Business Plan for ABC Energon
Appendix page
- Executive Summary3
- Objectives3
- Mission4
- Keys to Success4
- Company Summary4
- Company History5
- Company Resources and Facilities5
- Products5
- Product Description5
- Competitive Comparison6
- Sourcing and Fulfilment6
- Technology6
- Future Products and Services7
- Market Analysis Summary7
- Target market segment strategy7
- Market needs7
- Strategy and Implementation Summary7
- Strategy Pyramids8
- Value Proposition8
- Market Strategy8
- Pricing Strategy9
- Distribution Strategy9
- Management Summary10
- Organizational Structure10
- Management Team11
- Financial Plan11
- Projected Cash Flows12
- Business Ratios12
- Break even Analysis13
- Investment Required13
Executive Summary
Global warming is one of the few effects of increase in the degradation of the environment. This is the reason as to why as much as financial decisions are to be made they should be able to cater for the environment as well as the future. The use of non renewable energy source leads to the release of gases that act as a blanket around the earth and increasing the temperatures over the years. Manufacturing and transport industries are the most users of energy leading at about 30% of the total budget of their individual countries for purchase of fuel as they try to look for alternative ways to cut their budgets. It is because of this very reason that there is need to have a company that is able to offer an alternative in the production of renewable energy.
Objectives
- Campaign against the use of non renewable energy source by the use of legislations that will term it as illegal or place a smoke tax that will too high for the companies to afford and will simply opt to use the renewable energy sources.
Mission
Key to success
Company summary
Company History
The company is fairy new and it hopes to liase with the government in making the mission come true and meeting all the objectives set. The company has very efficient people in terms of technical qualification and experience that are ready to ensure that all the goals are achieved in the long run.
Company Resources and Facilities
The company will have purchased a piece of land that will be 20 hectares and will have the assembling and manufacture plant. This will be the point where all the solar panels will be constructed and tested. There will be several cargo carriers and distribution vehicles to reduce congestion and traffic at the plant and to aid in time savings.
Human resource will be another major input as their knowledge and labour will aid in creating good and efficient products to cater for the market demand and increase it gradually.
Some of the facilities include the inputs that will be used in the manufacture and installation of the panels to become the end product.
- Products
- Product and Service Description
In order to be able to capture all the energy sources that Mother Nature has to offer, the location of the company to purchase the product will determine the type to be installed. This is because there are two products: the solar panel and the wind powered panel.
The solar panels will be built to offer an alternative energy source that is eco-friendly. The solar panels will be built as heavy duty meant to serve a high production company in manufacture of commodities. It will depend on the hours of sunshine available per day but will also be able to store the energy as per its manufacturing.
The wind powered panel will be dependent on the amount of wind blowing in an area best suited for areas where sunshine hours are limited and there are strong winds experienced, however a company can purchase both to ensure that there is constant production.
The service of installation and maintenance will be offered by the company to all the clients as a means of keeping data on their products so as to be able to improve on performance but also to increase client contact and satisfaction.
- Competitive Comparison
The company’s competitors are two small businesses that produce smaller duty solar panels and no wind powered panels. The two companies do not offers the service of installation or maintenance of the commodities. This is a service that will be highly offered by ABC Energon
The two companies have not fully satisfied the market as they do not meet the demand. This means not only is it that many people do not know about their product and services, they do not meet the needs of the ones who do. This is the reason that the Steam hydroelectricity companies have dominated the market and almost made the market a monopoly.
- Sourcing and Fulfilment
Sourcing will done form the government, this will be in terms of finances and the relevant paper work required to start the manufacture of the products.
- Technology.
The use of solar panels and wind powered panels will be an improvement in technology. This is because the actual manufacture and assembly will be done with the state of the art technology to ensure precision and efficiency of the end product. Durability is also another aspect that is expected of the products as they are meant to ensure that the companies do not go back to the use of non-renewable energy sources that cause more harm to an already bad climatic condition and environment.
- Future Products and Services
In the future the company hopes to manufacture solar panels that can be used by the daily household in their everyday activities. The panels will be smaller in size and will be expected to produce an average amount of energy that can be used for domestic purposes without posing as a danger to the people using it. There will also be the incorporation with a biogas company that will aid in the acceptance of the use of gas that does not lead to degradation of the soil and the earth.
- Market Analysis Summary
- Target market segment strategy
Target market will be most of the manufacturing and producing firms that are still using the non renewable sources of energy. It will be an opportunity to sell and sensitize them on the benefits of the use of the renewable energy.
- Market needs
The market needs an aggressive non renewable energy company that will be able to offset the disequilibrium that has been established by the hydroelectric company that seems to dominate the industry. This will lead to decrease prices as there will be competition among the firms and the consumer will be the one to benefit.
- Strategy and Implementation Summary
- Strategy Pyramids
Given the fact that the company will be relatively new there are two strategies that will be applied: the cost strategy and the growth strategy. The growth strategy will be in terms of the volume produced and the market share control that the company will command. Given the fact that the energy industry is more of an oligopolistic market structure, market share control is very important as it helps in controlling the price of the commodity to the extent that one firm is not pushed out of business by any other firm. There should also be increase in the volume produced in order to ensure that the firm enjoys economies of scale.
