Business Plan

TECHNO SMART Tomorrow’s solution today!

Solution provider for electronics equipment through highly advanced micro electronics technology. Submitted To: Mr. Faizan Khalid Submitted by:  Ali Ahmed Khan  M. Ali Khan  M. Shan Malik Mahin Mujahid 

TECHNO SMART

Table of Contents I.

Executive Summary .............................................................................. 1

II.

Business Description ............................................................................ 2 Form of Business Owners Name of Business Description Mission Statement Unique Selling Point (USP) Primary Objectives Location Gap Identification

III.

Porters Model ...................................................................................... 6 Barrier to Entry Supplier Power Buyer Power Threat of Rivalry Threat of Substitute

IV.

Pest Analysis ........................................................................................ 7 Political Economic Social Technological

V.

SWOT Analysis ..................................................................................... 9 Strengths Weakness Opportunities Threats

VI.

Market Size and Trends ...................................................................... 10

VII.

Market Growth .................................................................................. 10

VIII.

Government Policies .......................................................................... 10

IX.

Population Shifts ................................................................................ 10

X.

Growth Potential ............................................................................... 10

XI.

Barriers to Growth ............................................................................. 10

TECHNO SMART XII.

Competitor Analysis ........................................................................... 10

XIII.

Market Segmentation ........................................................................ 11 Demographic Factors Geographic Segmentation Target Market

XIV.

Value Proposition............................................................................... 12

XV.

Pricing Strategy .................................................................................. 12

XVI.

Sales & Distribution Strategy .............................................................. 12

XVII. Advertisement & Promotions Strategy ............................................... 12 XVIII. Organizational Structure .................................................................... 13 Role and Duties Staffing Plan – Salary Structure XIX.

Critical Risks ....................................................................................... 15 Potential Problems

XX.

Obstacles & Risks ............................................................................... 16 Obstacles Risks

XXI.

Contingency Plan ............................................................................... 17

XXII. Exit Strategy ....................................................................................... 17 XXIII. Operations ......................................................................................... 18 Capacity Management Supply Chain Management XXIV. CONCLUSION ..................................................................................... 20

Executive Summary Techno Smart is a solution provider for electronics equipment through highly advanced micro electronics technology. Moreover, the services are being enhanced by offering security lock system as well as automatic switching of fans and lights by using personal mobiles of the customers. Techno Smart would be owned by 4 persons who would make it possible to provide quality products as well as deemed services required by the customers. Initially in the first phase, Techno Smart will target households only in Lahore market. Thereafter, the expansion will be done to other main adjacent cities. Due to the prevailing insecure atmosphere in Lahore, Techno Smart lock system idea would be warmly welcomed and adopted. Results of the survey show that people are ready to spend money in exchange of security of their families. As far as automatic turn ON and OFF is concerned, the luxurious and busy routine of people would support it too. This innovative idea is going to fascinate the target market. The primary objectives for next 5 years would be: • • • • •

To gain customer’s trust and satisfaction. Position our brand effectively and obtain a reputable image. Expansion of Techno Smart to other metropolitans, first in Punjab and then in Sindh too. To make this Techno Smart system the necessity of the consumers. Generate reasonable profits.

Techno Smart lock device would be the set-up of an electronic lock powered by the existing gate controller 12-24 Ac or DC supply. Customers would not need to carry their keys along with them, moreover no need of waiting on the road or getting out of the car in rain. As only saved numbers can SMS so it would make the customer relaxed and relieved. The GSM switching would help to save the energy too and would also serve as a convenience product.

Lahore School of Economics

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Business Description Form of Business It is a Micro Electronic Hardware business which is manufacturing electronic hardware products and this business is owned by five partners. All are investing with equal ratio of 2 Mill ion Each.

