Business Development Plan and Financial Analysis: New Horizon Limited

This report details the business plan for New Horizon Limited, a company aiming to establish itself in the hardware and construction materials market within the United Arab Emirates. The report begins with an introduction outlining the company's objectives and methodology, which relies on secondary data sources to describe the company's features, products, and financial investments. The core of the report provides a comprehensive company description, including its mission, organizational structure, and key objectives like capturing a significant market share and achieving substantial revenue within the first few years. It then dives into product and service details, emphasizing the value proposition of affordable, quality construction materials, and outlines the company's marketing strategy, including market research processes, target customers, and competitive analysis. A detailed financial plan, including profit and loss projections and cash flow analysis over a five-year period, is also presented. The report concludes with a summary of the key findings and recommendations for the company's future endeavors.

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ECONOMICS ASSIGNMENT

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Table of contents
1.0 Introduction..........................................................................................................................3
2.0 Methodology........................................................................................................................3
3.0 Discussion............................................................................................................................3
3.1 General company description...............................................................................................3
3.2 Products and services...........................................................................................................5
3.3 Marketing Plan.....................................................................................................................6
3.4 Financial plan.......................................................................................................................7
3.5 Startup capital investment....................................................................................................9
3.6 Conclusion..........................................................................................................................12
Reference..................................................................................................................................14

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1.0 Introduction
The main step for the new business development is the planning and the documentation of the
features. This report introduces and discusses the features and the processes of a company
called New Horizon Limited. The company is aiming to develop its business in the market of
the United Arab Emirates. Each of the section of the documentation has been presented
separately in this report.
2.0 Methodology
The paper uses the data and information from the secondary sources in order to use it in the
paper after synthesis of the data. The paper, in a descriptive format, furnishes different
information regarding the features of the company, its products, and its capital investments.
Apart from that data and information have also been collected from the other similar cases
depicted in journals and articles as well.
3.0 Discussion
3.1 General company description
1.
Name of the company: New Horizon Limited
Location: Abu Dhabi
Products and service: Hardware related products
2. Brief description about the industry
The hardware and construction materials industry is growing in the UAE. This increase in the
volume and the demand for the products can be attributed not only to the increase in the
working population, but it is also due to the fact that house is becoming affordable to many
people of the country (Tukker & Tischner, 2017). The industry of hardware, in general, has
been increasing at a healthy rate of 9% since the year 2010. The future foreign investment in
IT and other forms of business may further increase the pool of working population of the
country. Therefore, the income of the people of the country is one of the major factors that
can affect the industry (Hollenbeck, Noe & Gerhart, 2018). In addition to that, the

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indigenous hardware industry of the country is also influenced by the policies and the actions
of the government. While a high import tariff can be beneficial for the industry, a reduce
import tariff can drive away the small and the medium players of the market.
3. Company’s mission statement
Short term- Providing affordable and quality materials for all.
Long-term- Establishing a brand name in order to capture the market in the future.
4. Facts about the company
 The company has highly qualified engineers and managers.
 The company has an in-house research department that helps in new product
development and redesigning of products as per the needs of the customers (Nicholas
& Steyn, 2017).
 Compared to the other companies in the market, this company uses a leaned
production system in order to keep the prices low.
 The company emphasises on the relationship with the customers which will have its
effects on the accuracy of the products in meeting the needs of the customers.
5. Draft of organisation structure
Figure 1: The draft of the structure of the organisation
CEO
Director
Manager
Operation
Operation
Director
Manager
Operation
Operation

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(Source: Developed by the learner)
1.1 Objectives and goals
Goals-
The goal of the company is to provide affordable construction materials and products to a
different segment of the customers of the market.
Objectives-
 To capture a market structure of 37% within 6 years of operation in the market
 To secure an overall revenue of 650000000 UAE dirham in the first 2 years.
3.2 Products and services
Size of the company
The size of the company is small as it only employs 60 employees.
Products and services
The products and the services will provide value for money to the customers of the market.
The company will use a leaning production process in order to keep the production cost low
(Charles, Schmidheiny & Watts, 2017). In addition to that, the company will also make sure
that the quality of the products does not deteriorate with the reduction in the production cost.
Differentiating factors
The low cost of production and the resulting low prices of the products will differentiate the
products of the company with that of the other products of the market. The management of
the company will also ensure not to compromise with the quality despite having low prices.
Pricing, fee and leasing structure
The prices of the products of the company will be slightly lower than the competitive prices
of the market (Marion et al. 2015). This will help the company to attract the initial customers
who will become a steady customer base for the company in the coming years. The company
will use a standard distributorship structure in order to lease out the products.
Major products

