Business Plan for FastCar Motors - Assignment Example

 CAR COMPANY: BUSINESS PLAN           TABLE OF CONTENTS TABLE OF CONTENTS 1 1.0 EXECUTIVE SUMMARY 3 2.0 MANAGEMENT TEAM 4 3.1.3 EPISLTE Analysis 5 3.1.4 Profit Potential 6 3.1.5 Market Segments 6 3.2 Target Market 7 3.2.1 Primary Target Market 7 3.2.2 Secondary Markets 7 3.2.3 Demographics of Target Markets 7 3.2.4 Customer Key Perception Factors 8 3.2.5 Customer Need Analysis 8 3.3 Established Major Competitors 3.3.1 Direct and Indirect 8 4.0 BUSINESS CONCEPT 4.1 Product Outline 9 4.2 Product Differentiation and Competitive Advantage 10 4.3 Pricing Policy 10 4.4 Entry Strategy 10 5.0 OPERATIONAL PLANS 5.1The Firm Policy 10 5.2 Automation Policy 11 5.3 Labor and Staffing Policy 11 5.4 Investment Policy 11 5.5 Strategic Priorities 12 6.0 MARKETING AND SALES PLAN 12 6.1 Target market sales projections and market share 12 6.2 Brand Image 13 6.3 Advertising and promotion mix 13 6.4 Market Research 13 7.0 FINANCIAL PLAN 13  7.1 Sales projections (£) 13 7.2 Profit and Loss projection 14 7.3 Key ratios targets and projections 14 7.4 Summary of Key Points and Capital Requirements   14 References 15 1.0 EXECUTIVE SUMMARY This paper presents a business for FastCar Motors, a retail company in luxury and sports car whose main target market segment is the individual and family market within the UK and later in the international market as the company expands. The motor vehicle industry within the UK has grown significantly and is contributing to employment of thousands of people. Technological innovations and growth is a driver of the modern car industry and as a result the FastCar Motors seek to invest in the retail of luxury cars in line with the market research which demonstrates an increasing market demand for luxury cars. The political, economic, legal, ecological and technological environment has an impact on the progress of the retail business. The profit potential within the target market is promising for the company but a competitive advantage is aimed to be reached over the already established competitors through application of appropriate strategy in the marketing mix. The staffing policy of FastCar Motors is in line with the legal framework of the government and it seeks to develop and train the employees to ensure that they have knowledge on the application of technology in the care retail business to facilitate the growth of the company. 2.0 MANAGEMENT TEAM The directors of the FastCar Motors comprise of the management team of the company who include the company CEO, the General Manger, Sales Manager and Human Resource Manager whose roles are stipulated in the organizational structure. 3.0 MARKET ANALYSIS 3.1The European Industry Description 3.1.1 Industry size The automobile industry within the UK is growing at a very fast pace with the implementation of modern technology in the production of automobiles especially sports cars such as Daimler, McLaren, Aston Martin, Rolls-Royce and Lotus. The car producers in the UK such as Toyota, Ford, Nissan and Honda have established themselves in the automobile business over time despite the challenges and competition within this industry. Chatal, Haugh and Mourougane (2010) say that since the 19th century the automobile industry in the UK has developed in terms of production and export. 3.1.2 Industry status There was notable decline in the rate of growth of the car manufacturing industry in the UK as compared to the competing companies in Japan, France and Germany before 2008. The growth of the car manufacturing industry of the UK began to be experienced after 2008 with the country being rated among the producers of large car volumes. This is in contrast to the early 1980s when many British car manufacturers were owned by foreign firms. The UK car manufacturing industry can therefore be described as to have matured after a long period of turbulence as demonstrated by Rhee, Young-Choon and Han (2006). 3.1.3 EPISLTE Analysis The ecological environment is prioritized by FastCar Motors to ensure environmental friendliness of the cars it deals in. the emissions of the cars have an ecological impact and as a result the company will retail in cars whose manufactures incorporate ecological consideration in production of its cars. Davey-Rafer (1998) explains that the political environment has a large impact on the car retail business in terms of the regulation of licensing of business and the taxation rates. Moreover, the government acts to regulate the importation and exportation of cars which is considered in the strategic plans of the company for future expansion into international car retail business. The social environment impacts on the retail of the luxury cars because of the social class associated to the ownership of these cars. The company will consider social factors in promotion of the luxury cars it deals in and the associated accessories. The legal framework is to be considered especially in complying with the labor laws of the UK government. Technology is the string point of the business because the retail business aspires to deal in modern cars which applies technological innovations in enhancing speed, comfort, security and adaptability to the weather conditions. The economic factor affects the company because of the expenses associated with the luxury cars and the competitiveness in terms of investment of competing companies in the business. 3.1.4 Profit Potential Elliott (2011) points out that the motor vehicle retail industry in the UK has a high profit potential for retailers who are able to balance the political, economic, technological and social factors to gain a large market share. The strategic plan of FastCar Motors is to utilize the opportunities in the market to maximize its profit potential through promotion and keeping up to date with the modern car technology to meet the needs of the target market. 3.1.5 Market Segments According to McDermott (1996), the manufacturing and retail industry in the UK automobiles has developed a bias into the niche markets especially in luxury cars. The market segments available to the FastCar Motors include sports market, family markets, individuals, organizations and institutions. The car industry in the United Kingdom depends more on investors from other countries as opposed to the tradition mass manufacture of automobiles by indigenous producers. This is because of the potential of the foreign shareholders to investing in high cost luxury car production which applies modern technological innovations. 