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Business Model

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Submitted By nasoor
Words 2508
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United Arab Emirates University
College of Business and Economics,
Computer application
Group Project, Final Report
Fall 2012-2013

Business Development Plan
New Modern Watch Company

Table of Contents EXECUTIVE SUMMARY 1 New Modern Watch Company CC 1 Watch Industry Trend 1 Our Products 1 Target Market 1 Our Competitors 2 Financial Performance 2 BUSINESS PROFILE 3 MARKETING PLAN 4 Industry Trends 4 KEY SUCCESS FACTORS IN SOUTH AFRICAN INDUSTRY 5 Products 6 TARGET MARKET 7 Competitive Analysis 8 OUR PLAN IS ALREADY IN OPERATION 10 FINANCIAL PLAN 11 PAST PERFORMANCE& FUTURE 11 PROJECTION BASED ON PAST PERFORMANCE 12 STATEMENT OF FINANCIAL POSITION - PROJECTED 12 INCOME STATEMENT - PROJECTED 13 STATEMENT OF CASH FLOWS - PROJECTED 14 SALE – FORECAST MOVING AVERAGE EXAMPLE 15 APPENDIX – EXTRACTS OF FINANCIAL STATEMENTS 16 STATEMENT OF FINANCIAL POSITION 16 INCOME STATEMENT 17

EXECUTIVE SUMMARY
Africa is full of opportunities and fortunes, only sincerity, hard work and consistency in approach is required to explore those fortune. These fortunes not only increase the numbers of national growth but also bring fame to the business worldwide. This business plan entails the opportunity available to invest and prosper, through targeted market as there are more than ever competition is also waiting for you.
The Watch industry is very dynamic. Technologies are updating Day by Day. The optimistic views of these changes are: * Easy to use technology * Update Require low cost * Prices of Watches are decreasing as compared to the Past * It is the need of the day
New Modern Watch Company CC
We are a team of highly dedicated people working not only for the benefit of ourselves but in larger interest we are working for the prosperity and betterment of Africa which in turn will benefit all of us. New Modern Watch Company’ last two years performance is the evidence of its future growth.
Watch Industry Trend * South African Watch Market worth $ 1 Billion * South Africa became supplier of watches to neighboring countries of Africa * 99% people in South Africa using watches
Our Products
We are offering wide range of Watches ranging from high class to economical wrist watches. We also deal in computer peripherals and can be called on stop shop for all your computer needs.
Target Market
We are located in the heart of Gauteng Province that is Vanderbijlpark and surrounded by 3 universities. The total strength of these 3 institutions is around 90,000 students; these are our main prospective customers. We would design our advertising policy in such a way to equip each of them with our Watches.

Our Competitors
We learn through our competitors, we analyze their experience and try not to commit the mistakes which were resulted in loss. We strongly believe in innovation and try to bring new ideas to our business. Our aim is to capture at least 30% of the total market.

This represents projected market share in which we would hold major market. However current market share is given in detail at competitive analysis

Financial Performance
During 2012 we have observed a drastic increase in Gross profit from 47% in 2011 to 50% in 2012, while net profit has increased superbly from 195,557 Rand (2011) to 400,140 Rand (2012) (Please refer annexure for historical financial statements). Based on our past performance future profit is predicted (For detailed projected financial statements, please refer Financial Performance section.

BUSINESS PROFILE

Form of Business Partnership

Legal Status Close Corporation (CC)

Nature of business Mainly engaged in wholesale and retail of Watches

Incorporation No. 2008/200456/878

Tax Reference No. 9921636-39

Registered Address 405, AmbalaStreet Vanderbijlpark, Gauteng, South Africa

Commencement Year 2008

Owners Mr. Mohamed Alsubhi (CEO)

Business Timings Normal Business timings in South Africa While available 24 hours via website

Operations Details Engaged in importing and distributing High Demanded latest Clocks, Watches, Watch peripherals and other electronic items.

Business Address 405, AmbalaStreet Vanderbijlpark,
Gauteng, South Africa Phone : +123-456789 Fax : +3654-123456 Web : http://www.modernwatch.com MARKETING PLAN
Industry Trends

Watch market of South Africa is valued close to $ 1 billion. Industry’s focus is now shifting from classic to modern watches. This has further exaggerated by decreasing in prices of watches with increase in their dynamics. Demand for modern watches increased strongly. South Africa is the main supplier of watches to its neighboring countries like Botswana.

