NEF4105 Business Plan

NEF4105 Business Plan

Educative summary

The main aim of the report is to prepare the business plan for starting engineering related business. As concerning of this purpose, this report develops a business plan for solar panel building and installation for Universal Energy Solution (UES). The company will operate in Australia will offering a wide product range with also offering some special services. In this report, from the findings of the environment and industry analysis, it is found that company will get significant profit in the market. The company will also conduct market research with the help of the third party. This report also includes the financial plan for the company that depicts the estimates business start up the cost.

Business Information

The increasing the problem of energy has become critical for the human beings. In the current environment, all the countries are serious about the saving natural resource for the next generation. It also creates the business opportunities for the companies that want to start up in the solar panel building and installation. In the context of this, Universal Energy Solution (UES) will be established to provide product and service in Australia. The company is seeking lots of the business opportunities regarding the solar panel building and installation. The company will offer a wide range of goods with service in the solar panel industry. It has an aim to get a significant market share in Australia with offering a good quality product at the reasonable price.

Environmental and Industry Analysis

The environment and industry analysis the key part of a business plan because it enables the business planner to know the maker situation and industry competition regarding the business which the company is going. In the context of the Universal Energy Power, the environment and industry analysis will help the company to understand various aspects, predicts and trends of the market. Along with this, it also helps to know the aspects that can affect the business of the solar panel building and installation (Radwan & Pellegrini, 2010).

UES will also conduct environment and industry analysis with the objective of identifying the key success factor of the industry. By the help of environment and industry analysis, the company can develop the competitive strategy to achieve the advantage over the competitors. In order to analysis the environment, the company will develop PESTEL analysis and to conduct the industry analysis, the company will develop the porter five forces. The below are PESTEL and Porter’s five forces analysis:

NEF4105 Business Plan

PESTEL Analysis

PESTEL analysis is a kind of macro environmental analysis that can influence a decision of the organisation. For example, the new business law, tax change, trade barriers etc. are some factor that evaluated in the PESTEL analysis and these factors have the ability to influence the business. The PESTEL analysis studies the six main factors in the environment including, political, economic, social, technology, environmental and legal (Richard, et al. 2005). UES is going to start the business in Australia that is why, it will conduct PESTEL analysis there. PESTEL analysis is below:

Political factor

The political situation in Australia shows that Australia is a safe destination in the context of investment. The country has a political and regulatory environment stability that supports the industries to conduct business activities more effectively. Along with this, business in Australia has a high degree of certainty that provides strength to the companies or investor to invest in Australian market. In Australia, there is an efficient and transparent legal framework and the level of the corruption is also low compared to other developed nations (Warren, et al. 2008). UES can get the advantage of the stable political environment in Australia.

Economic factor

The political factor in the PESTEL analysis contains the economic activities in the contrary. In Australia, the price of the land and properties is high due to high demand. Australia has a strong capital growth that shows the strong economic condition of the country. Australia has a large market in the context service sector, and it is also the main exporter of natural resources, energy, and food. The GDP per capita of Australia is AUD37493 and total GDP is 380643 AUD million. However, the GDP growth rate is some low, and it is near 2.3%. The unemployment rate is low in Australia that is 5% approx (Zunker, 2015). This factor shows that there is a good opportunity of the company to invest in the Australian market.

Social factor

In the business environment, there is a great impact of the social change on the organisational activities. The Australian culture is fully modern and developed according to the current situation. In Australia, 81 percent of people speak English and remaining people use Greek, Vietnamese, Arabic and Italian. The literacy rate of Australia is 99% that is really good, and the approx 60% population of the country is under 24-60 aged. Along with this, Australia love to sport and other outdoor activities which create business opportunities. These things show that there are a great business opportunities for UES. The company will able to find educated and skilled employees that can deal in the international market by speaking English (Webber, et al. 2010).

Technology factor

Technology factor indicates to the extent of the technology awareness, research and development and automation that support the business operation. Australia is well developed in the context of the technology. Organisations can access each kind of technology in the Australia and can reduce the cost of the business. Business firms in the Australia are fully supported by the Australian government research and development. The Commonwealth Scientific and Industrial Research Organization (CSIRO) established with the aim of technology development in the country. It will help UES to adopt the advance technology in the business operation and minimise the cost of the company. The internet facility in the Australia is well developed. Hence, it can be said that UES will get advantage from the technology development.

