Executive Summary
Eco Dryers is a company that intends to export clothes dryers from Sydney, Canada to China. The Chinese market in the cloth drying industry has not been unexploited due to several reasons that border on the culture of the country. The economic status of its citizens also plays a major role in determining their ability to pay the bills or purchase the cloth dryers. The company advances the best strategies of changing the beliefs of the peoples and ensuring they can acquire machines at pocket friendly prices.
The management of the company is done initially by a seven-staff member group that is headed by the C.E.O. Majority of these, particularly those in the distribution channel, is the locals who are familiar with the location and the culture of the country. The remuneration basis is through the basic salary, commissions or a share of the profit depending on the post held.
The company intends to start small and grow gradually and increase the distribution centers in the country. In the process adequate marketing strategies are used after a careful analysis of the market itself. The market is divided into the locals and the foreigners among others. With this, the company is set to achieve its goal as initially planned.
Introduction
Technology has been beneficial to humans in the recent past and continues to benefit him as better and more advanced machines are developed around the world every day. Among some of the great inventions that are beneficial to him is the clothes dryer machine that has eliminated the dependency on sunlight.
Since its manufacture, the clothes dyer comes in different capacities to suit different client tastes. It has particularly been useful in countries that experience the four seasons in a year especially winter. Moreover, it becomes readily useful in cases of long rains when one still wishes to dry their clothes.
China is an expansive country that boosts of the largest population in the world. This is the most promising attribute for any new business venture as one is guaranteed of a large consumer market. However, this may not be the direct case in as pertains to the clothes dryer machine business in the country.
The clothes dyer machine businesses exists in the country but has failed to generate any substantial returns for the proprietors. Business people vending the clothes dryers currently complain of low sales of up to two machines in a year. Foreigners are perceived as the largest market for the machines in the countries.
The main reasons advanced for the poor performance are the people’s culture that tends to value nature above technology; the price of the machines and the cost of electricity consumed by the machine. Other minor reasons such as space consumption and the benefits of sun drying are also advanced. The export business is intended to counter these barriers and alter the current statistics of the clothes dryer machine business statistics in the country.
Mission
The company’s mission is to popularize the use of cost effective and environment friendly machines in the world. This will be the company’s goal for this and other future ventures.
Vision
To become the leading exporter and distributor of clothes dryer machines in China and other parts of the globe.
Objectives
- To export more than 1000 machines into the Chinese market in a year.
- To utilize the huge cheap labor available in china for profit maximization.
- To have over 10 outlets in the country.
- To sell cost effective and environment friendly machines.
- To develop repeat customers and referrals for every one-time sale.
Strategies and tactics
The company intends to change the people’s current view of the product using the different workable measures. It intends to achieve a sales goal of 1000machines in a year and increase the number by the same figure through subsequent years. In the short run the company intends to cut down its profits on the different machines so as to sell at an affordable price.
This price is estimated to be slightly lower than $350 for a machine with the smallest capacity and slightly lower than $2000 for the largest machines. This will enable the company to beat the existent completion as the current market prices are as quoted.
To begin with, the company will open up one major outlet which should in the long run nature the other outlets as will be deemed necessary be the management. The Different advertising methods will be applied to ensure the machines are as popular as they can possibly be. Moreover, the machines sold will be cost effective in terms of electric consumption and space consumption.
Management issues
The business sales procedure is divided into three processes. The first entails the purchase of the machines from Canada. A manufacturer that sells the best cost effective machines at reasonable prices will be sought from which the company will obtain its products.
A procurement manager with good bargaining skills will be sought to ensure the company benefits from huge discounts due to large purchases. He should be in a position to negotiate for credit purchases should future demands exceed the amount of cash available at hand.
The qualifications of the manager will be biased more on the ability to deliver and negotiate rather than on academic performance. His experience in the export business, suitably over 5years, will also be vital. This will eliminate fault of hiring paper managers who can hardly deliver in practical situations. The manager’ remuneration will be a monthly basic salary, which will be agreed upon, supplemented with a percentage of the company’s profits. This will act as an incentive for him to secure the best machines with the best price possible.
There will be two staff members to assist in the purchases process and the maintenance of any necessary records. The two need not have extensive experience in the exportation business as they majorly take instructions from the procurement manager and report to him in case of any anomalies (Massachusetts Export Center, 2010). A driving license should be a compulsory requirement for all the three personnel for the speedy execution of activities of the company and for easy transportation of the machines from the manufacturers.
The second process is the transportation of the goods from Canada to China. Here, the key person in charge will be the freight manager. The freight manger will liaise with the purchases manager so as to convey the orders to him and avail the ordered products as scheduled.
