Harmentec Final Business Plan.doc

8/14/2019 Harmentec Final Business Plan.doc

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1. Executive Summary

The vehicle rental industry is a multi-billion dollar sector of the global economy. Over the

course of the next few years, the industry is expected to experience accelerated growth, which

equates to an annual rate of 3.5 in the !"#" $ !"#3 period. The %iddle &ast vehicle rental

mar'et is a huge and well-established service. (n the coming years, this mar'et is expected to

grow by approximately ) per annum.

%ar'et research has identified a problem in this industry resulting in a significant amount

of revenue lea'age. *armentec aims to deliver a new, multipurpose and multifunctional

technological device with unique customer benefits and superior value, whose aim is to bring

efficiency in the vehicle rental industry. The vehicle rental industry plays a vital role in the

%iddle &ast mar'et as most countries here lac' a developed transportation system. (n the

initial 5 years of operation, +ahrain, audi rabia, &, /atar and Oman will be targeted. Our

product aims to solve the problems faced by the vehicle rental industry in the short term and

will later diversify to serve other forms of corporate organisations, such as 0*1 and 2edex. s

a business, we have developed a strong mar'et orientation with customer focus for our initial

years of operation.

ll vehicle rental companies operating in the %iddle &ast will eventually be targeted, and

we have based the positioning of our product on a real competitive cost and superior quality4

and intangible company service and reputation4 advantage. n aggressive mar'eting

approach will be adopted to target car rental companies operating in the %iddle &ast and to

advertise our product in as many ways as possible. e will be investing large amounts in

launching *armentec and its product into the mar'etplace. s well as the launch event,

personal selling and direct mar'eting will be built into our mar'eting strategy.

Through this aggressive mar'eting strategy, we intend to brea' even in the first quarter

of the second year and be profitable henceforth, with a constant gross profit of #3 through

the years. 6et profit ratio, is expected to increase from -7 in year one to 5.8 in year five.

The company is expected to have sufficient liquidity to operate through the years, with a scope

for potential expansion and diversification in the near future.

The research used in this business plan has been collected from internet sources,

9ournals, and also referred to Text boo's for our better understanding of the concepts. e

have even co-ordinated with engineers at 2ord and :ehicle rental companies in the %iddle

&ast in order to ensure that the data collected is closer to reality. e also made efforts to

ma'e this business pro9ect, as much as possible, free from assumptions.

This report encompasses primarily nine parts; &xecutive ummary,


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2. Company Overview

2.1. Company Description

*armentec aims to deliver a new, multifunctional device, whose aim is to bring efficiency

in the vehicle rental industry. The ob9ective of our commercial underta'ing is to develop and

provide a vehicle-speed reducing device, in order to assist the car rental organisations in

having more control over the vehicles rented by their customers. The device also aims to

reduce significant revenue losses faced by the vehicle rental organisations owing to the

misuse of their vehicles by the customers and employees of the organisation.

2.2. Vision

*armentec=s vision is to be the best and most successful global supplier of cutting edge

technology based products, to bring efficiency in the vehicle rental industry by optimising the

utilisation of time to begin with, thus and then, expand the hori>on of our businesses.

2.3. Mission

*armentec=s mission is to develop and mar'et advanced products and technologies that

'eep vehicle rental industries connected to their customers and to exceed our customers=

expectations in quality, delivery and cost through a continuous drive to improve.

2.4. Corporate Values

The company=s management philosophy will be based on responsibility and mutual

respect, while encouraging ownership of responsibilities to help foster personal and

professional growth. *armentec will be dedicated to designing, developing, mar'eting and

selling innovative products. The company=s goal will be to build strong customer relationships

based upon a foundation of trust while establishing a new reputation as a committed and

professional organisation. The highly innovative technological based product, produced by the

company will aim to promote and achieve these core values and enable our customers to lead

more fulfilling and relaxed lives. Our corporate values will include putting our customers first,

being professional in our conduct, striving to continuously improve and creating strong

partnerships with our suppliers and partners.

