University of Northampton MKTM033: Opportunity Analysis Report

This report presents an opportunity analysis for Serco International, focusing on a new contract with the Defence of the Middle East. The report includes an executive summary, and analyzes the external environment using PESTLE analysis, industry dynamics, and financial feasibility. The PESTLE analysis examines political, economic, social, technological, environmental, and legal factors influencing Serco's operations. The industry analysis explores the threat of entry, power of suppliers and buyers, threat of substitutes, and rivalry among competitors. The report also addresses market segments, target markets, and unique selling propositions. Financial feasibility is assessed, and the report concludes with references and appendices. The report predicts this endeavor will be very profitable.

THE UNIVERSITY OF NORTHAMPTON
Faculty of Business and Law
2018/2019
MODULE NAME: The Entrepreneurship Report
Module Code Level Credit Value Module Leader
MKTM033 7 20 Kate Pascoe
Assignment Brief
Assignment title:
Opportunity Analysis
Weighting:
40% of Module Marks
Deadline:
09th October 2019
Feedback and Grades
due: See NILE
Resit Date See NILE
Opportunity Analysis Report Assignment Brief (40%)
Writing an Opportunity Analysis Report will enable you to define your business by critically
examining the idea for a new business venture and to check it against your initial perception of the
market-place so that you may write your first draft ‘nature of the business’ statement on which
market investigations and calculations can be based.

Your report should have a contents page, an executive summary, a reference page and appendices
(to include any supporting information).
The word limit is 2000 words excluding a Contents page, Executive Summary, Appendices and a
References page.
NB: Please note that the word limit suggestion for each session is for general guidance only. Should
you wish to include more or fewer words in each session is entirely up to you. All assessment points
are equally weighted, and we advise you to make a full use of appendices. Please note, you will
also be assessed on your use of sources, your writing style and presentation (how well you can
communicate your plan to investors, and whether you have written a convincing proposal).
Contents
1. Executive Summary
2. External Environmental Analysis
3. Industry Analysis
4. Key People and Skills
5. Financial Feasibility
6. References and Appendices
NB: One of the strategies to ensure you have included all the points in your report is to copy and
paste the expanded version of your Opportunity Analysis Report Template into your document and
then include information covering all relevant points. When you completed your analysis and it is
ready for submission, please do not forget to delete the expanded version of questions as it will be
counted towards your word limit and may be penalised.

OPPORTUNITY ANALYSIS REPORT
Executive Summary
The Business environment can be considered to be very dynamic in nature and with respect to this;
it becomes considerably crucial for the different firms to ensure that, they are successfully being
able to look out for new and better business opportunities. The given assessment is based on the
new contract which the Serco International has got into with the Defence of the Middle East. The
main theme of the report is based on the Opportunity analysis report which is centred on
understanding the overall manner in which the firm will be able to attain success in the business
environment. The External forces analysis, Industry analysis and the financial feasibility has been
provided in the report. The report has analysed the background of Serco which has then been
followed by the examination of the various internal as well as external factors which have an
influence on the business and may have an influence on the operational efficiency of the firm along
with their expansion plans to extend the operations in other countries. The financial investment
which is required to be made has also been described. It has been predicted that this endeavour of
the firm will be very profitable in nature.

Table of Contents
Assignment Brief.................................................................................................................................................1
Opportunity Analysis Report Assignment Brief (40%).............................................................................1
Contents........................................................................................................................................................2
About the firm....................................................................................................................................................5
External Environmental Analysis.........................................................................................................................5
Industry Analysis.................................................................................................................................................7
Market Segments, Target Markets and USP............................................................................................8
Key People and Skills...........................................................................................................................................8
Financial Feasibility.............................................................................................................................................9
Start-up Expenses........................................................................................................................................9
References........................................................................................................................................................11
Appendix...........................................................................................................................................................12

