Electronic Engineering Business PlanExecutive SummaryGAFAT
Engineering, Inc. has established a strong foothold in a niche
technology market for Product Category One devices. The potential
market demand of 180 million units far outstrips the capacity of
present suppliers and is growing at a rate of 10% annually in our
under developed country. GAFAT's success in taking advantage of
this boom market is assumption by its recent growth in sales and
profitability. Sales are projected to grow from the first quarter
of Year 1 total of 4,760,000 to 27,200,000 by the end of the first
year, and to exceed 238 million by the end of the third year of
operations. A similar growth pattern will cause before tax profits
to rise significantly by the end of Year 1 and continue increasing
through the end of Year 3. These results will be achieved without
large additions to fixed assets. A relatively small banking
facility will be needed in the form of a line of credit of
2,550,000-3,400,000 to support the necessary growth in current
assets, half of which will represent prime corporate receivables.
*Note: Propriety and confidential information has been disguised or
removed from this sample plan.
1.1 Objectives
While working to develop GAFATs Engineering's image as the
premier maker of Product Category One devices with the latest
cutting-edge technology, the measurable objectives are:1. Complete
work to make GAFAT's products compatible with at least five of the
most popular first-tier operating systems (by end Month 5, Year 1),
and at least three others within one year.
2. Complete a thorough website redesign and get out a quality
mailer to 300 Value Added Resellers (VARs) (by end Month 6, Year
1). 3. On the basis of a professional media analysis, arrange an
effective advertising campaign in trade publications designed to
target the telecommunications, industrial automation, and
instrumentation sectors (by end Month 7, Year 1). 4. Through
networking and partnering with operating system developers,
technology manufacturers, and other industry players, arrange at
least five banners/links on a reciprocal basis with key
market-related websites. 1.2 Mission
GAFAT Engineerings mission is to develop cutting-edge Product
Category 1 solutions for appliance and equipment makers who, due to
the fast pace of technology, are under pressure to get their
products to the market quickly and to advertise our poor country
for the worldwide competitive centers. GAFAT achieves this by
maintaining a small "think tank" style technical team, outsourcing
the manufacturing, and keeping a marketing offering which caters to
the more demanding Product Category One requirements, leaving the
simpler high-volume and pricesensitive market needs to the
competition. Note: Proprietary and confidential information has
been disguised or omitted from this sample plan.1.3 Keys to
Success
The demand and growth potential is so overwhelming that success
in selling Product Category 1 devices is virtually assured provided
a few key aspects are kept in mind:1. There is no problem in
contract manufacturing the devices, provided a ready stock of
components is available. Careful planning in ordering sensitive
components is essential, and sufficient financing must be in place
to support long inventory periods. 2. Avoid time-consuming
inquiries originating from outside the chosen market targets.
Everyone is interested in Technology 1. It is important to weed
through the inquiries and respond to those that fall within sales
and marketing parameters (needs between 100 and several thousand
units, designed for use with high-ticket sophisticated equipment).
3. Move quickly to build a brand awareness for cutting-edge
reliability. The market need for Product Category 1 devices is
potentially so large that more competitors can be expected. It will
be more difficult to build an image later.
Company SummaryGAFAT Engineering solely owned by the group
members Ferew, Gashaw, Adinew, Tewodros ,Alemayehu and many more
intellectual persons as well as some other workers. To capitalize
on the growing demand for the Product Category 1 devices, the
company will able to shifted from offering consulting services to
the development of the Technology 1 hardware and software.
This prototype has been vastly popular with its group members
and the company soon will start shipping the improved version of
its device. For further development for the future; the company
positions itself as a developer of high-end devices and selectively
targets telecommunications companies, as well as smaller industrial
automation and instrumentation companies, that have strong demand
for the high performance Product Category 1 devices.2.1 Company
Ownership
Our group members collectively led as the founder, owner, and
sole stockholder. The company is not publicly traded at the time of
this writing but for the time being it will be the welfare of the
society as well as the government. Note: Proprietary and
confidential information has been disguised or omitted from this
sample plan.2.2 Company Locations and Facilities
GAFATs Engineering is not presently operates with its specified
location for the development of the company but with the increasing
of technology and the development of our country the leads to
implement the company with out-side plant in order to protect the
environment from the environmental hazardous. All manufacturing is
out-sourced to contract manufacturers. *Note: Propriety and
confidential information has been disguised or removed from this
sample plan.
ProductsGAFAT Engineerings products are off-the-shelf ready
platforms containing all the necessary infrastructure for
Technology 1, so that appliance makers can immediately focus just
on their own specific product applications.3.1 Product
Description
GAFAT Engineering occupies an important segment of the
"Technology 2 system" market. A Technology 2 system is any system
that is physically incorporated into a product that performs a
dedicated function or specific application. Consumer examples
include kitchen appliances and home entertainment systems, whereas
commercial examples are point-of-sale terminals, industrial process
controls, etc. The button you press which toggles back and forth
between total miles travelled and the trip mileage is an example of
the many Technology 2 systems found in new cars. GAFAT specializes
in the segment of the Technology 2 system market that relates to
Technology 1. One example is the odometer as an ultra-simple
Technology 2 system that does not normally require communication.
However, one can imagine a company with a large fleet of vehicles
wanting accurate, up-to-date information concerning mileage for
purposes of scheduling servicing, or checking routing distances.
