Business Development Proposal (Kiddo Watch) Dr. Robert Suban 31/01/2019

The report contains the details of the market feasibility analysis, the business model, marketing strategies and an array of other policies that have reflected opportunities of growth, success and profitability of the business. The name of the business is coined “KiddoWatch” which will manufacture and sale the highly advanced and unique impact 57 GPS-enabled watches for the children such that their parents are able to track them all the time. Executive Summary 2 1 Chapter 1: Introduction 10 1.1 Rationale 10 1.2 Design and structure of

Anglia Ruskin University
LM0038KEAKEA1017
Ulker Begum Ishchy
MBA Full –Time
Final Project
Business Development Proposal
(Kiddo Watch)
Dr. Robert Suban
31/01/2019

Executive Summary
This business development proposal encompasses a proposed idea of opening up a new
business of kid’s GPS-enabled watches in the electronics sector of Malta. The report contains
the details of the market feasibility analysis, the business model, marketing strategies and an
array of other policies that have reflected opportunities of growth, success and profitability of
the business. The name of the business is coined “KiddoWatch” which will manufacture and
sale the highly advanced and unique GPS-enabled watches for the children such that their
parents are able to track them all the time. The idea is to provide the working parents
facilities of monitoring their children when they are away in their workplace. The parents
would be able to track the movements of their children and would also be able to take
precautionary and active measures in times of emergency. This watch will be manufactured
with high quality ingredients so as to take care of the tender skin of the children. The watch
will also be able to track the footsteps and pulse rate of the children and the information will
be notified to the synchronized smart device application. The parents could download a
mobile application and install them in their smart phones or any other Android and iOS
enabled smart devices. The analysis of the contextual factors in Malta has shown positive
prospects for the business to achieve fruition. The watch will be exclusively for the children
and the company wants to target working parents of Malta. There will be different channels
of distribution to reach the products to the target customers. The company is going to provide
unique features to the target customers and hence, it is quite feasible for the company to gain
success. The market and the industry have ample potentials for a startup like KiddoWatch.
The smart watch segment of Malta market and industry is growing and there is scope to
revolutionize. The proposal is quite feasible and it is expected that the company will be able

to make money with its highly differentiated and unique deliverable. The report has entailed
an effective feasibility analysis along with intricate analysis of the vital areas which have
indicated the potential success of the business proposal.

Table of Contents
Executive Summary...................................................................................................................2
1 Chapter 1: Introduction ...................................................................................................10
1.1 Rationale....................................................................................................................10
1.2 Design and structure of the report.............................................................................11
1.3 Relevant models and Information Sources Used.......................................................12
1.4 Assumptions..............................................................................................................12
1.5 Timescale for achievement........................................................................................13
2 Chapter 2: The Business Concept....................................................................................14
2.1 Products and services................................................................................................14
2.2 Target Market............................................................................................................14
2.2.1 Market Segmentation.........................................................................................14
2.2.2 Positioning..........................................................................................................15
2.3 Value Added..............................................................................................................16
2.4 Specific Features.......................................................................................................16
2.5 Involved Entities........................................................................................................16
2.6 Window of Opportunity............................................................................................16
3 Chapter 3: Feasibility Research.......................................................................................18
3.1 Feasibility Research Plan..........................................................................................18
3.2 Research Methodology..............................................................................................19
3.2.1 Secondary Research...........................................................................................19

3.2.2 Data Collection...................................................................................................19
3.2.3 Data Analysis.....................................................................................................20
3.3 5 Key Areas of Feasibility Research.........................................................................20
3.3.1 Industry..............................................................................................................31
3.3.2 Market................................................................................................................33
3.3.3 Organizational....................................................................................................37
3.3.4 Financial.............................................................................................................38
3.3.5 Breakeven Analysis............................................................................................39
3.3.6 Return on Investment and Profit Margin...........................................................40
3.4 Results of the Research in terms of Ambition Vs Ability.........................................41
4 Chapter 4: The Business Model.......................................................................................42
4.1 Introduction to Business Model.................................................................................42
4.2 The Core Strategy......................................................................................................43
4.3 Business Model Canvas revise title of section Business...........................................43
4.3.1 Value Proposition...............................................................................................45
4.3.2 Customer Segmentation.....................................................................................46
4.3.3 Channel..............................................................................................................47
4.3.4 Customer Relationship.......................................................................................48
4.3.5 Revenue Stream.................................................................................................49
4.3.6 Key Activities.....................................................................................................50
4.3.7 Key Resources....................................................................................................51

4.3.8 Key Partners.......................................................................................................51
4.3.9 Cost Structure.....................................................................................................52
5 Chapter 5: The Business Plan..........................................................................................53
5.1 The Watch Industry in Malta.....................................................................................53
5.2 Project Planning and Development Stages................................................................54
5.3 Product Design..........................................................................................................56
5.4 Marketing Plan..........................................................................................................57
5.4.1 Retail Outlet Marketing Strategies.....................................................................57
5.4.2 Online Marketing Strategies..............................................................................58
5.5 Management Structure...............................................................................................58
5.6 Operating Process......................................................................................................59
5.7 Financial Plan............................................................................................................60
5.7.1 Start-up Cost.......................................................................................................60
5.7.2 Projected Profit & Loss......................................................................................61
5.7.3 Projected Cash Flow..........................................................................................63
5.8 Critical Success Factors.............................................................................................65
5.9 Risk analysis with risk matrix – impact/probability..................................................65
5.10 Exit Strategy..........................................................................................................69
5.11 Viability.................................................................................................................69
6 Reference list....................................................................................................................71
7 Appendix..........................................................................................................................75

List of Acronyms & Abbreviations:
GPS- Global Positioning System
PESTLE- Political, Economic, Social, Technological, Legal, Environmental
iOS- iPhone Operating System
UK- The United Kingdom
US- The United States of America
CEO- Chief Executive Officer
CFO- Chief Financial Officer
MDC- Malta Development Corporation
ROI- Return on Investment

List of Tables:
Table 1: Breakeven Analysis……………………………………………………………….35
Table 2: Business Model Canvas…………………………………………………………...39
Table 3: Project Planning Timeline………………………………………………………..49
Table 4: Project Development Timeline…………………………………………………...50
Table 5: Start-up Cost………………………………………………………………………56
Table 6: Projected Profit & Loss…………………………………………………………..57
Table 7: Projected Balance Sheet………………………………………………………….58
Table 8: Projected Cash Flow……………………………………………………………..59

List of Figures:
Fig. 1: Research Plan ...…………………………………………………………………… 15
Fig. 2: Interest of people in Smart Gadgets from 2004-2018……………………………. 29
Fig. 3:Porter’s Five Forces Analysis…………………………………………………….....30
Fig. 4: Product Design for KiddoWatch…………………………………………………...52
Fig. 5: Proposed Management Structure for KiddoWatch………………………………54
Fig. 6: Proposed Operating Process of KiddoWatch……………………………………..55

1 Chapter 1: Introduction
The business development proposal has been formulated with the aim of constructing a
blueprint for the concept of new business that will manufacture and sell GPS enabled wrist
watch for children. The business concept is a unique one where the GPS enabled watches will
be manufactured for the children. This business opportunity has been selected because of its
uniqueness and potential abilities to revolutionize the market with its uniqueness and
innovative concept (Amit & Zott, 2010). The business development plan has been developed
with the aim of providing important insights to the areas which are very significant for the
business. The business idea is related to the manufacturing and selling of GPS enabled wrist
watches for children. The idea is to come up with GPS enabled wrist watch which the
children will be wearing comfortably. The software of the watch will enable the parents of
the children to have a close monitor on the movements of the children (Advameg, Inc., 2018).
It is mainly for working parents who have to stay away from their children during their
working hours. There will be a mobile application which can be easily installed in smart
devices with Android, Microsoft Windows or iOS. The application will provide real-time
updates of their children’s locations. This watch will help the parents to track their children
and will also be helpful to prevent any unfortunate events with the children to take place.
This is a new business idea in Malta. The working parents will be highly benefited with the
watches. It is quite unique as it is an innovative watch with multi-purpose features only for
the children. The watches will be attractive so that the children will love to wear them, and it
will be safe to use (Camilleri, 2017).
1.1 Rationale
The GPS enabled wrist watch is not a unique concept in the modern time but when it will be
exclusive for the children along with the software for their parents will definitely be a unique

and innovative business idea (Advameg, Inc., 2018). The company is going to launch this
luxury watch for its target customers in the market of Malta (HUANG, LAI, & KAO, 2014).
It is expected that the company will be able to achieve competitive advantages in the market
as it is introducing a unique concept of watch exclusive for the children, which will be of
great help to the working parents or guardians to have a track on the children from any
location (Intercomp, 2018).
1.2 Design and structure of the report
In this report there are mainly four chapters which are briefly discussed in the following:
 Description of Business concept (Chapter 2): This is one of the most vital sections
of the report where the analysis and discussion on product and services, target market,
positioning, value-addition, specific features, involved entities and window of
opportunities.
 Feasibility research (Chapter 3): This is another important segment where primary
and secondary data needs have been discussed. This section entails the analysis of the
research methodologies. The five major areas of feasibility research on product and
service, industry, market, organizational and financial aspects have been covered in
this report.
 Development of the business model (Chapter 4): The business model for this
business concept has been discussed. The core strategy which the business model will
include has been discussed. This section also includes the discussion on the
competitive advantages, sustainability resource needs, essential networks and
partnerships, ways of value addition and the summary of the business model canvas
has been provided to highlight the suitability of the model with the business idea.