This manager picks on the most efficient means of transport for the different products of the company depending on the urgency and the size of the machine. He is responsible for the negotiation of the transport fees also dependent on the size of the products. Very urgent and small machines will be delivered by plane to the headquarters in China for later distribution to the different parts of the country. Air transport is fast but expensive.
Only products that are urgently required by the customer and duly paid for will be transported in these means. However, in the long run, the company should purchase an airline to facilitate the transportation processes. The airline could double up as cargo and passenger to help increase the returns. However, in the short-run, transport by ship will be sufficient particularly for the large machines demanded by the customers.
The procurement manager should have extensive experience in the export business. He should be in a position to choose the most efficient and dependable transport company and one that offers competitive market prices.
Again, the 9creteria of selection will be based more of the ability to deliver and the level of experience rather than the academic prowess. In the long run, the company could consider opening its own sister company to handle the transportation details on its behalf. This will attract more profits while reducing the transport costs for the export company.
In this department, there will also be two assistant under the manager to take care of the handy jobs necessary. They ensure all the goods arrive as planned and in case of anomalies they report to the manager. Damages and replacement of damaged goods in transit is their responsibility.
To cushion the company from such losses, the staff will handle the insurance of goods on transit as deemed fit by the freight manger. Remuneration of the freight manager and his staff will be a basic monthly salary and other allowances to motivate them as the company expands in the long-run.
The last process will be the distribution of the products in the country. This is the key part of the company. It is responsible for the success or failure of the business both in the short run and in the long-run. It gives business to all the other departments. Therefore, the staff in this docket must be the very best the market has to offer.
At the helm of the department will be the marketing manager who is entitled to a basic monthly salary and a share of the annual profit. The marketing manager is responsible for coming up with the best advertising policies and evaluating the best location for the establishment of the headquarters of the business in the short run and other branches in the long-run.
He should be conversant with the Chinese culture so as to market the product in ways that do not conflict with this culture. For instance, the Chinese value technology less compared to nature and would therefore prefer to hang their clothes in the open. The marketing manager should then come up with incentives that shift this mentality such as offering a commission to a one-time buyer for every referral he makes. Customers will thus be encouraged to advertise the commodities to their friends so as to earn cash.
The marketing manager is also in charge of coordinating the orders from the freight department all the way to the customer. He checks all the orders as received from the customers and forwards them to the freight manager. On the other hand, he counter checks all the received orders to ensure they are as ordered before. Any inconsistencies are then communicated to the freight department. The distribution channel to be followed also falls under the docket of the marketing manager.
There will be two staff members who work under the marketing manager in the distribution of machines in the country. A mandatory requirement for this job will be a driving license that will come in handy in case of delivery of the product to the customer’s abode (Massachusetts Export Center, 2010). The remuneration of these staff will consist of the basic salary and commission on every single machine sold. The commission percentage will be dependent on the eventual selling price of the different commodities.
The Chief Executive Officer (C.E.O) will be in charge of the entire progress of the company. The procurement manager, the freight manager and the marketing manager all report to the C.E.O. In actual sense, he is entitled to a monthly basic salary and a share of the profit. He is in charge of the recruitment of staff in the three departments. He will also be in charge of securing additional finance for the company as may be deemed necessary.
All the key decisions such as the opening of a new branch in the country have to be approved by him. He should have vast experience in the management of an export business in a similar position. These will aid in the faster resolution of complication s in the company. Lastly, he makes sure that all the remaining profits after all the employees have been compensated for their efforts are reinvested into the business appropriately.
Market overview
China has a great market in terms of numbers but there are certain barriers limit the direct pick up of the clothes dryer machine business. Some entire market can be analysed based on the political and the economic environment, the existent competitors and other trends and market factors.
Political environment
The legislative laws will in china are favorable and they do not limit of the number of imports in flowing into the country. Due to the large population in the country the market numbers allow different competitors to secure their share of the market. The local authorities consider the hanging of clothes in the open unsightly and often issue edicts banning the practice.
They consider it uncivilized and offensive especially when it involves the hanging of clothes on trees. For instance, during Shanghai World Expo, the authorities do not permit the airing of clothes in the open to dry. This might favor the use of the machines as people will have to seek alternative ways to dry their clothes in such situations.
Economic environment
A large majority of the Chinese people belong to the middle income level. They can therefore afford to pay an extra electric bill for the clothes dryer machine. However, the most disadvantageous factor is the congestion of the houses owing to the country’s large population (Richburg, 2010). There may is no available space to place the dryer. In fact, people place poles between two buildings to hang their clothes on.
