Business Plan for the Manufacturing of Waste Product Shredders

 

I. Executive Summary

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The need for a solution to the worsening situation of waste disposal among households and other commercial entities are getting out of hand over the day. If we are not to do anything about such a problem, one day we could be living in a place wherein the wastes we produce such as garbage, commercial offshoots (i.e., sawdust, wood chips, etc.) could lay side by side along our backyard. The solutions to these problems have an urgency that we should never neglect and could spell out comfort not just for ourselves but for the environment as a whole.

With this in mind, Drill Power, a power tool producing company, through its Research and Development Department, conceptualized of a “shred-all” machine which could literally put paper, plastic, and other materials into bits and therefore minimizing the waste problems that we have in our households today.

However, the company has a small workforce with much concentrated on the Production Department but is adept on Assembly. The question then comes if with such workforce, the company could still be able to sustain the operations. There is also another option wherein Drill Power could sell its patent over the Waste Product Shredder to another company and still maintain the assembly operations of the product and still make money out of the product.

It is the objective therefore of this study to look at the options that could help Drill Power in deciding whether to continue with its plan or to sell the patent of the new product. The study will also present a benefit-cost analysis as well as a SWOT matrix which could help us show the counterpoints between the two options that the company has.

 

II. Background

 

Drill Power is a reputable company which has the capability of designing, manufacturing, and assembling power tool solutions for home and commercial use. The company has a total workforce of 50 which is primarily adept on the assembly stage of most products that they make. Although they also have an established research and development arm, the feasibility on sustaining the operations for further corporate development of a “shred all” product could come into question and needs to be studied further.

Upon the development of their Waste Product Shredder, one of their associate companies offered to bid into buying a stake on the operations of developing the product. Under the offer, Drill Power could still keep the assembly operations on the product but must have to waive the rights on the product in favor of the bidder. The development of the product on a larger scale will depend heavily on the result of the decision to be made whether to retain the operations for the shredder or sell it to the company which showed interest for the product.

 

III. Market Analysis

 

Industry Description, Scope, and Trends

The main target market for the new product mainly revolves on the domestic household market which accounts for the main concept that the research and development team of the company had in mind during the conceptualization stage of the product.

 

 

Major Customer Profile

The projected customers for the product initially include the members of the local household with the expansion to accommodate the demand for the product in the commercial or even industrial purpose in the near future possible.

Before the September 11th tragedy, there was a trend for the fastest, easiest, least expensive products/services, which also provided a venue for immediate gratification.  Since this tragedy, the trend has changed.  Consumers are re-evaluating their lives.  Family and values have jumped to the top of their priorities.  As a result, consumers are willing to wait longer and pay more for items related to family and expressing their emotions.  There has been an increase in keeping in touch with family and friends and less on the demand for the waste product materials.  Americans are trying to simplify their lives and reinforce their values.  We believe this trend will continue.

 

Market Research

Our target market is one of constant growth. Families are growing at a slower rate than in the 1950’s, but it is a consistent rate. By choosing the target market for individuals that are mostly engaged in the domestic waste disposal, we will not only be incorporating our brand with our families’ needs of disposing waste, but also with the society as a whole providing solutions for the availability of waste disposal resources being developed by the company.

Most families shop with children, so they are passing on the values being developed by the tradition to them, our future customers. By learning from their parents, the importance of waste disposal, people will value the cleaning one’s own things, and leaving a lasting impression.

Marketing is important today since during these fast times, people need to be informed of the products that are already available in the market. They also need to be informed of the conveniences that the product offers. And lastly, it’s a step by which the company convinces the possible customer to buy their product and indulge in its features and capabilities. This information is in the form of print-ads, tele-marketers, and the television commercials that you watch. These are the marketing channels that are used by marketing people as means of spreading news and information about their product. Sometimes, product surveys tell the marketing people on how they would be able to present the products in such a way that the people would be attracted and would decide that they needed the product, ending up in the sale of the product, and the profit generated by the company (Kotler, 2003). The company even quickly came up with a series of tie-ups with different companies that lead to the production of a series of complement goods with the aforementioned product.

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Market Strategy

We believe that our target market needs more than a basic selection of cards and gifts. This need has increased due to the growth of large superstores, “Do it yourself” stores, and retail establishments that offer some specialty items and hardware materials but don’t offer the product selection, quality, and convenience that households need (2001).

We anticipate that much of our target market is employed on a full-time basis; therefore, we will add marketing vehicles to our plan emphasizing the concept of “convenience shopping” to both current and potential customers. The internet has a fully developed e-commerce solutions which will be used as a tool to promote our product. This will have to use the skills and resources of the Marketing and the Distributing Departments which could later on provide a venue for the further development and consumer exposure for the product. This could work for the company given the small size of its personnel.

By offering a convenient, customer-oriented services, the product will be backed up by a with significant product selection, we will meet our consumers’ demand. By providing a “one-stop” shop for gift-giving needs, households will not have to fight the traffic of large superstores, providing the shopping convenience they demand.

 

Product Description

The new product offering of the company, a Waste Product Shredder will be designed, manufactured, assembled, marketed and distributed in the United Kingdom under a test market strategy. Under this kind of strategy, the firm could be able to utilize its resources in finding out whether the market is feasibly ready and able to make a demand for the product.