 Business plan (Chapter 5): The business plan section entails the details about the
source of the idea. The plan talks about the desired position of the company in the
market. The ways of arriving at that position have also been highlighted in this
section. The expected outcomes of the business have been discussed. The potential
risks have been identified along with the ways of managing the same have been
stated. The critical factors which are important for the success have been mentioned.
The viability of the plan along with the budgets and required investments has been
mentioned in the report.
1.3 Relevant models and Information Sources Used
The models which have been used include Porter’s Five Forces analysis which has helped in
analyzing the major five forces in the industry such as threats of the new entrants, bargaining
power of the suppliers, bargaining power of the buyers, availability of substitutes and
competitive rivalry (Omsa, Abdullah, & Jamali, 2017).The PESTLE analysis has also been
done to identify the feasibility of the factors of macro-environment of the business. The
major external factors which have been analyzed include political, economic, social,
technological, legal and environmental factors (PESTLE Analysis, 2018). The secondary
analysis has been done on the basis of the review and analysis of the resources collected from
the secondary sources like the online resources, books, journals, and resources on the Maltese
watch industry. The primary data have been collected from the surveys of the customers of
the watch industry of Malta. The survey has been based on the structured questionnaires
(Explorable, 2018).
1.4 Assumptions
It is assumed that the business development proposal will be able to evaluate the feasibility of
the proposed business of GPS enabled wrist watches in Malta. It is also assumed that the

areas which have been discussed in the plan will be able to lead the business to its desired
success. This segment is one of the developing segments of Malta and therefore, the business
has ample opportunity for success (Advameg, Inc., 2018).
1.5 Timescale for achievement
The research and analysis of the potential market and the risks will be initiated from
December 2018. In January 2019, the location of the shop and search for investment would
be decided. The license of the shop would be processed from April 2019. The furnishing and
the entire decoration would be completed by October 2019. The process of hiring employees
would be started from the end of October 2019 and from the middle of November 2019, the
training and induction would be initiated. The hotel would commence its business from
December 2019.

2 Chapter 2: The Business Concept
2.1 Products and services
The business will be dealing with a new concept of GPS enabled wrist watches exclusive for
the children. The watch will come with a free software or smart device application for the
parents or the guardians of the children. The parents can easily download the application and
run it in Android, Microsoft Windows, and Apple iOS. The application would provide real-
time updates of the current locations of their children. The customers can easily buy the
products from the exclusive store of KiddoWatch and also from different online shopping
sites. The target customers will also be given a free demonstration on the working of the
watch and application (Business Jargons, 2018).
2.2 Target Market
The target market is consisted of the young working parents who have to leave their children
back home or in day-care or under the care of the babysitter. Both nationals and expats of the
country will be its target market. The people with moderately high income will be the target.
The working parents with a higher standard of living and disposable income along with
purchasing power will be that major target customers. The parents are always concerned with
the safety and security of the children and it is quite difficult for working parents who have to
leave for their workplace (Joseph, 2018).
2.2.1 Market Segmentation
The target market segment consists of the specific customers that the company will seek to
offer its value proposition. The customer segmentation has been conducted by the marketing
management department of the business into the following:

 Demographic Segmentation- The demographic segmentation is the process whereby
the customers are grouped on the basis of factors such as age, nationality, gender,
income level, etc. Both male and female nationals and expatriates of the country will
the target segment. The age of the target segment will be between 18 years to 45
years. The people above 45 years of age can also be the target customer.
 Psychographic Segmentation- It refers to the segmenting of the customers according
to their psychographic traits such as the desire to purchase a particular product or
service, the utility derived from a particular product or service, etc. The working
parents who want to have a regular track of their children's movement and location so
as to ensure the safety and security of the children will be the target.
 Geographic Segmentation- This form of segmentation refers to selecting the target
customers based on the geographic locations from where they belong. People from
different places can buy the product.
 Behavioral Segmentation- The behavioral segmentation refers to a grouping of the
target customer segment based on certain behaviors such as income level and price
sensitivity. The target segment with moderately higher income and standard of living
with affordability can be the target segment of the company (Gichuru & Limiri, 2017)
2.2.2 Positioning
The positioning of the brand will be essential to the success of the marketing strategies in the
luxury watch segment in Malta. The positioning technique helps a brand to establish itself in
a target market segment among the rival brands by being able to establish its distinctiveness
with the other competing brands (Ridal, 2018) The positioning strategy is to be formulated in
such a way that the customers are attracted towards the brand and they can recall the name of
the brand whenever they are thinking of buying the particular product or service. For the
business, the positioning statement is “Be assured that your child is safe and secure”.

2.3 Value Added
The watch will be GPS enabled with an advanced technology in its operation. The parents
will be able to download a mobile application and synchronize the device with the
application. The application will be able to provide real-time and accurate information about
the location with timing to the parents and the guardians who have installed the application.
The target customers can purchase the watch from outlets of the company and also from
online sites. The application can be easily downloaded and installed in Microsoft Windows,
Android and iOS enabled smart devices.
2.4 Specific Features
The watches will be made up of high-quality ingredients keeping safety and security of the
children and their tender skin. The watch will also provide information about the pulse rate
and footsteps of the children in the application of the parents. In the time of emergency, the
children can also press an alert button which will be attached to the watch and the emergency
notifications will reach the synchronized smart devices of the users of the applications. The
product will also promote the safety and security of the children (Anastasia, 2015).
2.5 Involved Entities
The major entities that are associated or involved with the GPS-enabled watches are the
children and their parents. This is because the watches are to be worn by the children on their
wrists and a mobile application will be loaded in the smartphones or other smart devices of
their parents which will enable them to track their children when they are outside their homes
in some gathering.
2.6 Window of Opportunity
The product has an innovative concept and the market does not have such existing brands that
offer GPS-enabled watches for the children. Therefore, it is expected to be a really useful and

lucrative product for the target segment of the customers. There are not too many
technologically-advanced products available in the market for the kids and children and
therefore, the product has a large window of opportunity to capture the luxury watch market
by storm if all the associated marketing, advertising, and promotional strategies can be
implemented effectively. There is the need to be quick in capturing the market to gain the
competitive advantage.

Setting Research Aim and Objectives
Literature Review
Research Methodology
Selection of Research Method
Sampling
Designing Research Questionnaire
Research and Data Collection
Data Analysis
Presenting Findings
3 Chapter 3: Feasibility Research
The viability of the business idea is the main theme of the feasibility research. It is important
as it analyzes the abilities of the business idea to achieve the desired outcomes. The important
areas like the industry, market, service, competitors, financial and organizational factors need
to be analyzed. The feasibility or the suitability of each factor will help to understand the
opportunities which the watch manufacturer could avail of and could become successful.
3.1 Feasibility Research Plan
The feasibility Research Plan is:
Fig. 1: Research Plan
Source: Author

3.2 Research Methodology
3.2.1 Secondary Research
Secondary data has been used in this research. This secondary data had been collected in
2018-19 as part of a survey of the customers of the luxury watch sector of Malta . This data
will be used as secondary data in this project The survey has been conducted on 50 customers
of different luxury watch brands in Malta in 20XX. Close-ended questionnaires have been
used for the collection of the survey results. The respondents were previous customers of
luxury watches in Malta. This data was collected during visits to some of the watch shops in
Malta and had sought permission of the respective shop authorities to conduct a survey with
their customers who have also been approached. The respondents have been selected on a
random sampling basis so that each of the prospect client had an equal chance to be included
as a participant of the survey. The questionnaire has been structured with the use of 5 Point
Likert Scale so that they could conveniently give their responses. The secondary data have
also been collected to complete the feasibility analysis for the watch company. The secondary
analysis has been done on the basis of different secondary resources which have been
collected from different external sources. The use of this data has enriched the knowledge
and information pool on which basis the suitable strategies of the business plan were framed.
3.2.2 Data Collection
In addition, other secondary data has also been collected from different online resources such
as reports, articles and journals that have offered valuable information on the watch industry
prospects in Malta, the current scenario of luxury watch market in Malta, the overall position
of the electronics industry as compared to the other industries in the Maltese economy.