Watch industry in South Africa is very dynamic; witnessing around 36% increase of Customers in 2010, 25% in 2011 and in 2012 it is estimated to increase around 29% with total 11 million customer base.

Customers | In Million | % wiseIncrease | 2006 | 5 | 0% | 2010 | 6.8 | 36% | 2011 | 8.5 | 25% | 2012* | 11 | 29% |

* Estimated figure
**http://www.dti.gov.za

The population of South Africa is 48 million and according the Government sources up to 2015 there will be more increase in customer base for Watch Industry. Watches have become part and parcel of life of the people in South Africa. From a student to a business person they all need it in their daily chores.

South Africa is a next business paradise for investors; following paragraphs discuss the advancement in South African market due to Social, Economic, Technological and Political change. Social Change Gone are the days when South African society called a racist apartheid which neglected basic human rights to a majority. Now, it is a fully democratic nation and it should be celebrated as the better change for our society. The fruit of this change is and will be the collaboration and integration of South Africa into the global economy. Global economic recognition resulted in a removal of many of the trade barriers previously imposed. Rapid Urban growth has been observed due to diminishing of apartheid laws and implementing a neo-liberal macroeconomic environment. Young South Africans are the future of South Africa and they do not consider any one in-equal whether young or old, black or white.

Economic Change Today’s South African economy has a good physical infrastructure for manufacturing business. Foreign debt is low according to international standards and no obligation towards the Bretton Woods institutions. As an economic analyst remarked “…compared to Russia, the challenges of economic transition in South Africa were less daunting since most basic institutions – like capital markets, a private banking system, justifiable contract law – were already firmly in place.” More liberal agenda for government economic policy has now given birth to a new beneficial economy of South Africa. Technological Change

Drastic technological increase has been witnessed during last 20 years. Main sectors of advancement include more efficient monitoring and assessment procedures in biomaterial engineering, dynamic growth in biotechnology, and a faster transportation. Innovation in technology nurtured various opportunities for facing challenges in economic productivity, education, inequity of gender, health, water etc and more importantly to work side by side with global economy.

Political Change The struggle of the people of South Africa has resulted in pure democratic government in South Africa. Government has built a better tradition of public relations practice in forming a pure public government by public and for public. Political practitioners of today are more aware of the problems of communities from the grassroots, those who hold a high symbolic value of Africa.

KEY SUCCESS FACTORS IN SOUTH AFRICAN INDUSTRY

* Rapid Growth at the rate of 29% – 36% * Low cost structure due to international Watch prices * High Demand due to rapid increase consumer demand during last 6 years * Most dynamic technologies tend people to buy more frequently * Increase in number of university students

Products

In New Modern Watch Company we have varieties of branded and Un-branded watches and other related peripherals; we also sell Play-stations, laptops skin. We also have computer peripherals like laptop skin, laptop pouches and much more. Our products have unique ability of reaching the hearts of the people, those who love to see peripherals matching their style and nature are attracted towards us. Our products are reliable and worth each penny spent. Some of our highly demanded and must buy products are shown below:

TARGET MARKET

Our plan is to target whole South Africa through our store chain system and Franchises, but in the initial years we are planning to capture the most market of Gauteng Province. At-least two more stores will be opened in the next 3 years and then we would start licensing our Franchise across the country and become a Franchiser.

Population of Gauteng Province is around 10 million thus our first market will be 10 million customers. The literacy rate of South Africa is increasing and stand today at 42%, as the people become educated need for braded watches increases. We are located in Vanderbijlpark, surrounded by three prominent educational institutions.

University | Number of Students | Source of Data | North West University | 62,000 | Management Information report Jun 01,2012 | Vaal University of Technology | 21,000 | University website | Sedibeng College | 10,000 approx. | University website |

Above 3 institutions will be the main focus of our marketing, we will higher trained marketing staff, will prepare mobile phone applications to persuade our prospective customers, will build a camp in the universities to inform students about the latest watches and how it would help them uplift their standard. Currently we are expecting 25% of our revenue from these universities after a strong advertising and marketing campaign. Our financial forecast is also entailed with expenses related to advertising and salaries of new staff.

