Managing Uncertainty Business Plan - Coursework Example

Managing Uncertainty Business Plan Introduction The world of business is always marred with all sorts of uncertainties, which can sometimes break down an organization if enough care is not put in place. Because of this reason, it is always important to a company, to devise proper and reliable ways to manage uncertainties within the organization. This should be even more paramount, when it comes to start-up businesses that are plunging into the world of business for the first time. This paper will discuss and devise a business plan for Electronic repair Services Company to be established in Birmingham, while taking into account how uncertainties in the new business will be managed. The business plan will start by highlighting on the business concept, followed by the targeted market, products and services, pricing and sales, risk management, budget and financing, and lastly how marketing and advertising will be conducted. Business concept It is always advisable to settle on a business enterprise that is not only viable, but also within your area of expertise in order to ease its management. In this case, I am intending to start up Electronic repair Services Company, in the City of Birmingham which its capital will be around £ 250,000 in its first year of operation. The organization will specialize in repairs of home electronics, most particularly home entertainment electronics, such as; DVDs, TV, VCRs, and CD players among many others. The small enterprise is created with an idea of providing top notch innovation to the general repair service business. It will offer a one stop solution for the repairing or renovation of home electronics and phones in Birmingham. This business is aiming to offer its services to home owners and phone users who are often caught unawares with unexpected electronic malfunction. The unique and distinguished services of the Electronic shop will give it the much sought after competitive advantage against other repair services businesses. (Apple, 2013, pp. 24) Market analysis There are around 0.9 million households in Birmingham, U.K. Virtually, all these households at least have phones, TVs, VCRs and many other types electronics. The electronic service company will segment its market into product categories, which will reflect the projected number of each electronic device, being used in Birmingham city, because these devices may malfunction at any time, and they may require repair services. The growth rate of each product used in homes, are based on the current sales growth of each item. At the moment, the highest growing product, based on the number of sales, is the DVD player. However, the product is expected to be replaced by the VCR in the coming future. The biggest segment presently is the home and car stereo, since in many cases people have more than one of these electronics. It should be understood that the company will be aiming at servicing all these systems, and not concentrating on one product over the other. The electronic shop will target the following market segment; Single men living alone or have roommates; this is not the largest group in the organization, although they are potentially profitable. Single men tend to prioritize buying electronics; mostly they will spend a lot on a high quality stereo, phone and television. Middle class couples without kids; this consumer group tend to have a large amount of disposable income, because they are two, and do not have any expense on children. They are bound to spend on electronic, perhaps entertainment electronic so as to live a good life. Baby boomers; these people are reaching that time in life, when their children are leaving home, and are no longer young. The group has more disposable income since they have reduced expenditure at home, hence having more money to spend on electronics. Moreover, they are quite tech-savvy and have a taste for quality electronics. The repair service industry is very competitive, and because of this, most organizations have a very minimal power to affect the forces that make them affect the price levels in the market. This means that the Electronic repair Service Company will work in a very competitive environment, where the demand curve will be horizontal. The company will be free to offer their services at any price, without being compromised. The company will face competition from the typical repair service company, which certainly existed before the firm, which will include the local repair shops. However, this will go on for quite some time before the firm becomes a regional electronic repair shop. In order to outshine the existing repair outfits in the region, the Electronic repair company will embrace a robust and on-call customer care service which will ensure customers get customer satisfaction. This method is rarely practised by local repair firms in the region, and this will ensure the organization achieves competitive edge against its rivals. (Honig, & Karlsson, 2004, pp. 28-48) Product/Service The electronic shop will offer a wide range of services. This is because the ultimate goal of the organization is to create a one-stop repair facility for all home electronics and phones. In this manner, the company will be able to deliver a greater perceived customer value for the target customers, more than the already existing customers. The wide ranges of repair product and services that the firm will offer are as follows; Authorized repair services; this involves repairing electronics from all the major companies. Maintenance contracts; this involves corrective and preventive services agreed by the organization on major institutions. Electronic upgrades and repairs; the firm will be repairing various types of electronics such as; microwave ovens, home theatres, phones, televisions. Procurement of spare parts; the organization will be shipping spare parts from various places, just to avail them to customers in need of them Cleaning of electronics; this involves