Business-Plan - Business plan Enc PDF

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348270 - EnCAssessment Task 3:Business Plan TemplateTask Description Team 83 - Contributors:Marks1 Executive Summary Sabindra 12 Business Summary Lou 13 The Market Lou 34 Customer and Value Proposition Prashan 45 Development and Design Zia 56 Operational Plan Prashan(6) /Sabindra(1) 77 People and St...

Description

348270 - EnC Assessment Task 3: Business Plan Template Task

Description

Team 83 Contributors:

Marks

1

Executive Summary

Sabindra

1

2

Business Summary

Lou

1

3

The Market

Lou

3

4

Customer and Value Proposition

Prashan

4

5

Development and Design

Zia

5

6

Operational Plan

Prashan(6) /Sabindra(1)

7

7

People and Structure

Zia

5

8

Marketing Plan

Lou

6

9

Financial Plan

Sabindra

4

10

Implementation Plan

Sabindra

4

Total

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Australia - China Team: 83 13577212 – Prashan Seneviratne 13516087 – Zia Samano 99210597 – Sabindra Neupane 13039639 – Lougene Mahfoud

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Table Of Contents 1. Executive Summary

5

2. Business Summary

6

2.1 - Business Structure

6

2.2 - Business Description

6

3. The market

7

3.1 - Market Description

7

3.2 - Competitive Analysis

8

3.3 - Environmental Analysis

9

3.4 - Market Size and Potential Share 4. Customer Analysis and Value Proposition

10 [4 marks]

11

4.1 - Voice of the Customer [3]

11

4.2 - Value Proposition [1]

12

5. Development and Design

[5 marks]

13

5.1 - Minimum Viable Product [1]

13

5.2 - Detailed Design of product or service [4]

14

6. Operational Plan

[7 marks]

17

6.1 - Value Creation (Core Business Process) [1]-Sabindra

17

6.2 - Operations Model (Core Business Process) [3]

18

6.3 - Ongoing Operations (Support Processes) [1]

18

6.4 - Location [0.5]

19

6.5 - Suppliers [1]

19

6.6 - Outsourcing Policy [0.5]

20

7. People and Structure

[5 marks]

7.1 - Roles and Responsibilities [1.5]

21 21

b. Business Development Manager:

21

c. Operation Manager:

21

d. Account Manager:

22

e. Project Manager:

22

f. Legal advisor:

22

g. Procurement Officer:

22

h. Shipping manager:

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I. Website Developer:

22

7.2 - Workforce [1]

23

7.3 - Organisational Structure [2]

23

7.4 - Professional and Advisory Support [0.5]

24

Insurance Agent:

24

Accountant:

24

Small Business Attorney:

24

8. Marketing Plan

[6 marks]

25

8.1 - Market Segmentation Strategy

25

8.2 - Customer Profile

26

8.3 - Pricing and Positioning Strategy

28

8.4 - Distribution Channels

28

8.5 - Promotion and Advertising Strategy

29

9. Financial Plan

31

9.1 - Start-up Costs

31

9.2 - Sales Forecasts

33

9.3 - Cash Flow

35

9.4 - Break-even Analysis

36

10. Implementation Plan

37

10.1 - Projected Schedule

37

10.2 - Critical Path Analysis

38

10.3 - Contingency Plan

38

References

40

Lougene’s References

42

Draft of Diagrams

44

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1. Executive Summary The aim of this business plan is to provide a detailed business plan for Evolve Sourcing - a new product sourcing, manufacturing and procurement service targeting the Australian safety equipment and PPE market. The business plans to facilitate the supply of hygiene and safety products to the Australian businesses, government and non-government organisations. Face masks, hand sanitisers, protective personal equipment(PPE), antibacterial films, etc are some of the products we supply to the Australian market. Use of hygiene and safety products have skyrocketed after the outbreak of Covid-19 pandemic, and to help Australian communities battle with Covid-19 we have teamed up to form a start-up company. Evolve does not manufacture these products however sources them from international manufacturers or suppliers to Australian market. Therefore, Evolve basically connects buyers and suppliers from overseas to the home market. In addition to this, our business purpose will make the whole buying process of hygiene products very simple and straightforward as buyers do not need to deal with the intricate rules and various steps in the buying process as we complete those different processes for our buyers. China will be the major overseas supplier in the beginning however we will expand our horizon in the near future and facilitate to provide products from other nations as well. Evolve will assist in sourcing of hygiene products and PPE in Australian market due to its soaring demand due to Covid-19 effect. The company will assist the buyers for all the essential processes after the initial query form is filled by the buyer. This process involves finding numbers of suppliers and providing comparison for the price , preliminary factory audit, factory report, sales contract, prototype delivery and ensuring customer satisfaction. Also, full emphasis will be provided to ensure the best marketing tools are in place such as social media advertising, click per pay run, client testimonials, and projects accomplished. Moreover, clients will be provided competitive rates compared to our competitors. Further research and development of the human resources will also be ensured to motivate the staff working for Evolve resulting in better outcomes for the company. After careful calculation, the total fixed cost for Evolve Sourcing has been identified as $113,976 and the variable cost as $6,500. Sources have been provided in the finance section of this report to support the argument. Moreover, net sales for Evolve for the first year period has been identified as $1,800,000, $1,827,000 for second year, $1,854,405 for third year, $1,882,221 for fourth year and $1,910,454 for fifth year as we have anticipated a heavy influx of customers with a proper marketing plan and networking with various businesses. Cash flow for five year also has been provided in the relevant section and break-even unit of 27 orders unit also have been calculated. Assumptions made for this calculation are also provided in the section.Project schedules have also been identified with tasks, subtasks and milestones with the aid of Gantt chart and pert chart has been provided in the appendix to justify project schedule and critical path analysis which is calculated to be 158 days. In addition to this, a contingency plan has been identified with risk identification and its mitigation procedures in place.