2.5. Company O!ectives

t *armentec, we have identified three types of ob9ectives that will serve as challenging

but attainable goals for the company;

+(6& O+?&


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#4 To become the premium vendor in the evolving vehicle rental industry

!4 To reach profitability within one year of the companies launch

2(66


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3. Mar"et

3.1. #ar$et Mar"et

The %iddle &ast has been chosen as the main target mar'et for this product. 0espite thecurrent global economic slowdown and recession and wea'er growth forecasts for many

industries, the worldwide vehicle rental mar'et is anticipated to grow at a compound annual

growth rate


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Our initial target mar'et is the (sland country in the @ersian Culf, 'nown as the Bingdom

of +ahrain. econdary mar'et research has shown that this country has diversified its

economy over the past few years and possesses great potential in terms of resources, as well

as modern and advanced infrastructural facilities. (n !""), a leading research institution

identified +ahrain as one of the fastest growing economies in the rab world. 0ubai chool of

Covernment published a report on the @ersian Culf


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ince we are emerging as a new business and bringing out a new product into the

mar'etplace, we have decided to adopt focused mar'eting $ i.e. serve one of our mar'et

segments, the vehicle rental company, in the short term and develop a single mar'eting mix

and strategy aimed at our target mar'et. e have decided to adopt this strategy because it will

be less ris'y as the product is still in its development stages and also the business is starting

out with a small scale operation. 2ocused mar'eting will allow us to focus our research and

development expenditure on meeting the needs of one set of customers and managerial

activities can thus be devoted to understanding and catering for those needs. o, how did we

identify there was a need for this product and find out our customers= needsE The figure below

details the mar'eting research process and methods that were carried out.

8

@roblem

Aecognition

problem was identified in the vehicle rental industry, through mar'etresearch. Aesearch has shown problems in transparency of dealings small,

confusing contracts4, disputes about vehicle damage and problems with

online boo'ings. 2urthermore, big problems have also been identified in that

vehicles are never returned on time, leading to ma9or losses in revenue.

Ob9ective

etting

n ob9ective was set to try and identify a product that is able to overcome

problems being faced by vehicle rentals. The ob9ective was to produce a

multipurpose device to be fitted into vehicles, whose features would be

dependent on the exact problems being faced by vehicle rental companies.The main aim of the product would be to eliminate many of the problems

being faced by vehicle rental companies at the moment.

econdary

Aesearch

econdary research was carried out on the :ehicle rental mar'et. (nformation

was gathered on the :ehicle rental industry using %ar'et (ntelligence reports

and %ar'et research reports. 2urther information was also gathered on thema9or vehicle rental companies to identify the mar'et si>e detailed below4.

@rimary

Aesearch

0esign of primary research; (nterviews and /uestionnaires see appendix4

were prepared for vehicle rental industries to identify whether any problems

exist with the vehicle rental system and to identify whether there is a need for

improvements in this industry.

&xecution of primary research; (nterview was conducted with a manager of a

%iddle &ast company and questionnairesFtelephone interviews were

conducted with executive managers of the ma9or vehicle rental companies

and potential users of the product.

nalysis of

Aesults

Aesults from all primary and secondary research conducted were analysed

and presented to identify the problems that exist, the need for a product,

target mar'et for the product, mar'et si>e, growth and opportunity.


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Aesults from the %ar'et research conducted can be shown below. 2irstly, an in-depth

face to face interview was conducted with an &xecutive manager of 6ational


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uestion 1 Does your company +ace prolems w,en rentin$ out ve,icles to customers

%ost vehicle rental companies answered yes.

The main problems faced by these companies

are - vehicles not being returned on time

leading to ma9or losses in revenue for the

company, damage to vehicles, and problems

with renewing the rental of vehicles - some

customers complain of a long process.

uestion 2 s t,ere any misuse o+ company ve,icles y employees

%ost vehicle rental companies answered yes.

The main problems faced by these companies

are $ theft of vehicles by employees and

damage to vehicles.

uestion 3 n +inancial terms ,ow muc, loss /oes t,e company ma"e on avera$e /ue to

t,ese prolems on a yearly asis

(n order to illustrate the effectiveness of introducing this product into the mar'etplace, we

have modified the table above to show the losses suffered by four of the leading international

vehicle rental organisations in +ahrain in comparison to the one-off cost they would incur by

investing in this device and the amount of time it would ta'e for them to brea' even;