3.2.3 Data Analysis
All The secondary data has been analyzed on the basis of an empirical approach where the
existing data and statistics regarding the watch industry, luxury watch industry, and kid’s toys
industry have been analyzed in the feasibility study. The primary objective of the data
analysis has been to determine the current prospects of the GPS-enabled watch as a luxury
kid's product in the luxury watch segment in Malta. The analysis has been conducted entirely
on a quanitative basis such that the current and the future market prospects for KiddoWatch
can be determined effectively. The analysis of the results has led to some of the key findings
that encouraged the management to have positive hopes regarding the fate of the new
business in the country.
3.3 5 Key Areas of Feasibility Research
The feasibility research has been the most crucial phase of the entire proposed plan of
launching the business of the kids’ GPS-enabled watches in Malta. The feasibility of the
business has been determined such that the ensuing plans and strategies can be framed
accordingly such that the management is able to understand the pros and cons of launching
the business in the competitive electronic sector in Malta. The business will be launched
where there will be a whole lot of investments in multitude directions and hence, it was
essential for the management to determine the strengths and weaknesses of the proposed
business.
Product / Service
The product and service feasibility research have yielded positive results for KiddoWatch as
it has been determined that the modern generation of technologically advanced electronic
products such as watches, and smart devices are gaining popularity faster than expected with
the Maltese consumers. Malta holds an important strategic position in the Mediterranean Sea

and acts as a connection between Europe and the several African and Middle Eastern nations.
With the growth and development of the economy, the country has now embraced a huge
upgrade in its technological know-how and infrastructure. The young generation of the
population that is the millennial are the ones that are highly addicted towards smart gadgets
such as smartphones and other forms of smart devices such as watches with additional
facilities and technologies such as GPS connectivity.
secondary data on prospective customers
just present below in one table with all summary characteristics....
5%
23%
65%
8%
1. Age
Less than 20 years 20-30 years 30-40 years More than 40 years

Source: Author
Less
than 20
years
20-30
years
30-40
years
More
than 40
years
1. Age 2 9 26 3
Table: 4.3.1- Age
Image 1 depicts that out of the 50 prospective customers 2 were less than 20 years of age, 9
were in the age range of 20-30 years, 26 were in the age range of 30-40 years and 3 were
more than 40 years of age. Hence, the majority of the parents were in the age range of 30-40
years.
62%
18%
6%
10% 4%
2. Nationality
Maltese Asian European African American
Source: Author
Maltes Asian Europe African Americ

e an an
2. Nationality 31 9 3 5 2
Table: 4.3.2- Nationality
Image 2 shows that out of the 50 participants, 31 were Maltese, 9 were Asians, 3 were
Europeans, 5 were Africans and 2 were Americans. Thus, it is evident that the majority of the
customers were nationals from Malta, but still, there is the presence of a wide range of
nationalities and culture in Malta that forms a potent customer base for the electronic
products such as watches for kids.
58%
42%
3. Gender
Male Female
Source: Author
Male Female
3. Gender 29 21
Table: 4.3.3- Gender

Image 3 depicts that out of the 50 respondents, 29 were males and 21 were females. Thus
both the observations of the fathers and mothers were considered in the survey.
10%
36%
34%
12%
8%
4. Family Income Level
Below $10000 $10000-$15000 $15000-$20000
$20000-$25000 Above $25000
Source: Author
Below
$10000
$10000
-
$15000
$15000
-
$20000
$20000
-
$25000
Above
$25000
4. Family Income Level 5 18 17 6 4
Table: 4.3.4- Family Income Level

Strongly Agree Agree Neutral Disagree
30
3
9
4
5. Smartwatches are extremely
popular nowadays and are extremely
important for kids also.
Source: Author
Strongl
y
Agree
Agree Neutral Disagre
e
Strongl
y
Disagre
e
5. Smartwatches are extremely popular
nowadays and are extremely important
for kids also.
30 3 9 4 4
Table: 4.3.5- Smartwatches are extremely popular nowadays and are extremely
important for kids also.
Image 5 reveals that out of the 50 prospective customers, 30 strongly agree that smartwatches
are extremely popular nowadays and are extremely important for kids also, 3 disagree that
smartwatches are extremely popular nowadays and are extremely important for kids also, 9
were neutral, 4 disagreed that smartwatches are extremely popular nowadays and are
extremely important for kids also and 4 strongly agreed that smartwatches are extremely

popular nowadays and are extremely important for kids also. Therefore, the majority of the
parents were of the opinion of that their kids need smartwatches.
Strongly Agree Agree Neutral Disagree Strongly Disagree
19
9
13
2
7
6. Do you prefer smartwatches over
standard watches for your kids?
Source: Author
Strongl
y
Agree
Agree Neutral Disagre
e
Strongl
y
Disagre
e
6. Do you prefer smartwatches over
standard watches for your kids?
19 9 13 2 7
Table 4.3.6- Do you prefer smartwatches over standard watches for your kids?
Image 6 reveals that out of the 50 respondents 19 strongly agreed that they prefer
smartwatches over standard watches for their kids, 9 agreed that they prefer smartwatches
over standard watches for their kids, 13 were neutral, 2 disagreed that they prefer
smartwatches over standard watches for their kids and 7 strongly disagreed that they prefer

smartwatches over standard watches for their kids. Hence, the majority of the customers said
that they prefer the smartwatches over standard watches for their kids.
Strongly Agree Agree Neutral Disagree Strongly Disagree
9
11
8
5
17
7. Are you interested to purchase a
smartwatch that keeps track of your
kids?
Source: Author
Strongl
y
Agree
Agree Neutral Disagre
e
Strongl
y
Disagre
e
7. Are you interested to purchase a
smartwatch that keeps track of your
kids?
9 11 8 5 17
Table 4.3.7- Are you interested to purchase a smartwatch that keeps track of your kids?
Image 7 makes it evident that out of the 50 respondents, 9 strongly agreed that they are
interested to purchase a smartwatch that keeps track of their kids, 11 agreed that they are

interested to purchase a smartwatch that keeps track of their kids, 8 were neutral, 5 disagreed
that they are interested to purchase a smartwatch that keeps track of their kids, and 17
strongly disagreed that they are interested to purchase a smartwatch that keeps track of their
kids.
Retail Stores Online
28
22
8. Where do you mainly buy watches
for your kids from?
Source: Author
Retail
Stores
Online
8. Where do you mainly buy watches for your kids from? 28 22
Table 4.3.8- Where do you mainly buy watches for your kids from?
It is evident from Image 8 that out of the 50 respondents, 28 preferred buying kid’s watches
from the retail stores and 22 preferred buying the watches for their kids online. Thus, the
retail outlet format has been preferred by the majority, but it closely followed by the online

sales format. Hence, the management of the company needs to implement both the formats of
selling to serve the tastes and preferences of diverse groups of customers.
Digital Analog Smartwatch
16
8
21
9. What kind of watches will you
prefer for your children?
Source: Author
Digital Analog Smartw
atch
Not Sure
9. What kind of watches will you prefer for
your children?
16 8 21 5
Table 4.3.9- What kind of watches will you prefer for your children?
From Image 9 it can be seen that out of the 50 respondents, 16 preferred digital watches for
their children, 8 preferred analog watches for their children, 21 preferred smartwatches for

their children, and 5 of the respondents were not sure. Thus, the majority of the prospective
customers preferred the smartwatches for their kids, followed by the standard digital watches.
Location of Store Price Customer Service Convenience &
Comfort Safety of Children
10
3
8
10
19
10. Which is the most important
factor for choosing a watch for your
children?
Source: Author
Locatio
n of
Store
Price Custo
mer
Service
Conven
ience &
Comfor
t
Safety
of
Childre
n
10. Which is the most important factor
for choosing a watch for your children?
10 3 8 10 19
Table 4.3.10- Which is the most important factor for choosing a watch for your
children?

