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This business plan provides to shareholders and customers an analysis and evaluation of the prospective marketing capability, product capability, and profitability of small computer industry-643744 Company in three years by running business simulation SimVenture. 643744 Company designs products, and sales superior computers, focusing on the professional services customers. Based on the investigation of resources, strengths, and capabilities competitive, customer, and environmental issues, company establishes their vision, mission, and achieving goals over three financial years. The company’s vision is “Walking in the forefront of times”. The mission and goals have been represented in table 1. Currently, the basic salary of the owner is planned £1500 per month.
Table : The Company’s mission and goals in following 3 years
Our products must be:
Sophisticated in quality
Offer good value
Beautiful artistic style, and
Our role is to play a vigorous part in markets. We can improve people lives to be happier and effective through their use of our products.
Devising the idea design to meet customers’ needs
Accomplishing above 50 orders
To be the No.1 computer service company in the world and among the premier industrial concerns in terms of quality, profitability and growth, through innovative leadership.
Enlarge its markets
Accomplishing 100 orders 1000 products
To be the preeminent building block supplier to the worldwide electronics business.
Achieving 150 orders monthly
Targeting global markets
643744 Company followed the strategic planning process (Ferrell & Hartline, 2011:32), which was separated into 4 sections. It focuses on integration of effort to achieving operation, sales and marketing, human resource (HR), and finance stated objective (Ferrell & Hartline, 2011:39). In the sales and marketing section, it analyses the market prospect though marketing research and customer research. Then it provides marketing strategy and risk management plan, dealing with marketing promotion via advertising channels to achieve customer needs and build customer values. In operation, it involves in the strategy of the Supply chain management (SCM), the Just-in-time (JIT) inventory control, and outsourcing management. In HRM, it focuses on employee recruitment, training and evaluation. Functional strategy aims to meet company’s mission, goals and objectives. It also evaluates the effort on organization’s sales, costs, image, and profitability. Finally, the business plan explains financial risks management, and reveals the cashflow and the profit and loss forecasts over three years. This program conducted has limitations on that the business will not be registered for VAT in software SimVenture calculation.
Sales & marketing
Via a range of Ad hoc research (Jobber & Fahy, 2009:85), company targeted at professional services market. According to the market report (Figure 12 in appendix), by contrast with other 5 segments, the professional services have 2415 market shares with 24 months order frequency. It has to succeed by good quality, good style, and above javerage features. Thus, the fixed cost can be generally calculated in £450 per unit. It has more potential interests under the typical price than solo business and service companies.
643744 Company’s competitive strategy focuses on new product developing strategy to be a low-cost manufacturer and improve the cost-effectiveness of production process (Czinkota, 2000:268-269). According to the competition research and analysis (Figure 13 and table 19 in appendix), company’s competitor, Parry systems, is a medium size maker of fashionable computers in professional services market. In the company competitive strategy, firstly, managers can influences on consumer behavior in buying situation by affording information-rich communication through advertising and the sales forces (Fill & McKee, 2012:75-79). Thus, company supports marketing promotions applying institutional and product advertising (Ferrell & Hartline, 2011:299), via different channels. Additionally, though the Voice of customer (VOC), company can offer marketing programs to raise customer satisfaction and create long-term reputation (Ferrell & Hartline, 2011:354). Czinkota (2000:104) commented that a successful company should focus on the differentiation of chief “players” in the marketplace, which will react to the company’s changes in business tactic, rather than customer’s reactions on new product or business strategy.
Sales and marketing strategy
On the marketing promotion strategy, The 643744 Company performed in transation market, personal selling, and distributor sales channels, taking suggestion from Jobber and Fahy’s theory (2009:230). It explains that the consumer and trade promotion could be considered through those 11 approaches (Figure 1), including price discounts, premiums, money off, allowances, free goods, and loyalty cards etc.
