Executive Summary
This report shows the purported business plan of Nerd Patrol, a partnership business formed by three friends- John, Mary and Nabil. The business will be on hardware and software services, debugging, networking and franchise sales. The strategy to be adopted by the company would be using innovativeness in creating top quality for clients. Financial discipline would be adhered to. The long term goal of the business is to grow and start manufacturing innovative hardware components and software programming. Each role of active and passive managers is spelt out in this report. Employees would constitute of four units – computer engineers, marketing and sales, administrative and HR unit, and security unit.
Introduction
This business plan report focuses on the operations of Nerd Patrol. This venture is a partnership business involving three friend; John Robbins, Mary Singh, and Nabil Quresh. The business operates in the information technology hardware and software industry. The partnership venture has John as the dominant partner while Mary and Nabil are passive at the meantime while they have plan to tack active roles in the business in future. The Nerd Patrol business venture would be modeled after the Geek Squad franchised pattern.
Partnership business entails different individuals, could be relatives or friends, coming to form a venture where they pool their resources and operate according to a written partnership deed. Partnership business ventures have long existed. According to Jaeger partnership as a concept has existed for long through the Middle Ages where ‘commenda’ is well operated. This type of partnership entails that one partner in the business contributes his capital while other may give their contributions in form of knowledge, skill, etc. (p. 138).
In the case of strategic alliance, where there is no outright takeover, the firms agree to jointly put their resources together in order to attain the corporate objectives for their companies. This is a more reason why it is germane to harness and synchronize the diversity in the corporate cultures of the organizations in the alliance. This comes as a result that each firm still maintain its entity and corporate identity while the alliance progresses. Hence, the likelihood that their organization w ay of operating may differ and this tend to affect the level of success in the corporate alliance. The issue of human resource management also needs to be taken into proper consideration in the process of strategic alliance. Since strategic alliance brings with it changes to the status quo of the firms operations, there is then the need that workers in the firms forming the alliance are put in tune with the emerging trends and adequately carried along through regular communication and information dissemination. In this view, Lajara et al quoted Lorange & Ross, saying some aspects linked with human resources management are particularly important in the context of strategic alliance, among them the assignment of executives to the alliance, personnel transferability, the distribution of time between strategic and operative matters made by the executives assigned to the alliance, and problems related to loyalty. Marks & Mirvis cited in Lajara et al. “A strategic alliance usually results in a series of change in the cooperating organization’s behavior. These changes may represent a potential source of problems and conflicts with the firm personnel, who can cause the cooperative venture to fail if they are not properly sorted out”. In the case of strategic alliance, where there is no outright takeover, the firms agree to jointly put their resources together in order to attain the corporate objectives for their companies. This is a more reason why it is germane to harness and synchronize the diversity in the corporate cultures of the organizations in the alliance. This comes as a result that each firm still maintain its entity and corporate identity while the alliance progresses. Hence, the likelihood that their organization w ay of operating may differ and this tend to affect the level of success in the corporate alliance. The issue of human resource management also needs to be taken into proper consideration in the process of strategic alliance. Since strategic alliance brings with it changes to the status quo of the firms operations, there is then the need that workers in the firms forming the alliance are put in tune with the emerging trends and adequately carried along through regular communication and information dissemination. According to Lorange & Ross (1993), cited in Lajara et al (2002), some aspects linked with human resources management are particularly important in the context of strategic alliance, among them the assignment of executives to the alliance, personnel transferability, the distribution of time between strategic and operative matters made by the executives assigned to the alliance, and problems related to loyalty. Marks & Mirvis “A strategic alliance usually results in a series of change in the cooperating organization’s behavior. These changes may represent a potential source of problems and conflicts with the firm personnel, which can cause the cooperative venture to fail if they are not properly sorted out” (Lajara et al.).
Market Analysis
The Hardware and Software market is very significant in this cotemporary time. The computer age has seen the creation of innovative and hi-tech computer systems. Computer hardware comes in different forms and shapes. Mainframe computers are for large industrial usage, and for sophisticated military hardware operations. There are microcomputer processors like palm tops, laptops, ipads, blackberries, etc. Software programs are developed to run and operate computer systems. There are numerous and of different significant usages.