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The major products of the company are-
 NH Cement
 NH Paint
 NH putty
 NH Plaster of Paris
Product feature
NH Cement- One of the important features about this product is that it consolidates faster
than other cement of the market. This will be helpful in increasing the building speed as well.
NH Paint- The important feature of this paint is that it does not retain water or any other
liquid. Therefore this will benefit the customers in rubbing off any stains from the wall.
NH putty- The fixing capacity of this putty is high. The intensity of the linseed oil in the
product is very high. Therefore the customers will be able to use it immediately after the
application of the product (Baraldi & Havenvid, 2016).
NH Plaster of Paris- The premium plaster of Paris in the cheap price is going to be the best in
the market. The customer will get benefitted due to the smooth texture that it will offer. Apart
from that this feature of the product also helps in
3.3 Marketing Plan
1. Importance of marketing research
Market research is important to understand the preferences of the customers and the
capabilities of the existing products of the company (Batkovskiy et al. 2016). The preferences
of the customers change rapidly and hence in order to be consistent it is important to carry
out regular market researches. Furthermore, the market research also enables the management
to understand the gap between the needs of the customers and the existing products.
2. The process of market research
This market research is a combination of internet searches and personal communications with
the hardware store owners and the customers of the market. While the internet searches are
important to understand the contemporary development and researches in the field, the

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personal communications enable the market researchers to get the insight from the demand
side (Abrahamsson et al. 2017).
3. Market size and the share of the company
The size of the hardware and the construction industry of the country stand at 12 billion UAE
dirham. Currently, the company captures 2% of the overall market.
4. Expected barriers and constraints
One of the biggest constraint or the barrier to the operation in the country is the presence of
other rival players in the market. The existing companies have a high market share and loyal
customers (Amaral Feris & Zwikael, 2017). However, this company has the aim to use the
low price and quality as its USP which will help in attracting customers. Furthermore, high
capital investment is also another barrier which the company will overcome through the
funding from different types of investor and debt funding.
5. Changes in external factors
The government policies such as import tariff may ease the business processes of the
company (Luzzini et al. 2015). Again the changes in technology can be problematic for the
organisation as it can increase the cost of operation of the company. The economic boom can
increase the demand for housing and hence the demand for the products of the company may
go up during that time. Lastly, the changes in the industry will again increase the cost of
operation of the company at least in the initial phase (Moulaert, 2016).
6. Target customers
The segment of the customers who are most likely to become important for the company is
the middle-aged working person (Sommer et al. 2015). That means the target customers of
the company may age between 28-42 years. Given the fact that the prices of the products of
the company will be slightly on the cheaper side, the education and the level of income range
of the customers may is large (Kostyanev et al. 2015). In terms of the demographics, the
urban people are the main target customers of the company.
7. Competitors
Union Cement Company, Sharjah Cement Company, Sahara international group are few of
the companies that have the same business as that of New Horizon Limited.

