The Levels of Income in China and the Far East - Essay Example

Business Decision Making Task1/A This section has been presented in the attached excel and PowerPoint document files that accompanied this paper. Task 2 Introduction Appalachian PLC, a renowned manufacturer of high end furniture that are sold directly to retailers, in firm markets across Europe and the UK has witnessed a drop in its overall sales to the established markets and has opted to inquire opportunities in a new target geographical markets; this is particularly in China and the far East. This aims at widening the market niche in order to have increased sales volume. China and Far East have been identified as the next market target since most competitors have not invaded the market segment in these areas. Additionally, most foreigners from China and the Far East back in the UK portray excellent purchasing trends. The move can result in either being positive or negative depending on the approach used in the new market segments. Statement of the problem The main aim of this study was particularly to determine the type of core customer, the price margin that can be charged and the levels of income in China and the Far East. Significance of the study There are 3 groups that are likely to benefit from this study. The first lot consists of the company employees who may gain skills in pitching new customers in the new market niche. Identifying customer trend may help them to take the necessary actions to coup with challenges that may arise in the event of initiating business activities in the new markets. Through sharing this knowledge, the employees can act as machines to aid management in implementing appropriate marketing strategies. The second group is the employers who automatically gain insight as to how new market can actually be managed having consumer preference data. Finally, business analysts can use these findings as valuable guide whenever advising Appalachian PLC. Through analysts, the firm can be in a position to determine whether they will have a significant profit income or not. Scope of the study The study was limited to the real income and age of clients in China from a merchandise firm in the UK; the interest was on the type of prices that can be charged and the levels of income in China. For the purpose of this study, what constitute pricing is determined by the employer. This study was restricted to customers based in China. This sample included a range of customers evenly distributed within China Republic. Review of related literature Barden, a freelance writer specializing in new business ventures and a former managing editor of Commerce and Accounting, stated the importance of through market research and gave specific examples of new markets that have successfully been reached. The Company that was used in undertaking the research activity currently makes huge profits for every furniture sale by offering services such as customized furniture according to customer need, amount of cash, and customer locality. According to market statistics, the success of this company offers enough evidence that China can be a good hub to do business in. the company spend less and make huge amount of profits. Foster, a professional speaker on business channel development, surveyed midlevel consumers in China and found customer preference to be a major determinant in having high sales volume. Methods of study Source of data Questionnaires were used to collect data for this study which was developed by a business consultant firm outside the United Kingdom. It generally focused on the income of the individuals and the age groups. Respondents were asked whether having cheap and customized furniture would be their preferred choice. Sample Selection The respondents involved in this survey were China’s middle class working in companies located in China. A nonprobability, convenience sampling technique was used in collecting the primary data. All the members of the research crew was answerable for calling 5 members of the sample. To ensure confidentiality, respondents were convinced that their personal information and the information given would remain discrete at all cost. Controls were used to exclude reponsen duplicate. Statistical Methods Guileless statistical techniques were deployed in results tabulation for this research project. All the primary data obtained were analyzed by the use of percent response that were successful. In order compute the needed percent response, responses number to each choice was divided by the total number of those respondents who gave information via phone calls. The results of questions were tabulated by totaling the number of respondents who picked a section each believed was either least or mostly affected by their choice. The respondent also gave their age groups. Limitations of the study All firms that may be manufacturing furniture may not have been involved in this study. This study activity may also be limited by using a nonprobability, convenience selection technique. The sample of business consumers was chosen for convenience purposes and could be possible that they may not be the total population representation of this business consumers. A lot of Care should be given priority whenever generalizing these conclusions to the entire population. Then finally, using simple statistical techniques may lead to subjectivity element into the analysis and interpretation of the data. Finally, all measures have been put in place to minimize effects of these