Using Breakthrough Technology to Expand IFACE Operations to India and China

IFACE, a medical aesthetic, dermatology and consumer beauty company, plans to expand its operations to India and China using advanced technology to achieve massive growth in a booming and rapidly growing industry. The expansion model is expected to increase revenue by 100% per annum for the next 3 years. The company will start operations in North America in 2019 and will be fully operational in India and China by the start of 2020. The expected net present value of the growth model is $3,503,802.59.

Running head: ENTREPRENEURSHIP
Entrepreneurship
Name of the Student:
Name of the University:
Authors Note:

ENTREPRENEURSHIP
The innovation and technology have changed the face of business and its operations. In
fact the change has become the mantra for success in business world. An organization or
business irrespective of the sector must accept and move in line with technology or if possible
stay one step ahead of technological innovation to be relevant in the market.
In this case IFACE, a company operating in medical aesthetic, dermatology and consumer
beauty have decided to use advanced technology to achieve massive growth in a booming and
rapidly growing industry in all across the globe. With a perfect mix of innovation, technology
and medical science, IFACE will allow the customers to be the doctor of their own skin and
beauty by using the advanced technology platform of the company (Kirzner, 2015)
Mode of operation Supplier
Growth Model Expansion of operations to new
geographical locations
At present the company provides
Current geographical areas in which services are
provided
North America
Expansion strategy to include expansion operations
to:
China
India
Logic:
The company is proposing to use breakthrough technology to combine medical science and
aesthetic beauty
Hence, two of the most populated and beauty conscious countries present huge potential to
increase the revenue
China Most populated country in the world
India Second most populated country in the world
People of both the countries are quite conscious about beauty and health (Hitt & Duane
2017)

ENTREPRENEURSHIP
Parameters:
It is expected that expansion of operations would help the company to grow the revenue by
100% per annum for next 3 years
Year 2019-12 2020-12 2021-12 2022-12
Revenue 4,500,000.0
0
9,000,000.0
0
18,000,000.0
0
36,000,000.0
0
Less: Cost of revenue 1,800,000.0
0
3,600,000.0
0
7,200,000.0
0
14,400,000.0
0
(A) Gross profit 2,700,000.0
0
5,400,000.0
0
10,800,000.0
0
21,600,000.0
0
Operating expenditures
Salaries of employees 225,000.0
0
450,000.0
0
900,000.0
0
1,800,000.0
0
Administrative and general
expenditures
180,000.0
0
360,000.0
0
720,000.0
0
1,440,000.0
0
Depreciation 450,000.0
0
900,000.0
0
1,800,000.0
0
2,700,000.0
0
(B) Total operating
expenditures
855,000.0
0
1,710,000.0
0
3,420,000.0
0
5,940,000.0
0
Earnings before interest and tax 1,845,000.0
0
3,690,000.0
0
7,380,000.0
0
15,660,000.0
0
Less: Interest 461,250.0
0
415,125.0
0
373,612.5
0
560,418.7
5
Earnings before tax 1,383,750.0
0
3,274,875.0
0
7,006,387.5
0
15,099,581.2
5
Less: Tax @25% 345,937.5
0
818,718.7
5
1,751,596.8
8
3,774,895.3
1
Profit after tax 1,037,812.5
0
2,456,156.2
5
5,254,790.6
3
11,324,685.9
4
In 2019 the organization will start operations in North America and the goal is to spread the
services to different parts of the world with specific focus on India and the Republic of China.
The expansion will be started at the end of 2019 and will be fully operational in India and China
by the start of 2020.

ENTREPRENEURSHIP
Evaluation of growth model:
The expansion model to start operating in China and India apart from the existing markets in
North America and other parts of the world.
Expected cost of expansion
Particulars Amount ($)
Cost of investing in new and advanced
technology
3,000
,000.00
Cost of setting up operations in China and
India
1,500
,000.00
Initial marketing costs 750
,000.00
Working capital required 850
,000.00
Initial capital outlay for expansion 6,100
,000.00
Financial revenue and net cash flow from business operations in India and China:
Values for investment in India and China
Year 2020-12 2021-12 2022-12
Revenue 4,500,000.0
0
9,000,000.0
0
18,000,000.0
0
Less: Cost of revenue 1,800,000.0
0
3,600,000.0
0
7,200,000.0
0
(A) Gross profit 2,700,000.0
0
5,400,000.0
0
10,800,000.0
0
Operating expenditures
Salaries of employees 225,000.0
0
450,000.0
0
900,000.0
0
Administrative and general expenditures 180,000.0
0
360,000.0
0
720,000.0
0
Depreciation 450,000.0
0
900,000.0
0
1,800,000.0
0
(B) Total operating expenditures 855,000.0
0
1,710,000.0
0
3,420,000.0
0

ENTREPRENEURSHIP
Earnings before interest and tax 1,845,000.0
0
3,690,000.0
0
7,380,000.0
0
Less: Interest 461,250.0
0
415,125.0
0
373,612.5
0
Earnings before tax 1,383,750.0
0
3,274,875.0
0
7,006,387.5
0
Less: Tax @30% 415,125.0
0
982,462.5
0
2,101,916.2
5
Profit after tax 968,625.0
0
2,292,412.5
0
4,904,471.2
5
Add: Depreciation 450,00
0.00
900,00
0.00
1,800,00
0.00
Cash flow from business operations 1,418,625.0
0
3,192,412.5
0
6,704,471.2
5
Net present value analysis for investors’ concern:
Particulars Amount ($) Amount ($) Amount ($)
Cash flow from business operations 1,418,625.0
0
3,192,412.5
0
6,704,471.2
5
Present value factor @10% per annum 0.9
1
0.8
3
0.7
5
Present value of cash inflows 1,289,659.0
9
2,638,357.4
4
5,037,168.4
8
Particulars Amount ($)
Present value of total cash inflows 8,965,185.0
1
Add: Present value of working capital to be recovered (850,000 x
0.751)
638,617.5
8
Present value of total cash inflows 9,603,802.5
9
Less: Initial capital outlay 6,100,000.0
0
Net present value. 3,503,802.5
9

ENTREPRENEURSHIP
With expected net present value of the growth model is $3,503,802.59 IFACE should proceed
with its expansion strategy of business operations to India and Republic of China. Investors will
be able to earn significant return from the growth model as the NPV is quite encouraging for the
investors and shareholders of the organization (Drucker, 2014).

ENTREPRENEURSHIP
References:
Drucker, P. (2014). Innovation and entrepreneurship. Routledge.
Hitt, M., & Duane Ireland, R. (2017). The intersection of entrepreneurship and strategic
management research. The Blackwell handbook of entrepreneurship, 45-63.
Kirzner, I. M. (2015). Competition and entrepreneurship. University of Chicago press.