Electronic Notepad - Business Venture Idea in Australia - Essay Example

Table of Contents Executive Summary 2 Marketing Goals and Objectives 3 Mission 3 Goals of Elecwrit 3 Market Segmentation 4 Target Market 4 MarketingStrategies 5 Product 5 Price 6 Place 7 Promotion 8 Financial Information 11 Bibliography 16 Executive Summary The number of international students in Australia is increasing and more and more companies are establishing their business units in Australia. The growing population, stable political environment, low corporate tax as compared to other countries are the major attractions for Multinational companies in Australia. This report has been created to propose a business venture idea in Australia. Elecwrit will be a pure partnership which will start its business from Melbourne, the hub of IT businesses in Australia. Electric will offer electronic products as a replacement to the traditional notebooks to the professionals. Elecwrit notebooks will be small in size, portable, simple, customized covering and exclusively for writing purpose. In the start we will only target the Melbourne market however, at later stages we aim to target customer segments from other geographical regions of Australia. We will target the customers based on their income level and profession. Our major target market segments include students and working professionals. We will adopt premium pricing strategy in the beginning however, at later stages we may switch to price penetration strategy. To promote the products we will create a strong marketing campaign in which we will participate in the trade fairs and we will also visit the universities, colleges and companies. We will offer special wholesale packages to the universities and companies in the beginning. The financial information in the report shows that we will require an initial capital of $400,000 to start up the company and in the first year of operations our net profit is expected to be above $90,000. Therefore, we believe that Elecwrit will be a successful venture. Marketing Goals and Objectives Mission Elecwrit offers high quality electronic products to those who are seeking trendy, stylish and easily portable products. We offer our products to a broad spectrum of consumers by offering them at affordable prices. Goals of Elecwrit Elecwrit aims to improve the life styles of students and professionals by offering them a device which could replace the traditional papers and notebooks We want to improve the information storage and sharing easier for our target market By improving information storage and sharing, Elecwrit aims to increase the efficiency of professionals in managing their work and student in managing their notes and stuff Market Segmentation To select the target market, the market segmentation strategy will be demographics market segmentation. The two variables including the income level and profession will be selected to segment the Australian market. Since the company will start its operations from the Melbourne market therefore, at the initial stage only the universities and companies in Melbourne will be targeted. Target Market Following table shows the target market of Elecwrit. We aim to target students and professionals with the income level of $5000 and above. The income level represents the individual income and not the household income. Since students are mostly dependent on their parents therefore, parents will be also one of our target segments. Income Level Profession $5000-$20000 Students   Low income workers $20000-$30000 Students   Professionals/workers $31000 above Professionals Marketing Strategies Product The product, I am planning to launch in Australian market is customized electronic notebook. This small mini-laptop kind of book will be used as an electronic writing pad. The distinct features of this notebook are its portability, small size, and easy information storage and access and data software. Core product: The core product is a writing pad. Actual product: Actual product features include electronic writing pad, branded, portable, small size, easy information sharing and storage. Augmented product: Warranty, wholesale packages for businesses and educational institutions, cover customization options, shipment delivery. The electronic notebook that will be offered by Elecwrit will be different from the products offered by the competitors because this notebook will be introduced solely for writing purpose and information storage and sharing. This product is a replacement of traditional paper notebooks therefore; it should not be compared with highly systematic and complex featured laptops and mini-laptops. Secondly, cover customization options will be also offered to attract huge student audience. The following diagram shows the components of the products including core, actual and augmented values that will be offered to the customers. Price Since product life cycle is very short in technological industry because of high imitation therefore, price skimming strategy will be used rather than price penetration strategy. In the information technology industry the imitation is usually very high therefore; we do expect that after entrance into Melbourne