Figure : Consumer and Trade promotion
(Sources: Jobber & Fahy, 2009:230)
In the pricing strategy, the price changes and setting might occur over the products life cycle (PLC) (Ferrell & Hartline, 2011: 239), which is also influenced by costs, competitions and marketing (Hobber & Fahy, 2009:194). Homozi (et al., 2002:755) believes the most central point is “where the pricing strategy realistically places the business in comparison to the competition”. Based on the monthly customer research and “break-even analysis”, company apply the price penetration strategy (Czinkota 2000:513), and pricing promotion strategies.
However, the strategy is a continuous process rather than a single event (Pollard and Hotho, 2006). The further information is illustrated in the table 2:
Table : marketing promotion planned strategy
The 643744 Company focuses on the international market in the future, which is the most effective management of B2B operations (Lages, Abrantes, & Lages, 2008, cited in Sharland, 2001; Katsikeas, 2006). However, this is remarkable considering that although small business is not able to compete on price with large international companies (Lages, Abrantes & Lages, 2008). Day (1984:102-103) recommends, management general strategies could be considered by increasing sales volume, or improved productivity or margins (Figure 2). Nevertheless, it is difficult to evaluate the factual scanty order and insufficient profitability in marketing strategy.
Customer satisfaction depends on their exceed expectation, which is created by pre-buying experiences and discussion with other customers (Jobber & Fahy, 2009:6). Therefore, strategically, the product design is the key to entry into professional service market, which can be succeeded in minimum two months. Then managers need to improve their product design by monthly customer research, due to the PLC theory (Fill & McKee, 2012:44). Additionally, Company determines to contract out automatically by normal quality within 5 minutes on testing to prevent faulty products and build business reputation.
A successful supply chain management (SCM) can fetch competitive advantage and better margins (Fill & McKee, 2012:182). Company selects ProSupply supplier with more flexible payment terms, which has been considered its insufficient order quantity at introduction stage of the PLC. As the marketing expanded, suppliers could be changed to Sourceline or MegaParts with more discounts (Planed in the table 4). One of SCM risk is the approach of cooperation with upstream associates to obtain efficient and effective supply of materials¼ˆGuido et al., 2008¼‰. Nevertheless, Fill and McKee (2012:182) believe that “a penny saved here becomes millions saved there”.
The company relocates working place started into a Small Business Centre that provides partial units, beneficially for new business, and cheaper than other commercial premises. Due to the limitation of Small Business Centre, in the latter two years, managers will rearrange the office into a retail unit. The table 5 represents the detail with calculation.
The started-up office resources (Table 6) are one standard office equipment and two premium tools. Having a car can be considered in the third year. In the later two years, the double quantities in each will be required at the end.
The company selected the hard and soft model of human resource management (HRM) that integrates “hard” and “soft” HR performance. Price (2011:548, cited in Storey, 1989) believes that “People are led rather than managedâ€¦ â€¦involved in determining and realizing strategic objectives” Basic on the initial information of staff skills, business owner required more capabilities training on research, marketing, and sales, etc. it will be improved efficiently by training centre course. The working time will be under 60 hours per week. On the other hand, Setting-up a limited company in law is essential before the business owner goes full-time, which intends to implement after the first year. For the future business expansion, employment contract is required and employees are under controlled in 5 members. Creating statutory contacts with customers is obligatory at the beginning.
Finance & Forecasting
Amir (et al, 2002) argues the lack of liquidity is the greatest threats to start-up business. Cashflow can help businessmen ensure when extra cash requires and plan accordingly. The company has capital £10,000 in bank balance for starting business. The three-year cashflow forecast and the Profit and loss forecast have described in appendix 2, in the which, the predictive profit is £311,182 over three years. Additionally, it is essential to prepare a contingency plan (presented in table 7). Through the process of contingency plan, dealing with the immediate consequences of the potential severity is to compensate for the changes, and shift to the minimized impact on the businesses viability.
