The Repair and Supply of Computer Parts in the Computer Galore Company - Essay Example

Completed business plan Executive summary The Computer Galore Company deals in the repair and supply of computer parts. Further, the company also provides services after the end of warranty to its customers. The use of computers has increased especially in the big companies who use this to enhance their operation. This acted as the main trigger for company entering the market since the use of computers is now critical. Apart from servicing to the bigger companies, the company also looks forward to reaching the small businesses and households who are turning to the use of computers. The existing companies in the same industries have always despised the small businesses and the households in the provision of their services. Generally, the advancement in technology has led to the increase in the use of computers worldwide even in the developing countries. This implies that there is increase in the demand for computers and the subsequent repair to the parts. This presents a chance for the company to offer its services worldwide. The business was formed in February 13th 2011 with the founders being Michael McDonald and Ben Omogen. McDonald and Omogen are the directors for the company ensuring that the there is positive image of the firm in the market, especially to the investors. The company has employed two hundred and fifteen in all its five locations in USA. The main branch is in New York with the other branches being in California, Illinois, New Orleans, and Missouri. In terms of performance, the company is in a good position in the market when considering the higher sales that it got in its last year operation. The company obtained an overall of $200,000 compared to the $50,000 in last year. This represents a growth of $150000 within just one year. The company also realized a net increase in its cash and cash equivalents of $41383 as shown in the income statement. Computer Galore complement the computer retail business by offering repair service after the computer’s warranty coverage has elapsed. Computer Galore will engage in the selling of computer parts and software and is also engaged in the customization, upgrade, repair, virus removal and hard disk data recovery of computers (Du et al, 2008). The company intends to create a niche in the computer retail and service industry by providing customized computers as well as providing repair service at a significantly lower cost than competition delivered through an unparalleled customer service. It will work in synergy with the computer customization business as the skills needed in the repair component of the business can also be used in the assembly of computers. In order to achieve maintain it production, the company seeks finance assistance from investors who would like to get huge return on their investments. The company has $90000 available for the project while the investors, PepsiCo have contributed $45000. This means that there is a requirement of $45000 to help the company reach $180000 required for increasing the number of branches in USA. The company looks forward to establishing its branch in Africa and Southeast Asia since there are few companies who offer the same services in these countries. Further, the few companies existing in these regions do not always offer services after elapse of warranty. This implies that the company will act as sole provider of the services hence the assurance of higher return on investment (ROI). Market analysis Industry analysis The industry operates in a computer servicing and repair industry whereby the main products are the computer parts while the services are the repairs to the computers. The industry deals in distribution of computer parts especially the hardware. The industry remains relevant in the market because of the increase in the use of technology in institutions. Target market The target market for the company is both the small and big institution besides the elite families. The modern development restricts the institutions (such as schools, firms and healthcare institutions) into having computers since it is critical for their growth in the field. Almost all the bigger institutions have computers in their premises implying that the servicing and provision of their computer parts is critical. Further, the elite families always have computers at their homes implying that they would also need the servicing for their computers and the provision of the parts. The company has a market share of $2.54 per share making them relevant among the best performing in the industry. Competitive analysis The competition existing in the market is also high because of the increasing number of firms operating in the same. Many firms are now adventuring into the market because of the increasing demand from the consumers. The use of computers is on the increase, especially when considering the existing technological advancement in the market. Everybody now needs computer in order to increase their productivity in whatever they are doing. The firms are venturing in with new ideas in order to convince the customers. The firm has competitive advantage in the way they offer their services. The firm offers their services at slightly low prices while also maintaining the quality required by their customers. Further, in order to remain relevant in the market, the firm also offers warranty even after the completion of their services. Company description Computer Galore Company operates in the provision of computer parts and the associated repairs. Further, the company also provides services after the end of warranty to its customers. Computer Galore engages in the selling of computer parts and software and is also engaged in the customization, upgrade, repair, virus removal and hard disk data recovery of computers (Du et al, 2008). The company obtained an overall of $200,000 compared to the $50,000 in last year. This