The paper "NEWCO Company Due Diligence " is a good example of a business cases study. NEWCO is a startup company that intends to start a business of solar-powered charger in Kenya. The solar-powered mobile charger will be able to charge up to six mobile phones at the same time and NEWCO believes that this would help address the problem faced by Kenyans in rural areas where electricity supply is not available as most Kenyans in rural areas are still being forced to travel several miles to get to the nearest town with electricity connection to charge their phones.
This due diligence report is based on NEWCO’ s business plan and seeks to see if it is a good business to start. Market Targeted Customers NEWCO adopted a top-down bottom approach in estimating the market size. The analysis found that out of the 39 million Kenyans, about 19 million have mobile phones and that approximately 12.5 million mobile users face difficulty accessing electricity and will charge their mobile phones once for every 4 days while a single kiosk will charge 10 cell phones. To determine the number of devices needed each day to charge all the mobile phones, the entrepreneurs used the following formula: (M/ 4) / 10 = 0.313 m = 313,000 NEWCO used Porter’ s Five Forces model to understand the degree of completion it is likely to face in the Kenyan market. Internal rivalry (Low): There are only two companies in the industry competing for the market share, which include Motorola “ Motopower” and Sony Ericsson solar charging station. Supplier Power (Low): There are many suppliers in the market and companies incur low switching cost Buyer Power (Medium): Customers consist of owners of kiosk and individuals interested in starting their own businesses and sales are not made to few big customers. The threat of New Entrants (High): New players can easily enter the market because of the low investment required and due to low barriers to entry.
NEWCO can reduce threat through first-mover advantage The threat of Substitution (Medium): Although electricity is the main substitute, customers will prefer to charge their phones locally at the nearest kiosk to traveling long distances to towns where electricity is available to have their phones charged. Observation The business failed to state clearly its market segment.
The business ought to have used different bases to segment its market, such as geographic, psychographic, demographic and behavioral as these would have made it easy to design products that suit the needs of each and every specific target market. The industry analysis indicates little threat to NEWCO either from existing rivals or substitutes, buyer power or supply power, which make the industry attractive considering that the market is also huge. However, NEWCO must be wary of new entrants that are high, which means it must strategize well to counter this threat by delivering quality products and services. Business Model Value Proposition Generate revenue at no operation cost Alleviate poverty Promote growth in society Promote the use of renewable energy source Project is sustainable and scalable
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