Toy Company - Market Opportunity, Financial Data, Environmental, and Industry Analysis - Example

Toy Company Business Plan Name Date Course Table of Contents Table of Contents 2 Executive Summary 3 Company Information 4 Market Opportunity 4 Financial data 5 Environmental and industry analysis 7 Nature of the Industry 7 Five forces analysis 8 Threat of new entrants 8 Threat of substitute products or services 8 Bargaining power of customers 9 Bargaining powers of suppliers 9 Intensity of competitive rivalry 9 Manufacturing and Operational plan 10 Management Team 11 Chief Executive officer 11 Human resource management officer 11 Chief financial officer 11 Production manager 12 Marketing manager 12 Logistics manager 12 Benefits to Community 13 References 14 Appendix 16 Executive Summary The company will be named Toysco Limited and it will be involved in the manufacture of toys for children. The products of the company will be of high quality and innovative in order to meet the needs of the customers. The industry has a high potential as its products is required by every child. The toy industry is profitable and it is also experiencing growth. A capital of $ 200,000 will be required by the company and it will be financed by personal savings as well as a bank loan. The competition is however high in the industry and the leading companies in the industry includes Agglo and Applied Minds. The industry was able to generate revenue of $ 22 billion in 2012 in the United States of America. This is an indication that the industry has a high potential. The company will be involved in mass production which will be facilitated by the use of technology. The five forces analysis indicates that the company has a potential of being successful. The company will be managed by highly qualified management team. The management team of the company will be composed of the Chief Executive officer, Human Resource Manager, Production Manager, Marketing manager, logistics manager and the Chief Financial officer. The company will be involved in corporate social responsibilities. The company will build the rods, provide scholarships to students and provide free healthcare services to the community. The community will also benefit from employment opportunities which will improve their social status. The company will be involved in the environmental protection activities in order to avoid any negative impacts on the employees and the local people. Company Information The company will be operating in the manufacturing industry under the name Toysco Limited. The main products of the company will be toys for both boys and girls. A variety of high quality toys will be manufactured by the company and this will include the remote controlled toys that are currently popular among the children. The dolls that are common with the girls will also be manufactured by the company. The form of business for the company will be partnership and it will have a total of 5 business partners who will also be the directors of the company. The partnership business is advantageous in terms of raising capital as the business requires a high amount of capital (Longenecker, et al, 24). The use of technology during the production process will be applied for the purposes of improving on quality of the toys. The use of technology will also play an important role in ensuring that the goal of mass production is achieved. Mass production will be important in ensuring that the company is able to supply its products to a high number of customers. The brand image of the company will also be enhanced for the purposes of ensuring that it has a good relationship with the customers. The owners of the business are former university graduates who are highly motivated and equipped with business ideas. The main objective of the company will be to ensure that the customers receive high quality and modern toys at affordable prices. Market Opportunity The toy market has a huge potential both in the local as well as the international market. The number of customers in the market is on the increase which has created a gap. The industry is also faced with some challenges in terms of lack of innovations. The existing companies in the market are not innovative enough and the same products have been sold over a long period of time (Sethi, et al, 487). However, with the advancement in technology and changes in the customer needs, new products are required. The company therefore has an opportunity to come up with unique and innovative products that meets the need of the current customers. The current trend I the industry indicates that the customers who are mainly the children prefer innovative products that have elements of technology. This means that the children prefer the toys that have different technological features. It is increasingly difficult for the customers to purchase the ordinary toys which do not have any technological features. The company is set to occupy at least 25% of the market share within three years of operations. The company will be in a position to achieve a high degree of growth and development due to the use of technology and ability to meet the needs of the customers. The market trend in the industry is an important factor that can be used for the purposes of developing the strategies of an organization. The toy industry has a great potential but the organization has to meet the needs of the customers. Financial data The amount of capital that will be required by the company will be $ 200,000. The company will raise its capital from contributions as well as bank loans. The contribution from the members will be $100,000 while the bank loan will be $100,000. The loan from the bank will be paid within a period of three years. Negotiations will be carried out with the bank for the purposes of avoiding high interest rates that may affect the operations of the company. All the financial information will be prepared by the chief financial officer of the company. The sources of business financing are an important aspect that determines the ability to raise adequate capital required for carrying out different activities. The company will also be required to carry out its activities with the aim of making profits. This is for the purposes of ensuring that it is able to pay for the bank loan. The profits and losses will be shared among the members depending on their contributions and shares at the organization. All the laws and regulations with regards to financial reporting within the company will be observed. This is for the purposes of avoiding any legal problems. The accounting books of the company will be updates by the Chief Financial officer and handed over to the management team and the CEO for analysis. Pro forma profit and loss Year 1 Year 2 Year 3 Sales 150000 300000 450000 