*ame o+

t,e Car

&ental

Company

%vera$e

revenue

per

ve,icle

per

mont,

-(SD

#otal

numer

o+

ve,icles

&evenue

loss /ue

to

misuse

o+

ve,icles

-0

#otal

mont,s

#otal

revenue

loss

-(SD

%mount

spent on

our

/evice

-(SD

6rea" even

perio/ +or

ve,icle

rental

companies

-mont,s

6ational G"" 8G" D #! !!5,#!" !87, """ #D

+udget 8"" #7G" 3.!5 #! D3G,57" GD7, """ !#

vis 5G" 38D" 3.7" #! )D8,#") #, D58, """ #7

*ert> G5" 3#! 3 #! G",!"" #!D, 7"" !#

Thirdly, short questionnaires see appendix4 were sent out to &xecutive managers of carrental companies based in the %iddle &ast. (ts findings are summarised below;

7

0

5

10

15

20

Yes N

Question 1

0

2

4

6

8

10

12

14

Yes No

Question 2

0

1

2

3

4

5

6

7

Below 5% 5!% 1014% 151!% "#o$e 20%

Question 3


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+oth primary and secondary research identified a need for the product and ma9or vehicle

rental companies are supporting the rationale of our business. *owever, only a limited number

of car rental companies were interviewed and sent questionnaires, due to time constraints. t

*armentec, we want to continually provide our customers with a good quality product and

service. To maintain this ethos, we will ma'e extensive efforts to continually carry out mar'et

research to gain customer feedbac' and develop our product.

3.3. Mar"et Si7e an/ OpportunityThe vehicle rental industry is a multi-billion dollar sector of the global economy. Over the

past five years, big vehicle and car rental companies have been wor'ing towards enhancing

their fleet si>es and increasing their levels of profitability as according to industry analysts, the

better days of the rental vehicle industry are yet to come. Over the course of the next few

years, the industry is expected to experience accelerated growth, which equates to a es are

expressed in the table below;

)


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Country %pproximate 8leet Si7e -in cars

+ahrain !5 """

audi rabia !"" """

& #5" """

/atar !" """

Oman D" """

0espite the recent economic adversities, the industry and its 'ey leaders have started to

regain their footing in the sector as overall sales and profit margins grow. ll rental companies

operating in the %iddle &ast will be targeted. detailed analysis of the nature, scope and

current position of our 'ey target customers $ :(, *ert>, +udget and 6ational is given

below.

:(

:( &urope is a leading car rental company in &urope, frica, %iddle &ast and sia,

where it operates the globally recognised vis and +udget brands. The :( brand operates

across four continents via a networ' of over !)"" locations in #") countries, through wholly-

owned subsidiaries in #3 corporate countries complemented by license arrangements, in a

further )8 countries. The budget brand serves customers across three continents through over

)"" locations in 88 countries. These are predominantly franchise businesses. (n !""G, the

brands corporately owned locations had an average fleet of ##7 """ vehicles. 2urthermore, in

!""G, revenues from the :( brand represented )8 of the Croup=s overall revenue and the

+udget business represented D of the Croup=s overall revenue.

*ert>

The *ert> corporation is one of the world=s largest car rental company, handling more

than 3" million rentals worldwide with approximately 85"" locations in more than #D" countries

and a fleet of 55" """ vehicles. The company has focused on international expansion, and in

the late #))"=s *ert> rental cars were available in Aussia and all &astern &urope countries, as

well as ustralia,


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automobile and truc' rental system in #))G, operating in more than #!" countries and 3!""

locations. (t has a pea' fleet si>e of !73 """ cars, !! 5"" truc's and 5#"" pic'ups.

6ational

6ational


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4.1. 9ES#:E %nalysis

@olitical

+ahrain is relatively easy and straightforward to set up our business in. The country

boasts a variety of incentives to potential investors. ignificant among these are no taxation on

personal or corporate income and no withholding and :T tax. Other advantages include duty

free merchandise for re-export and duty free import of materials and machinery for

manufacturing the product, low costs for energy, utilities and rents and #"" repatriation of

capital and profits. +ahrain offers the best value for money $ it has the lowest living costs

within the region and operating costs for businesses.

&conomic

hile many countries across the orld have been hit hard by the downturn in the global

economy, for the most part +ahrain appears to have avoided the negative effects

demonstrating economic stability. +ahrain has diversified its economy over the past few years

and its economy loo's steady and forecast to grow this year. ccording to figures from the

(nternational %onetary 2und, +ahrain should see an increase of !.8 in the economy this

year, which is twice the regional average.

