Executive Summary
The presented business plan is the comprehensive account on the newly launched car making company titled the AutoMakers, Inc. This company will deal with car production, manufacturing of the spare parts and accessories for cars, as well as reparatory works. The market analysis shows that the AutoMakers, Inc. will face considerable challenges in respect of the global economic conditions, the associated increase of governmental regulation of business, the use of perceived opportunities, and the strong and fierce automotive industry competition. However, the proper design of the business, clear development and management initiatives, and the well structured system of resource accumulation and allocation allow the AutoMakers, Inc. to hope for the success of its long-term developmental strategy.
Business Description
The business that this business plan considers is the car making company whose operations will be focused on production of premium and medium class cars for various layers of the society and for people with varying levels of income. The car making company will be titled AutoMakers, Inc. and will deal initially only in the domestic market, although the goal of international development will be set as the basic long-term strategic goal. Besides the car production as such, AutoMakers, Inc. will also deal with the production of spare parts for its cars as well as the development of creative accessories for all types of cars and reparatory works.
The founders of the business will retain the majority of its shares and form the Board of Directors of the AutoMakers, Inc. The company will develop a combined horizontal-vertical organizational structure to provide both the proper level of subordination and the necessary proportion of integrated decision-making and staff involvement into the process of strategic development. The funding of the company will be carried out mainly through the personal and organizational investment, the attraction of which will be one of the main goals for the strategic development department of the AutoMakers, Inc. Every fiscal year, beginning on January 1 and ending on December 31, the result of the company’s performance will be assessed.
Market Analysis
The market in which the AutoMakers, Inc. will operate can be characterized by controversial conditions for newly emerging businesses. On the hand, the companies like the AutoMakers, Inc. will obviously have more developmental opportunities in the light of the decline that the bulk of the more experienced and powerful companies like General Motors, Land Rover, Bentley, etc. experienced during the recent global economic recession. On the other hand, the AutoMakers, Inc. will also face the decreasing demand for cars and the restricted taxation conditions, increase of the governmental regulation and the need for permanent technological updating. Thus, the development of the AutoMakers, Inc. market share will depend upon the ability of the marketing management to properly analyze the market and direct the company’s activities in the right way.
The automotive market can be characterized by such important facts as:
- The overall recession resulting from the global economic crisis;
- Decreased demand for automotive industry products;
- Growing levels of governmental regulation that is being introduced in the major car making companies around the world;
- The average of 20% decrease in sales and profit of major automotive market players;
- Difficulty in using the perceived market opportunities;
- Fierce competition in the market that has become even more intense in the context of the above mentioned economic crisis.
Business Analysis
Perceived Opportunity
An especially important point for the success of the planned company AutoMakers, Inc. will be the latter’s ability to use the perceived opportunity. In other words, the AutoMakers, Inc. will have to take any, even the minor, chance to enhance its market position, and to turn the drawbacks in its competitors’ and its own work into the opportunities for development. The examples of such opportunities include the use of the competitors’ sales decrease to promote the cars by the AutoMakers, Inc. in the market, the transformation of lack of AutoMakers, Inc.’s funding into the impact towards producing cheaper cars for people with medium to low income levels, etc.
The major strategies through which the AutoMakers, Inc. will use the market perceived opportunities include:
- Development of the special department to monitor and report any perceived opportunity in the market;
- Establishment of the analytical department to consider those opportunities and offers steps for their proper use;
- Creation of the assessment tools to measure the success in the process of using perceived opportunities;
- Risk management policies aimed at predicting and moderating the risks associated with the improper use of perceived opportunities;
- Finding the financial resources necessary to implement all above initiatives and update the technological basis for the AutoMakers, Inc. development.
Competition
The competition in the automotive market has always been rather strong. In the period preceding the global economic recession that started in the later 2008, the car makers of the whole world competed for the newly emerging markets in Asia and Africa. At the same time such automotive giants as BMW, Daimler-Chrysler, General Motors, etc. focused on their domestic market and provided cars for people with various income levels. Therefore, nowadays, when the crisis is seemingly over but the companies still experience its effects, the AutoMakers, Inc. will face the strong competition in all possible markets including the European automotive market, the American market, and the Asian automotive industry. The main potential competitors of the AutoMakers, Inc. are:
- Europe – BMW, Volkswagen, Land Rover, Renault, Peugeot;
- USA and South America – General Motors, Daimler-Chrysler, Ford;
- Asia – Toyota, Honda, Suzuki, Mazda.
The competition in the global automotive market, which the AutoMakers, Inc. plans to enter in the course of its strategic development, is also formed by the above mentioned companies that apart from local activities have long been promoting their products to the potential buyers from all over the world. To stand this strong competition, the AutoMakers, Inc. will have to possess a proper organizational structure, essential funding, and potentially successful strategic planning initiatives.
Business Launching
Design and Development
The design of the planned business is the most essential component of its success, especially at the initial stages of the business development. The car making company titled AutoMakers, Inc. will also have a proper business design. First of all, the company will have the clear organizational structure and the set of people responsible for the company’s founding and operating. The Board of Directors of the AutoMakers, Inc. will carry out all the activities associated with the business launching and development. The second element of the business design includes the distribution of functions among the staff of the company and the development of planning and measurement bodies to monitor the progress of the AutoMakers, Inc.