Direct cost of sales 50000 75000 100000 Other cost of goods 0 0 0 TOTAL COST OF SALES 50000 75000 100000 Gross margin 100000 225000 350000 Gross margin % 50 60 30 Expenses Payroll 50000 100000 150000 Marketing 5000 15000 25000 Depreciation 1000 2000 3000 Rent 5000 5000 5000 Utilities 500 1000 1500 Insurance 1000 1000 1000 Payroll taxes 300 600 900 Other expenses 1000 2000 3000 Total operating expenses 63800 126600 189400 Profit before taxes 31200 98400 160600 Taxes 5000 10000 15000 Net profit 26200 88400 145600 Environmental and industry analysis Nature of the Industry The toy industry is stable and mature as it has been operating for a long period of time. A highly fragmented retail channel is in place for the purposes of ensuring that the products reach the customers. The competition is high in the industry and the digital gaming products are also increasing competition within the organization. In the industry, there are both large and small manufacturers which have contributed to the high levels of competition. In 2012 alone, the revenue for the industry in the United States of America was $ 22 billion. This is an indication that the industry is profitable and has the potential of generating a huge amount of money. Lego is the industry leader in the United States of America and it occupies a market share of about 85% (Robertson & Bill, 13). The industry is set to undergo a growth of up to 9% in the next ten years. The main customers of the products of the industry are the children who are below the age of 17 years. Every child at one point has to purchase or posses a toy. This has made the industry quite lucrative and profitable. The industry is also set to attract a high number of companies that are competing for a market share in the industry. This is due to its lucrative nature. The industry is receiving a lot of support from different stakeholders who believe that children will be more health when playing with their toys. This is because it encourages physical activities as compared to the children playing the digital games. Five forces analysis Threat of new entrants The toy industry is quite lucrative and profitable due to the nature of the demand. As a result of the profitability, the threat of new entrants is quite high. The industry does not require much capital which is a barrier to entry in most of the industries (Ong, et al, 23). However, a company has to obtain patent rights in order to operate successfully in the industry. The government policies with regards to the industry are not strict although the companies may be required to observe some rules and regulations. The customer loyalty in the industry is however high which may affect the new entrants. Threat of substitute products or services The threat of substitute product and service is low in the industry. Most of the children prefer playing with their toys and it has been a common practice all over the world for a long period of time. However, it is important to ensure that the changes are made in the design so as to meet the needs of the customers. The computer games are increasingly becoming popular among the children (Hora, et al, 777). However, it does not cause any threat to the products of the industry as it is equally popular and important among the children. The low levels of threats of substitute products are an advantage to the industry. Bargaining power of customers The bargaining powers of the customers in the toy industry are lower than that of the company. A higher bargaining power of an organization is an advantage as it can control the market (Bharadwaj, et al, 473). The company will therefore be responsible for setting the prices of its products. The company should however be in a position to meet the demands of the customers and ensure that the prices of products are affordable. The customers despite having a lower bargaining power may not purchase the product in case the prices are too high and the quality is too low. Bargaining powers of suppliers The industry relies of different suppliers for the purposes of manufacturing the toys. The materials required for the manufacture of the toys are readily available and some of the materials can be recycled. A high number of suppliers are present in the market. The presence of high number of suppliers reduces the bargaining powers of the suppliers. The company will therefore have higher bargaining powers than the suppliers. It is easy to finds supplier in the market as most of the suppliers bare competing with each other for contracts to supply the different raw materials. Intensity of competitive rivalry The intensity of competitive rivalry in the industry is high in the market. The companies are actively involved in competing for the customers. As a result of this, a lot of advertisements are in place for the purposes of marketing the products. Agglo and Applied Minds are the top companies in the industry and the intensity of the rivalry is quite high (Ouyang & Munan, 50). The company will therefore be required to come up with competitive strategies in order to deal with the high level of competition in the market. The competitive strategies will be important to the company in ensuring that it is able to increase its market share. Manufacturing and Operational plan The manufacturing plant of the company will have a warehouse that will be located in an environment that is far from the residential areas. This is for the purposes of avoiding any negative effects to the people. Some of the activities of the company may have effects on the people in case the manufacturing plant will be located near residential areas. The premises of the company will occupy an area of 50X50 meters. The offices of the company will also be hosted at the manufacturing plant. The manufacturing plant of the company will be automated for the purposes of ensuring that the operations are made easy. Technology will be used for the purposes of dealing with the logistics as well as the investors of the company. A recycling plant will also be set up within the facility for the purposes of ensuring that all the wastes produced are recycled. Recycling of wastes is an important environmental protection aspect. The company will also embrace the concepts of green energy in order to promote the environmental protection and reduce the emission of greenhouse gases. The design of the facility will be carried out in consultations with a highly qualified architect and engineers. The Health and Safety aspects will be considered during the design of the building. This is for the purposes of ensuring that all the employees can work in a safe environment that is free of any injuries. The company will mainly rely on the local people for labour. Management Team Chief Executive officer The Chief Executive officer of the company will