Walton Electronics and Auto-mobiles Limited: UK Business Plan

This report details Walton Electronics' business plan for entering the UK market, focusing on the sale of refrigerators. It begins with an executive summary and a business background, outlining Walton's existing operations and its objectives for the UK market. The plan includes a market analysis, asse...Read More

Walton Electronics and Auto-mobiles Limited set
up a new business in the UK
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Table of Contents
1. Executive summary .........................................................................................................................3
2. MY BUSINESS PLAN ....................................................................................................................3
2.1 Business background ................................................................................................................3
2.2 Business mix by segment ..........................................................................................................4
3. MARKET DEMAND.......................................................................................................................4
3.1 Market size.................................................................................................................................4
3.2 Market growth ...........................................................................................................................4
3.3 Market demand for a start up ....................................................................................................4
3.4 Market demand risks and opportunities'....................................................................................4
4. UNDERSTANDING THE MARKET .............................................................................................5
4.1 Competitors................................................................................................................................5
4.2 Competitive intensity ................................................................................................................6
4.3 Competition in a start up ...........................................................................................................6
4.4 Industry competition risks and opportunities.............................................................................6
5. STRATEGY .....................................................................................................................................7
5.1 Competitive position..................................................................................................................7
6. RESOURCES ..................................................................................................................................7
7. FINANCIALS AND FORECASTS ................................................................................................8
8. RISK, OPPORTUNITY and SENSITIVITY..................................................................................11
9. CONCLSUION ..............................................................................................................................11
References..........................................................................................................................................13
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1. EXECUTIVE SUMMARY
Walton Group is a well-established business which is operating in Dhaka, Bangladesh. It is a
privately owned enterprises who was established in the year 1977 and offering wide range of
electronics, motor vehicles and telecommunication products. Company is serving customers at
international level and selling consumer electronics, Auto mobiles, Mobile phones and Home
Appliances to large number of customers. Recently, Walton intends to enter into the UK market for
selling refrigerators because there is a greater electronic product demands in UK so that, this new
investment proposal will be more viable. Thus, by entering in this new market, Walton can enhances
their potential performance and build more strong and powerful position in the world.
2. MY BUSINESS PLAN
2.1 Business background
Walton is the famous brand of Bangladesh in the field of electronics or electrical products. It
manufactures and offers high quality as well as durable domestic refrigerators, freezes, air
conditioners, oven, motorcycles and other electrical products. Business organization offers designer
electronic products at highly affordable prices. Now, company is planning to offer electronic
products in UK. Moreover, in UK disposable income of the people is high in terms of 73.5%.
Besides this, they prefer to spend high in the electric products with the aim to raise the standard of
living. Thus, Walton has decided to move in UK market with the aim to attain high level of sales
and profit.
Goals and objectives: The objective of Walton is to offer high quality electronic products such as
refrigerator with multiple designs and size at very reasonable prices to the customers of UK.
Strategy: Company's strategy is to offer standard product or services in accordance with the UK and
European market. Through this, company is able to build distinct image in the mind of target
market. Further, company also needs to complete the documentation process which includes CE
marking, refrigerator energy rating, import licence, EORI number etc. (Gebauer, Paiola and
Edvardsson, 2010). Once all the documentation procedure has done thereafter business organization
will hire the warehouse for storing the finished product on rental basis. Further, business unit will
also hire the showroom from which company would be able to make delivery of the product more
effectively. In addition to this, market research will be conducted by the business organization with
the aim to assess the market segment. Walton also recruits and select local people to deliver the
product or services to the end customer. In order to set up business in UK Walton initially invests
£800000. along with it, company has plan to set up the business within the 2 months. With the aim
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to attract large number of customers company also undertakes marketing and promotional activities
which helps them in developing awareness among the people.
2.2 Business mix by segment
In UK, Walton will offer electrical products such as refrigerator to the lower and middle
income class people at affordable prices. Business organization is planning to offer refrigerator with
the attractive designs and sizes. Further, business unit will also provide after sales service to the
target market.
3. MARKET DEMAND
3.1 Market size
The total market size for the refrigerator is £1.1 Billion pounds in the financial year 2016.
According to the report of BSRIA's consultancy there is a need of commercial and industrial
refrigeration in nine countries including UK (Refrigerant market to reach £10.4 Billion by 2018,
2015). Thus, market size, trend and growth are the major key drivers for commercial and industrial
refrigeration. On the basis of this aspect, it can be stated that market size of Walton is very large in
UK.