We shall not only confine to the above mentioned educational institution but to the whole province and we would fetch around 25% of our revenue from the whole Gauteng province. We are also planning to build a new up to date and easy to use website to win the hearts of our customers (prospective & current) around the world, based on our past performance we expect to fetch more than 50% of our revenue from online.

Our Promotional Strategy may include the following tools to leave an everlasting impression on our prospective customers:

* Bill boards * Business cards * Community Newspapers * Contests at Universities * Personal Selling by our dedicated marketing staff * Sponsoring an event mainly at Universities * Google Advertisements for our online customers * Writing articles about the latest development in this dynamic field

Competitive Analysis
Our major competitors in Gauteng and there estimated market share is given below in a pie diagram: * Amazing Computers * Incredible Watches * Matrix Watches * Digital Watches

Strength of Our Competitors

Our competitors are also operating in the same environment, but analyzing their strength is not a big issue there are three things words which define their strength:

* Adequate Investments

* Attractive Websites

* Targeted Advertising

Our Weaknesses and Overcoming Strategy

* We need at least 300,000 Rand to overcome all over weaknesses and continue the same pattern of profit earning as we have shown in year 2012 (Please Refer our financial statements at annexure).

* We have already discussed the marketing strategies in the targeted market section.

* We are also planning to give our current website a unique look and to create an attractive website we would consult the best web designer and developer and allocated around 12,870 Rand for this purpose.

* We have decided to allocate the additional investment in the following manner: Investment Break-Up | Amount in 'R' | Percentage wise | Delivery Van | 150,000 | 50 % | Furniture & Fixtures | 40,000 | 14 % | Office Equipment | 30,000 | 10 % | Advertising | 25,000 | 8 % | New Website | 12,870 | 4 % | Expenses | 42,130 | 14 % | TOTAL | 300,000 | 100 % |

Home Delivery

Through our investment in delivery van we intend to persuade and win our prospective customers by offering them home delivery at a minimum cost. They can easily select the item from our website and order us; we would reach them in minutes.

Customer Attraction

We profoundly seek attraction of our showroom customers and want to furnish our shop with the latest state of the art technology like Apple shop in America.

OUR PLAN IS ALREADY IN OPERATION

To attract our customers and increase our base we have already spent 71,000 Rand for the renovation of our showroom (Our 2012 financial statements may be referred to confirm at Annexure), this is the evidence of our dedication and strong will to implement the business plan.

Here are the pictures of our current showroom with some 3D photos to illustrate our wish and will.

FINANCIAL PLAN

An additional investment of 300,000 Rand is required to flourish the business as discussed earlier; main portion of the additional investment will be spent on Fixed Assets that is around 70% to 80%, while other 20% to 30% will be spent for advertising and other related expenses. Following breakup and pie-chart may explain it more.
PAST PERFORMANCE& FUTURE
During the financial year 2012 our GP Percentage increased 3%, while our Net Profit Percentage drastically increased 13%. Our net profit has shifted from 44,478 Rand to 193,725 Rand (Please refer our 2012 financial statement at Annexure). Based on past analysis we have made projected financial statements and the following graphs combine our overall performance.

PROJECTION BASED ON PAST PERFORMANCE

Based on past performance we have projected future 3 years performance subject to the additional investment of 300,000 Rand. These projections consist of Financial Position, Income Statement and Statement of Cash Flows.
STATEMENT OF FINANCIAL POSITION - PROJECTED

INCOME STATEMENT - PROJECTED

STATEMENT OF CASH FLOWS - PROJECTED

SALE – FORECAST MOVING AVERAGE EXAMPLE Period | Observed | 2-week Moving Average | t | | A(t) | Forecast | Error | Deviation | Percent | 1 | 73 | | | | | | 2 | 220 | 208.25 | | | | | 3 | 350 | 216.50 | 208.25 | -141.75 | 141.75 | 41% | 4 | 190 | 189.75 | 216.50 | 26.50 | 26.50 | 14% | 5 | 106 | 159.75 | 189.75 | 83.75 | 83.75 | 79% | 6 | 113 | 128.75 | 159.75 | 46.75 | 46.75 | 41% | 7 | 230 | 128.25 | 128.75 | -101.25 | 101.25 | 44% | 8 | 66 | 119.00 | 128.25 | 62.25 | 62.25 | 94% | 9 | 104 | | 119.00 | | | | 10 | 76 | | | | | | 11 | | | | | | |

