Investment Analysis and Appraisal - Oman - Case Study Example

Investment Analysis and Appraisal Name Course Tutor Institution Date Introduction Business investment analysis, characterized as the procedure of assessing a speculation for risks and benefits, eventually has the reason for measuring how the given speculation is a solid match for a portfolio. The analysis can run from a solitary security in an individual portfolio, to the venture of a new company, and even huge scale corporate undertaking. This paper provides a prospective investor in Oman with the suitable business plan and how the proposal can be a success to the investor. Business proposals Mobile phone production Mobile phones are extensively globally in the daily to daily life of almost every person. The phone presents convenience to each and every individual either in their private life or business life. This has made the mobile phones to be almost irreplaceable in the lives of individuals. The technology development in addition to the global economy has made the mobile phone industry to flourish so much. The increased availability of mobile phones in Oman at a wide range of costs, and the advanced lowering of the price of as solitary phone coupled with the increased demand of mobile phones from different clients in Oman has supported the growth of the mobile phones in the country. Due to technological advancement, the demand of the mobile phones keeps on increasing in Oman. The country has a vibrant mobile market with more than 177% mobile phone usage penetration (Muscat Daily News, 2012). The idea of mobile phone investment in Oman is a great one which the investor should be enthusiastic about. The Oman mobile phone market is growing due to the country’s ever growing economy. The country has a high population and the per capital income is growing (Vaidya, 2015). This means that there is an increase in the middle class. The population is has a young age with more than half the population being below the age of 30 years. The competitors for the market would come from the already established mobile phone manufactures including Nokia, Samsung, Motorola, HTC, Blackberry, Apple, Sony and Huawei (Muscat Daily News, 2012) Most of the raw materials for the manufacture of mobile phones will be imported from Asia where there are manufactured at a cheap cost. This will lower the cost of production as compared to local sourcing of the raw materials. As per the Omani laws and regulations, Part 2 Article (11) each company should satisfied the Omanization percentage that specified by the law. And the investor will create different opportunities for Omani population to work in his business and prevent unemployment and spread. Laptop production A laptop can be described as a personal computer which is portable and appropriate for mobile use. Due to their portability, Laptops can be used in almost every kind of setting including for personal use, at school, work and. The competitors in this field include Dell, HP, Sony, Apple, Lenovo, Samsung and Toshiba. The blue prints for various important IT initiatives in Oman are outlined by the eGovernment and strategy in Oman referred to as e.oman and the Oman digital society. These initiatives are aimed at empowering the oman population through provision of interaction via the eServices. The integration of the IT in the school curriculum and more than 85% of the schools connected to the internet shows that there is high usage of computers in learning institution especially the higher institutes. There is also a high percentage use of computers among the public sector employees. All these indicate a high demand of the product. The investment will strengthen the local capacity for the assembly/ manufacture of laptops as well as creating job opportunities for the skilled youths in the country (Muscat Daily News, 2014). Most of the raw materials for the manufacture of mobile phones will be imported from Asia where there are manufactured at a cheap cost. This will lower the cost of production as compared to local sourcing of the raw materials. As per the Omani laws and regulations, Part 2 Article (11) each company should satisfied the Omanization percentage that specified by the law. And the investor will create different opportunities for Omani population to work in his business and prevent unemployment and spread. Figure 1: Increased Use of Laptop to Access Internet Television manufacture The worldwide business for extra-large TVs is bouncing back as buyers supplant their flat screen gadgets that entered into the business 10 years ago. In 2014, The media showcase in the Middle East was esteemed at $15.5 billion, and it went from quality to quality with the assistance of the TV fragment. Research by Strategy&, shows that the TV market will increase by more than 3% - 4% annually for the following 4 years (Strategy&, 2015). With current patterns flagging upward development, producers are testing examiners who say that advanced substance and gaming will slow down the locale's TV advertise in impending years with further interests in TVs. Since the time