Business Performance Measurement - Term Paper Example

Student’s Name: Instructor’s Name: Course Code & Name: Date of Submission: Table of Contents Cover letter 1 Executive summary 2 About the innovation 3 Competitors Analysis 6 Countering Competition 6 Key areas in which our innovation will have impact 7 Our customers 8 Key performance indicators 8 The industry Analysis 10 Products and services 11 Our mission 11 Our vision 12 Business Strategy 12 Corporate Structure 13 Business Process 14 Relationships with external entities 16 Risk management plan 16 Technology requirements and infrastructure 18 Information Technology Infrastructure required 19 Finance and key findings 19 References: 22 Appendix: Activity log 24 Cover letter From: Smartapps To: Angel Investors RE: BUSINESS PROPOSAL; APPLICATION FOR SEED CAPITAL Smartapps is a start-up company based in Australia, Sydney that is looking forward to start operations with specialization in development of mobile phone applications that provide solutions to real-world problems. This innovative idea has been generated from increased demand and use of mobile devices by the Australian population as well as the global market. This business proposal contains a detailed research of the mobile industry in Australia, and the strategies that the proposed organization will use to maneuver and cut a competitive edge in the industry. Key performance measures of the start-up firm have been highlighted as well as financial estimates for the first three years of operations. The company requires seed capital amounting to $300,000 to start operations. However, we can only raise $100,000 of the required capital. Given that this is start-up firm, we cannot get the additional capital from financial institutions. We thereby request you to facilitate us with the additional $ 200,000 in exchange of shares and management position in the company. We also assure that we shall refund the borrowed amount within two years after operations have started, given that the firm has a high potential for growth and profitability. We look forward for a favorable response. Yours sincerely, C.E.O Smartapps. Executive summary Smartapps is an ICT company that is focused on mobile apps development and is to be based in Australia. The innovation has been compelled by the increased demand for smartphones and tablets that has been caused by the shift by people from using desktop computers to the use of mobile devices to access essential services. This shift has been necessitated by advancement in technological invention and innovation. Smartapps is seeking to establish a market niche both locally and internationally, aimed at solving real world problems and improving peoples’ lives. This will be achieved by developing mobile applications that employ the latest mobile technology to bring the world to the user’s mobile phone or tablet to enhance convenience, effectiveness and efficiency. From research and financial estimates, the company being a start-up requires additional capital amounting to $200,000 so that it can start its operation. About the innovation According to (Lee, Schneider and Schell, 2004), the penetration of mobile phone devices has been quite rapid in the recent past fuelled by advancement in technology, with the innovation becoming indispensable by most people. This has led to the soaring of the demand for mobile phone apps in themarket so as to revolutionize web browsing and mobile gaming. SmartApps is an ICT company that will be involved in developing mobile phone applications and software that will improve the lives of people by solving real world problems. Theemergence mobile technology has made it possible for people to access information anywhere and anytime due to the mobility of the devices. Smartapps has then came in place to make lives easier by creating easy accessibility of information by the users by developing interface software and mobile applications that match the dynamically changing technological environment. This will enable our individual and institutional clients adapt to changes in their industries so that they can have a competitive edge in their markets (Golding, 2008). Thiscompany is focused on developing a mobile applicationthat will be used by students and lecturers for course work. This mobile application will create an interface for interaction between the student and lecturer where the lecturer can send learning notes to students. It will also be possible for a lecturer to undertake customized evaluation of individual students according to their learning capabilities, taking into consideration the fact that different learners have different rates of understanding a particular concept. The learner will be also be able to submit his or her assignments through mobile phone facilitated by the application. The application will be available at all mobile operating systems stores such Android, iOS, iPhone, iPad and Windows(Fitzgerald and Savage, 2004). The potential user will be required to login to these stores and download the mobile application, where data charges will be applied at a rate that will depend on the network operator. Additionally, the application will have enhanced privacy and security of personal information that will be enhanced by encrypted will a username and password. Hence, there will be no unauthorized access to the application in the mobile phone. It will require the user to have an internet connection facilitated by a mobile network operator at 2G, 3G, or 4G. It will be possible to run the application through a Wireless Fidelity network (WI-FI).The application