The Technology 2 device that would be needed here
would require Technology 1. The "net" in this case would be a
small, simple, closed net that would be comprised of the Technology
2 devices (called "smart" devices) connected to the vehicles'
odometer (satellites) and one central terminal (the server) located
at company headquarters. There is a whole array of means to connect
the satellites and the server. A wire would obviously be
inappropriate here. A digital radio wave would be the likely
choice. Each individual odometer device would have a discrete
identifier, and would communicate to the server. Each would have
the potential to communicate to and from anywhere on in the world.
However, in our example, it being a closed system, the rest of the
world would not be permitted to gain access to these identifiers.
This example clearly shows with the changes of technology from the
time of the past to the present; that is way we will be able to
open this broad and vast company in our country with large amount
of money that loan from the government or with sponsored ship from
the foreign countries or by sharing with the foreign investors or
business men. GAFAT makes these Technology 1 devices. The basic
device (here called Product Wrasse), about the size of a credit
card, is comprised of:1. A central processing unit (CPU). This is a
very powerful chip supplied by Technology Manufacturer 1 which
represents the computing brain. 2. FLASH chip. This is memory
capacity that does not die when power is turned off. 3. SDRAM chip.
Normal memory capacity. 4. A Controller. This governs the data flow
from the satellites to the server. 5. GAFAT's proprietary Product
Blennies. 6. Other elements like voltage regulators, electrical
conduits to connect chips and external hookups.
The Product Wrasse, described above, would be bought by original
equipment manufacturers (OEMs) to incorporate into their appliance.
The unit might also be bought by an "integrator" who takes a basic
odometer, plus the Product Wrasse, and adds some software to end up
with a "smart" odometer which the market integrator then tries to
sell to companies with fleets of vehicles that might have good need
for this specialized product. GAFAT would configure the Product
Wrasse so that it is compatible with the operating system used in
the appliance, and would build in whatever FLASH and SDRAM capacity
are needed for the designed purpose of the smart odometer. GAFAT's
third product is an add-on to the basic Product Wrasse and is
called the Product Damselfish. Going back to the odometer example:
If the company with the fleet of vehicles would like to be able,
once a certain mileage had been reached, to tell the driver: "Time
for an oil change," then the Technology 2 device would need to have
audio capability. Some applications might even need a video screen
and a keyboard (like an ATM) for user interface. These capabilities
are available through Product Damselfish. *Note: Propriety and
confidential information has been disguised or removed from this
sample plan.
3.2 Competitive Comparison
OEMs, who want to benefit from the trend toward Product Category
One their products, typically outsource their needs. This allows
the OEMs to concentrate on the design and application of their
specific appliance without having to worry about the Product
Category One aspect. Outsourcing this part saves the OEM in
development costs, and more importantly, saves time in getting the
appliance to the market. The attached table is a schematic of the
main recipients of this outsourcing and the major features of the
Product Category One devices offered by each.1. Outsource Provider
1. The processor used is somewhat slower and parts costs are higher
than with Technology Manufacturer 1's CPU chip. This company, by
virtue of its parent being a contract manufacturer-assembler of
smart devices, is primarily hardware-focused. It would not be easy
for Outsource Provider 1 to switch from Technology Manufacturer 2's
chip to Technology Manufacturer 1's. 2. Outsource Provider 2. This
company seems to be market-segmenting to concentrate more on the
multi-media market represented mainly by ATMs and kiosks (such as
betting kiosks) which require a keyboard and a screen for user
interface. 3. Outsource Provider 3. This company moved in the wrong
direction from the start by using their own proprietary software
which is built into their devices. This puts them at a real
disadvantage. Their devices are the slowest, and the least
flexible, but still fine for certain nondemanding purposes. The
company has done some work for the HVAC market. Their lower price
reflects their limitations. 4. Outsource Provider 4. This company
is in close proximity to Software Manufacturer 1, is primarily a
software company made up probably of ex-Software Manufacturer 1
people. This explains their emphasis on the Technology 2 software.
Despite Software Manufacturer 1's operating system dominance in one
market, the Technology 2 market is different. There are many
widely-used Technology 2 operating systems. This company buys their
hardware from Outsource Provider 1. 5. Outsource Provider 5. This
companys products are distributed and supported the extra layer may
explain the added price. Specs are similar to those of Outsource
Provider 1. 6. GAFAT has made a considered effort to offer the
fastest CPU chip and to build in the widest range of capacity (from
low amounts of FLASH and SDRAM up to high amounts). GAFAT tries to
make its units compatible with all the major top-tier Technology 2
world operating systems and will work with the second- and
third-tiers as well.
*Note: Propriety and confidential information has been disguised
or removed from this sample plan.Chip Type Speed OP 1 and Max.