The cost strategy will be made in terms of the finance of the firm, this means that it must work well within the budget and avoid any overheads especially at the beginning. In this strategy two main conditions must be established and they are:
- The marginal cost must be equal to the marginal revenue to ensure maximum profit. This is the aim of every firm because at this point there is production of the optimum volume and there is enough profit to be ploughed back as re-investment.
- The total cost of the inputs must always be less than the total revenue earned from the sale of the panels. In this regard the total cost will include both implicit and explicit costs of the production process.
- Value Proposition
Alternative energy is good for all, making it happen is a challenge for all. ABC Energon is dedicated to making sure that it happens all the way. The value of the solar panels will not only be attached to the financial costs it will be attached to the social effects and benefits it is bound to bring to the society.
The value of the energy produced will be evaluated annually to establish the real value of the company in a stock exchange market. This will lead to increase in the number of investors which will offer a platform to expand in terms of capacity and influence in the market.
- Market Strategy
The target market for the panels is the energy deficient world. This means the marketing strategy will include a creating awareness programme. This can be done through the use of the entire fourth estate and the social media. There will also be direct marketing where there will be the use of sales marketers who will be trained on how the panels work and how to best install and maintain them. This will be done by office to office and company to company. There will also be the use of corporate pamphlets that will be circulated to all the firms and companies.
There will be a seminar for sensitizing people on the dangers of using the non-renewable energy source and the benefits of using renewable energy sources.
Pricing Strategy
The price will be set as per the cost of production. The cost can be set to ensure that the marginal cost of a single panel produced will equal the marginal revenue acquired from the same panel. This will ensure that there will be maximum profits and expansions can be possible through profits plough backs.
Distribution Strategy
The company will have vehicles and carriers to help in the initial distributing process. This is to ensure that the price of the panels will not be increased due to the increase in the number of middle men between the producer and the consumer. There will be a specific distribution company that will be contracted to ensure that the panels can easily be accessed by the companies that wish to have them. The company vehicles would take all the already manufactured and properly installed panels to their depot where the initial distribution to the consumer’s access point will be done.
It will be cheap for the consumers and the producers can be able to follow their panels to the different places they are dispatched to. This will allow for the company to keep track of where their panels are distributed to and the reactions of the market to the panels.
- Management Summary
- Organizational Structure
The key partners include the government, the National Environmental Conservation body; the key supplier is the Shinto Electronics company of Japan. Their roles and responsibility are as follows;
- Management Team
The management team will comprise of top managers from all partners. They will be allowed to have an election of an overall manager for the entire company. This will be based on technical qualification and experience of the individual and success in prior companies. The company will be divided into different departments that will be mandated with different roles and responsibilities. There will be a constitution for the firm that will be followed by all the employees to the letter.
The departments will include: the personnel department, which will deal with hiring, contracting and firing of the necessary work force required. The finance department, which will deal with all the finances, withdrawal and receipt of money by the firm. The operations department will deal with the ensuring all the operations of the firm in terms of labour and machines are operating as expected. The distribution and supply chain department will deal with the distribution of the panels and will be in close contact with the Japan Company to ensure there is proper supply.
The manager will ensure that there is proper co-ordination of the departments while their heads will ensure that each department performs to its level best. All the resources and inputs are catered for in the departments.
- Financial Plan
Finance is the most important aspect of the project, this is because lack of the required finances can lead to many of the operations to stall and finally come to a stop. This is the reason why it is best to have required financial analysis beforehand.
- Projected Cash Flows
Pre-Tax (Cash-only) Equity IRR (Over defined Useful Life) =4.74%
After Tax Equity IRR (Over defined Useful Life) = 12.00%
Net Present Value @12.00% (Over defined Useful Life) = $200
- Business ratios
- Beak even Analysis
Sample inputs provided to test the market.
This means that in order for the firm to make any profits there will be need for the revenue collected to be more than the total amount. This will be the total costs of the entire first phase of production and sale of the panels without including the marketing costs. The revenue has to exceed the $6,000,000 mark.
The break even can also be achieved when the cost of inputs, operational costs, labour costs and distribution, deducted from the total revenue acquired lead to a positive figure.
- The investment required
According to the above information the initial investment required is at least $6,000,000. This is meant to cater for the production, installation and distribution of the panels. For the total investment required to have a successful plough back, it must be inclusive of the amount of money required for marketing and the cost of labour used in the production of the panels. The following is the projected total cost and investment allocation
Project Cost Allocation
Conclusion
The ABC Energon is a contemporary company that seeks to save the environment and protect the future while still making profits and offering employment to idle factors of production like the sun and the wind. In this essence it is more of a role model company: one that seeks to make commercial activities flourish at the same time seeks to be ethical and considerate of the environment that surrounds it.
A look at its finance shows that there is a lot of risks in terms of assurance of payback period and return of the initial invested money however the risk is worth the profit as it is in both monetary and non monetary terms.
