UNIVERSITY OF PISA DEPARTMENT OF ECONOMIA E MANAGEMENT
THE BUSINESS PLAN PROCESS A PROJECT ELECTRONIC FUTURE
Giovanna Mariani
1 THE ROAD ACCIDENTS ARE A MAJOR SOCIAL COST 'THE POOR VISIBILITY (FOG) OR OTHER EVENTS WEATHER ARE FREQUENTLY THE CAUSE
IN PUBLIC OPINION THERE IS THE NEED TO INCREASE THE SAFETY OF DRIVING IN BAD WEATHER CONDITIONS
THE BUSINESS IDEA SATISFYS THIS NEED OF GREATER SAFETY,
Dott. G.Mariani ANTI-COLLISION RADAR
iINFORMATION Display
ELABORATION
SENSOR SENSOR
Dott. G.Mariani MARKET SHARE
Dott. G.Mariani MARKET SURVEY
*Direct interviews with wholesalers, journalists at the Motorshow *Direct interviews with wholesalers *Direct interviews with managers of stores specializing in car accessories *Direct interviews with dealers
Dott. G.Mariani CUSTOMER PROFILE *owner of the car to upper-medium segment *male lives in regions characterized by frequent foggy formations *good level of income *interested in high-tech items *attracted by innovation *habitual reader of journals *attending trade fairs in the sector *Sustainable price (900€)
Dott. G.Mariani WHERE WE CAN FIND OUR CUSTOMER??
1. WHAT ABOUT POTENTIAL MARKET
2. SEGMENTATION PARAMETERS
3. WHAT ABOUT POTENTIAL SALES
Dott. G.Mariani REGIONS N. CARS (1998) PIEMONTE 2.572.800 VALLE D’AOSTA 102.000 LOMBARDIA 5.177.300 TRENTINO 478.500 VENETO 2.501.100 FRIULI 709.500 LIGURIA 818.000 EMILIA ROMAGNA 2.389.600 TOSCANA 2.051.200 UMBRIA 496.100 MARCHE 837.200 LAZIO 3.076.700 ABRUZZO 658.900 MOLISE 146.300 CAMPANIACA 2.927.000 PUGLIA 1.784.500 BASILICATA 264.900 CALABRIA 905.700 SICILIA 2.507.400 SARDEGNA 802.800 ITALIA 31.207.500 Fonte: ACI-Statistiche automobilisticheDott. G.Mariani REFERENCE MARKET QUALIFIED
NUMBERS OF CARS IN CRITICAL REGIONS (13.930.800)
Dott. G.Mariani CLASSES EXAMPLE N. CARS % CLASS INNOVATION BEHAVIOUR ON TOTAL
A. Super Economy Fiat Panda, Ford Ka, Nissan Micra, Peugeot 106, Renault 1.295.564 9,30 5% Car Twingo, Seat Arosa B. Economy Cars Fiat Punto, Ford Fiesta, Lancia Y, Opel Corsa, Peugeot 206, 6.561.407 47,10 7% Renault Clio, Polo C. Medium Cars Alfa Romeo 145, 146, Audi A3, Fiat Bravo, Brava, 3.315.530 23,80 10% Lancia Delta, Mercedes serie A, Opel Astra, Peugeot 306, Reanult Megane, Rover "serie 200", Vw Golf D. Upper- Fiat Marea, Ford Mondeo, Lancia Dedra, Opel Vectra, 1.518.457 10,90 15% Medium Peugeot 406, Renault Laguna, Rover "serie 400" Vw Passat. E. Executive Alfa Romeo 156, 164, Audi A4/S4, BMW serie 3, Citroen 585.094 4,20 18% Class XM, Opel Omega, Renault Safrane, Rover serie 800, Saab 9-3, 9-5, Mercedes serie C, Volvo S40 F. Prestige Cars Alfa Romeo 166, Audi A6/S6, Lancia K, BMW serie 5, 195.031 1,40 18% Mercedes classe E, Volvo S80/S70 0,20 G. Luxury Audi A8/S8, Chrysler 300M, Jaguar, Mercedes classe S 27.862 17% H. Sports Alfa Romeo Gtv, BMW Z3, Fiat Barchetta, Ford Puma, 431.855 3,10 16% Mercedes CLK, Volvo C70, Ferrari TOTAL 13.930.800 100,00
Dott. G.Mariani REFERENCE MARKET QUALIFIED
CLASSES N. CARS % INNOVATION n. INNOVATORS BEHAVIOUR
C. Medium cars 3.315.530 10% 331.553
D. Upper medium 1.518.457 15% 227.769
E. Executive 585.094 18% 105.317
F. Prestige 195.031 18% 35.106
TOTAL 5.614.112 699.744
Dott. G.Mariani END MARKET : A) Market survey B) Customers characteristics C) Competitors D) Reputation E) Strengths C) Prudential behavior (innovation) 5% potential market I° ANNO = 34.987 units
Dott. G.Mariani POTENTIAL SALES
1 2 3
N. 34.987 36.737 38.573 ANTICOLLISION RADAR
