Executive Summary
Paper Works is company engaged in the production and distribution of paper products used in offices, schools, and households. The Company is known for producing top-notch papers used in legal documents and other important purposes. Because of competition, Paper Works has recognized the need to develop a product that will sustain the firm’s competitive advantage. Through meticulous study and research, Paper Works have developed a product that will compete in the stationery industry. The product is stain-free and fold-free stationery designed to meet the demands of the market.
The initial goal of the Company is to obtain financing from interested investors. Despite strong operational performance, Paper Works has insufficient funds to finance the project. Given the complexity of the project, the Company needs approximately $3 million. The stated amount will be used to acquire the machinery and conduct actual product testing. Target investors include venture capitalists and existing players in the market. Paper Works also considers collaboration with established paper firms that are willing to provide the financial requirements for the project.
The Company intends to attract customers that prefer paper products with lasting effects. Paper Works observed that most paper products are disposed immediately after being used. The goal of the project is to lessen the cost incurred by clients in purchasing paper. The stationery is designed to be used up to 10 times. In addition, the new venture seeks to promote the protection of the environment through maximized paper use.
Management Strategy
The role of planning in the Company is clearly defined. Before any activity is pushed, the personnel undergo massive planning stages. Planning is done because uncertainties in the market are abundant. The technical process of realizing strategic management is divided into two areas. The first phase regard planning as course for intended strategy and the patterned actions are the realized strategies. The second part involves implementation and possible changes on the activities maintained.
Product development has to produce a master plan. The master plan will detail the manner in which the available resources will be used to make the project succeed (Hormozi, et al., 2000). The primary attributes that has to be promoted in this stage are aggressiveness. In addition, the components of the project have to be defined. The objectives, tasks, and resources have to be managed effectively. Enhancing the morale of the individuals tasked to perform the project through tem-building will boost the changes of success.
Marketing Strategy
Positioning refers to the perceptions developed in the minds of the target market. The process entails the creation of image of the brand and the entire firm (Trout and Rivkin, 1996). Market positioning is purely procedural and relies on the completion of stages before making further improvements. The initial stage involves the definition of the firms’ target market. There are three important segments that are being targeted by the Company. These comprise of students, professionals, and business executives.
Aside from the specific targets, there are specific general clients that the Company will try to penetrate. The first include government offices which require stationeries and other similar products. Since government notes needs to be protected, StainTionery is a suitable product for their disposal. Another important group of clients include private offices. These are vital institutions that use stationery in their activities. The Company will attempt to project StainTionery as a product of need.
The marketing group will be the department in-charge with the planning and implementation of the plan. The marketing group identifies the specific roles that other groups will assume to avoid confusions. Most of the tasks will be carried out the marketing group along with the approval of minor change that is required in the plan. The marketing group will be further divided into smaller teams and provided with responsibilities. This is a basic assumption because there are tendencies that other departments intervene.
The development of marketing mix entails strategies that are design to ensure consistency in the quality of performance. The first aspect that has to be considered is the price of the product. The Company plans to sell a pad of StainTionery as $2. A pad contains 100 leaves and packaged similar to papers used in schools. The price of StainTionery will still be subjected to change as the introduction commences. The final market price will be determined after all inputs needed are provided and accounted.
Promotional activities have to continue using all the options available. Television is an effective media and providing print advertisements is highly recommended. Most important, the company has to focus its promotional initiatives on the extensive use of the Internet. Aside from being cost-effective, the strategy has worked for most firms in the industry. Online advertising is important because the scope that the Internet covers is wide. Such market coverage is needed to fully introduce StainTionery to the public.
Aside from traditional advertising, the Company will bring StainTionery directly to the market. There are two locations where StainTionery will be demonstrated. These include schools and offices. The Company will provide shows in these locations to explain the benefits provided by StainTionery. Sample products will also be provided for testing. These road shows are needed because competition is strong. The best way to be known in the market is to grab the attention of the customers.
Operations Strategy
Operations management is defined as the design, operation, and improvement of the system that creates and delivers firms’ products and service combinations. Moreover, it deals with the proper allocation of resources and the strategic acquisition of technology. Some managers contend that the external environment is too influential to be ignored. Operations management also includes the proper consideration of the outside entities as contributing agent that will eventually affect the performance of the firm. The external environment consists of the customers and other economic indicators.