basic cleaning of electronics, which might be caught by dust or any other form of dirt. Specialized repair training and development; the company will offer a training program for individuals interested in the repair service industry. Satellite television installation and servicing; the company will be providing satellite dish installation services to people who are troubled to manually install the electronics. The above electronic repair services will be provided to the following market segment; baby boomers, couples without children, single men living alone or roommates. On the other hand, the existing competitors offer the same services; however, the newly established electronic repair company will gain competitive gain through; low cost strategy and customer satisfaction. The cost to design, develop and deliver the repaired electronics. The aforementioned services will be designed, developed and delivered to customers, at the following costs; (An elaborate pricing of the products and services is on the attached excel document) How the consortium will improve the products and services. Considering the services and products, which the electronic repair service company offers, the consortium will improve them by adding a touch of innovation when they are serviced or repaired. The company will ensure the electronics brought for repairs, are not only serviced but also go beyond customers’ expectations. This will include offering delivery costs, perhaps, at a reasonable and competitive cost. Since there will be a chain of businesses in the region, the company will certainly share mutual relationships such as; having one managing director for a regional repair services outlet. This will ensure that the consortium works as one, due to similar managerial directions. The consortium will increase its competitiveness, through the following manner; Say for example, in case a person buys a new electronic and by bad luck it ,malfunctions or becomes hard to operate, then instead of visiting a service centre, the user can directly call the Electronic repair services consortium and he or she will be helped. Through high-tech advertising, the consortium will ensure the target markets are aware of this service. In an event the damages or failures are substantial, the consortium will assign a pick person, who will go to the user’s place and take the electronic for repairs, and later deliver it back. This kind of approach is different from other repair service firms, and will surely earn the organization a formidable competitive gain. The collaboration between the business partners will see the reduction of delivery and component costs. This is because the delivery of repaired items will be made in bulk, while the components will be also bought cheaply when in bulk. It should be understood that buying of goods and services in bulk will cut down the expenditure costs, hence being a plus for the organization. Moreover, the consortium will invest the group finances through; expanding the group’s facilities, with the help of its huge finance base and goodwill. The consortium can open up more repair shops for the organization, among many other things. (Yang, & Papazoglou, 2000, pp. 39-47) Pricing and sales Since the electronic repair industry is more of a job-shop environment, it would be quite to project sales. Although the pricing and sales process will be carried out in the following manner; The organisation should first have a thoroughly revised knowledge about the repair services. This is known as product knowledge, which will ensure the company offers their services accordingly. Thereafter the company will have to do prospecting of potential customers who will be the target in the company. The approach; now this is where the proverbial rubber gets on the road in the sales process. This is the place where the electronic repair company will start creating a relationship and gather intelligence regarding the service industry. It should be understood that the best approach will determine the success of the sales. The company will thereafter carry out the needs assessment where they will determine how to approach the repair service industry. The presentation stage will see the company determining the benefits rather features of the services to be offered. This presentation should be focused on the advantages, and the salesperson should not go out of the topic. Moreover, the company should embrace the importance of closing. In fact, research studies have it that around 80% of sales is normally lost because of failing to close. Closing is all about pushing the sales process to finally get an order. Finally, there should be a good follow up, which will certainly increase the closing ratio. The electronic repair service should create a relationship with potential customers. Risk management Risk management is a strategic priority for an organization, which should also be embraced by the electronic repair service company. The key elements in any risk management is identification of the types of activities that might hinder the operations of the company’s objectives, evaluating the possibilities for the risk, devising measures to curb risks deemed detrimental, as well as managing the risks over time. (Haimes, 2005, pp. 1223) The following are the potential risks that might face the Electronic repair company. i) Financial risks; Some of the potential financial risks that might affect the electronic repair company include; Purchasing practices; since the organization is involved in repairs, chances of making a loss during the purchase of components are high. This can be toned down by carrying our market research before making any purchase just to reduce possibilities of losses. Exchange rate losses; due to the fluctuation of foreign currencies, the company might make huge losses when importing spare parts abroad. This can lead to immense losses due to high expenditure costs. It can be reduced by carrying out prior research before conducting any global business. Lawsuits