MGT306 Strategic Management: 5-Year Business Plan for Synergy Inc

This report presents a comprehensive 5-year business plan for Synergy Inc, an e-commerce company. It includes an executive summary, business environment analysis (vision, mission, goals, SWOT), organizational structure, marketing and sales strategies, customer management and retention plans, pricing policies, and competitive analysis. The plan also addresses the e-commerce industry landscape, target market, competitive forces, and detailed financial forecasts, including set-up costs, profit and loss statements, balance sheets, cash flow statements, and break-even analysis, projecting profitability from year one with steady growth in sales and cash flows.

Business Plan for Synergy Inc

Executive Summary
This report presents a 5 year business plan for Synergy Inc, an e-commerce
company dealing in multiple products. The report covers the business environment
of the organization by the help to SWOT analysis and studying organization
structure. Also covered in the plan are marketing, pricing, customer retention and
business strategy of the company. The plan also gives a view of e-commerce
industry, target market for the company, competition in the market and effect of five
forces. In the end five year financial forecasts are given for Synergy Inc. According to
the forecasts, company will be profitable from the first year with sales of nearly
$1miillion. Sales, profits and cash flows will grow steadily for all 5 years. Operating
cash flows will be negative in the first year but will stabilize and become positive from
second year. The company plans to increase debt throughout all five years and will
have balanced capital structure consisting of debt and equity.

Contents
Business Environment...........................................................................................................................4
Vision.................................................................................................................................................4
Mission..............................................................................................................................................4
Goals..................................................................................................................................................4
Products & Services...........................................................................................................................4
Business, Organization & Finance Structure......................................................................................4
SWOT Analysis...................................................................................................................................6
Premises, Plant & Equipment............................................................................................................7
Information Systems and Telecommunications.................................................................................7
Goals, Milestones and Strategies...........................................................................................................7
Goals and Milestones........................................................................................................................7
Marketing..........................................................................................................................................8
Sales..................................................................................................................................................8
Customer Management & Retention................................................................................................8
Pricing................................................................................................................................................9
Suitable Business Strategy.................................................................................................................9
Business Competition............................................................................................................................9
The Industry.....................................................................................................................................10
Target Market..................................................................................................................................10
Market Competition........................................................................................................................10
Influence of Five Forces...................................................................................................................11
Financial Forecasts..............................................................................................................................12
Set Up Costs.....................................................................................................................................12
Profit & Loss Forecasts....................................................................................................................12
Balance Sheet Forecasts..................................................................................................................13
Cash Flow Forecasts.........................................................................................................................14
Break Even Analysis.........................................................................................................................14
References...........................................................................................................................................16

Business Environment
Vision
To become one of the leading ecommerce organizations that provides for
mutual development of all stakeholders.
Mission
To provide a world class shopping experience to customers by offering best
quality products.
Goals
 To create a world class online platform that is secure, user friendly and
creates a lasting impression.
 To create a high degree of customer reach with dedicated marketing and
advertising efforts.
 To increase and maximise conversions of visitors to the website and aim for
high customer loyalty.
 To promote an atmosphere of integrity, practice of fair trade and mutual
growth of all internal and external stakeholders.
Products & Services
Products & services offered by an organization can play a decisive role in
deciding about various financial and non- financial strategies of the enterprise (Wise,
2016). Synergy Inc plans to offer a bouquet of products ranging such FMCG
products, consumer durables and apparels. The company also to set up dedicated
customer support centre for suppliers and customers.
Business, Organization & Finance Structure
Business and Organization Structure refers to the flow of command and
hierarchy in an organization. A well-organized structure helps in achieving goals and

objectives of the enterprise (Schell, 2017). Synergy Inc has divided its functions into
IT, finance, operations and marketing departments led by vice presidents who report
to the CEO. Vice presidents are subordinated by respective department managers.
Managers lead various assistant managers, who in turn supervise various teams.
Organization Structure of Snergy Inc.
In the initial years of operation company plans to use equity from owners and
take loan from financial institutions for starting business operations. Company plans
to increase its debt throughout all five years for funding expansion and will have a
balanced capital structure. Company many also explore options for private equity
and venture capital funding after 5 years of operations.
Finance
Vice
President
Marketing
Vice
President
IT Vice
President
Operations
Vice
President
CEO
IT
Manager
Finance
Manager
Marketing
Manager
Operations
Manager
Assistant
Managers
Assistant
Managers
Assistant
Managers
Assistant
Managers
Team
Members
Team
Members
Team
Members
Team
Members