The analysis of operations management is critical in the success of firms. In fact, some practitioners have instituted organizations that specifically tackle issues concerning operations management. There are strategies implemented to ensure that quality is maintained. In addition, operations management provided an avenue for the company to continually grow. The Company recognizes the importance of operations as catalyst for efficiency. Processes and systems are valuable to sustain success and eliminate failure.
Focus on Quality
Quality is an aspect that is highly maintain in the Company. The Company knows that there is a need to attain quality results in all the process of production (Deming, 1986). The technical process pertains to the emphasis of quality in the different stages of operations. The rationale behind this strategy is that the continuous inclusion of quality in the process will result to highly competitive and superior products.
To boost quality of StainTionery, the Company will ensure that high quality materials are used. In addition, the Company will use the best equipment to limit waste. There are several stationery-making machines that came to the market. Selecting the best is one of the challenges that the Company needs to achieve. In terms of the processes, the Company intends to cut some stages of production to reduce cost. Core production activities will be maintained and some enhancements will be provided.
Inventory System
Inventory handling is one of the most important aspects that require attention. Among the inventory schemes used, just-in-time inventory is the most preferred. This method has been used by the biggest firms and has enjoyed success. The Company will rely on orders instead of producing excess pads. The cost effectiveness of this method is proven and this aspect is valued by the Company. The Company will determine the demand through initial orders and make adjustments as demand increase.
Human Resource Management
The primary task of Human Resources Management is to seek for competent applicants that will contribute and make a difference once hired (Miller, 1987). HRM practitioners identify suitable training schemes that are designed to improve the skills and competency of the employees. HRM revolves on the creation of programs that will keep the employees loyal and productive. This task has been expanded as HRM practitioners have been accorded the capacity to settle employee related disputes.
The company needs financing activities to pursue plans of expansion and growth. The most common method of financing involves debts, equity, and retained earnings. The use of debts is the most common form of financing. Equities involve creation of marketable securities to increase cash stock. The retained earnings include company profit gained from operations. There are several methods used to evaluate financing. These mechanisms are employed to determine rate of return and risk calculation (Beaney, 2005).
Financing Option
The company has several options ensure that financial flexibility is achieved. Paper Works can resort to debt financing which is abundant through several financing institutions. The option of debt financing retains full ownership to existing investors. In addition, there are a number of investment banks that cater to the needs of firms. The availability of these institutions makes borrowing more certain. Debt financing, however, is prone to risks. The unpredictability of exchange and interest rates can affect the paying capacity of the Company.
Paper Works can also resort to equity financing which will require the Company to go public. The advantages of becoming public are well documented. High liquidity is often considered as the primary benefit of preferring equity financing. In addition, there are no risks involved regarding payments to stakeholders. But there are also drawbacks to this strategy. The company has become open to future squabbles among stockholders. Moreover, Paper Works have to adapt to numerous regulations. Stock prices are also volatile and dependent of investor perception.
Financing Strategy
Venture Capital is a common source of financing in the critical stages of product development. The role of venture capital in firms is crucial as companies require that financial capacity when products are developed (Trester, 1993). Paper Works has been planning to secure financing from different interested investors. Private equity financing option is perhaps the best option for the Company. Although the goal of the Company is to acquire funds from individual venture capitalist, other corporate investors are allowed to participate.
Empirical evidence suggests that the presence of corporate investment adds value to the company (Hege, et al., 2003). Hence the idea of inviting current firms in the industry with expertise in the product is highly important. Moreover, focus on individual venture capitalist will be emphasized. Venture capitalists provide costly investments which will ensure close participation in the process of product development. Venture capitalist effort is expected because success is dependent on their monetary and non-monetary contributions.
Through the aid of a financial adviser, Paper Works will present the project to a pool of venture capitalists. The presentations will be made in rounds as early success is often unpredicted. After the project has been explained to target venture capitalists, the lobbying for corporate investment will start. Although the contribution of several firms is appealing, the Company will prefer a single firm that will provide that valued industry expertise. In each rounds of financing, the stages of development will be clearly outlined.