that the presentation of the world's first Internet-empowered TV in 2010, the brilliant TVs have turn out to be more prescient, more advantageous and more easy to use with each new line-up (Strategy&, 2015). With new employments and pay rises individuals' discretionary cash flow has gone up and they are moving from old TV sets to the most recent ones. Youthful Omanis are settling on new houses subsequent to getting occupation which is boosting the development for electronic equipment. As the economy is developing and the legislature has reported more employments, we are extremely energetic about the proceeding with development of the shopper gadgets market. The competitors in this field include Sony, Samsung, LG and Panasonic which command the biggest share of the TV market globally. The raw materials for the manufacture of the television will be imported from Asia at a cheaper cost than the local materials. As per the Omani laws and regulations, Part 2 Article (11) each company should satisfied the Omanization percentage that specified by the law. And the investor will create different opportunities for Omani population to work in his business and prevent unemployment and spread. Figure 2: Increase in the Demand for TV in Oman Air conditioners An air conditioner is electrical equipment that is utilised for cooling the air temperature in a building. The process of air conditioning is mainly achieved by a refrigeration cycle although at times is also through free cooling or evaporation.With the Oman government setting up the steel industry in the country, most of the raw materials (metallic sheets) would be locally available. The aluminium piping which are major components of the system can be acquired locally from the aluminium factories. The commercial and residential demand for the air conditioners has increased tremendously in the entire globe. The product manufactures have increased the efficiency of the equipment as well as technology and components improvement. Due to the increased demand for the air conditioners, the industry competitiveness has also increased and the companies manufacturing the conditioning system and units are on the rise (Oeronline, 2015). During the summer, the temperatures are high which makes homes of offices uncomfortable. With the air conditioners people don’t have to worry about the temperatures any more. The air conditioners bring comfort when the air is humid and hot. This means there is already a ready market for the products in the country. The products can also be imported to the neighbouring countries. There are more than 20 main competitors in this field including: Zamil Air Conditioners, Airedale International Air Conditioning Ltd, Sharp, Panasonic, Eurostar, Electrolux, LG, Daewood, Toshiba etc. the air conditioner marke in Oman accounts for 70% of all the white goods market business. The air conditioning products market size constitutes over 200,000 units annually in Oman (Oeronline, 2015). As per the Omani laws and regulations, Part 2 Article (11) each company should satisfied the Omanization percentage that specified by the law. And the investor will create different opportunities for Omani population to work in his business and prevent unemployment and spread. CCTV Camera Production CCTV (Closed-circuit television) cameras are used to recording surveillance footages either as still images or videos. The CCTV cameras have the highest market share globally in the security field. The apparent security risk running from wrongdoing, terrorist action and interior extortion holds on. There is additionally a need to oversee and check forms for regulation and protection purposes (Towler, 2012). Governments are executing more prominent fringe security and there is expanding interest for the insurance of basic framework locales, for example, utility establishments, government offices, pipelines and transport centres. Consistent urbanization, extension of open transport systems and very exposed security episodes are driving security spending in numerous offices. Because of innovative development and incorporation of frameworks, the interest by framework integrators for gifted work will keep on growing. There remains a high level of partnership and obtaining action, which is required to proceed for quite a long while as the business combines. Security has turn into a characteristic piece of our ordinary lives, and we can anticipate that it will turn out to be considerably more present and regularly discrete both inside and outside our structures (Towler, 2012). There are over 500 CCTV camera manufactures selling their products in Oman. The competition in this investment is stiff. The raw materials for the production of CCTV cameras can be imported from Europe, Asia and America. As per the Omani laws and regulations, Part 2 Article (11) each company should satisfied the Omanization percentage that specified by the law. And the investor will create different opportunities for Omani population to work in his business and prevent unemployment and spread. Figure 3: World market share by security system type