The Holden Company Business - Research Proposal Example

BUSINESS PROPOSAL: HOLDEN COMPANY Name: Institution affiliated: Date of submission: Tutor: The company The Holden Company was founded in 1856 as a saddler manufacturer and was improved to become an automobile manufacturer in 1908. The company has its headquarters in Melbourne, Australia and is a subsidiary of General motors. Currently, Holden Company employs 2900 employees as at the years ended 2013. Holden Company is a dealer in automobile and automobile engines. The engines have for long been used by major large companies around the world. As competition in the market continues to increase, the competition continues to thrive, the pressure from consumers on the pricing of the products push the margins lower and their product quality is demanded to improve over time. Holden Company has been formed by a strong team of highly experienced directors who design a good quality product line which is aimed at improving the flexibility of manufacturing and cost efficiency through enhancing accuracy in production, increasing manufacturing productivity, reducing labour costs such as the supervisory costs and identifying means through which they can reduce and convert the variable costs into fixed costs. When this is achieved, Holden Company is able to increase its profit margins and allows changes to be made on the processes without changing or increasing the capital structures [She10]. About the new product The major engine type that Holden Company has been manufacturing over the years is the high feature. A new proposed Family II type engine has been proposed to be manufactured by the company. The aim of the new product is production flexibility, improved performance capacity, cost reduction for the end user and precision. Production flexibility will allow Holden Company to provide differentiated product and provide them as and when the consumers demand for them. Improved performance capacity means that the organization manufactures better engines with better performance [Ric091]. The engines in such a case have a bigger horse power output, better acceleration and higher speed levels for the vehicles. While quality is continuously being improved, Holden Company will also target to reduce the prices of the new product to encourage the consumers to purchase the new engine brand. Ensuring precision means that accuracy in production is achieved for maximum quality and performance to be achieved [Ann03]. Target market Holden Company is a manufacturer of both vehicles and vehicle engines. They specialize in all types of vehicles for the different classes of people around the world. The target markets include both the high capacity consumption industries like the Toyota Company and Ferrari and small consumers around the world. Whereas other major industries and corporations have been vital for Holden Company to sell their product, other small consumers around the world also play a key role in the sales and revenues collected by the organization. It is most likely the ratio of consumption of the company’s products between other companies and the small consumers is 2:1. This implies that at least 33% of the sales made in the organization are purchases from the small consumers [Suj09]. Marketing plan Holden Company will first be obliged to conduct a marketing research for the new product. Marketing research provides businesses with a broad picture of the performance of the products that they provide to the public. Marketing research provides the researcher with the specific information that is required to assist in addressing the issues and methods that determine the processes used to provide for the good and services available. Marketing research is a set of processes set by a given company to help link the consumers of the company’s product to the marketer. The marketing research process provides the marketer with information that is used to identify opportunities that may arise in the market, the problems available and how to generate, refine, monitor and evaluate the performance of the goods and services for decision making purposes. [Placeholder1]. It is expected that the new product may face poor performance over the short term period but will improve to perform better in the long term. The marketing plan for Holden Company is both direct marketing for both the domestic and foreign markets and partnerships with other companies around the world to sell their products. While Holden Company has conveniently set up new stores around the world, they may not have the capacity to reach all their consumers through the stores. Partnerships have been important for Holden Company to make to help reduce the competition they face from the other competitor companies. Partnerships have allowed the Holden Company to reach more consumers as they increase the geographical region in which they cover thus increase the volume of consumers reached by the company. For the stores, sales personnel will be strategically posted around the world and will be paid a basic salary plus commission depending on the sales that they make to entice them to reach more customers and make their sales [Eri04]. Holden Company market share 1982 1992 2012 Domestic 88% 65% 54% Foreign 12% 36% 46% Costs Holden Company requires an initial expense of $456 million for the first year for the new Family II type engines for the first year. The cost will be inclusive of both the fixed and variable costs. Consequently, the project will require a fixed cost of $300 million for the consequent