The company will devise a plan in which tenants from a given flat can afford to share a common machine to save on space and cost. However, to evade conflicts on cost that could eventually arise, each tenant will be entitled to a specific weight of clothes that are equivalent to a certain number of units. Beyond that weight, additional units are added. Payment of the electric bill is then shared depending on the number of units shared.
To cut on costs of purchase, hire purchase options for the different customers will be available. In addition, the commodities will be priced differently but relatively cheaper than competitor’s products so as to ensure the vast majority can afford to purchase the machines. Dissimilar sizes of machines are also available to cater for the interests of the customers depending on their income. Therefore with our export company, the Chinese people can be assured of pocket friendly products.
Competitors
A large majority of the competitors are the local manufacturing companies that go to the extent of exporting their products to the other nations. The main advantage of the competitors is that they can manage to benefit from the cheap labor available in the country. This makes the products they sell relatively cheap. However, absence of a ready market in the country makes.
Size of the market and segmentation
Today, china’s population is growing rapidly due to the effect of technology and friendly business friendly environment which can be largely attributed to political and economic stability. Economic stability has also played a vital role in causing great expansion and a positive change in the standard of living. Importing environmental friendly in china would target: the local populations, the foreigners, and the Chinese who are coming back from oversees from studying and working abroad.
Locals
Local population has not adopted the use of drying machines due to ignorance. They peg their minds so much on culture other than looking at the advantages of adoption of new technology. In order to counter this Chinese culture, our company will strive to educate the Chinese on the positive effects of using the drying machine instead of using the natural way of drying clothes.
Sun is the cheapest way but most expensive way in the long run. Some of the effects that should be communicated to the locals are: the bleaching effect of the sun to clothes and hardening of clothes due to the effects of the sun.
Foreigners
The number of foreigners is growing immensely in china. Most people who travel or migrate to china are mostly the well off population from countries like America, South Korea, and Japan in search for better working or business conditions. Since many of them are wealthy and busy, sun drying may be a form of inconvenient when they do not have time to wait for clothes to dry.
Convenience is another factor to consider for the foreigners. It is expected that the greatest number of them have high lifestyles from developed where dryings machines common. They are therefore expected to be in need of such machines when they are in china.
Chinese returning from overseas
Chinese people who have moved to other countries are exposed to the environment that other people live in and the levels of technology they employ in their day to day lives. This makes them to adopt the new technologies and among the technologies adopted, is use of drying machines. On return to china, they will find such machines there and there are high chances of them continuing to use them instead of going back to their old ways of drying clothes.
Tariff and non-tariff barriers
China is a country that has strong economy and provides room for foreign investors. Though the Chinese government has introduced a system of charging high tariffs on all electrical appliances and importing licenses, its objective is to offer protection to local companies manufacturing the same commodities.
To us, this is an advantage since even though the tariffs will increase the end cost of the machines but there is no single company that sell or manufacture highly efficient and environmental friendly machines in china. This implies that the target population will still buy our machines even though the cost is high.
China has also reduced and in some cases abolished non-tariff rates in order to open the Chinese market to the outside world. This is a key factor in encouraging private investors and business people who think that china is a good country to invest in.
Purchasing process and buying criteria
Our company will make purchases via cash in the short-term but after operating and developing trust with our suppliers or distributers the company will make arrangements for credit purchases. The clients will have two options of buying the clothes drying machines, through cash and hire purchase. The hire purchase option will help the company to be able to target the local people who can’t be in a position to buy the machines in cash.
Industry trends and other factors
The use of sun as a clothes drying method has been popular in china in the past. But due to increasing number of foreigners in china are changing this trend by introducing the concept of using clothes drying machines. The major challenge in the past has been the efficiency of the drying machines and the extent into which they are environmental friendly.
Machines only available in the market are not cost friendly since they consume high amount of power. It is therefore vital if people can appreciate a faster, convenient and cost efficient method of drying clothes. It can also be noted that sun drying is more prevalent due to cultural beliefs.
Market outlook
The market of drying machines in china is relatively small compared to other developed countries like America. Due to increasing number of foreigners, locals changing life styles and stabilization of the Chinese economy, the use of such machines is growing. The market has a gap between cost inefficient clothes driers and environmental friendly drying machines which are cost effective. There is a need to fill this gap by adopting Eco-Driers machines.
Financial plan
The finances of the company can be divided as per the need s of the different departments
In the procurement department:
In the freight department:
In the distribution department:
Financial statements
Eco-Dryers Company. Profoma Income statement. For the year ending 30th June 2013
References
Massachusetts Export Center. (2010). How to start an export/import business. Web.
Richburg, K. (2010). China’s sun lovers don’t warm to dryers. Web.