Management & Entrepreneurship of Power Electricals Limited - Assignment Example

Business Power Electricals Limited Business logo: I. Executive Summary:  This is a business plan designed for a company engaged in producing high voltage devices and equipments like transformer, motor etc. This is a start up company and the name of the company is Power Electricals Limited. The main aim of the business is to become one of the best companies in sales and maintenance of high-voltage devices. The plan focuses on all areas that have to be focused before starting a business. For starting a business as high voltage device producers, what all challenges they have to face and what all issues they have to confront are discussed in this paper. A systematic market research has been designed to analyze the marketing trends, competitors and the product and services offered by them. The marketing trends include aspects such as online marketing, multiple marketing etc that can be used for marketing the product of the company. Analysis of competitors involves the pricing strategy, after-sales services offered, the discounts offered to their target customers and the advertising strategies adopted by the competitors. The products and services along with their life cycle are depicted in this plan. The various health and safety measures that have to be adopted in the organization to avoid accidents are also discussed here. The strength of the company is sales growth, assets, employees and potentiality in manufacturing the product. The weakness of the company is delay in adopting modern technology, failure in adopting appropriate performance management system, lack of financial support from the financial institutions and failure in identifying the real product what the customers are in need of. The total number of employees to be employed in the organization is 100 which include web-administrator, IT-operator, director/manager, product designer, secretary, marketing/sales assistant (external) accountant (external) and lawyer. The start-up cost required for the firm is $62,000. This comprises of $20,000 provided by proprietors, $ 30,000 from banks, and $12,000 can be secured by way of loan at cheaper interest rates. Content page: I. Executive Summary  1. Introduction – History and background 2. Market Research 3. Product or service 4. Legal obligations 5. Business Aims & Objectives 6. Marketing strategy 7. Sales activity plan 8. Pricing and production costs 9. SWOT/PEST analysis 10. Contingency plans 11. Staffing requirements – recruitment and training 12. Resource requirements 13. Sources of funding and investment 14. Personal survival statement 15. Conclusion/summary 16. Cash flow forecast and other financial statements 17. Appendices  1. Introduction: A business plan is a formal document which is keen on setting targets and the achievement of the same. The business idea here is to start up a company which deals with high voltage devices and equipments like transformer, motor etc. The idea is to involve the company into sales and service of the products. The aim of the business is to provide the customers with the best products and increased satisfaction. There are different factors that affect the success criteria of a business; they are the technology, skills and the strategic resources, vision and mission, balancing of the activity by quality products, personal marketing or the intense marketing activity, global trends in the product, market segmentation and sustainability. Each of the factors contribute in one or the another way for the critical success in the business. The success factors are those to be analyzed well in advance and during each stage of the business operations. 2. Market research: Market research is the integral part of a marketing firm. Market research is the activity conducted to know the potential market and the achievability that the product can gain in the market. It provides the ultimate picture of the strategic business process and the forecast about the potential earnings. There are mainly 2 types of research; they are the qualitative research and the quantitative research. Market research as a process: The market researches should be systematic and objective, as they are to be useful throughout the research process and the research plan for the critical business success. The definition of the problem includes the idea generation for the set up of the business related to high voltage equipments. The first stage includes the analysis of the plan and checking its viability. Surveys are conducted and the data collected are analyzed by statistical tools, weighing methods, correlation and regression and tabulation methods. From the analysis certain conclusions can be drawn whether the product suits the market, the different forecasting in terms of revenue and the opportunity in the market. Marketing trends: Online marketing: Online marketing is done through internet. With the advancement of internet, different kinds of the products find the market easily. As far as our product is concerned, online purchase using credit card can be done. Different varieties of products are available at the customer point of view. Multi level marketing: Multi level marketing includes the promotion of the product in multilevel. Catalogue marketing: As the product is new in the market, catalogue marketing can be a success, the catalogue consists of the different features and the specification of the product mentioned as synopsis, and the uses can also be specified. The catalogue and the picture should be attractive enough to create a tendency to the customers to have a look the products again. Competitor analysis: The competitor of the same product should have a cross check during the operation, the different methods of the analysis are to be used for the analysis. The competitor should be analyzed in terms of quality, price and distribution channels in the market. We had done very good research on our different competitors in the market without considering whether it is direct or indirect competitor. We have studied their adopted strategy in the market. We have found out what they are doing in the market and what kind of marketing they are doing. Our assigned