Table : Contingency plan of financial risks (Source: Author)
Sales are less than forecasted
Increasing marketing promotion
To do more advertise or personal sales
Start-up finance takes three months longer to obtain
Increasing working hours
Using professional Consultant
Liabilities, financial crisis in the short term
Borrow money from the bank, around £5,000-£10,000 for 6 months
Money required to expand business
Borrow money from friends &family with lower interest rate in long-term
Cash flow interrupted
Raising money from banks or friends in a short term
The limitation in this business plan is no registered for VAT in software SimVenture. Company decides do bookkeeping in-house to saves cost. Company credit control is under 30 days for deports. If customers’ credits are overdue one or two months, managers will make a phone call first; if it is overdue three months, company will utilize legal threat in the county court.
REFLECTIONS ON THE BUSINESS PLAN
Through creating the business plan, I learnt and understood three core points during the process of project. It has been explained in this business plan reflection.
Initially, I understand that everything has been relative through the approach of functional strategy (Kazmi, 2008:435) in the business plan. Any analysis could not be totally separated into specific objective during considering of all information. For me, the first significant experience was to learn the way of consideration from the overall point of view. Previously, I thought the plan could be distinct from marketing, operation, HRM and finance aspects, same as their subordinate factors. Later, I noticed that, in operation section, I had to ensure the product design and how many components required. Then I can select SCM strategy, improving productivity, and setting price based on gross margin according to the fixed cost. I realised all elements were strongly associated by business activities. Having reading extra references (Quran: Surah Al Hajj, verse 22:76), now I believe that everything happens for a strong connection and for a reason. Additionally, I have learnt that nothing can be absolutely identified as good or bad. Daft (2012:191) recommends the advantage of start-up business is that entrepreneurs are able to create and grow the business in their own way. It is similar as traditional Chinese medicine. One herb can save people’s life, also can be poison capturing their life, which depends on the approach of using it. This understanding is essential to me as a practitioner. As a next step, I need to arrange my planning structure more strategically and comprehensively.
Secondly, several of information could not be predictive in the business plan due to the special marketing period and the PLC and timelessness. As stated by Romano and Ratnatunga (1995), small and emerging firms face marketing critical issues for their survival and growth. For me, the meaningful aspect is the awareness to economic issues in the world and the PLC period in the market. In the Simventure, it does not need to consider the real global environment, at the same time, managers not need to care about more than one competitor. Although, the simulate system makes the process of business plan become easier, in the real world, those aspects can become core issues and hard, especially when the company attempts to expand global markets. However, I am conscious of the marketing information and products analysis has timeliness, which has been strongly related with global economic events. Nowak and Washburn (1988) also prove that timeliness is one of core elements focused by marketing research clients. Therefore, in the next time, I need to do more researches and consider about business environments by timeliness in the real business world.
For me, the most meaningful experiences are the self-education that, as a top manager, to put all the information together, and maintain a big picture view while concurrently keeping an eye on the details (Ferrell & Hartline, 2011:256). Previously, I read various theories and references based on trail Simventure. It covers the knowledge about marketing management, human resource management, financial management, international management, and management process, etc. Subsequently, the crucial information are selected and organized. Therefore, I understand, the process of doing assignment has specific procedures. Firstly, it needed to unearth modules of process, and determine the objective, mission and goals. Next, I identified core issues by functional objectives. To the question, I went to research required references and resources, providing constructive business plan. Finally, I will evaluate and prove decision-making strategies in management reports. Equally, this could be related to all project processes, not only in the business area. For example, when I map out any new field, I can go through the process with to identify goals, outline the targeting vital objectives in new field, and then to evaluation outcomes. Having this project, I found the key to acquiring proficiency in any task is the way how to study, in which, more is self-educated with unforgettable experiences. In the next project, I need to balance the macroscopic and microcosmic views with a lucid outline.
Overall, I reflected three central points of building business plan. Firstly, all objectives have a relative connection by reasons, which could not be clearly separated. Secondly, business strategies and implementation have timeliness in the entire process. Finally, self-education is the key to open every field, which also require maintaining a big view with an eye in detail.
