Smart Fridge Inc Business - Assignment Example

Smart Fridge Inc. Business plan Executive summary This plan has been developed to present Smart Fridge Inc. to prospective investors and raise capital needed to see its expansion and also to continue research and development for the Smart Fridge. Smart Fridge Inc. is a private firm aimed at manufacturing the Smart Fridge and marketing it. The firm will manufacture and sell the Smart Fridge and also sell smart fridges from other major firms. The Smart Fridge is a luxury refrigerator that has been invented and is yet to be introduced to the market. This proposal is designed to provide step-by-step plans for attaining sales, profits and development of this facility. Objectives Our objective is to market the invention as well as popularise it with the aim of making profits. We aim to create ease of cooking especially to the high end audience. We shall be focusing at individuals looking for an easy means to cook and shop for their families. We also aim at ensuring 100% customer satisfaction, design and sell meaningful and valuable fridges. We will be stationed in London, UK. Location determines the trading area from which a store draws its customers and should thus be evaluated carefully (Pride & Ferrell, 2006, p. 465). Recommendations This is an exciting and rewarding venture. This proposal can be viewed as one that is viable and with huge future returns. The establishment will also be aimed at availing other unique, modern, superior electronics but our main focus for now will be in the Smart Fridge. This is because we are confident that in the long run, returns from this appliance will be super normal profits. Planning process This venture preposition is set to start the business plan implementation by 2013 the month of June. This business plan is therefore designed to estimate the financial requirements in terms of costs, identify the revenues channels and how they will be maximised as well as forecast future streams of profits. The firm’s assets will all be purchased and only the premises will be rented. The facility will be on a 500 square foot space and approximately 1 km from the city. This plan is designed to serve the purpose of setting a framework for growth of the enterprise and consumer satisfaction. Realisation of this plan will ensure our excellent performance. Objectives The managers’ main focus will be to: 1. Achieve a large market and penetrate it. 2. Educate the customer on prototypes in the market 3. Create a serene environment for development of this facility. Smart Fridge Inc has a clear understanding of what is required for it to be a success. By prioritising the above three objectives the firm will with no doubt, be successful. Ownership Smart Fridge Inc. is a private firm and majority of ownership is by its founder. There are six other owners comprising of four investors and two employees. The above mentioned are the internal shareholders. The firm has external shareholders too. They are 3 in total. These shareholders are the sole funders of the corporation. Management Smart Fridge Inc. is in a start up position with the management being headed by George Daniels as the CEO. His extensive skills as an owner of many successful business ventures, qualify him as the ideal candidate for the position. He has the experience that this business requires to be a success. Mr. George is with no doubt, an entrepreneur capable of taking this small business to greater heights. His qualifications are an asset to this firm. He will be tasked with the responsibility of increasing awareness of the fridge from its current estimated 45% percent to an estimated 80 percent to 85 percent worldwide. Under the CEO, is a team of 4 departmental managers. The four will be heads of the marketing, research and development, sales and finance departments respectively. The four qualify as they have adequate credentials for their respective positions. Employees of the company will be evaluated according to their qualifications. Staffing will be thorough and a team of 20 employees will be selected and positioned in their respective duty positions. Employees will be allocated in the different departments. This will bring the total number of both managerial and subordinate staff to 25. The research and development department will have 4 engineers tasked with manufacturing and fridge designing. The sales and the marketing departments will have 5 employees each. Theories and models Smart Fridge Inc. will be following the entrepreneurship theories. The Schumpeter entrepreneurship theory and the Morris and Kuratiko theory will help us achieve economic development. Schumpter protested that innovation and technological change is achieved through entrepreneurship. He stated that innovation is a critical factor that needs to be applied in a business. Morris also states in his book that new ventures need to step up and compete with their rivals who are already established. Morris and Kuratiko (2010, p. 1-3) state that companies cannot be static and that they need to adjust adapt and redefine themselves. Our firm will apply these concepts in efforts of making it competitive and innovative. Other theories developed by Parkhrst, Kirby, and Drucker that were aimed at creativity and opportunity will also be integrated within our organisation. Burn’s theory of leadership will enable our management achieve their objectives as they will increase our competitiveness in the market (Bennett, 2006, p. 418). We will run our business with key theories that will help us grow in mind. An analysis of Porter’s Five Forces has been conducted and the firm is in a position to apply all the 5 tools. First, the threat of new competitors entering the market has been evaluated and our management team is confident that our entry to the firm first will be a great advantage to Smart Fridge Inc. We shall