There are many players in the hardware and software industry. This has made competition in the industry very keen. However, major players have continued to curve niches for themselves and operate as market leaders which smaller organizations in the industry look on to for motivation and aspiration. Such market leaders include Dell Incorporation, Microsoft Incorporation, IBM ,etc.
The volume of sales in the computer hardware industry has continued to rise and has made significant boost to transnational trades. Figures from 2003, show that an estimated 156.2 million personal computers were transacted worldwide. This reflects an increase from 2003 sales by 15 million units.
The graph shows the sales and shipment of personal computers (PCs) from 1975 to 2003.
It is germane to concisely analyze the status and operation of some big players in the industry. The organizational structure in Dell Incorporation is one that is based on situational leadership style. The management of the organization carries out decision-making base on the current market trends and situation that need to be determined instantly. This situation has made the organization very successful in its operations. The situational leadership style is one that is considered as most effective, as management and organization’s leaders adopt any leadership style that is most feasible and applicable at any given period. Customer relationship formed in the organization is one that encourages bonding for the organization with its customers and those workers in the organization. The Dell‘s product are specifically tailored to suit customer purchasing power and their taste, thus the organization of relationship build up for the organization is one that follows customer relationship bonding through effective HR practices. Thus, Dell organization practiced a flexible relationship with its customers and workers; this is done to make the organization carry out its strategic pattern of providing its products to suit the economical need and taste of its customers.
For the Microsoft organization, the organizational structure would be likened to what is obtainable in Dell. It has a management in place that sought to bring about the best condition of services from its workers. Thus, it encourages a democratic leadership style that encourages workers in the organization to contribute meaningfully to the organization’s decision process. Nevertheless, to some extend it would be said that the situational leadership model is applicable to Microsoft organization, as situation arises and demands that other leadership styles are introduced. The organization has successfully created soft wares that teach managers of organization how to carry out an effective leadership style in management practices.
In the case of IBM organization, the practice of teamwork is encouraged. Here, the democratic leadership style is practiced to some greater extend. The hardware and software industry that Nerd Patrol plan to operate in is a highly capital intensive one and the turnover of products is very high, compared to other industries.
Investment Strategy
Nerd Patrol will operate an innovative strategy and liaise with prominent existing market leader in franchising their brands until it is matured enough to own its own brand name in the future. Hence, with negotiation from big hardware and software brand names, like Dell, IBM and Microsoft Nerd Patrol will enter deal to trade market their products, render essential services for hardware and software repairs, debugging and services. This will continue for some years until the organized matured enough, but financially and skillful human resource for it to manufacture its own brand. Hence, while it engages in research and development, the ultimate growth of the organization is to have its unique brand name over the years. The company shall have team of software professionals to help in developing its software to provide solutions to clientele IT problems. Niche marketing will be adopted in increasing the sales of the companies’ hardware and software products. This marketing approach spans over every industries and become effective when it is implemented by using product differentiation strategy. Hence, even though Nerd Patrol will be marketing some products of market leaders and enter into franchise deal to produce some of these products it can curve a niche through good marketing and customer treatment.
Marketing Strategies
As part of our marketing strategy, we shall find ways of expanding our customer base and satisfying their needs by stocking the latest and hi-tech computer hardware and software products. In Nerd Patrol shall continue to find ways to satisfy their desire. Therefore, we shall operate marketing strategies that are effective and result orientated. This will cost effectiveness strategy, total quality management and using supplementary gift product to attract more customers to us.
Cost effectiveness strategy to be adopted in this plan does not imply that cheap services that are associated with low standard of service. The cost reduction strategy is the efficient utilization of organization resources for it to incur the minimal cost and have the maximum efficiency in the utilization of its resources, while standardized services are maintained. Many organizations have used cost effectiveness strategy in gaining competitive advantage. In this ready, the end product made available to customers is at very low price. However, this does not mean that quality is scarified for low cost. Flynn & Flynn’s definition Flynn & Flynn’s definition of the strategy using cost effectiveness means giving more priority to product design, manufacturing and how they are distributed, than putting more concentration on competition (p. 41-44).
