Implementing New Product in Saudi Arabia - Example

Business Plan Name Institution Instructor Date Executive summary Our business mainly deals in the sale of mobile phone spare parts and second hand mobile phones. Our main advantage in running this business is that businesses dealing in the sale of second hand mobile phones exist but those dealing in the sale of spare parts extracted from used mobile phones do not exist. We will thus have many customers at our disposal. Our company is set to commence as soon as capital is got. We will mainly depend on Al rajhi bank for a loan to cater for our capital. Our main objective as a business is to assist the public as much as possible so that they can get access to cheap mobile phones for communication purposes. This will help improve the economic level of the community as they will have the advantage of selling their old unused phones to us thus getting money. Our management team will have three people. I will be the CEO of the team, followed by my cousin who is a successful business man in Riyadh. He will be the legal advisor and a close partner in running the business. I will also have a deputy who will be stepping in in case I am not around at the business premises. He is my friend whom we have been together for a long time. We are expecting a small market at the start of the business. However, we expect the market to grow rapidly because the youth in Saudi Arabia love using android phones hence will opt to come for the cheaply available ones. Introduction My business will deal in mainly the sale of phones spare parts old phones. The spare parts sold, will basically be obtained from old and spoilt phones bought from the public. We shall be repairing the spoilt phones and obtaining the viable spare parts from those that cannot be repaired. The spares will then be sold separately as a product of the business. This business is unique because it will be the first one to deal in the sale of spare parts for mobile phones.This business has many chances to succeed basically because there are many customers looking for spare parts for their phones without success. Our business will thus capture all these customers. In summary, I will need around $ 3500 to start up the business. I will need to put aside$ 800 for operation costs. Wages and salaries will amount to about $ 1200. Equipment will take up about $ 450. Benefits to the community a. Economic Development This business will create a number of job opportunities in the community around. We will need cleaners and security officers during the day and the night for the subordinate staff. For the technical staff, we shall need a diploma holder in electrical and electronics who will be fixing spoilt phones. He will need to have knowledge in operating system of android phones and the electronic configuration of the same. We shall also need an operations manager who will be overseeing all the operations of the business. We shall have at least three sales people and three agents for a start. We shall however increase the number of the employees with consideration of demand and necessity. This will total up to around twelve employees to start with. b. Community Development The finished products from our company, the repaired phones, will be very important to the community. The advantage of our product will be that, they will be in good working condition just like the new phones. This is basically because upgrading the operating system of an iPhone makes it as good as a new one. It will now be upon the user to download the applications he or she requires. It will be a big boost to the citizens of Saudi Arabia. Selling of the spare parts obtained from used and old phones will also be so helpful. For a long time it has been a problem to get the spare parts of expensive iPhones in Saudi Arabia. c. Human Development Our firm will offer a lot to the employees. For the electrical and electronics technician, he will be sponsored to go to seminars and boot camps where he will be able to further his knowledge and skills in the structure of the ios; the android phone operating system and iPhone’s operating system. The sales representatives and the sales agents will be sponsored to go to talks so as to better their sales technics. The employees will also be given rewards for any good work done. This will help motivate them in doing even better work for the business. 6. Company Analysis a. Form of Business Ownership This business will be a two people partnership. I will be doing it in partnership with my cousin who is a business man dealing in the sale of new phones and electronic goods. Being in partnership with a well vast person in terms of business, I will have an easy time in running the business. He will be giving guidance on the tricky and critical issues. This will help save time indecision making and following of the legal procedures. My cousin, having have done business for a long time, will help me to secure a business license from the legal offices and pay the required amount per annum. In addition to this, I will need a permit that will enable me to buy the old phones. This will be an agreement with the authorities allowing me to continue with my business. It will also be my shield in a court of law in case a person finds his phone at the premises and claims that it was stolen from him. To obtain the permit and the license, we will need $ 185 per year. This will help us cater for all the licensing needs. b. About the Company Over the past few years, I have seen people looking for spare parts for their phones without success. Those who found only got them after a long hustle. From this, I thought it right to start a business that will cater for the needs of such people. This is the root mother of the idea to set up this business. The business will be out to help customers to secure spare parts for their phones and also help them fix the spare parts into the phone. This will be done by the help of our technician who will be repairing the phones. As a business, we will try to ensure that spare parts of all phone types are at the premises. This will ease the technician’s work of repairing the phones and also will satisfy the customer’s quest for spare parts. 