It is evident from Image 10 that out of the 50 participants, 10 consider the location of store as
the most important factor for choosing a watch for their children, 3 consider price as the most
important factor for choosing a watch for their children, 8 consider customer service as the
most important factor for choosing a watch for their children, 10 consider convenience and
comfort as the most important factor for choosing a watch for their children, and 19 consider
safety of children as the most important factor for choosing a watch for their children.
It is important to present overall results in a table and interpret collectively and summarises
main points to take and not in detail as this is supposed to be secondary data....
3.3.1 Industry
The analysis of the industry has been conducted by the management for determining the
prospects of the company in the Maltese watch industry. It has been observed from the
analysis that currently Malta is being considered by global investors as one of the important
places to develop modern manufacturing firms. The shape of the electronics industry of the
country has transformed in the past few years. Malta was previously known for its mass
production but later on, with the growth and development of the nation, there has been a shift
from the mass production to the high-end manufacturing. Malta has a supply of skilled
factory workers that are highly innovative and competitive. This has given the electronics
industry a new lease of life and there has been an opportunity for the manufacturing firms to
be able to achieve a cost-competitive and extremely high quality of production in the
manufacturing sector in terms of the electronic goods. The electronics industry is so fast
developing in Malta that there are investments from different leading global organizations fro
the countries such as the US, UK, France, Germany, Italy, India, Spain and others. The
manufacturing and the electronics sector has observed a major strategic change where the
attitude has changed from the large-scale production for the mass markets to the
manufacturing of unique and exclusive products that are perceived to be of added value to a

specific target segment of the customers. Thus, niche marketing concept is gaining popularity
in the electronics industry of the nation (Neo, 2011).
This niche market has been helpful for the watch industry also like the other electronic
industries of Malta. The industry is highly favorable for the companies that specialize in
products of high technology in the department of electronics and precision-engineering. The
industry is also highly prospective for the capital-intensive projects like in the domains of life
science or maintenance of aircraft. The investments in the electronics sector have been
increasing more than ever before as the renowned companies around the world are prepared
to invest millions of Euro on the facilities that are available for the companies in the Maltese
Island. The future of the manufacturing industry in Malta is going to change forever as the
domestic and global companies are finding it a highly cost-effective and profitable place for
investment. The country has observed a huge change in the technology such as in the domain
of sensors, robotics, high-performance computing, and others. Hence, the modern watch
industry has also been highly benefitted from this immense growth and development in the
technological infrastructure. The demand for the modern categories of technologically
advanced watches is rising. The young generation is addicted to smart gadgets and they
prefer to wear watches that are mainly digital along with an array of additional functions such
as smart connectivity or GPS connections. This has also been observed in the kid’s toys and
accessories industry where there has been a huge growth and development in technology
(Camilleri, 2017).
The parents are nowadays more inclined to buy their kids items that are technologically
advanced such as smart gadgets such as watches or other toys which have digital technologies
built into them. Hence, it will be beneficial for KiddoWatch to find a prospective and stable
electronics industry in Malta. There has been a shift in the manufacturing sector of Malta,
previously the business operations were mainly focused on food, beverage, and the furniture

industries. But, after Malta gained independence from Britain, the nation promoted itself as a
cheaper manufacturing base to the diverse foreign investors and firms by offering convenient
access to the export markets (Ridal, 2018).
Fig. 2: Interest of people in Smart Gadgets from 2004-2018
Source: (Google Trends, 2018)
3.3.2 Market
The market feasibility analysis has been conducted with the help of Porter's Five Forces
Analysis. The results of the analysis are depicted as follows:
Porter’s Five Forces Analysis

Fig. 3: Porter’s Five Forces Analysis
Source: Author
o Threat of New Entrants- The threat of new entrants in the Maltese electronics sector
is moderate, yet KiddoWatch must ensure that it offers high quality of products and
services at competitive prices such that it is able to hold on to the competitive edge in
the market with its unique GPS-enabled kids watches that it wishes to launch into the
market. Retaining a high level of efficiency can make the market unattractive for the
other potential rivals. The business might have the first mover advantage in the
Maltese market as there is no such company, domestic or international at present that
offers similar smartwatches for kids. The electronics market is highly attractive for

the new competitors due to the demographic characteristics of the country. The
majority of the people in the population reside in some specific towns and cities and
hence it is possible for an electronics company to serve the majority at a
comparatively lower expense.
o Threat of Substitutes- The threat of substitute products for the smart GPS-enabled
kid’s watch category is low because there are not too many companies that have come
up with similar products for the children as yet in Malta. Though there are a variety of
smart devices and gadgets for the customers that are mainly young to middle-aged,
there are not too many brands coming up with technologically advanced products for
the children. There are modern high-end toys for the children but not a product such
as a smartwatch that is GPS-enabled and can be an asset to the parents as the device
helps to track their children at any location such that they can always keep track of
them. The product has been designed with an element of social beneficence intent
such that the parents can take more care of their children such that incidents of
children getting lost, kidnapped or being victims of accidents can be reduced.
o Industry Rivalry- There is an intense rivalry in the watch industry in Malta between
the several domestic and global brands manufacturing and selling digital and analog
watches in the country. The popularity for high-tech watches is increasing fast in
Malta like in the other parts of the world. The degree of competition in the
smartwatch sector is also high as there are some of the most reputed global brands
such as Apple, Huawei, and Garmin which have come up with state-of-the-art and
highly innovative smartwatches which are just not watches but smart gadgets with an
array of functions (Intercomp, 2018). However, the advantage for KiddoWatch is that
none of these brands are currently offering smartwatches with GPS-enabled
technology especially for the children along with several features and facilities that

will make the devices prized possessions for the children and most importantly, their
parents. Hence, in the kid’s smart gadgets sector specifically, there are not too many
potent competitors at present and this is advantageous for the business.
o Bargaining Power of Customers- The bargaining power of the customers in the
smart electronic devices sector is moderate. This is because the smart products require
high technological inputs and hence cannot be manufactured by brands that do not
have adequate technological knowledge, resources, infrastructure, and capital
strength. Therefore, the customers have to depend on the brands for such products and
trust their products and services to be of high quality and value-for-money. The
customers are willing to pay premium prices for the products that they perceive to be
unique and hence, they have to rely on the prices set by the brands on such precision-
electronic gadgets such as smartwatches. Hence, the brands have a certain degree of
liberty in charging prices depending on the specific segment or the niche segment that
they wish to serve. Similarly, for KiddoWatch, the customers will not be having much
bargaining power, but the brand should price the products at a reasonably competitive
range for enhancing market attraction quicker and for ensuring prompt sales of the
products.
o Bargaining Power of Suppliers- The suppliers in the smartwatch or smart
electronics sectors have moderate bargaining power because they have few reputed
brands to serve their materials that are being used by the smart electronic
manufacturers for manufacturing their devices. Therefore, they cannot charge too
much of prices from the companies or else they will not be allowed to continue as the
trusted suppliers for those brands. The raw materials such as chips, circuits, etc. that
are needed by the smart device brands are main sources from Asian nations where
they are produced at cheaper costs such as Taiwan, South Korea or China. The local

suppliers of the electronic brands in Malta mainly resell these products that are
imported from the Asian nations. Therefore, the smart gadget brands can choose from
an array of suppliers that supply with similar quality and prices of these products.
Thus, the brand can switch between suppliers if any of them are charging extremely
high prices for their raw materials. Hence, the suppliers do not enjoy much bargaining
power in this sector.
3.3.3 Organizational
KiddoWatch will be a medium-sized enterprise and to begin with there will be around 40-50
workers, staffs and employees that will take care of the several functions of the business such
as production, assembling, distribution, marketing, administration, human resource, financial,
public relations, etc. Thus, the number of work-force initially will be not too high for the
company initially. It is expected that the organization will be able to meet the operational
requirements with the chosen number of staffs to start with.
There will be several outlets of the organization where the products will be available to the
customers. The outlets will be taken on rent where the showrooms will be designed, and the
products will be put on display. The company is planning to open up two outlets in the city.
Later on, some more outlets might be opened by the company. The products will also be
available to the customers online through the third-party E-Commerce sites. There will be
both bricks and mortar format and bricks and clicks format of operation for KiddoWatch.
3.3.3.1 Key Persons of KiddoWatch
The key people in the management of the organization will be the entrepreneur Mr. Alex
Smith. He is also the CEO of the company. He has an experience of 10 years in the
electronics industry and therefore it will be very helpful for the company to gain his
experience and insights that will be critical to the success of the company in the competitive
smartwatch segment of Malta. Mr. Smith holds a 40% share in the company. Mr. John

