The NEWCO Business Plan: Due Diligence | Free Essay Example

The NEWCO Business Plan: Due Diligence

Words: 1450
Topic: Business & Economics
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The Perspective

The term NEWCO belongs to the number of products that enable end users to charge mobile phones with the help of solar energy. The NEWCO business plan touches upon the opportunities for further growth of the business, supporting the feasibility of the project by market research and the analysis of needs that people in non-electrified areas in Africa have. The given paper analyzes strengths and weaknesses of the NEWCO business plan from the position of an entrepreneur.

Strengths and Weaknesses of NEWCO Business Plan

Within the frame of the NEWCO project, a device that helps citizens from non-electrified areas in Africa to charge their mobile phones to keep in touch with their friends and relatives was developed. The product that NEWCO offers can be listed among important and innovative technological devices that are expected to increase people’s quality of life and prevent emergency situations caused by a lack of information exchange.

Technology

The product that NEWCO offers is expected to make a range of positive changes to the society in African countries such as Kenya because it promotes the use of renewable energy that is safe and has a range of other advantages, especially useful in countries with developing economies (MacLean et al. 725). In terms of the innovativeness of the technology, it must be pointed out that solar panels that use the sunlight as a source of energy and mobile phone chargers based on this principle are utilized all over the world (Attia 17). Nevertheless, the report states that there are no similar charging systems currently in Kenya, making the NEWCO system unique to the country.

When it comes to the patents that NEWCO can obtain, project developers acknowledge that protecting the design of the system presents a difficult task due to the fact that similar systems allowing mobile phones to charge with the help of solar power are already used in other parts of the world. The company can produce its charging systems, but, considering the lack of IPR protection, the risks associated with the introduction of counterfeit products are enormous and reduces the company’s opportunity to achieve financial success (Peng et al. 16). This is especially important for entrepreneurs who plan to use NEWCO products as a source of income. At the same time, the design of NEWCO charging units does not repeat that of other devices, and this is why the company and entrepreneurs collaborating with it have an FTO (Benkler 19). Innovations expected to ensure brand protection include, collaboration with government agencies and the opportunity to expand the range of devices that NEWCO units can charge.

Value Chain

When it comes to consumers, NEWCO units are intended to be used by the general public in Kenya who do not have access to cheap and convenient ways to charge their mobile phones. The company is planning to sell its charging units to those who own kiosks. NEWCO will reach its end users easily due to the combination of affordable prices and a great number of small businesses that will benefit from purchasing NEWCO products. Also, shop owners will have an opportunity to buy charging units on special terms. Another advantage of the business plan is that it touches upon the use of information to promote the product. The company has designed special posters that will be sent to consumers planning to provide charging services. The boxes can be easily converted into posters that contain information on the use of the product and its advantages and, therefore, help to reach the end user.

Among the additional assets that the company controls to reach the end user, human capital can also be effectively utilized. The NEWCO team is supposed to play the primary role in shaping the advertising strategy of the company. The downstream industry includes a range of key market players, such as Motorola, that provide solar charging units in other African countries and suppliers of solar panels (Wyche and Murphy 1959). The solar power industry is still growing and, despite the presence of large providers of solar chargers in neighboring countries, NEWCO is expected to have a competitive advantage due to the unique features of their product, its affordable price, and flexibility in choosing suppliers. NEWCO provides a strong value proposition that is based on the lack of operating costs and the ability to help those who want to start their own businesses. Selling its charging units to those who own small shops in non-electrified areas in Kenya, NEWCO wants to promote the use of safer and cheaper sources of energy and support small businesses to reduce poverty. Another strength associated with the value proposition is that the company is ready to modify its charging module to make the product more popular and unique.

