Business Plan
The need
After conducting thorough research on the market concerning kitchen appliances, it is clear that there exists a market gap for dish washing machine. From the findings, currently in the market, there are only two business entities providing the dish washing service – one dish washing machine and the house help. The idea of setting up another washing machine manufacturing firm is, therefore, in line with the current market behavior.
Setting up another company that makes the washing machines will, as a result, provide customers with alternative to choose from; it will also push the already existing company towards producing better quality products (Kolb, 2008). In addition, proper management would allow the firm to thrive by establishing itself as the best in manufacturing washing machines through initiating a healthy competition within the sector.
Merits
The firm’s produce is environmental-friendly since the product does not release harmful wastes to the environment.
The product is also convenient; it easies people’s life and saves their time. The washing machine like any other machine would serve to make work easier by working at users’ convenience. The commodity also seeks to help consumers save time by doing the required duty within the limited time.
The equipment should be designed in such a manner that it should be easy in use by the target group through initiation of simple commands. The user interface should be fit by well-placed buttons with lightings that are to be easily interpreted by the user.
Low cost of maintenance is another advantage of the company. Its design is well-thought in order to avoid complexity by reducing the frequency of occurrence of moving parts within the machine
One of the advantages of mechanization is its speed of operation because people can do the same operation slower as compared to the output of machines.
Target market
In line with its production, the produced commodity targets, in particular, the working class with lots of office work to take care of, and as such they have little time to do their house duties. Equally, the firm is also targeting the hotel and catering industry in general.
Big hotels serving a large number of customers require efficiency and fastness in order to attend to the needs of their customers within favorable time. It is clear that by mechanizing the industry, they will not only increase the speed of the hotel operations but also ensure that employees meet all the needs of their clients as thus they have time to do that (Landström, 2012). The commodity will also equip the catering companies, which deliver services to a large number of persons.
Expected unit volume sales
Given the high number in the targeted region, with the USA boasting a larger population of up to over three hundred and thirteen million, and Germany having over eighty million heads, the company stipulates to serve the outlined population by delivering the below mentionedquantity to the market. The firm will, however, concentrate on supplying the local market before setting up its operations abroad.
Table 1. Estimate sales volume against population count in the USA and Germany.
4P’S
Product
Considering the nature of the market, both local and foreign, as outlined in the market research report, both markets have mechanized and human labor. The washing machine that is to be produced by the firm will seek to bridge the gap between the services offered by the human labor and the already established washing machine method. The machine, therefore, will be designed to provide the much needed speed, efficiency, convenience and the ability to handle large volumes of load. Verily, the machine will also be easy to use, with much attention given to raw materials used in manufacturing the machine to ensure that the final product does not wear out fast. The firm will also study the prevailing market behavior to ensure that it produces the required amount of goods for the available market. This will help reduce wastage as a result of poor planning.
Price
In order to enter into the market, which has already been traversed by the competitors and other service providing companies, the firm would set price at a reasonable value in between the cost of hiring a house help and the pricing of the already occurring alternatives. The set price will allow the firm to maximize its profit from sales in addition to luring more customers. While the price of the commodity is expected to remain fairly static, it will be subject to change depending on the changes in the factors of production.
Table 2. Prices of the commodities in the market
Place
The firm should be located in proximity both to the target market and the factors of production. This would help cut on the cost of transportation from the firm’s warehouse to the market and even in shipping the raw materials from their point of production to the factory (Lord, 2012). The presence of the international airport is also an added advantage since it allows for easier exportation and transportation of the machines The Company, therefore, may be located in New York.
Promotion
In line with the market structure, since the market already has other substitute commodities and service providing entities, the firm, therefore, will need to do more aggressive advertisements and sales promotion in order to penetrate the market (Hisrich, 2010).
The firm, therefore, plans to invest in running advertisements of the existing new product in sensitizing the population at large through business magazines; participation in business shows, televisions and even radios. Additionally, the firm seeks to provide a fifteen percent discount on the first one thousand goods to be sold.The firm also intends to do door-to-door campaigns in areas where the competitors have strongly set their base.