Angelo is the second shareholder with a 20% share in the stakes of the company. Mrs.
Cynthia Fox will be the third shareholder of the company with another 20% share in the
stakes of the company. So, this will be the basic structure of the organization, to begin with
and it is expected that with the kind of experience these people will bring into the
organization, the company will achieve success in terms of growth profitability and
sustainability in the long run.
3.3.4 Financial
The financial feasibility is very important for the company to consider because it needs to
ensure that all the financial resources are available on time so that all the business operations
can be conducted successfully. The financial resources are composed mainly of the capital
that has to be raised by the organization from the diverse sources such as shareholders and
through borrowings made from different banks and financial institutions. Management has
done the financial calculations prudently in order to ensure that the financial resources are
available at the right time depending on the requirement of the organization. The financial
resources vital for conducting the daily business operations that encompass inflow and
outflow of cash and other forms of current assets. Another important element of the financial
structure is the share capital that has to be raised from the investors of the company. The
revenue that will be generated from the sales are also the essential financial elements to
impact the management decisions of the firm. Thus, the financial feasibility analysis has been
an important constituent of the feasibility analysis strategies undertaken by the management
of the organization.
3.3.4.1 Set-up Capital
The setup capital represents the initial starting capital that the company will require in order
to initiate the business. The estimated budget capital for KiddoWatch will be 79,714 euros
and the rest of the required amount will be taken in the form of a loan from the various banks

and financial institutions. The consideration of the set-up capital has been important from the
perspective of the organization because it is through the raising of capital that the company
will be able to conduct its business activities successfully. Capital is required by the business
for performing the daily business operations where there is involvement of a considerable
amount of investment in different directions. The organization will undertake these expenses
by raising capital from the shareholders and at the same time borrowing funds from banks
and other financial institutions. As decided by the management the capital will be brought in
the ratio of 4:3:3 by all the three members of the management.
3.3.4.2 Revenue
The revenues will be important financial aspects for the company as the success of the
business will be reflected in the revenues. From the first year of operation in Malta, it is
expected that the company will be able to earn a revenue of around 220000 dollars
(1,91,812.50 Euros) in the first year of operation. From the analysis of the revenues, it can be
considered as satisfactory for the business in the first year. If the expected level of revenue is
earned by the company then it can carry on its business operations profitably into the future.
From the financial analysis, it has been revealed that if the management can implement the
strategies effectively then the company will be able to increase the revenue year on year basis
and this will contribute to the growth, profitability, and sustainability of the organization in
the long run
3.3.5 Breakeven Analysis
Year 1 Year 2 Year 3
Sales Price Per Unit 35 35 40
Variable Cost 15 15 18
Contribution 20 20 22

Fixed Cost $215000 $215000 $215000
BEP Unit 10750 10750 9772.72727
Table 1: Breakeven Analysis
Source: Author
Break-even analysis is an important factor to consider in the financial analysis of the
organization. The break-even point is where the total revenue earned equals the total fixed
cost incurred. This is a calculation which enables the organization to understand the progress
in terms of the revenue generated and the profitability of the firm. Depending upon the break-
even analysis the management takes various decisions related to the selling price of the
products. The faster the company is able to recover the initial investment behind the cost of
the product it is better for the organization to remain profitable. Thus, the break-even analysis
is an important factor to consider by the marketing and sales department. Shareholders are
also interested in the break-even analysis of the organization because they have an idea as to
when the company will be able to recover the total fixed cost that it has incurred during the
years of its operations in the Maltese market.It is expected that the break-even will be
achieved after 3 years of operation.
3.3.6 Return on Investment and Profit Margin
The return on investment (ROI) is an important financial consideration for the organization. It
denotes the return that the company is earning on the investment amount. It is a measure of
the financial stability and the profitability of the organization. Hence, the management has
calculated the return on investment that it proposes to earn during the first three years of
operation in the Maltese market. The profit margin is another essential consideration for the
organization because it denotes the profit cushion that the management wishes to make
during the first three years of operation in the market. The higher the return on investment,

the better it is for the organization and it will enhance the profit margin of the company on a
year-on-year basis. Hence, the management of KiddoWatch has considered both the return on
investment and the profit margin to be important financial indicators of the operating success
of the company in the market. It is expected by the management that with the successful
years of operation the return on investment along with the profit margin will be enhanced and
this will be crucial in achieving competitive advantage in the smartwatch segment of the
Maltese economy . It is expected that the profit margin will be around 20-25% and the ROI
will be around 30-40%.
3.4 Results of the Research in terms of Ambition Vs Ability
From the perspective of a research study, ambition refers to the basic objectives that the
researcher wishes to achieve in a research project. Ability refers to the actual capacity to
which such ambitions can be achieved by the researcher. So, it is essential that there is no big
gap between the research ambition and ability. This is because if the ambition for the
researcher is too high then there are chances that the research will not be successful in the end
as the objectives will be unrealistic to achieve. Thus, any study has to be based on the
available resources, knowledge, know-how, and skills of the organization and its resources so
that the feasibility objectives can be achieved as per the expected outcomes. In terms of this
business development plan, the initial feasibility research has revealed situations that put
substantial confidence that the management of the organization will succeed in the new
startup and they have the ability to attain the ambition of the business. Hence, it can be
concluded that the feasibility research has depicted positive outcomes that put confidence in
the management to go ahead with the proposed stage of business modeling. At this stage, the
needs for resources of the entrepreneurial business strategy have been analyzed and
effectively covered in the completed feasibility studies.

4 Chapter 4: The Business Model
4.1 Introduction to Business Model
A business model can be defined as a representation of the ways in which a business
enterprise makes or wishes to make money. The business model is based on 9 building blocks
that form the business model canvas (Ovans, 2015). Hence, a business model can be defined
as the strategies that are used by the organization to run the business on a regular basis. The
management of an organization needs to analyze the business model from time to time such
that they can review the various policies and strategies that the organization undertakes in
conducting its daily business operations in the chosen sector (Dudin, Kutsuri, Fedorova,
Dzusova, & Namitulina, 2015). As the business environment is highly dynamic, it is
extremely essential for the management to be innovative with the business model and make
the changes as necessary to suit the changing demands of the market (HUANG, LAI, &
KAO, 2014). Hence, the new business will also have to develop a business model based on
which it will conduct the daily operations with the objective of making money and remain
profitable in the sector (Mock, 2017). Before the business model canvas has been developed
by the management, which is composed of 9 blocks such as, the value proposition which
consists of the product or service that will be offered to the customers in the target segment,
the market segments which consists of diverse customer groups to which the business will
offer the products, the communication, and distribution channels or the media through which
the products will be made accessible to the customers, the relationships encompassing the
building of warm and trusted bonding between the organization and the key stakeholders, the
key resources needed are those which will ensure seamless flow of the business over time,
the key activities consist of the strategies needed to be implemented to achieve the desired

organizational objectives, the key partners are the several entities that have substantial stakes
in the business, the revenue streams comprise the flows of revenue from the sale of the
products to the target customers, the cost structure represents the several elements of costs
that have to be incurred by the business on a regular basis with the objective of attaining the
overall organizational objectives (OSTERWALDER, 2005).
4.2 The Core Strategy
KiddoWatch will be implementing a differentiation strategy. The differentiation strategy will
be suitable because the products are unique and the company will be able to generate
uniqueness in the customers’ perceptions (Saint-Leger, 2017). The strategy will be based on
the unique design and mechanism of the watches and the services to be offered to the target
customers (Rivkin & Trout, 2001). The pricing strategy will be based its premium qualities
and services to be offered to the target customers. The aim of the company is to feature the
unique offerings to the target customers which will be well-demonstrated by the company’s
marketing strategy (Bulanda, 2014).
4.3 Business Model Canvas revise title of section Business.....
Key
Partners
-Suppliers of
inputs
-Watch
showrooms
-Electronic
showroom
-Software
manufacturing
company
-Online channels
Key Activities
-Research and
Development
-Marketing
activities
-Quality and cost
control
-Maintenance
-Inventory
control
-Distribution
-Sales support
Value
proposition
-GPS enable
wrist watch
-Exclusive
for children
-Mobile
application
Customer
Relationship
-Customer
Database
Customer
Segments
-Working parents
-People with
middle to high
income
-Young working
parents
-Local guardians
of children

-Customer-care
services
-Production
planning
Key
Resources
-Financial
resources
-Human
Resources
-Physical
resources
Channels
-Social media
-Online
website
-Magazines
-Feedback
loop
-Television
Cost Structure
- High Initial Fixed Cost
- Fixed Cost
- Operating cost
-Administrative cost
-Taxation
-Selling and distribution cost
-Overheads
-Marketing operations
-Resource Procurement
Revenue Streams
-Sales revenue
-Sponsorships
Table 2: Business Model Canvas
Source: Author