SWOT Analysis
Business decisions and plans should be carried out after taking a view of
strengths, weaknesses, opportunities and threats an organization faces. SWOT
analysis is a tool evaluating business enterprises (Pahl & Ritcher, 2009).
Strengths
 Well organized business and organizational structure.
 Adequate initial funding in form debt and equity for business operations.
 Experienced team consisting of CEO, vice presidents and other junior team
members.
 Well-developed centric E-commerce portal and logistic capabilities; and broad
range of products.
Weakness
 Lack of customer loyalty due to new business operations.
 High expenditure in initial years.
 Product distribution is limited to few cities only.
Opportunities
 Expansion in other product categories and regions.
 Increasing number of online users will result in expansion of customer base.
 Cost effectiveness can be increased by optimizing supply chains.
 Opportunities for expansion by acquiring small businesses.
Threats
 Risk of online frauds and hacking
 Competition from brick and mortar stores ;and established online players
 Threat from changing laws and trends in shopping.

Premises, Plant & Equipment
Synergy Inc will initial open a premises for head office. Head office will house
finance, IT, marketing and operations department. Company also plans to rent a
space for a warehouse for storing products. Synergy Inc will hire a place for setting
up dedicated customer support centre. Company will also invest in all necessary
office and warehouse facilities.
Information Systems and Telecommunications
Synergy Inc will develop an IT system for E-commerce platform. Enterprise resource
planning software will be developed for internal information flow within the
organization. Telecommunication system will be planned and developed for internal
communication as well as for support of customers and suppliers. Company will
house team of IT and telecommunication experts.
Intellectual Property, Licences and Memberships Insurances
Synergy Inc will also try to develop e-commerce platform that is unique and
may try to patent technologies that it may develop various phases of expansion. It
also plans to take exclusive distribution licences for some FMCG products.
Goals, Milestones and Strategies
Goals and Milestones
 To Target a customer base of 200000 by the end of 5 years
 To achieve sales revenue of $2 million by 2023.
 To be among the top 5 shopping websites of the country in terms of customer
experience.
 To be among top 10 small ecommerce websites of the country.

Marketing
Marketing strategy should consist of series of steps and processes at that are
aimed at promoting and advertising products for maximizing revenues (Iyamabo &
Otubanjo, 2013). Synergy Inc marketing will focus on use of digital and online
medium in first 3 years; and later on use of television and traditional marketing. This
will be through online mailers and social media website advertisements. It will also
encourage customer loyalty by running membership programs and promoting its
wallet. Customer centric approach will be taken with the help of the easy return
policy.
Sales
Sales will be handled by a dedicated marketing team. Sales team will make
use of IT tools for product promotion on social media and online platforms. Sales
team will also focus on contacting premium sellers and on-boarding them on the e-
commerce platform. YouTube, LinkedIn and Twitter will utilised for promoting
memberships programmes. Sales function will ensure maintaining coordination
between sellers, warehouse and customers. After 3 years, sales function will
coordinate with television channels for product promotion.
Customer Management & Retention
Marketing strategies of organization fail and become ineffective if enterprises
do not take steps for customer satisfaction and retention (Spotts, 2014). Synergy Inc
will have a dedicated focus on customer management and retention. Dedicated
customer support for query resolution and product returns will established. Customer
experience will be enhanced by optimizing speed, improving navigation and
enhancing responsiveness of the portal. Royalty programmes will be planned for
increasing retention. Regular touch will be maintained with the help of online mailers.