charges; a customer might sue the organization for any misplaced electronic under the hands of the company. This might ruin the image of the organization. This can be alleviated by ensuring there is utmost caution among the workers, while respecting customers’ items. ii) Operational risks; these are risks involved while carrying out the business operations. Personnel safety; repairing electronics can sometimes explode, and put technician’s life at risk. This might attract an employee injury lawsuit against the organization. This can be alleviated by advising technicians to put on safety gears while at work. Facilities safety; the company’s shops are subject to theft, and the facilities can be vandalized sometimes. This can reduce the repair service firm back to zero, since it is quite expensive to start up again. This risk can be reduced by beefing up security, including employing watchmen in collaboration of surveillance systems. Capital project management and product shortage; the organization might be troubled with managing its capital finances or even running short of key products supply. This can stall the operations of the organization. Such operational risks can be put at the bay by employing capital project managers. Moreover, the firm can employ alternative or back up suppliers of main products to the organization, in order to avoid the business being brought to a halt. Permits and licences; just like any other organization, the electronic repair service shop is required to subdue to government regulations such as; acquiring business licences. Failure to have a business license might attract heavy fines on the organization. This type of risk can be reduced by ensuring the business buys the license on time. Data security and management; the organization is subject to data loss when handling perhaps, due to virus infections from various sources. A serious data loss can affect the organization, most particularly when they lose important information regarding the company. Data loss can be avoided by embracing data management systems, such as installing cloud backups and many other approaches. iii) Reputational risks; The electronic repair service firm is subject to the following risks; Public expectations; since the electronic repair service company is determined to become the leading repair company in the region, customers are bound to have high expectations on the organization. Unfortunately, a customer might not be satisfied with the firms’ service and end up tarnishing the company’s name/image. This risk can be controlled by having the firm promise to deliver services they can easily deliver, and strive to go beyond customers’ expectations. Settlements at low-level environments; the company’s success might create the notion of supposedly being established in good suburbs. However, the company might decide to be established in relatively poor regions, hence tainting their credibility. In fact this might create a worst case scenario of negative public perception. This risk can be reduced by controlling the public perceptions towards the organization. New policies without implementation resources; the company might tend to develop new policies, thought to improve the company’s services. However, this can be conducted blindly without taking into account the organization’s available resources, hence increasing possibilities of tainting the company’s image for not being able to handle its finances. This reputational risk can be alleviated by hiring a financial manager, who will oversee the company financial operations before they commence. (Loch, 2011, pp. 192) Budget and financing The following are the primary business costs for the electronic repair services; Staff Salaries =£55,000 Managing Director Salary = £50 Payroll costs = £ 10,000 On costs (10%) = £5 Contingency (10%) = £25,000 Overhead (15%) = £37,500 Total Pre-Allocated = £117,500 (47%) Leased Equipment = £ 15, 500 Utilities = £ 1500 Sales and Marketing and Other Expenses = £ 25,000 Total operation cost = £144, 500 Remaining Budget = £105500 (53%): This amount will be set aside for any emergencies that might occur within the organization. (Babusiaux, & Pierru, 2001, pp. 326-337) Marketing and advertising The type of marketing and advertising strategy often determines the success of an organization. In this case, the electronic repair service company will embrace the following approaches; Use of internet advertising to reach a higher customer base Use of radios and television adverts The organization can also invest in the following approaches; direct mailers, yellow pages, flyer, and referrals from other businesses. (Berry, & Parasuraman, 2004, pp. 3447) Nonetheless, the above business plan is set to produce real time outcomes, provide the organization sticks to it, while putting their eye on possible risks. There is no doubt that the business plan will perfectly fit within the set capital limit, and conversely bring in the desired profits for the organization. Reference list Apple, K., 2013, Should Business Methods Be Patentable? Understanding the Impact on Society of Business Methods Patents (Doctoral dissertation, George Mason University, pp. 24. Berry, L. L., & Parasuraman, A., 2004, Marketing services: Competing through quality. Simon and Schuster, pp. 3447. Haimes, Y. Y., 2005, Risk modeling, assessment, and management (Vol. 40). John Wiley & Sons. Pp, 1223. Honig, B., & Karlsson, T., 2004, Institutional forces and the written business plan. Journal of Management, 30(1), pp, 29-48. Loch, C. H., DeMeyer, A., & Pich, M., 2011, Managing the unknown: A new approach to managing high uncertainty and risk in projects. John Wiley & Sons, pp. 192. Yang, J., & Papazoglou, M. P., 2000, Interoperation support for electronic business. Communications of the ACM, 43(6), pp. 39-47. Babusiaux, D., & Pierru, A., 2001, Capital budgeting, investment project valuation and financing mix: methodological proposals. European Journal of Operational Research, 135(2), pp. 326-337. Read More