represents a growth of $150000 within just one year. The company also realized a net increase in its cash and cash equivalents of $41383 as shown in the income statement. The company differentiates its product and services through creating a niche in the computer retail and service industry by providing customized computers. The company also provides repair service at a significantly lower cost than competition delivered through an unparalleled customer service. This makes the company to remain relevant in the industry since they attract more customers through their differentiate service. The provision of services even after the warranty also complement on the productivity of the company. The target market for the company are both the big institutions and the small institutions; besides the elite families. Almost 90% of these individuals own at least two computers in their premises making them an ideal market for the company. Further, the big institutions represent 57% of the whole market, while the small institution represents 23% while the elite families represent 15%. Organization and management The company consists of two big shareholders who posses about 50% of the whole company. However, other one hundred shareholders also contribute to the operation of the company. Below the shareholders, is the board that forms a critical part in the decision making. Every decision must pass through them. Below the board are the two directors who also contribute to the critical decision making of the company. They command other managers below them. The directors control the working of the following departments: cooperate planning department, investment department, purchase department, service department and human resource department. The Cooperate Department consists of five managers who deal with the services such as sales account and individual customers. The investment department controls the planning department and the research department. These individuals ensure that there are new ideas, which can help the firm in increasing its productivity. The marketing department controls the activities occurring in the commodity sales department and the sales administration department. These individuals ensure that the services and the products reach the customers in time and the required place. The service department consists of 10 managers who control the technical service department and the Customers Service Department. The human resource department consists of 15 managers and supervisors who control the activities of the training group, recruiting team and the salary group. The following is a management structure of the company. Management structure Marketing and sales management The marketing procedure of the company consists of the strategies that will help in ensuring that it has attracted more customers in the market. The main aim of the sales strategy of the firm is to ensure that there is reduction the selling costs and increase in the revenues. The company will define its sales strategy through assessing performance environment, evaluating organization design, conducting competitive analysis and developing roadmap (Du et al, 2008). Assessing performance environment This will involve the company determining their previous performance in the market while studying the cooperate strategy. This will help in identifying any loopholes in the strategy while replacing them with well-defined strategies. The definition of cooperate strategy helps the firm in ensuring that they (strategies) are relevant in the industry. Assessing the performance environment also involves the company studying the market dynamics to ensure that its production strategy accommodates the changing needs of the customers. Evaluating organization This will involve studying the sales structure and the sales channel whether they are efficient with the company operations. Accessing the sales structure is significant since it ensure that the organization understands the needs of the customer while also helping in solving the needs of the customers. Assessing the sales channels also involves the organization facilitating transactions between it and its customers while solving any problems that may hinder the channels. Evaluation will also involve defining a cheap channel that can complement on the revenues of the firm. Conducting competitive analysis This will involve the organization studying its competitors in the market to ensure that it understand their differentiation process and the sales strategy. The understanding makes the business to put up processes and strategies that are better than that of the competitors. This keeps the business ahead of others in terms of production and revenues. Developing roadmap This will involve the organization establishing a clear roadmap that would be useful in achieving corporate goals. Developing roadmap constitute five processes: design, build, momentum, success and sop. The design would involve the business researching and the measures for success in the market. The build constitutes developing the system to thrive the results of the sales strategy. Momentum involves incorporating and carrying out the defined strategies. The success involves successful execution of the strategies and establishment of achievable results. The sop involves studying the system, processes and communication within the firm. Service or product line The firm sells computer parts, especially Hardware while also providing repair services. The company specializes have different products lines, especially in the selling of its Hardware. The company supplies Dell products, Hp product, Lenovo products, Acer products and Gateway products. Apart from these products, the company also specializes in repairing all these product lines. Consequently, the company benefits the customers since it does not only specialize in the supply and repair of one product. Product lifecycle The product lifecycle constitutes