NewCo Business Plan Analysis - Assignment Example

NewCo Business Plan Analysis [Student’s Names] [Institutional Affiliation] NewCo Business Plan Analysis Introduction A business plan is an important document considered by both investors and entrepreneurs when seeking to invest in a business. This tool aids the entrepreneurs in setting milestones and determining a number of risks that is expected of them when undertaking a business idea. Through the business plan, entrepreneurs are able to describe the products or services, set long and short-term goals, get an insight of the industry and have an overview of what the budget of the venture may be like both in initial and advanced stages. Entrepreneurs are therefore liable to conduct due diligence on a business plan in order to identify the missing points that need consideration prior to investing in a business. The process of due diligence on a business plan scrutiny of its strengths and limitations or weaknesses and coming up with a proposal of how the business plan can be revamped to suit the entrepreneur or investor. Due-Diligence for NewCo Business Plan (An Entrepreneurial View-point) The due diligence on NewCo business plan engages three major steps: statement, strengths and weaknesses and proposal for improving the plan. Statement We are entrepreneurs who seek to start the business as NewCo that is going to operate in Kenya. As entrepreneurs, there are few specifics that we expect to include or exclude in a business plan. Strength and Weaknesses of NewCo Business Plan Strengths The business plan has a plethora of features that appear to sum up as its strengths. First off, the plan has an executive summary that highlights the major points of the report in a summary form making it easier to predict what to expect in the plan. Moreover, the plan gives an expanded view of what the market really looks like and uses a language that is simple to understand. Additionally, the section is also systematic and illustrates the contents lucidly section through section. Secondly, the business plan also has the project background. The project background sets a rationale for the business plan by giving specifics of the setting where the business will be located. The project background section also outlines the problem being solved by NewCo in the market and offers a proposition of how the proposed product will offer solutions to the identified problems. Thirdly, the plan also details the market giving statistics of the people in the target market (Kenya) and extending to giving the statistics about the sub-Saharan population which is targeted for expansion. The report also clearly outlines the targeted customer base through the elaboration of the different characteristics that make the targeted population a potential consumer and thus market. In estimation, 12.5 million people use mobile phones in Kenya, and it is assumed that they charge phones once in every four days. Based on this data the plan has an estimation of the devices needed in a normal day to meet the demand. The plan also stipulates the needs of the customers that is being solved by the NewCo Solaris C product. The needs are well drafted in a manner that they make sense. The business plan also integrates an industrial analysis. There are many players in the market calling for the need of independent analysis in order to better place the business and determine the potential competitors, suppliers and other people and channel in the industry. The technical analysis is presented in the form of Porter’s five force which in itself is an integrated tool that aids in understanding the market and the industry in general. The plan also entails the business model that is important once again for us as entrepreneurs when making a decision on how the business will operate. The value proposition of the business is presented. Evidently, cost revenue inflow with no operational costs, encouraging growth and prosperity of the society, and poverty alleviation among others is some of the value propositions. The value propositions are stronger and realistic. Still under business model the plan also has a value chain analysis that categorically states the alternative business approaches or models that are plausible in Kenya. The explanation of the profitability of the direct sales to shop and kiosk owners is a plus for the plan since the advantages are listed. The value chain is also represented in diagrammatic form for ease of understanding. The plan also states the design and manufacture process of the products. The products will be engineered and designed in the UK to meet standards. However, the manufacturing or production will be outsourced to China owing to operational cost advantages. The plan also covers the logistics of the products right from the manufacturer to the end users. The plan also has a SWOT analysis section that further elaborates the challenges and opportunities open to NewCo in Kenya. The downstream industry is concentrated among few companies such as Motorola and Siemens as elaborated in the plan. The plan also reflects the products and services to be offered by NewCo including their advantages and specifications in the packaging process. The plan also elaborates on the design and standard operational procedures of the products in a sequential and easy to understand manner. The plan also entails a manufacture and quality section that expounds on the specifications and standards as well as the reason for outsourcing the manufacturing process to China. The plan also covers the warranty and after sales services to be provided to the