Owners The designations of all partners will be as follow: • • • •

M. Ali Khan Ali Ahmed Khan M. Shan Malik Mahin Mujahid

(CEO & Sales & Production Manager) (Finance & Aftersales Manager) (HR and Operations Manager) (Marketing Manager, Head of R & D)

Name of Business The name of the business is TECHNO SMART which represents that it provides a complete technologically advanced package for home, offices and industries with one device.

Product Name Techno Smart

Logo

Tagline

Tomorrow’s solution today!


2

Product Design


3

Description TECHNO SMART is a new company that will provide high quality electronic hardware products to its clients. TECHNO SMART will be a partnership owned business and operated by M. Ali Khan, Ali Ahmed Khan, M. Shan Malik & Mahin Mujahid. There is a high demand for such products in Lahore because people are becoming more aware of convenient electronic products and they are willingly adopting them. Therefore, TECHNO SMART has initially taken first step to manufacture such products in Pakistan. It switches ON and OFF any electric product through sending sms from users mobile. The user can attach max 6 electrical devices with it and a sim is required for its operation. It uses electricity through its charger. This is a plug and play device. The functions of the device are: • • • • • • • • •

Multiple applications. (gates, barriers, garage doors, shutters and access doors, generators etc.) Impossible to intercept the sms. Secure Quick & easy Unknown callers are ignored. Open gates prior to arriving, no waiting on the road or getting out the car in the rain. Let visitors and deliveries in remotely. Can be operated from anywhere. Power by the existing gate controller 12-24 Ac or DC supply.

For Home Use


For Industrial Use

4

Mission Statement To provide solutions for electronic equipment’s with high valued products and services. Make “TECHNO SMART” the necessity of households by gaining customer’s trust and satisfaction.

Unique Selling Point (USP) The product itself is a unique product because it has a no range limit and can be operated from anywhere in the world. The other uniqueness in this product is that customer can operate any electronic appliance ON and OFF function with SMS.

Primary Objectives The primary objectives for next 5 years would be: • • • • •

To gain customer’s trust and satisfaction. Position our brand effectively and obtain a reputable image. Expansion of GSM HOME to other metropolitans, first in Punjab and then in SIndh too. To make this GSM HOME system the necessity of th e consumers. Generate reasonable profits

Location Plot -234 Main Raiwind Road, Lahore The office space is company owned and the necessary office equipment such as computers, fax machine, photo copier and other engineering equipment.

Gap Identification • • • •

• •

At this stage company is producing 10 units per month. At this initial stage company has total of 10 workers and one outlet. For future the company will be looking forward to increase its human resource and outlets in different places in Lahore. The company is getting a small amount of profit from the first year but after looking the demand for this product the company is very keen to invest more so that company will be earning good profits. We don’t have direct competitors. The company has an advantage on this initial stage but the research and development department is focusing to bring new changes in existing product and will be introducing other new products.


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Porters Model There is absolutely no direct competition present in the market. If the right sorts of resources and action plan are followed the company can run this business very efficiently. In this fast moving world people needs more comfort and ease in their life so to make your lives easier such products are invented. Thus the need in the coming time is an opportunity for Techno Smart.

Barrier to Entry High industry profits become the reason of entrance of other firm in the industry. By avoiding this barrier can be created for these firms. When a firm is charging high profits and high cost to the customers then that firm is making an increase in the entrance of other firm in the industry. This company is using a cost plus pricing strategy at start which means that they are charging a minimum profit over each unit. This will cause the industry to remain disciplined. Patent are also one of the barrier to entrance. When the company product is patent other firm are not allowed to share the market for a certain time period.

Supplier Power There are number of competitive suppliers in the market because the raw material which the company require is easily available. Due to that the power of supplier is weak so it is not a big issue for the company to switch supplier and supplier needs to create good relation with company.

Buyer Power This product is innovative and has no such product available in local market. So the company has a huge number of buyers available who are willing to buy innovative products. The product is standardized and the company has its own distribution network. Buyers are fragmented so no buyer has any particular influence on this product and on its price.