Business Model

As is clear from the business plan, the company is able to utilize at least four various business models based on direct sales or in collaboration with mobile network companies. The chosen model focuses on direct sales to the owners of small shops visited by Kenyans from non-urban areas. The pricing model that the company has chosen acts as an important source of its competitive advantage as it plans to sell the product for less than $200 US dollars. Using a value optimized pricing model, NEWCO sets the price of $150 that is based on the expected amount of money that small business owners in Kenya will earn within the first months of work. Apart from the affordable price that increases NEWCO’s chances to success, it is also considering the introduction of special terms for those who cannot pay the full sum. The company has a growth strategy that is based on a few channels such as the collaboration with mobile network companies and improving the product to increase customer loyalty.

Market

Even though Kenya is listed among developing countries, there are numerous opportunities for those who want to provide telecommunication services. Nowadays, there is a steady demand for such services as almost half of all citizens in the country use mobile phones on a regular basis. The business plan clearly explains the feasibility of the project as the number of potential end-users from non-urban areas exceeds twelve million people. From a geographical viewpoint, there are a few areas, such as Uganda, where similar services are already available due to the presence of large American and European companies. Another advantage is the choice of time to develop the product and begin distribution – with the growing business opportunities of NEWCO’s key rivals they, also, could try tapping the Kenyan market.

Team

As is clear from the business plan, the company has already named the CEO and states its aim in planning to hire more skilful specialists to form the team in the United Kingdom. Among the advantages related to the team, the inclusion of local people who have a wide knowledge of the Kenyan market, as well as local awareness that may impact on the popularity of the product among people in non-urban areas, are significant. Also, the decision to hire agents who speak local languages will have a positive impact on sales and decrease problems related to the misuse of equipment. Nevertheless, due to a number of skill gaps, caused by the lack of experience in selling such products, agents and other specialists will still have to be trained, which involves additional expenses.

Financial

The budget is expected to increase, together with the growth of insurance costs. In addition, given that the team will be based in the United Kingdom, traveling and living expenses will be substantial. In general, the company’s financial assumptions are realistic as it will not be expensive to manufacture the charging units. Affordable prices, together with the absence of operational costs, support the company’s plans concerning the rapid growth of sales.

Recommendations

In general, the business plan proposed by the given company seems to be based on a thorough analysis of market and expected costs. Nevertheless, there are certain aspects that could be improved. To begin with, the company should pay focused attention to any precise changes that can be implemented to increase the uniqueness of the product. The numerous problems that the absence of IRP protection causes can significantly reduce NEWCO’s opportunities for further development. At the same time, marketing strategies may need to be concretized as entrepreneurs cannot predict the way that the information about their new services will be disseminated. Another weakness is the absence of a strategy in helping to deal with any technical problems with the charging units. Considering the importance of customer service, this problem should be addressed and the opportunity to meet special repair services needs to be analyzed as a matter of priority (Izogo 19).

Works Cited

Attia, Hussain A., et al. “Portable Solar Charger with Controlled Charging Current for Mobile Phone Devices.” International Journal of Thermal & Environmental Engineering, vol. 7, no. 1, 2014, pp. 17-24.

Benkler, Yochai. “Degrees of Freedom, Dimensions of Power.” Daedalus, vol. 145, no. 1, 2016, pp. 18-32.

Izogo, Ernest Emeka. “Customer Loyalty in Telecom Service Sector: The Role of Service Quality and Customer Commitment.” The Training for Quality Magazine, vol. 29, no. 1, 2017, pp. 19-36.

MacLean, Lauren M., et al. “Democracy and the Distribution of NGOs Promoting Renewable Energy in Africa.” The Journal of Development Studies, vol. 51, no. 6, 2015, pp. 725-742.

Peng, Mike W., et al. “History and the Debate over Intellectual Property.” Management and Organization Review, vol. 13, no. 1, 2017, pp. 15-38.

Wyche, Susan P., and Laura L. Murphy. “Powering the Cellphone Revolution: Findings from Mobile Phone Charging Trials in Off-Grid Kenya.” Proceedings of the SIGCHI Conference on Human Factors in Computing Systems, 2013, pp. 1959-1968.