About the firm
The Serco provides support services around the globe with respect to the defence forces. The
company offers services which are in country as well as embedded with various deployed forces. The
organization has a breadth and depth of expertise across the military environments and comprises of space,
maritime, air and land expertise. The firm ensures that they are able to maximize the capacity of defence
organizations by providing the delivery of high-quality support services to the personnel around the globe as
well as the military commands (Hill, Jones and Schilling 2014). The firm has a specialized and teams which is
generally recruited from military backgrounds and is able to meet the unique demands of the firm they serve.
Moreover, they are also able to provide hand in hand service with the personnel wherever and whenever
required. The firm provides operational excellence; dependable performance and top quality delivery which
can ensure that the military assets are always ready for any mission (Venkataraman 2019).
External Environmental Analysis
The external environmental analysis of the firm will be carried out based on the overall PESTLE
analysis. The PESTLE Analysis is a strategic management tool which will assist in finding out the impact of
the forces lying in the external environment (Stead and Stead 2014). The PESTLE Analysis of the firm has
been done in the following section:
Political
The political factors have a key role to play in determining the manner in which the factors have the
capability to have an impact on the overall profitability of the firm in the long run. The company operates in
various companies and in regard to this, has been exposing itself to various risks in the different countries
(Ansoff et al. 2018). These comprise of the political stability of the Middle East, the risk of military invasion, the
level of corruption which exists in the industry, the Bureaucracy and interference in the Industrial services
domain, the Intellectual property protection, the taxation and related incentives, the Mandatory employee
benefits, the product labelling and the Trade regulations and related tariffs relating to the particular domain.
The Saudi has various issues relating to the political conflict regarding the overall ownership of the land and
the oil reserves (Lasserre 2017).
Economic
The economic factors tend to comprise of the different factors like that of relating to the inflation rate,
interest rate, savings rate and other foreign exchange rates along with the economic cycle which tends to
determine aggregate investment in the economy (Barringer 2015). The Serco needs to look out for various
factors existing in the industry like the inflation rate, overall economic indicators of the industry, and the type of
economic system which exists in the industry (Stead and Stead 2014). In addition to this, aspects like the
government intervention, skill level of the workforce, the education level and the business cycle can be taken
to be the unemployment rate has the overall tendency to impact the operations of the firm ( Hill, Jones and
Schilling 2014). The Saudi has a high GDP per capita and is a country with high amounts of Foreign Direct
Investment.

Social
The social aspects in the economy generally tend to have an impact on the overall manner in which a
firm is generally able to perform with respect to the culture of a country (Nataraj et al. 2014). In relation to this,
the demographic and skill level of the Middle East including the class culture, educational level and the overall
defence approach and mechanism tends to have a strong impact on the overall operations of the industry
(Burns 2016). Kuratko (2016) states that the globalization of various different countries has brought about
considerable lifestyle change in the country.
Technological
The technological aspects which tend to have an impact on the overall operations of the firm generally
comprise of the factors like the rate of technological advancement in the industry, the overall technological
disruption as well as the overall technological developments in the personal domain may also determine the
manner in which the company may perform in the current industry (Hill 2017). In line with this, the rate of
technological diffusion also impacts the overall operations (Ansoff et al. 2018). As the Saudi is comparatively
tech savvy, it allows the firms to leverage technology.
Environmental
The environmental aspects which affect the operations of Serco relate to the different environmental
standards which have an impact on the overall profitability of the organization in those markets (Drucker
2014). Hence, the Serco needs to be largely concerned about the aspects like the attitude of the society and
the government towards these initiatives, recycling issues, laws and regulations and other related aspects as
present in new country (Kuratko 2016).
Legal
Lastly, with respect to the Legal aspect, it can be largely understood that, the antitrust law in the
Industrial Goods and Services industry need to be taken care of (Barringer 2015). Additionally, aspects like
the copyright, patent, employment law, data protection and the health and safety laws have to be abided by in
order to see to it that, the Serco is able to establish its operations well in the industry situated in the Middle
East (Storey 2016).

