Background Information
ABC limited was incorporated in the year 2010 with only one line of business is manufacturing steel from scrap metals. The main motivation behind its formation was the escalation of steel prices due to various factors caused by the macroeconomic forces such as inflation and many others. The increase in the returns on the business has brought in a new line of business which is to produce floating fishing pliers for use by anglers. Although the company was registered and incorporated in the year 2010, the workstation has been home based since this saves a lot of overhead costs such as office and workshop space rent.
Company structure
The company’s human capital comprises of a foreman, a workshop manager and several casual laborers who have different skills in welding, electrical works, and steel fabrication and joinery. The company has managed to attract two partners; a bank and a strategic investor. The bank acts as the financial advisor to the company and also acts as a regular credit lender to the company and also provides finances to the company at a cheaper rate than other commercial money lending institutions and banks.
The organizational mission and vision
The organization’s mission is to provide a high quality steel to small scale clients while ensuring optimal utilization of the available resources. The company also seeks to develop other steel related business lines such as fabrication of various steel products such as floating fishing pliers. The company’s vision is to become a regional leading manufacturer of steel and steel products and to be a major market commander in the supply of steel and fabricated metal works.
Resource needs assessment
The company has two major resource needs which provide the much needed fuel for the day to day running of the organization. These are the human resource and the financial capital resources.
Human resource
Without any human input no organization can carry any task. As such, ABC limited places the human resources at the top of the needs. The nature of operations requires high class expertise and as such the human capital at ABC limited is up to the task. With a technical director and a structural engineer at the heart of operations, the quality of the output is guaranteed to be top-notch. The company seeks to improve its capacity that helps to attract and retain qualified staff. There is also frequent workshops and training that the employees undergo to understand the vision and the mission of the organization to become part of the company as it grows.
The Financial capital resource needs
While the human capital is crucial to any organization, capital is a major drive for any organization and as such, an integral part of the operations of ABC limited (Newstrom & Davis, 1993). Since all business organizations exist for a common purpose of making profit, financial resources are essential. ABC has an asset base of about $ 80,000.00 in value. A 10% reserve ratio on capital is kept in cash to fund the working capital and to enhance the liquidity of the company.
Technology requirements for the processing of fishing pliers
The process of manufacturing the fishing pliers involves the extrusion of steel. This is done through collection of the scrap metal and heating the metal at as high as 1000 degrees celsius to melt the metal. The molten metal is then poured into a high heat resistant object that shapes the molten steel into the desired size and shape. The cooled steel is then cut and fabricated to make the pliers. The process of cooling is usually carried out in such a way that the final steel bars have low density to ensure that they can float.
The set objectives
The objectives of ABC limited are to increase its profitability by at least 25 % per year for the next five years. This will ensure a more than doubled production of the steel. The company also has the objective of increasing its market share in the production and distribution of steel in the regional market. The company also aims to optimize its utilization of the resources to increase the profit margin through efficient and effective management of expenses.
Hardware and software and facility resource
The company intends to strategically acquire hardware that is necessary required to catapult the organization into the automated manufacturing of the steel products such the fishing pliers. This is in line with the company’s expansionary vision where it intends to automate the steel extrusion by the year 2016. The company also intends to acquire the necessary software to enable it to run the automated extrusion of the steel. The modern day business organization is characterized with computerization and automation of the operations and this is the key driver to the success of ABC limited (Bazerman & Moore, 2009).
Training human resource and staff developing plan
The company also pays keen attention to staff development. Regular trainings are workshops are organized for the staff to ensure that they gain and retain the most advanced production methods and are kept abreast of the prevailing steel manufacturing practices. The company develops its employees and is keen to attract and retain valuable employees. This is done through constant and regular appraisal which is done through filing of the balanced score card to ensure that the best are rewarded.
ABC marketing plan
Marketing is an important part of any business organization that seeks to push its products to the target consumers (Newstrom & Davis, 1993). As such, ABC limited has incorporated the 4ps of marketing which are the Product, Place, Price, and Promotion. The first P is the Product. ABC Limited has ensured that the new product- fishing pliers are made of high quality steel. This ensures that the pliers meet the implied condition for fitness for the use and are free from any defects. In terms of place, the company seeks to ensure that the product is availed to the target consumers who are the anglers. This is done through continual distribution of the product to make it readily available on demand. The pliers will also be availed to the several retail outlets to increase the supply.
The third P is about the price of the pliers. Proper pricing methods are applied to ensure that the price charged is reasonable and affordable by the buyers (Allen 2011). The method applied is the cost-plus method where the direct cost per unit is calculated and then the overhead costs are added which are about 15% of the direct cost. The markup is done at 25% to arrive at the sales cost per unit.
The last P is promotion which is a marketing tool that is used to drive a company’s product to the target consumers. ABC limited does not have a well established promotion strategy but seeks to develop the business and use such promotions as message-media strategies and also the online platform such as the social media.
ABC budget and the funding sources
Based on the mission and the vision born by the company’s management, the company plans to grow in revenue and operations by at least 25% every year for the next five years. The current operational state of the company is rather small in size. That notwithstanding, the company seeks to double its capital expenditure in the next three years. This will help expand the operations of the company and also ensure that the company remains on course to become a stake holder in the steel and pliers manufacture method.
The following is a table indicating the itemized budget year by year for the next five years.
Sources of funds
The company intends to generate funds from three main sources. These are retained earnings, investment from the strategic partner, and bank loan. The evaluation of the effectiveness of this strategic plan will be carried out thrice a year, once in each trimester to establish the achievement of the set goals and objectives (Bertsimas & Lo, 1998).
References
Allen, N. B. (2011). The Economics of Small Business Finance: The Roles of Private Equity and Debt Markets in The Financial Growth Cycle. Journal of Banking & Finance,12 , 236-249.
Bazerman, M., & Moore, D. (2009). Judgment in Managerial Decision Making. NewJersey: John Wiley & Sons.
Bertsimas, D., & Lo, W. (1998). Optimal Control of Execution Costs. Journal of Financial markets , 1-50.
Newstrom, J. W., & Davis, K. (1993). Organizational Behavior: Human Behavior at Work. New York: McGraw-Hill.