4.3.1 Value Proposition
The value propositions are the unique features which the company will be providing to its
target customer segments. These unique features will help the company to serve the
customers in an effective way. The competitive edge over the rivals can be obtained with the
help of value proposition. The GPS enabled wrist watch for the children will be one of the
unique products in the market. It will come with a mobile application which can be installed
in Android and iOS enabled smart devices. This watch will help the working parents, local
guardians and young working parents with real-time information about the movement and
location of their children (Berends, Smits, Reymen, & Podoynitsyna, 2016). This watch will
not only provide safety to the children and wellbeing to the working parents but also it will
provide information about footsteps and pulse-rate of the children. In case of an emergency,
there will be an alert message notification in the smart devices’ application. The watches will
be manufactured with the use of non-toxic ingredients and high-quality inputs so that they do
not cause any harm to the tender skin of the children (Amit & Zott, 2010). The mobile
application will be synchronized with the watch so that the application users can get instant
information which will enhance easy and convenient tracking of the children. The product
will be highly useful and effective for working parents who have to leave their children at
home or day-care centers while going for their working place the parents from any place and
location can track their children with the help of this GPS enabled wrist watch the children
from 3 years to 12 years can wear this watch the working parents will not only be getting
information on current location of their but also they can prevent any unfortunate incident to
happen to their children the footsteps and the pulse rate of the children could also be tracked
with the help of this watch the quality of the ingredients to be used will be remarkably higher
so that this variable does not cause any harm to the delicate and tender skin of the children

this GPS enabled wrist watch will be exclusively for the children which comes with user
friendly mobile application and it is one of the unique features (Greenwald, 2012).
4.3.2 Customer Segmentation
The customer segmentation is a practice of segmenting or dividing the entire base of the
customer into different groups of individuals which are similar in some specific ways and
relevant to marketing. The customer groups generally divided between the basis of age,
gender, spending, and habits. Customer segmentation takes place on the basis of different
differentiators which actually divide the customers on the basis of income, religion, family
size, and education level. The customer segmentation also takes place on the basis of some
geographic factors depending on the locations of the target customer and psychographic
factors like lifestyle, personality, and social class etc. The behavioral segmentation of
customers includes the division of customer base on the basis of desired benefits,
consumption, spending, usage etc. Customer behavior is an important aspect of taking
decisions for customer segmentation strategy formulation. It aims at increasing the
effectiveness of the allocation of different marketing resources and increasing up-selling and
cross-selling opportunities. The customer is one of the important aspects of the marketing
mix of any business organization. In the case of KiddoWatch, the target customer segment
will be the working parents who have to leave their children back at home or any other
daycare Agencies while going for their workplace (Ovans, What Is a Business Model?,
2015).
The working parents who during their working hours stay away from their children at distant
locations are the major customer segment of the company. The young working parents and
the local guardians of the children will be the target customer segment. The price of the
watch will be higher because of its high-end configuration and quality of the ingredients used
the company will be targeting the customers from moderately higher to higher income

earning section of the society (Casadesus-Masanell & Zhu, 2011). The major target segment
of the company is the population who are ready to pay for the premium price to protect their
children and give them a safe environment while they are away from their children. The
company will be launching its product in the market of Malta so the target market is Malta.
The company wants to achieve a competitive advantage in the market of Malta where there is
no such company which has introduced GPS enabled wrist watch exclusively for children.
4.3.3 Channel
Kiddo watch will be considering different channels of distribution through which it can reach
its target customer. The social media platform will be one of the most effective channels
through which the company can connect with as many people as it wants. The increasing
popularity and use of social media platforms will help in convenient circulation of marketing
contents to the target customer (Rouse, 2018). The company will be providing every kind of
important information in its online website through which it can reach its customers who will
be visiting its website. The advertisements will also be given in some of the print media like
magazines, newspapers, brochures, and flyers. Television will also be used as one of the
effective media of marketing. The company has also conducted a survey on the working
parents of Malta. From the survey, it has collected important information regarding the
attitudes and perceptions of the working parents and the hidden demands of the target
customer have also been identified through the survey. The company will be ensuring an
effective distribution channel which will help in convenient supply of the watches from the
point of manufacturing unit to the final destinations. The company will also provide after-sale
services to the customers through the service center options (Hemmer, 2016). The watches
would be available in the exclusive showrooms for watches, other electronic-device outlets,
and online shopping sites. The aim of the company to improve its distribution channel is to
enhance the customer reach its products and to effectively distribute the products to the hands

of target customers. The success of the business will depend on the selection of suitable
channels for marketing, advertisement, and distribution. The main aim is to enhance the reach
of the customers to the products of the company and to enhance customer convenience. The
effective marketing channels will ensure the convenient reach of the customers to the
products of the company.
4.3.4 Customer Relationship
Customer relationship is one of the important factors and elements in the business model
canvas. Customer relationship needs to be well developed so that the customers’ demands,
taste and preferences, and even grievances could be identified and necessary measures could
be taken to address the same. Customer acquisition is an important process where the
customers are persuaded to select the products of the organization over substitutes available.
Content marketing is a way to acquire customers. The company will also be using Search
Engine Optimization through which content marketing activities will be conducted (Business
Jargons, 2017). The target customers will be getting necessary and relevant information about
the brand and the products. The company will also be using email marketing through which
the target customers will be informed about the necessary contents. The customers can
receive important information and updates through email subscriptions. Social media
marketing will be will be used to elevate the products of the company significantly in the
target customer segment. Another important aspect of the customer relationship is customer
retention there the company has to develop initiatives to keep the customers retained with
their brands. The company will be choosing the right platform of communication so that the
customers can be informed about the new updates and information. Speed is one of the
important aspects which are secondary to the quality of the products and this will also take
well care of by the company (Osterwalder & Pigneur, 2010). Customer database has already
been created from the details of the respondents who have participated in the survey. The

main aim of the sales and marketing personnel of the company will be to interact with the
target customer, build a relationship with them, improve the sales and retain the customers.
The sales representatives will be interacting with the customers to provide them with personal
assistance dedicated and committed assistance to increase service quality (Business Jargons,
2018). The customers can also search online about the details of the products and will be able
to buy the watches from the online sites like the official website of the company. Each
customer will be taken care of and if any customer faces any post-purchase issues, the
company will be provided with excellent after-sales service so that the inconvenience can be
resolved on an immediate basis (Anastasia, 2015).
4.3.5 Revenue Stream
The company will focus on increasing sales and will be using up-selling strategy. It will be
providing some kind of incentive programs to motivate its employees to boost up the sales.
The sales personnel will be given ample training so that they could contribute their skills in
initiating the sales and increasing the volume of sales. The company will be developing an
effective revenue model focusing on the pricing of each unit of the product. It will be suitable
for the company to select the closest fit revenue, model. The company has to invest in the
technology model and Research and Development and hence, selecting linear projections will
be suitable for it. The pricing should be fixed with the aim of increasing sales volume of the
company. The revenue model will be magnifying organizational value and highlighting the
features on which the brand is unique. The revenue model of the company will also be able to
attract suitable investors to the business. There should be ample flexibility in the model so
that necessary changes can be made if needed. The revenue streams will be divided into two
major streams of which, one is transaction revenue and the other one is recurring revenue the
transaction. Revenue will be generated from the target customers who are making a one-time
payment for the GPS enabled wrist watch for children. The recurring revenue will be

generated from the target customers who will be consistently buying the product and the
company will be dedicated to providing value before and after the sales to these customers.
The customers will be encouraged to pay the premium price for the products of the company
by proposing the value of the brands to the customers. The benefits which the customers will
be getting from the purchase will also be portrayed (Teece, 2010). The customers will be able
to make their payments conveniently with the help of online and offline modes of payment. It
is expected that a substantial percentage of the total revenue will be contributed by each
segment of the revenue stream.
4.3.6 Key Activities
Key activities of the company will be including delivery of quality products to the target
customers of Malta. The company has to decide on the procurement of the ingredients to be
used for the manufacturing of the watches. The key activities will include the research and
development practices which will help in gathering information based on which the strategies
for marketing, production, and sales will be formulated. The company needs to gather
information about the existing products in the market R&D activities are also needed to
ensure quality checks of the products. The production activities will include a selection of
design and product and production process. It needs to select the right production capacity
through an effective production planning. The company needs to ensure production control
along with cost and quality control. The inventory control functions will also be ensured so as
to prevent under-stocking or overstocking the replacement and maintenance of different
machines will also be included. The marketing activities will include the formulation of
suitable marketing strategies, market research planning, product development, sales support,
communication and different events such as campaigns exhibition and product launches sales
and customer service activities will include customer assistance, the key activities will also
include clerical tasks and specific job responsibilities (Zott, Amit, & Massa, 2011).