will be synchronized with search engines such as Google that will enable the user to browse the web for information needed in research work. The mobile application will enhance convenience and increase flexibility to tutors and learners by enhancing fast interaction between the parties. This will largely reduce time spend in classroom discussions, giving the users an opportunity to access services at the comfort of their premises. Learners and tutors will have more time to attend to other non-academic roles such as spending time with their families or sports as classroom meetings will be moderated. It also enables the lecturer to serve many learners at a go. Smartapps will also target the heath sector to create apps that enhance efficiency and convenience in medical services by creating a platform through which doctors and patients can interact directly (Deering, Tatnall and Burgess, 2010). Through the application, a patient can search for the availability of a medical facility as the app will be integrated with a map. Hence the patient will be notified of the nearest hospital or clinic to his or her location. Patients can then create and login into an account where they will have direct communication with a medical practitioner. The patient then describes his or her sicknesses to the doctor who will then prescribe the recommended medication for the patient and then send the feedback to the patient. Consequently, this app will go a long way in reducing costs incurred by patients as they do not have to travel to hospitals for small issues that do not require strict doctor’s presence. Doctors can also keep a database for the individual patients and be able to track their recovery and prescribe alternative medications in the case of discrepancies. In this way, world’s leading terminal diseases will be greatly controlled and create a healthy workforce for our countries. In the airline industry, we will venture to develop apps that will enable the airline companies to meet the needs of their companies by creating convenience and efficiencies. Customers will be able to search, book and receive reservations for airline travel services at the comfort of their mobile phones.Similarly, we will develop an application for the road transport sector to enable long distance travelers book vehicles at the service offices through their mobile phones and also pay their fare via the application (Courtney, 2013). We will also target the catering, tourism and hospitality sector to create applications that will enable customers to book hotels and tourism services using their mobile phones. This will be customized according to a client’s needs. This will indeed enhance convenience for customers visiting distant or unfamiliar destinations by making prior arrangements. This will also enhance efficiency of operations by the respective firms as management will become more standardized. Competitors Analysis In Australia there are several mobile apps developing companies which will pose some considerable competition to Smartapps. These companies include Buzinga, Jtribe Mobile Services, Appsterand Outware. These companies have specialized in software engineering focusing on mobile applications within Australia. Buzinga is a company focused in developing iOS and Android apps having built partnerships with companies like BlueScope Steel and Bounce Inco to provide mobile app solutions. Jtribe has specialized in developing iOS, iPhone, iPad, Android and Mobile Web applications with clients such as PwC, Apple, IBM and Invoice2go. Outware deals with mobile apps for iPhone, iPad, Android and windows phones. Countering Competition Despite these firms having entered the Australian market for mobile applications, Smartapps will maneuver into the market with lucrative apps and techniques embracing the latest that will be attractive to the potential clients. Our products will be value added and customized to suite our clients’ needs. We shall ensure that our products are fully-tested, delivered on time and on budget. We shall integrate the latest technologies in our processes to create innovative and effective products that will solve real-world problems by leading the industry with the best practices in design methods for mobile app development. We shall retain our customers by rampant advertisement of our apps. Key areas in which our innovation will have impact The innovation will positively impact education, financial services, and travel and hospitality areas by creating customized mobile applications that will enhance convenience, effectiveness and efficiency of service delivery to consumers.I the education sector, we will create lasting partnerships and relationships to develop mobile apps that will transform education to fit the emerging trends in technology that call for mobility and on-the-go services. This will enable students and tutors to interact directly with each other through the mobile app, ensuring convenience and efficiency of learners. They will also have the ability to concentrate on other areas of life other than learning as little time will be wasted in class meetings. In the financial services sector, our company will develop competitive software and mobile applications that address the needs of customers by addressing the issue of security and confidentiality of personal information, a feature that lacks in the current apps in the market (Lunny, 2011). People will be able send and receive money or even pay their bills over their mobile phones as opposed to having to go to the financial institutions to access the services. This will create confidence