Discuss about the Strategic Management for Growth and Promotion.
Digital marketing is one of the growing industry in Australia, which aids the brand to reach new prospect customers as well as helps the brands to have sustainable growth path (Ryan, 2016). Recent statistics supports that almost 80% of small business, 73% of medium sized business and the 39% of large business utilise the digital marketing strategy to enhance their brand’s growth and for promotion purpose (Culley et al., 2017). Considering the recent growth in the digitalize marketing in the country, a new business start-up in the digital marketing sector has been considered (Epstein & Robertson, 2015). This business plan is made in order to project the business planning of the new digital marketing start-up business, which is “Sharks SEO”. The firm is aimed to provide various Search Engine Optimisation service to the vast sector of the market in order to promote their business. The firm will initially operate from the Sydney area and over the time as the business grows it will move beyond the local boundary. Detailed business plan for the new start-up is provided below.
Visions of the new start-up are as follows:
Missions of the new start-up are as follows:
Goals of the new start-up are as follows:
Product and services of the new start-up are as follows:
Details regarding the financial structure are provided in the financial forecasting section.
SWOT analysis is one of the important tools that help the firm to determine the market competition while depicting the details regarding Strength, Weakness, Opportunity and Threat (Bull et al., 2016).
New start-up is expected to operate in Sydney during its initial days and in phased manner it will move outside the local geographical boundary to different parts of the Australia. It would require hardware like laptop and internet equipment. Business will ensure stable and constructive communication with the business partners (Ryan, 2014). In addition to this it will ensure constructive communication with the commission and community for good reputation of the firm.
According to the forecast the firm need to seel around 57,204 orders every month during 1st year and it will fall during the second year to 44,209 orders as there will be less depreciation, which will cause lower break even.
Over the time the firm will bring in various promotional activities, which will help the firm to hold its customer base.
According to the forecast, during initial year product will be sold at competitive price so that it can enjoy normal profit.
The brand will first operate in the Sydney region and then it will expand to the greater Australian regions. As the business strategy, it will utilise KPI measurement for employee performance measurement (Grant, 2016). And it will perform survey periodically to adapt the market situation.
Digital marketing industry in Australia is growing over the year. In addition to this, it has been seen that due to presence of large market player the market has become an oligopoly market, where the market serves a large amount of consumers (Hayward, 2017).
Targeted market is the small business houses in the Sydney. In phased manner it will appear move towards the large business.
Market competition in the digital marketing sector is growing day by day in Australia. Under the oligopoly structure of the market most of the firms provide close substitute service. Thus, the firm is about to face good amount of market competition (Mistilis, Buhalis & Gretzel, 2014).
Five forces are another important market analysis tools (Kotler, 2015). Market influence according to the Five forces are as follows:
For opening up the new digital marketing business in Sydney, it would require 4,200,000 AUD out of which start-up expenses to fund will be of 1,200,000 AUD and start-up assets to fund will be of 3,000,000 AUD. Non cash assets will be of 2,200,000 AUD as the equipment of the firm and the cash asset will be of 800,000 AUD. There will be two owners of the firm who will enjoy 1,100,000 and 1,000,000 AUD of owner’s equity making total liability of the new opening 2,100,000 AUD. Total planned investment from the investors will be of 2,100,000 AUD and start-up expense will be of 1,200,000 AUD (Ciftci & Darrough, 2015). According to the estimation owner’s equity will be of 900,000 in total. Total liability and the equity of the owner will be 3,000,000 making the planned investment for the new opening is of 4,200,000 AUD.
Profit and loss forecast of the new opening is an essential part because it determines whether the firm need to enter the market or it should close its initiation to penetrate the market (Taylor, 2015). According to the forecast the firm will enjoy 430,125 AUD of gross profit during the first year of its opening. There will be depreciation of 218,000 AUD and the total operating expenses will be of 246,900 AUD during the first year. 54,968 AUD dollar will be shelved out from the operating profit and at the end of the first year the firm will enjoy 128,258 AUD of net profit. During second year the gross profit will be of 462,825 AUD. After depreciation and deducting the operating expenses, the firm will achieve 273,318 AUD of net profit before tax. Post taxation during second year the firm will have 191,323 AUD of net profit. According the forecast, gross profit of the firm will be around 576,675 AUD. Post taxation and deducting the operating expenses, the firm will enjoy 211,172 AUD of net profit. According the estimation, the firm will enjoy around 64% growth in its net profit by the end of third year from its introduction during 2018 (McDonald & Wilson, 2016).