Flash Max. SDRAM Size Memory 64 MB COM Speed I/O Price Cards
14350-76565
Technology 32 MB Manufacturer 2 800
3.55" X 100 MB Y 3.775" per sec
OP 2
Fast 206 mhz Technology 32 MB Manufacturer 1 Slow Technology 1
MB Manufacturer 3 Fast 206 mhz Technology 32 MB Manufacturer 1
Technology 8 MB Manufacturer 2 800
32 MB
4" X 6"
10 MB per N sec X 10 MB per N sec X 100 MB Y per sec X 100 MB Y
per sec X 100 MB Y per sec
3325
OP 3
256 KB
1.54" 1.93" 2.5" 2.25" 2.13" 3.94" 1.4" 2.4"
8149
OP 4
32 MB
4350
OP 5
64 MB
7440
Fast 206 mhz RNSE Technology 32 MB Manufacturer 1 3.3 Sales
Literature
64 MB
3350-5650
See the appendices for product data sheets. ** Appendix
materials omitted in this sample plan.3.4 Sourcing
The chips and other basic building blocks used in GAFAT
Engineering's Product Category One platforms can be purchased from
a number of large distributors. Sourcing is not a problem, but
order scheduling must be given careful attention. Shortages can
occur, making it necessary to order well in advance and to
stockpile in order to make certain that sales do not outstrip
production because most of the materials could not be implemented
in our country but imported from outside of the country so this
leads to overcome the problems the shortage of the materials that
used for implementation of our company.3.5 Technology
Technology is moving at a rapid pace. The first commercial
computer in the early 1970's had a speed, measured in megahertz, of
only 0.1 Mhz. Now computers are on the market that race at 1,000
Mhz. Although the speed may still increase, a bigger area for
growth involves Technology 2 systems, (rather than personal
computers) and especially the Technology 1 uses of those Technology
2 systems. The appliance makers simply include a power cord and an
appropriately sized plug. The consumer merely plugs the unit in and
pays for whatever power he actually uses. The emerging technology
now refers to another protocol of "assumed communication."
In the future, appliance makers will assume that everyone has an
"Information Service Provider," and will build in Technology 1
right into every Technology 2 component that goes into each
appliance. Until now, we have had to program the VCR ourselves
before we leave the house if we want it to record a program on TV
that will air while we're away. We also have to hope we did it
right and actually record the last round of the Masters Golf
Tournament (and not end up with several hours of some home shopping
channel). However, with the new protocol, we will be able, from
wherever we are, to simply contact our Information Utility (which
will have all our appliance records). Product Category one
appliance is not going to be reserved for simple on/off features.
Now available on the market are many very sophisticated appliances
such as a printer, a sewing machine with computerized embroidery
capability, or data stream music. At the moment these are
PC-dependent. Take a high-tech sewing machine like a Pfaff Model
7570. This machine with its Technology 2 system can perform complex
sequences of operations including executing pre-programmed patterns
and monograms and fonts. The difficult operations which are very
user-interface intensive can be performed by the general-purpose PC
into which the sewing machine (like a printer peripheral) is
plugged instead of by the sewing machine's Technology 2 system. If
this user-interface capability had to be built into the Technology
2 system of the sewing machine, the cost of that machine would
skyrocket. Likewise, the MP3 player (data stream music) is
extremely CPU-intensive. At the moment the encoding takes place on
the general-purpose PC which allows the music player to have much
lower requirements for CPU and memory. These devices are
essentially one step removed from the Internet. Technology is
moving quickly to remove the PC intermediary thus making the
devices able to communicate directly with a content provider. Those
capabilities of the generalpurpose PC will be replaced by the
Internet itself thus making the appliances more flexible, more
portable, and less expensive. PCs themselves will metamorphose into
very light-weight, very inexpensive units without hard disks and
without extensive memory. All these aspects will be provided by the
Internet itself. Need file capacity? That too, can be provided by
the Internet. A user can move around the globe and access his/her
files from a very portable laptop. If the laptop is lost or damaged
there will not be a crisis. Simply buy another (for maybe 14000
birr). All your files are safe, located elsewhere.
Market Analysis SummaryThe market for Product Category One
devices is keyed to the production of Technology 2 microprocessors.
Over 180 million 32-bit microprocessors are being delivered
annually out off country for the past time. But in our company
could not be greater than the conservative estimates that have the
market growing at 0.2% annually. Some estimates are much higher.
Market trends indicate that most, if not all, of these
microprocessors will want Technology 1. At the present time, the
number of makers of off-the-shelf Product Category One devices is
limited and unlikely to be able to fill the demand.
4.1 Market Segmentation
The Product Category One devices sold by GAFAT are connected to
this total Technology 2 product market. The more products that are
produced, the greater the demand for Technology 1. This does not
include the 32-bit microprocessors placed in the 80 million PCs,
the three million MACs, or the approximately one million work
stations." Our mission for the development of the company is to
produce the chips and the RAMs that able to produce the least
available and cheapest microprocessors that leads as every person
could able to buy by his potential and mostly considered the
economical standards of the of the country. It is, however, the
32-bit sector that is growing fastest. It is this sector that is
most meaningful in projecting the market for GAFAT's products. Of
this total of 180 million 32-bit microprocessor units, the market
research firm of Information Architects, claims that the market is
broken up roughly into thirds:
Office Automation (34%). This included laser printers, faxes,
feature phones, etc. Consumer (33%). Includes video games, portable
games, CD players, and high-end audio visual equipment.
Communications (28%). Includes network hubs, routers, switches,
telephone infrastructure equipment. Automotive (3%). Military (1%).
Other (1%).
In addition to the new Technology 2 microprocessors, there are
hundreds of millions of older 4bit, 8-bit and 16-bit boards that
have already been sold. These too, although ignored in the market
study, represent a potential demand for Product Category One
devices retrofitted into many of those microprocessors. The 33%
consumer share of the market is characterized by high production
runs and pricesensitivity. VCRs and MP3 players are good examples
of products in this consumer market segment. Similar comments can
be made concerning the office automation market segment as well.