Systematic index analysis Mobile phone production Factors Factor weight Rating Factor score (%) VG-5 G-4 A-3 P-2 VP-1 Profitability 30% ✓ 30/100*5 = 1.5 Input availability 20% ✓ 20/100*4 = 0.8 Risk 20% ✓ 20/100*2 = 0.4 Adequacy in market 20% ✓ 20/100*4 = 0.8 Compatibility of promoters 10% ✓ 10/100*2= 0.2 100 Total 3.7 After analysing factors and doing calculations the mobile phone score is 3.7 Laptop production Factors Factor weight Rating Factor score (%) VG-5 G-4 A-3 P-2 VP-1 Profitability 30 ✓ 30/100*1 = 0.3 Input availability 15 ✓ 15/100*2 = 0.3 Risk 15 ✓ 15/100*4 = 0.6 Adequacy in market 20 ✓ 20/100*5 = 1.0 Compatibility of promoters 10 ✓ 10/100*3 = 0.3 Total 100 2.5 After analysing factors and doing calculations the laptop production score is 2.5 Television production Factors Factor weight Rating Factor score (%) VG-5 G-4 A-3 P-2 VP-1 Profitability 25 ✓ 25/100*4 = 1.0 Input availability 30 ✓ 30/100*2 = 0.6 Risk 10 ✓ 10/100*3 = 0.3 Adequacy in market 20 ✓ 20/100*4 = 0.8 Compatibility of promoters 15 ✓ 15/100*2 = 0.3 Total 100 3.4 After analysing factors and doing calculations the TV production score is 3.4 Air Conditioner (AC) production Factors Factor weight Rating Factor score (%) VG-5 G-4 A-3 P-2 VP-1 Profitability 35 ✓ 35/100*2 = 0.7 Input availability 15 ✓ 15/100*5 = 0.75 Risk 20 ✓ 20/100*3 = 0.6 Adequacy in market 15 ✓ 15/100*5 = 0.75 Compatibility of promoters 15 ✓ 15/100*2 = 0.3 Total 100 2.9 After analysing factors and doing calculations the AC production score is 2.9 CCTV Camera Production Factors Factor weight Rating Factor score (%) VG-5 G-4 A-3 P-2 VP-1 Profitability 20 ✓ 20/100*4 = 0.8 Input availability 10 ✓ 10/100*2 = 0.2 Risk 30 ✓ 30/100*3 = 0.9 Adequacy in market 20 ✓ 20/100*4 =0.8 Compatibility of promoters 20 ✓ 20/100*2 = 0.4 Total 100 3.1 After analysing factors and doing calculations the CCTV Camera production score is 3.1 Market analysis The market analysis involved the following steps. Situation analysis The situation analysis of this investment will be done through the competitor analysis, industry analysis swot analysis as well as customer analysis. Secondary data collection The secondary data concerning the mobile phones in Oman is readily available from the market research done by the telecommunication companies. Additional data can be collected from reports by the government, Ministry of Transport & Communication, Sultanate of Oman - Ministry of National Economy and Telecommunications Regulatory Authority. Economic as well as academic journals will also be used. Market survey The market survey on mobile phones will be carried out on bigger groups of individuals in form of questionnaires. The information to be collected will touch on different aspects of mobile phone specifications like the colour, weight, cost, size of the phone, size of the screen etc. in the process of data collection, the sample size must be determined, questionnaires developed and data collectors recruited. Once the questionnaires are developed, data collection will take place followed by data analysis. The analysed data will be studied and from there a conclusion can be deduced (Blogger, 2010). Market characterization According to Blogger (2010),Market characterization can for the most part be well-defined as an evaluation of the functioning and structure of a market, the basic role of which is to see how the business sector works keeping in mind the end goal to have the capacity to viably change the route in which the business functions (McNeil, 2005). According to the primary and secondary data collected, the mobile phone market in Oman can be described as follows: Demand: there are diverse models of mobile phones and mobile phones are used by almost everybody but with the youth being the highest users. The mobile phones can be used in all the regions in Oman since the telecommunication companies and service providers have ready infrastructure. Price: the recommended retail price for the mobile phones will be determined after summing up all the cost of manufacturing and the profit margin of the investor. Distribution: the mode of distribution of mobile phones in Oman can be through partnership with the already established electronic wholesalers who will deliver the product closer to the customer. The investor can also enter into partnership with the mobile phone service providers to display the phones in their sales shops all over the country. The company should also export the mobile phones to the neighbouring countries to increase the sales of the product. Competition: The, mobile phone industry has many players therefore the competition is high. Some of the notable brands in the market include Samsung, IPhone, LG, Huawei, Sonny etc. Government policy – include legislations of mobile phone products, taxes structure, licensing, import and export restrictions and penalties. Market planning Marketing is the procedure of creating and executing a strategy to recognize, foresee and fulfil buyer demand, so as to realise a profit. The two fundamental components of this arrangement are statistical surveying to recognize and expect client