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8. Distribution channel
The company will not have its own retail outlets. Rather the products will be sold through
distributors who will distribute the products among different retail shops owned by
individuals (Saebi & Foss, 2015).
3.4 Financial plan
Profit and loss projection
[New Horizon Limited]
5-Year Financial Plan—Manufacturing Product
Profit and loss projections
Year-by-year profit and loss assumptions
Year 1 Year 2 Year 3 Year 4 Year 5
Annual cumulative price (revenue) increase - 2.00% 20.00% 10.00% 2.00%
Annual cumulative inflation (expense) increase - 2.00% 4.00% 6.00% 5.00%
Interest rate on ending cash balance 0.00% 0.00% 0.00% 0.00% 0.00%
Year 1 Year 2 Year 3 Year 4 Year 5
Revenue
Gross revenue $32,67,700 $33,33,054 $39,99,665 $43,99,631 $44,87,624
Cost of goods sold (manufacturing cost) 16,33,850 16,66,527 19,99,832 21,99,816 22,43,812
Gross margin $16,33,850 $16,66,527 $19,99,832 $21,99,816 $22,43,812
Other revenue [source] $0 $0 $0 $0 $0
Interest income $0 $0 $0 $0 $0
Total revenue $16,33,850 $16,66,527 $19,99,832 $21,99,816 $22,43,812
Operating expenses
Sales and marketing $40,000 $40,800 $42,432 $44,978 $47,227
Payroll and payroll taxes (salaries) 60,000 $61,200 $63,648 $67,467 $70,840
Depreciation 20,000 20,000 20,000 20,000 20,000
Insurance 40,000 $40,800 $42,432 $44,978 $47,227
Maintenance, repair, and overhaul 15,000 15,300 15,600 15,900 15,750
Utilities 30,000 $30,600 $31,824 $33,733 $35,420
Property taxes 0 $0 $0 $0 $0
Administrative fees 18,000 $18,360 $19,094 $20,240 $21,252
Space Rental + Other 50,000 $51,000 $53,040 $56,222 $59,034
Total operating expenses $2,73,000 $2,78,060 $2,88,070 $3,03,519 $3,16,750
Operating income $13,60,850 $13,88,467 $17,11,762 $18,96,297 $19,27,062
Interest expense on long-term debt 449 358 263 163 59
Operating income before other items $13,60,401 $13,88,109 $17,11,499 $18,96,134 $19,27,004
Loss (gain) on sale of assets 0 0 0 0 0
Other unusual expenses (income) 0 0 0 0 0
Earnings before taxes $13,60,401 $13,88,109 $17,11,499 $18,96,134 $19,27,004
Taxes on income 5% 68,020 69,405 85,575 94,807 96,350
Net income (loss) $12,92,381 $13,18,703 $16,25,924 $18,01,327 $18,30,654
Profit % 39.55% 39.56% 40.65% 40.94% 40.79%
Table 1: The profit and loss projection for the company
(Source: Developed by the learner)

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Cash flow
[New Horizon Limited]
5-Year Financial Plan—Manufacturing Product
Cash flow
Year 1 Year 2 Year 3 Year 4 Year 5 Total
Operating activities
Net income $12,92,381 $13,18,703 $16,25,924 $18,01,327 $18,30,654 $78,68,989
Depreciation 20,000 20,000 20,000 20,000 20,000 1,00,000
Accounts receivable 0 0 0 0 0 0
Inventories 0 0 0 0 0 0
Accounts payable 0 0 0 0 0 0
Amortization 0 0 0 0 0 0
Other liabilities 0 0 0 0 0 0
Other operating cash flow items 0 0 0 0 0 0
Total operating activities $13,12,381 $13,38,703 $16,45,924 $18,21,327 $18,50,654 $79,68,989
Investing activities
Capital expenditures $0 $0 $0 $0 $0 $0
Acquisition of business 0 0 0 0 0 0
Sale of fixed assets $0 $0 $0 $0 $0 0
Other investing cash flow items 0 0 0 0 0 0
Total investing activities $0 $0 $0 $0 $0 $0
Financing activities
Long-term debt/financing ($1,810) ($1,900) ($1,995) ($2,095) ($2,200) ($10,000)
Preferred stock 0 0 0 0 0
Total cash dividends paid 0 0 0 0 0 0
Common stock 0 0 0 0 0 0
Other financing cash flow items 0 0 0 0 0 0
Total financing activities ($1,810) ($1,900) ($1,995) ($2,095) ($2,200) ($10,000)
Cumulative cash flow $13,10,571 $13,36,803 $16,43,929 $18,19,232 $18,48,454 $79,58,989
Beginning cash balance $50,000 $13,60,571 $26,97,375 $43,41,303 $61,60,535
Ending cash balance $13,60,571 $26,97,375 $43,41,303 $61,60,535 $80,08,989
Table 2: The projected cash flow of the company
(Source: Developed by the learner)
3.5 Startup capital investment
Physical resources Investment
Land 1,10,19,600 Dirham
Building 1,83,66,000 Dirham
Machines and equipment 3,67,32,000 Dirham
Table 3: The startup investment of the company
(Source: Developed by the learner)
Cost expenses
Cost Funds
Type Amount Source amount