limitations witnessed on the study. Findings The outcomes has been presented in two major segments according to the following characteristics: Age, and spending habits. All successful responses from the sample were considered full-time employees. The participants were also required to specify their age group; the results featured all age ranges, as shown: Most of the respondents were below thirty years of age. Most of the participants were between the age of 25 and 30 years. The trend illustrates that elderly people spend less as compared to the young individuals. Conclusion China and the Far East still remains a potential market which Appalachian PLC can invade. The firm should focus on producing furniture that are unique from what the giant competitor has in store for most of the consumers in these areas. To achieve this, Appalachian PLC should consider recruiting young talents around China and the Far East to come up with furniture that are very attractive to young individuals especially who are establishing life. Task 3 Introduction PLC is experiencing a market challenges in most areas they operate in within United Kingdom. The managing crew is under pressure to look for new markets that would enable them make significant profits. The company has identified China and the Far East to be the major market niche with great potential. The Company has prepared a budget that it intends to use once it storms the market. Due to economic challenges and challenges experienced by new entries, the company has opted to operate in China for the start. Statement of the problem The main aim of this report is to analyze the proposed capital outlined by the company to launch its services in the China. This report will focus on four major segments: Payback analysis The company has commissioned a draft cash budget for the first 5 years of its operations in China, which has been summarized as follows; Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 £, 000 £, 000 £, 000 £, 000 £, 000 £, 000 Cash outflow 1000 200 200 200 200 200 Cash inflow 0 150 250 500 1000 750 The company has adopted a payback period of three years as a hurdle rate for new project in recent years, but given the importance to the company, and the input of the Finance Manager, the Board is interested to look at discounted cash flow. The company has a weighted cost of capital of 10%. The adoption is essential especially when entering new market which has established companies with their esteemed customers. The first order of this firm when doing discounted cash flow analysis is to find out how far out into the future the firm should project cash flows. PLC Company is estimated to grow faster than gross domestic product expansion of China’s economy. Over this excessive returns period, the company will be in a position to net returns on new investments that are greater than cost of capital. Therefore the DCF requires forecasting on free cash flow amount that the company intends to witness over this period. Net Present value analysis Net present value is gage of how much important a project or an investment brings to the firm. In the case of PLC Company, the NPV stands to be a positive; hence the company should go ahead and establish new markets in China. It should be noted that risked investments having positive NPV may be accepted. For this case, PLC has experience and enough resources to enter the Chinese market in a more efficient way. With the estimates, the intended cash flow is subject to success and is very essential in predicting the payback. It should be noted that net present value in any way does not cogitate the existence of a constraint in the system of cash flow generation, which could limit the total amount of cash really generated in due business operation. Result can be a projected net present value that cannot be recognized. The NVP is good determinant over payback analysis since it gives a real variance and not an estimate of what is the expected outcome. Financial criteria The company has opted to set up an office depending on the following data: Key Process Dependent Tasks Time to Completion A Leasing Office Space None 3 months B Undertaking Market Research None 6 Months C Finding Local Suppliers of Raw Materials A 2 Months D Identifying Retail Partners A,B 1 Month E Leasing Warehouse Space None 1 Month F Formalizing business contracts with Retail Partners A,B,C 2 Months G Developing logistics and supply chain A,B,C,D,E,F 1 Month H Beginning deliveries to retail partners/commencing normal operations A,B,C,D,E,F,G 1 Month The company has estimated sufficient time frame that could see it thrive in a new environment. To implement all of these, the company should opt for recruiting staff originating from these markets. The staff members are then trained back in the United Kingdom and later sent to undertake their duties in China. The first thing the company should establish is an office, of which in this case has been given priority; an office with a designated administrator would see most operation move in a smooth manner. The company should look for more suppliers as much as possible to do away with issues of material supplies fluctuating immediately they start operating. It is important for the company to also collaborate with its competitors, especially those who lend an ear in order to be networked. GNATT Chart The chart summarizes all that the project intends to do over a specified duration. The project can be completed in time if at all the measures are adhered to. Read More