Newco Company limited is a company dealing with solar power mobile charger used to charge up to six mobile phones at a time. One has to determine the viability of the business plan if it can be applied in sourcing for finance for it to become a business in the future (Wong ,2005).An entrepreneur is a person who is able to see an opportunity in a given situation and be able to come up with a viable idea than will eventually lead to a successful business. According to Christensen, (2013) Investors will rely on the business brought about by the risk-taking idea and entrepreneurial intensity of the entrepreneur. In this business plan we will analyze the business plan as entrepreneurs who are able to source finance and make the idea a successful business or company. In this case the business will need to be established and nourished to expand more.
Q1. For any business to prosper it needs to have both strengths and weaknesses. An entrepreneurs has to focus on the strengths while trying to minimize on the weaknesses of the business (Drucker,2014 ).
According to the business plan Newco has a number of weaknesses and strengths. First is that the company will deal with unique products that targets a large number of people. The uniqueness of product and its utility will attract more customers. Since the company will be dealing with solar powered energy the raw material which is solar will be readily available hence it will reduce costs.Anothe r strength of the business is that it targets a large number of customers who are available in the rural areas. The product will also have new simple features that will be able to able to charge a lamp and it will create opportunities to partner with mobile network operators. Direct selling to customers will help improve the interaction with the target customers leading to increase in sales volume. Lastly strategic hub locations for the products will facilitate timely sales.
The company has a number of weaknesses which will need to be addressed or reduced when running the business. The business will require high startup capital. The equipment and other requirements will require a lot of capital to start the business. It will be had to obtain licenses for the type of business because it requires a lot of resources including financial resources. There will be also a lot of transportation costs and training of the staff based on the new idea. It will not be easy to adapt the new technology of using the solar energy and lastly it will be not easy to switch to new technology due to lack of capital for expansion. Employees will have to be trained on the usage of new technology, transportation costs will have to be reduced and lastly extensive marketing will have to be employed to target a wider market and to expand.
Due diligence report
Q 2. The type of technology being applied has not yet in tried for this kind of product since there will be sourcing of components like solar modules, batteries and electric components. The business will have to find difficulties in applying the technology since most of the staff will be unskilled and would need more training. Simple technology will have to be applied by the company as they expand they upgrade to complex technology. The location of the business is ideal because it will serve the need of the customers in the ground. The targeted customers are found in the rural areas hence it will be easy for the customers to access the services easily without having to travel long distances. The company needs to set up forms of protection in the business because of potential for growth of the business. The company first it has to be registered to be a fully functional business. The licenses would be required for the company to start its operation. This will help in the paying of taxes and prevent it from any liability that may occur in its operation in the market. The business should operate continuously without any disruption or interference. According to Stutely, (2012) a company should also have intellectual property that will help it patent the processes and product of the company. This will prevent any other company from using their process of adapting a similar product. This will be a tool for competitive advantage as there will be barriers to entry in the market.
Q3. In any given country and market there are rules and regulations that govern the operations of business or an enterprise (Saaty,2013). Entrepreneurs are able to operate in different markets without any restrictions. They can open business in different fields and industries if they have the required documentation. In this case Newco can operate in any place of the country to serve the needs of the customers. Financial plan is vital for any given business because every activity will require finance. The different departments of the business requires finances for its operation. The employees of the company need to be paid well in order for the business to operate efficiently. The employees are the drivers of the any given business. According to the financial plan of the business more finances has to be invested in the creation of the product and marketing the product to the customers since it is a new product in the market.
Q4. The infrastructure and operations should also be allocated more finances since most of the process will require a robust infrastructure for production of quality product. The business will have to seek for more funds from investors for the startup, development and expansion process in order to protect the business from closing up. The applied value chain will incorporate direct sales to shop owners as one of the business models. This will be important because it will lead to higher margins because it does not include the distributors in the chain. The cost of distributors is removed leading to higher margins and also the business will have the opportunity to have feedback on product enhancement and negotiate with the shop owners. The value chain would be more appropriate if it allowed the retailers to store some of their products so that they can distribute to the customers. The customers may need more products requiring him or her to travel to look for the sales agents instead of picking from the retailer shops. The retailers will also act as a venue for advertising the products to the customers in the targeted market. In any business the four PS are vital for the operation of the business. The 4ps include pricing, product, promotion and pricing (Stevenson,2007).