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Employee salary 1,83,660 Dirham Debt finance 91,83,000 Dirham
Depreciation Cost 47,75,160 Dirham Angel investor 3,30,58,800 Dirham
Table 4: The cost expenses of the company
(Source: Developed by the learner)
Payback period
(cost of project/ Total investment)/ Cashflow= ((2300000/1200000)/7953254))= 2.4 years
IRR= 34.6%
Figure 2: The cash flow diagram
(Source: Developed by the learner)

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Figure 3: The relation between the revenue and the cost of the project
(Source: developed by the learner)
Figure 4: The relation between the total revenue and the demand
(Source: Developed by the learner)

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[New Horizon Limited]
5-Year Financial Plan—Manufacturing Product
Balance sheet projections
Assets Initial balance Year 1 Year 2 Year 3 Year 4 Year 5
Cash and short-term investments $50,000 $13,60,571 $26,97,375 $43,41,303 $61,60,535 $80,08,989
Accounts receivable (Sales not yet paid) 0 0 0 0 0 0
Total current assets $50,000 $13,60,571 $26,97,375 $43,41,303 $61,60,535 $80,08,989
Buildings $0 $0 $0 $0 $0 $0
Land 0 0 0 0 0 0
Capital improvements 0 0 0 0 0 0
Machinery and equipment 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000
Less: Accumulated depreciation expense 0 20,000 40,000 60,000 80,000 1,00,000
Net property/equipment $1,00,000 $80,000 $60,000 $40,000 $20,000 $0
Goodwill $0 $0 $0 $0 $0 $0
Deferred income tax 0 0 0 0 0 0
Long-term investments 0 0 0 0 0 0
Deposits 0 0 0 0 0 0
Other long-term assets 0 0 0 0 0 0
Total assets $1,50,000 $14,40,571 $27,57,375 $43,81,303 $61,80,535 $80,08,989
Liabilities Initial balance Year 1 Year 2 Year 3 Year 4 Year 5
Accounts payable (Payment to suppliers) $0 $0 $0 $0 $0 $0
Accrued expenses 0 0 0 0 0 0
Notes payable/short-term debt 0 0 0 0 0 0
Capital leases 0 0 0 0 0 0
Other current liabilities 0 0 0 0 0 0
Total current liabilities $0 $0 $0 $0 $0 $0
Long-term debt from loan payment calculator $10,000 $8,190 $6,290 $4,295 $2,200 ($0)
Other long-term debt $0 $0 $0 $0 $0 $0
Total debt $10,000 $8,190 $6,290 $4,295 $2,200 ($0)
Other liabilities 0 0 0 0 0 0
Total liabilities $10,000 $8,190 $6,290 $4,295 $2,200 ($0)
Equity Initial balance Year 1 Year 2 Year 3 Year 4 Year 5
Owner's equity (common stocks) $50,000 $50,000 $50,000 $50,000 $50,000 $50,000
Paid-in capital 10,000 10,000 10,000 10,000 10,000 10,000
Preferred equity 0 0 0 0 0 0
Retained earnings 0 12,92,381 26,11,085 42,37,008 60,38,335 78,68,989
Total equity $60,000 $13,52,381 $26,71,085 $42,97,008 $60,98,335 $79,28,989
Total liabilities and equity $70,000 $13,60,571 $26,77,375 $43,01,303 $61,00,535 $79,28,989
Table 5: The balance sheet of the company
(Source: Developed by the learner)
3.6 Conclusion
Therefore the paper furnishes the features and the projected performances of the company in
the market of the UAE. As per the finding of the report, there are four major products of the
company for which the management will use a competitive pricing in order to keep the prices
low. Apart from that, a distributorship will also be used for leasing the products as well.
However, the paper has depicted few of the threats as well which may hamper the operation
of the company in the country. These include the problems of high capital investments and
the rivalry of the competitors. The organisation has formulated strategies such as competitive