Market Analysis for the Plastic Bottles - Essay Example

? A Business Report on manufacture of Plastic bottles and Table ofContents Page Introduction 3 Market Analysis for the Plastic Bottles 4 Market Growth 4 Technology Change 5 The Market Size 5 Importance of the Statistics 6 Costs Analysis 7 Fixed and Variable cost Analysis 7 Budget and Make or Buy Decision 7 Global Financial climate 8 The manufacturing 8 Design Concepts 9 CAD vs CATIA 9 Creativity 9 Conclusion 9 List of References 11 A Business Report on manufacture of Plastic bottles Introduction Packaging has grown to become a large industry. Every product, which is processed, needs packaging in one way or another. If the product is such a big thing like the airplanes and ships, then there are some accessories belonging to that particular product. These accessories need to be packaged. It is with no doubt that as long as manufacturing remains, packaging will continue to exist. Amazingly, even if the processing industries die out, packaging will not follow the same suit because there are products which need packaging in their raw state. This aspect sets a clear detachment of packaging from the manufacturing. Manufacturing only accentuates the packaging industry operations. Packaging is itself a wide and complex industry. It takes different forms. This is because products to be packaged are different. For this reason, you find that the industry is as diverse as the products to be packaged. Liquids cannot be packaged the same way solids like biscuits are packaged. The magnitude of the product to be packaged is also considered when it comes to packaging. As the cost of packaging trickles down to the cost of producing the entire product, then size is a key feature which if ignored it would result to unknown costing mistakes. This report presents a detailed business report on a plastic bottle manufacture. Bottling is a giant industry. Basically, many liquid processors have often opted for bottling to package their output. The convenience which comes with bottling lacks an equivalent. Plastic bottling is accommodative to many forms of liquids and hence many manufacturers result to it. Any investor who wants to invest in the most dynamic industry then needs to embrace plastic bottle packaging industry. It is a sector where the rate of return is high and risks involved are minimal. Actually it is the only industry which violates the principles of investment of the higher the risk the higher the profit. The report analyses possibility of entrance into the market. It gives details of the market analysis and its interpretations. All costs involved have been analyzed. These costs include the Fixed and variable costs. Budgeting is a key element in the financial management of any organization and this report includes a budgetary estimate which comes with production of these plastic bottles. The stocking aspects have been taken into account also to ensure that the best policy is adopted in the implementation of plastic bottles production. Production of these bottles call for technical inputs. This report presents a link between the manufacturing principles and how the actual production is carried out. Some of the aspects captured in this report are the jobbing, designs and how quality and continuous improvement are sustained. In addition, there is some focus in to the way models are produced and justified for use in the final product production. It is a report which upon the implementation of the recommendations suggested bottling will be turned into a multibillion making industry. Bottling is added value by inclusion of the modern technology in the production. The world is going green and the bottling industry has to follow the suit. For this course, the production will concentrate on production of biodegradable plastic. This implies that there has to be specialties in the making of the bottles and it is these specialties that are making these bottles unique from what has been there previously in the market. Market Analysis for the Plastic Bottles The following are some of the aspects considered in analyzing the market. Market Growth Technology change The market size Market Growth The market for plastic bottles continues to grow day by day. With increased productions, the same is translated into the demand for plastic bottles. The population of the world today is growing. Economists over time have proved that with growth in the population, demand for goods and services increases. It is evident that with growth in population in most parts of UK demand for goods is gradually growing. From the National statistics, population growth has hit eight percent. This has amounted the population to a 56.1 million (Cavanagh, 2012: pp1). Most of the people in this category are active people and all use drinks. Drinks will need to be packaged in bottles. It is no doubt that there are other players in the market but the biodegradable plastic bottle makers lack in this market. This guarantees an immediate entrance into the market. Out of the 56.1 million populations, 12 million is projected to turn into direct use of our product. The statistics below present PET as the one expected to have highest growth. Technology Change The market is flooded with plastic bottles which take hundreds of years to decompose. In UK, there are no statistics which shows the actual output of biodegradable plastics bottles. Nevertheless, this report did not either find any of such a bottle. The call for save the world from plastics is allover and everybody is ready for this (Blatt, 2011:pp162). Introduction of the biodegradable plastic bottle is in line with this call and it is no doubt that it will receive undivided acceptance. The market research conducted proved that this is a maiden market and being the first to introduce this product in the UK, it would take time before other competitors catch up. The room to establish and maintain is guaranteed. Additionally, this aspect of technology change solves two things concurrently; taking care of the earth and establishing a business which is projected to grow (Andrady, 2003: pp. 160). The project has many hopes of growing. Having anything decomposable is being on the safe side in the modern world commercial circles (Maynard, 2003: 190). The good will is trickling from all governing agencies. The political will is there as governments want to keep compliance to international goals of keeping the world from