Austratech ltd - Product and Service Offering, Hardware Repairs, Market analysis - Example

Business Proposal Customer Inserts His/Her Name Customer Inserts Grade Course Customer Inserts Tutor’s Name (23 September, 2014) Executive Summary Austratech ltd will offer professional service to repair computers quickly and efficiently. The employees at Austratech ltd will be experts at their relevant field thus ensuring that the customers receive the best quality. The Austratech ltd experts will value customer service above all else. Another key component of the Austratech ltd’s business model is that the services will be delivered to customers doorsteps. In this regard the customer could call the Austratech ltd’s office or place the order at the Austratech ltd’s website. In essence Austratech ltd will deliver superior customer value and as such it will adopt premium pricing model. Furthermore, by utilizing the latest repair tools Austratech ltd experts would be able to repair the computers quickly and efficiently. The inherent nature of the business dictates that Austratech ltd could not afford an inventory management system. In this regard Austratech ltd will adopt a Just-in-Time inventory management system. The business model of Austratech ltd dictates that the firm is initially organized in an informal manner. Austratech ltd will also adhere to horizontal communication structure. Since the Austratech ltd’s business model is designed to primarily target other businesses rather than individual customers, the entrepreneur can call upon his/her social contacts to generate initial sales. This external analysis has proved to be extremely useful in developing a business model for Austratech ltd. The current business model of Austratech ltd is quite restricted in terms of financial well-being. This situation demands that Austratech ltd employs a handful of experienced professionals who could offer superior value to its customers. Table of Contents Mission 6 Objectives 6 Keys to Success 6 Hardware Repairs 8 Software Repairs 8 Industry analysis 10 Start-up Funding 15 Table: Start-up Funding 15 Income Statement 16 Balance Sheet 17 Background The entrepreneurship phenomenon is not a new concept; its origins can be traced back to the history of economic activity itself (Bruin & Dupuis 2003). However, this phenomenon has gained much popularity in recent years. The process of entrepreneurship can be associated with human desire to grow and expand (Drucker 2009). It is quite needless to say that most people wish to own their own business. And it is this desire; to be self employed, which leads to the creation of entrepreneurial firms and organization (Drucker 2009). This is indeed a crude definition of entrepreneurship but for all practical reasons this definition accurately defines the motivation of entrepreneurs. However, the motivation for being self employed is not the only variable which shapes an entrepreneurial personality. There are numerous other variables; all of them interconnected and interlinked, which determines the ability of entrepreneurs (Bruin & Dupuis 2003). These variables include creativity, innovation, high risk appetite, ability to break free from the status quo, desire to develop a group of people or a region, etc. All of these variables or a combination of any number of these variables is necessary to instigate the entrepreneurial activities. There are numerous researches which suggest that the entrepreneur, himself, is not the only entity which profits from the entrepreneurial activity (Kuratko & Hodgetts 2008). The benefits of such activities extend to numerous groups of people and even entire nations (Bruin & Dupuis 2003). These entrepreneurial firms also help in developing certain local economies. Hence, it can be said with confidence that the sheer magnitude of benefits, shared by a large population, forces governments to extend incentives and encouragement to entrepreneurs (Bruin & Dupuis 2003; Kuratko & Hodgetts 2008). Austratech ltd will offer professional service to repair computers quickly and efficiently. Its customers will not have to go anywhere, as the service can be provided at the doorsteps of the customers. In this regard a phone call or request dropped at the office will be enough for a visit. In this regard the customer can specify date, time and address. After which the main office will deploy a team of Austratech ltd experts who will visit the customers’ specified address for problem solving. The business model is unique in the sense that it offers the customers superior quality; in terms of convenience and ease. The employees at Austratech ltd will be experts at their relevant field thus ensuring that the customers receive the best quality. Furthermore these Austratech ltd experts will have all the necessary equipment to tackle any relevant problem. Under routine operations these experts can easily repair computers offsite, however, in case of special circumstances; the Austratech ltd experts will take the computer back to the office and fix the problem. Then this PC will be delivered back to the customer with an Austratech ltd expert accompanying it. This Austratech ltd expert would be responsible for rebooting the computer under natural settings at the customer’s office/home Computer repair will be performed by qualified educated professionals with experience and qualification. The Austratech ltd experts will value customer service above all else. And as such they will have to make visits to customers’ homes or offices. However, the customers can bring the computer to the head office as well. In addition to these two services; offsite and onsite