Budgetary Requirements
As a start-up, the financial budget is valued at $3 million. Of this amount, $2.5 will form the assets and $500,000 for other expenses. From the total asset value, $2 million will be dedicated to non-cash assets. In addition, cash will amount to $300,000 and additional $200,000 for contingency. At present, the liabilities of the Company are still undetermined. The initial capital will be funded by the current Paper Works assets and initial funds from venture capitalists. The assets will be comprised of machineries, equipment, and delivery vehicles.
Assets are valued as fair market. Depreciation method used for the assets is straight line. The portion of the assets includes patents and materials. The cash is used for short-term financing and requirements for materials. The firm will also use the cash for marketing initiatives. Contingency is provided to fund some unexpected expenses. This is important to ensure that the business is operating even in uncertain periods.
Profit and Loss
The revenue of the Company will mainly come from the sales of StainTionery. The initial goal of the Company is to sell 300,000 pads of Notes Restore after 5 months of production. The size of the first StainTionery is 3”x5”. The Company plans to add a smaller size at 2’’x2” and a bigger size at 6.5”x9. The 3”x5” StainTionery is sold at $2 per pad. The Company plans to sell the 2’’x2” pad at $.85 and the 6.5”x9 pad at $3.25. In addition, the Company charges extra for personalized StainTionery pads.
The cost of the Company will come from two sources: administrative expenses and operations expense. The administrative expense will mainly cover employee compensation, legal fess, utilities, marketing and promotions, and other miscellaneous expenses. The operations cost will include any expense that is incurred by the operations. These expenditures are mostly related to materials, equipment, machineries, delivery, and maintenance. The Company projects that 67% of the expense will be incurred by the operations and 33% administrative.
Break Even Analysis
The selling and distribution of StainTionery will start after 1.5 years from the start of the operations. The initial goal of the Company is to accumulate $3 million in sales after the 3rd year. In doing so, the Company has to sell a number of StainTionery within the desired period. At $2, the Company has to sell at least 800,000 units of 3”x5” StainTionery valued at $1.6 million. The other part of the target will be covered by the two other sizes. The contribution of the 2’’x2” and 6.5”x9 StainTionery is less because of late production.
Cash flow is another important aspect that needs to be considered. In the initial year, the company expects cash inflow of $0. This is expected because the product has yet to reach the market. By the second year, cash inflow is valued at $900,000. The inflow of cash will pick up in the third year since $2.1 million is projected to be returning to the company. In terms of borrowings, the Company will seek loans when opportunity for short-term financing occurs. Improving the firm’s creditworthiness is another important element.
Financial Reporting
Preventing failures in reporting financial information requires the development of quality financial reporting systems (Burns, 2006). Effective financial reporting system allows stakeholders to accurately evaluate the financial ratios and other information relevant to decision-making. Also, effective financial reporting clearly shows the value of the company. Even without the usual promotional activities, firms can easily invite investments through the precise figures presented in the financial report.
The systems used are critical because it serves as the framework used for the preparation. Also, the individuals taking part of the process has to develop some sense of honesty, responsibility, transparency, and accountability. The principles and guidelines have to be constantly evaluated and reviewed to determine their conformity to the changing demands of stakeholders.
Project Implementation
The product life cycle is characterized as the process of creating concepts, development of the ideas to finished products, and terminates the products. Project managers usually divide the process into stages so that projects are managed with efficiency. The project reaches a point of maturity as it is exposed to several stages of production. The cycle includes the point of inception until the project is terminated. Each phase independently functions and overlapping is observed as a rare situation.
Project Development
The initial stage involves the development of StainTionery. This is the start that is manifested by the product development team. The team considers several aspects in developing StainTionery. Competition and financial capacity are the primary considerations. The returns and possible sustainable growth of the product are also viewed meticulously. The development takes time and will require 4-6 months. The specified time is needed to properly evaluate the opportunities and threats in the market.
Production Process
The production stage has four phases. The first segment includes buying of materials, machineries, and equipment. The second part of the production seeks to develop the first StainTionery. The first batch of StainTionery pads will be tested and demonstrated to the public. After quality checks, evaluations, and suggestions, the Company will go to the final production phase. This stage will take 8-12 months of the firm’s schedule.
Distribution and Enhancements
The initial delivery process will be carried over the Company and retail stores. The distribution will first focus of paper stores before moving to specific clients. After the three StainTionery pad sizes are determined to be successful the Company will introduce additional sizes. The firm will be planning to increase the size of stationery to legal size. Moreover, the firm will develop stationery that will surpass the recover capacity of StainTionery. Future stationery will include water-proof and fire-proof capabilities.
