Refrigerator Market Analysis and Business Plan

This assignment delves into the UK refrigerator market, examining its size, trends, key players, and consumer preferences. Students are tasked with conducting a thorough competitor analysis and developing a comprehensive business plan for a hypothetical new entrant in this competitive sector. The plan should encompass aspects like product strategy, marketing, financial projections, and operational considerations.

Business Proposal
Walton refrigerator enter UK market as a new brand
1

Table of Contents
Introduction of Business proposal...................................................................................................4
Objectives........................................................................................................................................5
Market Size of UK for electronic products......................................................................................5
Market Forecasting and Possible Annual Turnover.........................................................................6
Competitive landscape.....................................................................................................................7
SWOT ANALYSIS.........................................................................................................................8
Investment Plan..............................................................................................................................10
Expected Annual Turnover in UK.................................................................................................10
Operational cost.............................................................................................................................10
Calculation of Average operational cost per unit..........................................................................11
Profit Analysis...............................................................................................................................11
Financial plan.................................................................................................................................11
Revenue projections.......................................................................................................................11
Projected Cash flow statement.......................................................................................................12
Projected Income statement...........................................................................................................12
REFERENCES..............................................................................................................................14
2

Introduction of Business proposal
The business proposal herewith is going to deal with a business proposal for Walton
Company which is proposed with an entry in UK with a new brand. This proposal is all about
Walton refrigerator enter UK market as a new brand. After investigating the demand of product
into the UK economy, the company has reached to a positive conclusion of introducing a new
brand of Walton into the United Kingdom in the near future. In the investigation carried out by
Guardian Environment Network represented that the UK's total electricity demand is slightly
increased. The Walton Refrigerators comes under a range of exportation as these are the
advanced products and have a good record for their performance and durability in other markets.
Walton manufactures very high quality and durable refrigerators and freezers for commercial
and home purpose. The strength of the British pound as well as the state of the economy has
remained United Kingdom to be an attractive investment area for foreign investors (United
Kingdom - International trade, 2016).
Nonetheless, flexible trade policy centres on exchanges is a major reason that provide
opportunities for a Bangladesh based electronic manufacturer to capture the UK electronic and
consumer goods market. The people of UK tend demand more frozen food and they also demand
for cold drinks, therefore, a huge demand of refrigerators can be expected from UK people. The
specific demand of customers also presents opportunities for a new business to enter in the
market and to capture huge market share. The trends represent that the introduction of energy
efficiency labelling and other mandatory regulation that have been included into practice during
2011 have lead to organic growth in the consumption of high electricity growth (Angelis, 2016).
In the similar fashion, the people of UK are fond of variety of foods and they prefer to have
snacks in bulk at each home and office spaces, this flexure the demand of competitive Walton
Refrigerator in the UK local market (United Kingdom - International trade, 2016). In addition to
that the people of UK are now interested in replacing their ageing and broken appliances as there
spending power has been increased. The business entity is not planing to come up with a
manufacturing plant in UK however, it will enter through exporting medium.
3

Objectives
 The major objective of proposed business plan is to explain the processes to entering in
the UK and to explain the relevant financial figures along with annual turnover and
operational costs associated with business. This report is going to discuss how and in
what manner the entry of Walton refrigerator in UK market as a new brand will be
beneficial for the company. It addition to that, it includes the information why investing
in the UK would be fruitful for Walton Group as a foreign trading company.
 The purpose of Walton, behind entering in the UK market is to expand its foreign
investments as well as to introduce competitive Walton products in the growing market
of United Kingdom. There is witnessed as large demand of Walton refrigerators in the
UK market as the company is worldwide known as high-end technology product with
quality standards.
 The introduction of new brand of Walton refrigerator is purposed at UK establishing a
strong presence of the cited company in the UK and other European countries, through
which more business opportunities are to be brought.
 The investment policies of Walton aimed at starting the retail operations in the UK with
full potentials. It is expected that setting up retail business would give a kick start for
Walton refrigerator.
 The objectives of company to increase the sales at international level by making
investments into foreign trading.
Market Size of UK for electronic products
At the time of purchasing home appliance the buyers focuses on of price, efficiency,
durability, style and brand (Bowhill, 2008). This has become a trend in UK and the people of the
UK consider, process and brand associated with the products. This is the reason for which the
electrical appliance manufacturers in the UK are challenged by relatively high costs as
compared with the countries that are having cheap labour. Therefore, it is suggested to Walton
Company to not coming up with a manufacturing plant and focus on exporting. The UK
electronic consumer goods especially the refrigerator section is on the way of growth. The
4