THE MANAGEMENT ANNUAL REPORT OF 643744 COMPANY
643744 Company is committed to operating computer business in the world widely, focusing on products design and production in professional services marketing. It has been established since January 2013 for three years, with capital £10,000. Company’s vision is “Walking in the forefront of the times”. 643744 Company aims to be a preeminent building block supplier of fashionable computer in the global market. Managers set up their mission and long-term goals for three years’ running business, aiming to improve innovative products and services, stepwise achieve profitable growth (Reading, 2002:360). Generally, the main achievement of 643744 Company is by product design, marketing promotion and business forecast, which follows JIT management process theory.
In finance, at the end of 2015, the company has value £1,469,003.6177, net profit £21,925.8363, current liability £112,245, and no long-term liability. Moreover, 643744 Company was invested by grants for £1000 on employees’ training and research. By financial analysis of 643744 Company, in 2015, its ratio of ROCE (Return on Capital Employed) has achieved 59%, therein £167,671 current assets, and £282,562 current liabilities. Its current ratio, for measuring liquidity of company, is 3.43. The asset turnover, for measuring utilization of company’s assets, is 3.51.
In sales and marketing, 643744 Company applied marketing strategies (Ferrell & Hartline, 2011) and international management theory (Deresky, 2010), with various marketing promotion and sales channels, resulted in brilliant corporate reputation in the international marketing. Over three years, the total investment of marketing advertising is £47,175, including newspaper, TV or radio, direct marketing, the public relations building, business club, premium websites, exhibition, and relative premises. It goes via different sales channels, containing traditional sales, personal selling, and distributor sales. However, the company won a wonderful reputation by prestigious advertising. Through three years, 643744 Company sold approximately 3400 items, which has exceeded 1000 units than business pervious plan.
In operation, in 2013, 643744 Company applied operational management strategy (Brown, et al., 2005:67), involving in SCM, JIT, PLC theories. According monthly customer research, this suitable design keeps meeting customer’s needs, and no need to reset. The fantastic products of professional serves completes with 79% quality, 47% performance, 79% features, and 97% style. It totally requires with 65 components. Additionally, the company offered excellent reasonable price with 30 day credits, and discount pricing promotion, which is based on Jobber & Fahy (2009:204) pricing strategies. It is satisfied by customers as well.
In organization, during those three years, the organization of 643744 Company expanded maturely, which followed organizational management strategies (Daft, 2012). At the end of 2015, the company had three workers, except business owner, Ian and Mark. Business owner went to full-time job in 2013. Additionally, the company’s premise started at a small business centre, then changed to retail unit and the business park.
Overall, 643744 Company managers realized several issue about the company’ premises arrangement, financial cashflow risk management, marketing promotion selection and implementation. Firstly, it is difficult to calculate the utilizing space of premises for running long-term business, due to unexpected growth of product sales in a started-up business. Additionally, credit control is a key factor in finance for a successful small company, which related its monthly cashflow and bank balance. The shortage of cash influences on SCM, resulted in stopping components delivery. Otherwise, the company will lose all of orders and customers in next month. Especially, once the company entre into globalization, it will be more difficult to collect debts. Finally, the marketing promotion has plenty of methods. Not all of them fit professional service, which needs to be measured and researched by manager’s experience in marketing.
Eventually, even though, in the simulated Simventure, this company not needs to be registered for VAT, in real world which has to be forecasted. It is significantly important in the international business, particularly on export products and import components.
The first year management annual report
The 643744 Company Inc. is a small new company, providing computer design and production in the world widely. In the 2013 financial year, it achieved profits with £2,661 by £10,000 capital.
Company’s mission and goals:
Company’s products must be sophisticated in quality, offer good value, beautiful artistic style, and philosophically inspiring. As a vigorous part in the market, company has capability improve people lives through their use of company’s products.
Company devises the idea design to meet customers’ needs and compete with competitors,
And accomplishing 50 orders and 300 products of product at end of year.