have accumulated a large market share and so that new entrants in the business find it difficult to enter the market. By creating barriers, we shall have secured ourselves from much competition. Secondly, we shall have captured the major suppliers. Major suppliers dictate the prices of the fridge, quality and convenience of their delivery. Capturing the powerful suppliers will enable us access the fridge from the major companies easily and at lower prices. We are also assured of quality fridges. The power of buyers will allow us negotiate prices of the fridges with our customers hence ensuring customer satisfaction. Threat of substitutes from other companies is not practical with our business as there is no other appliance serving the same purpose as the new fridge. Smart Fridge is thus safe from threat of product substitutes as stated by Herzog (2010, p. 23). SWOT ANALYSIS Strengths This preposition comes with a lot of merits for example high returns, creation of job opportunities. There are also tools to improve human resource activities e.g. interview guide and manuals. The firm has dedicated employees with a team of qualified managers. We are able to respond fast to customers as our firm is not huge thus allowing immediate feedbacks to our customers. Our location is close to our customers thus easy delivery. Weaknesses There is no continual evaluation of the markets. If the fridge fails to operate after the guarantee period the consumer is left stranded. As of now, the firm does not have market presence or reputation. Opportunities There is raw talent in the market comprising of innovative engineers Our market is expanding thus more future opportunities for success. Threats There is possibility that many of our customers will not give in to purchasing the Smart Fridge as they already posses a fridge. Location The company’s total coverage area is 500 square feet next to Oasis Sports Centre on the 32 Endell Street. Electricity is easily accessible and runs to about £50 a month. Gas is available and estimated to be £1000 annually. The location is convenient and dwellers of the region are committed to high standards of maintenance. Transportation within the location is also favourable to us as it is of high standards. By maintaining an appealing image, we are assured of a steady progression between businesses close to us and those that are far. The location of the company is advantageous as it is located in the central business district. Framework of activities The Smart Fridge Inc. will be run on a daily basis including weekends from 8 am to 6 pm. This shows the need for a committed employee team. There is need to work for long hours during the early stages of our activities as this gives us the opportunity to be available to the customer if need be. Smart Fridge Inc. mission Smart Fridge Inc.’s mission is to be a competent electronics complex providing high end products to the society. This enterprise will vary the needs of its customers as it tries to cultivate a long term relationship with them. The 500 square foot venture will have the corporate main office where all the firm’s matters will be handled. It will have a large showroom capable of accommodating more than two hundred people at a time. The spacious showroom is designed to ensure customers willing to buy the commodities, have enough space to access and view the electronics with no problem of overcrowding. Profit maximisation is therefore ensured as the customers are trained on how to use the extremely complex refrigerator. The population of London as whole is favourable as most residents are middle class and the upper class. London had an average income of men at £104, 622 in 2002 and £51,008 for women in 2006 (Roberts, 2008, p. 8), hence reflecting it as a suitable location. London is the largest metropolitan area in UK and among the most populated in Europe further revealing it as a potential market. The Smart Fridge comes with all the features of a normal fridge but has a twist. It has an inbuilt PC connected to the internet or a home network. It has a RFID tag reader that will enable the owner to categorise all contents in the fridge. The built in PC allows users to monitor all contents in the refrigerator. It also alerts users when a particular item is running low or when it is about to expire. The RFID tag reader allows users to scan all contents in the refrigerator. It can also be connected to other home appliances. Another feature that makes the fridge a lucrative item to venture in is that it can be used as a central point in the kitchen. The Smart Fridge is an indication of other smart household appliances and thus a potentially lucrative future market for Smart Fridge Inc. Plans are already underway as our research and development team revealed that other appliances are already being made e.g. the smart washers. The key to success will be dealing in authentic products from well recognized production labels e.g. Samsung, LG among others. In addition, products that we will be making will match the standards of the huge firms to ensure quality. These labels have already established their products reliability in the market and customers trust their products. Thus, in dealing with such companies original products, we are assured of customer trust and loyalty. We will also have a wide range of brands enabling the customer to have a wide selection. Dealing with recognised labels of big companies is already a marketing advantage for us. Targeted market analysis Identifying the appropriate market is crucial to putting into practice a successful marketing strategy, and failure to do this can result into poor sales, high operating costs and huge financial losses (Pride & Ferrell, 2008, p. 176). Our sales and marketing team have performed an extensive research activity and findings have backed this plan’s viability. Our target