destructive substances. The political will helps businesses grow without any hindrance and even accentuate the growth. This is not a completely new business but rather a change in technology. For this matter, the channels of distribution are already well established. Nevertheless, there is need to establish new channels which will set the market apart from the rest. This is with an aim of establishing an identity. With identity, clients have an easy way of finding what they want in the place they know without confusion. The chart below shows the chances of entry to the market especially to the European market. It is taken from the Applied Market Information 2010. The figures above will definitely in large portion be transferred to the new product and hence the new product will find its way easily. The Market Size The potential presented by this product of creating a big market is inevitable. Ninety percent of the packaging industry is stormed by plastic (Kluth, 2010: pp.1-2). The makers of drinks are the first clients who account for about 50 % of the market. The drinks, as mentioned earlier, are gaining demand with gradual population growth. With increased demand for drinks, the demand for the biodegradable bottles is eminent. There is also the untapped beer and solid packaging bottles. Due to weight issues, glass is no longer a welcomed ideal in the packaging industry. Flexibility is inevitably needed and only PET products are able to maintain this aspect. The entire Europe packaging industry is opting for plastic bottle and thus the market size is not only expected to grow but the growth will be exponential. Below is a plastic bottle usage chart that indicates the expected market size. As the chart shows that the need for plastic bottles is diverse and more usage is expected to pop up with the introduction of the decomposing feature of the plastics. This is because the waste management will no longer be problematic. Importance of the Statistics to the company These statistics are very important. The trend which is depicted in the normal plastic bottle business is expected to be transferred to the new product. The difference is that this new product will claim more attention and applause because it is more eco-friendly. Everybody is championing for green technology and the fact that these plastics can decompose they in a way agree to the guidelines of green technology. Planning is key for any business entity and only through actual figures on the table can these be achievable. The figures aid in planning for the production and costing effects expected. The figures in fact affect every activity that will occur in the entire process of the production, distribution and usage. Areas of weakness are noted easily because figures do not lie. Improvement will thus be continual. The company will focus on global market. The data received is for a global market. This will help the company determine on how to cope with impulsive global demand for this new product. It is impulsive because the growth expected will be exponential. Costs Analysis Fixed and Variable costs Analysis Every new technology comes with new cost involvement. This excludes not the biodegradable plastic bottles’ technology. The costs are spread out both in fixed and variable forms. The large part of the cost will comprise of the variable costs. This is primarily because the variable costs vary in accordance to the production. The variable unit cost is computed using all the variable costs. The variable costs include the costs for the raw materials. The raw materials pick up the large portion of the all the variable costs to be involved. Also, this cost is diverse. Power is needed in the production of these plastic bottles and is also a variable cost. Wages also is a major variable cost worth mentioning here because the production is depended on the orders placed. If the orders are large, there is need to hire more causal workers who can be retrenched once the demand has gone down. Fixed costs will always be present despite the level of production. The salaries and rent costs are part of the fixed cost. The machinery and all capital products which undergo depreciations also belong in this category. It is though arguable whether depreciation is fixed or variable but clarity depends on the method used. Nevertheless machinery will undergo depreciation whether working or not. Buget and Buy or Make decison Budget is vital for all ventures. The budget for this business will be directed by the targeted output. Total cost per unit is taken into account in arriving at buy or make decision. Something of importance to mention here is that this being an extension of plastic bottling technology, then it has no option of buying instead of making. The costs involved are higher than normal plastic making and hence more units may be needed before breaking even. For this, the budget is mandatory. The chances of buying the product instead of making are near zero. This is because the idea is ours and very new. The product to be introduced in the market will have no competitor of its equivalent and hence making it is the only way out. Global Financial Climate Financing the projections in the budget is a matter of major concern. The implications of the Euro debt crisis have led to the global financial climate to be unfavourable. The costs of financing loans are relatively high compared to any other time in history. Nevertheless, it is only through loans that the financing of this project can be achieved. The project is in itself able to repay the loan and the costs that come with loan facilities. The challenge lies only in convincing the financiers as the ideal is maiden. The only collateral is the idea and it had not been given a pilot test. With many policy makers investing into the security bonds, it will require a pilot project to convenience the lenders The manufacturing The method used in processing is similar to that employed in manufacture of the normal plastic bottles. Most of the material is made from the oil products, the PET (Polyethylene Terephalate) combine to form polymers. It is a process which uses or rather has stages in it. Jobbing is very helpful in this process and every man is assigned a job according to the expertise he has. With every stage having right person to do the job, the whole process guarantees a continual improvement. The improvement gives out a quality product which the client will feel value