Threat of Rivalry In the traditional economic model, competition among rivals results profits to zero. The rivalry of this company is low and market is disciplined. However If some other firm comes in the future to share the profits of the market it will decrease the discipline in the market. When some rivalry comes in the future the company has these options to get safe from the attack, firstly by changing the prices of the products secondly bringing a change in the product differentiation.

Threat of Substitute Substitutes exist in Pakistan but company is focusing on research and development side to bring more innovation in the product. The threat of substitute increases when the price of Lahore School of Economics

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the substitute decrease and the market share increases. By keeping in mind the price of this products is set accordingly to the minimum level of profit.

Pest Analysis Political The government plays an important role in the operation and manufacturing products and services in terms of regulations. Following are some of the factors; •

•

•

• •

Tax policy o Due to the unpredictable political and governmental changes rules and regulation are changed quite frequently. Currently government has increased the taxes. Employment laws o Child labour laws are there and employee’s rights and laws to safeguard their rights. Environment regulations o No such material is allowed to be used which cases an increase in the environmental pollution. Trade restrictions and Tariffs o Import duty and other restriction on import items. Political stability o Now a day’s Pakistani environment is instable due to political clashes among political parties. o Inside country war and drown attacks in north frontier areas. This political instability has led to uncertain environment in the country, which is a threat for any business

Economic Economic factors affect the purchasing power of potential customers and the firms cost of capital. Few factors which exists in Pakistan economic condition are: •

• • •

Inflation rate o Due to inflation the cost of doing business is also gone higher. Inflation remains the biggest threat to the economy, jumping to 7.9% in 2006 to 23.3% in first quartile of 2009. This increasing ratio will hurt the buying power of the consumers that will overall reduce the demand for the products. Exchange rate Interest rates Economic growth o Pakistan has a growing upper class with relatively high per capita incomes. o The unemployment rate is going up and up with the increase of level of poverty that is reducing the buying power of the people that is threat for mobile brand.


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Economic conditions are influenced by political and government policy, being a major influence affecting these can affect the company’s strategies. Overall economic conditions are not very sound. The country risk of Pakistan goes to 3 which is alarming situation for Pakistan.

Social Social factors include the demographic and cultural aspects of Pakistan. These factors affect customer needs and the size of the potential market. Some social factors includes; •

•

• • •

•

Health conscious people o People are more health conscious and people have now trend to get more and more convenience in their lives. Population growth rate o The total population of Pakistan is approx. 1.8M. o The population is increasing rapidly which increase the number of cellular usage and help in projecting high profits. Age distribution Career attitudes Emphasis on safety o The rate of theft and robbery is increasing. o People are investing in safety of their families. Before no one worries to get a security system for their home but now people are even paying approx 20,000 to 40,000 annually to companies for their home security. Cultural o The culture of Pakistan is rigid in term of adopting new technologies. o Increasing globalization has amplified the influence of western culture in Pakistan. o People are aware of what new technology is being used. o The life style of Pakistani people is changing rapidly. o People are more conscious about their status.

Technological The technology factors can also lower the barriers to entry and can reduce minimum efficient production level some technological factors include; • •

Research and development Rate of technological change

Awareness of technical products is increasing. Due to rapid technological advancements to cope with this situation is a tough job. But if a company achieve this situation then it would be not hard for the company to survive a nd to get a large market share.


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SWOT Analysis Strengths • • • • • • • • •

No need to carry keys and buttons Can be operated from everywhere Long backup time (mobile battery) Strong R&D and product related innovations Good quality of product Durability Uniqueness in products Services Plug and Play

Weakness • • •

People like more foreign brands in technological products. High R&D cost Delay time of (few seconds) in Operation

Opportunities • • • • • • •

Wide range market Low SMS prices (SMS packages) People’s interest in new technological Products Increasing rate of robbery and theft force people to buy such products Load shading. High cost of electricity. Multi-Devices can be attached.

