Green BTS Business Plan

Final Exam Paper:

“GREEN SKY TRAINS BUSINESS PLAN”

Nawadee Inprasong 749 21 00081

Cao Thanh Hoang 749 21 00545

COURSE: KNOWLEDGE MANAGEMENT

Submitted to Dr VINCENT RIBIERE

Table of contents

- Executive Summary

- Company information

- Company name

- Mission and vision

- Strategic intents

- Product and business description

- The Market

- Customer target

- Products

- Prices

- Place

- Promotion

- Competition, risk and opportunity

- Management team

- Operation plan

- Designing

- Operation consultancies

- Strategic partners

- Financial plan

- Conclusion

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Executive summary

This business plan describes how to bring the idea of Green Sky Train

system into the business world. Business concept comes from catching the

increasing demand for public transportation and adding values to the

trains’ travelers. Green Trains Company is established to provide two

products segments including sky trains designs and operation

consultancies. Designing sky trains products focus on technology

advance, less energy consumption and enjoyable feeling. Operation

consultancy products concern about how to generate fare and non-fare

revenue as well as to reduce costs of running business.

Green Train is located in Bangkok, Thailand. However, our

businesses are international market. We firstly start with Asian countries

including Thailand, Vietnam, China and India. Capital required for

setting the business is $200,000. We expect to achieve the sales amount in

first year at $500,000. Sales volume will grow steadily around 30% annual

during 5 years. Break-event point will be reached in the first operation

year. Net present value is positive and greater than $18,000.

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Why Green Sky Trains?

We are in the time period of mass transportation investment. Recently, the world has been facing

with an endless energy crisis. Reducing oil consumption becomes the most concerns for many

countries. The problems are more serious in developing countries such as China, India or Viet

Nam. High density populations and limited area in the cities, sky trains is the best solution for

investment public transportations. More importantly, the sky train systems operate by using

electricity and non-polluted causing.

The demand in building sky trains is increasing around the world. Urban citizens will spend more

time to travel on the sky train. Another concern arising among transportation organizations is that

how to operate the sky trains system with highest effectively and serves the passengers better.

Green Sky Train will change travelers’ concepts by its unique designs. Green and open doors

trains will make the passengers feel relax and enjoyable. Advanced technology will also be

applied in order to add values for the customers. In addition, with experienced and professional

staffs, Green Sky trains provide business solution packages to help our customers run the sky train

more productivity.

2. Company information

- Company name: Green Trains Inc.,

- Founded in May 2008, Bangkok, Thailand.

- Green Train Inc is a company supplying business solutions for the public transportation vehicles.

Green Trains specializes in designing and consulting services for sky train and metro systems.

- Strategic intents:

- Vision: Enjoying passengers on the trains

- Mission: - Designing sky trains with reliable, safe and friendly environment.

- Giving enjoyable time for train passengers.

- Strategies:

- Taking the first-mover in adding value for the train with best designs.

- Creative in designing the trains with relax and convenient feeling

- Innovative in the material and technology used for trains with best energy

consumption.

- Capturing markets by best products and differentiation.

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- Critical success factors:

- Unique in designing products with green and environment friendly.

- Advantage in application new technology for economical benefits.

- Best business models for customers in trains operation.

- Key measurements

- International market scope: Asia, America, Eastern Europe

- Number one in train designing and operation solutions

- Break- event point: within the first year operation

- Positive Net Present Value within five years

2. Products description

Green Trains supply range of business solutions for sky train system including:

- Trains design: We offer designing products for exterior and interior of the sky trains and metro.

Our products focus on environment friendly and make the passengers feel convenient and relax

when traveling. We also introduce types of materials and technology that reduce energy

consumption of the trains.

- Operation consultancies: We consult our customers to improve their business by increasing fare,

non-fare revenue and reducing cost.

3. The market

3.1 Customer segmentation:

We plan to target on customers in Asian countries including: Thailand, Vietnam, China, India and

others in near future.