The third large sector of the market, telecommunications (28%) does
not appear to be as price sensitive nor are production runs as
large. It is this sector that has so far accounted for the majority
of GAFAT Engineering's sales. The other category, representing only
1% of the total, probably includes various industrial automation
products as well as testing and instrumentation. These fields,
although small in relation to the three major categories, still
accounts for over two million microprocessors placed in high-ticket
equipment, nearly all of which will need Internet connectivity. The
chart and table below summarize estimated domestic market potential
for the GAFAT's products. As stated above, GAFAT will selectively
focus on the telecommunications and other customer segments.
*Note: Propriety and confidential information has been disguised
or removed from this sample plan.
Market Analysis 2000 Potential Customers Growth Office
Automation Consumer 22% 22% 61 59 50 5 2 2 75 72 61 7 2 2 219 92 88
74 9 2 2 267 112 107 90 11 2 2 324 137 131 110 13 2 2 395 2001 2002
2003 2004 CAGR 22.32% 21.86% 21.55% 24.56% 2.67% 2.67% 21.71%
Telecommunications 22% Automotive Military Other Total 22% 22%
22%
21.71% 180
4.2 Target Market Segment Strategy
GAFAT Engineering plans to concentrate on the telecommunications
segment of the market (28% of total market) as well as the
industrial automation and testing and instrumentation segments (1%
of total) as these sectors are most likely to have more demanding
requirements which are suited to GAFAT's premier, cutting-edge of
technology architecture. These sectors are most likely to be
installing the Product Category 1 devices into high-ticket item
instruments and appliances, thus making these clients less
price-sensitive in relation to the high-volume consumer (MP3
players, Palm Pilots, etc). VARs and OEMs (Fortune 500 as well as
venture capital startups) connected with these market sectors are
the most attractive target customers for GAFAT.4.2.1 Market
Needs
The market, whether it is a maker of telecommunication switches,
industrial automation equipment, or a VAR with a time and
money-saving idea for a specific industry, wants to concentrate on
its special product and bring it to the market place as soon as
possible--hopefully ahead of the competition. They want to
out-source the Technology 1 need because they know that trying to
engineer it themselves would be more expensive and slow down the
launch of their end product by six to nine months. Some Technology
1 need, for example, an inexpensive 4-bit microprocessor lodged in
a thermostat, can be satisfied without spending 16,350-18,650 for a
GAFAT Engineering Product Wrasse. This need would be satisfied by
one of the low-end devices (like Outsource Provider 3). GAFAT needs
to focus on the customers with the more demanding requirements for
Product Category One.4.2.2 Market Trends
The market trend is to add Technology 1 to just about
everything, leading eventually to a view of the future
well-expressed by the CEO of Hewlett-Packard (see the section on
Technology). The trend is moving so quickly that the market is
having problems keeping pace with the demand. Reports of component
shortages among chip makers have been in the business news. For the
foreseeable future, we can expect Technology 1 products to be a
sellers' market.4.2.3 Market Growth
The market for 32-bit microprocessors could be increased by the
amounts to a 0.2% annual growth rate (see the section on Market
Segmentation). The 32-bit microprocessors were delivered, not
counting those that were used in computers and work stations. A
0.2% growth rate comes to an additional 1 million annually. Nearly
all of these will need Technology 1. The total unit sales projected
for GAFAT Engineering for the future three years will amount to
only 0.4 of that. In the demand of more specific market data, we
have projected market growth at 0.2% for every segment of the
Technology 1 market, although it is likely that some segments will
grow faster than 0.4% annually and others perhaps less.
4.3 Industry Analysis
The industry encompassing Technology 2 microprocessors, the
operating systems housed in them, the makers of components used to
build them, and the people developing software to make special
applications possible is quickly mushrooming into one of the
world's largest industries as our company vastly developed and
greatly advanced for the next 20-30 years. To be successful in
marketing a Product Category One device it is essential to
understand the patterns and major players in the industry.4.3.1
Competition and Buying Patterns
Currently, demand for the Product Category One devices outstrips
supply. With the trend of adding Technology 1 to almost any
appliance, demand will continue to grow. The variety of offered
platforms and configurations of such devices lead to the market
fragmentation where no incumbent company holds a major market
share. For low-end devices, pricing is one of the major factors.
However, for high-end devices, such as the products supplied by
GAFAT Engineering, high technical specification and flexibility
with major operation systems are more important.4.3.2 Main
Competitors
The main competitors for GAFAT Engineering's products are listed
in the section on Competitive Comparison. The listed competition is
unlikely to even come close to satisfying a large portion of the
demand for Product Category One devices indicated by market
research. But our company as a beginner no more competitors to the
world largest electronics companies but for the future we have
planned to overcome as competitors with the increasing working of
the company and more advanced technology and more and more
intellectual persons could able to scarifies their knowledge to be
competitive. One hundred, eighty million 32-bit microprocessors
being delivered annually with a projected growth rate of 0.2% is a
huge market for Technology 1, not to mention the billions of
microprocessors already delivered in stock configuration.
Obviously, much of the Technology 1 will be done by internal
engineering. But this option has serious drawbacks for the company
trying to develop this feature on its own. First, its engineers
have to examine hardware and software options, which, given the
number to choose from, could take months.
Will the component support the input/output (I/O) requirements
needed by the product? Do separate add-on components need to be
designed and manufactured? Which operating system vendors support
the component? Does the hardware vendor support the operating
system (O/S) vendor? What about integration of the hardware and
software?
