Assignment 1: Proposal

Marquita Wright

BUS 315

October 21, 2013

Diamond Dynamics is a company that builds drone navigation systems. Our vision statement is clear “There are two ways to change the world: the pen (the use of ideas) and the sword (the use of power). Peter Drucker chose the pen and thereby rewired the brains of thousands who carry the sword—and contributed as much to the triumph of the free world as any other individual.” By by Peter F. Drucker (Foreword to the book by Peter F. Drucker). I believe that this vision statement summaries what this company wants to achieve. We see the vision as a goal to change the world by picking up the pen and changing the world with no boundaries and also be a performance leader of Diamond Dynamics and to do that have to achieve to have operational excellence, customer satisfaction as well as support and training for all staff. Our mission statement is to provide the latest state-of-the art technology that is American made navigation drones system as well as to help protect and save the lives of others. Our companies’ product is navigation drone systems and we are currently creating a navigation drone system that does not need GPS. The reason for the new creation is because the military drones rely heavily on GPS for its navigation system to give guidance while in the air but there are some areas where a signal is not found. So like the military sub-contractor BAE we are testing out a new system that would be able to use any wireless signal to find its location. But enough of that for now let’s introduce our staff. My name is Marquita Wright I am the CEO and founder of Diamond Dynamics. I formed Diamond Dynamics six years ago but before that I used to work for a company called Systems Management that worked with other companies that created navigation drones systems so I took interest in that and here I am. Next to me is my head of production Mr. Michael Morris he has been with Diamond Dynamic since it was founded but before that he use to work with Dell computers and Microsoft for a few years. On the other side of me is Ms. Cheryl Winstead that is in charge of the finances and accounting here at Diamond Dynamics. Before that she used to work in New York overseeing different financial companies. After Ms. Winstead there is Mr. Jay Demond he is the head of the governmental contracts that come through Diamond Dynamics. He has also been with Diamond Dynamics since it was founded. But before that he served in the Army which gained him a lot of experience with the military contracts as wells as audits.

Now that we have talked about the basics of our company let’s go over our main competitor and how forecasted method is for their company and how it interacts with us as well as our forecasted method. Our competitor is VectorCal they also create navigation drone systems and we are going head to head with each other. The only difference is that we have started working on a navigational drone that does not need to use GPS like I stated before. But back to VectorCal they have forecasted that their reward would result in a fixed-price type contract. This means that it’s a contract to where the amount of payment does not depend on the amount of resources or time expended. With that being said I don’t think that a fix-price contract would be the right way to go. The reason why I say that is because it would not cover the cost plus some of the amount of profit that could be made. For example most often it is used in the military and in the government contractors where the risk is put on the vendor instead. That is why Diamond Dynamics is more focused on having a forecasted approach of a cost-price contract where we are paid for all of the allowed expenses for a set limit and an additional payment to allow for profit. I think that this way is a lot better then the fixed-price contract and I think that it would also benefit out company in a good way in the future.

Now in the start-up phase of this company there well be a few cost that well happen. Some of the costs are semi-variable, allocated, and indirect costs. I will start with the semi-variable cost. Now in order for me to let you know what is, Semi-variable cost are costs that are partly fixed and partly variable depending on the amount of production is being used or done. So I would say that for this cost it would be labor cost, material cost, utility cost. Next let’s take a look at the allocable cost. In definition this means that it would have to be an assignable or chargeable cost to one or more cost objectives on the base of relative benefits received or other equal relationships or a cost that can be identified with a business unit. In this case some cost would be have to be put on the books and balanced out before I give the final look over and that would be handled by the finance and the accounting department that Cheryl Winstead is in charge of. Her department would handle putting all the cost that have be accrued by other areas like production cost and contract cost and have it balances and put on the books before I look over it for the final time. All of the production cost would be handled by the production department that Michael Morris is the head of to be reviewed before giving it up to the finance and accounting department to be balanced. And with a lot of government contract that come in there will be some cost that would come with it so before it goes to Cheryl’s team to put of the books it would go through the government contract department to have it reviewed and that would be Jay Demond’s department. The next thing is the indirect cost that the company would have to pay. The definition of indirect costs is any costs that are not direct. With being say some of the companies indirect costs are ownership of the building, taxes, the lights and heat, insurance that we need, sales expenses, personnel administration cost as well. There is a lot more indirect cost that the company would have to pay.

Resources:

o Guide to Contract Pricing text book-Pages-105, 50, and 57