market is large and will include the following businesses: Hotels There are several hotels within London. Examples include Wyndham Grand London Chelsea Harbour, London Stratford, The Marble Arch, and Sheraton Park among other potential hotels that are likely customers. Restaurants There are several restaurants in the region that have potential of purchasing the smart fridge. Examples are the Amici Italian Restaurant, Michaels on the Thames, Friday Knight Lights and many others. Families Households are also major potential customers of Smart Electronic Inc. Our extensive six-month research involved questionnaires. Residents were asked what they think of the invention and responses were positive. The findings show that households are a likely market for our product. Major organizations North London has many organizations that are likely customers. Most of these organizations are already using other brands of fridges, hence they will need come convincing to purchase this high tech product. The list above does not comprise the full potential customers for this product. The above are just a fraction of the possible customers with the number bound to increase once people are assured of the commodity’s quality. We will form partnerships with the several hotels having other branches in different cities. The chain restaurants and hotels will help market this appliance. Price The asking price for the fridge will be based on many factors. Key among them is profit. We will set our prices to ensure a high profit margin for the company. Pricing will also be based on trends of the fridges. Newer and more advanced trends will necessitate a price higher than less advanced models. However, we will ensure that consumers get value for their money as this will strengthen our relationship with them. We shall also have the following policies to increase our sales. 5 percent discount on 10 large fridges. 10 percent discount for every purchase by a business in partnership with us. Delivery will be free of charge to all customers within a radius of 5 km from our premises. Such offers attract customers by helping them to manage their time and resources through reducing their cost of thinking (Tybout & Calder, 2010, p. 178). Operations The firm’s operations will be concerned with risk management. With such an entity there come lots of challenges. In place is a legal counsel that will be solely responsible with legal matters concerning Smart Fridges Inc. Being a private limited company, it is a separate legal entity. Therefore the counsel will be dealing in legal matters. The firm is insured by AON. Our management team is prepared for unexpected events. The company will of course be faced with issues that may see our performance not at its best. Several challenges such as competition are inevitable. We anticipate competition from other companies especially those engaging in sale of low quality fridges. Also, market penetration will be a challenge for our company. This is because the fridge is an advancement of a product that is almost in all our customers’ possession. With this in mind, we shall ensure we educate the customers on merits of owning a Smart Fridge over those in the market. The challenges have been adequately assessed and measures are in place to counter these issues. These challenges are mainly revolving around the growth and development of the facility. Smart Electronics Inc. management has thus focused on innovation as one of its best practices. Through innovation, employees will be empowered, thus allowing the firm to perform better. Creativity will be encouraged among our employees as through it, ideas for improvement of not only customer service but also the firm as a whole will be generated. Research of the market has been conducted and findings reflect the viability of the business proposal. Growth and development of the complex is based on the demography, low operating costs, wide and the range of services to be offered. All these will play an important role in our growth. Low operation costs will ensure that targeted profit goals are achieved. The initial start-up cost will be regulated to counter extravagance. At the same time, the initial costs will not to be regulated to an extent where the end result is not appealing. Operating expenses will be minimised. Financial analysis This plan aims at estimating the start up costs and costs of running the firm. It also aims at identifying the revenue streams and forecasting cash flows and profitability. The venture will be fully funded through capital contributions by the shareholders. The initial start up cost is estimated to be £500000. Research has already been carried for a period not less than six months and conclusions have been made that this amount is sufficient to cover the costs. We shall be renting a suitable premise for our operation and the venue is ready. Payments of rent will be on a monthly basis and the amount is £1000 per month. Start up costs are estimated to amount to £400000. An additional £50000 has been accounted for as start up expenses to cover staffing. Equipping has been allocated £300000 and this covers a variety of Smart Fridges. A full financial report is in place with details of actual amounts of all the requirements and products. These requirements are brochures about the activities of the complex, legal fees including registration, purchase and transportation costs of items and payments of workers salary. The remaining amount of £50000 will serve as our working capital. Revenue and profit projections On commencement of business, the management is to maintain a net gross profit margin of 40 percent. Monthly net profits are expected to reach £50000 during the first year with an increase thereafter. The period of June 2013 will see the start of activities with a first year sales goal of reaching £475,000 and double that in the