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CMA Young Post Green Manufacturing CompetitionWriting Business Proposal

CMA Young Post Green Manufacturing CompetitionWriting Business Proposal

Alex Alex ThamThamTeaching FellowTeaching Fellow

Department of MarketingDepartment of MarketingCity University of Hong KongCity University of Hong Kong

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Recommended Structure of theBusiness Proposal

(25 slides excluding appendix)1. Executive Summary2. Company Summary3. Products and Services4. Market Analysis5. Strategy and Implementation6. Management7. Financial Plan8. Risk management and contingency plan9. Bibliography and Appendix

Marketing Scheme

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Marking Scheme

• Innovation / creative thinking 40%– Originality / modification (20%)

• Is the business idea an original one?

• Zero mark would be given if there is adequate evidence of cheating

– Creativity (20%)• Does it have a creative approach?

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Commercial viability (40%)• Profitable (10%)

– Does the business idea offer an attractive and realistic opportunity?

• Investment ability (10%) – Does it have a sound business strategy?– Is the proposed technology or skill capable of creating a

commercial advantage?• Market potential (10%)

– Is there a demand for its products services?– Are the market and financial projections realistic?

• Long-term growth (10%)– Does the business have a good growth prospects?

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Communication Skills (20%)• Paper presentation (10%)

– Is the business plan clear and well written?• Presentation (5%)

– Does the team present the business plan clearly and convincingly?

• Response (Q&A) (5%)– Can the team quickly and appropriately respond to the Judging panel’s inquiries?

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Executive Summary• Highlights of your business

• Mission of the company

• Value proposition (less than 30 words)

• Objectives of your business

• Keys to success for the business

• Market potential (local and global)

• Growth prospects and sustainability

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Company Summary• Valid assumptions

• Company Ownership e.g. Limited Company or Partnership

• Start-up Plan, including start-up expenses, assets and liabilities, investment and total capital

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Considerations of the Mission Statement(from Wikipedia)

• Purpose and values of the organization • Which business the organization wants to be in (products or

services, market) or who are the organization's primary "clients" (stakeholders)

• What are the responsibilities of the organization towards these "clients"

• What are the main objectives that support the company in accomplishing its mission

Haschak, Paul G. (1998). Corporate statements: the official missions, goals, principles and philosophies of over 900 companies. Jefferson, N.C: McFarland. ISBN 0-7864-0342-X

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Samples• "To enable people and businesses throughout the world to

realize their full potential."—Microsoft

• "Organize the world's information and make it universally accessible and useful."—Google

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Value Proposition• A statement summarizing the core differentiation of one's product from the offerings of competitors.

• A clear statement of the tangible results a customer gets from using your products or services.

• The more specific your value proposition is, the better.

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McKinsey & Company - Corporate Finance - value proposition

• Our value proposition rests on an unrivalled package of strategic, transactional and financial advisory services, uniquely linked with independent judgment and deep industrial/commercial insight.

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Product and Services• Product and Service Description e.g. special features and functions, technology, materials used and sourcing of products and services

• Any patent, copyright, license needed or acquired

• Future development of products or services

Green Manufacturing• A method minimizes waste and pollution.

• CMA – bring green manufacturing to Hong Kong.

• Range from solutions for waste reduction, scarp recycling and carbon emissions to ways to use renewable energy such as water.

• find ways to 'green' industries that already exist or come up with a new concept to manufacture green products.

• Your product or service can be a new one or an enhanced version of a current one on the market. It should bring out the message of promoting a sustainable green living and environment, with a target audience in mind.

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Market Analysis• Market Segmentation • Target Market /Customers, , market needs and wants,

buying behavior, trends and growth• Competition and major competitors, suppliers,

substitutes etc– Who, What (business model, strategy, and entry barrier)

• Market Research (primary and/or secondary)• Market environment (PESTLE Model)

A Famous Story: Marketing shoes

• Business all around the world

• Find a country where they don’t have their business there.

• According to the secondary data, the purchasing power is “ok”; able to buy as least one pair of shoes made by this company and the the target population is large enough.

Question– So, what will you do if you are the

Contemporary Marketing, 2005 FB 2601 Marketing

Send a team to have a market survey

Facts

– True secondary data

– Blue sky, dusty ground

• No one wearing shoes

Question• What is Demand?

Conclusion•No Demand

•No need => No habit => No desire => No market•Same as selling a comb to a monk who has no hairs.•Give up this market

Send the 2nd TeamFacts

– The same facts

Conclusion• A huge market!!! Go! Go! Go!

Question• Why ?

• Currently no competition > Enter it as quickly as possible to get the first mover advantage.• As long as you can sell your benefits to the market, people will buy your products.

Contemporary Marketing, 2005 FB 2601 Marketing

Send the 3rd teamFacts

– Same as the previous two

Conclusion– They don’t need it because they can’t see the benefits of wearing shoes.