Key staff members
Company owner goes full time in September 2013, at the end with £1,300 on salary.
Sales and Marketing
During running the business of 643744 Company in the 1st year, the core issue involved in the sales that did not catch the predicted value and delayed the business planning goals. Additionally, the scenarios of the business was making business managers concerned, which increased their stress level and declined the efficiency of organizational work. This was caused by business performance instability that presented in the lack of order and sale. This problem threatened the company’s reputation that is the most valuable assets for a film (Haywood, 2002:112).
However, the company decided to implement marketing strategy, as below, for enhancing the sales and orders to meet the planning profit. The certain solution of symptom has two approaches. These are basic on the marketing strategy Day’s theory (1984:102-103) in business plan (Figure 2). Internally, managers were constantly in a state of training, with no knowledge where it should be heading (It has been explained more in the organization section). Externally, the promotional and marketing research activities were developed, in order to achieve the sales quantity in short-term and long-term. This view was supported by Rowley (1998:383, cited in Mercer, 1996: 309):
“The ideal form of promotion is the conversation, which takes places between the expert sales professional and his or her customer. It is interactive and conversation is specific to the needs of both. Other forms of promotion, which deal in the ‘average’ needs of groups of people can only hope to approximate to this ideal”.
Firstly, managers applied various marketing promotion to advert its products, and build company’s reputation. It followed the previous business plan. Rowley (1988:384) suggests the tool of promotion mix can be advertising, direct marketing, sales promotion, personal selling, and sponsorship, which could be combinative or individually utilized. It had been applied in the first year and represented in the table 9.
Through the implementation of marketing promotions, company realized the direct marketing was not effective as in the supported theory. Jobber & Fahy (2009:255) claimed “unlike many other forms of communication, direct marketing usually requires an immediate response”. Unfortunately, due to the result in 2013, the 5 months promotion on direct marketing did not bring plentiful customers to the firm. It was proved by monthly customer research. The reason behind of it could be the organization of company was not mature enough. The total cost nearly caught the marketing promotion budget in table 3.
Second one is the implement of “pricing rise or fall” strategy (Jobber & Fahy, 2009:204) in pricing promotion. Since May 2013, company had set price at £670 per unit with 3% discount for 3 month. Strategically, company still had £162 interest per unit. Consequently, the number of order quantity (Finger 3) rose from 2 orders in April to 12 orders in May. Substantially, the sales were continuing growth up.
Figure : The order quantity in the first year
In the first year, 643744 Company implemented the product design after 4 months researching and designing. The product had 79% quality, 47% performance, 79% features, and 97% style in 65 components, which had better design than in the business plan (Table 3), represented in figure 4. The Component was purchased from ProSupply by £7.50 per item as planning.
Figure : Product design comparing with competitor and panned design
In SCM, company decided retaining the current supplier rather than changing another supplier right now with more discounts. The reason behind of it was the payment to supplier. Company could not pay off all of credits by 30 days, due to without enough liquidity. This potential financial risk leads to the increasing fixed cost of production. However, the operation management planned to improve it in the next year.
Since in February 2013, 643744 Company had relocated at Small Business Centre (£15 per sq ft) with 300 sq ft for one year, and fortified office resources as planned in table 5. The only issue in organization was the requirement of developing office recourses and employment in organization. It was causes of the limitation on the working time and the shortage of production equipment and tools. Consequently, the productivity and working effectiveness had been impacted, as well as the tiredness of employee.
However, the Company followed in the business plan, applying “hard” HRM model into organization. After managers solved out the limitation of company set-up, customer and employment contracts, business owner went full-time work in September. Bratton & Gold (2007: 324) argues many firms neglect Human resource development (HRD), as a central, other than to keep production in shape. Thus, the vocational training was required instantly on marketing, production, sales, and research, which had implemented by £500 training grant supported. It enhanced productivity and proved by working effectiveness in the Simventure. However, the Company plans to recruit 2 more employees in the following financial years.