be responsible for the overall supervision and operations of the company. The holder of this position must have at least 5 years experience in management position. In terms of the educational qualifications, the Chief Executive Officer must have at least a master’s degree in the field of business or management. The high qualifications are due to the sensitive nature of the operations that has to be carried out by the position holder. The Chief Executive officer will also be responsible for the development of strategies required by the organization. Human resource management officer The human resource management officer at the company will be in charge of managing the resources of the company. The welfare of the employees as well as any other issues affecting the employees will have to be managed by the Human resource management officer. The Human Resource management officer at the company will act as a link between the employees and the management. The holder of this position must have a Bachelors degree in human resource management and a master’s degree will be an added advantage. At least three years of working experience will be desirable for the position. Chief financial officer The chief financial officer of the company will be responsible for the management of all the financial resources of the company. The preparation of the financial statements as well as all the financial information of the company will be carried out the Chief financial officer. Al the financial plans of the company have to be approved by the chief financial officer. The holder of this position must have at least five years working experience and a degree in accounting. The holder of the position must be a person of high levels of integrity as the finances of the company will be under their custody. Production manager The production manager will be in charge of the production process at the company. This will also involve all the technical activities at the company. The production manger will also be responsible for the quality of the products. The production strategies will be developed by the production manager. The holder of this position must be a registered mechanical or production Engineer. Marketing manager The marketing manager of the company will be responsible for the marketing activities of the company. Marketing is an important aspect for any business as it ensures that creation of awareness among the customers is achieved. The marketing manager will be required to consult the other members of the management from time to time. The building of brand image of the company will also be carried out by the marketing manager. The holder of this position must have a degree in the field of marketing and five two years working experience. Logistics manager The logistics manager in the company will be responsible for the supply chain, inventory and the logistics within the company. The logistics manager has to ensure that the company has adequate raw materials for the production process. The delivery of finished products to the customers will be under the logistics manager. The logistics manager will also be in charge of transport at the company. The holder of this position must have a degree in supply chain management and logistics. The holder of the position must have at least two years working experience. Benefits to Community The company will have a lot of benefits to the community living in the region where it will be carrying out its manufacturing process. The local people will be employed at the company for the purposes of carrying out different operations. This will be useful in terms of ensuring that the economic status of the community members is improved. The company will be engaged in corporate social responsibility for the purposes of benefiting the community. Corporate social responsibility is important for an organization as it is an opportunity for giving back to the society (Samuelson & Hans, 18). The company will build roads for the community as it will also be using the roads for transportation purposes. A dispensary will also be built and the community members will be provided with free medical services for the small ailments. The provision of free medical service will be useful in terms of improving the health of the community members. A foundation will also be established by the company and it will offer scholarship to the students in the community. The scholarship will mainly be for the purposes of enabling the students to pursue higher education. The standards of the community members will therefore be improved by the company. Adequate measures will be put in place for the purposes of ensuring that the environment is protected. Environmental protection is parts of the corporate responsibility of an organization. The recycling plant as well as the green strategies will be useful in protecting the environment from negative effects such as pollution. The health of the employees as well as the community members will be given the first priority by the organization. References Sethi, S. Prakash, et al. "Mattel, Inc.: Global Manufacturing Principles (GMP)–A Life-Cycle Analysis of a Company-Based Code of Conduct in the Toy Industry." Journal of business ethics 99.4 (2011): 483-517. Robertson, David, and Bill Breen. Brick by brick: How LEGO rewrote the rules of innovation and conquered the global toy industry. Crown Business, 2013. Ong, Derek Lai Teik, et al. "An exploratory study of the factors influencing Generation-Y's purchasing intention within the toy industry in Malaysia." Academy of World Business, Marketing and Management Development Conference Proceedings. Vol. 6. No. 1. Academy of World Business, Marketing and Management Development, 2014. Hora, Manpreet, Hari Bapuji, & Aleda V. Roth. "Safety hazard and time to recall: The role of recall strategy, product defect type, and supply chain player in the US toy industry." Journal of Operations Management 29.7 (2011): 766-777. Zhu, Yun Feng. "A Study on Development and Design of Toys for Intellectual and Physical Prompting Purpose." Applied Mechanics and Materials. Vol. 271. 2013. Ouyang, Jing, and Munan LI. "Research on the Influence of Regional Culture on the Innovation Evolution of Industrial Clusters-Taking Toy Cluster of Chenghai as an Instance." Science and Technology Management Research 9 (2014): 050. Bharadwaj, Anandhi, et al. "Digital business strategy: toward a next generation of insights." MIS Quarterly 37.2 (2013): 471-482. Samuelson, Paul A., and Hans Christian Anderson. "Corporate social Responsibility." Morality and the Market (Routledge Revivals): Consumer Pressure for Corporate Accountability (2014): 43. Longenecker, Justin, et al. Small business management: Launching and growing entrepreneurial ventures. Cengage Learning, 2011. Appendix Layout Read More