Environmental factor

The environmental factors are surrounding the business environment and also have the ability to influence the business firm. These factors can be related to the weather, climate geographical location and global changes in climate etc. In Australia, organisations face the problem of the availability of the water so it may be possible that UES will also face this problem. At the same time, another significant environment problem is inland damage due to soil erosion. In regard of this, the government has established and imposed significant and strict law and regulations that essential for an organisation to follow. In the same way, UES has to follow these rules and regulations. There is protection of sea act of 1981 and prevention of pollution from the ships act 1983 can affect the import and export activities of the UES (Doole & Lowe, 2008).

Legal factor

In the business environment, the legal factor can happen in both terms internal and external. It includes certain policies and rule that are developed by the government of the country. It also contains the consumer laws, labour laws, and safety standard. Australia legal system is based on the strict rules and regulations. People in Australia included Australian and non Australia is treated equally. In Australia, the introduction of age discrimination, increased in the wages and greater requirement for the firm to recycle are some major examples affect the cost of the company. In the business environment, change in the legal factor can affect the cost and operation of the business.

Porter’s Five Forces

Porter’s five force analysis helps an organisation to conduct the industry analysis. In the reference of solar panel, the industry analysis is below:

Threat of new entrants

In the business of Solar panel building and installation, the threat of new entrants is low. In order to do start business in this industry there is a need to high investment with the depth research on the business strategy on the existing companies. Along with this, there is also need to purchase the lots of machines to start the business process (Ferrell, 2012). Due to this, it is difficult for an organisation to enter in this industry.

Threat of rivals

The completion in the renewable industry is moderate because there are lots of companies are involved in this industry. But at the same there is no one popular company that has a significant market share in the industry. The competition is increasing in this industry continuously. The business of the companies is also affected by the government project as the save energy programs.

Threat of Bargaining Power of Buyers

In the solar energy industry, the bargaining power of the buyer is moderate. The switching cost is also low for a customer in the position to shop energy providers. In the renewable energy, customers are prices sensitive. Customers always have an expectation to minimise the price and higher quality. Along with this, substitute products are available for customers so that they help the customers to negotiate in the industry (Jennings, 2008).

Threat of Bargaining Power of Suppliers

In the solar industry the power of the suppliers is medium because there are lost supplier of the raw material and there is high competition in the market. UES can get its benefit as the getting the raw material at the low cost and minimise the overall business cost. At the same time, there are also a lot of solar energy companies and renewable energy companies that invest a lot of money to get high quality products or material to improve the quality of their service and produces. Therefore, it can be said that threat of bargaining power of supplier is medium.

Threat of Substitutes

The threat of substitutes is high in the solar energy sector because there are lots of ways to get the electricity or power. The customer can get energy from the fossil fuels, wind power etc. Along with this, it is expensive for the customers to get the energy from the solar compared to other resources. The solar industry is developing industry and improvement is going on this industry regularly.

On the basis of above environment and industry analysis, it can be said that there are lots of business opportunities are presented UES if it starts the business in Australia. From environment analysis, it is found that the company is helpful by the macro analysis factor of the county. The political and economic stability of Australia will provide competitive advantage of the company. The technology and social factor will also support the company to conduct business activities effectively. But, the company can face issues and problem in the context of the legal and environment issues (Lamb, 2009). Additionally, on the basis of Porter’s five forces, it can be said that market situation is complete for UES. The company has to develop and implement an effective strategy to achieve the competitive advantage.

Products and Services Planned

Universal Energy Solution will plan offer service and product in the market. The service and products that will be offered by the company are below:

Products Services
Solar Panel and spacecraft Installation  service
Solar charger Site Inspection
Solar cooker Procurement & Supply
Solar tree Solar item repairing
Solar still Plant Operation & Maintenance
Solar vehicle Civil Works
Solar inverter Structural & Electrical Design & Engineering

Marketing Research and Evaluation

In order become successful in the industry, UES will require to market research and evaluation in the contrast of target market and customers. Market research is process of measuring the growth of new product and service by the help effective research on the market and potential customers. It helps the company to study market trend and customer that also helps the company to identify the interest of the customers on the product and service. In regard of this, the company has the option to conduct the market research by the help of the third party that will specialise in conducting the market research. UES will make a contract with organisation that will support the company to conduct market research.