Threats • •

Ups and downs in the political and economic conditions of the country Substitutes available


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Market Size and Trends This is a new company in market with innovative products and assuming that there must be a lot of buyers and there are a huge number of customers who are willing to purchase innovative technological products in Pakistan. As the product shows by itself that, it’s a high technological product and as well as highly differentiated product, being a costly product we are targeting the middle upper and upper class segments for this product.

Market Growth People are accepting innovative technological products and becoming conscious towards convenience products, so the market of technological hardware products is expanding rapidly.

Government Policies Due to the instability of political status of Pakistan, there is always a threat of changing policies regarding taxes, trade policies and trade agreements with other countries.

Population Shifts Population is increasing day by day and people are changing their life style from joint family system to individual systems. Where in joint family, the whole family uses one TV but when this joint family system convert into individual system then needs and wants expands. So that is a positive impact on the industry as well as on the product acceptance.

Growth Potential This is a company which manufactures innovative products and have budget of 10 million and have competent work force that enhance the company’s growth regarding HR and R&D departments that works for the customer’s needs and wants.

Barriers to Growth Ups and downs in the political and economic conditions of the country can become a barrier. Reluctance of people towards adopting new product can create a hurdle in achieving our task. Rivalry in future, new tax and tariff policies from the government side may act as obstacle in retaining our position in market.

Competitor Analysis As our product is unique and innovative in our local market, so there is no direct competition but indirectly there is some competition with foreign companies’ products. People can use these substitutes when Techno Smart products are available and that can affect the company’s sales as well as profits.


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Market Segmentation Demographic Factors Demographic factors play an important role for a company while choosing its segments. • • • •

AGE – Above 18 GENDER – Male & female INCOME – As our target segment is middle upper and upper class, so the income of our target segments above RS 80, 000. OCCUPATION – The major occupation of our target segments is professionals, businessmen, people having executive posts.

Geographic Segmentation • • • •

REGION: Lahore 2 SIZE – 1,772 km (684 sq mi) POPULATION – 180M CLIMATE – Rainy, long and extremely hot summers, dry and warm winters, a monsoon and dust storms

Target Market As the product shows by itself that, it’s a technological product and as well as highly differentiated product, being a costly product we are targeting the middle upper and upper class segments for this product. We are targeting: • • • •

Main residential areas of Lahore (DHA, Model Town, Johar Town, Garden Town.) Middle upper and Upper Business Home.

Target Market Description Techno Smart is a product which is for the use in commercial building and as well as in households’. This product is a bit costly from normal locks but is cheaper from other electronic locks. So it targets market is middle and upper middle class.


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Value Proposition Techno Smart is offering products that make convenience in customers’ life. It al so gives customer piece of mind and relaxes from doing same functions daily and many times a day. Customers will save their valuable time by installing Techno Smart product. It will satisfy the customer’s needs due to the innovative technological product. Techno Smart promises to provide innovative products according to the customers taste like Techno Smart offer this product which have many benefits in one product like it can be used with 8 electronic products in one time.

Pricing Strategy Techno Smart is using the Cost plus pricing strategy because it is new company in the market and just gaining low profit margin. Techno Smart wants to make himself strong image in customers mind then change the pricing strategy. The cost of product is 12,000 and selling it at 15,000.

Sales & Distribution Strategy Distributors are the institution through which availability of products is possible. • • • •

Techno Smart is distributing its own products. Each product is sold at a price of Rs.15, 000. The Techno Smart manufacturing unit will be in Raiwind Road area. The company’s sales point will be in Hafeez Centre.