-Vietnam:

Presently, there is no city train system in Vietnam. The government is planning to build two metro

systems in Sai Gon and Hanoi. Under the pressure of traffic jam, the authorities now are in hurry

of constructing these public transportation systems. ADB (Asian Development Bank) agreed to

fund for these projects and are ready to finance whenever they receive the master plan from

Vietnamese government. Metro systems will be invested and managed by Public Transportation

Company, a state owner corporation.

- China:

China is the fastest growing country in the world. They have built several metro systems in

Beijing, Shanghai and other main cities. However, the demand of transportation and endless price

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increase of oil prices force the authorities to invest more in public vehicles. Metro system is one

suitable solution. In China, the metro systems are operated by Public Transportation Companies

which governed under the provinces authorities. Financing and investment policies of public

transportation are hierarchal and complicated.

Vietnamese and Chinese customer’s behaviors:

- State owner companies

- Inflexible financing polices

- Building relationship and politics involved are critical factors

- Operation the metro system is new to them (special for Vietnam)

-Thailand

Bangkok Mass Transit System Public Company Limited (BTSC) was established in 1992 and first

operated the services in 2002. For an each skytrain, it can carry about 1,000 passengers or about

800 care users. The purpose of BTS Skytrain service is to provide the alternative to Bangkok

people with the faster, safety, pleasant, and friendly environment option, avoiding from traffic

jam, pollution. Therefore, the BTSC is working on extending the route services in order to cover

the increasing of demand.

BTSC Behaviors:

- Listed company on SET (Stock Exchange of Thailand)

- With the flexible financing policy

- Profits driven is more concerning

Customer insights:

The sky train owners would like to take the chance of increasing in demand for public

transportation. They want to keep the passengers’ loyalties for exploring fare and non fare

revenue. Providing a sky train with enjoyable and more convenient is one solution. In addition,

high technology application and less energy consumption are other ways to improve their business

operations.

3.2 Competition:Our direct competitor presently is Singaporean Metro Rail System (SMRT). SMRT is a public

companies listed on Singapore stock exchanges. SMRT have many experienced years in operation

and building public transportation in Singapore and other countries. However SMRT businesses

are diversified in pubic transportation services including trains, bus and taxi. SMRT products in

train system more technical and engineering driven. We are unique in designing and business

innovation. 6

Bombardier Advance Rapid Transit is an American based company. Bombardier is famous with

advance technology application for trains, planes and aerospace. Bombardier has been successful

with several projects in Canada, Shanghai (China) and others. Bombardier is outstanding in the

market by its technology. However, their products are very expensive and not designing focused.

3.3 Products:

Train designs:

Objectives: Make the passengers feel safe, more comfortable and enjoyable when traveling by

trains.

Strategy: Bring the nature into the sky trains or metro, outdoor connection.

A green train is our concept of designing. We offer the trains with environment friendly. Our

products are differentiated by bring the nature into the train. The sky train will be built with open

roofs and grass floors. Passengers can see sky through transparent roofs. Chairs inside the train

can be foldable that make spacious in rush hours. Screens on the train will show the moving map

which can help the passengers to know where they are locating and avoid loosing ways.

Passengers also can listen music or watch movies via headphones from the chairs. The trains will

be designed in bullet shape and painted with green field moving outside. Hereinafter are some

samples of products we will consider to provide in future.

Open-roof sky train Open roof sky train using Solar Energy

In addition, we also offer the trains to customers with high technology and less energy consuming.

These products are originated from researching and application centers in Green Train Company.

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Light and environmental materials will be encouraged to use in our trains. Of course, our designed

products must be satisfied with customers’ requirements that are in different counties and culture

contexts. Green Train and our customers will together add value to the passengers by train.

Operation consultancies:

Objectives: Help the train owners to do business with highest effectiveness and efficiency.

Strategy: Best fixed business models with maximize revenue and minimize cost

Green Trains consultant services mainly focus on the effectiveness of business operation in trains

and facilities utility. The solution basically includes how to maximize revenue and minimize costs.

Green Train will help customers know how to explore the fare revenues and non-fare revenues. On

the other hand, we consult our customers to reduce cost by innovation and improving business

process. Business models will be delivered under the completed plans and execution schedules.