After months of evaluation, and spending 25,000 on a leading
real-time operating system (plus another 110,000-120,000 buying and
building hardware), more months will pass building, debugging, and
integrating the operating system with the software. More time is
spent writing
the application. An engineer (who is an expert in the chosen
operating system) will need to be hired, and each year another
75,000 will need to be spent in O/S upgrades and software. Keeping
up with protocols and standards will also take time away from
development efforts. In the end, hundreds of thousands of dollars
can easily have been spent just on the task of adding Technology 1
to the product internally. The end product, now including
Technology 1, will have been delayed getting to market by six to
nine months. This delay to market aspect is the strongest deterrent
to attempting to engineer one's own Product Category One device.
*Note: Propriety and confidential information has been disguised or
removed from this sample plan.4.3.3 Industry Participants
There are several major components in the industry:
Microprocessor Manufacturers The sheer variety and quantity of
microprocessors is small enough in relation to desktop computers.
There are only a few choices with desktop computers as Technology
Manufacturer 1's MMMM architecture increasingly dominates. But with
microprocessors there are a wide variety of tiny fractions of the
total volume of microprocessors shipped each year. Even if we
restrict the count to only 32-bit chips, there are more than 100
different microprocessors currently on sale. This does not take
count of the all the different speed grades or packaging options.
These 100 different microprocessors represent more than a dozen
instruction-set architectures. Some of these manufacturers have
large sales forces and large marketing budgets. The ability to
attract the attention of one of these large manufacturers is key to
marketing Product Category One devices. Operating Systems
Microprocessors must have an operating system in order to function.
Again, unlike the desktop market where DDDD dominates, there are
many competing operating systems. . When a manufacturer of an
automated milling machine chooses a Product Category One device, he
will want one that is compatible with his chosen Technology 2's
operating system. In fact, the first time he hears about a
particular Product Category One device it is likely to be through
the salesman who sold him his operating system Market Integrators
Market Integrators are often referred to as value added resellers
(VARs). There are countless VARs who develop special applications
which are usually industry-specific. For example, Reseller 1 is a
VAR engaged in software related to building maintenance. This
involves Product Category One thermostats and other building
maintenance connected equipment in large office buildings. These
VARs are heavy users of Product Category One devices. OEMs Original
Equipment Manufacturers have quickly recognized the importance of
adding the power of the Internet to their equipment, for example,
the manufacturer of an automatic scale for use in
a production line. The scale will weigh every packet of tea
passing along the belt to check that the weight is within certain
tolerances. If not, the packet is removed from the line by
compressed air. By adding Technology 1 to the scale, the scale's
activity no longer needs to be visually monitored by a human in the
production hall, but can be remotely monitored from a central
location. This is especially interesting for a factory with a dozen
production lines. The same evolution is having an impact on almost
every type of equipment. The OEMs are important customers for
Product Category One devices as the device adds very little cost
relative to the ticket price of the equipment. *Note: Propriety and
confidential information has been disguised or removed from this
sample plan.4.3.4 Distribution Patterns
There are large established distributors of microprocessor
chips, and other components. It is possible that one, or all, of
these distributors may consider offering a Product Category One
device soon with a few limited configurations. However, the main
distribution channel for GAFAT's products is direct. The buyer may
have heard about GAFAT through a Technology Manufacturer 1
salesman, or through an operating system salesperson, but the sale
would be handled directly. Most inquiries come initially via
telephone or email over GAFAT's website.
Strategy and Implementation SummaryGAFAT Engineering's marketing
strategy will be to concentrate on the large telecommunication
sector of the market (28% of 180 million units annually), as well
as the smaller industrial automation, and the instrumentation
sectors. In keeping with GAFAT's trim organizational structure,
growth in sales will be closely keyed to success in its partnering
relationships with Technology Manufacturer 1 (its main component
maker), developers of operating systems, as well as with suitable
VARs. It will be necessary to augment sales staff. This "push"
marketing will be supported by some "pull" marketing in the form of
advertising in specialized trade publications. At the moment
supplying Product Category One devices is a sellers' market,
however, with demand projected to outstrip supply, more makers of
these devices are likely to spring up. It is important for GAFAT to
leverage its present ground-floor position in the supply of
Technology 1 devices by building a market image that will make it
difficult for later entrants to make in-roads into GAFAT's target
market sectors.5.1 Competitive Edge
GAFAT Engineering's competitive edge stems from the high
technical specifications of its products. The company develops
top-of-the-line Product Category One devices that can work with all
the major operating systems available in the market. Further, GAFAT
has developed a very favorable partnership with Technology.
Moreover, GAFAT's compatibility with all the firstand second-tier
operating systems provides a unique opportunity to capture the
market share.
5.2 Marketing Strategy
GAFAR Engineering will concentrate on the more demanding sectors
of the market and, in doing so, build an image for the highest
cutting-edge technology among the various makers of Product
Category One devices. Pricing on the high side is consistent with
that image, and alignment with Technology Manufacturer 1 (the
premier CPU maker), and the first-tier developers of operating
systems will further enlarge that image. In addition, an investment
should be made in image-bolstering advertising in targeted trade
publications serving the chosen market segments.5.2.1 Positioning
Statement
GAFAT Engineerings positioning statement is to stay on the
cutting edge of Product Category One device technology by
constantly improving its products ahead of the competition with
such features as the Product for Technology Manufacturers product.