years after the first year. Additional variable costs on the Family II type engine will be dependent on the demand of the product. Other standard costs to be paid by Holden Company include tax on their profits and duties from the export of their goods. Whilst some of the financing of the project will be obtained from the retained earnings from the company, debt financing will also be crucial for the organization [Don05]. Holden Company has anticipated that the profits from the organization will be realized as from the second year of operation for the product. The realization of revenues is expected to increase over the years as the consumers of the product realize its performance to be better, they will most likely purchase the product over the others that already exist in the market [Jos10]. Year 1 Year 2 Year 3 Sales 96,699 103,273 136,547 Revenue (millions) $1000 $1300 $1450 Exports 57,432 84,333 102,344 Expenses (millions) $456 $300 $300 Net profit before tax (millions) $644 $1000 $1150 Net income (millions) (200) 10 320 Product competitive analysis: SWOT analysis Strengths Weaknesses Pricing The pricing of Holden Company’s products is usually lower than those of the competitor companies. It is so since the company has invested fully in the most advanced technology which allows them to improve the quality of their goods while at the same time reducing the costs of production. Research and development has also allowed the company to produce better quality products than those made by the competitor companies. The pricing of products is vital in any market. Holden Company should understand that consumer always go for the cheapest but most quality products, thus they should ensure that they reduce the prices set for the new Family II engine while at the same time maintain quality. Quality Quality is another strength that Holden Company enjoys while it produces the engines. Most of the materials used by Holden Company are readily available locally thus making it cheap to purchase them. Similarly, Holden Company enjoys quality through the employees that they have who work in the company for the production of the new engines. The many years of experience for the company have allowed them to enjoy quality in production through the continuous improvements made on the products and product designs through the encouragement of innovation in the industry [Ric04]. Company’s reputation and experience Holden Company has not been in the market for a long period of time as compared to their competitors. The company’s experience in products and sales it still lower than its competitors and so is their reputation around the world. The products by the company have not been properly established and few consumers understand the quality of their products as they are not fully in the market. Most consumers tend to prefer to use products from the already existing and established brands around the world [Nad09]. Opportunities Threats New markets There are plenty of emerging new markets that Holden Company can take advantage of. Most of the companies identified are in Asia and Africa. Most companies have not fully utilized the vast market opportunities in these places. Holden Company can take advantage of the new market opportunities and set up new stores in the area to help them take control of the markets before the competitors come into the market [Law12]. Distribution channels The sales and distribution channels that Holden Company uses are among the best. Holden Company has three alternative distribution channels that it can use to create better opportunities for sales in the market. The first distribution is from the producer to the wholesaler to the retailer and finally to the consumer. The second channel entails foregoing the wholesaler and the producer to sell directly to the retailer who finally sells it to the consumer. The final distribution channel is where the producer sells directly to consumer. If Holden Company can properly utilize these opportunities, then it is possible for them to improve the performance as the new product will have better market channels [Jul11]. Competition Holden Company has over the years been receiving competition from Ford motor company, Toyota motor corporation Australia Ltd and Honda motor company Ltd. Competition faced by Holden Company has reduced their market share to other competitors who tend to reduce the prices of their products to win the consumers loyalty. However, Holden Company still continues to make profits from the sale of the engines. The introduction of the new Family II engine will help Holden Company to reduce the competition that it faces significantly and increase their market share [Ann03]. Personal involvement in the project The new family II engine has been proposed to be manufactured by Holden Company but for the business proposal to become successful, then it requires that personal involvement be done for the project since you understand the project better. The project will thus require that one be in control from the management resources for the natural and human resources, management of costs and the introduction and implementation of control systems for the project to be successful. REFERENCES She10: , (Shelby, 2010), Ric091: , (Richard, 2009), Ann03: , (Annacchino, 2003), Suj09: , (Nair, 2009), Placeholder1: , (Suja, 2009), Eri04: , (Eric, 2004), Don05: , (Don & Maryanne, 2005), Jos10: , (Joseph, 2010), Ric04: , (Bruce & Ricky, 2004), Nad09: , (Anne & Nadine, 2009), Law12: , (Lawrence, et al., 2012), Jul11: , (Julien, 2011), Read More