3.2 Market growth
There is healthy growth in UK for the refrigeration appliances. As the disposable income of
the people of UK is continuously increasing. Thus, the purchasing rate of UK people in terms of
refrigeration is continuously since the year of 2007. It is the positive sign for the business
organization. Sales revenue of the the electric manufacturer appliances are increase with the annual
growth rate of .6%. Hence, it can be said that high market growth of refrigeration will help Walton
in attaining in UK market.
3.3 Market demand for a start up
In UK, growth of the chilled food sector is continuously increasing. This aspect clearly
shows that market demand for the refrigeration industry is very high. Now, UK customers prefer to
take chilled food rather than low temperature food (Giordano and Fulli, 2012). This factor stimulate
Walton to offer quality and affordable refrigerators to the target market of UK. Thus, business unit
can enhance its productivity and profitability to the large extent by fulfilling the high demand of
target market.
3.4 Market demand risks and opportunities'
Technological changes are the main factor which impose high level of risk on the demand
factor of refrigerator. Taste and preferences of the customer are change with the very high pace in
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accordance with the technological advancement. Besides this, market condition such as inflation or
deflation also have high level of influence on demand for refrigerator. Moreover, during the period
of inflation purchasing power of the customers are increased. On the contrary to this, in deflation
customers have less income to invest it in the luxurious product or services. Thus, market condition
which is prevail in the market also place negative impact on the demand of refrigerator.
Further, Walton can attain success in UK market by garbing the opportunities which are
present at marketplace. Moreover, in UK most the companies provide refrigerator to the customers
at very high prices. Due to this, middle and lower income class people are unable to raise their
standard of living. Thus, by offering the quality refrigerator is each size at affordable prices Walton
wills get the desired outcome or success in UK market. In addition to this, by introducing the
refrigerator which helps in save energy Walton would be able to build distinct image in the mind of
target market (Lee and et.al., 2010). Thus, by exploiting the opportunities company is able to
achieve success in the strategic business environment of UK.
4. UNDERSTANDING THE MARKET
Before framing any strategy it is vital for the business organization to understand the
market in terms of competitor to the large extent. Thus, Walton needs to make analysis of the
competitors and their intensity who manufacture or offer refrigerator to UK customers.
4.1 Competitors
There are several business organization which offer high quality and attractive refrigerators
to the people of UK. In UK market Walton has to compete with the following brands are as under:
 Samsung
 Beko
 Whirlpool
 Daewoo
 LG
 Liebherr
 Logik
 Miele
 Panasonic
Thus, Walton will make through analysis of the business strategies and policies which are
adopted by the competitors. Through this, Walton can frame competent strategic framework which
will help them in achieving success in the new business market.
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4.2 Competitive intensity
From the assessment of the refrigerator market of UK it has been identifying that
competitive intensity take place in this area to some extent. There are several brands namely
Samsung, Whirlpool, Bosch etc. who serve the niche such as lower and middle income group. Thus,
Walton needs keep this factor in mind while framing the strategic and policy framework. Report of
BSRIA's states that market demand for refrigerator would be £1.1 billion ponds in 2016. This is one
of the main factors which attract entrepreneur to manufacture and offer refrigerator to the customers
(Storey and Greene, 2010). Nevertheless, there are several aspects which impose threat to the new
entrants. In order to take strategic move in UK business organization needs to follow all the laws
and legislation which are framed by the government. Besides this, company will also require to
perform their activities according the European standards such as CE marking etc.
Further, Walton also needs to develop certain or specific technology and operational process.
Besides this, business entity will also require to train the personnel to manufacture and deliver the
product or services in an effectual manner. In addition to this, company also requires to make huge
investment in the capital assets which also impose high threat in front of the new entrants. On the
basis of this aspect it can be stated that competition is neither too high nor too low. Thus, Walton
will attain success in UK market by offering the high quality and durable product.
4.3 Competition in a start up
Walton will face stiff competition in the market due the existence of major players. Usually,
customers prefer to purchase the product of brand to which they are highly familiar. Thus, in the
initial stage company will require to make efforts to develop the brand image.
4.4 Industry competition risks and opportunities
Competition factor also imposes high level of risk in front of Walton. In the world of high
technological changes or advancement if competitor comes up with new freeze with the unique
feature then it will closely hamper the growth and success of Walton. Due to this, sales and
profitability aspect would also be affected to the large extent. In this, Walton will also require to
make investment in the new technologies which may also affects the cash flow or position of the
firm. In comparison to the other players or competitors Walton will offer freezes in all size. In
addition to this, affordable prices, quality, durability, energy saving factor and design etc. are the
main features which will help Walton in coping up with the competition more effectively and
efficiently.