customer. Additionally, the plan covers the protection options available for the company in Kenya including Trademark Registration and Intellectual Property Rights (IPR). The latter is applicable to the manufacturer while the former for NewCo in the Kenyan market or industry. The attributes of the products and services are also analyzed in the plan making it easier to know what product or service to replace in the long run. The plan also clarifies the mode of distribution to be used by NewCo in making sales of the proposed products and services. Marketing and promotion of a product are essential in the market as reflected in the plan. Different strategies to market the products and services as well as the benefits of each strategy is outlined in the plan. The business plan entails a whole financials section, dedicated to offering insight into the budget and all money and funds related issues that NewCo will have to deal with in the market. NewCo will basically have to encounter either fixed costs or variable costs. The fixed cost includes such things as a human resource whose projections are well elaborated, services rendered by third parties, marketing, and business operations. All these costs are factored in the plan, and each lucidly explained including the forecasted increase in real figures. Moreover, the forecast of the costs through annual projections is presented in the plan. The variable costs include components costs, assembly and production, sales and distribution, and shipping. Once again, these costs are well explained and presented in a tabular form where applicable for easier understanding. The pricing model chosen for NewCo is based on objectives that are clearly explained and consideration of cost plus as well as value-based analysis. A flat rate of $150 has been settled upon to cover all the costs incurred in product development. NewCo is considering to offer micro-finance loan as a move to help its consumers acquire money to purchase the products rather than having to undergo tedious processes when sourcing for startup funds. The pricing model is feasible, and worth consideration and adoption are owing to the clarity of the variables considered in its development. The service will be through a partnership with different microfinance institutions in Kenya. It is plausible based on the projections presented. The plan also has an income statement projection for a period of five years from the roll out plan. Given all the conditions, NewCo is able to achieve the projection with no doubt. A lucid explanation is given for the negative values in the initial year which, of course, is intuitive. Finally, the sensitivity analysis makes it even simpler to understand the viability of NewCo in the market. As a matter of fact, the revenue projections by NewCo is bound to work based on the financial projections and the accompanying explanations. Weaknesses The options for protection are not explored in-depth. The plan claims that IPR is not applicable in Kenya yet the recent legislations have taken IPR as a serious issue that benefits entrepreneurs venturing into the Kenyan Market. Even so, the bodies charged with the protection are also not included in the plan. Additionally, the plan does not detail the legal requirements that NewCo would have to meet before entering the Kenyan market. The plan does not incorporate a product development plan with timelines indicating the timeline within which the products will have been manufactured and ready for distribution. However, to some extent (in a rough manner) the plan elaborates on the needed resources to accomplish product development. The growth strategy of the business that is through expansion is expensive. Other growth strategies such as partnerships, acquisition, and franchising have not been considered. The specifics of NewCo Company are not availed including the Mission and Vision statement as should in a good market plan. How to Improve NewCo Business Plan NewCo’s business plan covers nearly all the tenets that an entrepreneur is likely to be interested in. however, for the improvement of the market plan a few additional points are worth consideration. First, the plan should include a mission statement as well as a vision statement which are the key strategic direction drivers in any organization. The business plan should also incorporate an expanded explanation of the legal requirements that NewCo will have to comply with and if so the associated costs for the whole process. Thirdly, the report should include the bodies charged with the protection of the products and services of the business in Kenya in order to know the best protection to adopt while entering the market. Fourthly, the plan should have a whole section dedicated to the explanation of the growth strategies to be adopted by the company and the feasibility of such strategies. The plan should also elaborate the strategy and timeline for the market roll-out plan. Last but not least, the plan does not elaborate on the sources of startup capital to kick start its operations. Conclusion This plan is informative to an entrepreneur as it is now. The strengths of the plan outweigh the weaknesses a great deal. However, for a complete solution into the weaknesses of NewCo business plan, it is essential that the proposed tenets be included. This said and done an entrepreneur is more likely to convince an investor with the complete business plan that it is currently. This is not to discredit the viability of the current business plan but only means that the plans optimal efficiency are achievable through necessary adjustments as proposed. Read More