It will use various methods to find out the information on the market, target customers, competitors, market trends, elements that provide customers satisfaction and customers’ needs. It will be helpful for company to setup business and fulfil the customer needs (Meagher, 2010). By the help of market research, the company can achieve competitive advantage.

Business Operations Plan

Operation plan is a key plan of any business that is prepared by the top management of the company. Operation plan helps the company to meet the business objectives and goals. Under operational plan of the UES supply chain plan and production process plan will be developed by the companies. UES is going to start the business in the solar industry and for this it will require to develop supply chain plan. Under the supply chain plan, the company will take below actions

Supply chain plan

Supplier: Universal Energy Solution will select the supplier that will provide the company raw material and equipment. It will select suppliers on the basis of quality and prices.

Facilities: The company will develop strategy plan where the production will start.

Personnel: Under this step, the company will plan on the staff that will require for the daily operation activities. Along with this, it will also decide the responsibilities of employees and staff (Bunting & Diniz, 2012).

Equipment: In order to conduct business activity, UES will require to equipment, tools and technology at the workplace. It will include all things such machines and computers etc.

Shipping and fulfilment: It is also a significant stage in the operation plan where the company will outline the shipment process. In this, the company will plan how the product will be delivered at the store of the company.

Inventory: In the step, UES will determine that how many unities it will produce and keep at warehouse. Along with this, here it will also plan about the delivery unities to its dealers.

Customers support: The company will also develop a customer support plan in order to provide service after the buying process. Here, the company will make strategy regarding to refunds, support requests and customers complaints (Kapferer, 2012).

 Production plan

  • Universal Energy Solution will also develop the production plan in order to meet business goals and objectives. Under this plan, the company will also decide how much unites the company will product in a particular time period. At the same time, the company will also decide how what the key features of their products and what the quality they will provide in their product (Zunker, 2015).
  • UES will also develop the quality control plan in which the company will measure whether its set up is going to according the expectation or not. In regard of this, the company will follow the ISO 9000 standard.
  • At the same time, in the production process, the company will outline its day to day operation. It will decide the location of the plan and size where the production process will be completed (Pride, et al. 2013).
  • Equipment will also decide purchased that will play a great role in the production process. The company will also take the decision that which equipment it will purchase in how much quantity.
  • The asset is also a significant part of the operation plan where the company will take decision regarding the land, buildings, inventory, furniture, equipment and vehicle.  

Marketing Plan and Future Directions

Marketing plan

It is a critical aspect for a new business to develop a marketing plan. In the current competitive business environment, it is important for companies to have an effective marketing plan. The marketing plan of UES will prepare in two steps. In the first step, it will plan on segmentation, targeting and position and in the second step it will prepare market mix.

Segmentation, Targeting and Position

Segmentation, Targeting and Position are significant marketing strategy of current business. It is moistly used marketing strategy to achieve the competitive advantage.

Segmentation

Segmentation is a process of dividing the market into the groups of customers. Under this process, customer groups are prepared on the basis of age, gender, family size or life cycle, income, occupation, education religion, race, generation, nationality (Ahlstrom & Bruton, 2009).

Targeting:

In order to develop plan for targeting market, UES will take below step

Critical size: In the initial stage, the company will target the major cities of Australia.

Difference: On the basis of customers and product range or price the company will prepare segment. The market segment can be according to income level of customer.

Money: The cost of marketing is essential. For this, the company will determine profit more than its cost (Alihodzic, 2013).

Accessible: Each segment of the company will clear and understandable by the marketing team of the company. It will help to spread the marketing message of the company.

Focus on different needs: for improving the efficiency of the marketing plan, the company will focus on the needs of the different marketing plan.           

Positioning

It is the last element of the STP process that shows the specific product attributes. The product of UES will involve two main attributes such as price and quality. The positioning map of the company is below:

 

High Price

 

The above positioning map shows that UES will maintain its position between the high quality and low price. It means that the company will provide high quality in its product range (Aylward, 2014). At the same time, the company will also keep its price low then to its competition. It will help the company to achieve the competitive advantage.