Period | Observed | 4-week Moving Average | t | | A(t) | Forecast | Error | Deviation | Percent | 1 | 73 | | | | | | 2 | 233 | | | | | | 3 | 120 | | | | | | 4 | 320 | 186.50 | | | | | 5 | 150 | 205.75 | 186.50 | -36.50 | 36.50 | 24% | 6 | 113 | 175.75 | 205.75 | -92.75 | 92.75 | 82% | 7 | 96 | 169.75 | 175.75 | -79.75 | 79.75 | 83% | 8 | 160 | 129.75 | 169.75 | -9.75 | 9.75 | 6% | 9 | 104 | 118.25 | 129.75 | -25.75 | 25.75 | 25% | 10 | 76 | 109.00 | 118.25 | -42.25 | 42.25 | 56% | 11 | | | 109.00 | | | |

Period | | 6-week Moving Average | t | Observed | A(t) | Forecast | Error | Deviation | Percent | 1 | 73 | | | | | | 2 | 106 | | | | | | 3 | 76 | | | | | | 4 | 89 | | | | | | 5 | 106 | | | | | | 6 | 999 | 86.00 | | | | | 7 | 230 | 94.25 | 86.00 | -144.00 | 144.00 | 63% | 8 | 66 | 317.50 | 94.25 | 28.25 | 28.25 | 43% | 9 | 655 | 356.00 | 317.50 | -337.50 | 337.50 | 52% | 10 | 455 | 350.25 | 356.00 | -99.00 | 99.00 | 22% | 11 | 788 | 487.50 | 350.25 | -437.75 | 437.75 | 56% | | 800 | 351.50 | 487.50 | -312.50 | 312.50 | 39% | | | | 351.50 | | | |

APPENDIX – EXTRACTS OF FINANCIAL STATEMENTS
STATEMENT OF FINANCIAL POSITION
AS ON FEBRUARY 29, 2012

INCOME STATEMENT

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...Business Models and Systems • Consider a local business whose services you frequently use. What are the main components of this company's business model? I work as a salesman for a local restoration company, American Restoration, in Indianapolis. Our main source of new business is generated by the cruelty of Mother Nature. We generate new business when the weather unleashes havoc on local residents. Our process starts when hail wind, tornadoes, floods, and fire affect an area or specific neighborhood. This could be within the city, or even outside of the state. The salesman frequents the area to find homes and buildings that have sustained damage. We contact the insurance companies for the home or business owner to file claims on the property. We then meet with the insurance adjuster to make sure the damage is absolutely insurable. Once the roof is bought we work directly with the homeowners and business owners to get the work completed using a list of contractors we work directly with. • Write a 200- to 300-word response describing the three components of the business system that comprise the local business you selected. Use Figure 1.2 on p. 11 of Introduction to Business as a reference. Business Commerce – American Restoration uses a process of weather monitoring that allows them to monitor what Mother Nature is doling out, not only locally, but also throughout the country. This system allows the salesmen to move directly into areas that have been affected...

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Premium Essay

Business Models and Systems

...CheckPoint: Business Models and Systems A company’s services I frequently use is Wal-Mart. One of the components of their business system is their competitive advantage. Walmart has been able to provide quality goods at a reasonable price for many years. By doing this it has allowed them to grow at a rapic rate. They have been able to take the basic products sold at high-end stores and sale them to the public at an affordable cost. Another component of their business model is their mission statement which is ("Our mission is to enhance and integrate our supplier diversity programs into all of our procurement practices and to be an advocate for minority- and women-owned businesses."). This is an important component for Wal-Mart because it gives them a plan or course of action to head towards in order to become and stay competitive. What this also does for Wal-Mart is give their suppliers a place to sell their goods and since Wal-Mart has established a name for themselves, it gives their suppliers peace of mind. A third component of Wal-Mart is to build capital. Wal-Mart has been able to do this by taking profits and putting them back into the company. They have created Wal-Mart Superstores which are one-stop-shops which ultimately draw more customers. Customers can purchase everything for their home, kitchen, garden even get their car worked on all in one location. This is a convenience for customers which ultimately prevents them from having to drive to multiple locations...

Words: 286 - Pages: 2