Industry Analysis
The Industry in which Serco tends to function with respect to the defence aspect can be understood to
be related to the UAE`s industrial environment in the following manner:
Threat of Entry
The new entrants of an industry tend to bring about capacity and desire to gain a considerable market
share in the market. In the defensive industry, the barriers to entry can be take to be considerably high and
the threat of entry can be understood to be limited in the sense that, any firm which prefers to enter in the
industry can be understood to have proprietary technology, established brand identifies as well as the
cumulative experience which is required for the industry (Burns 2016). Hence, it is difficult for the small
businesses to attain these contracts and compete within the defensive firms present.
The Power of Suppliers
The power of suppliers can be understood to capture additional value by bringing about a change in
the prices of the products and limiting the quality of the services or by shifting the costs to the various industry
participants (Fawaz, Belin and Masson 2018). The main competitors in the industry can be understood to be
the Lockheed Martin, Raytheon, Northrop Grumman and the General dynamics. Hence, some of these firms
have patents which prevent the government from switching the suppliers and expecting the same product
from another firm.
The Power of Buyers
The powerful of the buyers can be understood to be the powerful customers who generally bring down
the captured value in demand for better quality (Kirzner 2015). The defence industry is highly regulated with
respect to the fact that there is only major buyer which is the regulator is the Department of Defence and
hence, the defensive spending accounts form the major source of revenue and thereby this department is a
powerful buyer and captures more value by forcing the prices down and the demand high for the better quality
(Barringer 2015).
The Threat of Substitutes
As there exists a high entry barrier and powerful suppliers, here are very few competitions in the
industry therefore; there is a little scope for the presence of substitutes (Parker 2018). This means that the
contracts take a long time to get completed and in relation to this, the defence agencies often look out to
insource the defence contractors and suppliers so as to ensure that, the requirements of the emerging
companies can be met with accordingly (Ansoff et al. 2018). As stated previously, Kuratko (2016) believes
that the military advantage of the departments poses a threat to confidentiality and proprietary aspects of the
domestic technologies.
Rivalry amongst Competitors
There exists intense rivalry in the industry and hence, they often compete for low price and technically
acceptable contract. As stated earlier, there exist a lower number of competitors in the industry and they often
bid on new projects (Serco.com 2019). The prime contractors provide technical data packages that require

the consideration of the proprietary information and make it easier for the smaller firms to engage in the same
(Fawaz, Belin and Masson 2018).
Market Segments, Target Markets and USP
The Serco Group Plc has signed a contract with the Australian Defence Force`s Joint Logistics
command so that they are able to provide Middle East Logistics services and the Base Support services
(MELAB). The new contract begins on January 2019 and is valid for a period of three year with various
individual option years and total value which equivalents to AU$135million of the operational exercises are
carried out in the right manner (Serco.com 2019). Under this contract, Serco will provide 21 service lines
which also comprise of the catering, facilities, waste disposal, facilities and the ground maintenance along with
transport management, procurement, welfare service and the ground maintenance services which will be
based in the United Arab Emirates only.
According to Kirzner (2015), the operational solution for the MELABS is developed on the ground up
basis using the expertise in a meeting with respect to high service standards which are required in the existing
contacts and can base the understanding of the unique challenges of delivering such services in the Middle
East region. The services of the firm will deliver cost efficiencies and thereby improve the overall service
experience which will be tailored to support the needs of the ADF which have been deployed (Hill 2017). The
company looks forward to providing the tailored services to the Middle East and will ensure that they are being
able to deliver the cost efficiencies and service improvements under the particular contract.
Key People and Skills
Having analysed the overall competitive environment and the external forces which govern the
industry, the key people and skills are as follows:
1. Manager: According to Hill (2017), the primary person who will be involved in the particular domain
can be understood to be the manager of the project in the country. In line of this, the manager is
required to be particularly skillful with respect to the fact that it is important for the firm to have an idea
about the overall culture of the Middle East and have the analytical skill to understand the manner in
which the firms and departments tend to function (Drucker 2014).
2. Project Manager: The project manager can be understood to be one of the most important people who
are involved in the given domain (Fawaz, Belin and Masson 2018). The project manager would be
required to deal with the different aspects of the project or the opportunity in order to determine the
fact that the deal with the Middle East can be carried out successfully.
3. Product manager: The product manager would be required to essentially check the overall quality of
the supplies which are being provided and also measure and match the manner in which the overall
aspects of the pricing have to be matched (Venkataraman 2019).
Personnel Skills Qualifications
Manager Good at communication, excellent
analytical skills
Masters in Management
Project Manager Good management skills and Masters in Project management