Dott. G.Mariani 1. WHAT ABOUT COMPETITORS
2. WHAT INFORMATION
3. HOW TO PRESENT
Dott. G.Mariani MINUS/PLUS MATRIX
A B C COMPANIES OF CAR AUTOMOTIVE New enter ACCESSORIES COMPANIES
PLUS 1) reputation 1) interested as 1) second mover 2) ditribution system optional, with high- opportunities 3) price competition level segments
MINUS 1) big companies non 1) offshoring 1) New market interested to little market buy opportunities 2) High risk/Low share profittability for 2) long time to market follower 3) potential market in expansion 4) patent
Dott. G.Mariani High Innovation
POSITIONING MAP Terarecon – MGC 500
Eurorad – Minicam II
Li Tech – IP Guardian
Electronic-future
Gem Imaging – Sentinella
Low Price High Price
Anzai – eZ-Scope
Eurorad - Europrobe II
Surgicalprobe - SGP
Clerad – Gamma Sup
Nuclear Fields - SRP MK II
Low Innovation SWOT Strengths Weaknesses -innovation, user friendly and high quality - Competitors (multinational companies) -excellent team -? - IP ?
- ? - ?
Opportunities Threats - To satisfy a new need - Acquisition - Outsoucing big companies - New technologies - ? - ? - ? - ? Technical and productive plan
*MAKE OR BUY *ASSETS *SUPPLIERS *PRODUCTION COSTS *INVENTORY POLICY
5/21/2018 18 2- MAKE OR BUY
MAKE
OFFSHORING OF SOME PARTS WITH INTERNAL ASSEMBLY WORK
TOTAL OFFSHORING WITH INTERNAL ASSEMBLY WORK COMMERCIALIZATION
5/21/2018 19 Assets (in euro) Intangible assets 722,910 Equipments 1,345,000 2,067,910
CURRENT ASSETS 1th year Inventory 627,264 Account receivable 2,624,025 Cash 188,929 Account payable 2,567,628 TOTALE CURRENT ASSETS 872,590
5/21/2018 20 Organizational Plan
*Employment plan
*Defining personnel costs
*Organization chart Marketing plan
Promotion Activities
Customer management
Pricing Policy 5/21/2018 21 22 • Penetration pricing Penetration pricing includes setting the price low with the goals of attracting customers and gaining market share. The price will be raised later once this market share is gained •Premium pricing Premium pricing is the practice of keeping the price of a product or service artificially high in order to encourage favorable perceptions among buyers, based solely on the price. The practice is intended to exploit the (not necessarily justifiable) tendency for buyers to assume that expensive items enjoy an exceptional reputation, are more reliable or desirable, or represent exceptional quality and distinction.
•Price discrimination Price discrimination is the practice of setting a different price for the same product in different segments to the market. For example, this can be for different classes, such as ages, or for different opening times.
5/21/2018 23 PRICE FOR CONSUMER 900€ +IVA
Wholesalers mark-up 25% Shop mark-up 30%
PRICE I YEAR 540 € PRICE II AND III YEAR 550 €
5/21/2018 24 FINANCIAL REQUIREMENTS FINANCIAL STRUCTURE BALANCE SHEET RATIOS PANEL FINANCIAL DYNAMICS ANALYSIS BREAK EVEN POINT NPV AND IRR (Altman Z-score)
5/21/2018 25 BUSINESS RISK The possibility that a company will have lower than anticipated profits, or that it will experience a loss rather than a profit. Business risk is influenced by numerous factors, including sales volume, per-unit price, input costs, competition, overall economic climate and government regulations. A company with a higher business risk should choose a capital structure that has a lower debt ratio to ensure that it can meet its financial obligations at all times.