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5. STRATEGY
5.1 Competitive position
Walton conducts SWOT analysis which provides information about the strengths,
weaknesses, opportunities and threats. From SWOT analysis it has been identifying that the
following factors will closely affect to Walton if it move or operate in UK market are enyumerated
below:
SWOT analysis
Strengths
 Quality products at low prices
 Using advance high technology
 After sales service Wide product range
Weaknesses
 Lack of skilled manpower
 shortage of accessories
 Low quality hardware
Opportunities
 Company can achieve success in UK
market by offering the high energy
saving refrigerators in the market.
 By offering the employment
opportunities business unit will also
make contribution in the growth and
development of UK economy. Further, company can offer refrigerator
at low prices as compared to other
players by taking into account the
research and development activity.
Threats
 Walton will face major competition from
unethical competitive activities which
take place in the market.
 Political factors as well as laws and
legislation of UK.
 Quick changes in the customer demand.
 Entry of new players.
6. RESOURCES
In order to set up business in UK company will require human and financial resources.
Walton will require people to manufacture the refrigerator. Besides this, to deliver the product and
after sales service business unit will also require the enough amount of human resources. For this,
purpose, 54 people will be needed by the firm. Thus, Walton will hire skilled and efficient personnel
who are able to deal with the customers more effectively and efficiently. In addition to this, for
performing the business operations and activities company will also require enough amount of
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financial resources. To staring the business in UK market Walton will require £800000. Moreover,
company has to make expenses on material, labor, hardware, software and other aspects. Through
this, company would become able to execute its business plan in the best possible manner.
7. FINANCIALS AND FORECASTS
Financial feasibility
Walton will make turnover projection on the based on some assumptions. It will help to
prepare projected income statement and cash flow statement so as to determine their potential
performance and cash flow availability at the end of the period. Moreover, lies assumption will
assist Walton owner to determine their break even point at which business will neither have any
profit nor loss. It is the point at which business resources are optimum utilised and there after, it will
gain profits.
Sources of finance
Walton will invest £800000 initially, out of which £300000 will be invested from personal
savings and amount worth £500000 will be acquired through bank loans from Barclays bank.
Interest rate on borrowings will be fixed at 7.63% per annum. The reason behind choosing bank
loan is interest payment on borrowings will be consider deductible when, computing tax
obligations. So that, Walton has to pay less taxes and can earn more profits as well.
Assumptions for projection
 Walton will sell refrigerators at £250 each unit and it will remain constant over the projected
period.
 Number of refrigerators sale will be £7 each day. While, Walton will run operation for 25
days within a month it is because of 4 Sundays and one casual holiday.
 Every year, Walton's total revenue will be increase at 20% rate because of high consumer
demand and innovative and designer refrigerators.
 Working capital for pre operating year will be £200000.
 Legal and registration charges, Market research and Marketing and promotional expenses in
pre-operating year will be £200000, £30000 and £20000 respectively.
 In 1st year, Marketing and promotional expenses will be £10000 and will be increase at 10%
p.a.
 Utilities payments in 1st year will be worth £30000 and incline at 5% p.a.
 Plant and equipment costs will be fixed worth £10000 every year.
 Miscellaneous business expenditures will be £20000 and increase at 5% rate p.a.
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 Insurance expenditures will be fixed worth £10000 each year.
 Corporation tax rate will be 20% on Walton's profitability.
 Premises will be taken on rent and 1st year rental charges will be £10000 and increase at 5%
per year.
 Monthly salary for staff members will be as follows:
 Every year, staff salary will be increase at 5%.
 Variable costs will be 30% of average selling price.