necessities and the strategizing of a proper marketing mix to meet these prerequisites. Statistical surveying includes assembling and recording data about buyers, business sector, competitor, and the product in a composed way. Current marketing situation In this part, there will detailed data with respect to the business sector size, development, shopper goals and buying conduct (McNeil, 2005). Besides, the focused circumstance will show the pioneers' rivals in market, their targets, techniques, qualities, shortcomings, creation limit, opportunities in import and export and so forth likewise, it will distribution capabilities of the competitors and portray the matters identified with impact of economic, social, technological, political as well as other exterior market variables. Swot analysis Swot analysis will discuss the strengths, weakness, threats and opportunities of the product. Swot analysis will help the management of the organisation to identify the opportunities present that can be exploited. Through understanding of the weaknesses of the organisation, the management can manage to do aware with the threats that would catch them unaware. Objectives Marketing objectives will characterize what the organisation management need to achieve through their product marketing exercises. There are imperative variables that the management of the organisation will have to consider when establishing operative marketing objectives. The marketing objectives should be SMART i.e. Specific, Measurable, Achievable, Realistic and Time bound objectives. Location of the Industry The location is very important for any business organization. The investor needs to consider several factors before deciding on the best location for their business. Sohar city is a viable location to set up the industry. The Sohar industrial port in Sohar city there have been industrial developments thereby making the city to be considered as the industrial hub in the country. The following factors make Sohar city a suitable investment location. Sohar city is the fifth most populated urban centre in Oman. This would provide labour for the factory. The Port of Sohar has premeditated importance and is also a world class port. The importance of competitive and efficient port is that it drives greater trade with other nations. The port will provide the main transport method for the import of raw materials and the export of finished goods to international market. The city has a developed transport network. The transport network is paramount in the delivery of raw materials and dispatch of goods to the local market. The cost of land is reasonable in Sohar city. The investor will incur less cost in the acquisition of land to set up the factory. The availability of the institution of higher learning in Sohar city will provide skilled labour to the organisation. Ownership of the Organisation Majority of business owners who are knowledgeable have their eyes focused on the revenue and therefore they are attentive on chances that will lead to growth, extra market share and profitability. In the midst of different growth approaches available, as a new investor it would be advisable to consider a Limited Liability Company (LLC). LLC is a blend of operational flexibility and tax efficiencies of a partnership and the limited liability components of a partnership. The owners of the LLC are known as members who can consist of a solitary individual, or a group of individuals, corporations or other LLCs (Spadaccini, 2007). Features of a Limited Liability Company Limited Liability: members of a LLC are offered limited liability. Despite the fact that individuals, supervisors and workers remain accountable for their civil wrongs, or own torts, an LLC associate is shielded from obligation for torts conferred by different individuals, directors or workers. This element permits management the flexibility to contract representatives and direct high-obligation business that would somehow put the individuals' personal resources at risk in a claim. Taxation flexibility: LLCs have flexible taxation terms. These elements are taxed as either sole proprietorships on account of solitary individual LLCs, partnership for group of individuals LLCs or enterprises solitary or group members associations. This adaptability gives individuals the capacity to pick the type of taxation that bodes well with the business. Simple documentation: Most governments don't require a yearly shareholders' meeting and the specialist planning and documenting of minutes of that meeting. LLC individuals, dissimilar to shareholders in a company, are additionally by and large not needed to designate a top managerial staff to run the organization. Recordkeeping is additionally considerably less oppressive than with organizations. Separate legal existence: An LLC has a different legal existence separated from its individuals. An LLC is a different lawful element: it can purchase and offer property, employ representatives, institute claims and hold lawyers to guard claims against it. In spite of the fact that state law in regards to LLC operation