhile to re-examine the estimates of annual revenues to see if the company's confidence in their accuracy can be improved (Mott, 1993). Conclusion and Recommendation Taking into account the data mentioned above it is evident that China proposes great opportunities for MediCan international expansion. There is a demand for the product (a device for diabetics which integrates a glucose meter and an insulin pump) on the country's market which suggests successful penetration into Chinese market by MediCan. In order to achieve its objectives, MediCan should follow proposed marketing plan to avoid possible threats like serious commercial and organizational consequences when environmental and competitive conditions become hostile and unstable. Foreign managers must be extremely cautious in the way they borrow management ideas from other cultures. MediCan should pay attention to the cultural context of the country in order to understand differences among cultures in their reactions to communication and behavior. Cultural influences in Chinese society will result in different styles of organization behaviour and different patterns of organization structure, as well as variations of influence in the business environment, such as the role of the state. As a result, the policies of MediCan corporation may well need to vary and managers operating out of their home environment need specific training in cultural differences. MediCan should promote cooperative projects with commercial domestic and foreign firms to recognize critical technology links to major systems and open global markets to the prospect of two-way trade in defense-related technologies. Strategies should integrate technology refresh provisions early in the design process of major systems and components to allow upgrades during development, production and system operation. As competition in the medical equipment market intensifies, MediCan is designed to assist this market by providing timely and critical market intelligence necessary to aid in strategic and tactical planning for the fast growing market in the world. Bibliography 1. Bellis, Mary. Strategy Formulation in a High-tech and Project Management Setting, Cambridge: Cambridge Univ. Press, 2001. 2. Boone, L.E., Kurtz, D.L., Management, 2nd Edition, McGraw-Hill, New York, 1992. 3. Crawford C. Merle. New Products Management. Irwin-McGraw Hill. 7th edition, 2003 4. "FDI Confidences Index" The Global Business Policy Council, October 2004, Vol.7. Available at: http://www.atkearney.com/shared_res/pdf/FDICIOct_2004_S.pdf 5. GDP per capita annual Growth rate. 2001 Available at: http://globalis.gvu.unu.edu/indicator.cfmCountry=ER&IndicatorID=45#rowER 6. Hodgetts, R.M., Management: Theory, Process and Practice, 4th Edition, Academic Press, College Division, Orlando, 1986. 7. McDonald M., Christopher M. Marketing: A complete Guide. Palgrave Macmillan, 2003. 8. Mott, G. Investment Appraisal. Pitman, London. 1993. 9. Porter M.E. 1985, Competitive Advantage. New York, Free Press. 10. Rothaermel, Frank T. Technology Analysis &Strategic Management, 2000. 11. Welford, H. Gouldson, K., Environmental Management and Business Strategy, Pitman, 1993. 12. 2004 World Population Data Sheet. 2004, Available at: http://www.prb.org/pdf04/04WorldDataSheet_Eng.pdf Appendixes Appendix 1. Device for diabetics (glucose analyzer) Appendix 2 (Production scheme) Production Manager TECHNICAL PRODUCTION ADMINISTRATION PURCHASING WORKS DEPTS Technical Manager Production Engineer Purchasing Officer Works Manager Quality Design Research Process Production Records Buying Manufacturing- Maintenance Appendix 3 Monthly forecast for 1st year: Month, 1 2 3 4 5 6 7 8 9 10 11 12 Total Receipts from sales 5.000 5,000 6,000 6,000 6,000 6,000 7,666 7,666 7,666 7,666 7,666 7,666 80,000 Payments to suppliers etc. 4.000 4.000 4.200 4.200 4.200 4.200 6,323.5 6,323.5 6,323.5 6,323.5 6,323.5 6,323.5 61,941 Net cash flow ($000) 1,000 1,000 1,800 1,800 1,800 1,800 1,121.5 1,121.5 1,121.5 1,121.5 1,121.5 1,121.5 18,059 Cumulative net cash flow ($000) 700 700 800 800 800 800 800 800 1,000 1,000 1,000 1,000 10,200 Appendix 4 P&L account for the 1st year. $, a year Sales 80,000 Cost of sales 48,000 Gross profit 32,000 Net Operating Expenses 14,290 Profit on ordinary activities before taxation 5,710 Taxation 1,941 Profit for the financial year 3,769 Appendix 5 Read More