Pricing
Pricing Policy of a company plays an important role in determining market for
its products. A well planned policy can help in creating a demand for the products
(Schindler, 2011). Synergy Inc will maintain a pricing policy that is consistent with
current market trends in e-commerce industry for most of the products. The company
will offer discounts on various products. Products in the category of consumer
durables and electronics will offer more discounts as compared to FMCG category.
Pricing policy will remain consistent throughout the year for first 3 years. Price policy
will be aggressive during holiday season of winters when the focus will be more on
increasing revenues by increase number of products sold.
Suitable Business Strategy
Synergy Inc will develop a business strategy that will aim at identifying the
target audience and segmenting them into various groups. Company will focus on
developing quality content for targeting customers. This will be done to SEO
enhancement of website. Various groups will be target by suitable content that suits
their choices. Choices will be identified by market research. Consistent brand
management will also be the focus of the company. Company will help sellers on the
platform in optimizing their operations for better delivery management and improving
product quality.
Business Competition
Competition helps organizations in enhancing their products and services. It
also makes enterprises develop better systems and improve existing processes
(Fleisher & Bensoussan, 2015).

The Industry
Ecommerce industry is growing at a rapid pace globally. Sales grew at 23% in
2017 reaching an all-time high of $2.3 trillion. By 2021, two third of the global market
will be confined in Asia-pacific region. Global players like Amazon, Ebay and Alibaba
still dominate the markets. However some new organizations like Flipkart in India are
giving tough competition to these giants. It shows that new players can create niche
for themselves by going out the way and delivering better services. Discounts and
mobile platform dominate this industry. Companies after initial years of operation
also differentiate into other areas such as partnerships with brick and mortar stores.
With growth in technology and better logistic facilities, industry is set for massive
growth along with intense completion (International Post Corporation, 2018).
Target Market
Synergy Inc will largely be dealing in FMCG, consumer durables, electronics
and apparels. Target groups can be identified by segmentation in various categories.
Segmentation can be done on the basis of demographic and geographic factors
(Mcdonal, 2012). Target group of Snergy Inc for apparels and electronics will focus
more young generation but will not be confined to them. On the other hand FMCG
and consumer durables are demanded by middle aged in majority of circumstances.
Company will initially focus on geographic regions with high density of population
and high incomes. Far flung hilly areas and inhabitable areas with low density will not
form the target group of Synergy Inc.
Market Competition
With the development of technology, e-commerce industry is one the fastest
growing industries in the world. Synergy Inc faces intense competition from existing

established players in the industry. Apart from that company also faces threat from
traditional shopping avenues like malls and stores. Industry also has low barriers to
entry as a result companies are not willing sacrifice market share. Companies in the
industry tend to reduce price and sacrifice of margins for increasing revenues.
Synergy Inc will try to nullify all these affects by offering differentiated services and
high quality products.
Influence of Five Forces
Power of Suppliers
Supplier’s power in e-commerce industry is limited. Online companies can
choose which products to sell on their websites. Suppliers tend to follow the rules of
online website. Synergy Inc will have advantage over suppliers
Power of Buyers
Power of Buyers is high in this industry. Majority of clients keep switching the
websites for their purchases. Synergy Inc will have to maintain its focus in
maintaining customer loyalty.
Threat of Substitutes
Retail stores and malls offer substitutes for Synergy Inc. These also offer
similar products. Therefore threat of substitutes is high.
Threat of New Entrants
Barriers to entry in the industry are high. It requires technological innovation
and capabilities to enter into it. Threat of new entrants is moderate for Synergy Inc.
Rivalry
Rivalry for Synergy Inc is high because of large number of established and new
players. This will result in intense competition.

Financial Forecasts
Financial Forecasts has been planned for Synergy Inc. Financial forecasts
help in giving a view about future projects of financial position of an organization.
Financial forecasts are prepared for setup costs, profit & loss statement, balance
sheet, cash flow statements & break even analysis (Kao & Liu, 2003).
.
Set Up Costs
Financial forecasts of Synergy Inc suggest that, $402000 will required for setting up
the operations. Company will purchase its own head office for the cost of $250000
and spend on IT infrastructure, hiring, office equipment and ware house
development.
Year 0
Web Development
a) Designing 15000
b) Hosting 2000
Head Office Purchase 250000
IT Infrastructure 50000
Office Equipment & Infra 50000
Hiring Costs 5000
Ware House Development 25000
Miscelleneous 5000
Totatl 402000
Set Up Costs ($)
Profit & Loss Forecasts
As far profit & loss statement is considered, Synergy Inc will be able to
generate sales of $1million and net profit $14553 from first year on the basis of
projections. Sales will grow continuously and reach to about $2million by the end of
fifth year. Net profit will also grow to $68970 by the end of fifth year