+ahrain was named the freest economy in the %iddle &ast. +ahrain=s economic freedom

is characteri>ed by improved business freedom, monetary freedom, fiscal freedom and

financial freedom. hen compared with other %iddle &ast countries, it has maintained

monetary stability despite inflationary pressure. Het, its inflation rate is low, 3.5, compared toother %iddle &ast countries.

Though 1abour productivity is increasing in +ahrain and it is home to a large highly

s'illed wor'force, it still suffers from some government imposed regulations. Operating in

+ahrain, a percentage of the wor'force has to be +ahrainis and wor'ers can be hard to

dismiss once they are hired.

Technological

Our product will require high investments in research and development. +ahrain boasts

an advanced information and technology infrastructure and does possess the latest

technology to process or develop products. hile the +ahraini government is spending money

to build critical infrastructure and also giving lot of incentives in order to boost the foreign direct

investment in various sectors across the country. There is an influx of foreign direct investment

in regard to technology and investment continues to rise. ccelerating the diversification

program, the government=s strategy targets five primary areas for expansion $ business and

financial services, tourism, information technology, telecommunications, healthcare and

education.

1egal

#!


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+ahrain has a tried and tested legal and regulatory framewor' in which investors can

trust to fairly protect their interests in an open and transparent manner. everal legal

procedures need to be adhered to for new businesses to operate.

The law requires us to have a local partner or sponsor who holds the ma9ority interest or

share and can therefore control the business. The local partner, be it a company or a private

individual, doesn=t need to contribute to the start-up investment or participate financially at all.

2urthermore, any new business must register with the chamber of commerce and municipality

for approval of starting the business and when the business is registered, we must show the

ministry of commerce that we have a substantial sum of money to invest. The required sum

varies and is regarded as a guarantee against liabilities. lease agreement must also be

obtained to prove the location.

The process is complex and financially ris'y. 1ocal 'nowledge and consultation with a

good lawyer from the outset is crucial. 6onetheless, +ahrain has produced many successful

and highly profitable businesses. &xport, distribution and manufacturing industries are strongly

supported by the Covernment, especially when it comes to obtaining land in which to construct

the office or factory. Therefore, the +ahraini government would be more than willing to help us

obtain the licenses needed.

&nvironmental

Our product is designed to have a positive impact on the environment as it will help

control and monitor vehicles for fuel consumption, saving on fuel costs and eliminating

wasteful vehicle movements. This will give *armentec a more positive image, moving towards

an ever expanding Igreen economyJ.

4.2. 9orter;s 5 8orces %nalysis

Threat of 6ew &ntrants

Threat of entry into an industry depends on the extent and height of barriers to entry.

The threat of entry into this mar'et is low in the short run as the idea of such a device tailored

to suit the needs of a vehicle rental organisation is unique. The product is new and

differentiated in terms of quality, branding and technology. 1egal restraints are quite high as a

local sponsor is required, product is expected to be patented and there are high initial financial

requirements, with a lot of commitment needed for advertising and research and development.

witching costs are expected to be high and the production process is not easily learned,

which can lure away potential competitors. *owever, the threat of new entrants is li'ely to

increase over the longer period.

Threat of ubstitutes

@roducts from one business can be replaced by products from another. ubstitutes are

products or services that offer a similar benefit to an industry=s products or services, but by a

#3


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different process. ubstitution reduces demand for a particular IclassJ of products as

customers switch to the alternatives. The threat of substitutes is medium. lternative products

such as a C@ system do exist, which can be used as a trac'ing device for vehicles. 0ue to

their well establishment in the mar'etplace, consumers may find it hard to ta'e a ris' on a new

product. *owever, our product is multipurpose and multifunctional and can provide the

consumer with many more benefits compared to other substitute products. e will need to

wor' hard to establish loyal customers and offer them our product at a good quality and good

price so they find it much harder to switch to alternatives.

@ower of +uyers

The power of buyers can describe the effect that our customers will have on the

profitability of our business. The power of buyers will initially be high as our business will be

targeting a few, large car rental companies. 2urthermore, they will have a large influence in

determining the success of our product.

