Project Background And Basic Idea: Water Soluble Toilet Paper - Assignment Example

Project Background And Basic Idea: Water Soluble Toilet Paper Executive summary This investment study report gives a description of a plan to implement a water soluble toilet paper project. The introduction briefly introduces Solu- Toil and the reason for its development. It also gives a description of the organization. There is a background study of the project which reveals the problems that are to be solved by this product and how they will be solved. A marketing strategy is laid out and it will ensure that the product reaches its target customers who are also mentioned in the report. The organizational structure is given and the operations that will be involved in implementing the project are also outlined. Financial analysis which is a critical part of any business plan has been carried and the ratios used have also been explained. Introduction Solu-Toil Industries Ltd is a company that will engage in the business of producing water soluble tissue paper. This product will be marketed under the brand name SoluToil and it will come in different packaging according to sizes. This business plan document will give detailed information on the steps that will be followed in the production, distribution and marketing of SoluToil. Extensive market research was carried out in order to properly inform the product development team on the specifications needed on SoluToil. Financial projections were also done for the business and these will be used as a control tool once the project kicks off. The financial analysis done was used in decision making as to whether to go ahead with the project or not. The financials reflected this as a very viable business. This business plan also gives details of the operations involved in production of SoluToil as well as the distribution channels that will be used to ensure the product reaches the targeted consumer at a competitive price. Project Background and Basic Idea Development of SoluToil was motivated by the problems experienced as a result of backed up water systems and blocked sewerage drainage pipes. These obviously meant incurring expenses to unblock the systems or repair burst drainage pipes. The decision making process for this product was informed by a study into the project, that had several parameters. First, the study looked into the product itself and examined its strengths. These would be used as the key marketing points. SoluToil is a type of toilet paper that is soluble in water. Water is considered to be the universal solvent so it was very important that the formula of the materials for SoluToil allow for its solubility in water. Having analyzed the market situation, the study looked at the achievable production levels over the first several months of the project’s life. A strategic location for the warehouses was identified as well as a partner manufacturing entity that would be given the authority to produce the finished product. Production will be in Netherlands which is our target market. According to the project’s schedule, in the study report, the business is supposed to kick off early next year and break-even before the beginning of its second year of operation. The basic idea in the project is to avoid any clogging of the drainage and water systems. Background studies and surveys had shown that most of the blockages are caused by too much toilet paper material in the systems. This has often resulted in pipe bursts that release foul smell to the environment as well as high expenses incurred in hiring plumbers to fix the pipes. SoluToil will have the ability to dissolve in water and thus no more blocked sewerage pipes as a result of toilet paper build up. This will in effect mean that no more costs for hiring plumber services. Regardless of the amount of toilet paper used, SoluToil will completely dissolve and it will be easier to treat the waste water as there will be fewer resources required for filtration of debris such as the one from ordinary toilet paper. Production of SoluToil will be environmental friendly and in line with the Netherlands’ Environment Management Policy. The business will be a private company limited by the shares of its owners. Since the project will be under the manufacturing industry, all the manufacturing sector policies will apply in the business. The owners will share the capital requirement equally and this means that they will all have equal voting rights in the company. One of the owners will be the chief financial officer, the other will be the chief operations officer, the third partner will be in charge of marketing and distribution and the fourth partner will play the role of general management. All the partners are competent in their respective fields and this will count as a strong point for the business. Market Analysis and Marketing Strategy The market analysis results in the study indicate that Netherlands will provide a good market for SoluToil due to its large population. According to the analysis, demand will not be high during the first few months of operation since the population will not be widely aware of the new product. However, the demand is projected to increase with time after utilization of the planned marketing tools to create product awareness and acquire market acceptance. The marketing strategy is to separate the customer into two categories. The first category will include the early adopters who are expected to be the first customers for SoluToil. This category will be strategically chosen because they will create product