Furthermore, the accomplishing supplementary product to be used as our marketing strategy would go a long way in making the delivery of its products to consumer in the most delightful way and making them satisfied. All these supplementary services are built around the delivery of good products to consumers. Hence, where quality services are provided, gift items or bonuses to clients would be used as incentive to attract them. Furthermore, services rendered would have six months guarantee where if there is a relapse of worked problem this will be further handled at no extra cost within the six months.
Statement of anticipated Objectives
The following corporate goals and objectives would be attained by Nerd Patrol as it strives to gain market share and operate competitively in the hardware and software industry:
Expected Qualitative Objectives to be achieved
Nerd Patrol would operate a feasible and implementable management drive with accountability and financial disciplined projects implementations. Investors interest will be protected always and operations would be carried it to ensure that reward to our investors and financiers are regularly maximized.
Nerd Patrol will also put machinery in place to maintain a corporate culture that promotes and sustains every stakeholder, to actualize our target of rewarding investors and financiers. This will be done with our feasible strategy of owning and partnering with a top leading Hardware and software market leaders with a reputation to acquire within the shortest time large market share in the IT world, especially in the hardware and software industry. To attain this, our company will maintain good ethical values, and have a code of conduct and operations for every member of our organization. Our partners, financiers, workers and clients will all be accorded the sense of belonging that is required in enabling Nerd Patrol to quickly achieve its goals and objectives.
Our inclusive model of operations is aimed at ensuring that high productivity is maintained at every level of operations and discipline is not traded for anything. Indiscipline and recklessness will not be tolerated.
Quantitative objectives
In line with achieving our qualitative objectives the following quantitative objectives, which are measurable will be attained.
Within two years, it is the aim of Nerd Patrol to expand its hardware and software services, networking and debugging solutions to grow to a state where it will become a recommended service providers for leading organizations and brand names; such as Dell, Microsoft, IBM, HP Packett etc.
Nerd Patrol will operate to gain 15 % of market share within 7 year of its operations. This will be achieved through effective strategy implementation.
Furthermore, the organization will operate 20-40 channels of distributing our products within 3 year that we begin operations.
The company’s initial area of operations will cover states in the US and as we grow we shall expand to Europe and target market in Africa that is still a growing market for IT products. This marketing expansion will be targeted within our five years of operations.
Nerd Patrol shall also endeavor to increase of capital base to around $ 3,000,000 $ by 5 years of commencing our operations.
Products
The Nerd patrol’s products including giving services to individuals and business organizations in hardware and software repairs, solution packages, debugging, and networking solutions etc.
In the long term will entail the manufacturing and marketing computer hardware and software products. Our services will be professionally done and they are expected to be of the best quality available in the industry. Even while stocking project of market leaders the best of quality would be sold to our customers.
Organization of the business and key players
The active partner, John, will act as manager to coordinate the business resources and operations. As the company’s manager he is expected to position the company to compete favorably with our rivals and operate strategy that will make the organization grow to gain higher market shares.
Other partners in the business will also play active role. However, they will remain dormant till after five years when they are expected to more active role in the business’ operations.
While John will initially play managerial role, others partners- Mary and Nabil will play advisory roles and make decisions where necessary until they come into the business to play active roles as members of the management team.
Employees
Professional and certified computer engineers will be recruited to man the core functions of the organization. They are expected to have in depth knowledge of software programming, hardware repairs and maintenance and networking configurations.
The roles of the employees would be subject to implementation of professional work functions in their given disciplines. Hence, Nerd Patrol units would be divided into core computer engineers, marketing and sales unit, administrative and human resource unit, and security unit.
The computer engineers would handle the repairs of clients hardware and software programming and configuration. The marketing and sales unit will relate with our clients and seek for jobs for the company. The administrative and human resource unit will handle all internal and external administrative functions and take care of workers welfare and payrolls. The security unit will guard the office during and after working hours.
- SWOT Analysis
Channels of making our products
Nerd Patrolwill be directly selling our products line to retail companies, resellers and small retail shop.