coordination skills
Product Manager Problem solving skills have to be
present
Diploma in Product designing
The organization plans to use these skills and resources by ensuring that they are being able to solve
the relevant solutions and bring up the operations which would serve best for the organization (Drucker 2014).
Additionally, the firm also plans to make use of these skills of the human capital to gain a competitive edge in
the market and to see to it that the firm is being able to engage in successful operations throughout.
Financial Feasibility
The financial feasibility can be assessed based on the Assumptions and the expected Cash Flow
statement.
Start-up Expenses
Start-up Expenses
Buildings / Real Estate
Purchase $ 5,000
Construction 50,000
Remodelling 23,000
Other -
Total Buildings and R / E $ 78,000
Leasehold Improvements
Item 1
Item 2 -
Item 3 -
Item 4 -
Total L / H Improvements $ -
Capital Equipment List
Furniture $ 10,000
Equipment 2,000
Fixtures 3,000
Machinery 3,000
Other -
Total Capital Equipment $ 18,000
Location and Admin Expenses
Rental $ 300
Utility Deposits 2,000
Legal and Accounting Fees 30,000
Prepaid Insurance 2,000
Pre-opening Salaries 3,000
Other -
Total Location and Admin Expenses $ 37,300
Opening Inventory
Category 1 $ 3,000
Category 2 3,000
Category 3 3,000
Category 4 3,000
Category 5 -
Total Inventory $ 12,000
Advertising and Promotional Expenses
Advertising $ 5,000
Signage 2,000
Printing 7,000

Travel & Entertainment 4,000
Other / Additional categories 3,000
Total Adv and Promo expenses $ 21,000
Payroll and payroll taxes
Expense 1 $ 2,000
Expense 2 5,000
Total Payroll and payroll taxes $ 7,000
Sources of Capital
Owners' Investment (name & % ownership)
Your name & % ownership $ 75,000,000
Other Investor
Other Investor -
Other Investor -
Total Investment $ 75,000,000
Bank Loans
Bank 1
Bank 2 -
Bank 3 -
Bank 4 -
Total Bank Loans $ -
Other Loans
Source 1 $ -
Source 2 -
Total Other Loans $ -
Therefore, from the analysis which has been undertaken it can be rightfully mentioned that, the
organization will be performing well with respect to its new venture in the UAE. The cash flow statements
which have been attached in the Appendix reflect that, the organization has a good ad positive cash flow from
various financial, operational as well as the Investing activities. Moreover, during the first year of the
operations, the firm is expected to earn $79812120 as its funds which can be understood to be a good
estimate. Moreover, the main sources of funds for the business are the firm’s own funds which would help it in
achieving better profitability.
Sales Funnel