Performance Evaluation
Assessing marketing performance is an increasingly important task for managers and other corporate stakeholders. The use of financial schemes has three significant functions (Otley, 1999). Multi-disciplinary perspectives on performance measurement are increasing the attention given to non-financial measures of performance in general. Measures traditionally used by managers were inappropriate given the modern manufacturing environment. Changes in technology and working practices resulted to the assigning overheads on the basis of direct labor resulted in wildly erroneous product costs.
Benchmarking provides cost savings in executing operations and its support of the organization’s budgeting and strategic planning process. Benchmarking is designed to leave the past behind and embrace the future. The benchmarking process has many defining features (McNair and Leibfried 1992). In order to benchmark effectively, a company needs a strong strategic focus and some flexibility in achieving management’s goals.
Industry Analysis
Porter (1980) introduced the concept of five elements that seeks to analyze the competition in the industry. The threat of new entrants involves market openness to new players. Compared with other industries, stationery manufacturing is rarely viewed as a profitable venture. Hence there are limited interests as to penetrating the industry. The substitute to stationeries provides the most threat. The emergence of the Internet as communication tool has affected the industry. Electronic mails are preferred because of convenience.
The bargaining power of the consumers relates to buying capacity and preference. Consumers have been meticulous when choosing for stationeries. The issue of value for money is often emphasized in this process. The bargaining power of the suppliers highlights the ability of suppliers to meet the demand of clients. Recycled paper is abundant and acquired with less cost. Competition is stiffed and intensified by substitutes and industry luminaries such as Post It. Some customers are also traditional and views stationeries as luxury.
Value Chain
Value adding is an important process that improves the products and services of the Company. The additional value provided to the services is important in controlling the market. There are two value adding activities that the Company provides to up the quality of services. The first involves the provision of perks and privileges to clients. Increasing the value for money is an important aspect that the Company attempts to provide. Aside from the quality products, loyal customers will be accorded with discounts and other promotional gifts. This important is building that trust with clients.
The other value adding activity performed by Company is customer services. Other stationery firms consider the sell-buy transaction as the final engagement between customers and the firms. But the Company believes that continuous communication is a key to long-term success. The Company will be in constant connection with customers to ensure that the promises of Notes Restore are delivered. In addition, the Company will seek for comments and suggestions to further enhance product quality.
SWOT Analysis
The product being developed is founded on the idea of protecting notes written in stationeries. Usually, stationery users have to keep their notes in folders and envelopes. These safekeeping tools are then kept in more secure places like drawers and cabinets. StainTionery will ensure that notes are protected even without the traditional protection. In addition, Paper Works is supported by esteemed venture capitalists. These investors are considered as the experts in the industry.
On the other hand, the concept developed by Paper Works has one minor weakness. The Company needs to change product specification regularly. Consumer preference on paper is highly volatile. This means that preference to a product is maintained only in short periods. To continue the success, Paper Works have to continuously ensure that StainTionery is evolving. In doing this, the Company will incur costs which will require more financing.
The success of Post It and other stationeries have motivated the company to penetrate the industry. Stationeries have maintained strong demand despite the presence of computers and other electronic saving devices. Moreover, several consumer groups have been using stationeries even for formal uses. Government and private offices use stationeries because such products provide identity to the mentioned institutions. In schools, stationeries are used for requirements and other academic purposes. The demand for stationeries can sustain long-term success to firms that venture in the industry.
Competition is the ultimate threat to the Company. Although the number of players is less as compared with other industries, the stationery market is loaded with traditional powers. These players have established strong connection with consumers. In addition, there are small players that dominate niche markets. Piracy is often a concern in the industry. There are some businesses that prefer to steal ideas instead of building their own. These aspects are relevant concerns that will be addressed as Paper Works continue to progress.
Corporate Social Responsibility
Corporate social responsibility (CSR) highlights the duty of the organizations to their stakeholders. CSR also details the necessity for organizations to develop and maintain relationship with stakeholders. Aside from good corporate governance, this is observed through quality performance (Van de Ven, 2006). The Company’s goal is to involve households in the process of production. The supply chain of the firm requires used papers coming from houses, schools, and offices.
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