market is leaded by fridge-freezers and the volume growth of refrigeration appliances was
counted healthy in the UK during 2015 (Refrigeration Appliances in the United Kingdom, 2016).
The cited performance was boosted due to a slight recovery in real wages in 2015. The market is
continued to be benefited from the recovery in construction activity that was begun in 2014,
nonetheless, the growth was somewhat down somewhat as compared to the expected rate in
2014, as during the period UK economic starts have rose to their highest level.
According to the forecasted made for 2015-2020 refrigeration appliances are expected to outpace
the performance and are also expected to taped in the review period. The highest growth is
forecasted in the field of freestanding fridge-freezers through which the sales is going to be
boosted while having a slight. This has also been forecasted that real wages are continued to
recover, consumers in the UK are set to be increasingly confident for making upgrades in their
home appliances such as advanced refrigerators which is representing a growth opportunities for
the new business who are going to operate in the marketplace (Angelis, 2016).
The appliances within the UK refrigerator market are expected to have a post retail
volume growth of 2% in the year 2012, this growth is leaded largely because of increased
innovation and energy efficiency. The people now wants to have refrigerator with advanced
food preserving features such as humidity-controlled compartments. In addition to tat that
demand of 3D cooling and multi air flow refrigerators is increased that can satisfied the needs of
UK people of the longevity of food preservation so that more and more people can be attracted
towards the market (Angelis, 2016).
Market Forecasting and Possible Annual Turnover
From an in-depth investigation, it has been witnessed that total UK market for electrical
appliances is estimated to be worth £4.4 billion in 2015-16. It has also bee stated the of this
market 69.3% is approximated to be satisfied by imports. To the similar fashion, the exports of
business are forecasted to be worth £518.1 million. The total revenue generated from selling of
electronic goods accounts for 27.9% of industry revenue. As per the application of the industry
trends, it has been identified that over the five years through 2015-16, the revenues in the
industry are going to be increased at a compound annual rate of 0.7% (Electrical Appliance
5

Manufacturing Market Research Report, 2015). However, it has been witnessed that revenues
are negatively affected by weak domestic demand for home appliances, strong import
competition and a decline in export sales. The investigations have further revealed that facts that
the Electrical Appliance Manufacturing industry of UK has entered in a decline stage of its life
cycle and the market players are losing both domestic and global market share. The future trends
of the industry are representing that industry value added may lead to the growth of economy, at
a compound annual rate of 1.5% in upcoming 10 years from 2020-21. Nonetheless, it can be
said that overall economy is forecasted to grow at a compound annual rate of 2.1% for the same
time in near future.
Revenue
£2bn Annual Growth 11-16
0.7%
Employment
8,763
Businesses
176
Table 1: Industry Statistics & Market Size
(Source: Electrical Appliance Manufacturing Market Research Report, 2015)
Competitive landscape
From the statistics, there has been witnessed a slight competition in UK in the aspect of
refrigeration appliances. The intense competitive is due to increased prices as well as quality of
the products. In the previous year 2015 Indesit Co UK remained the leading players within
refrigeration appliances while having a large market shares. The competitiveness of business is
due to its two major brands including Hotpoint and Indesit brands. Within that review period ,
mid- to low-priced appliances have become popular among the people of country. The major
reason for this demand was a progressively squeezing in real wages and consumer confidence.
Many consumers within the industry are focused towards seeking lower-priced alternatives for
the purpose of replacing ageing and broken appliances. In today's era, there is an increased
6

pressure for manufacturers to design ever-more innovative products so they can fulfil the
lifestyle of needs of the people of UK. The market for fridges and freezers in the UK includes
products such as beer chillers and chilled cabinets for wine that are make is use by domestic as
well as commercial customers. New brand Walton refrigerator will include range of product
line such as single-door refrigerators – larder-style (including large US-style) having features of
icebox, beer coolers and wine fridges. To have a competitive edge in the marketplace, the
electronic dealers have to come up with more gadgets, smart applications and they also have to
design the products in an effective form. However, the shoppers or target market of refrigerators
are having the ability to seek out the keenest prices products which must have innovative
features (Consumer Appliances in the United Kingdom, 2016). So this is the question, how the
new brand is going to build its profitability and competitive image in the future? For the new
product branding can be seen absolutely central which decide the success of business while
employing employ innovative strategies so as to create differentiation in marketing offerings
and designing competitive marketplace for Walton refrigerator.
SWOT ANALYSIS
SWOT Analysis
Strengths
Financial strength
Brand equity
Flexibility in manufacturing area
TQM quality improvement system
Effective distribution channel
Weakness Low product rating from customer report
Ineffective brand strategy
Lack of global presence
Opportunities Rise in E-commerce marketing
Introduction of advanced tools in manufacturing
Lower operating cost in other nations
7