Q5. Pricing is one of the vital instrument in a business since it will determine the marketability of the product. In most cases for startup businesses it is advisable to set the prices low for easy penetration into the market and acquire most of the customers. The importance of setting the prices low for penetration is that it will increase the market share by increasing the sales. Once the product has penetrated the market it is important to set the price higher to be able to recover the money invested with production of quality products and increase in customer value.Newco business would have to concentrate on market skimming since it does not have direct competition and innovative technology applied by the company to charge a higher price.
The pricing should also be considerate to the customers since they come from poor backgrounds and they should afford the products. Hence the need to the set the prices at an affordable price after breakeven point is reached. The company will be able to earn money from selling the products to the customers in the kiosks and shops. The company within a given duration after it has established itself it can go viral to offer share to the public to gain capital.
Q6. According to the business, the target market is appropriate since of the people in the rural areas do not have electricity and this would be able to suit their needs by providing them with the products. The company will have to grow by incorporating more product designs and opening more retails in the different parts of the country or the region to acquire more market.The market segmentation applied in the business will help target a specific market who require the services. In concentrating in kiosks who are the majority customers it is able to set a market niche since most people will get the services from the kiosk.
Q7. The team in the business will have to possess necessary skills like leadership skills, communication skills and interpersonal skills with good work attitude and able to prepare a budget. The net income of the business needs to be improves and also it needs to grow each year by incorporating strategies for growth. Obligations like taxes and liabilities will have to be paid to avoid any shut down. The profits should be shared according to the structure of the business and if any deal is agreed on the shareholders need to agree on the how will share the profits. The business plan should be very informative for it to be able to source capital for startup and extension. A good business plan is a blue print for successful business (Baron,2004).
References
Baron, S. G. (2004). Developing Power Business Plan: Empowering the Bottom of the Pyramid: a Thesis Submitted in Partial Fulfillment… Master of Science in Natural Resources and Environment… University of Michigan.
Chen, X. P., Yao, X., & Kotha, S. (2009). Entrepreneur passion and preparedness in business plan presentations: a persuasion analysis of venture capitalists’ funding decisions. Academy of Management journal, 52(1), 199-214.
Christensen, C. M., & Christensen, C. M. (2013). The innovator’s dilemma: The revolutionary book that will change the way you do business (p. 320). New York, NY: HarperBusiness Essentials.
Der Foo, M., Wong, P. K., & Ong, A. (2005). Do others think you have a viable business idea? Team diversity and judges’ evaluation of ideas in a business plan competition. Journal of Business Venturing, 20(3), 385-402.
Drucker, P. (2014). Innovation and entrepreneurship. Routledge.
Macaulay, S. (1963). Non-contractual relations in business: A preliminary study. American sociological review, 55-67.
McKeever, M. P. (2001). How to write a business plan. Nolo.
Stutely, R. (2012). The definitive business plan: the fast track to intelligent planning for executives and entrepreneurs. Pearson UK.
Saaty, T. L., & Vargas, L. G. (2013). The logic of priorities: applications of business, energy, health and transportation. Springer Science & Business Media.
Stevenson, H. H., & Jarillo, J. C. (2007). A paradigm of entrepreneurship: Entrepreneurial management. In Entrepreneurship (pp. 155-170). Springer Berlin Heidelberg.
Sharma, P., & Chrisman, S. J. J. (2007). Toward a reconciliation of the definitional issues in the field of corporate entrepreneurship. In Entrepreneurship (pp. 83-103). Springer Berlin Heidelberg.
Reichheld, F. F., & Covey, S. R. (2006). The ultimate question: Driving good profits and true growth. Boston, MA: Harvard Business School Press.
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