to investors and customers who transact with commercial banks and other financial institutions and this will boost economic growth in general. In the travel, catering and tourism industry, booking flight or car hiring will be done using an application in their mobile phones. They will also be in a position to book accommodation services at their destinations prior travel to avoid inconvenience and delays especially during peak seasons. As a result, more tourists and visitors would access services easily increasing profitability in the sector, and consequently lead to general economic development and improved living standards. Our customers Our target customers will be learning institutions, medical centers, airline companies, governments, travel agencies and hospitality agencies. These sectors dominant in the people’s lives as people interact with them on a daily basis, as being essential for human existence and development and thus constitute a relatively large market. Our creative team of experts in mobile app development will approach these potential customers and explain the ideas and their benefits to them and convince them to buy our products. We will then create long lasting customer relations by ensuring their satisfaction by meeting their needs exceedingly, timely delivery of products, maintenance and ensuring that our prices are considerable. This will indeed enable us to retain our customers to continue using our products. Key performance indicators We will measure the success of our apps using the following key performance indicators for mobile apps: (i) Brand awareness. Brand awareness will enable us to understand the extent to which our applications are known in the market. Online surveys will be conducted to establish the level of brand awareness in the initial periods of an app’s launch. (ii) User experience User experience is implied by a customer’s happiness in the use of a product. We will ensure that our apps have no defective UI, bugs or crashes that usually discourage users from using an application. Reviews and ratings by customers will greatly help us understand thinks about the application, and what modifications should be done on the app to ensure optimal performance (Neely, 2002). (iii) Retention rate Repeat purchase by customers is clear indication of the success of a mobile up. The retention period for an app by a customer shows that the customer is engaged to the product, given the rapid dynamics in the market for mobile apps. (iv) Visit frequency This refers to the number of times a user opens the application in his or her mobile phone. A high frequency of the use of the contents of the mobile app is a good indicator of customer satisfaction and good performance of the application. (v) Active users The number of customers using our apps per session will be an ultimate indicator of success. Just installing the apps in mobile phones is not enough until they are actively used by the customers. (vi) Social shares Happy and satisfied customized more often connect and share their mobile apps with their social media accounts. More social shares indicate a lot of interest in the app, and a perfect key to increasing trustful customers. (vii) Average revenue per user Revenue generation is the ultimate most important goal of mobile app development. The amount of revenue will based on the earnings generated from the purchase of the apps by the customers, app conversions and usage of the app. The industry Analysis Our business will operate in the mobile apps industry in Australia. Australia has a higher rate of smart devices ownership compared to other developed economies like United States and United Kingdom. Australians have adopted the use of mobile phone apps in their daily lives much more compared with the consumers of other countries. This could be attributed to the geographical factor that Australia is continent-sized country and hence the need to bridge the physical distance by use of mobile communication. Another factor leading to the rapid expansion of the mobile industry is carriers giving push to the mobile industry through expanded coverage in terms of network and development of infrastructure in areas which have dense populations such as Melbourne and Sydney. This has led to increased demand for mobile devices, data and mobile applications in the country. Smartphone and tablets penetration in Australia’s market as high as 84%, with a 42.7% of overall revenue for wireless resulting from data usage. This creates a large market for the mobile apps. The expansion of the mobile apps industry in Australia has also been attributed to the shift by Australians of their social media practices to mobile phones and tablets. As a result, they use mobile apps to access their social media accounts rather than the web, making them spent much of their time on their mobile handsets and this has led to increased demand for mobile applications too.This is catalyzed by desire of the people to access services through their mobile devices which are convenient (B'Far, 2005). Australia’s mobile marketing and advertising which is also in the form of paid search spend and ad clicks has also led to the growth of the mobile apps industry. Australia ranks high and even closer to its developed counterparts, Singapore and Japan. These advertising techniques are more pronounced in smartphones and tablets than PCs, hence more demand for mobile apps in the industry. Products and services Our products and services will range from mobile applications development and provision of the infrastructure required to support such