7. Industry Analysis Our business will basically operate in the communications industry. The main competitors in the business are the companies dealing in the sale of second had phones.This business will be very profitable. This is evident from the fact that the business will only be interested in buying of old and spoilt phones. The business has many opportunities as there are many companies in other continents looking for businesses that can buy used phones at a cheap price. Our business can thus grow so fast if we can get enough capital to link up with such companies as our suppliers. This will see into it that our company grows at an alarming rate. When the business starts stabilizing in terms of sales, we shall start a company website where customers worldwide can be contacting us for the purchase of cheap android phones and the purchase of used or spoilt mobile phones. We shall thus be operating on a worldwide basis. 8. Management Team The management team will be formed by three people. I will be leading as the CEO of the company. I will be assisted by my cousin who is a well-established business man in Riyadh. He will act as the legal advisor for the business. I will then have a deputy who will be stepping in in case I am not at the premises. My deputy will be my friend who is an expert in financial records and accounting. He will help a lot in keeping the inventory. I will basically use the participative business leadership style. This will help both the managers and the workers to work hand in hand to ensure the success of the business. 9. Manufacturing and Operations Plan a. Location and Space Requirements After an analysis of the markets in here in Saudi Arabia, I have decided to set the business at Riyadh. This is mainly because this is the capital city of Saudi Arabia thus it will be easy to get the used and spoilt phones. The city has a good number of people; 5.3 million people. This is a good number of customers to depend on. Being located in the capital city will also ease participation in international businesses like importation of used phones from other countries. It will help to cut on transportation costs as the raw materials will be obtained from the surrounding community. We will basically rent the building in which we will be operating our business. This is because we don’t have enough funds to buy one. We shall however need to buy one if the business expands. b.Equipment Since our business will only require a small number of equipment for use, we shall purchaseour equipment so as to be independent as from the start. We shall need around four kits of different screw drivers and of which will be of different sizes. The cost of renting for the equipment will be high and will add up to the monthly running cost of the business. Purchasing the equipment will cost around $ 10000. This will be sufficient for all the tools and equipment to be used. c. Labor Force There are a lot of people looking for jobs in Riyadh. Many young men travel from local towns to the capital city in search for jobs. Getting sales representatives and sales agents from this pool of people will thus not be a difficult task. There are a good number of people trained in electronic circuits and electronic equipment. Getting a technician will thus be an easy task in this case. According to the market trends and the current salary scales, the electrical technician will be getting a salary of about $ 880. The cleaners and the security people get an average of $ 240. The deputy CEO will be getting around $ 1200 and tellers get an average of $ 550. The legal advisor and the CEO, I in this case have volunteered until the business gets to be stable. All these workers for the business will need to join a reputable union that can help them on issues regarding spending options and general workers rules and obligations. a. Inventory Control In order to control quality of the mobile phones produced after the repairs, I will purchase a machine that tests the different aspects of the phone before it is put on display for sales. This will ensure that the phones are in good working condition and have no traces of getting faults. We will put up advertisements that will help the public to know where we are situated so as they can reach us in time to sell the used and spoilt phones. The constant search for the used phones will help make our business to be in constant work of repairing old phones and selling the repaired ones. b. Purchasing Requirements At the start of the business, the purchases for the old phones will be made locally from the inhabitants from Riyadh. This will be through our sales representatives and agents. They will be collecting the phones from individuals and from shops dealing with the sale of mobile phones. We will also be purchasing spare parts which we will not be having in stock. This will be for the repair of the old phones brought into stock. c. Subcontractors and Suppliers The potential suppliers in this case are generally those having the spoilt or old phones in possession. Businesses dealing in the sale of second hand phones can also be our suppliers. They can be giving us the spoilt phones from their stores. As the business grows, we shall start to import the second hand phones from other countries. This will increase our work turnaround hence profits. 