Marketing Mix

The marketing mix is a significant part of the marketing that helps the company to deliver the right product, sold at the right price, in the right place, and also allow the company to use the suitable marketing promotion tools. The marketing mix involves four elements such as product, price, place and promotion.

 Product

Product is a major element of the marketing mix that refers to what the business is going to sell. In the business environment, product may be a good or a service. In this good is known as the physical product and service is known as intangible product. Product has some special features that that are helpful for customers to fulfil their needs. Product has some unique feature that makes it different from another product (Cameron & Quinn,  2011). The product enables the organisation to fulfil the customers’ need and want. In the context of the UES, the company will offer both good and services. The below table shows the product range of the company:

Products Services
Solar Panel and spacecraft Installation  service
Solar charger Site Inspection
Solar cooker Procurement & Supply
Solar tree Solar item repairing
Solar still Plant Operation & Maintenance
Solar vehicle Civil Works
Solar inverter Structural & Electrical Design & Engineering

Price

In the marketing mix price, refers to how much a customer will pay for the product. USE will set the price of their product according to the cost of the product and margin. For this, the company can use to different pricing strategy that will help the company to set the price. UES can use the price skimming strategy and price [penetration strategy.

Place

The pace is the third element of the marketing mix that refers to how the company will offer its products for customers. It directly indicates to distribute channels of the products. Universal Energy solution will follow the below process deliver the good:

 

Promotion

Promotion is a way communication the product in the market. The main aim of the promotion is to spread the awareness of the product in the market. Under the promotion strategy, the company selects the promotion channels that help the company to communicate the product in the market (Chapman, 2011). UES can select various channel of the promotion such as direct marketing, public relation, special offers and sponsorship.

Further Direction

Future direction shows future action of the company toward the expanding the business. In regard of this, UES will open its business unit out of the country. Along with this, it will also focus on the rural area of Australia where it is difficult for the government to deliver the electricity. At the same time, UES will also concern on increasing the product range. The company will focus on introducing the product range.

Management Plan

 

A management plan provides opportunities to the business to achieve the objectives and goals. For this, the management plan allows the organisation to develop strategy and plan to achieve the goals and objective (Gido & Clements, 2014). In the management plan of UES, the below element will be included:

  • The management plan of the company will include the clear objective and goals
  • The report of the actions will also prepare by the management that will help to achieve business goal and objectives
  • The management plan of UES will also include the liabilities and responsibility of the each person in the company
  • The management plan will also describe the change process of the project
  • Under the management plan, the company will also prepare the procedure of the requirement
  • The management plan of UES will also include the acquire and equipment maintenance process
  • Timeline of the various projects and their stages of the company
  • Employment process of the company
  • Organisational structure and code of conduct

 Financial Plan

A financial plan is a major activity of a business plan that makes aware about the financial activities. A financial plan shows the value of the investor’s current investment by the help of income statement, balance sheet and cash flow statement.  It is a process of determining the need of the capita for starting the business. The main objective of the financial plan is to determine the requirement of the capital and also determine the capital structure (Gorgenlnder, 2011). Along with this, financial plan is also helpful to frame the financial policies. Universal Energy Solution is going to start business so that it will require money to invest. The below table shows that start up expense of UES

Stat up cost

Start-up Expenses Cost (in AUD)
Website development costs 50000
Retail outlet rent 45000
Staff salary (12 Months) 350000
Advertisement 20000
Insurance 25000
Stationary Expenses 800
Other expenses 2000
Total Start-Up Expenses 492800
Start-up Assets
Production Unit 4500000
Computers and IT equipments 500000
Delivery Van 30000
Production Equipments 600000
Furniture 650000
Total Start-up or Initial Required 6280000

The above table shows that the company will require $AUD 6280000 to start business.