Advertisement & Promotions Strategy Advertisement & Promotions is the main factor behind the every company’s success. So the company is focusing much more in the advertisement of the product through different advertisement channels in other words Techno Smart is adapting Media strategy. • • • • • •

News Paper (Dawn) Local Cable Ads Brochures Stalls Direct Marketing Social Media

Elements for Deciding Media Strategy • •

Affordable easily by Techno Smart (keeping in view our budget) Maximum coverage of our target segments


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Organizational Structure 5 Technicals 5 call operators 2 Staff Worker 3 Coworker 2 call operator 1 staff worker

CEO

2 coworker 1 staff worker 2 coworker 2 receptionist 3 call operator 1 staff worker 3 coworker


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Role and Duties •

CEO & Sales Manager – M. Ali Khan o Will manage the strategic plans and policies, e.g. Creating culture Building senior management team, Financing Meeting with the delegations Supervising works of others Sales monitoring Production control and monitoring Finance & Aftersales Manager – Ali Ahmed Khan o Will manage all the financial issues of the company and will have the responsibility regarding financial activities of the company. o Managing compalints HR & Operations Manager – M. Shan Malik o Will manage Human Resource and Operations department. o Responsibilities will include Recruitment & selection performance appraisal quality management Effective operations management. Marketing and R & D Manager – Mahin Mujahid o Will manage all the work related to marketing. o Execute marketing skills in making marketing strategies, marketing plans and will have the responsibility of promoting the product. o Innovating and enhancing product line o Strengthening product image through R & D       

•

•

   

•

Staffing Plan – Salary Structure Designation

No.

Salaries / month (Rs.)

Expert Technicals

2

40,000

Technicals

3

25,000

Staff Workers

5

10,000

Coworkers

10

6,500

Call operators

10

10,000

Receptionist

2

8,000

Clerical Workers

3

4,000

All workers will have multi-tasking abilities Lahore School of Economics

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Critical Risks Potential Problems Political Instability As political condition of our country is very critical and we are starting new business so turnover of Government can result in increase of taxes, import duties and subsidies.

Management Problem Company can face management problems like we are new in the business and launching a totally new product in Pakistan so we can face problem in hiring of skilled labor and employees related to that technical field.

Insufficient Capital We can face capital problem so we have to bear in mind not only the costs of starting, but also the costs of staying in business.

Technological Problem:As our business is related to technology and it is a totally new concept of automated home security system so we can face problem in technology.

Location We have to open our franchises in overall Pakistan so location of our franchises and can also be a problem.

Electricity Barrier As economic conditions of our country is very critical and load shedding is a big barrier which can stop our company to achieve our target.

Buying Behavior People are stick to the manual home locks and it is very difficult to switch them to automated home security system. They will have following questions in the mind.   

Is it user friendly or not? Is it reliable or not? What about warranty and after sale services?

Operating Problem At user’s end there operating of device can be a problem because firstly they use manual locks for home security and manual switches and it is very difficult task to switch people from manual system to electronic system.


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Obstacles & Risks Obstacles 





 

As there is no direct competitors of us but there are many indirect competitors and our goal is to beat them and capture the market so biggest obstacle in our way is price difference, of course we are providing most advance technology but the manufacturing cost is also high so will people give preference to our product on manual home security system or not? As this business is partnership based so decision of all will be the final decision this is personal obstacle for all in achieving personal thinking for the organization. How will people behave when we launch the product? Do I have the right physical environment to achieve my goal? War and terror situation in the country is also an obstacle for expanding our business. Is this capital enough to survive in the market?

Risks There is always risk involved in starting a new business. We are investing a huge sum of money in the current situation of Pakistan which is the first risk.   



Lack of Adequate Capital Import of china products Market risk is a result of many factors, including whether the market is large enough to support your business, whether the market is growing, what trends exist in the industry, how the competition is structured, and how distribution works. Operational risk deals with whether the business can set up internally to deliver goods and services to customers effectively.


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Contingency Plan Utilize Multi-tasking If we face management problem than we will outsource our hiring process and hire those people who have multiple skills and utilize the multi-tasking capabilities to reduce expenses.

Pricing We will apply low profit strategy as Zong is doing in Pakistan even we can fix price to breakeven point for sometime when we feel our product is going to fail due to price .

