Student assignment: Business Plan for XXX International Enterprise Limited (2013-2015)

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1.        Executive summary

 

This study consists of four major parts: first of all, it introduces the Business history and company background of XXX International Enterprise Limited, and the reasons of expansion are also briefly discussion for the company to expand oversea; secondly, the study in detail introduces the business environment where the company is operating and also the marketing strategies adopted by the company; the third part of the study is the analysis of the legal issues, operation decisions, personnel strategies that the company should address in its plan to expand into the EU market; fourthly, by setting some three year objectives to be achieved, the study also presents the detailed annual budget and action to assist the company to achieve these targets.

2.        Table of contents

 

  1.      Executive summary……………………………………………………………………………………. 1
  2. Table of contents……………………………………………………………………………………….. 2

Business Plan for XXX International Enterprise Limited (2013-2015)………………. 3

  1. Introduction……………………………………………………………………………………………… 3
  2. Business history & company background……………………………………………………… 3
  3. Analysis……………………………………………………………………………………………………. 4

5.1      Market research……………………………………………………………………………….. 4

5.2      Marketing Decisions…………………………………………………………………………. 5

5.3      Legal decisions………………………………………………………………………………… 6

5.4      Manufacturing and operations……………………………………………………………. 6

5.5      Personnel strategies………………………………………………………………………….. 7

5.6      Financial decisions……………………………………………………………………………. 8

5.7      Implementation schedule…………………………………………………………………… 8

5.8      Justification of the project……………………………………………………………….. 11

  1. Conclusion……………………………………………………………………………………………… 12

List of references…………………………………………………………………………………………… 13

 

Table 1 Goals to be achieved in the business plan for 2013-2015. 9

Table 2 Budget and Action plan for 2013. 10

Table 3 Budget and Action plan for 2014. 10

Table 4 Budget and Action plan for 2015. 11

Business Plan for XXX International Enterprise Limited (2013-2015)

-Business expansion into EU market

 

3.        Introduction

 

This report has been prepared to be summated to the top management of XXX International Enterprise Limited to provide references, analysis and advices to the company in a strategic level in assisting the company to get involved in the international markets. The report covers not only the analysis of the company’s background and current market conditions, it also takes into consideration of the legal factors, operation issues as well as financial and human resource factors together with a short-coming plan to bring some changes to the company’s current operation and management.

 

4.        Business history & company background

Starting from a trading company based in Hong Kong focusing on the trading   wooden products, furniture, decorative panels, metal parts, speaker cabinets and etc., XXX International Enterprise Limited grasped the early trend of internationalization of China’s manufacturing in the 1990s and began its own production in South China’s Guangdong Province. Now by engaging in the production of quality and luxurious furniture, the company has been expanding its international business quickly in the new century. It has two factories which together account for 1,000,000 sq. ft. in area and by hiring more than 1,800 staffs the company has sufficient capital and talents and other capabilities to expand its business globally. In addition, the company’s two founders, the Yeung brothers are also highly supportive about the company’s global expansion rather than confining the company’s business in the current relatively small market in the south east Asia.

 

5.        Analysis

 

5.1    Market research

 

In term of the target market choices, we are now targeting at the EU and the Southeast Asia market for coming business growth due to a number of reasons. First of all, we still recommend our company to stay in business in Southeast Asia and continue its penetration in this emerging area for two major reasons: on one hand, the major clients that we now in business with are mainly from Singapore, Hong Kong and Thailand. The business in these Southeast Asian countries account for more than 70 per cent of our annual revenue, therefore, our international expansion needs the funding of the sustainable profits which are from the current operations in Asia; on the other hand, our business practices and experience make us well known that partnership does not stay unchanged and it could extend and develop with time and with our efforts. For example, many of our clients are actually intermediaries and many of their end customers are actually the hotels and business entities in EU and the US, there with time passes, many end customers would tend to avoid these middlemen and contact us directly. Therefore, our business would also expand slowly to our desired EU market. And secondly, European Union (EU) is an economic and political entity and confederation of 27 member states which are located primarily in Europe (ec.europa.eu 2012). And because the Directorate General for Trade of the European Commission is in charge of implementing the common trade policy of the European Union, and the single trade policy is considered as one of the most integrated policy areas in the EU (Borrás 2003), our targeting at the EU market would mean that we only need to care a single import policy when we are exporting to 27 EU member countries. Thirdly, the EU is the largest economy. As early as in 2007, the U.S. lost its seat to the European Union as the world’s largest economy. The EU’s economy produced $14.4 trillion in goods and services at that year while U.S. GDP came in at $13.86 trillion (useconomy 2008).