market, the other branded companies would follow the similar strategy. In consideration to our manufacturing costs and overheads, we believe that potential price of our product will be around $600. The information on price components is available in the section of financial information. Place The product will be sold in Australian market which will be divided into geographical segments. Our products will be manufactured in Australia and in the beginning we will only sell in Australia and oversees (if customer accepts to pay shipment cost). The specialized traders and importers will be also attracted to distribute our products through their channels. To make our presence visible in the Australian market, we will establish an outlet in Melbourne. Melbourne is a suitable location to establish Elecwrit because it is considered as the IT hub of Australia. Some other facts which make Melbourne suitable for the proposed venture are as follows: According to University of Victoria, 50 percent of the business delegates visiting Melbourne have plans to spend a holiday within two years. The population of the city is 3,203,088 and it is around 70 percent of the Victoria’s population. Melbourne is considered as the most competitive business locations in the Asia Pacific. The city is considered to have the world’s second lowest business costs. The largest sectors and industries in Melbourne are Finance and business services and wellness sector. The corporate taxes are same throughout Australia and the corporate tax rate is 30 percent. Source: Mebourne.org Promotion A strong promotional strategy is very important to attract the target market. We will allocate 15 percent of the sales budget to advertising and market however, before launching the products creating awareness among the target customers regarding the distinct features of this product is very important. Our products will be positioned as simple electronic writing pads for students and professionals at affordable rates. Elecwrit will be promoted through Trade fairs. A number of technological events are organized in Australia every year therefore, before launching the company in 2011, we will first attend a few trade events where we will create the awareness about Elecwrit. Following are the trade fairs which have recently organized and TradeTech which will be organized in February to March. Trade Fair Date Venue TradeTech Australia 28-FEB-11 to 01-MAR-11 Sydney The Westin, Sydney, New South Wales IT Matters 07-OCT-10 to 08-OCT-10 Melbourne Crown Conference Centre, Melbourne, Victoria Retail Expo 20-SEP-10 to 22-SEP-10 Sydney Convention & Exhibition Centre, Sydney, New South Wales Strong relationships will be established with major IT brands, so that that may also promote our product The statistics of 2008 shows that total spending on all digital services in Australia was $17.9 billion and $3 billion was spent on TV advertising, $3 billion on Print advertising and $1.5 on internet advertising (4webmarketing website, 2010). Therefore, we will focus on all internet, TV and printing media for advertising. Online promotion will be done through establishing and online website. Moreover, Twitter and Facebook will be two main social websites where we will interact with our customers. Open discussion, solutions to problems, suggestions and other information will be available on these two platforms. The expected online marketing investment is $80001. The printed ads will be published in newspaper “The Australian” and mono ads 10x2 will be given for the first three months on weekends. The colored ads cost for strip ads is $795/ad (The Australian). Promotions will be also done through radio channel FM 88. We will purchase two packages of the company, one with 50 ads per week from 6am to 6pm at $95 and other with 50 ads per week from 6pm to 6am at $70 (Australia Trade, 2010). We will also visit the corporations and companies and we will offer discounts on huge bulk purchases. Moreover, institutions and universities will be also visited. The flyers will be designed and distributed. When we will visit an institute or a company our two team members including the sales head and the marketing head will lead the team. The presentations will be given so that the audience may get the true picture about the usage of the product. Organizational Structure We aim to establish a small company which could initially target the Melbourne market and if the product demand increases then we have plans to expand into other markets of Australia. At this stage we will be a team of six people who will work together. Therefore, organizational structure will be very simple. One person will be responsible to look after the financial matters; the second person will be responsible to look after the advertising and media. The third person will deal with the sales. Fourth person will lead the manufacturing unit. Fifth person will look after the HR functions. The sixth member of the team will act as the coordinator who will continuously monitor the performance of all other team members and will make the reports. In addition to the team, we will also recruit sales team, transportation staff, office boys etc. The product will be developed in