3.2 Target Market 3.2.1 Primary Target Market The primary market segments that the company targets is the luxury markets. This market is within families in addition to individuals who desire to own expensive cars. Maling (1999) explains that technology has led to the manufacture of luxury vehicles which have a high demand from the local population and the international market. The company takes the opportunity of the application of technological innovations in the car industry and the increasing demand for these vehicles in the country and abroad. 3.2.2 Secondary Markets The secondary target market is within the sports industry. This market is very competitive in the United Kingdom because most sporting companies get supply of the cars from their preferred dealer or directly from the manufactures as explained by Murray & Sarantis (1999). However, there are individuals in the local and international market who engage in recreational sports including those who prefer sports cars as compared to the ordinary ones due to their power and speed despite the high costs associated with their acquisition. 3.2.3 Demographics of Target Markets The market for luxury cars is within the higher social status of the British society. This includes celebrities, businessmen and politicians. The demographics of the market include individuals from a wide range of adult range. This includes children of the rich and the wealthy in the UK. According to Parker (2005), the application of technology in the manufacture of cars has attracted the demand for high cost luxury cars from members of the high social status in the UK. The members of the high social class are the target of the company due to the characteristic rich man buying habits which includes purchasing cars for the spouse, mistress and the children. This is therefore a potentially attractive market for FastCar Motors despite the increasing competition from both local and international retailers. 3.2.4 Customer Key Perception Factors The perceptions of the customers include compliance to the modern trends in the car industry. Modern cars are preferred by financially stable families and individuals because they are able to afford them. In addition, the ordinary English person has access to the credit facilities in backs which promotes the ability of purchasing a luxury car. 3.2.5 Customer Need Analysis The needs of the target market are to acquire a modern car even at relatively high price as long as it safe, fast and in line with the modern trends in the automobile industry. Rhee, Young-Choon & Han (2006) say that needs of the customers is usually inclined towards the purchase of a car from a specific manufacturer. This acts in favor of the company which aims at retailing automobiles from various manufacturers in accordance to the needs of the customers. 3.3 Established Major Competitors 3.3.1 Direct and Indirect The established retailers in cars within the United Kingdom such as the Jardine Motors, Marshall Motor Holdings, Pendragon, Porsche Retail and the GK group are examples of established retailers who are likely to be major competitors to the company both directly and indirectly. 3.3.1.1 Market Share and Segments The Porsche Retail is among the retail competitors who have a wide market share in the sports segment. The luxury car segment for individual and family cars is shared among many retailers at different levels. 3.3.1.2 Strength and Weaknesses The strength of the FastCar Motors is based on the availability of capital to invest in the retail of luxury cars. This could enable the company catch up with the established retailers in gaining a substantial amount of the market share. The marketing strategy of FastCar Motors is based on past market research which would have been outdated with the quick advances in motor vehicle technology. This acts as a weakness because the marketing strategy of the company is not likely to have a competitive advantage over the already established car retailers. 4.0 BUSINESS CONCEPT 4.1 Product Outline The FastCar Motors will deal in cars with high speed, modern automatic gear system and breaking systems which are suitable for all seasons including winter. Security systems such as auto-lock mechanisms, protection on impact and tracking systems including luxury seats and music systems will the special features of the modern cars that the company is to retail on. This will be beneficial to the retail business because the target market desires such features as demonstrated by Elliott (2011) in reference to previous market research. 4.2 Product Differentiation and Competitive Advantage The FastCar Motors will deal in luxury cars for individual and family use and for sporting with special features such as heating system within seats to cater for users during the cold season. In addition, retail business will deal in car parts such as all season tires. Furthermore the retail business will seek competitive advantage from the provision of after sale services and maintenance for the loyal clients. 4.3 Pricing Policy The pricing policy of the company includes the provision of discounts to customers as a strategy of attracting and retaining them. To gain a competitive edge against the major competitors, the retail business will offer discounts slightly better than those of the competitors. 4.4 Entry Strategy The market entry will be through promotion and advertising of the products of FastCar Motors through the media and displays. Moreover, the company will enter the market through the use of the local sports events in marketing its brands. 