5.2    Marketing Decisions

 

Marketing is well known as the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods and services to create exchanges that satisfy individual and business goals (Gummesson 2002, p. 284). Marketing decisions should be made when our company is going to expand our business into the large EU market. Here we talk about the 4Ps marketing mix in our business. In term of product strategies, as mentioned earlier, the company right now is mainly focusing on the production of the high-end furniture and many of the current orders are from large hotel and famous furniture designers, therefore we are dedicated to the provision of end products that meet the various requirements from the clients and customers. To do this, we design, produce and package the furniture to meet the sample provided by the clients or conditions set by them; In term of pricing strategies, the company applies premium pricing which is the strategy of pricing at, or near the high end of the possible price range. Customers would buy the premium priced products because (a) they are made believed that high price would come with better product quality and (b) they are made to believe it is a sign of self worth (Talloo 2007, p. 151). We adopts the premium pricing not only because we have good partnership with famous designers and hotels but the core reason is that we provide the best ever furniture that exceed the requirements and conditions stated in the EU trading and import policies; In term of promotion strategies which usually include advertising, publicity, sale promotions, personal selling and public relations (Harper 2003, p. 108), we use personal selling but no other promotional strategies as the company right now still does not has a formal marketing department to be in charge of these activities; In term of place strategies which mainly involve the decision-making concerned with developing an efficient and effective means of storing and handling finished products and of getting them efficiently to the target market (mimi.hu 2011), the management of the storing and delivery of final goods is based on the software that is developed by the company to contribute to the efficient and effective good delivery to meet the customer needs.

 

5.3    Legal decisions

 

Our company is targeting at exporting our furniture into the EU market and as we know that we need to comply with import licensing requirements and with common customs tariffs that apply across the EU and import restrictions can be product-specific or trade-specific. Many products are subject to product-specific standards (businesslink.gov.uk 2011). In order to handle the large quantity of legal issues and address the concerns hereto, the company had set up a dedicated legal department to research into the relevant legal issues that are product specific under many circumstances. Another issue that concerns the company a lot is the contract enactment which is also handled by the company legal department. For example, in term of the currency used in the contracts, we are pleased to adopt the Euro or US dollar which are the two major international currency in the usual international business transactions, but therefore the company could suffer loss if the exchange rate between the China yuan and the currency stated in the contract fluctuates significantly during the contract term. And the legal department thus is also responsible for enacting terms and conditions that will help ensure the reduction of such uncertainties and risks by adding some clauses defining the money amount under changed exchange rates in various situations.

 

5.4    Manufacturing and operations

 

As a manufacturing company, our production and operation strategies have to provide sufficient support to our plan to have more involvement in the EU market in the current and future business practices. Now there two major factories for our company and they are both located in the South China’s Guangdong province. And there has been suggestion we need to need to build up a new manufacturing center in somewhere in Europe if we want to establish our business firmly in the EU market, but before we can say that it is advisable to do so or not, what we should do is to check our value chain which could help us to better understand the activities through the company develops a competitive advantage and creates shareholder value (Moschella 2003). Looking into the value chain of our business, our quality production with cost advantage contributes the most eminent part to the current value chain, therefore, setting up a new division of manufacturing in the EU would reduce our cost advantage though we are engaging in the high end furniture production and sale. As a result, a better alternative would be to set up a sale and product design division in EU to be in charge of the market expansion and order taking practices. In addition, an EU design center would help us to enjoy two kind of benefits: first of all, an EU design center by hiring the local designers would assist us to better understand and communicate with our clients and key accounts; secondly, a design center would help build a good image of our business as people tend to consider the products to be off premium value and better quality if they are designed in EU.

 

5.5    Personnel strategies

 

An important task during our future plan to expand into the EU market is the hiring the right number of human talents with the required competences. While the same job analysis and recruitment process could be copied in the EU market for our business division there, according to Aswathappa and Dash (2008, p. 136), in the international human resource recruitment, HR managers not only select resources with the right skills but also they need to choose employees that can fit in the organizations’ culture which should be shared among every staff in the company. And one of the strategies that could be adopted to contribute to the fast achieving of the goal of international hiring of the management and executive-level candidate is to approach to the local headhunter for assistance. Though incurring higher cost, the professional service provided by the headhunter could ensure that we are hiring high quality management and executive-level employees. And the hiring of these talented executives would further pave the good base for the business structure building in the new business division in EU.

 

5.6    Financial decisions

 

One of the issues that always arises is the differences in taxation law and administration in the various EU countries, particularly as each member state has its own range of direct and indirect taxes (hlbi.com 2012). Therefore, our company needs to acquire local financial advisory to help us become more familiar with the local taxation laws and regulations. In addition, it would also be important that we get our financial executives well trained with both the national and international financial systems. In addition, since Euro would be used as the currency in our future contacts with the EU clients and customers, our company could have a large sum of Euro for which management of the capital should be of great importance. Investment could be a good choices, but whether public stocks, government bond or other investment choices should be involved the finance department should collect more market information before the financial investment decisions could be made.

 

5.7    Implementation schedule

 

In the following we will analyze a well designed schedule to begin our ambitious plan and ensure that the goals that we want to achieve in different phases.

 

First of all, it is necessary that we define our main targets to be achieve in the next three years.