Figure 1: Sales Generation for the business

References
Ansoff, H.I., Kipley, D., Lewis, A.O., Helm-Stevens, R. and Ansoff, R., 2018. Implanting strategic
management. Springer.
Barringer, B.R., 2015. Entrepreneurship: Successfully launching new ventures. Pearson Education India.
Burns, P., 2016. Entrepreneurship and small business. Palgrave Macmillan Limited.
Drucker, P., 2014. Innovation and entrepreneurship. Routledge.
Fawaz, M., Belin, J. and Masson, H., 2018. Shareholder nationality among the major European and American
defence contractors: an exploratory data analysis. Finance Bulletin, 1(2), pp.36-49.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach.
Cengage Learning.
Hill, T., 2017. Manufacturing strategy: the strategic management of the manufacturing function. Macmillan
International Higher Education.
Kirzner, I.M., 2015. Competition and entrepreneurship. University of Chicago press.
Kuratko, D.F., 2016. Entrepreneurship: Theory, process, and practice. Cengage Learning.
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Nataraj, S., Guo, C., Hall-Partyka, P., Gates, S.M. and Yeung, D., 2014. Options for Department of Defence
Total Workforce Supply and Demand Analysis: Potential Approaches and Available Data Sources (No. RR-
543-OSD). Rand national defence research inst santa monica ca.
Parker, S.C., 2018. The economics of entrepreneurship. Cambridge University Press.
Serco.com 2019. Media releases [online]. Available at:
https://www.serco.com/news/media-releases/2018/serco-signs-au135m-rebid-with-australian-defence-force-
for-military-base-support-in-the-middle-east (Retrieved on: 09 Sept. 2019).
Serco.com 2019. Sector expertise [online]. Available at: https://www.serco.com/me/sector-expertise/defence
(Retrieved on: 09 Sept. 2019).
Stead, J.G. and Stead, W.E., 2014. Sustainable strategic management. Routledge.
Storey, D.J. ed., 2016. Entrepreneurship and new firm. Routledge.
Venkataraman, S., 2019. The distinctive domain of entrepreneurship research. In Seminal Ideas for the Next
Twenty-Five Years of Advances (pp. 5-20). Emerald Publishing Limited.

Appendix
Assumptions
1. Year-one revenue expectancy
<Product
1>
<Product
2>
<Product
3>
<Product
4>
Number of units sold annually 500 700 800 1,000
Average sales price per unit $4,500.00 $5,000.00 $7,000.00 $8,000.00
Annual revenue per product $2,250,000 $3,500,000 $5,600,000 $8,000,000
Total year 1 revenue
$19,350,00
0
2. Year 1 cost of goods sold
<Product 1>
<Product
2>
<Product
3>
<Product
4>
Expected gross margin per product 20.00% 30.00% 35.00% 40.00%
Annual cost of goods sold per product $450,000 $1,050,000 $1,960,000 $3,200,000
Total year 1 cost of goods sold $6,660,000
3. Annual maintenance, repair, and
overhaul
Factor (%) on capital
equipment 20%
4. Number of years for straight-line
depreciation 5
5. Annual tax rate 30%
6. If long-term debt is being used to
finance
operations, enter the total loan value.
-
7. Account receivable and payable % 20%
Cash Flow

Year 1 Year 2 Year 3 Year 4 Year 5 Total

Operating activities
Net income
$8,847,4
40
$9,024,3
89
$9,385,6
96
$9,949,5
15
$10,746,5
10
$47,953,5
50
Depreciation $19,200 $19,584 $19,968 $20,352 $20,736 $99,840
Accounts receivable ($77,400)
($157,89
6)
($246,31
8)
($348,12
9) $0 ($829,743)
Inventories ($38,700) ($78,948)
($123,15
9)
($174,06
5) $0 ($414,871)
Accounts payable $26,640 $54,346 $84,779 $119,821 $0 $285,586
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
$8,777,1
80
$8,861,4
74
$9,120,9
67
$9,567,4
94
$10,767,2
46
$47,094,3
62
$0
Investing activities $0
Capital expenditures $0 $0 $0 $0 $0 $0
Acquisition of business 0 0 0 0 0 $0
Sale of fixed assets
($3,791,7
60)
($3,867,5
95)
($4,022,4
41)
($4,264,0
78)
($4,605,6
47)
($20,551,5
21)
Other investing cash
flow items 0 0 0 0 0 $0
Total investing
activities
($3,791,7
60)
($3,867,5
95)
($4,022,4
41)
($4,264,0
78)
($4,605,6
47)
($20,551,5
21)
Financing activities
Long-term
debt/financing $0 $0 $0 $0 $0 $0
Preferred stock 0 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 $0 $0 $0 $0 $0 $0
Cumulative cash flow $4,985,4 $4,993,8 $5,098,5 $5,303,4 $6,161,59 $26,542,8