the manufacturing unit however, to develop the product we aim to negotiate with the team of IT engineers from Bangalore’s Indian Institute of Science (IISc). These engineers have recently developed the laptop technology for only $35 (GoodLaptipNews, 2010)therefore, to make electronic pad, we expect to negotiate with them. If they do not agree then we can also look for another local Australian company who could negotiate with us. These options will be further considered only after getting access to the funds and funds are available, proposals can be made to further negotiate with the manufacturers. Financial Information Product manufacturing cost Electronic notebook components Parts Specifications Motherboard A small and highly integrated motherboard will be used with no expansion slots at all however, only two external port for USB. Some other functions that will be implemented on mother board include storage controllers, sound card and networking. Central processing unit CPU will be soldered and cannot be replaced Memory (RAM) 2 GB RAM to keep the cost low Power Supply Internal rechargeable battery Battery Lithium ion batteries Display 10 inches screen with a resolution of 1024 x 600 Removable media drives There will be no removable media drive Internal storage Up to 16GB to 64GB Input Keyboard Ports Two USB ports Other features Multimedia features, Wifi connectivity, pdf reader and video conferencing The estimated cost of the product will all the features is $35 however, with labour and manufacturing cost, it is assumed that total cost of the product will be around $65. Table: Output per hour, hourly compensation, unit labor costs, and related measures manufacturing, 17 countries or areas, 2007-2008 With the price skimming strategy, the price of electronic notebook will be $600. Although it seems to be a significantly high cost however, the target customers will be conveyed that it will be one-time-cost and a complete replacement of traditional notebooks. Start-up Funding Estimated stating Fund $400,000 Estimated stating Assets funds $302,000 Total Funding Required $400,000 Investor 1 $200,000 Investor 2 $200,000 Additional Investment Requirement $0 Total Planned Investment $400,000 Assumptions: While making the financial statements some assumptions have been made. We have assumed that minimum sales per month will be around 150 which makes annual sales of 1800 The inflation for the year 2011 has been considered constant which means cost of material and labour will not change and a constant cost of goods sold will be incurred in 2011 The product price has been also assumed constant for 2011 The allocated budget to advertising is 15 percent of the sales The enterprise will be shareholders’ ownership and interest-bearing loans will not be taken It has assumed that Elecwrit will be a partnership between two investors and each will be sharing the same capital The corporate tax rate in Australia is 30 percent Corporate Tax Rate 2009 Source: NSW Government Projected Income Statement We have projected that we will be able to generate a positive profit of about $90,300 right from the first year of our operations. However, in the initial months of 2011 we expect to have higher expenses than our revenues however, in the second half of 2011, we expect to generate positive revenues.     2011 Sales   $1,080,000 Cost of goods sold   $117,000 Gross profit   $963,000       Operating expense       Employee expense $360,0002   Utility bills $20,000   Transportation cost $10,000   Advertising cost $162,000   Office rent $60,0003   Other expense $50,000 Total operating expense   $662,000       Earnings before interest and tax   $301,000 Finance cost   $0 Earnings after tax   $301,000 Tax     $210,700 Net profit   $90,300 Projected Balance Sheet Following is the projected balance sheet. The major portion of the investment will be invested in product development, fixed assets and a significant will be kept aside as cash. We will not take any kind of interest bearing loan because we aim to establish a partnership. Assets   Initial   Cash $98,000   Fixed Assets $302,000 Total Asset   $400,000       Current Liabilities       Short term Borrowing 0   Accounts payable 0 Noncurrent Liabilities Long term liabilities 0 Total Liabilities   0       Capital     Shareholders Equity   $400,000 Bibliography Bureau of Labour Statistics. (2009, October 22). INTERNATIONAL COMPARISONS OF MANUFACTURING PRODUCTIVITY AND UNIT LABOR COST TRENDS, 2008. Retrieved October 12, 2010, from http://www.bls.gov/news.release/prod4.nr0.htm Committee for Melbourne. (2008, October 6). Extraordinary Facts about Mebourne. Retrieved October 12, 2010, from Melbourne.Org: http://melbourne.org.au/membership/impressions-of-melbourne/extraordinary-facts-about-melbourne GoodLaptipNews. (2010, July 28). IIT develops world’s cheapest laptop . Retrieved October 12, 2010, from http://goodlaptopnews.info/iit-develops-worlds-cheapest-laptop/ MCO. (2010). Melbourne Commerical Offices Sales and Lease. Retrieved October 12, 2010, from http://www.mco.com.au/search.php NSW. (2009). Corporate Tax Rates. Retrieved October 12, 2010, from http://www.business.nsw.gov.au/aboutnsw/climate/A14_corp_tax_rates.htm Read More