Evaluation and controlling methods are also introduced in order to manage the objectives.

3.2 Prices strategies

The products are priced in various ways that depends on each specific project. Basically, we

charge our customers based on the scale of projects and time consuming. Driven by the business

strategy of products differentiation, our pricing strategy will be “skimming prices”. In other

words, we will offer best products with higher prices comparing to other competitors. Pricing

scheme is different from one project to long time contract of consulting services. They will also be

reviewed every year in order to commit with financial plans.

3.3 Place

The better that the customers can access to the company services is the better business opportunity

will come. The followings are the channel that the customers would be able to reach the company

services.

Objectives: Providing the easiest ways for customer approaching the company’s products.

Strategies: Establishing range of contact portals in the company and other strategic partners

E-business portal:

- Website – All the information will be available in the website

- Email - The customers could be reach any time with sending an email

-Telephone call – The customers can call directly to the office when need further information

regarding the services or when would like to use the company services

Offices chains:

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Green Trains plans to open its offices in some important market including China and India. These

offices will work closely with customers and quickly response to customers’ demand.

Strategic Partners

Customers also contact with Green Train Inc through our strategic partners. Based on cooperation

contracts, Green Trains and partners will supply the information to customers on mutual benefits.

3.3 Communication/Promotion plan:

Key message: “Green Train Systems, bring the soul of nature into the trains”

Advertisement

- Company Website

Website is the most effective ways of advertising and reaching customers. Its exclusive advantages

come from the cost of investment and scales of reaching customers. In addition, website is also

useful for communication with customers who are in different countries. Therefore building a

website is a must in communications plans. The website will be made in different languages:

English, Chinese, Japanese, and Spanish.

- Magazine

The company will put the advertisement in the business marketing magazines e.g. Marketeer,

Brandage, and other 3 English well-known magazines for the updated information about services

providing and special events or exhibitions on one or two page size. Advertisement will be posted

every month and the cost is $1,000 per page.

- News Letter

The news letter will be issued quarterly and should be launched from the company in order to send

directly to the customers and the possible/future customers. The contents should contain all the

information about the company activities & events, the new, updated and useful information. The

cost is about 12 cent US dollar per a news letter including mailing cost. The company will publish

about $1,000 news letters per quarter.

Public relation

Free Technical & Business Training Courses

The course will provide the information on the technical and security knowledge to the customer.

The course will lead by the profession of the company and will be held in Bangkok office. There

will be 20 attendants per course. All the expenses will be shouldered by the company. The free

training course will be arranged twice a year on April and September. Total expenses would be

$8,000 per one time course.

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Seminar

The purpose of arranging the seminar is to get the feedback, ideas and the comments on services

from the customer. The seminar will be help yearly switching from one country to another with

very relaxing and enjoyable places. The Seminar will be held on August. The company will send

the invitation to the specific customers. All the expenses will be bear by the company. There will

be only key account customer and no more 15 people joining the seminar. Total expenses will be

$10,000.

Exhibition “Transportation Technology”

Attend the international congress once a year in order to expand the market to other countries such

as the world congress and exhibition on intelligent transport systems and services

(www.itsworldcongress.com), The EXPO Transportation’s showcase

(http://www.apta.ntpshowsites.com) and ITCN (www.itcnasia.com). The expenses would be about

$18,000 in total.

4. Risk and Opportunities

Risks: We will face a fierce competition from organizations supplying trains. Generally, most of

train manufacturers offer the interior decoration for their customers. In addition, we also need the

good corporation from the manufacturers in order to make sure that the designs and real products

are able to work properly. On the other hand, consultancies in business operation can be competed

by some organizations specialized in this industry such as Ernst & Young or Anderson Consulting.

One of the biggest issues for Green Train companies is the scales of market. Train and Metro

systems are only few in each country. Therefore, with products of train designing and business

operation consulting, Green Train may face the problems of revenue generating in the future. The

company must plan to expand the products portfolio after few years.