10. Labor Force a. Labor Requirements Our business will require around fourteen workers. They will be working on a full time basis. We shall only recruit experienced people to work with us. This will help to have only quality services offered by our business. Each employee will get a descriptionof the duties he will be expected to do at the business. Our payment will be in line with the market trends and requirements. This will help to avoid complains from the workers and the trade unions. b.Selection, Orientation, and Training For the selection of the employees, we will have an application form that will need to be filled by the applicant. The form will need to be forwarded in together with an application letter handwritten by the applicant. Once the applications have been received, the applicants will be analyzed and the most satisfying will be taken as the selected candidate. They will be selected on merit. The new employees will be taken through the orientation process by the security officers. They will be shown around the premises and shown all the escape routes to use in case of a fire. They willalso be shown the positions of fire extinguishers to use in case of a fire. They will also be given manuals for the daily routine at the work premises and the plan of how the building is structured. After all this, they will undergo a two weeks training to show them what is expected of them as their work at the premises. They will also be trained on the use of the first aid kit and the necessary first aid procedures. c.Evaluation, Policies, and Rules Employees at the premises will be evaluated based on their daily output at the end of the month. Their daily output will be tabulated and evaluated at the end of the month. This will help them to monitor the trends of the employees and will make them to stay focused throughout their work as a drop in the output will be questionable. Employees will be given restricted authority. They will only be allowed to act on the things they are allowed to. Most of the major decision making and generation of ideas will be done by the operations manager. This will help regulate the freedom of the workers so as to maintain their working standards and no to go outside their zone. When an employee makes a mistake at the business, he or she will be called to the office and given a warning. If the same employee makes the same mistake the second time, he will be given a two day unpaid off from duty. 11. Marketing Plan a. Target Market(s) The target markets in this case are the middle class people and the low class people. We are targeting the people who cannot afford new and expensive iPhones and phones in general. We also target those looking for spare parts for their phones. We are out to give the best services and good to our customers. The current needs of the target market are mainly lack of spare parts for their phones and lack of cheap and affordable mobile phones in the market. Our target market is basically distributed all over the country although a big number of them are in Riyadh the capital city of the country. The target market and especially the youth in that bracket like using expensive android phones and accessories. This is thus a good market to venture in as youth will want cheap but trendy phones for use (Michael, 42 ). We are anticipating an increase in the use of iPhones and android phones in general. This is basically because the knowledge of android phones and iPhones is spreading quickly to the interior parts of the country. We shall need to expand our services and goods in other cities throughout the country. The advantage of running this business is that the raw materials needed in our business will be readily available our surrounding markets and citizens. According to O'Kane Michael, (Michael, 62 ) many young people like the use of colorful accessories. This make them look trendy. We shall therefore need to import different colors of the accessories and spare parts for our repairs. b.Environment Considering the market structure and its trends, it is a healthy market for any upcoming business and especially ours dealing in old mobile phones. Legally we can be faced with charges from people claiming that their phones have been stolen and found at our premises. This will be solved by using the license and permit acquired from the authorities.In terms of economic levels of our business, we may have some problems getting the required capital for the start. The business will require a good amount of capital, especially for the payment of wages of the employees. This will be solved by acquisition of a loan which we will be paying monthly from the sale of the products. Technologically we will need to be up to date with any upcoming technology as we deal in technological goods. This will help us go with the trends in the market (Michael, 22 ). d. Marketing Objectives Once the spare parts are extracted from the phones, they will be ready for sale. We estimate a market size of about $ 5,000 at the start. The market is however expected to grow rapidly with time. To come up with this estimated value, we had to carry out research online from economic related websites. We had also to give questionnaires to university students who gave us a lot of views in regard to iPhones and android phones. We shall be using sales agents and sales representatives to sell and distribute the products. We shall price the spare parts at 10% lower