introduction, growth, maturity and decline (Du et al, 2008). Introduction stage The introduction stage of the product represents the phase when the product first appears in the advertisement thereby making the potential consumers aware of its presence. The company set the prices lower to ensure that it has attracted more customers. The growth phase The growth phase occurs when the sales and profits from the product are on the rise. The prices of the products remain the same as that of the introduction phase with the product quality being similar. Further, the growth phase also involves the company enlarging its product distribution to reach a wider market. Maturity stage This stage involves the emergence of competition because of the realization by other potential investors that the computer business is thriving well in the market. The investors start specializing in the repair and supply of computer parts thereby bringing the need for the company to develop new features. Decline stage This stage involves the decline in the demand of the company’s product because of dynamism in technology. There is introduction of new technology forcing the company to reduce either the products’ price or stop supplying the products. Further, the company may involve itself in determining other uses of the product in the market to ensure that it remains relevant. Financial plan Year 1: Monthly and year-end income statements and cash flows; year-end balance sheet. Computer Galore company Balance sheet December 31st 2012 assets liabilities and capital current assets cash 6,300 accounts payable 6,900 accounts receivable 24,900 wages payable 9,525 inventory 30,090 total current liabilities 16,425 prepaid insurance 3,500 long term liabilities total current assets 64,790 bank loan payable 17500 Total long-term liability 19,500 fixed assets total liabilities 39,925 equipment 100200 capital less: accumulated depreciation -78,321 Computer Galore capital 48,744 total fixed assets 21,879 Total Assets 86,669 86,669 Computer Galore company income statement Dec, 31st, 2012 Revenue Amount in $ net sales 114,000 cost of goods sold 33,200 gross profit(loss) 110,800 expenses advertising 6400 bad dept expense 800 bank charges 500 insurance 2400 payroll taxes 5783 rent 26900 supplies 900 wages 42,480 total operating expenses 83,243 net operating income 17,557 other income repair revenue 2400 other expenses interest expense -1800 total other expense -1800 net income (loss) 18,157 less:income taxes -2874 Net income 15,283 Cash flow investment Computer Galore company Dec 2012, 31st cash flow from operating activities Amount in $ net income 15283 increase in accounts receivable -21200 increase in inventory -5625 increae in prepaid expenses increase in accounts payable 8925 Total cash flow from operation 2617 cash flow from investing activities purchase of automobile -12800 purchase of land -20800 Total cash flow from investing activities -32800 cash flow from financing activities mortgage -12800 auto loan -20000 owners investment Total cash flow from financing activities 76800 Net increase in cash and cash equivalents 41383 3. Year 2: Quarterly income statements and cash flows; year-end balance sheet. Computer Galore Income statement For the 4 months ended April 2013 Income Statement Sales $50,000 Cost of Goods Sold $10,000 ———— Gross Margin $40,000 Rent $3,000 Office Supplies $150 Subscriptions $300 Utilities $125 Fuel $275 Repairs & Maintenance $500 Credit Card Interest 50 ———– Operating Income $35,600 Other Revenues and Expenses $0 Net Income $35,600 Good Deal Co. Statement of Cash Flows For the Four Months Ended April 30, 2013 Operating Activities Net Income $   300  Increase in Inventory (200) Increase in Supplies     (150) Cash Provided (Used) in Operating Activities (50) Investing Activities   Purchase of Office Equipment (1,100) Financing Activities Investment by Owner   2,000  Net Increase in Cash 850  Cash at the beginning of the year         0  Cash at May 31, 2012 $   850  Computer Galore Balance sheet for 31st April 2013 Assets Current assets current liabilities Cash $ 10400 accounts payable $ 23200 Accounts receivable 45500 notes payable 19600 Inventory 55300 total 42800 Total 111200 long term debt 40800 Fixed assets owners equity Net fixed assets 164400 common stock and surplus 60000 Retained earnings 132000 Total 192000 Total assets 275600 total liabilities equity 2756 4. Years 3-5: Yearend statements of income, cash flow and balance sheet. Income Statement For the year ending Dec 31St 2013 Sales $200,000 Cost of Goods Sold $80,000 ———— Gross Margin $120,000 Rent $12,000 Office Supplies $650 Subscriptions $1200 Utilities $1000 Fuel $2700 Repairs & Maintenance $2000 Credit Card Interest 200 ———– Operating Income $100,250 Other Revenues and Expenses $0 Net Income $100,250 Computer Galore Cash Flow for the year ending 31st Dec 2013 Net Income $134,000 Adjustments to reconcile net income to net cash Accts Receivable decrease $10,000 Prepaid Expense increase ($6,000) Accts Payable Increase $35,000 Depreciation $21,000 $60,000 Net cash provided from Operating Activities $194,000 Investing Activities Land Purchase ($70,000) Building Purchase ($200,000) Equipment Purchase ($68,000) ($338,000) Financing Activities Dividend payment to shareholders ($18,000) Issuance of Bonds Payable $150,000 $132,000 Net Decrease in Cash ($12,000) Cash Jan 1, 2013 $49,000 Cash Dec 31, 2013 $37,000 Computer Galore Balance sheet for Dec 31st 2013 Assets Current assets current liabilities Cash $ 16,000 accounts payable $ 26600 Accounts receivable 68800 notes payable 12300 Inventory 55500 total 38900 Total 140300 long term debt 45400 Fixed assets owners equity Net fixed assets 170900 common stock and surplus 64000 Retained earnings 162900 Total 226900 Total assets $ 311200 total liabilities equity $ 311200 Reference Du, P. A., Van, D. V., & Cook, A. (2008). Computer hardware and software: [NCV level 3]. Cape Town: Pearson Education South Africa. Read More