repairing, the Austratech ltd will offer another premium service of rush repairs. This will allow the company to accommodate urgent orders which would increase the profitability of the company as well. Mission Mission The aim of Austratech ltd is to provide a comprehensive portfolio of offering to its customers. In simpler words, the Austratech ltd experts will primarily deal with practical and contemporary aspects of hardware and software computers, such as: installation, tuning and optimization, maintenance, repair, data security, improved computer communications and consultation for the purchase of computers. However, the Austratech ltd experts will also be able to tackle contemporary IT issues of numerous small and medium enterprises. In this regard it is quite interesting to note that although different SMEs may have different work environments, all computer technicians perform similar physical activities in these organizations. Hence, Austratech ltd experts will also provide technical support to these organizations as well. Some of the supporting activities will include debugging, repair, installation and replacement of hardware and software. For specialized contracts in which any SME would require the services of a specialized technician, Austratech ltd will be able to act as intermediary between the two parties. There are many types of repairs; from changing the wrong settings to treatment of computer viruses of all kinds through, or from replacing hardware to installing an entire operating system Objectives Austratech ltd will be established for the purpose of generating the main source of income for the owner. The specific objectives of the company are: To establish a service-based company, the goal of which is to surpass customer expectations in terms of quality. To generate at least 6% increase in sales annually. Accomplish a customer return rate of 80% after the first year. Keys to Success Excellent service Environment: will be clean, upscale and welcoming to clients Convenience: customers will be provided a range of high quality service in just one stop Location: will be accessible for the convenience of customers Reputation:  credible, trustworthy, and dedicated to the satisfaction of customers. Product and Service offering Austratech ltd will provide services related to computer repairs and retailer. Austratech ltd will also offer other relevant services such as technical equipment, replacement parts, software upgrades and system administration, preventive maintenance of computer and office equipment. Austratech ltd will have deal with each customer on an individual and personalized basis. Hence the management of Austratech ltd will have to satisfy the customized needs of each customer. In this regard it is imperative that Austratech ltd hires skilled and experienced Austratech ltd experts who could complete the job without procrastinating and any delays. In addition to this, these employees should possess high level of ethical values as they will be handling confidential and private data of the customers. The notion of latter characteristic is quite relative and it could not be measured by conventional means. However, the management of Austratech ltd must employ best personal judgment to ensure that its employees adhere to the professional codes of ethics. In essence Austratech ltd will deliver superior customer value and as such it will adopt premium pricing model. In simpler words the prices Austratech ltd charged would be more than the competitors. And to ensure that these heightened price levels are justified Austratech ltd will provide better services to its customers. In this regard Austratech ltd experts will ensure that they arrive on scheduled time and they will provide professional services to its customers. In this regard the individual service and diagnostic kits would prove to be critical for the success of the business model. These kits will allow the Austratech ltd experts to effective and efficiently diagnose the problems with customer’s computer. Furthermore, by utilizing the latest repair tools Austratech ltd experts would be able to repair the computers quickly and efficiently. However, Austratech ltd experts will be able to provide two types of repairs to its customers. Hardware Repairs Austratech ltd experts will primary work with main types of hardware: desktop computers (PCs and servers) and notebooks (laptops and handheld devices). In addition to this the Austratech ltd experts will also provide repair facilities to include a range of peripherals namely; input devices such as keyboards, mice and scanners, output devices such as monitors, printers and speakers, and storage devices from external disks (hard disk is connected by a variety of connections - USB, Firewire, Ethernet, SATA) to special information storage defined as servers. The Austratech ltd experts will also be able to handle network hardware such as routers, lines, optical and other wireless devices. Software Repairs It is quite needless to say that in spite of hardware repair Austratech ltd experts will also deal with software repairs. In this regard Austratech ltd experts will undertake the responsibility to ensure that the customers’ information is protected from any loss. This service is quite unique and the market for data recovery and data protection is quite high. In simpler words by offering this service Austratech ltd will expand its product portfolio. Furthermore, customers’ usually pay premium prices for such services hence, Austratech ltd’s profit margins will increase significantly. In addition to data recovery Austratech ltd experts will also be responsible