@ower of uppliers

uppliers will supply the organisation with what is needed to produce the product or

service. s well as fuel, raw material and equipment, this can include labour and sources of

finance. The power of suppliers, in this case from (ndia, will be low as the inputs we require

can be available from a large number of suppliers. 2urthermore, there will be low switching

costs as it will be less disruptive to move from one supplier to another.

&xtent of


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branded product. s a result, they may shun the need to buy our product. +usinesses who

produce substitute products such as C@ systems can also be our indirect competitors. 2or

example; Carmin 1T0 specialises in the production and selling of C@ navigation systems in

the %iddle &ast. nother source of potential threat are companies in other parts of the world,

such as B and


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5.1. S


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base and build up our mar'et share. 2urthermore, we need to exploit the opportunities

presented to us through operating in +ahrain and develop a compelling mar'eting strategy to

overcome the wea'nesses and threats we might be faced with, especially in our initial years of

operation.

=. #,e Mar"etin$ Mix

#G


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The above mar'et research and analysis has helped us to develop an effective

mar'eting mix. This is the next step in our mar'eting strategy. (t will help us to ensure our

target customers and mar'et segment is reached, as well as our companies ob9ectives. The

elements of mar'eting needed to carry out our mar'eting strategy are outlined below.

=.1. 9ro/uct

Our product is aimed at the vehicle rental industry, in the short term. (t is a brand new

multipurpose technological device whose aim is to bring efficiency in the vehicle rental

industry. e understand that the need for product innovation has never been greater and

winning with new products is not so easy. Only one out of four development pro9ects succeed

commercially, and one-third of all new-product launches fail. (n order to ensure we develop an

effective product and there is less ris' of it failing, we have identified several critical success

factors. These are outlined in the table below;

Critical Success 8actor Description

0ifferentiated, superior

product

e are aiming to deliver a new, differentiated product with unique

customer benefits and superior value. e have ta'en steps toensure the product is able to reach the superiority level through

conducting customer studies, identifying a need for the product,

researching our target mar'et, researching new technology that

will give the product a competitive edge and carrying out technical

and operations feasibility assessments

+uild in voice of the customer e have developed a strong mar'et orientation with customer

focus. %ar'et research and customer reaction will be used as part

of the development process via constant rapid-prototype-and-test

iterations. 2urthermore, we will ensure the launch is based on

solid mar'et information

&arly product definition failure to define the product before development begins is a

ma9or cause of new-product failure. e have ensured that the

product does not move towards the development stages without

defining the product clearly including the target mar'etK product

concept and benefits to be delivered, mar'et positioning strategy

and the product features

ttac'ing from position of

strength

The new product will fare better when it leverages the business=s

core competencies. e will ta'e extreme steps to ensure we have

a strong fit between the needs of the product and the resources,

strengths and experiences of the new team and business in terms

#7


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of mar'eting, sales, distribution, technology and operations.

@lan and resource the

mar'et launch early

strong mar'et launch will underlie the success of a product. e

will ensure a quality launch for our product $ one which is well

planned, properly resourced, and well executed to ensure our

product ta'es off into the mar'et with a positive image.

=.1.1.


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One of the most critical strategic initiatives in our new product introduction is acquiring

an explicit definition of customer=s requirements, in collaboration and communication with

customers, which is where our mar'et research will always play a crucial role. Our mar'eting

strategy and promotion will be based on advertising the above features of the product to our

target customers. (dentifying the critical success factors and our products benefits will

contribute immensely to our mar'eting mix and help us effectively advertise our product.

=.1.2. Ma"in$ t,e pro/uct +it t,e mar"et

Cood mar'eting means developing products that fit the mar'et. @roducts need to be

designed correctly and then developed to 'eep pace with the mar'et changes. Our product

design will be based on idea generation and concept development. e will be hiring a highly

experienced product designer who will deal with the important aspects of our product such as

aesthetics, technology, ergonomics and usability to bring our product from conception to

mar'et. rough prototype of our product design can be shown below;

=.2. 9rice

!"


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e understand that price will play a critical role in our mar'eting activity. e are

launching a new product into the mar'et, so our price will be carefully aligned with our

promotional strategy. e will be practising a rapid penetration strategy as seen in the figure

below.