people have been successful in getting in the copies of their marketing report. We identified certain customers whom our competitors are attracting. Product and service: Our key product and the service are high voltage devices and equipments. This is a new start up plan. The high voltage equipment devices consist of transformers, motors, street lightening etc. Our core business strategy is to enable the customers meet the rising requirements and the critical application of them. Our services ere designed to be an eye opener and to span among the customer for the increased satisfaction and loyalty. There are plans to provide a good support of services in terms of quality in the service sector. As far as the sales part is concerned, efforts will be taken to make the sales force the unbeatable one from the competitors and to accelerate the least time schedule for availability of goods. Experts with proven skills will be hired to face the challenges from the competitors. Marketing professionals will be employed on-site for marketing the products and to be industrious in the field to generate the estimated sales of the company. The field personnel will be accessible and responsive to the queries of the customer. 3. Product life cycle: The product life cycle are the different stages of the product being in the market. At the introductory stage, lot of promotion-based activities are to be performed to create awareness of the product. The growth stage includes the method of developing establishment in the market and having to face competition from the competitors and to have the technological innovation. The next stage is the maturity stage where the products have established and they are saturated and there is no growth for them in the market; here the main threat is from the new entrants. The product then falls to the declining stage where the product is completely away from the market. The sustainability is the main factor considered for the product to be in the market irrespective of the different condition in the market. (Marketing: The product life cycle, 2007). 4. Legal obligations: It is prerequisite for a company to be aware about the harm that can happen to people. People can be employees of the company or the public. Health and safety of the people can be achieved by having a safety consultant in the company. It is very important to involve staff and employees of the company so that they will useful information regarding this. By having a contract with health consultant, company can avoid all sorts of problems arising out from this. Health and safety can be ensured in the company by taking some precautions such as replacing old materials with new, by reducing the use of hazardous materials, by placing apparatus to manage hazards etc. 5. Business aims and objectives: Business aim and goal: The main aim or goal is to become one of the best companies in sales and maintenance of high-voltage devices. Besides that, “goal is to provide our customers with outstanding service and the highest quality products to satisfy their product and delivery requirements.” (Smart high voltage solutions, Inc., 2009, para.2). In addition to that, our company’s aim is divided into four, namely commercial, social, profit and service. Commercial aim of our company is to achieve efficiency and profitability in our business. Profitability in the sense is to increase the market share, escalating competitiveness and producing more products. Social aim is to provide better products always to the consumers. Profit aim is to make profit in the business. But, there is no need to have any confusion that our company’s aim always relies on providing better service to customers. Objectives to achieve goals: Creating awareness of our company’s role in the market; Ensuring improvements in productivity and efficiency of our company; Stay in the competitive world by enabling latest technologies in our product by promoting “best practices within the industry.” (A newsletter of the automation industry association, 2004, p.1). Company always watches what the competitors are doing. Our company always tries to sell more products than the competitors. Also, in case of services to the customer our company will always stay one step ahead of any other competitors. Another objective of the company is to get back return on investment (ROI) as fast as possible. For this, good employees are needed. Our company will fix a target to achieve ROI in the first year. Target includes profit and number of customers. Also, it includes how many employees are needed in each area to make sure the flow or continuity of our business. By watching how everything is going, our company will make a plan for the second and third years. 6. Marketing strategy: Being a company involved in sales and maintenance of high-voltage devices, our team employ different strategies in marketing to attract more customers towards our company. Our company is making highly rich voltage devices. So, it is very necessary that everything reaches the customers. For this, very good marketing strategy is needed. Developing and maintaining a good relationship with the clients will always enhance business opportunities. For this, company will employ a team which will be assigned to meet the contractors, production managers, and constructors in order to make them aware about the products and also half an hour presentation with power point slides will be conducted. There will be doubt-clearing session also for this. Organizing promotional strategies is another way to attract clients. This can be done by sending free gifts to clients during holiday season in the name of company. Another way our company chooses to promote is by getting involved in the community. This is achieved by providing sponsorships for various events. This will help a lot to make awareness about the company. Giving advertisement in newspapers is another strategy our company is following. Also getting listed in phone books that is by giving ads in these books is another strategy to enhance the marketing of the product. Mailing post card to customers is another strategy. The card can feature any themes such as health check, safety first etc. Sending custom-made newsletters to contractors and subcontractors is another feature used in the marketing strategy. Contents in newsletters can carry safety factors of the product, comfort, cost benefit etc. Launching a website is another strategy which can reach out to everyone. Besides that, company can place its logo in a high rated website. 