Capital If we will face capital deficit than we will fulfil our need from angel capitalist.

Cope with Load shedding To minimize the load shedding problem we will use generator during working hours which can increase cost but minimize the probability of business failure.

In case of Theft of Techno Smart Lock Device If the operating device or command of controlling home security system is stolen from the user than we will have full control to block the device on single call of the customer which can increase customer satisfaction and can be a success factor for us.

Awareness of Product Use If our product will fail due to comprehensive system of controlling, than we will start campaign on tutorials of operating the device which can change customer’s perception & occupy positive share of mind of customers.

Exit Strategy As we are investing 15 million (10 M equity + 5 M loan) so we can exit this business if we will come up 50% loss of the total investment that is 7.5 million. If we bear 50% loss then we will sale out our business.


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Operations We will start our operation from different university links & social network because this way is perfect for our business as we can enjoy different benefits here. Techno Smart Lock Device product idea for our business because it is totally new and innovative idea. Being first movers, no first data could be obtained to measure and forecast the demand and trend of market. Therefore, we have taken the expertise of professionals & discussion with several enterprenuers in regard to our product and decided to launch the product. After deciding to launch Techno Smart now we have to gather all the required material to develop it. It contains    

A lock Capacitors IC’s GSM kit etc.

We contacted a lot different suppliers for each item required and held negotiations with them how the relation between them and us continues. No formal machinery is available to assemble our product therefore all the assembling process will be manual.

Capacity Management Capacity Management contains all that activities which are related to, the number of units a facility can hold, receive, store or produced in a specific period of time. Capacity Management tells us about the design and actual capacity of the company. Companies can judge the effectiveness of its capacity planning on the basis of its percentage of utilization and its percentage of efficiency.

Design Capacity Design capacity is the maximum output of the system means how many maximum units can company has produced, hold and store by using its given resources. In case of our company “ Techno Smart” we have set our design capacity after analyzing all given resources the maximum units which we store, hold and produced is 360 units in a year. Its mean almost 30 units produced in a month.

Design Capacity = 360 units/year

Effective or Actual Capacity Effective or Actual Capacity is the capacity a firm expects to achieve according to current operating constraints or in other words we can say the units which company has actually produced by using its given resources. Effective Capacity is usually lower than the design capacity.


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Foreseeing the design capacity to produced almost 360 units of Techno Smart in a year but according to the current situation of Pakistan we have faced lots of problems that create hurdle for us in order to meet our design capacity. In current situation are facing the issue of load shedding, strikes and Absenteeism etc. Therefore we are far away from our design capacity and actually the units we will be able to produce in given situation are 300 in a year or almost 25 units in a month. Effective or Actual Capacity = 300 units/ year

Utilization The formula which we normally used to calculate the utilization of any company, factory etc is given below: Utilization = Effective Capacity/ Design Capacity Utilization of Gsm Home for 1st year is: Utilization = 300/ 360 Utilization = 83%

Supply Chain Management The operations of supply chain starts from supplies of raw material to delivery of finished product to customer. As the flow chart diagram which is given below clearly shows the whole process of supply chain management very clearly.

Techno Smart also follows the same operations of supply chain which is given above. Suppliers which are selected by the management of the company will supply the needed parts of the product to the production plant where the production department assembles all parts of the product. After that the final product distributes as per demand to company’s own outlet. Then retailers of the outlets deliver the finished product to the customer.


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CONCLUSION Concluding the above, we can say that Presently, the industry welcomes Techno Smart products with open arms as there is absolutely no competition present in the market if the right sorts of resources and action plan is followed a monopolistic position can be created and this although seems big for a newly formed organization. A strong reason to believe that this venture has huge potential is the need for such product that we plan to offer, in this fast moving world people needs more comfort and ease in their life so to make your lives easier such products are invented. Thus the need in the coming time is an opportunity for Techno Smart.


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Business Plan

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