(n this strategy, we will be introducing a new product into the mar'et at a low price

while spending heavily on promotion, in order to penetrate the target mar'et as fast as

possible. Our main ob9ective via means of this strategy will be mar'et share and profit

maximisation in the long run. The price of our product is LD"". The price will be reduced by

L#" every year and we aim to introduce new features to our product to target a wider mar'et

segment and maintain a competitive advantage. The initial price is based on cost-based

pricing, which gives an indication of the minimum price needed to brea' even. The real value

of ta'ing this approach is that it will give an indication of the minimum price necessary for ourbusiness to ma'e a profit. Our business will be able to gain a competitive advantage with a low

price strategy because we are outsourcing manufacturing and building relations with suppliers.

e have the latest technology and our own Aesearch and development staff to maintain a

highly efficient process.

=.3. 9romotions an/ Mar"etin$

e will initially adopt an aggressive mar'eting approach to target all the car rental

companies operating in the %iddle &ast and advertise our product in as many ways as

possible. There are three 'ey aspects we will be concentrating on whilst launching and

advertising our product $ being informative, being persuasive and being reassuring.

=.3.1. :aunc, o+ pro/uct in t,e mar"etplace

e will be investing large amounts in launching our product at a high class presentation

and demonstration evening. +elow is detailed our mar'et launch strategy.

!#

Aapid 'imming low 'imming

Aapid @enetration low @enetration

*igh

1ow

*igh

1ow

@romotion

Price

*armentec

The product has been finalised $ manufactured, tested and is ready to be launched into the

mar'etplace


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This highly expensive launch event will be part of *armentec=s mar'eting campaign. e

want to build a positive image with our customers from the offset by organising an innovative

product launch. successful product launch will require integration and coordination among

multiple functional areas, accurate planning and a solid mar'eting strategy.

=.3.2. %/vertisin$ strate$y

s well as the launch event, the following advertising methods will be built into

*armentec=s mar'eting strategy;

dvertising

Our company will have the following logo that will give uniqueness, personality and

identity to our business and will help towards building a global image in the vehicle rental

industry;

@ersonal elling@ersonal selling will play an important role in the promotional mix. Three salesFmar'eting

staff will contact potential customers $ i.e. car rental companies directly through phone and

personal visits. This will allow for a more interactive mar'eting approach as any questions can

be answered and ob9ectives overcome. 2urthermore, we can build relations with our target

customers. lso, we believe that there is more loyalty and incentive for the sales staff since

they will wor' directly for *armentec.

0irect %ar'eting

0irect mar'eting will further allow us to build a direct relationship with our customers.

0irect mail, telemar'eting and the creation of pamphlets are the techniques that will be used.

!!

Two salesFmar'eting staff will be hired to call up executive management of all rental companies in the

%iddle &ast and arrange meetings with them to pitch our product and invite them to our product

launch evening and dinner, which will ta'e place in a 5M hotelFconference hall such as Ait>carlton

@ublic relations will play a vital role in the launch of our product and the presentation evening. 2or thisreason, a highly s'illed public relations officer will write all press releases. 2urthermore, media

relations tactics will be used to get some coverage of the launch to build a bu>> and win interviews if

possible

1aunch evening; :ideo will be played at the start to create a bu>> about the product. @resentation will

be carried out by professional mar'eters. They will spea' about the product and there will also be live

demonstrations. ll attendees will be presented with a brochure outlining the product details and they

will also be given complementary samples to test the product themselves. The -N of the technology

of the product will be explained and qualified trained technicians will be present at the evening to

tac'le any technological questions as'ed by the attendees.


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e will mail a pamphlet detailing the product, its features and contact information to all

potential customers. This will allow our target segment to fully understand the product and how

we can benefit their company.

(nternet

The internet medium will allow for an innovative way for us to advertise our product andcreate a viral mar'eting atmosphere. *armentec will have a website which details the

company information, product offered and its benefits, process and quality standards, as well

as pricing and contact information.

=.4. Distriution c,annel

&fficient and effective distribution is important for us to meet our overall mar'eting

ob9ectives. e will be using a direct, exclusive distribution strategy, as seen in the figure

below.

Our manufacturing will be outsourced, yet we will deliver our product directly to our

target customers. This will enable us to use our sales and advertising channels effectively to

maximise sales and profits and maintain control over the distribution of our product.

t *armentec, we aim to match our mar'eting mix with our mar'eting strategy, which

will be rooted in how well our product is matched to the segment of the mar'et we are

targeting. The mar'eting mix will be constantly reviewed and evaluated and changes will be

made if necessary to adapt to the mar'et environment. The above mar'eting and positioning

strategy will help us to position our product against competitors, emphasise our distinctive

unique product benefits and affiliate our product with something the target customers 'nowand value.