7. Sales activity plan: This section includes the plan carried out for the above-mentioned strategy. Meeting the contractors and sub contractors - For this company executives make a call and take permission from them for meeting. These kinds of meetings will take place thrice a week. This includes meeting of two-three contractors a day. Sending free gifts to existing customers and new customers - Gifts may be in terms of toys, calendars etc. This will be done on every holiday season or last month of the year. All the details of the customer will be retrieved from the database. Sponsorship will be done when any special occasions or events take place. The investment will be done according to the popularity of the program and also by enquiring who the guest etc is. Advertisement in leading newspaper – Newspapers carry our advertisement on all Sundays and holidays. Proper arrangements are done for this. Also in case of any events taking place in our city, then our company’s best compliment ad for the event will be placed. Sending post cards to as many people as possible - This is done by first collecting addresses of various people from various sources. Each post card will carry small text or graphics. Text or graphics will be on health check, safety etc. Millions of such cards will be sent in a year. Custom made letters to contractors or sub contractors will be sent twice a month. Letter will carry features of new products, then safety ness of the product, trends of the product etc. Launching a website is another task. This requires some investment. Also website should be updated periodically and it should be made sure that customers are getting updated information always. In our company’s view, all the above aspects are very important for our company to be successful in sales activity. By following these types of strategies it is sure that information about company and product will reach everywhere. 8. Pricing and production costs: “Pricing decisions require time and market research, the strategy of many business owners is to set prices once and "hope for the best." (Pricing a product, 2010, para.5). The pricing of the products ranges from its size and its usage type. “Production is the act of making things; in particular the act of making products that will be traded or sold commercially.” (Production, costs and pricing, 2010, para.1). The production cost is the cost incurred for the production of the product within the organization. The price of the product ranges from $1250 and above. 9. SWOT/PEST Analysis SWOT Analysis: The strength of the company includes the sales growth, assets, employees and its potentiality in manufacturing the product. The strength must be clearly identified because this acts as a weapon that can be used against the competitors. The weakness of the company includes delay in adopting modern technology, failure in adopting appropriate performance management system, lack of financial support from the financial institutions and failure in identifying the real product what the customers are in need. These weaknesses can be converted into strength by creating an appropriate performance management system, conducting marketing research for identifying the degree of customer satisfaction and the company will take necessary measure to update the latest technologies within the organization so that high quality product s can be produced with less defects. The opportunities that are open to the company depend upon the type of market where the organization is operating and the ways by which it can identify and explore them for their better performance. The threats that are faced by the company are the entry of other new companies into the market, certain rules and regulations that affect the successful performance of the firm and the treat of competitors charging lesser prices. PEST Analysis: This is where we have to identify the environment before beginning the marketing process. It is composed of three environments such as internal environment, micro environment and macro environment. 1) The Internal environment The internal environment includes the staffs, office technology, wages and finances that are available within the business. The number of staffs required for performing each operation, the types of technology to be used, the pay that has to be paid to the staffs and the total finance required for the operation of a business should be planned in advance. 2) The Micro-environment The micro environment includes certain factors such as the external factors, agents and distributors, suppliers and the competitors. Any unwanted or illegal performance of these factors will influence the performance of the organization. 3) The Macro-environment The macro environment consists of the PEST factors. There are certain political factors such as government rules and regulations related to organizations. The economic factors involve the business conditions. Social factors involve the religion, race and different cultures within the organization. Technological factors refer to the adoption of new technology within the organization. 10. Contingency Plans: A contingency plan is designed in an organization to make use when anything goes out of control or when the things go wrong. If the targets are not met, the company has to identify where it has gone wrong. For that, certain steps have to be followed; - List out all the activities in the organization - Analyze all aspects in each activity - Prepare a record for each activity - Identify the areas where deviations have occurred. - Discuss the problem with the respective department head - Take suggestions from them - Conduct a detailed market survey and analysis - Ensure the quality of the product - Design an appropriate performance management system - Carry out inspection in each stage till the targets are achieved. 