Opportunities:

Public transportation increases in line with the economics development. China, Vietnam,

Indonesia and Thailand are some emerging countries in recent years. However, they are facing

with the problem of traffic and environment issues. Public transportation is the best solutions for

these problems. In addition, investing in metro or sky train system requires a huge amount of

money. Therefore the investors must be careful with choosing the technology and construction

designing. On the other hand, global warming now is the hottest topic for every country. Green

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Train products with environment friendly and innovation in energy consuming will meet those

demands.

Furthermore, outsourcing becomes the trend of business strategy around the world. Public

transportation business is not only considered as solutions for society but also profit-driven

activities. How to run the metro or sky train business with highest benefits can be a question for

some organizations that are new to the industry. With experienced staffs and creativities in doing

business, Green Train Inc can help these customers to do their business more successfully.

5. Management

5.1 Organizational culture

The core value of Green Trains Company is “all for one, one for all”. That means every one, in the

organization, will work in collaboration and sharing information. Teamwork and freedom

environment are the key success factors. Working environment will be enjoyable and natural

oriented. Any ideas are welcomed.

Our beliefs are:

- People are our most valuable assets.

- Knowledge will be multiplied when people work together

- Customers are powerful

- Creativity and innovation are best weapons to compete

- Good people and good strategies, success will follow.

Due to the special characters in designing and consulting business, knowledge management is very

important in Green Train Company. Therefore, we only employ good people. Training programs

will be conducted periodically to enrich the staff’s knowledge.

5.2 Management team

Financial Manager

Accounting Manager

Human resource manager

DesignTeam leader

Chief ExecutiveOffer

Marketing Manager

Operation manager

Consultant Team leader

Board of Advisor

Research and Development

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Advisor: Dr VINCENT RIBIERE, D.Sc., PhD

Professor in Knowledge Management, MIS

Graduate School, Bangkok University

Chief Executive Officer: Mr. CAO THANH HOANG

BBA in International Business, MBA in Finance

Marketing manager: Ms. NAWADEE INPRASONG

BBA, MBA in Marketing

Financial Manager: Ms. HOANG TRA MI

BBA, MBA in Finance

Operation manger: EKACHAI KAEWCHAN

BS, Master of Engineering

6. Operation plans:

6.1Designing

Designing products are produced from the collaboration works between architectures, designers

and engineers. A team will be set up for each project. One team has around five or six peoples

with different background. Team leader is selected by the operation manager and rotated from

project to another depending on that person’s qualification. For each project, designing team will

work together with customers in order to understand clearly their desires. Designers are in charge

of designing concept with convenience, relax and comfort in using the products. Architecture and

engineers will be responsible for the safety, durability and technology advance. Designing team

will offer three solutions alternatives for customer selection. The final one will be developed to be

real products.

6.2 Operation consultancies

Basically, operation consultancies division works similar to other consulting companies. However,

Green Train consultants are more specialized in sky train and metro business. According to

customers’ requirements, a team of consulting project will be selected and work closely with them.

Examining and evaluation are two first basic steps of a project. Consultants will collect data and

information from customers. Many different types of analyses will be conducted in order to find

out the best business models. The outputs are various depending on particular customers with

different contexts. However, common solutions are mainly focusing on how to generate the

revenue from fare and non-fare businesses or how to run the system with lowest expenditures.

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6.3 Strategic partners

Critical partnership is a crucial strategy in risk management for Green Train Company. As

analyzed, Green Train business will face the risk of competition from sky train and metro

manufacturers. This problem can be solved by getting alliances. Green Train’s customers can be

very interested in the designing of their products but may have troubles in constructing systems

with the suppliers. Therefore, the partnership between Green Train and the manufacturers are very

important. In addition, corporation with manufacturers will help Green Train increase sales

amount from partner’s projects. On the other hand, Green Train’s competitive advantages come

from the unique of designing and technology application. Hence, long relationship with

technology centers will be one of key success factor.