Balance sheet

Balance sheet
Particular 1st year 2nd year 3rd year
Assets
Current assets
Cash 200000 224000 257600
Other current assets 50000 56000 64400
Total current assets 250000 280000 322000
Fixed assets 0 0
Plant 5000000 5600000 6440000
Delivery vans 30000 33600 38640
Furniture equipment 1350000 1512000 1738800
Accumulated depreciation 150000 168000 193200
Total Fixed assets 6530000 7313600 8410640
Total assets 6780000 7593600 8732640
Liabilities
Current liabilities 200000 224000 257600
Current borrowing 200000 224000 257600
Account payable 25000 28000 32200
Total current Liabilities 425000 476000 547400
Bank loan 1200000 1344000 1545600
Total noncurrent liabilities 2550000 2856000 3284400
Total liabilities 4175000 4676000 5377400
Owner’s equity 2000000 2240000 2576000
Retained earnings total equity 605000 677600 779240
Total liabilities and equity 6780000 7593600 8732640

 

Income Statement

Income statement
Particular 1st year 2nd year 3rd year
Sales revenue 5000000 5600000 6272000
Cost of good and service sold 4000000 4480000 5017600
Gross profit 1000000 1120000 1254400
Operating expenses
Selling expenses 250000 280000 313600
Administrative expenses 260000 291200 326144
Total Operating expenses 510000 571200 639744
Operating income 490000 548800 614656
Interest expense 90000 100800 112896
Income before tax 400000 448000 501760
Income tax expense 100000 112000 125440
Net Income after tax 300000 336000 376320

 

Cash flow statement

Cash flow statement
Particular 1st year 2nd year 3rd year
Cash flow from operation
Cash receipt 2500000 2875000 3306250
Cash paid to supplier 2250000 2587500 2975625
Cash paid for salary and wages 50000 57500 66125
Net cash flow from operation 200000 230000 264500

 

Exit Strategy

In the business environment, there are various strategy and plan that are used at the time of the existing from the market. In this, the complete shutdown of business operation is strategy plan that will be considered by the company. In this strategy, the owner of the company will take the necessary steps to close the business. In this, the company will keep in mind the investors’ money and try to minimise the damage (Jackson, Et al. 2011). Additionally, the company will sell all the assets and equipments with paying debs. The company can also sell its business to another company that will be interested to run the UES business.

Benefits to the Community

The business plan of universal energy solution will provide lots of benefit to the community in the different ways. This business will provide different benefits to communities

Job for community

In order to run the business, UES will require to employees and staff. For this, the company will hire people from the local community. Therefore, the company will provide job to the community (Turner, 2012).

Fulfil the need of community

UES is going to start business in energy solar industry. It will help the community compete their needs regarding energy. The company will offer various products that will satisfy the customer needs.

Environment Sustainability

The business of UES is fully depended on the sustainable business practices. It will provide environment sustainable advantage to the community. It will also retain natural resource secure for the future generation (Williams, 2012).              

Critical Risks and Assumptions

In the business environment, each business and business is associated with the risk. In the same concern of this, UES business plan also includes some business risk that is explained below:

Strategic risk

The business plan of solar panel building and installation contains the strategic risk. It is related to the failure of the strategy that is used in the business operation. There is a risk in the business of UES that failure of the strategy (Zaeh, 2013).

Compliance risk

The business plan of UES also involves compliance risk that indicates to the legal and environmental risk. UES can face legal and environment issue in the different manners that affect the business.

Financial risk

Financial risk is associated with money or investment. In the failure of the business plan, there is risk of losing the investment. Hence, this risk is also associated with the business of UES.

Operational risk

Internal failures become the cause of operational risk in the business. This risk is also associated with the business of solar panel building and installation. There is possibility of internal failure which reason may be anything.

Other risk

It is difficult to determine other risk. A business can be influenced by the environmental activities and natural disasters. It is also difficult for a business to train for the natural disasters.

 

 Timeline

Activities Responsible Person Weeks
Business Plan, Goals and Objective Owner and upper Management 4
Market RESEARCH Their party 4
Recruitment and Selection HR Manager 5
Business Establishment

And Procurement

Middle level Manager 4
Establishment of Machine and Equipments IT Manager & team 3
Develop Relationship with Supplier Customer Relationship Manager 5
Developing Marketing Strategy Marketing Manager 3
Monitoring and Controlling Top Level Management 4
Total Weeks 32

 

 Appendix

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