Goal content Main functional department
Goal No.1 Increase the EU business contribution from the current 5% to 45% in the next three years Marketing department
Goal No.2 Ensuring the relevant products meet the import requirements of EU Production department, Quality Control Department, R&D (research & development) department
Goal No.3 Establish the brand awareness from 0% to 5% among the end customers in the next 3 years Marketing department
Goal No.4 Control of risks because of the currency exchange rate changes Finance department
Goal No.5 Recruit sufficient human talents with needed capabilities Human Resource Department

Table 1 Goals to be achieved in the business plan for 2013-2015

 

And secondly, we would need the detailed action and budget plans annually to make sure that these three years goals are well carried out and when the end of the three year plan comes, these goals would be achieved. The initial plans for the next three years are stated in the following:

 

 

 

 

 

Unit: Euro

Month: 1 2 3 4 5 6 7 8 9 10 11 12 Budget
Research & Development × × × × × × × × 17280
Advertising (to promote the brand awareness) × × × × × × × × × × 12960
Sale Promotion × × × 6480
Sale force stimulation × × × × × × × × × × × × 34560
Headhunter services × × × × × × × × × × × × 1200
Financial investment × × × × × 3000
Employee Recruitment × × × 21600
Employee training × × × × × × 4320
Total 101400

Table 2 Budget and Action plan for 2013

 

Unit: Euro

Month: 1 2 3 4 5 6 7 8 9 10 11 12 Budget
Research & Development × × × × × × × × 22464
Advertising (to promote the brand awareness) × × × × × × × × × × 16848
Sale Promotion × × × 8424
Sale force stimulation × × × × × × × × × × × × 44928
Headhunter services × × × × × × × × × × × × 1560
Financial investment × × × × × 3900
Employee Recruitment × × × 28080
Employee training × × × × × × 5616
Total 131820

Table 3 Budget and Action plan for 2014

 

 

Unit: Euro

Month: 1 2 3 4 5 6 7 8 9 10 11 12 Budget
Research & Development × × × × × × × × 29203
Advertising (to promote the brand awareness) × × × × × × × × × × 21902
Sale Promotion × × × 10951
Sale force stimulation × × × × × × × × × × × × 58406
Headhunter services × × × × × × × × × × × × 2028
Financial investment × × × × × 5070
Employee Recruitment × × × 36504
Employee training × × × × × × 7300
Total 171366

Table 4 Budget and Action plan for 2015

 

5.8    Justification of the project

 

The annual action plan and program will involve large sum of investment as well as allocation of other resources such as human talents into the export activities to the EU market, and we have concluded the various goals to be achieved in the next three year term and also we allocate appropriate funds to ensure that these goals would be realized steadily.

 

6.        Conclusion

 

To conclude the above discussion and analysis, we have advised that the company should maintain the production in China, but export the quality but cost advantageous goods into EU market. And at the same time the establishment of the sale and R&D center in EU would contribute to the “EU design” brand that could add value to the goods to be sold in the EU member countries. Though we are confident about the business plan, more studies and researches should be done to iron out some contingencies and risks that may appear in the near future when the plans are carried out.

 

7.        Recommendations

 

There are two recommendations given to the company of XXX International Enterprise Limited to ensure successful implementation: on one hand, this plan should be communicated timely to the staffs in the company in particular those who could be sent to carry out this plan; secondly, the goals should be reviewed and re-evaluated yearly to check whether they are still practical and they are subject to change if necessary.

List of references

 

Aswathappa, K. & Dash, S. 2008, International Human Resource Management. New Delhi: Tata McGraw-Hill Publishing Company Limited. p. 136

 

Borrás, S. 2003. The Innovation Policy of the European Union: From Government to Governance. Northampton: Edward Elgar Publishing.

 

Businesslink.gov.uk 2011. Household goods, furniture and furnishings. [online] accessed on 27 Jul 2012. http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1078151650&type=RESOURCES

 

Ec.europa.eu 2012. A common international trade policy for the EU. [online] accessed on 27 Jul 2012. available: http://ec.europa.eu/trade/

 

Gummesson, E. 2002, Total Relationship Marketing. London: Loutledge. p. 284

 

Harper, S. C. 2003, The McGraw-Hill Guide to Starting Your Own Business: A Step-By-Step Blueprint for the First-Time Entrepreneur. New York: McGraw-Hill Professional. p. 108

 

hlbi.com 2012. Taxation within the European Union. [online] accessed on 27 Jul 2012. available: http://www.hlbi.com/index.php?option=com_content&view=article&id=102&Itemid=148

 

XXX.com.hk 2012. COMPANY BRIEF. [online] accessed on 27 Jul 2012. available: http://www.XXX.com.hk/aboutus.asp

 

mimi.hu 2011. Place Strategy. [online] accessed on 27 Jul 2012. available: http://en.mimi.hu/marketingweb/place_strategy.html

 

Moschella, D. C. 2003. Customer-Driven It: How Users Are Shaping Technology Industry Growth. Boston: Harvard Business Press.

 

Talloo, T. 2007, Business Organisation And Management (For Delhi University B.Com Hons. Course). New Delhi: Tata McGraw-Hill. p. 151

 

useconomy 2008. U.S. No Longer World’s Largest Economy. [online] accessed on 27 Jul 2012. available: http://useconomy.about.com/b/2008/02/12/us-no-longer-worlds-largest-economy.htm