Cash flow from the operation during 1st year for the firm will be of 1,088,100 AUD and net cash flow from operations will be 799,470 AUD. Net increase in cash by the end of the first year will be 104,470 AUD. According to the estimation, there will be 519% increase in the cash flow on behalf of the firm by the end of the third year. In addition to this it can be estimated that there will be 11% rise in cash flow that showcase the sustainable growth projection for the firm in coming years. Coming to the net increase in cash for the firm, it can be seen that it will increase from 104,470 AUD during first year to 331,801 AUD by the end of third year. Thus, cash flow forecast highlights there will be high growth of the firm in coming years as it gains maturity (Yoo & Pae, 2017).
Balance sheet forecast highlights the financial status of the business and considering the case of new start-up it can be seen that there will be total current assets of 1,004,245 AUD during the initial days and it will increase to 1,898,337 AUD by the end of the third year. In addition to this, it can be seen that current liabilities for the firm is 545,213 AUD, which is expected to rise to 989,262 AUD as the business grows. Summing the total liabilities and the owner’s equity, total liability for the firm will be 4,745,213 AUD during first year and it will be raised to the 5,650,435 AUD during third year due to expansion of the business.
Break-even analysis is one of the essential parts of the financial forecasting. According to the forecast the firm need to seel around 57,204 orders every month during 1st year and it will fall during the second year to 44,209 orders as there will be less depreciation, which will cause lower break even. However, there will rise in depreciation, which will lead to higher monthly break-even (Kim et al., 2017). During third year break-even sales will increase to 686,723 sales from 686,457 sales during first year.
Conclusion:
Sharks SEO is expected to start its business from the month of August of 2018 and it is aimed to achieve corporate reputation through providing customized solution, information and quality service to the respected customers. The firm is aimed to enhance its business beyond the local geographical boundary while keeping close contact with the stakeholders. In addition to this, initially it will try to avoid direct competition from the large market players as the contingency planning and next to this once it achieves maturity it will start to penetrate the market at higher magnitude with marketing research. As seen from the financial forecast for three years, the brand will achieve good amount of profit from the new opening and it can easily surpass its breakeven considering the present market scenario of Australian digital marketing. To conclude it can be stated that the brand will not only aimed to achieve profit maximisation through rising its sales figure; rather it is aimed to achieve good amount of market share while maintaining public reputation and close observation over its market strategies in coming days.
Reference:
Bull, J. W., Jobstvogt, N., Böhnke-Henrichs, A., Mascarenhas, A., Sitas, N., Baulcomb, C., … & Carter-Silk, E. (2016). Strengths, Weaknesses, Opportunities and Threats: A SWOT analysis of the ecosystem services framework. Ecosystem services, 17, 99-111.
Ciftci, M., & Darrough, M. (2015). What Explains the Valuation Difference between Intangible?intensive Profit and Loss Firms?. Journal of Business Finance & Accounting, 42(1-2), 138-166.
Culley, B., Graham, J., Kay, G., Norberry, J., & Wilson, S. (2017). Digital Marketing Plan: Naked Wines Australia. Newcastle Business School Student Journal, 1(1), 68-89.
Epstein, R., & Robertson, R. E. (2015). The search engine manipulation effect (SEME) and its possible impact on the outcomes of elections. Proceedings of the National Academy of Sciences, 112(33), E4512-E4521.
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Hayward, B. (2017). Submission to the Inquiry into Impacts on Local Businesses in Australia from Global Internet-Based Competition.
Kim, S., Jang, H., Gao, R., Kim, C., Chung, Y., & Bang, S. (2017). Break-Even Point Analysis of Sodium-Cooled Fast Reactor Capital Investment Cost Comparing the Direct Disposal Option and Pyro-Sodium-Cooled Fast Reactor Nuclear Fuel Cycle Option in Korea. Sustainability, 9(9), 1518.
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McDonald, M., & Wilson, H. (2016). Marketing Plans: How to prepare them, how to profit from them. John Wiley & Sons.
Mistilis, N., Buhalis, D., & Gretzel, U. (2014). Future eDestination marketing: perspective of an Australian tourism stakeholder network. Journal of Travel Research, 53(6), 778-790.
Ryan, D. (2014). The best digital marketing campaigns in the World II. Kogan Page Publishers.
Ryan, D. (2016). Understanding digital marketing: marketing strategies for engaging the digital generation. Kogan Page Publishers.
Taylor, B. W., Bector, C. R., Bhatt, S. K., & Rosenbloom, E. S. (2015). Introduction to management science. Prentice Hall.
Yoo, C. Y., & Pae, J. (2017). Do analysts strategically employ cash flow forecast revisions to offset negative earnings forecast revisions?. European Accounting Review, 26(2), 193-214.
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