Product Transitions
Communication plan to enhance our marketing strategy
In Nerd Patrol we shall have good communication plan to ensure that communication cuts across top and bottom levels flow unobstructed. We shall encourage our management team to be open and allow free marketing suggestions and plans. Hence, we shall make use of all available communication channels – online, print media, broadcast media to communicate our advertisements for our products. As seen in our operational plan; our advertisement cost will continue to increase from time to time. We shall also create an affiliation network program on the internet where websites with good traffic will be paid to promote our advert banners in their websites on strategic positions.
PEST Analyses
Demographic environment
The Demographic segment consists of variables that have to do with the country’s demographic feature such as the population size, the age structure of the population, geographical distribution, ethnic mix and income distribution. The population size of a country determines the market size and the level of demand that could transacted. In this computer age but young and old have shown interest in the use of computer and IT systems. Hence, that Nerd Patrol Company has a vast market for hardware and software services.
Economic environment
Economic segment is a major dimension in corporate organizations’ external environment that affects their strategies and operations. This segment constitute of the inflation rates, interest rates, trade deficits or surpluses, budget deficits or surpluses, personal savings rate, business savings rates and gross domestic product.
For Nerd Patrol the US economy is strong, in spite of its coming out from the recent global economic meltdown. Hence, the purchasing power of Americans and people in US is still high and our business will not suffer low demands known to societies with low purchasing power.
Political environment
The Political and legal environmental segment consists of laws and policies of government that tends to influence the pattern of conducting business operation in a country. The United States economy is not volatile and the political situation has been known to be very stable. This stability will lead to our business growth. There is no threat of violate change of power that will immediately affect our business. Moreover, the US government has policies that protect business operations, franchise deals and patent rights for innovative creations.
Technological environment
Technological dimension in the environment is a prominent and significant segment in this computer age, especially as businesses take active role in international business. According to Peter “The elements of technological segment include product innovations, application of knowledge, focus of private and government supported R&D expenditures, and new communication technologies” (p. 51). Also, Coopers says during revolution in technology there will be difference in means of obtaining set objective for organization (p. 1). For Nerd Patrol Company there is the need to embrace consistent upgrading in our technological equipment for our product to continue to retain its good continuous patronage from our customers.
Structure and Capitalization
Capital requirements
Nerd Patrol will require partners pooling their resources in form of contribution to raise the initial required capital to commence the business operations. In future, as the business expands new partner or investors to stand as financiers for the business will be introduced.
Use of funds summary
• Formation, legal and accounting efforts
• Development of the PaySchool.com.au platform
• Operating Funds and Working Capital
• Sales and Marketing
• Employee Salaries
Start-up summary
The Company's start-up expenses are budgeted primarily to be used in operations and include:
Financial Plan (start-up fund)
$175,000 is estimated as the required initial capital to start operation in Nerd Patrol Company
The required fund for this stage is estimated below:
Formation $25,000
Website Development $10,000
Prepaid Items $130,000
Legal and Accounting Services $5,000
Launch Activities $5000
Total Start-up Expenses $175, 000
Initial start-up fund $175, 000
Marketing $.10000
Manufacturing of our product $.2000
Others Utilities $5000.
Other expenses $10000.
Before Nerd Patrol can fully operate at its targets in the market, it will take a month to prepare the business and train competent staff to lead and manage the operations. It is expected that the first month of operations will only result to a net cash outflows since there in no expected income to be realized. That month expenses will be financed by the fund generated from partners and owners start-up investment.
The total Initial capital outlay for Nerd Patrol will be $30,000. On the succeeding months of operations, the company expects to earn high returns.
Ratio Analysis
- Payback Period
Payback Period measures the span of time to which the initial capital outlay in setting up the business operations can be fully recovered.
The capital outlay of $30000 is expected to be earned within the 2 years of operations.
- Profitability
There is a very high profitability for Nerd Patrol as demands are expected to increase from time to time and it covers a wide market with innovative marketing strategy.
On The First Year, the expected Return on Investment is only 5.43% of the initial capital outlay, this is because a lot a market experimentations are expected to occur and the achievement of the overall target is set at a low level.
On the second year- the estimated Return of Investment is 10.41 times the initial investment. While on the third year is 16.78 times than the initial capital outlay.
Return on Sales measures the percentage of net income earned over the Total Sales. This ratio will illustrate relationship of the income earned, the cost in providing the products or services.