differs, an LLC can typically keep existing even after an associate withdraws. Figure 4: Organisational Structure Organizational structure Organisational structure is the normally various levelled game plan of lines of power, correspondences, rights and obligations of an association. Authoritative structure decides how the parts, force and obligations are allotted, controlled, and composed, and how data streams between the diverse levels of administration (Spadaccini, 2007). A structure relies on upon the association's goals and method. In a concentrated structure, the top layer of administration has the majority of the choice making power and has tight control over offices and divisions (Zott, Amit and Massa, 2011). Advantages This organisation structure Contribute in wiping out the duplication of endeavors, for occurrence the elements of promoting is just executed by the showcasing division and its not needed to build up another office which bring about using the human and assets successfully. Offers better organization if the different elements of organization are separated into diverse divisions. Allows better correspondences among the administration and staff, where workers might correspond with their administrator in matters regarding work, upgrades, recommendations, and other issues and the supervisor will convey their voice and prerequisites to top administration. Allows specialization to occur where each and every manager will take their obligations which bring about better work and accomplishments and the work will be fulfilled in much lesser time. Offers the most elevated productivity and profitability of laborers on the grounds that if the specialists work in their specialization and practical region, they can perform the undertakings with abnormal state of value and rate effectiveness. Likewise, they can work and continue with high certainty and least measure of slip-ups because of the clearness and clarity of vocation. Helps with upgrading and expanding the administrative proficiency because of the performing same work, along these lines this outcome in benefit amplification. Disadvantages Disadvantage of this structure is that it can bring about interior unpredictability. A few workers may get to be confounded as to who their direct manager may be. The double power and correspondence issues may bring about division among workers and administrators. Absence of coordination and hardship between different departments within the organization The organisation structure is costly to maintain The communication of workers may bring about unfortunate rivalry between supervisors inside an organization The rivalry for alarm assets may bring about unfriendly atmosphere inside the working environment and thwart production Miscommunication and inadequate overseeing can bring about employee disappointment and low confidence. Delayed issues may bring about an association to experience high representative turnover In conclusion, investment in the mobile phone production would be a viable investment in Oman for the investor. References Blogger, (2010) Market and demand analysis, available from: http://commercelearner.blogspot.com/2010/09/market-and-demand-analysis.html . Accessed on 13/4/2015 McNeil R,2005, Business Market Research,UK. Kogan Page Muscat Daily News,. (2012). Oman's consumer electronics market to touch RO280mn this year: BMI,Oman. Retrieved 23 June 2015, from http://www.muscatdaily.com/Archive/Business/Oman-s-consumer-electronics-market-to-touch-RO280mn-this-year-BMI-1oj7#ixzz3dqb9NYzQ Muscat Daily News,. (2014). 80% households in Oman have Internet access - Oman. Muscat Daily News. Retrieved 23 June 2015, from http://www.muscatdaily.com/Archive/Oman/80-households-in-Oman-have-Internet-access-2ys6#ixzz3dp66sjza Oeronline,. (2015). :: OER - April - 2015 ::. Oeronline.com. Retrieved 23 June 2015, from http://www.oeronline.com/php/2015/april/spotlight.php Oman Labour law. Spadaccini M, 2007, Business Structure: Forming Corporations, LLC, Partnership, or Sole. USA .Entrepreneur Press, Strategy&,. (2015). Update Press release display page (Middle East). Strategyand.pwc.com. Retrieved 23 June 2015, from http://www.strategyand.pwc.com/me/home/press_media/management_consulting_press_releases/details/55045519 Towler, J. (2012). Electronic security systems market experiencing worldwide growth. Cablinginstall.com. Retrieved 23 June 2015, from http://www.cablinginstall.com/articles/print/volume-20/issue-5/features/electronic-security-systems-market-experiencing-worldwide-growth.html Vaidya, S. (2015). 65% mobile users in Oman move to smartphones. Gulfnews.com. Retrieved 23 June 2015, from http://gulfnews.com/business/sectors/telecoms/65-mobile-users-in-oman-move-to-smartphones-1.1202386 Zott, C., Amit, R., & Massa, L. 2011. The business model: recent developments and future research. Journal of management, vol. 37, no. 4, pp 1019-1042. Appendix Figure 1: Increased Use of Laptop to Access Internet Figure 2: Increase in the Demand for TV in Oman Figure 3: World market share by security system type Figure 4: Organisational Structure Read More