Regain lost market share through new products
Threats
Rise in competition level
Government regulations
Rise in raw material cost
Stagnant urban demand
Above shown is the SWOT analysis of new business which highlights the micro
environment of the company. Main strengths of business are finance where adequate funds are
present with company for conducting all the operations in the market (Bolton, 2013). Further,
organization is indulged into practices of manufacturing refrigerators on wider basis due to
which financial need is high. Management is able to satisfy this need through proper planning.
Brand equity is strength of company where overall value of company’s brand is high and this is
having positive impact on the entire company. Flexibility in manufacturing along with quality
improvement tools undertaken is the major strength for business where customers are highly
satisfied with the quality offered in its refrigerators and this has enhanced sales volume of the
company (Allen, 2012). Apart from this, some weaknesses of company is present which
adversely affects the overall operations carried out. Low product rating from customers is one of
the major weaknesses where customers are not fully satisfied with the products offered by
company to them. Further, in case of refrigerator they prefer to go for other brands in the market
and this is having unfavourable impact on the business. Ineffective brand strategies along with
lack of global presence are the main weaknesses of company through which overall efficiency of
the enterprise is declining at faster pace (Fridges and Freezers - UK - April 2014. 2016).
Apart from this, some opportunities are present with company which can be undertaken
for its smooth functioning. Rise in e-commerce marketing is one of the opportunity which
business can easily take advantage of. Organization can easily enhance its sales volume by
promoting products online. Further, introduction of advanced tools in manufacturing and lower
operational cost are the opportunities present with company. On the other hand some threats
present in the external environment which are affecting business productivity are rise in
competition level where other players are present in the market offering refrigerators. Therefore,
8

on analysing the micro environment of the business it has been identified that business can
operate efficiently through presence of effective strategies.
Investment Plan
For the proposed business plan, Walton UK will need financial resources amounting to 1
million GBP as working capital.
Expected Annual Turnover in UK
Annual Import plan from
Bangladesh (Unit)
Average FOB Value of Each
Product
(GBP)
FOB Value of Walton
(GBP)
12000 £90.00 £1,080,000.00
Operational cost
Item wise cost
(Annual) Particulars Total cost
Show room rent 1000×12 months £12,000.00
Warehouse rent 800×12 months £9,600.00
Salaries of employees 5 employees £10,000.00
Advertisement cost Both print and electronic media £5,000.00
Sales representative
expense Conveyance Allowance £2,000.00
Utility Bills Electricity +water + other £5,000.00
Transportation cost Distribution cost £100,000.00
After sales service
cost £20,000.00
Visas and Work
Permits Expenses £50,000.00
Board of Investment
registration fee £10,000.00
Total Expenses
(Annually) £223,600.00
9

Calculation of Average operational cost per unit
Name of the
product
Annual
Import plan
from Bd
(Unit)
Average
FOB Value
of Each
Product
(GBP)
FOB Value
of Walton
(GBP)
Calc
ulati
on
Average
operational
cost
(Based on
Value)
GBP
Average
operational
cost per
model GBP
Refrigerator 12000 £90.00
£1,080,000.0
0
1200
0*90 £90.21 £90.21
Profit Analysis
Name of the
product
Annual Import plan
from Bd (Unit)
Average Profit
(30%) per unit
(Value Base)
GBP
Total Average Profit (30%)
GBP
Refrigerator 12000 £27.06 £391,080.00
Financial plan
 Financial Assumptions : Sale growth 10%
 Cost :5%
 Interest rate 10%
Revenue projections
Year 1 (£) Year 2(£) Year 3(£)
Number of services
offered
12000 13200 14520
Average price £117 £129 £142
Revenues £1,407,276 £1,702,804 £2,060,393
10