products. These services include Android, iPad, iOS, iPhone, and windows app development, designing user interface, web services and even automated testing of apps. Our mission Our mission is to provide solutions to real world problems through mobile apps development for our clients, creating bonded relationships with the clients and nurturing the technical and creative skills of our dedicated team. Our vision Our vision is to become the leading company in Australia in mobile apps development and technical support to our clients. Business Strategy i. Entry and growth strategy We have carefully carried out a thorough feasibility study through an extensive market research and identified a large potential market for mobile apps in Australia and the global market. The existence of this market has been facilitated by advancement of technology leading to the invention of mobile phones and tablets. This has resulted to adoption of mobile devices by the people and causing a great shift social-economic ways of live. We will seek to retain our clients by creating good relationships with them that will lead to loyalty to our productions. This coupled with adaptability to changes in technology will enable tremendous growth and expansion of our company. ii. Pricing strategy Pricing is the fundamental way through which we can earn revenue to cover up for the costs incurred in developing mobile apps(Winer, 2005). We will price our apps based on the cost incurred in developing an app and the purpose for which the app is being used. We will adopt the paid (direct sale) strategy where the client will pay onetime fee to purchase the application this is the most appropriate pricing technique for our products since our business model is business-to-business (B2B) iii. Marketing strategy Dueto the stiff competition within the industry, we will adopt aggressive marketing practices to create extensive brand awareness for our products, attract customers and be in a position to retain them. We will advertise our products through media platforms such as internet by driving traffic to our websites, television and word-of –mouth public relations to reach our potential clients. Corporate Structure Our business will be a Limited Liability Company (LLC) registered in Australia. Since it is a start-up company, our personal property will be shielded from the company’s liabilities and this will give us peace of mind in our operations(Chamberlain, 1982). The business will also be a pass-through tax entity and so it will not be taxed as profit or loss is reported on individual tax returns. In addition, few formalities are required during formation of the limited liability company and hence the initial start-up costs will be considerably low. The members of the company will jointly manage the operations of the company and shared the profits as agreed. There will be Chief Executive Officer at the top of the company, working with a team of director to spearhead the firm towards achieving its mission and vision and other stated objectives. The following chart shows the organization structure: Business Process Our mobile apps development process will adopt the agile methodology that will help us in keeping a strict focus on rapid development and delivery of our products(Bruck and Rao, 2013). This approach will help us in reducing the development costs as well as ensuring timely completion of projects. Our clients will also be able to assess the projects and present their views and opinions, so that the final product meets the needs of the customer and hence enhance satisfaction and customer retention. We shall incorporate the following steps in order to ensure a success app development process: (i) Research To begin our process, we will sit with our clients and discuss their ideas so that we can understand their vision and objectives. This chat will provide us with a clear picture of what we need to achieve so that we can strategically and thoroughly define the problem and analyze it technically. At this stage we will identify the key user stories and then sketch the wireframes. We will then be able to choose the mobile platform, that is, iPhone, Android, iPad or Windows. (ii) Product specifications After understanding, defining and analyzing the problem, the next step will be to design and specify a complex product that will help to solve the problem. A dedicated team of experts will chart down the features of the intended product, and they will present a working prototype to the client where they will test it. The client will then show the modifications which will need to be made on the prototype so that it is customized to suit their needs. (iii) Development Our company will have a creative team of experts experienced in user-interface design, data systems and technical and creative solutions. We have in-house iOS, iPhone, iPad, Android and Windows apps specialists. We also have UI and UX designers. This team will help in transforming the specifications into the final product for the client. (iv) Product- testing Our company will have an in-house app testing team that will be working round the clock to ensure that the functionality of the app is optimized before it is delivered to the client or released into the market. This will make the app bug-free and help avoid the chances of the app hanging, crashing or slow loading, defects which may discourage the client from using the app. (v) Maintenance Due to dynamic changes in the technological environment, we will have to periodically update our mobile apps to fit the changes in software. Relationships with external entities (i) Relationship with the government Our company will operate within the legal regulations stipulated by the relevant authorities as stated by the law, by ensuring complete registration and compliance with tax obligations. We will also seek government support through subsidies and tax exemptions that will enable us to improve efficiency and reduce operational costs so that we can increase the profitability of our venture. (ii) Financial institutions We shall seek strong partnerships with financial institutions so that we can get favorable deals to finance our products, for instance getting loans at relatively low interest rates. (iii) Competitors We shall work closely with other firms in the industry so that we can learn from them and adopt emerging technologies and process from the industry so that we can know how to counter them to have a competitive edge in the market. Risk management plan Risk management is the process of identifying, analyzing, evaluating an unforeseen uncertainty and making decision either to accept the contingency or mitigate it in decision making(Dionne, 2013). Risk management is essential in our business as it enable us to minimize losses in case of unfavorable financial circumstances or undesired hazardous events occur. We will be in a position to take the necessary and appropriate action considering our objects and degree of risk tolerance.Risk The following table shows the risks, their description, probability, severity and the planned mitigation for the risks: Risk Description Probability Severity Planned mitigation Market risk This is a risk that has impact on market position of the organization in the market within which it operates. It affects the value and return of the firm’s investment due to the influence of market forces. 30% Major Using appropriate pricing strategies to absorb market fluctuations. Credit risk This is a risk that has an impact on the credit rating or standing of the organization. It affects the ability of the business to meet its financial obligations as and when they fall due. 20% Major Minimizing the risk by looking for alternative sources of capital other than taking loans. Legal risk This the risk resulting from the laws and regulation enacted by the government and other authorities that may have impact on the legal position of the business. 20% Moderate Ensuring compliance to laws and regulations governing the industry and the market. Operational risk Operational risks are those which have impact on the daily operational activities of the firm. They may include human resources and technology. 30% Minor Ensuring employee competence and proficiency and adopting the latest technology into the business Technology requirements and infrastructure Information system refers to the particular way in which an organization stores, organizes or manipulations information to enhance effective decision making within the organization(Laudon and Laudon, 2000). Information technology refers to the components that help in implementation of information systems and is composed of computer hardware and software as well as network. There are several types of information systems that we will integrate into our firm to enhance efficiency in operations. Management Information Systems will help us in summarizing transactional data and convert it into managerial reports which will be used by the middle managers and operational supervisors to manage the routine activities of the organization. Knowledge Management Systems will facilitate acquisition and integration of new knowledge into the business. Considering the dynamics of the industry within which the company will operate, knowledge management will help us in adopting the latest technology and best process so that we can thrive in the competitive market achieving customer satisfaction and retention. Transaction Processing Systems will help us greatly in efficient and accurate capturing and processing of routine transactions in the firm. Consistency in customer service will be achieved, as well as enhancing effective production, purchasing and control systems. In addition, Enterprise Resource Planning systems will facilitate the management of all business processes, and as well enable easy tracking and monitoring of the company’s resources such as raw materials, cash and control of the production capacity of the company. Information Technology Infrastructure required IT infrastructure refers the hardware and software on which the information systems are run. In our mobile apps development company we will require computers hardware and software as well as computer network and internet connections(Hayward, 2012). We will also require desks and chairs on which the team of experts will operate. It also involves the technicians who ensure that the information systems are functioning well. Finance and key findings Preliminary costs From extensive research, it was found that the following costs will be incurred before the start of the company(Welsch and Anthony, 1977). ITEM COST($) Rent 22,000 Furniture and fittings 150,000 Insurance 23,000 Legal fees 5,000 IT infrastructure 100,000 TOTAL AMOUNT 300,000 WORKING CAPITAL ITEM 31.12.2016 ($) 31.12.2017 ($) 31.12.2018 ($) stock 100,000 180,000 220,000 cash at hand 150,000 164,000 170,000 Cash at bank 200,000 250,000 350,000 Creditors 210,00 240,000 295000 Total Working Capital 140,000 354,000 445,000 Profoma Profit and Loss Statement ITEM Revenue Cost of goods sold GROSS PROFIT Expenses Electricity Wages and salaries Telephone Advertising Transport Internet Interest Depreciation Professional services TOTAL