Cash flow statement
Pre-
Operating
Year Year 1 (￡) Year 2 (￡) Year 3 (￡)
CASH INFLOW
Opening Balance 0 520000 714020 979792
Sales 0 525000 630000 756000
Owner's fund 300000
Bank Loan 500000
Total Cash Inflow 800000 1045000 1344020 1735792
CASH OUTFLOW
Working Capital 200000 0 0 0
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Legal and Registration
Charges 30000 0 0 0
Market Research 30000 0 0 0
Marketing and
promotional 20000 10000 11000 12100
Utilities (Electricity &
Phone) 0 30000 31500 33075
Plant and equipment
maintainance 0 10000 10000 10000
Interest on loan 38150 38150 38150
Rent on premises 0 10000 10500 11025
Salary 0 62880 66024 69325
Miscellaneous Expenses 0 20000 21000 22050
Insurance 0 10000 10000 10000
Tax 0 19130 44193 60104.15
Loan Repayment 0 100000 100000 100000
Total Cash Outflow 280000 310160 342367 365829.15
Closing Balance 520000 714020 979792 1347008.6
Income Statement
Particulars Year 1 (￡) Year 2 (￡) Year 3 (￡)
Revenue 525000 630000 756000
Less: COGS (30%) 157500 189000 226800
Gross Profit 367500 441000 529200
Operating Expenses
Legal and Registration
Charges 30000 0 0
Market Research 30000 0 0
Marketing and
promotional 10000 11000 12100
Utilities (Electricity & 30000 31500 33075
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Phone)
Insurance 10000 10000 10000
Salary 62880 66024 69325
Miscellaneous
Expenses 20000 21000 22050
Plant and equipment
maintenance 10000 10000 10000
Rent on premises 10000 10500 11025
Total Operating
Expenses 212880 160024 167575
Operating Profit 154620 280976 361625
Less: Interest 38150 38150 38150
PBT 116470 242826 323475
Less: Tax (20%) 19130 44193 60104.15
Net Profit 97340 198633 263370.85
Break-even point - It is the point at which Walton's total revenues will be equal to total
expenditures hence, no profit no loss situation exists.
BEP ( In number of refrigerator) = TFC/CPU
BEP ( In £) = BEP ( in units) * average selling price
Average selling price 250
Less: Variable costs 75
Contribution 175
Fixed costs
Legal and Registration Charges 10000
Marketing research 10000
Insurance 10000
Salary 83700
113700
BEP ( In units) 649.7142857143
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BEP (In units) 650
BEP (In value) 162500
8. RISK, OPPORTUNITY AND SENSITIVITY
When company enter in the new market then there are several factors which impose high
level of risk in front of the business organization. Now, Walton is planning to move from
Bangladesh to UK market. In this, Walton will make assessment on the risk which are present in
UK market. On the basis of this aspect company is able to frame competent strategies and policies
which helps them in mitigate the risk to the large extent. Besides this, Walton will also make
assessment of the opportunities by analyzing the market to the large extent. Further, sensitivity
analysis will also be conducted by Walton which help in assessing the factors which have high level
of impact upon the growth and profitability of the firm. Thus, by taking intro consideration all these
aspects Walton become able to move in UK market more successfully.
9. CONCLSUION
From the above discussion it can be concluded that by offering the low priced quality
refrigerator Walton will attain success in UK market. It can be stated the market trend towards the
refrigerator is highly positive. In addition to this, demand for the refrigerator is also continuously
increasing. Thus, by entering in the UK market company will attain success to the significant level.
It can be seen in the report company will get positive and high profitability by taking strategic move
in UK market. Further, by offering the low priced and high quality refrigerator company is able to
build distinct image in UK market. Besides this, it can be concluded that company has wide
opportunity to enhance revenue by offering the high energy saving refrigerator to the customers.
Thus, it can be inferred that by setting up store in UK market Walton is able to expand its business
operations and functions in an effectual manner.
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REFERENCES
Books and Journals
Gebauer, H., Paiola, M. and Edvardsson, B., 2010. Service business development in small and
medium capital goods manufacturing companies. Managing Service Quality: An
International Journal. 20(2). pp.123-139.
Giordano, V. and Fulli, G., 2012. A business case for Smart Grid technologies: A systemic
perspective. Energy Policy. 40. pp.252-259.
Grönroos, C. and Ravald, A., 2011. Service as business logic: implications for value creation and
marketing. Journal of Service Management. 22(1). pp.5-22.
Kern, R., 2014. Introduction. In Dynamic Quality Management for Cloud Labor Services (pp. 3-7).
Springer International Publishing.
Lee, S.M and et.al., 2010. Success factors of platform leadership in web 2.0 service business.
Service Business. 4(2). pp.89-103.
Storey, D.J. and Greene, F.J., 2010. Small business and entrepreneurship. Financial Times Prentice
Hall.
Online
Refrigerant market to reach £10.4 Billion by 2018, 2015. [Online]. Available through:
<http://www.racplus.com/news/refrigerant-market-to-reach-104-billion-by-
2018/8650608.fullarticle>. [Accessed on 8th March 2016].
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