Projected Cash flow statement
Cash flow statement
Pre-Operating
Year Year 1 (￡) Year 2 (￡) Year 3 (￡)
CASH INFLOW
Opening Balance £0.00 £8,988,000.00
£7,371,676.
00 £6,239,699.96
Sales £0.00 £1,407,276.00
£1,702,803.
96 £2,060,392.79
Retained earning £2,000,000.00
Bank Loan £8,000,000.00
Total Cash Inflow £10,000,000.00 £10,395,276.00
£9,074,479.
96 £8,300,092.75
CASH OUTFLOW
Working Capital £1,000,000.00 £0.00 £0.00 £0.00
Legal and Registration
Charges £12,000.00 £0.00 £0.00 £0.00
Show room rent £12,000.00 £12,600.00 £13,230.00
Warehouse rent £9,600.00 £10,080.00 £10,584.00
Salaries of employees £10,000.00 £10,500.00 £11,025.00
Advertisement cost £5,000.00 £5,250.00 £5,512.50
Sales representative expense £2,000.00 £2,100.00 £2,205.00
Utility Bills £5,000.00 £5,250.00 £5,512.50
Transportation cost £100,000.00 £105,000.00 £110,250.00
After sales service cost £20,000.00 £21,000.00 £22,050.00
Visas and Work Permits
Expenses £50,000.00 £52,500.00 £55,125.00
Board of Investment
registration fee £10,000.00 £10,500.00 £11,025.00
Interest on loan £800,000.00 £600,000.00 £400,000.00
Loan Repayment £0.00 £2,000,000.00
£2,000,000.
00 £2,000,000.00
Total Cash Outflow £1,012,000.00 £3,023,600.00
£2,834,780.
00 £2,646,519.00
Closing Balance £8,988,000.00 £7,371,676.00
£6,239,699.
96 £5,653,573.75
Projected Income statement
Particulars Year 1 (￡) Year 2 (￡) Year 3 (￡)
11

Revenue £1,407,276 £1,548,004 £1,702,804
Less: COGS (30%) £1,080,000 £1,080,000 £1,080,000
Gross Profit £327,276 £468,004 £622,804
Operating Expenses
Show room rent £12,000 £12,600 £13,230
Warehouse rent £9,600 £10,080 £10,584
Salaries of employees £10,000 £10,500 £11,025
Advertisement cost £5,000 £5,250 £5,513
Sales representative expense £2,000 £2,100 £2,205
Utility Bills £5,000 £5,250 £5,513
Transportation cost £100,000 £105,000 £110,250
After sales service cost £20,000 £21,000 £22,050
Visas and Work Permits Expenses £50,000 £52,500 £55,125
Board of Investment registration
fee £10,000 £10,500 £11,025
Total expenses £223,600 £234,780 £246,519
Operating Profit £103,676.00 £457,503.60 £611,778.96
Less: Interest £800,000.00 £600,000.00 £400,000.00
PBT -£696,324.00 -£142,496.40 £211,778.96
Less: Tax -£69,632.40 -£14,249.64 £21,177.90
Net Profit -£626,691.60 -£128,246.76 £190,601.06
12

REFERENCES
Allen, K., 2012. New Venture Creation. South Western Cengage Learning.
Angelis, A., 2016.UK refrigerator sector driven by technological innovation.[Online]. Available
through: <https://uk.finance.yahoo.com/news/uk-refrigerator-sector-driven-technological-
000000383.html>. [Accessed on 26th March 2016].
Bolton, B., 2013. Entrepreneurs: talent, temperament and opportunity. Routledge.
Bowhill, B., 2008. Business Planning and Control: Integrating Accounting, Strategy, and
People. John Wiley and Sons.
Consumer Appliances in the United Kingdom. 2016.[Online]. Available through:
<http://www.euromonitor.com/consumer-appliances-in-the-united-kingdom/report>.
[Accessed on 26th March 2016].
Electrical Appliance Manufacturing Market Research Report. 2015.[Online]. Available through:
<https://uk.finance.yahoo.com/news/uk-refrigerator-sector-driven-technological-
000000383.html>. [Accessed on 26th March 2016].
Fridges and Freezers - UK - April 2014. 2016. [Online]. Available through:
<http://store.mintel.com/fridges-and-freezers-uk-april-2014>. [Accessed on 26th March
2016].
Refrigeration Appliances in the United Kingdom. 2016.[Online]. Available through:
<http://www.euromonitor.com/refrigeration-appliances-in-the-united-kingdom/report>.
[Accessed on 26th March 2016].
United Kingdom - International trade. 2016. [Online]. Available through:
<http://www.nationsencyclopedia.com/economies/Europe/United-Kingdom-
INTERNATIONAL-TRADE.html>. [Accessed on 26th March 2016].
Walton Bangladesh: A Brief History. 2016.[Online]. Available through:
<http://www.risingbd.com/english/Walton_Bangladesh_A_Brief_History/743>. [Accessed
on 26th March 2016].
13