11. Staffing requirements – recruitment and training: The company is engaged in producing high voltage devices. For producing these devices, it requires a lot of machines and equipments and for operating these machines more human resources is required. As it is a new firm, in the starting period it requires only less number of employees. The total number of employees to be employed in the organization is 100. It includes web-administrator, IT-operator, director/manager, product designer, secretary, marketing/sales assistant (external) accountant (external) and lawyer. Advertisement for the staffs can be given in newspapers and in internet. We can also approach various consultancies that will be able to provide us talented and skilful employees. The recruitment for the staffs will be conducted in the respective consultancies or a separate venue can be arranged for the purpose of recruitment and selection. There will be a set of job description for each job category that is explained as follows; - IT-operator He is responsible to handle all the activities that are related to the information processing and the maintenance of overall performance with the help of information technology. - Machine operators He is responsible to control and monitor the performance of the machines and equipments within the organization. - Director/manager They are responsible for the overall performance of the organization. They have to take all the important decisions related to all processes in the organization and must provide required instructions to the lower level employees. - Product designer These personnel are responsible for the entire designing of the products and services offered by the company. - Marketing/sales assistant This person is responsible for conducting market survey, understanding the customer requirements, coordinating the marketing team and motivating them to attain the sales target. - Accountant (external) This person is responsible to maintain all financial accounts and reports of the company. - Lawyer (external) He is the legal advisor of the firm and must be able to give appropriate legal guidance regarding the operation of the firm. He must possess good knowledge in law and adequate experience in this field. 12. Resource requirements: The start-up cost required for the firm is $62,000. This amount is allocated and is shown in appendix as Fig-1. 13. Sources of funding and investment: The total funding required is $ 62,000. This comprises of $20,000 provided by proprietors, $ 30,000 from banks, and $12,000 can be secured by way of loan at cheaper interest rates. 14. Personal survival statement: The statement has been shown in appendix as Fig-2. 15. Conclusion/summary: This plan gives a clear idea about the various areas that have to be concentrated before starting an enterprise. The forecasting done for the cash flow and the financial statements are an assumption done on the total capital required for the business. For a start up company, it is essential to have more concentration on areas of business because any fail or any lack of attention in one area may affect the efforts done in all other areas. This is blue print for the business how to start and manage the business in the starting year.  16. Cash flow forecast and other financial statements: The cash flow and the financial statements are shown in the appendices. 17. Appendices: Fig 1 – Resource requirements Start up costs Amount Legal $0 Stationary $100 Brochures $200 Start up inventory $10,000 Cash required $29,700 Long term assets $ 22, 000 Total start up cost $ 62, 000 Fig 2 - Personal survival statement Particulars Amount Rent $ 600 Food $ 300 Clothes $ 300 Going out and other entertainment $ 400 Mobile phone $ 200 Gas and electricity $ 200 Total $2000 Fig 3(1) – financial statement (profit and loss account) Particulars Amount Sales $84, 987 Direct cost of sales $29,745 Other production expenses $0 Total cost of sales $29,745 Gross margin $55,242 Expenses Payroll $42,000 Sales and marketing $1,100 Depreciation $2,748 Leased equipment $12,000 Utilities $2,400 Insurance $0 Rent $6,500 Payroll taxes $6,300 Total operating expenses $73,048 Profit before interest and taxes ($17,806) EBITDA ($15,058) Interest expense $2,200 Net profit ($20,006) Net profit /sales -23.54% Fig 3(2) – balance sheet Particular Amount Current assets Cash $7,274 Accounts receivables $9,188 Total current assets $16,461 Long term assets Long term assets $22,000 Depreciation accumulated $2,748 Total long term assets $19,252 Total assets $35,713 Current liabilities Accounts payable $4,020 Subtotal current liabilities $4,020 Long term liabilities $22,000 Total liabilities $26,020 Paid in capital $40,000 Retained earnings ($10,300) Earnings ($20,006) Total capital $9,694 Total liabilities and capital $35,713 Net worth $9,694 Fig 4 – cash flow statement Particulars Amount Cash received Cash sales $ 21, 247 Cash from receivables $ 54,553 Subtotal cash received from operations $75,800 Sales tax, VAT, HST/GST received $0 New other liabilities $0 Sub total cash received $75,800 Expenditures Cash spending $42,000 Bill payments $56,226 Sub total spent on operations $98,226 Additional cash spent Sales tax, VAT, HST/GST received $0 Principal repayment of current borrowing $0 Long term liabilities $0 Purchase other current assets $0 Purchase long term assets $0 Dividends $0 Sub total cash spent $98,226 Net cash flow ($22,426) Cash balance $7,274 Reference List A newsletter of the automation industry association: Key aims & objectives. (2004). AIA: Automation Industry Association, Automation India. Retrieved January 4, 2010, from http://aia-india.org/download/AIA%20Newsletter.pdf Marketing: The product life cycle. (2007). Quick MBA: Knowledge to Power Your Business. Retrieved January 4, 2010, from http://www.quickmba.com/marketing/product/lifecycle/ Pricing a product. (2010). Entrepreneur. Retrieved January 4, 2010, from http://www.entrepreneur.com/encyclopedia/term/82380.html Production, costs and pricing. (2010). Economic Expert.com. Retrieved January 4, 2010, from http://www.economicexpert.com/a/Production:costs:and:pricing.html Smart high voltage solutions, Inc.: Our mission. (2009). SHVS: For All Your High Voltage Needs. Retrieved January 4, 2010, from http://www.shvs.us/ Read More