643744 Company had been facing a potential liquidity issue on finance in the first year. According to the first year annual report (Table 20), too lower sales and massive debtors restrained the company’s cashflow, as described by Fiedler, Brown & Moloney (2002:40) in the finger 5. Thus, the money of paying purchasing was limited, which impacted on operation strategy and company’s profitability.
Figure : The overlap of market, credit and liquidity risk
(Source: Fiedler, Brown & Moloney, 2002:40)
For this financial crisis, the company decided to develop marketing capability and credit control, rather than increasing long-term liabilities. Due to the low profitability monthly, additional long-term liabilities only would lead company into stressed market conditions. However, the credit control has been set up, as in the business plan finance section. Consequently, the current liability was £38,524.575 2013 with 237sales quantity, and £2660.9687 net profit at the end of December. On the other hand, Company obtained £500 grant on Training by this year. Managers selected to do bookkeeping in-house.
The second year management annual report
The 643744 Company was committed to technologies and products that focused on Professional Services selling field. It united the goals of customer value with sustainable development in the world widely. In the 2014 financial year, the company had achieved £751,628 on sales. Company’s goals were to enlarge its markets, and accomplished 100 orders and 1000 products at end of year.
Key staff members
Company owner’s salary was £1,300. In April 2014, the company employed one staff-Ian for £14500 per year, with 40 per week working hours, and 4 weeks holiday per year.
Sales and Marketing
In 2014, 643744 Company aimed to expand its markets and increase their regular sales to 1000, as described in the business plan to prepare into international market. According to the last year reserved profits, it was necessary to attract more loyal customers and enlarge the profitability substantially, in order to avoid raising credit risk and decreasing portfolio values (Fiedler, Brown & Moloney, 2002:38). In this case, the price discount and money off could be applied into Simventure. The company decided to develop sales strategy promotion and advertising strategy to boost sales over the short term (Gabriel, Kottasz & Bennett, 2006:506).
The first solution is managing price by using “promotional discounting” tactics. Since January until March 2014, the company had set price promotion with 3% discount on £670 per unit for three months. According to the “break-even analysis”, the company could obtain net interests £162 per unit. As a result, during those three months, the number of sales had notably boosted to above 90 orders. Moreover, the planned price penetration strategy was unsuitable at this year growth stage in PLC. Strategically, managers applied competitor-orientated pricing strategy (Jobber & Fahy, 2009:196) to change base price to £680 and provided 2% discount, which retrained for 4 months from April. Particularly, after the company changed to SourceLine supplier, the interest can reach to £240 per unit. Consequently, the sales order reserved to 105 units in July 2014. The order quantity (Figure 6) proved that the price strategy was effective.
Figure : The order quantity in the second year
Secondly, the company decided to improve marketing strategy. The Company desired to enhance the visibility and good corporate reputation in a new era of computer marketing. According to the sample survey of customer research, managers analysed the efficiency of all marketing promotion methods, resulted as Figure 7. Thus, the Company directly focused on adverts promotion and premium website rather than direct marketingthat part’s budget moved to advertising as well.
Figure : The analysis of marketing promotion in the first year and second year
Obviously, advertising promotion had more efficiency in figure 7. Hackley (2005:84) recommend advertising can swiftly build the awareness of audience. As stated by Levinson (2007:175), most small business owner never ever consider advertising on magazines, due to the lack knowledge of regional editions, remnant space, in-house agency discount etc. By provided information of advertising in the Figure 8, trade magazine had high effectiveness. Thus, the Company decided to spend more on trade magazine with £8,400.
Figure : The advertising efficiency of Professional services
In this year, the company had invested £14,110 on marketing promotion overall, which was in excess of the promotion budget around £2,000, listed in table 3:
However, those sales and marketing promotion leaded the company increase the sales. At the end of this year, the company has sold out 1127 items totally, and achieved more than 130 orders monthly.
643744 Company aimed to develop SCM with JIT management process for controlling liquidity risks. In the Ap
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