PROJECT RISK (BEP) -> OPERATING LEVARAGE, COMPETITIVENESS
FINANCIAL RISK - > The possibility that shareholders will lose money when they invest in a company that has debt, if the company's cash flow proves inadequate to meet its financial obligations. When a company uses debt financing, its creditors will be repaid before its shareholders if the company becomes insolvent. Financial risk also refers to the possibility of a corporation or government defaulting on its bonds, which would cause those bondholders to lose money. FINANCIAL RISK EQUITY/TOTAL LIABILITIES AND EQUITY OWNERS'EQUITY+NON-CURRENT LIABILITIES/TOTAL FIXED ASSETS TOTAL CURRENT ASSETS-INVENTORIES/CURRENT LIABILITIES
TOTAL FIXED ASSETS/TOTAL ASSETS
LEVERAGE
FINANCIAL BORROWINGS/TOTAL LIABILITIES SHORT TERM FINANCIAL BORROWINGS/FINANCIAL BORROWINGS
FINANCE COSTS/EBIT DEFAULT RISK ALTMAN Z-SCORE (PREDICTION PROBABILITY OF DEFAULT)
BUSINESS RISK ROI ROS
ECONOMIC RISK Operating leverage ROS Working capital ratios BEP SOME RATIOS YEAR 1 YEAR 2 YEAR 3
EQUITY/TOTAL LIABILITIES AND EQUITY 18.02 20.28 24.88 OWNERS'EQUITY+NON-CURRENT LIABILITIES/TOTAL FIXED ASSETS 112.91 146.24 228.72
LEVERAGE 1.80 1.30 0.68 FINANCIAL BORROWINGS/TOTAL LIABILITIES 40.23 33.46 25.27
SHORT TERM FINANCIAL BORROWINGS/FINANCIAL BORROWINGS 35.82 22.90 -
TOTAL CURRENT ASSETS- INVENTORIES/CURRENT LIABILITIES 87.86 101.43 123.41 FINANCE COSTS/EBIT 1.63 0.54 0.13 TURNOVER PER EMPLOYEE 1,453 1,554 1,632 LABOUR COST PER EMPLOYEE 57 58 59 ROI 1.47 4.37 13.61 ROS 0.40 1.05 2.93 ROE - 4.72 2.51 30.31
28 FINANCIAL RISK EQUITY/TOTAL LIABILITIES AND EQUITY OWNERS'EQUITY+NON-CURRENT LIABILITIES/TOTAL FIXED ASSETS TOTAL CURRENT ASSETS-INVENTORIES/CURRENT LIABILITIES
TOTAL FIXED ASSETS/TOTAL ASSETS
LEVERAGE
FINANCIAL BORROWINGS/TOTAL LIABILITIES SHORT TERM FINANCIAL BORROWINGS/FINANCIAL BORROWINGS
FINANCE COSTS/EBIT DEFAULT RISK ALTMAN Z-SCORE (PREDICTION PROBABILITY OF DEFAULT)
BUSINESS RISK ROI ROS
ECONOMIC RISK Operating leverage ROS Working capital ratios BEP Z-scores are used to predict corporate defaults and an easy-to-calculate control measure for the FINANCIAL DISTRESS status of companies in academic studies. The Z-score uses multiple corporate income and balance sheet values to measure the financial health of a company
BANKRUPTCY within two years . The original Z-score formula was as follows:
Z = 1.2X1 + 1.4X2 + 3.3X3 + 0.6X4 + 1.0X5
X1 = Working Capital / Total Assets. Measures liquid assets in relation to the size of the company
X2 = Retained Earnings / Total Assets. Measures profitability that reflects the company's age and earning power
X3 = Earnings Before Interest and Taxes / Total Assets. Measures operating efficiency apart from tax and leveraging factors. It recognizes operating earnings as being important to long-term viability
X4 = Market Value of Equity / Book Value of Total Liabilities. Adds market dimension that can show up security price fluctuation as a possible red flag
X5 = Sales / Total Assets. Standard measure for total asset turnover (varies greatly from industry to industry)
Altman found that the ratio profile for the bankrupt group fell at -0.25 avg, and for the non- bankrupt group at +4.48 avg
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