GAFAT will target customers in the demanding telecommunications,
industrial automation, and instrumentation sectors rather than to
market-segment a narrower field with lower Technology 1
requirements which tend to be more price-sensitive. *Note:
Propriety and confidential information has been disguised or
removed from this sample plan.5.2.2 Pricing Strategy
For projection purposes, pricing has been based on production
costs at 40% of sales price. This pricing scheme seems to put GAFAT
Engineering's products on the high end of the ball park with the
competition (see the section on Competitive Comparison), which is
consistent with the image RNSE wants to build for its products.
Product Category One devices are not yet perceived as
"all-the-same" commodities, with price being the only deciding
feature. In line with GAFAT's positioning statement, GAFAT's market
sectors are the more demanding ones (telecommunications, industrial
automation, and instrumentation) as its increasingly over coming
broader and broader for the future with the will of technology that
leads. These customers are installing GAFAT's devices into
sophisticated, expensive equipment, and are more likely to make a
choice based on which Product Category One device has the highest
technical specifications and flexibility in respect to operating
system compatibility, choices in configuration, etc., rather than
price.5.2.3 Promotion Strategy
Although GAFAT Engineering does have sales positions in the
personnel plan, GAFAT's promotion strategy will stress "partnering"
as its main means of getting the word out concerning its products.
The importance of partnering with major industry players (see the
section on Industry Participants) is explained below: Partnering
with Technology Manufacturer 1 Technology Manufacturer 1 has a
large sales force and is the industry leader with its CPU chips
that owned with our company. All of GAFAT's products contain
this chip, which is a good foundation for Technology Manufacturer 1
wanting to promote GAFAT's products wherever possible over other
Technology 1 devices that use Technology Manufacturer 2's chip.
This is expected to result in increased volume of inquiries to
GAFAT's website, and help build the desired image. GAFAT has
awakened a great deal of special interest in Technology
Manufacturer 1 by developing a Product of their product. Technology
Manufacturer 1 visited GAFAT recently and expressed interest in
using some of GAFAT's products internally, or in some sort of
jointventure. Partnering with Real Time Operating System (RTOS)
Developers As mentioned elsewhere in this plan, compatibility with
existing operating systems is key to Product Category One device
sales. The following is a list of most of the first- and
second-tier operating systems: O/S Vendor Compatibility with RNSE
Products
CCCC software completed. DDDD ready by end May. EEEE ready by
end May. FFFF being done by FFFF. GGGG ready by end May. HHHH ready
within one year. IIII ready within one year. JJJJ ready within one
year.
Some of these top echelon O/S developers have hundreds of
salespersons which translates into sizeable promotional activity,
as virtually all customers for operating systems have Technology 1
in their plans. Partnering with the first tier O/S developers will
also serve to build that allimportant image for GAFAT products.
Partnering with Market Integrators Market Integrators are heavy
users of Product Category One devices. Hundreds of these VARs have
sprung up who have developed software, and attached hardware
designed to address problems, or save time and money for a specific
industry. Most, if not all, of these VARs utilize Technology 1 as
part of their value added offering. Special instrumentation or
monitoring devices which attach to hospital beds that can sense wet
sheets or patient body temperature are good examples. These devices
all require satellites units located at each bed have a Technology
1 device like RNSE's Product Wrasse. Considering the number of
hospital beds alone, it is easy to see why the VARs represent prime
customers for Product Category One devices. These VARs may first
hear about GAFAT's products through one of the operating system
developers or via a search through the Web. In addition, GAFAT
plans to get out a direct mailing to a list of 300 VARs. *Note:
Propriety and confidential information has been disguised or
removed from this sample plan.
5.2.4 Distribution Strategy
There are no immediate plans to wholesale GAFAT Engineerings
products. There might be opportunities to distribute some
Technology 1 devices to one of the major component wholesalers, but
this could only be possible in limited configurations. All sales
are expected to be direct sales. This should be qualified as many
major customers out-source their manufacturing. XYXY, for example,
is a customer of GAFAT, but they subcontract to SRSR who actually
purchases the enabling devices from GAFAT. In the case of VARs,
they would purchase from RNSE and install them in the equipment
being sold to someone else. The target market customers addressed
in RNSE's positioning statement should have unit requirements of
100-10,000. With annual sales volume projected reaching 30,000 in
the third year, direct sales should not be a problem logistically.
*Note: Propriety and confidential information has been disguised or
removed from this sample plan.5.2.5 Marketing Programs
The most important element in GAFAT Engineering's marketing game
plan is to complete programming of its products to be compatible
with the top tier operating systems (see the section on Promotion
Strategy). Completion is planned for the end of May 2006 E.C. As
soon as this has been done, partnering activity with those
operating systems developers can begin in earnest. Informational
releases via email to O/S sales forces containing data
specifications should be encouraged. Opportunities to speak at O/S
developers' sales meetings should be sought. This will be
coordinated by the new sales manager position. In conjunction with
the above activities, a direct mailing to VARs should be
undertaken. An upto-date list of 300 VARs can be obtained through
Software Manufacturer 1. A budget of 1,000,000 has been provided
for in the cash flow projections. Since many first impressions of
GAFAT's products are made by a visit to its website, it is
important to give RNSE's website a face lift. The Cyber Design
Group as well as other professional website designers are being
considered. A budget of 715,000 has been provided for in the
projections. This is the shop window first seen by potential
Technology 1 device customers. The website design must put the
desired image at the top of its priorities. Included in this budget
are some ad agency costs, as most Web designers are really
technicians who have little knowledge of the art of image building.