!3

HARMENTEC VEHICLE RENTAL


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>. Operations

>.1. :ocation

*armentec will be registered in the Bingdom of +ahrain in the capital city of %anama.

The premises will extend over an area of G,""" sq feet with 5,""" sq feet allocated to office

space. The office space will contain the corporate communications department, reception

area, purchases procurement department, 2inance department, human capital department

and a meeting room. The rest of the !""" sq feet will be required for storing equipment and for

the loading and unloading of devices received from the suppliers. e have chosen this

location mainly due to the close proximity to all ma9or car rental companies. (t would cost

approximately LG!, """ a year to rent these premises. e have decided to rent as it is simpler

and more inexpensive.

>.2. Suppliers

*armentec intends to employ and form long term relations with reliable business

partners who will provide quality inputs at competitive rates. e will be loo'ing to outsource

the manufacturing of the product. The device and the card readers will be manufactured in the

city of +angalore situated in (ndia by ilicon :alley systemsK the programmable card will be

manufactured in +ahrain by Clobal @ayment services C@4 who speciali>e in the

manufacturing of chip and @(6 cards.

>.3. 9ro/uct #ec,nolo$y

!D


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*armentec as an organi>ation would focus on the design, mar'eting and distribution of

the product while leaving the production largely to our business partners. (n the long run

*armentec would aim at adding value to the product through brand building, advertising,

distributions 'now how and patents. trong emphasis has been placed upon controlling the

cost of the product. ed login (0=s and passwords. *armentec hasta'en into consideration that it would be dangerous for a vehicle to have their time

periods as stated in the agreements expired and the car would lose its speed on

the highway which can prove ha>ardous. 2or this very reason, the driver will be

provided with an extra @(6 code that can be entered upon expiry of the rental

agreement. The second @(6 code will authori>e the device to maintain its normal

course of activity for a period of 8 hours. s a proposal after this, the speed would

reduce to a maximum of #5 mph. fter expiry of the second @(6 code the car will

not cross its speed of #5 mph. nother important point to note is that if the driver

stops the vehicle after the expiry of the agreement period, the vehicle would

immobilise after which it can only be activated by an authori>ed personnel.

!5


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+ahrain has a radius of approximately !"" Bilometres, which allows for an ideal

location to best test and implement this business model. 2urthermore, it will be

easier for a technician to reach the vehicle to reactivate it in the shortest amount

of time. (n simple language the device will brea' communication with the three

vital circuits of the vehicle, namely, the starter, the ignition and the fuel, which in

turn will ma'e it impossible to start the vehicle. hen one tries to switch on the

ignition, the vehicle will not energi>eK and the communication with the ignition

circuit will remain bro'en.

#,e c,ip an/

9* car/

The card will store the following details $ #4 (nformation on the rental agreement

which will also be displayed on the screen of the device, !4 (mages of internal and

external physical damages, if any, to the vehicle, 34 1og of the distance covered

by employees, D4 ervice history of the vehicle, 54 Aecord of the non revenue

9ourneys, by employees.

#,e Car/

rea/er

The information from the data card will be uploaded into the


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Customer


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7.5. 9atency

t *armentec, we plan to patent our product. e have contacted a @atent ttorney

imon Aees4 at *aseltine 1a'e based in +ristol in order to understand the procedure of

getting the product patented in the nited Bingdom and &urope. e have already patented

our product in the %iddle &ast. (n the long run we will be loo'ing to achieve further efficiency in

our supply chain especially as we expand globally. e aim to produce the highest quality

products at competitive prices.

7.6. &esearc, @ Development

*armentec=s Aesearch 0evelopment unit will be based in +ahrain due to the

availability of highly s'illed human resource and advancement in technology. Aesearch

!7


29/41%E"& O' %(M"N

0evelopment places a very important role in our organisation in the perspective of

improvement of quality, cost effectiveness and development of our products and product line.