SWOT Analysis
SWOT analysis allows for evaluation of the business strengths, weaknesses, opportunities and threats both internally and externally. From the SWOT analysis done on establishing the firm, the factors listed below have been established as the strengths, weaknesses, opportunities and threats to the manufacturing of a washing machine.
Strengths
Well-organized management team, this will ensure smooth flow of firm operations in terms of supervision and execution of duties (Dana & Therese, 2010). The firm intends to employ particularly from the local labor market in order to minimize on movement of the employees for proper service delivery. The management would help in supervising the firm’s operation so as to ensure the firm’s growth within the established boundary.
Weaknesses
The possible weaknesses for the manufacturing exercise include:
– low capital base that will limit the expansion of the whole production exercise;
– inability to recruit experienced expertise for the manufacturing of the washing machine, which may limit the number of well-trained employees that the firm can accommodate in terms of wages.
Opportunities
Some of the existing opportunities that the firm seeks to take advantage of include well-established position with a clearly spelt out channel for market reach. The firm is to be set up the country’s capital that boasts well-developed infrastructure in addition to its large number of inhabitants. This will present the firm with a greater chance of delivering its product to the readily available market within the intended time.
Opportunities presented for the company also include readily available market for the washing machines. This will allow for mass production of the machines, hence high profit from large sales volume.
Threats
Already established firms dealing with manufacturing of washing machines will offer stiff competition to the newly established firm. Generally, house-helps are more appealing to people than machines; therefore, they may prove a hindrance to market penetration.
Possibilities of emergence of other manufacturing firms will lead to production of commodities in excess of the market; as a result, there will be reduced volume of sales hence low returns.
Marketing in Germany
Although marketing the product both in the USA and Germany will be more expensive in comparison to marketing only in the USA, it comes with lots of benefit as compared to the latter. Marketing in both countries (the USA and Germany) would ensure that a greater geographical region is covered within the appropriate time.
This will make the brand known to a greater number of people, drawing attention to a new commodity in the market, which will translate to large sales volume as a result of reaching (Harper et al, 2010). The firm will, therefore, conduct marketing in Germany due to its large population with a view of tapping its wide market.
After considerations on the availability and occurrence of factors of production, the USA stood out as the best choice of place for setting up the firm. The reasons in favor of the US as the best location:
The USA enjoys a fairly stable economy; therefore, it provides a financial security the investment.
The USA has a higher population than that of Germany (U.S. CB, 2013), and since the kitchen appliance is targeting households by default, the USA would, therefore, provide a wider market.
The USA is open to the whole world. Countries around the world look up to the USA for delivering better and quality products. Having the firm set up in the USA would, therefore, allow for easy penetration into the market, especially the foreign one.
Generally, English, which is the national language in the country, is widely used across the whole continent. Setting up the firm in the USA will, therefore, allow for labeling, user guides and even advertisements to be done in English. This will allow the company to reach larger target group over a short time (George& Yvonne, 2007).
The USA also enjoys a favorable political environment, which is essential for growth of the business. Favorable political environment enables proper formulation and implementation of business policies as outlined by the government of the day. This provides protection to business entities against unfavorable completion.
Additionally, the USA has better trade relations with the rest of the world, Europe in specific, which happens to be a significant target market for the product. Having the firm established in the USA will enable the firm easily to ship the product to the foreign market.
Self-manufacturing versus potential outsourcing decisions and reasoning
While outsourcing for ideas as well as reasoning is a more cohesive approach, it comes with increased expenditure on hiring additional professionals for the already catered for areas.
While it enables the firm management to make informed decisions on policies formulation and implementation, outsourcing for ideas slows the rate of operation especially if it comes to decision making process and implementation of policies since all the ideas drawn from outside will also be put under consideration (Christopher et al, 2012).
Self-manufacturing, on the other hand, would allow the recently set-up company to blend in original ideas into operation to ensure uniqueness of the produced product.
Since the firm is still a young enterprise, self –manufacturing would allow it to be run in accordance to the set objectives, without interference from external input. It will also allow the firm to make faster decision in addition to ensuring that decisions made are in line with the business objectives (Gary, 2010). In line with this understanding, owing to the firm’s limited financial base, the company will be looking to establish itself as a self- manufacturing entity.