Developing a suitable branding strategy along with the design for product and packaging will
also be one of the key activities.
4.3.7 Key Resources
The key resources of the business will include the human resource, physical resources,
financial resources, and other necessary resources which will ensure the business to achieve
its objectives and goals. The physical resources include the physical office of the company,
machinery, equipment, warehouse, outlets, and other important tangible resources. The
company will also be requiring intellectual resources like patent, copyrights, and partnerships
(White, 2012). The human resource will include skilled and competent employees who will
generate opportunities to increase the sales volume. The marketing personnel will be taking
care of the marketing activities. Different employees representing various departments of the
company are required to have extensive knowledge pool so that they can expand the business
and ensure the achievement of competitive advantage. The financial resources will include
monetary funds to support the working capital requirement and other expenditures of the
company. Since KiddoWatch is a product given business it needs human resources and
intellectual resources inadequate level.
4.3.8 Key Partners
The key partners include the customers at the clients, suppliers, the showrooms where the
products will be available, the software manufacturing company which will be developing the
mobile application and the online channels for marketing and distribution. Kiddowatch needs
to enter into right partnership agreements by selecting effective partners. It has to be
responsive towards the identification of critical partners to the business. The suppliers and the
partners who will be sourcing the key resources are major partners. The company has to
develop a cordial relationship with the various partners. The supply chain of the business
needs to be developed in the most effective way so that the functioning of different

operations of the business and flow of Information and final products takes place seamlessly.
The main objective of the business will be optimization and to achieve economy of scale it
will also need to ensure reduction of uncertainties and risks. Selection of suitable and
matching key partners will enhance the chances of the company to reduce its risks and
uncertainties.
4.3.9 Cost Structure
The company needs to understand the basic and fundamental costs which can be derived from
its business model. The cost of the key resources represents an important expenditure. The
company will incur a cost for the key activities of the business. It is also very important to
understand the ways the key activities and key resources will be deriving costs. The
alignment between the key activities and the value proposition of the business has to be
understood and analyzed by the company. A cost-driven business model will always focus on
reducing the cost and it might impact the other important blocks of the business model
canvas. Generally, the cost-driven model creates a lean cost structure with the help of
reasonably priced value propositions and high level of automation and also by outsourcing
the expensive functions. The attempt towards lowering the prices on the basis of internal
expenditure and cost is an important approach for the company. If the business model of the
company is value-driven, then the whole focus will be on developing value which the
company will be providing to its customers. The GPS enabled wrist watches are luxury
watches and hence, for this product, a value-driven business model will be important. In
every business, there are a certain fixed cost and variable costs. The fixed cost remains fixed
irrespective of the number of outputs produced while variable costs vary with the output.

5 Chapter 5: The Business Plan
5.1 The Watch Industry in Malta
The watch industry in Malta is a part of the electronics sector which is one of the most
developing sectors of the Maltese economy. Various industries have started to experience
exceptional growth in Malta, since the early part of 1990. Major industries that have
prospered in Malta are electronics, shipbuilding, and repair, construction and textiles.
Exporting is one of the main industries in Malta and around 90% of the exports constitute of
the manufactured products. The Malta Development Corporation or MDC is an initiative
from the government that attracts foreign investment into the nation. Currently, there are
around 200 international manufacturing firms in the country out of which the largest firm is
SGS Thomson which is a French organization. It employs around 1800 people in the country
and has an annual sales figure of around 1 billion US dollars. Like several electronics
industries, the watch industry is also developing fast in Malta due to the strategic location of
Malta which lies along the key commercial sea lanes in the Mediterranean area (Consulate of
Malta in Recife, 2015). It has become an important economic hub for the various
international organizations that are investing in the region owing to the Government support
and the fast pace of economic development of the economy of the nation. Currently, in the
watch industry, there has been a change in the tastes and preferences of the customers. Now,
the young generation of the customers mainly prefer smartwatches that come with several
technologies and facilities other than just showing the time (Advameg, Inc., 2018).

5.2 Project Planning and Development Stages
Planning
Stages
Dec 2018 Jan 2019 Feb 2019 Mar 2019 Apr 2019 May 2019
Market
Research
Location
Finding
Investment
Calling
License
Processing
Designing
Retail
Stores &
Online
Formats of
Sales
Table 3: Project Planning Timeline
Source: Author
From Table 2 it is evident that the proposed project will consist of the several stages such as
starting with the market research, moving onto the finding of the locations where the retail
outlets will be opened. Then investments will be undertaken in diversified areas for setting up
the proposed business in the country. Then there will be the phases of license processing
where the management will have to secure several licenses related to the proposed business
that it wishes to conduct in the smartwatch segment of the electronics industry. Finally, there

will be designed of the retail outlets and structures will be developed for offering online sales
of the products to the customers.
Development
Stages
Jun 2019 Jul 2019 Aug 2019 Sep 2019 Oct 2019 Nov 2019 Dec
2019
Acquiring
spaces for
retail outlets
on rent
Developing
the
infrastructure
for online
sales such as
website, and
third-party
sites
Contracting
with the
suppliers and
other key
partners in
the business
Undertaking
recruitment
and selection
Conducting
training and
induction

Commencing
the business
in a retail
store and
online
formats
Table 4: Project Development Timeline
Source: Author
From table 3 it can be seen that the product development phases consists of several stages
such as acquiring spaces for retail outlets on rent, developing the infrastructure for online
sales such as website and third party sites, contracting with the suppliers and other key
partners in the business, undertaking recruitment and selection, conducting training and
induction and finally commencing the business in the retail store and online formats.

5.3 Product Design
Fig. 4: Product Design for KiddoWatch
Source: Author
The product design for the kid’s GPS-enabled watches will be highly lucrative and attractive
for the kids. They will come in various colors, shapes, and sizes to suit the needs of the
children. Basically, they will have some very interesting technologically advanced features
such as GPS tracking and vital statistics monitoring such as measuring of pulse rate, heart
rate and strides walked by the children in a particular day. The watches will be made of non-
toxic materials that are highly durable and at the same time totally water resistant. Along with
the watches, there will be an application for the smartphones of the parents. The parents need
to install this application on to their smartphones in order to connect with the GPS integrated

into the watches. This application will be provided with the watches and can also be
downloaded from online websites such as the Play Store.
5.4 Marketing Plan
The marketing plan of KiddoWatch consists of the details of the two formats of marketing
that the brand will undertake for serving the needs of various categories of customers, some
of whom prefer to visit the retail shops for shopping and while the others prefer visiting the
online websites of the company, or the third-party e-commerce sites for purchasing their
desired products and services.
5.4.1 Retail Outlet Marketing Strategies
The retail outlet marketing strategies will consist of displaying and merchandising the
products in the retail shops that will make it easier for the customers to see the various
categories of the kid’s smartwatches that are put up for display. At the retail outlets of the
company, there will be staff for helping out the customers visiting the stores. They will assist
the customers in inquiring about their choice of watches for the kids that they wish to
purchase. The customers will have a wide range of products to choose from as the GPS-
enabled kid’s watches will come in an array of colors, shapes, sizes, and fittings to suit the
choices of the children and their parents.
5.4.2 Online Marketing Strategies
The online format of marketing will be done through the official website of the company.
There the several categories of the kid’s watches will be arranged in a clear manner such that
the visitors to the website can clearly see the products, their features, prices and the
availability in stock. The customers visiting the website for purchasing will be able to choose
their preferred variety of watch and they can order the same directly from the website of the
company. The watches will also be available online through third-party e-commerce sites

such as Amazon, eBay, etc. Therefore, the customers will be able to receive their chosen
products at the address provided.
5.5 Management Structure
Fig. 5: Proposed Management Structure for KiddoWatch
Source: Author
From Figure 6, the proposed management structure of KiddoWatch can be observed. It will
be a hierarchical organizational structure with the CEO or the entrepreneur at the top
followed by the CFO, HR, Admin & Legal Departments. Under the CEO, there are the Sales
& Marketing, Quality, Manufacturing, R&D and other departments. Being commenced as a
small-scale organization, the business will initially be started with around 50 employees and
staffs operating in the different departments.

5.6 Operating Process
Fig. 6: Proposed Operating Process of KiddoWatch
Source: Author
From Figure 7, the proposed operating process of KiddoWatch can be understood. There are
several stages in the operating process starting from demand forecasting and supply planning.
Then producing the required number of units of the watches, quality checking, inspecting,
sample testing, gathering feedbacks and then launching the final completed products in the
target market segment.

5.7 Financial Plan
The financial plan of KiddoWatch for the next 3 years of operations is enumerated as follows
in the following sections.
5.7.1 Start-up Cost
Start-up Costs $
Legal 110
Stationery 250
Consultant Fees 172
Brochures 450
Insurance 550
R&D 1550
Rent 75
Equipment & Machinery 10,450
Total Start-up Costs (A) 13,607
Start-up Assets Required
Opening Cash Balance 52,500
Other Short-term Assets 6,500
Total Short-term Assets 66,107
Long-term Assets Required 0
Total Assets (B) 66,107
Total Requirements (A+B) 79,714
Table 5: Start-up Cost
Source: Author

From Table 4, the start-up costs for the business can be determined. It amounts to 79,714
euros that the business will have to incur behind the several assets that are needed to be
purchased for the new business to launch successfully in the target segment.
5.7.2 Projected Profit & Loss
KiddoWatch
PROJECTED CONSOLIDATED INCOME STATEMENT
2018(‘000
)
2019(‘000
)
2020(‘000
)
Revenue 22
0
28
0
36
0
Cost of Goods Sold (125
)
(165
)
(195
)
Net revenue 9
5
11
5
16
5
Operating costs (16
)
(18
)
(22
)
Depreciation and depletion (25
)
(35
)
(42
)
Gross profit 5
4
6
2
10
1
General and administration expenses (15
)
(18
)
(29
)
Other income 3
2
4
5
6
5
Investment and finance income 1
3
1
8
2
2
Provision for surplus over entitlement (20
)
(26
)
(32
)
Provision for impairments (13
)
(18
)
(21
)
Other expenses (5
)
(8
)
(12
)
Change in fair value of investment property (4
)
(6
)
(8
)
Exploration expenses (18
)
(21
)
(26
)
Finance cost (11
)
(12
)
(14
)
PROFIT BEFORE INCOME TAX 1
3
1
6
4
6
Income tax expense 3.9 4.8 13.8