A. )uman &esource Mana$ement

A.1. Or$anisation Structure

!)MARKETING ASSISSTANT%E"& O'

%E"& O'

)%+E' E-E)(T+.E

ADMINISTRATION PUBLIC RELATIONSRELATIONSHIP MARKETING


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%E"& O' RE/E"R)% 0

RESEARCH INSTALLATION

The organisation chart highlights the reporting structure of *armentec. The


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0evelopment will be based full time at the head office, in order to monitor the installation and

routine maintenance wor' of the product, which will be performed by the installation team and

security and maintenance personnel.

A.2. Mana$ement #eam an/ Sta++

(n order to ma'e this section convenient and easy for understanding, we have bro'en it

up into the following sub sections;

%anagement Team and or'force

Ownership tructure and hareholdings

*uman Aesource needs

A.2.1.Mana$ement #eam an/


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Ms. &eie Aelationship %anager +< in %ar'eting and2inance, %+4

# year in %ar'eting ector

Mr. Mo,sin *ead of 2inance0epartment

+< in accounting,


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A.2.2.Owners,ip Structure an/ S,are,ol/in$s

*armentec is a @rivate 1imited


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*armentec=s structure and its main purpose. Aesponsibilities, accountabilities, 'ey ob9ectives

and 'ey tas's will all be incorporated into the 9ob description.

?O+ @&


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to perform the particular 9ob effectively. graded pay system will be adopted where

employees will be placed on salaries according to different bands.

. 8inancial 9er+ormance

.1. 8inancial Mana$ement

2inancial forecasting is one of the core aspects required to run a successful business,

since it forms the foundation for all other business activities. The forecasted financial

35


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statements for the first five years have been prepared in accordance with the (nternational

ccounting tandards (4.


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the fixtures fittings are depreciated on straight line method, with an estimated life of three

years. (ntangible assets are amortised on the straight line basis for five years. ssets are

acquired in line with our growth strategy.

1ease and Aentals

(n order to minimise the capital requirement, we will be acquiring all the tangible fixedassets on a financial lease basis. The benefit of financial leasing is that the assets are

recorded in the boo' of leases and treated as their own assets, which is not the case with

operating lease. *ead office and the branch offices will be rented. The rent is expected to

increase by #" each year.

Operating &xpenses

Operating expenses include salaries, wages, advertising, rent, insurance, sponsor fee

and so on.

Our sponsor will be paid yearly since it is a legal requirement in order to do business in the

%iddle &ast. The sponsor fee is mutually agreed between the company and sponsor for

each target country.

%ar'eting will be done in-house. +esides, mar'eting agencies will be consulted for

advertising if needed. These agencies will be paid a mutually agreed fee.

(nsurance is paid at the rate of #.5 of the assets= value.


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The customers will be given a two-month credit period. This will also be the time of

payment to our supplier. n advance payment of D" will be received at the inception of the

contract for year one and 37 of the cost price will be paid to the supplier in advance.

ponsor fee, rent and miscellaneous expenses are paid in the successive months, whereas,

all other expenses will be paid in the corresponding months. hort term borrowings will be

obtained to partly fund the wor'ing capital requirements for the first year alone.

The cash needed to meet the company start-up, and wor'ing capital requirements for

the new mar'ets expansion, will be funded by the cash reserves of the preceding years. This

is the reason for little cash flow in year two, since no external funding or capital in9ection by the

owners will be made. *enceforth, the cash liquidity will increase consistently, till about 0

#.G %illion towards the end of five years.

@rofit and 1oss nalysis

n overview of the forecasted profitability of *armentec is represented by the graph

below;

(n the first year of operation, there is a net loss, and the company will brea' even in the

start of year !. This is due to IAevenue (nvestmentsJ such as advertising, A0, repair and

maintenance, and mar'et research, which will benefit the company in the long-term. Our

company will brea'-even with sales of about ##,""" units. Thereafter, the profits will increase

at a consistent rate, the highest profit earned by the company being around L7)G,""".

.3. &atio %nalysis

6et @rofit Aatio

37


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s shown above, the net profit ratio of the company will increase over the years and

reach 5.7 in year five. The reason for a slight decrease in year four is that the company will

be entering the & mar'et, and as a result, will incur a significant start-up cost.


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*armentec=s policy is to pay a #" dividend of the face value of share.


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and this has been observed to be quite consistent through the years because of the

comparatively strong economic conditions in both these places.

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Harmentec Final Business Plan.doc

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