Distribution methods
Taking into consideration the firm’s proximity to the market and the nature of commodity that the firm would be dealing with, the company should consider setting up sales point in the major targeted areas for an easy access by the potential customers. Areas where low sales volume is anticipated will be served on customer orders by the door-to-door delivery method, by a van in order to create a good rapport with customers (Malcolm, 2012).
Goods made for the external market will be airlifted to the firm’s warehouses, which have been set up in the foreign market. From the warehouses, the company will deliver the product to the customers upon purchase by a van. In some areas, however, the product will be stored in the warehouse long enough until demand arises.
HR plan
Being a business setup dealing in the manufacturing of electrical washing machine, the firm will obviously need to have a human resource plan dealing with the recruitment, evaluation and dismissal of its employees. In this line, the HR would be required to abide by the labor laws and regulations employed in the different countries (Coase, 2012).
In the USA, for example, the firm is to abide by the following labor policies.
The set minimum wage for every employee act outlines the minimum wage to be paid. The Fair Labor Standards Act established in 1938 dictates the minimum wage and payments for overtime hours that employers in the private sector need to pay their employees taking into consideration a number of exceptions in reference to the nature and capacity of the business operations. The USA also has in place the free movement and immigration act that allows employees to roam freely within the country borders, when discharging their duties.
Employers, therefore, should ensure that employees that they seek to employ are available within the allocated time as spelt out in the contract signed between the two parties. The labor industry is also regulated by the pension policy, which seeks to protect employees from being denied their rightful retirement gains, upon expiry of the contract or on official retirement as outlined in the policies.
The Employee Retirement Income Security Act establishes the agreed standard and criteria for funding the retirement and care benefits that the employers offer to their employees upon retirement. The Employee Retirement Income Security Act also spells out the necessary actions to be taken against the employers that discriminate against employees preventing them from obtaining their deserved benefits as outlinedin the state laws that govern the labor industry.
Health care and safety act outlines the standards for workplace safety. This act also enables workers to refuse to work under unhealthy and unsafe conditions (USA DOL, 2013). The act also provides that the employers, especially in the manufacturing industry, should give their employees protective guards to offer protection against injuries and harmful chemicals.
Trade union act allows workers to participate in trade unions, activities dealing with union’s welfares and other businesses within the set state laws, in which the workers would like to involve (William, 2004). Right to organize, this state law allows the employees in the private sector to be represented by their trade unions in legal disputes between employers and employees.
Equally, the dismissal protection policy protects the workers against unlawful dismissal form duty by their employers.
Alike the USA, Germany also has state laws and provisions that aim at protecting both the employers and the employees. Some of these policies are listed below.
Federal Data Protection Act protects the employees against infringement of their right to privacy as a result of improper handling of their personal data by the interested parties. It also outlines equivalent penalties for employers who do not comply with the set standards. Germany also has adopted the Termination Protection Act which protects the employees from untimely voluntary resignation of employees without prior notice or ascension of the employer.
Germany also has the environmental protection policy that requires manufacturing firms in the country properly to dispose their waste products. This policy also providesfor the allowed amount of poisonous gaseous wastes that industries can release into the atmosphere. It also provides for the penalties that the industries may face should they violate the environmental control policies.
From the foregoing, it is true that there are policies that cut across in both countries, the USA and Germany. These policies include the employee protection act which protects the employees from unlawful dismissal from their duties by their employers. Additionally, both countries have the environmental protection act that seeks to regulate the amount of wastes that manufacturing firms release into environment.
The states also have different sets of policies regarding the labor industry. Unlike the USA, in Germany, the labor policy requires the employees to provide their employers with prior notification of their resignation from duty in correspondence with German’s employment statutes. The employees are, however, exempted from providing such a notice in cases where they have been involved in criminal acts, and when the working conditions are deemed unhealthy for both parties involved.
Additionally, in comparison with the USA which has put more restrictions on the employee’s background checks through state and local laws, in Germany, such restrictions have more obligations that outweigh the advantages attached to the whole exercise. Again, unlike in the USA, employers in Germany should take into consideration the German quota obligation that requires at least five percent of employees to be disabled in cases where the firm intends to employ more than twenty workers (Jens et al, 2010).
References
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