for his money. The first stage in the process entails making of the PET. Once chains of carbon have been chemically combined to form the polymer, the actual process begins. Confusion should not arise here as to why still PET is being used. The end product needs to be strong yet very light (Flores, 2008: pp.1). For this reason, PET is being used and now only the new ingredients are being introduced to make the product decomposable after its useful life. The first stage involves stretch blow molding (Ebnesajjad, 2012: pp.56). The heated PET is molded. The molding allows the PET to assume the shape of the tube. The tube shape is shaped in such a way that gives the final product shape. Molding has made making of biodegradable plastic bottles easy. Injection molding is used. At this stage, the molded plastic is referred to as the parison. After molding, stretch blow molding follows. In this process, the parison is forced into the mold using the pressure and heat. Experts are needed here to ensure that even the bottom receives its technical treat. The bottom should always be flat. Cooling is handled with care so that a qualitative product is realized. This process is quick. This sets the manufactured component well. The cooling technology is at an advanced level and depending on the cost quality convictions, the best method is adopted. These methods of cooling may be direct or indirect. Sometimes water is coursed around the mold hence indirectly cooling the heated mold. Either carbon dioxide or air under high pressure is used to directly cool the both the mold and plastic (Copper & Edgett, 2009: 172). Cooling terminates the whole process as what remains now is to remove the bottles. Continuous or non-continuous methods may be used in the processing. The method used determines the cooling method. Continuous mold calls for trimming so that separation of the bottles and the mold. Non-continuous sometimes may lead to excesses and thus element of cost becomes of concern. The climax of the process is when the bottle is removed from the mold and the excess plastic trimmed. As seen the process is not complicated and hence this implies to the design requirements. This though does not bring in the aspects of reluctance in giving it the best treat. The bottle takes the shape of the mold. It is the mold which then needs designing as the parison will befit itself accordingly. Models may be used before getting approval from the clients. Basically the work of engineers involves designing using the models. Design Concepts CAD vs. CATIA Use of CAD will be very hardy in designing the molds which will be used to produce the bottles. Since the designs are not very complicated, use of the CAD or solid works is enough. These are capable producing either 2 or 3 dimensional designs. CATIA may also be used to generate the designs. Creativity Creativity is vital. Being a new product in the market, input of creativity is very handy in establishing identity in the market. The creativity may be graced by critical thinking so that the end product does not fall short the elegance needed in the 21st century. Today technology is at an advanced level. Solid models are no longer the way to go in designing. There are softwares available for use in prototype simulation. The softwares are very economical to use in the designing process. Either attributive or morphological analysis may be used to get the finest details needed for the success of the project. Conclusion Biodegradable plastic bottles are products of the 21st century. They represent the untapped investment which is going to take packaging of products to another level. Means and methods are also under survey by other industry players to package solid products using plastics. Now that everybody is fed up with waste management complications, the decomposable plastics bottles are good news. It is a venture that enjoys support from all over and it is a solution in need. As the market analysis shows, biodegradable plastic bottles are the next big thing which is determining the packaging industry direction. All the stakeholders need to come on board both in formulating rules policies which safe guards the industry and also gives room for its growth. Growth is in the sense that new players can get along without difficulty because one of the aims is to have a safer earth to live on. By the year 2016, people of goodwill on this project do project that usage of biodegradable plastic bottles may hit around 80%. This will be a big step and thus this project is very valid as per the millennia goals. As these bottles gain momentum in their production, new products may start streaming in. this will in turn increase the productivity level of the company and translate to the financial statements. Room for growth is indeed imminent. A fully established biodegradable plastic bottle plant will yield also associative benefits. It will hub other numerous industries either directly or indirectly. The raw material supplying sector will sail high and as the rules for production are being formulated for the production, care must be given to ensure they are coordinative across all the sectors. This move will accentuate cohesion in the industry. List of References Blatt, H. (2011). America's environmental report card: are we making the grade? Cambridge, Mass, MIT Press Ebnesajjad, S. (2012). Handbook of biopolymers and biodegradable plastics: properties, processing and applications. Norwich, N.Y., William Andrew Maynard, E., & Fresco, J. (2003). Transforming the global biosphere: twelve futuristic strategies. Sedona, Ariz, Arcos Cielos Research Center Andrady, A. L. (2003). Plastics and the environment. Hoboken, NJ, Wiley Cooper, R. G., & Edgett, S. J. (2009). Product innovation and technology strategy. [Ancaster, Ont.?], Product Development Institute Cavanagh, M., 2012. A record population increase? it’s OK, Britain can cope. The Guardian.[Online] available at < http://www.guardian.co.uk/commentisfree/2012/jul/17/record-population-increase-overcrowding> Accessed on 19th April, 2013 Kluth, C., 2010. Plastic bottles and closures market trends in europe. PetCore Europe [ online ] available at < http://www.petcore.org/content/plastic-bottles-and-closures-market-trends-europe> Accessed on 19th April, 2013 Flores, M., C., 2008. Plastic and environmental externalities: Structural causes and corrective policy. Lethbridge undergraduate research journal, vol 3 no 2. Read More