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2. Business Summary 2.1 - Business Structure Evolve Group is an Australian owned business which has been operating as a registered Chinese company in Guangzhou Province, China for over 17 years. To date, the company provides product  ue to the sourcing, procurement and manufacturing services to businesses based in Turkey d company founders' close personal, family and business ties to the region. Recent drastic changes to the global economy, trade, travel and laws caused by the COVID-19 pandemic has seen shortages of product supplies across all industries likely to continue (Nine, 2020). While local consumers have seen reliable stores with empty shelves, essential life saving Personal Protective Equipment (PPE) has been in high demand with “wear a mask” campaigns and laws coming into effect and shortages have affected hospitals, schools and other organisations which must continue functioning in the safest way possible. (Department of Health, 2020). As such, Evolve Sourcing will be established as a proprietary limited company and a partially owned subsidiary of Evolve Group with Evolve Group owning 70% of the shares while the remaining 30% will be split amongst the incoming Australian founders. Evolve Sourcing (hereon referred to as Evolve) will be managed as an independent company which will target the niche Australian PPE and Safety Equipment market while Evolve Group will continue to focus on it’s broad market overseas.

2.2 - Business Description Evolve will be a service based business which will connect Australians businesses and both government and non-government organisations (customers) directly to reliable suppliers and manufacturers of Health and Hygiene PPE and supplies. Rather than purchasing and selling the items which would require large capital investment and significant risk, Evolve will use Evolve Groups connections and experience to act as an intermediary agent for customers seeking these products. Evolve facilitates the entire procurement process including finding suppliers, auditing factories for legal, environmental and social compliance, navigating the intricacies of the Chinese market and ensuring goods are delivered on time to the customer. This service removes the need for Evolve’s customers to travel overseas, hire translators, pay for flights or potentially expensive quarantine and accommodation and allows businesses to focus on their core competencies. Evolve’s experience and local knowledge also reduces the risk of delayed deliveries or defective products which during such a crucial global pandemic could be deadly. Evolve aims to become an extension of the organisations we engage and ensure their required products are always in supply.

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3. The market 3.1 - Market Description Prior to the COVID-19 pandemic, the Australian Health and Hygiene PPE and supplies market would be considered an aging market, with strong occupational health and safety laws in place for many years, ongoing demand was stable and market share among leading suppliers had been established with little space for newcomers and the likely narrowing of the market. The market itself consists of both an online medical equipment sector and the safety equipment and supplies sector which both share an overlapping supply chain. While the main focus is COVID-19 related equipment, some overlap in demand is observed from industries such as mining, construction and logistics. The sectors are considered high profit relative to average and low capital requirement. This positions the market for a strong number of new entrants alongside Evolve. (IBISWorld, 2020) The predictions may be due to the unprecedented demand increase caused by the need for the health sector PPE and laws and social pressure on the public to wear PPE daily and clean areas regularly, as such, the industry life cycle has shifted back into the growth life cycle with low capital intensity and medium rate revenue volatility. The market is no longer predictable and we see many new companies emerge, home-made masks have become a popular alternative increasing competition due to the barriers and risk to entry having been reduced. As the market life cycle has been significantly shifted, unpredictable changes of supply and demand for PPE caused by sudden outbreaks, lockdowns, shifting public sentiment and further PPE-related legislation see IBISWorld (2020) predict high revenue growth, potentially meaning a higher chance of a positive outcome for entrants. (WHO, 2020).