for changing one or more settings in a customer’s computer. For this the Austratech ltd experts will have to implement more complex techniques such as installation, removal or reinstallation of software packages. Moreover, Austratech ltd will also offer reconstruction services to its customers. The term reconstruction refers to the phenomenon of restoring any computer’s setting and storage to an initial stage. By this method the customers will have their computers to run at a setting which is optimum. In this regard, Austratech ltd could also offer a new product known as data backup; which would allow the customer to save personal settings or important information to ensure safety against system crashes and virus attacks. This new product is also unique as the current competitors are not offering such services on a regular basis. In essence these system settings are usually discretionary for the users. Since most of the people do not even bother to learn these techniques, they completely ignore it. This situation creates an opportunity which Austratech ltd could to exploit to the fullest. Market analysis The most effective and efficient method for the large business enterprises is to tap into their resources and either buy smaller companies or force such companies to terminate their business operations. This situation dictates that entrepreneurs cannot succeed in such a business venture until and unless they break free from conventional markets. Mature markets have become unattractive for new entrants and this conclusion will remain applicable on entrepreneurs (Hill & Jones 2009). Therefore, any entrepreneur who wishes to enter a product market which already exists in economies will have to face numerous problems. And since the rivalry amongst the existing competitors is already very high the entrepreneurs will find it difficult to operate profitably (Hill & Jones 2009). In such a case any entrepreneur will have no choice but to terminate his business. However, if the entrepreneur enters, or rather creates, a non-existent market he will not just survive, but all the avenues of expansion will be available to him. This is the primal reason why entrepreneurs either offer new products or innovative processes (Wüstenhagen 2008). Simply put, these innovative ideas allow the entrepreneurial firms to gain a competitive edge over their existing competition (McDaniel 2002). It is quite needless to say that any entrepreneurial activity will not succeed without new products or innovative processes as the existing competition will devour any such activity (Morris, Kuratko, & Covin 2010). Furthermore, due to the presence of globalization phenomenon every region in the world is following similar trends in market dynamics (Art & Jervis 2005). Hence, it can be concluded that entrepreneurial business entities have become a source for new products and innovative processes and this statement will remain true throughout the globe. The local entrepreneurs cannot simply compete with such large enterprises until and unless they adopt one of two strategies; either introduces new products or innovative processes in the market or plays a niche role and provide something marginally different to the market. Industry analysis As far as the industry is concerned, it has been observed that the market for this company for IT repairs is for all those individuals who own IT hardware and software. The individuals therefore come from the metropolitan areas and have a substantial amount of money willing to be spent on IT hardware and software. The industry therefore amounts to a fraction of 2/3 of the population. It is therefore believed that the company would be grasping almost 30 percent of themarket share. The market would work towards providing Austratech ltd a 25% profit increase with time. There are many companies that provide such services and it has been observed that there is such service available in the current targeted neighborhood. The company has services that work as an extra life and not an obligation;therefore it aims upper class individuals that reside in the selected geographical area. With the fact that there is competition from the industry near the targeted neighborhood, the basic issue to be focused upon would be making the customers aware of the Austratech ltd. The IT hardware and software related spending is expected to stay in growth (Bennett, 2010) Competition The current competitive environment dictates that there are numerous firms operating within the industry and each one of these companies is offering homogeneous services to a wide range of customers. In simpler words there are many suppliers in the market offering similar service portfolio to a diverse group of customers. In such a situation there is enough space for each competitor to grow and expand the market as well. However, during the last few years this industry has witnessed heightened levels of rivalry. Under such circumstances each of the competitors is now working to force others to shutdown; rather than grow as an industry. Hence, it is imperative for Austratech ltd to achieve product and brand differentiation which could be used to attract and retain customers. Competitors in this area include numerous service firms which repair various equipment, major equipment suppliers, which also provide repair services, private individuals and professionals who are operating within the same industry. Primary Target market The business model of Austratech ltd allows the company to enjoy some special privileges which are inherently tied with the nature of work. The most significant of the benefits is the extremely large