Question– So, what are the critical success factors to market shoes there?

– What should this company do to market shoes there?

Summary

Team Conclusions Concepts

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No demand No market

People buy what you sell Selling concept

People buy what satisfies their needs / solves their problem(s)

Marketing concept

Marketing is the delivery of customer satisfaction at a profit.

Kotler & Armstrong, Principles of Marketing, 12h edition

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What is a Market?• Having desire to buy

• Willing to buy

• Having authority to buy

• Having money to buy

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Market Potential• You need users and customers.

• Who and where are your customers?

• How many? (Now and Future)

• Research support

• Useful Links:– Business Source Complete

– Euromonitor / Global Market Information Database

– WiseNews

– www.bcg.com

Competition• Direct Competitors

• Indirect Competitors

• Barriers to entry

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Strategy and Implementation• Specific Objectives, with dates, budgets and targeted results (five years)

• Competitive Edge and Value to customers • Marketing Strategy, including product, pricing, promotion, and distribution as well as marketing programs

• Sales Strategy, with sales forecast and programs

Timeline (Gantt Chart)Task Target 2011 Jan-Mar 2011

Apr-

Jun

2011

Jul-

Dec

2012

Jan-

Sep

2012

Oct-

Dec

2013

1 Product development -

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Marketing ObjectivesObjective Direction Measure per month, quarter, or year

To increase unit sales

No. or % increase of product sold

To acquire new customers

No. or % of new customers acquired

To increase market share

Company’s dollar or unit sales divided by total industry sales

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Financial ObjectivesObjective Direction

Measure per month, quarter, or year

To increase sales volume

Dollars sales per a period of time

To increase product sales

Dollars sales per product per a period of time

To improve profitability

ROI by product, line, channel, promotion, price adjustment, segment, or customer

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Management• Organizational Structure

• Management Team

• Personnel Plan

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Financial Plan• Important Assumptions e.g. if your projected sales are

based on certain percentage of GDP growth, pricing, cost, margin, working capital, you should state it.

• Fund raising: the required initial investment?• Break-even Analysis (Where is the turning point?)• Income Statement• Projected Profit and Loss, Cash Flow, Balance Sheet

for 5 years • Growth milestones• Ratio analysis e.g. gross margin, return on asset,

inventory turnover• Long-term Plan• Financing strategy (stages, and size)

Key Financial Forecasts• Budgeted Income Statement

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(HK$) Year 1 Year 2 Year 3 Year 4 Year 5

Total

Revenues 826,501 4,019,376 6,639,241 9,524,868 12,396,890

Depreciation (70,000) (90,000) (170,000) (200,000) (230,000)

Gross Margin 756,501 3,929,376 6,469,241 9,324,868 12,166,890

Overheads (1,220,000) (2,813,563) (4,647,469) (4,762,434) (4,958,756)

Profit before

Interest and

Tax (463,499) 1,115,813 1,821,772 4,562,434 7,208,134

Taxation - (184,109) (300,592) (752,802) (1,189,342)

Net profit (463,499) 931,704 1,521,180 3,809,632 6,018,792

Budgeted Balance Sheet(HK$) Year 1 Year 2 Year 3 Year 4 Year 5

Assets

Cash 551,542 690,592

Current assets 306,625 1,104,844

Fixed assets 280,000 290,000

Total assets 1,138,167 2,085,436

Liabilities

Current

liabilities (a) 101,667 117,232Shareholders'

funds

Share capital 1,500,000 1,500,000

Reserves (from

Net Profit) -463,499 468,205

(b) 1,036,501 1,968,205

(a) + (b) 1,138,167 2,085,436

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Budgeted Statement for Cash Flow(HK$) Year 1 Year 2 Year 3 Year 4 Year 5

Cash from

operations (598,458) 239,050 1,665,896 3,533,485 6,294,839

Investment in

fixed assets (350,000) (100,000) (400,000) (150,000) (150,000)

Free cash flow (948,458) 139,050 1,265,896 3,383,485 6,144,839

Funding

Capital 1,500,000 - - - -

Dividends paid - - - (400,000) (400,000)

Net cash flow 551,542 139,050 1,265,896 2,983,485 5,744,839

Opening cash - 551,542 690,592 1,956,489 4,939,973

Closing cash 551,542 690,592 1,956,489 4,939,973 10,684,812 33

Risk and Contingency

Risks Solutions

1. Economic downturn

2. Copycat of the products

3. A lot of unsatisfied consumers

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Important Notes• Acknowledge sources of reference, information and data

• Attach supporting researches or documents

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Common Errors• Not large enough in customer base• No clear business model to make money• Not focus enough• Technically infeasible• Not enough capital, cost and benefit analysis

– All cost elements– Startup capital requirements (How to finance?)– Ongoing running costs like operating expenses– Upgrading costs

• Unjustified figures

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Good LuckGood LuckGood Luck