than their actual market price when they are new. This will give us an upper hand as we shall be cheaper than all the other businesses dealing in the sale of new spare parts. We shall contact advertising by use of a vehicle throughout the streets. We shall also use the sales representatives to inform people in interior places where the vehicle may not reach. To create a long term advertising means, we shall also hang up posters in most parts of the city. 12. Financial Plan a. Startup and Operating Needs To start with, I have $ 1,500 and will need an addition of $ 2,000 from a creditor. From the money we shall preserve $ 800 for operation purposes. We shall mainly borrow the capita for Alrajhi bank. This is a stable bank on which we can rely on and also offers favorable rates to customers. b. Financial Statements Income statement INCOME STATEMENT FOR SECOND HAND PHONES BUSINESS For May 2013 REVENUES Debit ($) Credit ($) Gross revenue 1943 EXPENCES Advertising 155 Bank and credit card fees 11 Bookkeeping 240 Entertainment 65 Insurance 13 Legal and professional services 116 Licenses 14 Printing, postage and stationary 12 Rent 23 Materials 600 Telephone 19 Utilities 20 Total expenses 1288 Net income 655 Balancesheet Balance sheet for the year ended December 2012 ASSETS (amount in $) LIABILITIES (amount in $) CURRENT ASSETS CURRENT LIABILITIES Cash 912 Accounts payable 610 Petty cash 202 Wages payable 1100 Accounts receivable 612 Interests payable 75 Inventory 400 Taxes payable 70 Supplies 602 Permit liabilities 135 Prepaid insurance 182 TOTAL CURRENT ASSETS 2910 TOTAL CURRENT LIABILITIES 1990 PROPERTY AND EQUIPMENT LONG TERM LIABILITIES Equipment 590 Bonds payable 1510 TOTAL EQUIPMENT 590 TOTAL LONGTERM LIABILITIES 1510 TOTAL ASSETS 3500 TOTAL LIABILITIES 3500 c. Financial Analysis At a sale of 1000 pieces of spare parts each costing $ 2.5, and an income of $ 2500, we will attain a breakeven point. At this point we shall be operating on no profits, income equals costs. We shall need to sell at least 400 pieces of the spare parts costing an average of $ 2.5 so as to cover all the costs at the start. Looking at the industry averages, we will be running slightly above the industry average incomes and slightly low on the running costs.This will be healthy for our business profitability and prosperity. 13. Exit Strategy When this business stabilizes, we will pay off all debts to our creditors as soon as possible. We will then extract capital from the business profits so that the business starts to run independently without dependents. This will help make the business independent and will have the capability to expand and to open other branches in other towns all over the country.This will enable our company to grow and can easily be transformed into an IPO. Becoming an IPO will help our business to run transactions worldwide easily. I want to embrace entrepreneurship on serious terms thus I will not sell this business. 14. Critical Risks and Assumptions We have come up with strategies to be followed in case risks and unexpected turn out occur in our business line. In case the market turns out to develop slowly than we have anticipated, we shall be forced to increase the number of sales representatives and agents so as to increase public awareness of the business. We will also start promotions and discounts so as to attract customers. On the other hand, if the market grows at an alarming rate, we will need to increase the size of the premises and also increase the number of tellers and sales people. We can also open other branches in the outskirts of the city or on other streets of the city. Favorable changes in the market will be an advantage to our side. We shall utilize any opportunity favoring our existence and operation. Negative changes in the industry on the other side will be dealt with accordingly. This will be mainly the work of the operations manager. Workers will be assigned duties according to the area having the shortage of workers. In case there is a sudden increase in the supply of the spoilt phones and accessories, we shall need to employ more technicians so that they can work on the raw materials quickly to give the complete goods. We will then need to sensitize an increase in the sales of the finished products. To do this, we will have to increase the number of sales representatives and agents. 15. Appendix a. Resume for management team The management team for the business will include three people, the CEO, the vice CEO and the chief legal advisor who will be also an assistant CEO. I will be the CEO of the business. I have a good knowledge in business issues and marketing options. I have a degree in marketing and trade. I also have a certification in entrepreneurship. The vice CEO is my friend and also has a degree in marketing and trade. He has a certification in accounting and bookkeeping. He will thus be very beneficial in bookkeeping at the business. The chief legal advisor and also the vice CEO is a well-known business man and holds a diploma in business management. He has a good knowledge of doing business. He has done business for around ten years. He has good reputation with the authorities and can help a lot in acquiring the legal documents and certification. b. Organizational chart c. Floor plan a. Advertising sample 1. References Blackwell, Edward. 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Petaluma, Calif: World Trade Press, 2011. Rogoff, Edward G. Bankable business plans. Sydney : Sydney , 2010. Shoult, Anthony. Doing Business with Saudi Arabia. London : Blue Ibex Ltd, 2005. Young, Paul. Business plan. Chandni Chowk, Delhi: Global Media, 2007. Read More