awareness to other people by their use of SoluToil. The second category will include consumers who will be segmented according to their places of residence and places of work. They will include yachts and small ships owners, residents of old buildings, hotels and large cruise ships and business apartments. The first category will include workers tasked with the responsibility of taking care of buildings, yachts and small ships as well large business parks. The competitive environment is not expected to be tough as there is only one competitor and their product cannot directly substitute SoluToil. However, the main aim in the competitive environment is to gain as much customer confidence in our product as possible and capture part of our competitor’s market. This will necessitate use of marketing tools which will effectively open up the market for our product as well as increase product awareness. The marketing tools to be used include start up accelerator, social media platforms and daily news prints. A combination of these marketing tools and the marketing strategy to be used by SoluToil Industry ltd are expected to deliver effectively. Marketing will account for a significant amount of expenditure since this is a new product. Direct marketing costs will originate from the use of the aforementioned marketing tools as well as the cost of transportation as well as expenses to be incurred in organizing and executing marketing events. Location and Supplies Netherlands was selected by the project owners due to its strategic reasons. Raw materials for the product are readily available in the Netherlands and the production plant for SoluToil is based in the same country. The third reason is that Netherlands has a great population that will form the market for the product in its initial months of selling. There are plans to expand the market and export the product to other countries where market research has proved there is a viable market. Production of SoluToil will be contracted to a different manufacturing firm based in Netherlands. This move will ensure that the projects implementation costs are reduced as this will eliminate the need to put up a production plant. Once the finished products leave the production line, they will be stored in warehouse owned by SoluToil Industry Ltd as they await distribution and supply to the early targeted customers. The supply chain has been set up in a way that will ensure that the product is available to everyone who will be interested. Organization and Human Resources SoluToil Industry Ltd workforce will consist of the top management, junior level management and sales staff. The top management will consist of the four partners who own the company and the junior management will consist of supervisors. Sales persons will be neede to help push the product in the market. Since production will be contracted, there will be no need for production staffs. Salary expenditure will be treated as a direct cost for those in the supply chain and the sales team while for administration staff; it will be treated as an indirect cost. SoluToil Industry Ltd Organizational Structure Implementation Planning The project is planned to be implemented in two phases. The first phase will involve construction work. Buildings that will house offices and warehouses for storing finished products will be constructed in this phase. This phase is expected to take a relatively longer period as it is resource intensive. Once the construction phase is over, the next phase will commence and it will involve beginning of operations. It is during this phase that the first batch of SoluToil will be produced and later dispatched to consumers. The second phase will be very critical as it will be used by the project’s evaluation team to determine whether the project will be continuing as scheduled. Financial Appraisal Major Investment data includes; Cost of building and infrastructure- $150,000 Administration Costs - $50,000 Purchase of Supply vehicles- $30,000 Raw Materials - $ 80,000 The initial capital will be partly sourced from partners’ savings and the rest will be from a bank loan. The financial ratios to be used are; Current ratio (CR) Return on Assets ratio (ROA) Fixed Asset Turnover Ratio (FAT) Projected Income Statement for Year 1, Sales Revenue $250,000 Total costs of Products ($134,500) Profit $115,500 Conclusion In conclusion, this project will have some great benefits to the consumers, investors, the government of Netherlands and the environment at large. SoluToil is highly soluble in water thus it will prevent blockages in water systems. This will cause a significant decrease in the expenses incurred in maintenance of water systems and sewerage pipes. This product is made of environmental friendly materials that will easily and quickly dissolve in water. Technically, this dissolution is actually decomposition that renders the toilet paper materials harmless to the environment. Another benefit is that much water will not be needed in the toilet when using SoluToil and this will result in great water savings. The only disadvantage with SoluToil is its slightly higher price. This is as a result of the processes involved in its production. However, the cost of production is expected to fall significantly with the purchase of new technology and use of cheaper raw materials. According the above information, the benefits clearly outweigh the disadvantages thus there are high chances that the project will be implemented. References Harvard Business Review. (2014). Creating Business Plans. Harvard Business Press. Read More