The developmental initiatives for the introduction of the AutoMakers, Inc. to the market will also include two major elements. The first one will be the massive advertising and promotion campaign. The company will gradually introduce more and more car types to the market that will be presented in both the brand stores and the mass media. The second elements of the AutoMakers, Inc. development will be the essential investment policy that will involve domestic and foreign investors promising considerable profit to them in case of the company’s success after a certain period of time, probably a year, of its overall development in the automotive market.
Management
The management of the newly launched business will be completely concentrated in the hands of people especially recruited and appointed to the respective positions. As mentioned several times above, the leadership of the company will be the function of the Board of Directors that will appoint the CEO and monitor the AutoMakers, Inc.’s performance during his/her work. The next level in the AutoMakers, Inc.’s management will be the supervisory department designed especially to track the progress of each of the company’s other departments including the marketing, the developmental, the strategic planning, the sales, the investment, and the statistics departments.
Further on, each of the above listed departments will have a specific person responsible for every task of this department. These people will be called operations managers, and they will report their work results to the department managers. The latter provide the data to the supervision managers who, in their turn, transmit the data to the CEO. Finally, the CEO reports the performance results to the Board of Directors (BOD), and the letter makes necessary corrections and sends them back according to the same scheme:
BOD → CEO → Supervision Managers → Department Managers → Operations Managers
Thus, it is obvious that the management of the business proposed will be carried out properly due to the clear structure and direct distribution of functions among the major managers involved in the operation of the AutoMakers, Inc.
Financial Analysis
Resources
The resources constitute the basis for any enterprise, especially the newly launched one, and especially in the conditions of the global economic recession, the effects of which can still be observed in the automotive industry. Therefore, the AutoMakers, Inc. will pay proper attention to the accumulation, allocation, and control over its recourses. The accumulation of the company’s resources will be carried out in three main stages. The first one will include the formation of the starting capital by the company founders who will contribute the shares of money proportionately to their shares of the company’s stock. This way, the beginning for the AutoMakers, Inc. launching will be made.
The next two steps will be carried simultaneously. On the one hand, the AutoMakers, Inc. will work on attracting considerable domestic and foreign investments, and on the other hand, the company will get the profit from car trading operations. The combination of these two activities will allow the AutoMakers, Inc. accumulate considerable funds and develop strategic initiatives using this financial support. The allocation of all the resources will be carried out by the developmental department of the AutoMakers, Inc. The developmental managers will process the data about the needs of every other department and make decisions on allocating the necessary resources to them. Control over resource allocation and usage will be included in the functions of the Supervision managers.
Investment
Investment, as a special point in the resources of any business, should be under the strictest control of the company’s high ranking managers. At the AutoMakers, Inc. the issues of investment will be handled by the two departments, the investment and the developmental ones, and will be controlled by the Supervision department. The functions of the investment department will include the process of attracting the investors and presenting them with the favorable cooperation terms. In other words, the investment department will find investors, persuade them to invest money in the AutoMakers, Inc., and control the conformance of the company’s investment relations to the guarantees given to the investors.
The developmental department, as it has been stated above, will handle the issue of investment usage and allocation. Simply to put it, the main task for the developmental department at the AutoMakers, Inc. will be to determine the prominent developmental initiatives of the company and allocate the invested money to the departments and managers charged with those initiatives.
Finally, the supervision department will deal with overall control over the investment relations of the company. Among other points, the supervision department will monitor the investors’ background and reliability; control the negotiations process and the transmission of the invested money to the AutoMakers, Inc. As well, the control over the work of the developmental department will be among the supervision department functions. The latter will include the monitoring of investment allocation and use of the invested money.
Long-Term Development Strategy
Finally, as the continuation of the initial design and development initiatives, the AutoMakers, Inc. will have its long-term development strategy. The major direction of this strategy is bringing the AutoMakers, Inc. to the level that will allow the company to focus not only on the domestic market but also to compete in the international markets with such giants of the automotive industry as Toyota, Ford, BMW, etc. Accordingly, the long term developmental strategy of the AutoMakers, Inc. can also be called an international strategy or the strategy of global expansion.
The major elements of this long-term strategy include the following points based on the today’s conditions of the market, global economic environment, and the initial stages of the AutoMakers, Inc.’s development:
- Establish the 5-year period as the timeframe for working on the long-term developmental goals;
- Identify the strategic goals of the AutoMakers, Inc.;
- Establish the strategic developmental department;
- Define the major long-term goals of the company and identify the means of their achievement;
- Determine the stages of the long-term goal achievement including the opening of the car making plants in the target regions of the world, promoting the AutoMakers, Inc. in those regions, resource allocation, and performance success measurement procedures;
- Global expansion of the AutoMakers, Inc. to the preliminary determined markets in Americas, Europe, and Asia.
Such a long-term development strategy is aimed at achieving a single long-term goal, i. e. the global expansion of the AutoMakers, Inc. and development of its positions as a strong international market competitor. The strategy embraces all the steps that should be taken beginning from strategy development and ending up with the achievement of the long-term goal.