7. Financial plans

Sales projection

Based on marketing plan, the sales volume will be projected to grow more than 30% annually

within next 5 years. The following financial data will show Green Train’s performance results in

first 5 years. This information is projected in adherence to some assumptions during the firm’s

operations. Sales volume will grow gradually accordance with customers’ awareness and demand

increases. Cost of goods sold in percentage will be kept the same. However, general and

administrative expenses will increase in line with sales growth but at a slower speed because of

continuous improvement of operations. Sales will be generated from two products segments

including designing products and operation consultancies.

Unit: USD

Sales forecast 2009 2010 2011 2012 2013

Designing products $300,000 $675,000 $843,750 $1,096,875 $1,535,625

Operation consultancies $200,000 $260,000 $351,000 $456,300 $593,190

Gross sales $500,000 $935,000 $1,194,750 $1,553,175 $2,128,815

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Income statement Unit: USD

Sales 2009 2010 2011 2012 2013

Gross sales 500,000.00 935,000.00 1,194,750.00 1,553,175.00 2,128,815.00

Cost of goods sold 300,000.00 514,250.00 597,375.00 698,928.75 851,526.00

Gross profit 200,000.00 420,750.00 597,375.00 854,246.25 1,277,289.00

Selling and general administrative expenses 120,000.00 180,922.50 238,950.00 341,698.50 447,051.15

Depreciation (5,000.00) (11,000.00) (21,000.00) (33,000.00) (49,800.00)

EBIT 75,000.00 228,827.50 337,425.00 479,547.75 780,437.85

Tax (30%) 22,500.00 68,648.25 101,227.50 143,864.33 234,131.36

Net income 52,500.00 160,179.25 236,197.50 335,683.43 546,306.50

Operating cash flow 57,500.00 171,179.25 257,197.50 368,683.43 596,106.50

Unit: USD

Cash flow statement 2009 2010 2011 2012 2013

Operating cash flow 57,500.00 171,179.25 257,197.50 368,683.43 596,106.50

Fixed asset Investment (50,000.00) (60,000.00) (100,000.00) (120,000.00) (168,000.00)

Investment in working capital (30,000.00) (56,100.00) (83,632.50) (93,190.50) (127,728.90)

Free cash flow (22,500.00) 55,079.25 73,565.00 155,492.93 300,377.60

Initial investment (200,000)

Net present value 37,788 (18,000.00) 55,079.25 38,591.48 63,689.90 98,427.73

Total net cash flow 177,500.00 232,579.25 306,144.25 461,637.18 762,014.77

Unit: USD

Balance sheet 2009 2010 2011 2012 2013

Current assets:

Cash 177,500 232,579 306,144 461,637 762,015

Net accounts receivable 12,000 39,818 154,798 245,450 356,591

Inventories 36,000 77,138 89,606 111,829 161,790

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Total current assets 225,500 349,534 550,549 818,916 1,280,396 

Fixed assets:

Building 45,000 94,000 173,000 260,000 378,200

Net fixed assets 45,000 94,000 173,000 260,000 378,200

Total assets 270,500 443,534 723,549 1,078,916 1,658,596

Current liabilities:

Accounts payable 18,000 30,855 74,672 94,355 127,729

Other - - - - -

Total current liabilities 18,000 30,855 74,672 94,355 127,729

Long-term liabilities: 

Owners' equity 200,000 200,000 200,000 200,000 200,000

Retained earnings 52,500 212,679 448,877 784,560 1,330,867

Total stockholders' equity 252,500 412,679 648,877 984,560 1,530,867

Total liabilities and equity 270,500 443,534 723,549 1,078,916 1,658,596

Financial figure explanation

The financial plan is made on assuming that initial investment is $200,000. This capital will be

invested in fixed assets working capital during 5 years. Cost of goods sold includes labor cost,

materials and other overhead cost. Marketing and other management expenses belong to the

selling and general administrative cost. Discount rate used in this business plan is 25%. The reason

can be explained by cost of capital and risk involved in the project. Because of service business,

Green Trains Company keeps the inventory, account receivable and account payable at low level.

The company also plans not to get any debt in first 5 years. All earnings will be retained for

reinvestment.

Conclusion

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