second year. This will result to an annual growth rate of 15 percent by the third year. The company will commence with no liabilities in its name. Dividends are to be paid to shareholders according to their capital contribution on a semi-annual basis. Profits distributed to the shareholders are to be 20 percent of the net profit. We plan to reach most customers through door-to-door marketing as we educate them on the need of the advanced home appliance. Our competitive edge will be attracting and retaining our customers with a team of highly trained and well-informed sales personnel. Our expertise in customer care will be an additional advantage. London offers an excellent environment for growth as it provides transportation The company’ cash system is to be fully automated. Credit cards will be accepted as the technology will be high quality. The cash system is to be run by a software platform for processing the credit and debit cards. Smart Fridge Inc. will have a website giving details of its activities such as new products in the market. Strategy and implementation Our strategy is entirely based on the findings of our research and development team and the sales and marketing team. These teams have performed a six month research and they have come up with results that will help make Smart Fridge Inc. an exciting and lucrative business proposal to venture in. The research and development team has researched on the product efficiency. The research and development team will therefore be tasked with the innovation process of the Smart Fridge Inc. A team of research engineers has been put in place. This team will be required to access the fridge functionality. They will be involved in the assessment of all fridges and make sure that they are of standard quality. All the fridges that will be sold by our facility will have to go through this team to avoid customer complaints of product malfunction. Our organisation will be giving guarantees for the fridge for a period of two years. If within this period a customer approaches us with claims of product malfunction, the research and development team will be able to cater for the problem. The research and development team will also comprise expert engineers who will be involved in the manufacturing of the product. In place is a sales and marketing team tasked with promotion process. It is important to consider adverting and promotion in the initial plan of a business to attract new or additional customers (Rogoff & Bezos, 2007, p. 34). The Smart Fridge will undergo a series of sales promotions to popularize it. This team will be aimed at establishing a loyal client base. Our services will be different from those of other businesses. Exceptional service delivery will be a major priority. We will focus on interacting with our customers in quest of a unique business facility. Focus will also be emphasised on target markets which include the hotels and restaurants. The team will market us in various ways including a proposed website, radio and television advertising, in store promotions and face to face marketing. A grand opening event will also be held as it will help popularise the new business. Thereafter, the sales and marketing team will carry out aggressive marketing campaigns and this will assist in creating awareness. Campaigns will begin in July all through to December 2013. This strategy assures the shareholders that our sales revenue target is attainable. Brochures will also add up to our marketing strategy with every visitor receiving a copy. Brochures will be containing particular items in our store and up-to-date prices. Our competitive edge remains our high profile location, dedicated workforce, ability to cope with emerging competition and our strong marketing team. Each revenue stream will be managed by a departmental head. They will be responsible for day to day activities of their respective departments. Departmental heads will report to the CEO on a daily basis. The CEO will be running administrative duties. Shareholders will not be tolerated in decision making involving the running of the complex but they will participate in all matters involving strategic planning and implementation. Shareholders know that such a venture is a high risk one. In case of failure, shareholders’ capital may not be recovered and in case there is need to bring in more capital, it will be upon them to do so. Owner’s capital amounts to £500000. The company does not expect any other form of conventional loan and the tax rate is currently fixed at zero awaiting further analysis. Our projected cash flows are considerably good. This shows that there is very little if any, chance of failure for the business. The ventures revenue will be tracked on a monthly basis to ensure that owners’ equity is safe. In case of failure the owners will be allowed to sell the company’s assets to recover their capital. Capital raised will also be used to settle liability in the event of business failure. A legal counsel has been assigned to the business to advice on matters of ethics and laws. References Bennett, A, 2006, Design Studies: Theory and Research in Graphic, Princeton Architectural Press, New York.  Herzog, C 2010, Strategic Tools in Dynamic Environments, GRIN Verlag, Munich. Morris, H M., Kuratiko, F D, & Covin, G J 2010, Corporate Entrepreneurship & Innovation, Cengage Learning, New York. Pride, W M & Ferrell O C 2006, Marketing: Concepts and Strategies, 13th edn, Cengage Learning, New York. Pride, W M & Ferrell, O C 2008, Marketing, 15th edn, Cengage Learning, New York. Roberts, R 2008, The City: A Guide to London's Global Financial Centre, 2nd edn, John Wiley & Sons, New York. Rogoff, E G & Bezos, J 2007, Bankable Business Plans, 2nd edn, Rowhouse Publishing, London. Tybout, A M & Calder, B J 2010, Kellogg on Marketing, 2nd edn, John Wiley & Sons, New York. Read More