5.0 OPERATIONAL PLANS 5.1The Firm Policy FastCar Motors will operate its services within the United Kingdom at the start before expansion into the international market as the company grows. As illustrated by Requena-Silvente & Walker (2007), retail companies in motor vehicle usually follow a trend characterized by local operations which expand into new foreign markets as the business grows in size. 5.2 Automation Policy Wang (2010) asserts that the investment of the company retail company in automation includes the purchase and installation technological applications and hardware within its business premises. The acquisition, maintenance and securing of both hardware is covered by the policy of FastCar Motors to ensure that investments of the company are protected from risk and loss. 5.3 Labor and Staffing Policy According to McDermott (1996), the motor retail industry in the United Kingdom employs more than 570 thousand people. These businesses have their staffing policies which must comply with the labor laws of the government. The staffing policy of FastCar Motors is to comply with the legal framework and the labor laws in provision of sustainable employment opportunities to its staff. As a result the company will contribute to creation of employment opportunities in the UK along with the more than 70 thousand other retailers in the car business. The staffing policy of the company aims at recruiting qualified staff in terms of education and experience. In addition, the staffing policy of the company seeks to promote creativity and innovativeness among its staff in addition to protecting the employees from the job risks associated with the automobile industry in the United Kingdom. 5.4 Investment Policy The investment policy of FastCar Motors considers input of capital on the emerging markets within the United Kingdom and outside the country. The marketing function of the company is considered very important by the management and as a result the investment policy aims at ensuring the company products are well promoted and marketed using various media as appropriate. 5.5 Strategic Priorities The priorities of motor vehicle industry are on technology which has advanced in the recent past and is considered the most suitable way forward in advancing the retail business. Therefore business applications are a priority in increasing the efficiency of coordinating the business functions such as acquisition, storage, promotion and sale of cars and automobile products. The strategic priorities of FastCar Motors also include expansion of the business to the international market as a way of increasing the market base. The value which the company gives to its employees makes its strategic policy to be the development and training of its staff to enable its employees to be compliant to the technological changes and application to Information and communication technology in business activities. 6.0 MARKETING AND SALES PLAN 6.1 Target market sales projections and market share FastCar Motors projects a higher market share of the luxury cars in the family and individual segment as compared to the sports segment. This is due to the high competition in the sports market and the long period required by a retail company to gain the trust of a sporting company as the sole dealer of its sports automobiles. 6.2 Brand Image The Brand image of the business is FastCar Luxury which is designed to promote both the name of the business and the car products it retails it. This image is appropriate because it implies quality and modernity in the cars which the company deals in. 6.3 Advertising and promotion mix The prices of the company’s brands will be regulated in a manner that will enable the firm gain a competitive advantage over the competitors as a way of promoting the company. Moreover, discounts will be given in order to reduce the overall price of the cars. However the promotion mix will be influenced by the market trends within the local and the international market. 6.4 Market Research The company will apply the current market research on the luxury cars in the beginning with strategic plans of investing in comprehensive research on the target market to determine the need s of the customers. 7.0 FINANCIAL PLAN  7.1 Sales projections (£) The sales projections in the year 2012 as the company begins its retail business are represented in the table below. FastCar Motors 1st Quarter 2012 2nd Quarter 2012 3rd quarter 2012 Total Number of Sales 3428 3540 3754 10708 Sales (£) Million 56 63 69 188 Table 1: 7.2 Profit and Loss projection FastCar Motors projects a net profit of £94 Million at the end of the 2012 financial year in relation to the projected sales in table 1 above. 7.3 Key ratios targets and projections The company targets a profit to loss ratio of 4:1; which is a favorable target and projection for the retail business. 7.4 Summary of Key Points and Capital Requirements   The company projects a total sale of 10708 cars at the end of the 2011 financial year with sales totaling to £94 Million. The company with require a starting capital of £200 Million at the start the business. This will cater for the purchase of the initial stock of the luxury cars and the installation of the premises. References Chatal, O, Haugh, D & Mourougane, A 2010, The Automobile Industry in and Beyond the Crisis, France, Paris. Davey-Rafer, M 1998, "Training and power in franchise systems: the example of the UK automotive industry", Journal of European Industrial Training, vol. 22, no. 9, pp. 367-374. Elliott, H 2011, 'The Best Luxury Car Buys of 2011', Forbes.Com, p. 1 Murray, J and Sarantis, N 1999, "Price-quality relations and hedonic price indexes for cars in the United Kingdom", International Journal of the Economics of Business, vol. 6, no. 1, pp. 5-27. McDermott, M.C 1996, "The revitalization of the UK automobile industry", Industrial Management + Data Systems, Vol. 96, No. 5, pp. 6-10. Maling, N 1999, "Autobytel to drive UK car revolution", Marketing Week, vol. 22, no. 10, pp. 21-22. Parker, PM 2005, 'Global Trade Perspective - Bumpers & Parts for Tractors, Motor Cars & Other Motor Vehicles', Global Trade Perspective 2005 - Bumpers & Parts For Tractors, Motor Cars & Other Motor Vehicles, p. 1 Rhee, M, Young-Choon, K and Han, J 2006, "Confidence in Imitation: Niche-Width Strategy in the UK Automobile Industry", Management Science, vol. 52, no. 4, pp. 501-513. Requena-Silvente, F and Walker, J 2007, "The Impact of Exchange Rate Fluctuations on Profit Margins: the U K Car Market, 1971-2002", Journal of Applied Economics, Vol. 10, No. 1, pp. 213-235. Wang, C 2010, 'Motor Vehicle Distribution', TIER Industry Report - Motor Vehicle Distribution, pp. 1-8 Read More