The returns to the business in subsequent years is expected to be high.
5% rebate would be given to customers whose patronage is very frequent and amounting to not less than $1000 for a single deal.
The expected revenue from turnover in the first year of our operations should be within the range value of $1,500,000. Deducting sales and services expense of estimated value of $700,000 from this sales, the net profit for our first year of operation will amount to around $ 800,000. In subsequent years the business stands a chance of tripling this recorded profit.
Amount for 5 years implementation cost
Cost for operations and admin expenses $50,000 $90,000 $120,000 $150,000 $170,000
Cost for marketing operations $18000 $28,000 $39,000 $49,000 $61,000 IT software and hardware operational cost $80,000 $95,000 $1,000 $125,000 $135,000
Fund for expanding business $12,000 $70,000 $150,000 $250,000 $400,000 Cost for personnel recruitment $80,000 $120000 $150,000 $170,000 $200,000 Estimated wages/ salaries bill $450,000 $760,000 $920,000 $1,100,000 $1,300,000 Office maintenance cost $15,000 $34,000 $44,000 $53,000 $71,000 Experts Consultancy fees $12,000 $25,000 $38,000 $42, 000 $80,000
Ratio analysis Year 1 Year 2 Year 3 Year 4 Year 5
Sales growth Nil 400.00% 300.00% 200.00% 100.00%
Percent of total assets
Total current assets 100.00% 100.00% 100.00% 100.00% 100.00%
Total assets 100.00% 100.00% 100.00% 100.00% 100.00%
Current liabilities -18.40% -13.10% -154.34% 32.04% 19.05%
Total liabilities -18.40% -13.10% -154.34% 32.04% 19.05%
Net worth 118.40% 113.10% 254.34% 67.96% 80.95%
Percent of sales
Sales 100.00% 100.00% 100.00% 100.00% 100.00%
Gross margin 35.00% 35.00% 35.00% 35.00% 35.00%
Selling, general & administrative 130.57% 79.32% 29.58% 18.23% 15.07%
expenses
Advertising Expenses 27.38% 5.48% 2.74% 1.37% 1.14%
Profit before interest and taxes -95.57% -44.32% 7.74% 23.95% 28.47%
Main ratios
Current -5.43 -7.64 -0.65 3.12 5.25
Quick -5.43 -7.64 -0.65 3.12 5.25
Total debt to total assets -18.40% -13.10% -154.34% 32.04% 19.05%
Pre-tax return on net worth 100.29% 69.93% -74.27% 180.21% 107.14%
Pre-tax return on assets 118.74% 79.09% -188.89% 122.47% 86.72%
Additional ratios Year 1 Year 2 Year 3 Year 4 Year 5
Net profit margin -95.57% -44.32% 5.42% 16.77% 19.93%
Return on equity 0.00% 0.00% 0.00% 126.15% 75.00%
Activity ratios
Accounts payable turnover 9.21 12.17 12.17 12.17 12.17
Payment days 27 21 s 19 20
Total asset turnover 0.00 0.00 0.00 5.11
Debt ratios
Debt to net worth 0.00 0.00 0.00 0.47 0.24
Current liability to Liability ratio 1.00 1.00 1.00 1.00 1.00
Liquidity ratios
Net working capital ($174,025) ($578,734) ($380,779) $1,456,271 $5,824,094
Interest coverage 0.00 0.00 0.00 0.00 0.00
Additional ratios
Assets to sales -0.80 -0.56 -0.04 0.20 0.33
Current debt/total assets 0% 0% 0% 32% 19% Acid test -5.43 -7.64 -0.65 3.12 5.25 Sales/net worth 0.00 0.00 0.00 7.52 3.76
Dividend payout 0.00 0.00 0.00 0.00 0.00
Performance Standards
Nerd Patrol needs to maintain an ethical standard that should guide the company in checking against unlawful practices from members of management and employees. Most times unethical practices attract sanctions from government agencies. Hence, the practice of ethical considerations would be widely adhered to. In addition, adequate communication between staff and management of Nerd Patrol would enable the management to see areas where there is low performance that require the commissioning of training session to plug in the loop hole.
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