customer base. In other words, the inherent nature of business allows Austratech ltd to cater to an extremely wide variety of customers. In this regard, Austratech ltd can choose to prioritize a few customers or it could try to capture a large customer base by following undifferentiated segmentation. Some of the customer types include individuals, schools, universities, commercial organizations, shops and entertainment avenues. However, it would be better for Austratech ltd to adopt an 80:20 rule to effectively segment and target a profitable customer base. In simpler words, individual customers would be extremely high in population but there are several negative attributes which can be related to these customers. First and foremost, individual customers are often one time customers; that is after effective service delivery the customer would not come back for a repeat sale. In this regard most of the customers will possess a life time value which is equal to a single sale. In addition to this individual customers would demand more customization which requires additional time and efforts. On the other hand corporate clients are usually seeking strategic partners which could grow with their companies. These companies place large repeat orders which could increase the profitability margins as Austratech ltd would not have to spend on advertising campaigns. In addition to large volumes of sales, corporate clients generally possess similar technology and equipment throughout the floor. Hence, Austratech ltd experts can perform their job more effectively and efficiently. As discussed earlier, these types of strategic partnerships are extremely crucial for Austratech ltd’s success. This believe stems from the view that these organizations are constantly searching for IT support services and these firms tend to pull relevant service providers by themselves. If Austratech ltd can form partnerships with a few of these firms, it could then pursue expansionary policy as the strategic partners would not only improve the client portfolio, they will act as a launching pad for Austratech ltd’s success. Marketing Product Austratech ltd will provide services related to computer repairs and retailer. Austratech ltd will also offer other relevant services such as technical equipment, replacement parts, software upgrades and system administration, preventive maintenance of computer and office equipment. Austratech ltd will have deal with each customer on an individual and personalized basis. Pricing As discussed earlier Austratech ltd will follow a premium pricing model. This is due to the fact that the experienced and qualified technical experts will demand superior salary packages. And these professionals would be able to provide superior value to the customers. Since the repair services will be performed by skilled and qualified workers, the customers will be more than happy to pay a premium price for employing Austratech ltd. The justification for charging a premium price is completely justified by the fact that Austratech ltd is offering superior value to the customers by hiring professional and qualified employees. Distribution Services will be delivered to customers doorsteps. In this regard the customer could call the Austratech ltd’s office or place the order at the Austratech ltd’s website. After receiving the request for a visit the Austratech ltd experts could visit the customer to resolve any problems or issues. Each of the Austratech ltd’s experts will be given a separate diagnostic and repair kit; including all the necessary hardware and software tools, which the expert can use to repair customer’s computers. Promotion Promotion is the single most important aspect of any successful business. This marketing activity encompasses all the instruments and techniques which are used to communicate any company’s voice to the customers. In this regard it is imperative that the management of Austratech ltd lays strong emphasis on developing an effective and efficient advertising campaign. The most notable factor whilst developing an advertising campaign is lack of financial resources. However, this is not an issue because the current business model dictates that advertising should be done via two means of communication. First and foremost, website planning and development should be prioritized. This is due to the fact that a website will serve dual purposes; it can be used to take orders from the customers and it will acts as a billboard on the internet highway. This is the reason why the planning and development of website should be given importance. In addition to website, Austratech ltd must also focus on using specialized e-magazines and blogs to communicate its presence to its customers. This can be easily accomplished by placing e-advertisements with technical helpdesks. These two methods are the cheapest alternatives available to Austratech ltd and even though these methods do not require significant expenses, it will have reach and access to millions of different people. Moreover, if Austratech ltd can successfully create a positive buzz over these websites, it could build upon the brand equity and customer loyalty. In addition to the online sources several advertisements will be placed in local IT magazines. Financial plan Due to lack of financial resources and a very small workforce, Austratech ltd could not simply afford any support staff; including accountant and legal advisor. In this regard these departments will be outsourced to other local firms who specialize in such fields. By doing so, the entrepreneur could ensure that the highly qualified and experienced teams could look after these departments. Furthermore, by outsourcing these operations to other firms, Austratech ltd could reduce its costs, thus these resources could be utilized in other areas of the business. Start-up Funding The start-up costs of Austratech ltd will consist primarily of cash, equipment and fixtures.  