The website technician and the advertising specialist need to work
together to get the right result. To help increase awareness of and
build the desired image for GAFAT's products, advertising should be
done in targeted trade publications. A media specialist should be
consulted to help in selection. In keeping with RNSE's positioning
statement, trade publications which reach OEMs in the
telecommunication, industrial automation, and testing and
instrumentation sectors of the market should be favored. It is
important to provide an adequate budget to make certain of
attracting notice. A media specialist can examine the "noise level"
(the amount of competing ads) to suggest how much needs to be spent
to break through the noise level and be heard. Until
a proper media analysis can be done, a budget will be initially
set for year 2006 at 950,000 growing to 2,750,000 in year 2007 by
assumptions.5.3 Sales Strategy
The general sales strategy is to concentrate efforts on those
sectors of the more demanding 32-bit microprocessor market that
have volume needs of 100 to several thousand. Despite the dramatic
increase in visits to GAFAT Engineering's website, a more proactive
policy needs to be taken by directly approaching heavy users of
Product Category One devices. Calls must be made on selected VARs,
and OEMs who fit the parameters set by GAFATs marketing strategy.
Referrals from GAFAT's partnering program (operating system
partners, Technology Manufacturer 1, and other industry players)
will be stressed. GAFAT plans to add a sales manager as well as
other sales personnel (see the section on Personnel Plan).5.3.1
Sales Forecast
Over 400 units of GAFAT Engineering's first generation product
will able to sells in the first quarter of 2006 without any
dedicated sales staff other than the owner and an administrative
assistant. In keeping with GAFAT's need to stay on the cutting edge
of technology, a faster, smarter, smaller improved product is now
ready which should easily succeed in reaching the company's sales
goal of 1040 units by the end of the year, increasing to 3000 and
9000 in the second and third year respectively. This is not an
unrealistic achievement considering the market demand for this
product, as evidenced by GAFAT's actual sales growth in the coming
year and the growth in visits to GAFAT's website which have grown
from a few thousand a year ago to over 30,000 website visits
monthly as of May 2006. With sales prices set at 2.5 times variable
costs, gross profits are expected to reach nearly 17 million in the
first year and nearly 153 million in the third year. The sales
projections forecast three GAFAT products, made up of a main
product (Product Wrasse) and two other products (Product Parrotfish
and Product Damselfish) each of which constitute the main product
with several add-ons (see the section on Product Description).
Within these three products, customers have several choices in the
configuration in respect to the amount of FLASH (from 1 Mb up to 32
Mb) as well as SDRAM (8 Mb up to 64 Mb). Depending on the
configuration options, the costs of materials range as follows:
Product Wrasse: 3132.10 up to 6193.85. Product Parrotfish:
11,210.60 up to 12,272.35. Product Damselfish: 13,150.10 up to
23,211.85.
To simplify projections, we will assume only one configuration
for all three products. This configuration is with 32 MB DRAM and 4
MB of FLASH. The costing then will have the following breakdown for
the basic product, the Product Wrasse: *Note: Propriety and
confidential information has been disguised or removed from this
sample plan.
The Product Parrotfish starts with the basic Product Wrasse
(13,165.85) and adds Technology 1 components (627.00), a modem
module (435.00) and several other minor parts (316.50), bringing
the cost up to 3,244.35 as compared to the presently developed
product in the worldwide and by considering the qualities of the
products that is much more cheap and less qualified but it could be
found everywhere in our under developed country. The Product
Damselfish starts with the basic Product Wrasse (2805.85) and adds
an audio interface ($10.00), Technology 2 components and connectors
(170.00), bringing the cost up to 1683.85. See the section on
Pricing Strategy for explanation of pricing policy.
Sales Forecast 2000 Unit Sales Product Wrasse Product Parrotfish
Product Damselfish Other Total Unit Sales Unit Prices Product
Wrasse Product Parrotfish Product Damselfish Other Sales Product
Wrasse 9,428,480 17,236,000 54,120,000 1,040 1,040 1,040 38 3,158
2000 7,412.00 3,000 3,000 3,000 0 9,000 2001 6,412.00 10,000 10,000
10,000 0 30,000 2002 6,412.00 2001 2002
11,610.00 11,610.00 11,610.00 9,457.00 9,457.00 9,457.00
21,995.00 21,995.00 21,995.00
Product Parrotfish Product Damselfish Other Total Sales Direct
Unit Costs Product Wrasse Product Parrotfish Product Damselfish
Other Direct Cost of Sales Product Wrasse Product Parrotfish
Product Damselfish Other
2,634,400 1,830,000 6,100,000 475,280 75,810 1,371,000 4,570,000
0 0
1,613,970 4,437,000 14,790,000 2000 165.85 244.35 183.85 630.00
2001 165.85 244.35 183.85 630.00 2002 165.85 244.35 183.85
630.00
172,484 254,124 191,204 23,940
497,550 733,050 551,550 0
1,658,500 2,443,500 1,838,500 0
Subtotal Direct Cost of Sales 641,752
1,782,150 5,940,500
5.3.2 Sales Programs
The most important sales program is the program based on
"partnering" (see the section on Promotion Strategy). By constantly
being in touch with the activities of Technology Manufacturer 1,
and the operating system developers, and by developing
relationships with their extensive sales teams, referrals can be
expected to VARs and OEMs who fit the parameters set in the
marketing strategy. Once a solid sales prospect has been identified
in this manner, more specific action can be taken directly with the
prospect. This action would include more technical discussions
between GAFAT Engineering and the prospect's engineers. "Starter
Kits" can be arranged which make it
very easy for the prospect to integrate hardware and software
between the Technology 1 devices and the appliance. Once a starter
kit has been sold, telephone follow-up is necessary to convert the
original opening into a substantial sale of 100 or more units.5.4
Strategic Alliances
As already explained (see the section on Promotion Strategy),
strategic alliances between GAFAT Engineering and Technology
Manufacturer 1, the chip manufacturer, and the top tier operating
system developers like WWWW, XXXX, or LLLL are essential to success
in selling large quantities of enabling devices. Partnering leads
to referrals which can be filtered as to needs, and many referrals
can be expected to transform into completed sales. The prospects
for a deeper strategic alliance with Technology Manufacturer 1 are
possible as a result of Technology Manufacturer 1's recent visit to
RNSE. Technology Manufacturer 1 is especially interested in GAFAT
development of a Product for the Technology Manufacturer 1 product.