Figure 1: Snapshot of the Safety Equipment and Supplies market supply chain in Australia. - IBISWorld (2020)

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3.2 - Competitive Analysis Considering the supply shortages discussed in sections 2 and 3.1, it is clear that buyers' ability to substitute products and their switching costs have greatly increased. The bargaining power of suppliers if the most relevant force which Evolve hopes to address. Due to global shortages and the desperate need for protection of frontline workers and the general public across every country suppliers are now positioned to demand a higher price for their goods as well as more favourable contract conditions. By utilising years worth of experience and Evolve Group’s staff within mainland China, Evolve is able to increase the reach of Australian businesses to find suppliers and factories who may be able to produce PPE to sufficient requirements but previously have not specialised or manufactured PPE. In addition, the increased reach will increase the buyers ability to substitute and the knowledge of local markets will allow Evolve to negotiate better conditions for the Australian customer in the hope of correcting the imbalance of forces. Evolve’s competitors, while limited, can be summarised into three main categories, each of which share different competitive advantages in the current market: Competing product sourcing agents - Established product sourcing agents share many of the same competitive advantages that Evolve has in the industry. However, the perceived first mover advantage of increased consumer trust and better positioning may benefit them, although Suarez and Lanzolla (2012) argue this may not be as effective as previously believed. Existing local PPE manufacturers - Existing manufacturers are able to both differentiate themselves as being “Made in Australia” for a differential strategy. Being local and manufacturing goods themselves will likely remove any chance of price competition, but focusing on quality such as the “feel” of PPE as well as the Australian made advantage are advantages that Evolve can only conditionally compete with. New Entrant local PPE manufacturers - The incredible increase discrepancies between supply and demand of PPE have driven other local businesses such as distilleries or clothing manufacturers to pivot into this market. While Evolve holds a significant advantage of greatly reduced risk and overheads, these business have the advantage of focussing on a niche specialisation within the market. For example, distilleries have found recent success in manufacturing and selling hand sanitizer, while clothing manufacturers make masks.

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3.3 - Environmental Analysis Political

Recently, Australia’s former ambassador to China remarked that “Australia-China ties are at their lowest point in years” (Walsh, Weedon. 2020). The origination of the COVID-19 pandemic being linked to Wuhan, China has increased anti-China political sentiment and has seen “trade wars” instigated by Australia’s close political allies. These have resulted in tariffs for which China may retaliate against. These relations could be targeted at Australia. Bilateral trade is still considered strong and Australia adheres to a controversial one-China policy, the recent decline has seen China suspend wine imports from Australia and further sanctions could follow. (DFAT, 2020. ABC, 2020.) This may affect Evolve if Australia responds in kind and bans the import of Chinese goods, however this is unlikely if the goods are health and safety related.

Economic

China is Australia’s largest trading partner in goods and services and accounts for 27.4% of our international trade. The RBA’s recent announcement of a reduction of the cash rate to 0.1% and simultaneous announcement of a 100 billion dollar bonds buyback scheme aims to lower the exchange value of the Australian dollar and encourage local purchasing and manufacturing (RBA, 2020). Despite this, China’s investment into Australian sectors is growing and totalled $46 billion in 2019 (DFAT, 2020).

Sociocultural

Chinese Australians make up 5.6% of the Australian population, however the proportion of Australians who view China favourably had dropped from 64% to 15% over the past three years (Pew Research, 2020). Very little popular culture is shared with China and this is unlikely to change, meaning further political and economic disagreements could further reduce consumer sentiment towards Chinese products or China based services.

Technological

Many of the problems faced by Evolve’s potential client base are solvable with the right technology. For example, a customer's inability to travel and inspect goods could be done so with trusted remote inspection services enabled by technology, or samples could be scanned by product assessment technology. While these solutions may exist, it is unlikely they will be implemented by factories or suppliers in China while there is a considerable power imbalance in market forces favouring suppliers.

Environmental

Geographic location is favourable for the Australia-China trade corridor which is well established. While changes brought on by climate change will not directly affect whether Evolve is successful, suppliers and manufacturers may be judged based on their commitment to protecting the environment.

Legal

By far the most complex part of Evolve’s business is the legal requirements of contacts and conducting business in China. China’s requirement for contracts to be in their native mandarin language works in Evolve’s favour as the ability to navigate such legal issues is an important competitive advantage. In Australia, the legality of acting as an agency is straightforward, with many businesses doing so across different industries, disputes will be handled through mediation prior to any action in the courts.

Figure 2: PESTLE Analysis table. Key (Impact/Colour): Red/High, Yellow/Medium, Green/Low EnC - Business Plan 

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3.4 - Market Size and Potential Share Total market sizes for the Safety Equipment and Supplies market combined with the Online Medical Supplies market are $1.8BN and $502.5M respectively. This brings the total combined market size to approximately $2.3BN with an estimated $298M profit. Given the current shortages and supply issues locally and considering the budget constraints placed on many businesses due to lockdowns, reduced spending and increased regulation during the COVID-19 pandemic, businesses are likely to look towards overseas manufacturers to save money considering the high labour and input costs in Australian manufacturing. A realistic and conservative estimate is that 1-1.5% of total market share could be captured by Evolve which is mainly due to Evolve’s niche specialisation compared to sourcing competitors, meanwhile overseas connections and pricing helps drive new business from when competing with local manufacturers. This estimate represents a potential of $18-22.5M of total orders for Evolve to capture within the first years and establishment of the business, with Evolve’s standard 10% service fee this could equate to around $1.8M to $2.25M in revenue.

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4. Customer Analysis and Value Proposition 4.1 - Voice of the Customer When businesses are in search of a supplier they are in need of one that is reliable, affordable and able to meet product specifications. Manufacturing and QC Blog discusses (Kn...