The primary owner is seeking a partner to come up with an investment of $100,000 at cost of 12.5% per annum to payable in four years time to supplement his initial capitalization of also $300,000. Table: Start-up Funding Start-up Funding Start-up Expenses to Fund $118,300 Start-up Assets to Fund $281,700 Total Funding Required $400,000 Liabilities and Capital Liabilities Current Borrowing $0 Long-term Liabilities $100,000 Other Current Liabilities (interest-free) $0 Total Liabilities $0 Capital Planned Investment Owner $300,000 Additional Investment Requirement $0 Total Planned Investment $400,000 Loss at Start-up (Start-up Expenses) ($118,300) Total Capital ($281,700) Total Funding $400,000 NB: Start-up Expenses is an assumed figure used for registration, initial rent, legal fees and other cost before business starts Income Statement The sales forecasts for Austratech ltd are calculated as an average mean of various other computer repair firms. The sales figure for Year 1 has been rounded off. In addition to this it has been assumed that sales will continue to grow by a constant sum of $50,000 per annum. During this time no new employees will be hired. The rent expenses shown in the income statement pertain to acquisition of office space and web space; for the website and its maintenance; these facilities are easily available. The net income generated by Austratech ltd’s operation will be constantly increasing with each passing year. And in Year 3, the CEO of the company could utilize these funds and hire a few more Austratech ltd experts which would further increase the revenues. Forecasted Income Statement   Operating Years     Year 1 Year 2 Year 3           Revenues   250,000 300,000 350,000 Rent Expense   5000 5000 5000 Salary Expense   60000 60000 60000 Amortization of start-up expenses   29,500 29,500 29,500 EBIT   155,500 205,500 255,500 Interest on investors funds at 12.5%   12,500 9,375 6,250 Earnings before tax   143,000 196,125 249,250 Tax @ 30%   42,900 57,336 73,275 Net Income   100,100 138,789 175,975 net profit b/d   0 100,100 238,889 retained earning   100,100 238,889 414,864 NB: Interest expense year 1 12.5% of 100,000, = 12,500, Second year 12.5% of 75000 = 9,375 Third year 12.5% of 50000 = 6,250 Balance Sheet The forecasted balance sheet starts at Year 0; the year in which company would be created. During this year the company would incur no liabilities as it would not have started its business operation. However, Austratech ltd would have to invest some funds to acquire necessary assets. These assets include a repair kit and diagnostic equipment. It is estimated that each of these kits would cost around $71,700 and since there are two Austratech ltd experts, for the duration of three year, the net fixed assets will remain fixed at $251,700. The cash and bank balance account is adjusted for retained earnings which are assumed to be 100% of total net income; the underlying assumption behind this is that the entrepreneur is willing to reinvest all his profits to expand and develop Austratech ltd’s operations. The store and spares account contains all equipment and assets which are necessary for Austratech ltd’s business operations. These assets include individual laptops for both of the Austratech ltd experts; each of these laptops is estimated at $800. In addition to laptops each Austratech ltd expert would be assigned some other necessary tools; including electronic meters, soldering irons and other spares. The value of this equipment is rounded to $200 per Austratech ltd expert. It is quite interesting to note that the inventory levels are always at $0 at beginning. Forecasted Balance Sheet   Operating Years   Year 0 Year 1 Year 2 Year 3 Assets: Repair Kit 71,700 71,700 71,700 71,700 Diagnostic Equipment 180,000 180000 180000 180000 Net Fixed Assets 251,700 251,700 251,700 251,700 Start-up cost to amortized $118,300 88,800 59,300 29,800 Cash and Bank balance 30,000 92,500 232,225 434,639 Inventories   5000 8000 9000 Store and Spares   80000 95000 88000 Total Current Assets 30,000 177,500 335,225 531,639 Total Assets: 400,000 518,000 646,225 813,139           Liabilities and Equity: Tax Payable   42,900 57,336 73,275 Borrowing 100,000 75,000 50,000 25,000 Retained Earnings (Reserve Funds)   100,100 238,889 414,864 Equity 300000 300000 300000 300,000 Total Liabilities + Equity 400000 518000 646225 813139 Nb: 1. Retained earnings is the net profit for year plus the previous year retained earnings 2. cash at bank is the balancing figure in balance sheet 3. Amortization is done at 25% of start-up Expenses to Fund at straight-line method 25% of 118300= 29,500 for year 1 and balance in balance sheet $88,800 Critical risks There are certain risks that Austratech ltd is to encounter; these would be associated with business modelling competition, financial voluminous small business, loss of financial capital in case of business mismanagement and late submission of organizational dues by the clients (Taylor-Downer, Hamilton & Taylor, 2000). So far we have launched mechanisms and incubation trainings to determine the potentiality and viability of proposed business ventures. We are also working on direct remittance of the intended commission to Austratech ltd organization once the clients receive their profit. 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