Technology Manufacturer 1 expressed an interest in working together
to exploit the product.5.5 Milestones The attached table lists the
major milestones in the first year that are key to the success of
the company's overall market strategy for our companys development
for the future.
Milestones Milestone Start Date End Date 7/1/2006 8/1/2006
9/1/2006 Budget Manager Department electrical electrical
Marketing
Mailing to 300 7/1/2005 VARs Website Design Trade Ads Journal
8/1/2005 9/1/2005
31,000 Ferew 15,000 Gashaw 50,000 Any one
Five Major O/S 6/1/2005 Programming
6/1/2006
0
Alemayehu electrical
Second Tier O/S 12/31/2005 12/31/2006 Programming Partnering
Banners/Links 12/31/2005 12/31/2006
0
Adinew
electrical
0
Tewodros electrical
Totals
96,000
Management SummaryThe management of GAFAT Engineering is led by
the owner/founder, the members of the group, who has extensive
technical experience in consulting to the industry. A profitable
track record indicates the presence of business acumen. Important
additions to sales and marketing staff should round out the needs
of the company to achieve the projected goals set by the sales and
marketing strategy.6.1 Organizational Structure
GAFAT Engineering plans to increase the number of employees to
five in the second year and to ten by the third year. Half of these
with are sales staff reporting to a sales manager who reports to
the owner. Two relatively low-level technicians will be included to
deal with repairs and testing of returns. The technicians will
report to owner of the company, but there will be a good deal of
interaction with the administration manager as well as with the
sales manager. The software engineer will, like the outside
consultants, report directly to the owner of the company also.6.2
Management Team
The major members of the management team are group members,
owner and founder, as an administrative assistant, Ms. Ferew, and
two independent consultant-engineers, who, as is common in the
industry, prefer to remain independent rather than become full-time
employees. This team will be augmented by a sales manager who will
coordinate the activities of those responding to telephone and
website inquiries with direct sales efforts to VARs and OEMs
referred through the partnering program, and a full-time software
engineer.6.3 Management Team Gaps
It is vital that a more proactive approach to selling be
initiated to take full advantage of the partnering program which
leverages the connections with operating system developers. There
are about 300 VARs which certainly justifies a dedicated sales
person. The number of original equipment manufacturers is also high
enough to warrant employing someone with experience in dealing with
large OEMs. A sales manager should first be employed to oversee
these sales efforts and to coordinate the involvement of media
specialists and ad agency work. The Personnel Plan projects the
addition of this staff.6.4 Personnel Plan
The founder and owner, GAFAT members, during his years spent as
a consultant to the industry, has many contacts among software and
hardware engineers. They have utilized them on a contractual basis
for much of the software engineering during the development of
GAFAT
Engineering's product line. They will still use them and their
cost can be seen on the income statement under the heading
"Contract Consultants" rather than in the Personnel Plan. Sales
Manager The primary duties of the sales manager will be to
coordinate the activity of media people to make certain the correct
amount of advertising is spent in the most suitable trade
publications and that the campaign adequately meets the goals of
GAFAT's positioning statement. The sales manager should be engaged
as soon as possible. A starting salary of 960,000 is budgeted with
increases to reward sales growth based on the economic increments
or development for the future that leads to overcome the retards..
Sales Staff Reporting to the sales manager will be salespersons who
will work primarily via telephone and email. One to concentrate on
VARs and another to concentrate on OEMs. One each will be added by
the end of 2005 after the sales manager is in place. Starting
salary projected at 680,000 annually with increases connected to
sales success. Two more will be added in the third year.
Technicians Beginning in year 2005 two low-level technicians need
to be added to deal with returns, repairs, testing, etc. Salary of
each is projected at 345,000. Software Engineer Despite the
excellent success that GAFAT has had with independent consulting
engineers, it will be advisable by 2005 to hire a permanent
in-house software engineer at a salary of 20,000.
Personnel Plan 2005 President Sales Manager Office Manager
Salesperson (VAR's) Salesperson (OEM's) Technicians 100,348 30,000
25,500 0 0 0 2006 100,000 75,000 38,400 50,000 50,000 0 2007
100,000 90,000 38,400 110,000 110,000 90,000
In-house Software Engineer Other Total People Total Payroll
0 0 2 155,848
0 0 5 313,400
80,000 0 10 618,400