EXPENSES Profit before Tax Tax (30%) NET PROFIT AFTER TAX ($) 31.12.2015 2,500,000 (1,200,000) 1,300,000 25,000 500,000 15,000 20,000 80,000 15,000 15,000 5,000 10,000 (697,000) 603000 (180,900) 422,900 31.12.2017 3,000,000 (1,400,000) 1,600,000 30,000 650,000 20000 50,000 100,000 15,000 13,000 10,000 17,000 (920,000) 680,000 (240,000) 440,000 31.12.2018 3,600,000 (1,500,000) 2,100,000 30,000 850,000 35000 55,000 110,000 15,000 11,000 12,000 22,000 (1,158,000) 942,00 (282,600) 659,400 The amount of financing required to finance the business venture is $300,000. The business being new, the owners do not have enough funds to start the business. We can only raise $100,000. We therefore request venture capital investors to invest in required $200,000 for the company to start operations. There will be returns for the investors in the form of shares in the business as well as allocation of management positions. Hence, the investors will be entitled to dividends from the company’s earnings. They will also have voting powers in the company’s annual general meetings. The venture capital will then be refunded with an interest of 15percent, after two years of operation, given the high profitability potential of the firm. References: B'Far, R. (2005). Mobile computing principles. Cambridge [England]: Cambridge University Press. Bruck, P. and Rao, M. (2013). Global mobile. Medford, New Jersey: Information Today, Inc. Chamberlain, N. (1982). Social strategy and corporate structure. New York: Macmillan Pub. Co. Courtney, M. (2013). Upwardly mobile [mobile computing]. Engineering & Technology, 8(7), pp.56-56. Deering, P., Tatnall, A. and Burgess, S. (2010). Adoption of ICT in Rural Medical General Practices in Australia. International Journal of Actor-Network Theory and Technological Innovation, 2(1), pp.54-69. Dionne, G. (2013). Risk Management: History, Definition, and Critique. Risk Management and Insurance Review, 16(2), pp.147-166. Fitzgerald, B. and Savage, F. (2004). Public libraries in Victoria, Australia: an overview of current ICT developments, challenges, and issues. OCLC Systems & Services: International digital library perspectives, 20(1), pp.24-30. Golding, P. (2008). Next generation wireless applications. Chichester, England: J. Wiley & Sons. Hayward, B. (2012). Sustainable ICT. TJA, 62(5). Laudon, K. and Laudon, J. (2000). Management information systems. Upper Saddle River, NJ: Prentice Hall. Lee, V., Schneider, H. and Schell, R. (2004). Mobile applications. Upper Saddle River, N.J.: Pearson Education. Lunny, A. (2011). PhoneGap. Birmingham: Packt Pub. Neely, A. (2002). Business performance measurement. Cambridge: Cambridge University Press. Welsch, G. and Anthony, R. (1977). Fundamentals of financial accounting. Homewood, Ill.: R.D. Irwin. Winer, R. (2005). Pricing. Cambridge, Mass.: Marketing Science Institute. http://www.businessinsider.com/the-massive-australian-mobile-industry-2013-9 Appendix: Activity log Date Topic researched Time duration Description Status 1/10/2015 The innovation Current problems to solve Two hours Doing research on the ICT sector to discover potential areas of innovation. The area of innovation chosen is the mobile industry, with specialization in mobile applications. Completed 2/10/2015 Competition in the industry One hour Researched on the state of competition in the industry and market. Completed 3/10/2015 Key areas of impact by the innovation Two hours Researched on the key areas on the innovation will have impact. These area include education, financial services, airline and hospitality. Complete 4/10/2015 Research on potential customers, market analysis and performance indicators Two and half hours Identified the potential customers for our business. They include learning institutions, airline and travel companies, government and hospitality agencies. Complete 5/10/2015 Industry and company analysis Two hours Identified the industry in which our company will commercialize and the company’s products and services. The industry will be mobile industry, and our companies products will be mobile applications. Complete 6/10/2015 Company mission, vision and business strategy One and half hours Outlined the company’s mission and vision to achieve. We also came up with the company’s business strategy for entry and growth, pricing and marketing. Complete 7/10/2015 Corporate structure and business processes Two hours Defined the nature of the business as a limited liability company. The structure and hierarchy of management was devised. The business process was outlined, adopting then agile approach to application development. Complete 8/10/2015 Company’s relationship with external entities and risk management plan Two hours Outlined how the company will relate with external entities such the government and other organizations. The company will adhere to government regulations and pay taxes, as well as building trust with lenders. We also came up with a risk management and to help contain any unforeseen contingencies. Complete 9/10/2015 Technology, infrastructure and finance requirements Two and half hours Identified the technological and infrastructure requirements for our business. These include information systems, computers and software. We also made financial estimates of the company, with seed capital of $300,000. Complete 10/10/2015 Cover letter, executive summary, table of contents and Compiling the assignment Three hours All the components of the report were combined, and a table of contents generated. The report was proof-read to ensure that it is free of grammatical arrors. Complete Read More