PROFIT FOR THE YEAR
9
1
1
3
2
Table 6: Projected Profit & Loss
Source: Author
It is evident from Table 5, that the expected net profit for the business in the first year is
$9,000 , that in the second year is $11,000 and that in the third year is $32,000 . So, it is
expected that the business will be highly successful in its operations in the target market of
Malta and will be able to increase the profits by 22% in the second year and by around 190%
in the third year.
PROJECTED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2018(‘00
0)
2019(‘00
0)
2020(‘00
0)
ASSETS
Non-current assets
Property, plant, and equipment 122 125 128
Intangible assets INCLUDING PRELIMINARY
EXPENSES
45 65 85
Investment property 65 75 85
Current assets
Inventories 80 90 120
Trade and other receivables 60 65 75
Available-for-sale financial asset 25 30 35
Financial assets at fair value
through profit or loss 18 20 25
Cash and bank balance 26 57 65
TOTAL ASSETS 441 527 618
EQUITY AND LIABILITIES
Share capital 80 120 130
Statutory reserve 25 35 55
Legal reserve 15 20 30
Retained earnings 8 12 15
Non-current liabilities
Borrowings 110 120 146
Provisions 18 25 32
Current liabilities
Borrowings 120 120 130

Trade payables and accruals 65 75 80
Total liabilities 313 340 388
TOTAL EQUITY AND LIABILITIES 441 527 618
Table 7: Projected Balance Sheet
Source: Author
From Table 6, it is observed that the total equity and liabilities at the end of the first year will
be $4,41,000 , that at the end of the second year will be $5,27,000 and at the end of the third
year will be $6,18,000. This shows a promising financial stability for the company from the
three years of operation.
5.7.3 Projected Cash Flow
PROJECTED CONSOLIDATED STATEMENT OF CASH FLOWS
2018(‘000
)
2019(‘000
)
2020(‘000
)
Profit before income tax 1
3
1
6
4
6
Adjustments for:
Depreciation and depletion 2
5
3
5
4
2
Other income (32
)
(45
)
(65
)
Investment and finance income
5 8
1
2
Provision for impairments 1
3
1
8
2
1
Finance costs 1
1
1
2
1
4
Changes in working capital:
Trade and other receivables (13
)
(15
)
(25
)
Inventories (5
)
(9
)
(11
)
Trade payables and accruals (8
)
(10
)
(12
)
Net cash generated from operating activities
9
1
0
2
2
Income tax expense (3.90
)
(4.80
)
(13.80
)

Net cash flows generated from operating
activities
5.1
0
5.2
0
8.2
0
INVESTING ACTIVITIES
Purchase of property, plant, and equipment (122
)
(18
)
(30
)
Expenditure on intangible assets (45
)
(18
)
(32
)
Net cash flows from/ (used in) investing
activities
(167
)
(36
)
(62
)
FINANCING ACTIVITIES
Proceeds from borrowings 23
0
7
5
8
5
Repayment of loans (18
)
(25
)
(35
)
Finance costs paid (2.5
)
(4.5
)
(9.5
)
Net cash flow from/ (used in) financing activities 209.
5
45.
5
40.
5
Cash and cash equivalents at the beginning of
the year
2
8
7
5
9
5
CASH AND CASH EQUIVALENTS AT THE
END OF THE YEAR
75.6
0
89.7
0
81.7
0
Table 8: Projected Cash Flow
Source: Author
From Table 7, it can be seen that the cash and cash equivalents at the end of the first year will
be $75,600, that at the end of the second year will be $89,700 and at the end of the third year
will be & $81,700. Therefore, it is evident that the cash and equivalents will increase in the
second year but will decrease in the third year.
5.8 Critical Success Factors
The critical success factors are those which are required to ensure that a business is
successful in attaining its objectives and aims as expected. For KiddoWatch, the critical
success factors will be the quality of the products, the professionalism, and dedication of the
customer service staffs, and the timeliness with which the products can be delivered to the
customers. There should be effective promotions and advertising such that the brand

awareness is created effectively, and the positioning of the business will also be of high
importance in achieving success. The marketing department should come up with promotions
and discounts to attract more customers.
5.9 Risk analysis with risk matrix – impact/probability
Any business establishment is prone to several categories of risks that can of financial or non-
financial in nature. All these risks have the potential to hamper the activities of the business.
Some of these risks have low probability, some have medium probability while the others
have high probability of occurrence. Therefore, the magnitude of the losses and damages vary
depending upon the probability and type of risks that the business is exposed to. Likewise,
Kiddo Watch might also have to encounter some uncertainties and risks during its operations
and therefore it is essential for the management to conduct a prudent risk analysis in order to
determine the probable risks that the business might face in its supply chain activities. The
value chain analysis has resulted in the depiction of some of the scenarios where the business
can encounter several risks. The risks are mainly of two types:
 Operational Risks- These are the several risk factors that might emerge at any
moment other than financial risks. These can affect the progress of the business and
lead to financial and non-financial losses to the business.
 Financial Risks- The financial risks refer to any uncertainties that might arise with
the financial aspects of the business such as funding from the several sources or the
cash inflows or outflows. These have the potential to impact hard on the business.
Situations of risks for the business:

Operational Risks
Capital risk
Operating funds risk
Cash inflow and outflow risk
Financial Risks
Loss of workers
Inconsistency in supply
Natural disasters such as cyclones,
earthquakes, drought, floods, etc.
Manmade disasters like accidents,
terrorism, war, etc.
The following diagram depicts the
Risk Assessment Matrix:
The risk matrix is a tool that is helpful in identifying the different types of risks, their
probabilities of occurrence and the details of the damage and the mitigation strategies that
need to be developed by the management to counter or mitigate the effects of such risks to
the extent practicable. The risk analysis department of Kiddo Watch has undertaken a risk
assessment that reveals the following details of risks and their respective mitigation policies.
Types of Risks Probability Risk Details & Mitigation Strategies

Operational
Risks
Loss of workers Medium Preparations are to be made for urgent recruitment and
selection of substitute workers. There should be
effective employee retention policies such as lucrative
compensation, training and development, rewards and
recognition, career growth opportunities, effective
performance management, etc.
Inconsistency in
supply
Medium Inconsistencies in supply of resources and raw materials
can occur if some of the suppliers are either dissatisfied
or are unfair in their partnerships with the business. If it
is due to an error or fault on the part of the business
such as untimely payment of dues, then such incidents
should be considered with due importance. The
suppliers are always to be paid on time and any
outstanding amount of credit should be released as per
the agreed terms and conditions. Where any supplier has
proved to be unethical and unfair then such supplier
should be dismissed, and a replacement will have to be
found out.
Natural disasters
such as cyclones,
earthquakes,
drought, floods,
etc.
Low Though the probability of the natural disasters occurring
is very low, yet in case one happens, the management
needs to be well-prepared in advance. Hence, there has
to be disaster management teams in place in case of any
uncertain calamities. Prior arrangements have to be
made with the local hospital, fire brigade and police
station so that they can immediately offer services in
case any such incident happens.
Manmade
disasters like
accidents, fire,
Medium The accidents that are caused by humans such as fire,
theft, terrorism or war can outbreak at any point of time
and cannot be predicted. But these need to be accounted

terrorism, war,
etc.
for. For disasters such as fire adequate fire extinguishing
systems have to be in place. For workplace accidents,
there needs to be effective observation of the workplace
health and safety regulations through effective policies
and equipment to prevent major accidents or health
issues of workers. For countering effects of terrorism or
war, there needs to be disaster management teams that
will quickly escort the workers out of the premises into
some safe place. The local police will also have to play
a major role.
Financial Risks
Capital risk Low The capital risk arises when the business is not able to
calculate the capital requirement effectively and either
brings in less capital or excess capital into the business.
Both the situations can be risky for the business because
under-investment leads to financial crisis and the
business will not be able to acquire the necessary
resources and assets for conducting its daily operations.
On the other hand, if too much of capital is injected then
there will be blockage of funds in areas which are
irrelevant for the moment. This will prevent the scope of
investments in the necessary areas of the business. This
risk is low as it has already been accounted for by
undertaking an effective market analysis through
analysis of the demand and supply for the products and
the evaluation of the several macro and micro
environmental factors affecting the business.
Operating funds
risk
Medium The business might face funding problems for
continuing its daily operating activities. This is a
medium risk factor and can be addressed by making
prior arrangements with local banks and other financial
organizations that lend money in the form of short-term