 

 

 

 

 

 

 

 

 

Figure 1: Sample image of a Shredder

 

IV. Benefit Analysis

 

Product Life Cycle

The product basically is on the introductory stage wherein the shredder of this type is being marketed and the demand for it in the market is still uncertain. The profits that the company could get from the sale of this product are still in the shadows and the risks that accompany it are also high. Given that the company has a shortage on personnel; it would be yet another problem on how the Marketing Department would be able to help create a demand for the product. The Waste Product Shredder could be a make or break product innovation of the company and also could spell out for the bankruptcy of the firm if the decisions to be made are considered under a half-baked circumstance.

 

Intellectual Property

Probably one of the most important factors of the product which needs to be settled is on the settlement grounds of the Intellectual Property of the product. Currently, Drill Power owns the sole IP of the Waste Product Shredder yet this is being challenged by an offer of an associate company that also seeks to gain the intellectual ownership of the product. The contract of which will put Drill Power as an assembler instead of the whole manufacturer of the product unit. This could pose a safe move for the power tools firm since of the scarcity in their resources makes it logical and not to mention practical for them to just sell the idea and make profits in the process while maintaining the assembly operations for the product instead of pushing through with the sole-ownership of the product and lose the business in general.

 

V. Operations

 

Personnel

There is an existing shortage in the human resources arm of the firm. This would pose as a weakness of the company given that they intend to venture out into the sole operation for the new product Shredder. It would not be advisable to push things through although much of the company workforce is concentrated on the production side. The current structure of the company whose personnel distribution is heavily concentrated on the Production Department poses an unequal prioritization on the company operations as a whole given the circumstances it poses towards the company output. For instance, 50 employees is not entirely enough to sustain the operations of a company who seeks to meet a possible demand for a new product that scales the entire United Kingdom.

 

Production Delivery

Given that there has already been an existing shortage and an uneven distribution in personnel, the production delivery possibilities that the company could offer provided that things would push through as planned and they would launch the product under their sole intellectual ownership, could spell out a low production delivery possibility. Should they be able to pull things off, it would still be insufficient since the company options will be limited because of the shortage in their resources.

 

 

 

Organizational Chart

R&D                Production          Administration            Marketing              Distribution

 

 

Supervisors                     Purchasing                                          Warehousing

 

Assembly                        Wages and                                              Delivery

Workers                          Personnel

 

Maintainance                  Administrative

Officers                              Staff

 

 

 

VI. Financial Analysis

The financial aspect of the venture of whether to sell the patent of the “shred-all” product tool may be looked up in this way.

1.)    Should they pursue with the sole production, would the company be able to carry out the possible costs and losses?

– The question if the company could carry out the costs and losses is unquestionably a no. With the nature of the product being in the introductory stage, the initial capital needed could even exceed the total value of the company itself. Yes, the company could get investors but the risks are far too high for them to gamble and it would be economically viable to sell the patent instead.

2.)    Should the company decide to sell, would it still be beneficial or profitable in the long run?

– Yes, if Drill Power would specialize itself on the assembly stage of production, the limitations that go with their situation could be maximized and optimal rates of production could be achieved. For now, specialization is the key for the firm to survive.

3.)    Would they forgo opportunities if they sell the patent?

– Yes. However, given the current situation of the company, there is no other choice left if the company is serious in keeping its existence afloat. Below is a sample of operational projections should they do sell the patent.

Activity
Jan. 2008
Feb. 2008
Mar. 2008
Apr. 2008
May 2008
Jun. 2008
Jul. 2008
Aug. 2008
Sept. 2008
Oct. 2008
Nov. 2008
Dec. 2008
R&D
Direct Research

Direct Product Development

Direct Product Development

Direct Product Development

 

Prod’n
Assembly

 

Assembly
Assembly
Assembly
Assembly
Assembly
Assembly
Assembly
Assembly
Assembly
Assembly
Assembly
 

Admin
 

Catalog – Calendar

 

 

Catalog – Calendar

 

Catalog – Calendar

 

Direct Mail
 

Catalog – Calendar

 

 

Catalog – Calendar
Catalog – Calendar

 

Small

Catalog Distribution
Catalog – Calendar

 

Catalog – Calendar

 

Direct Mail
Catalog – Calendar

 

Catalog – Calendar

 

Catalog – Calendar

 

Direct Mail
Catalog – Calendar

 

Mktg
Direct Mail

Direct Mail

Direct Mail
Large Catalog  Distribution

Small Catalog Distribution

Dist
Direct Email

 

Direct Email

 

Direct Email

 

Direct Email

 

Direct Email

 

Direct Email

 

Direct Email

 

Direct Email

 

Direct Email

 

Direct Email

 

Direct Email

 

Direct Email

 

 

 

VII. SWOT Analysis

 
STRENGTHS
WEAKNESSES
OPPORTUNITIES
 

High demand for the an earth-friendly product
Emerging middle class which has a high disposable income.
A higher awareness for the better ways of disposing wastes
 

 

 

Small number of employees which could not sustain a possible surge of demand
High concentration of the workforce in the Production Department
A murky R&D Department

THREATS
Selling the patent may curtail opportunity costs
The forgone profit from the sales of the product may be redirected to other products
Large scale producers that are targeting a larger scale of the market but may be more expensive than company offers

Limited scope of the market
Uncertainty of demand due to Product Life Cycle
The growing market that may be occupied by large scale producers
Some competitors may offer similar products at lower prices
 

 

VIII. Recommendation

Given the facts above, it is therefore highly advisable for the Drill Power Company to sell the patent of the Waste Disposal Shredder and make money out of it and instead use the money for further internal development within the organization. The study came up to this by showing that the viability of such operations could be far too risky for the small company and may cause the bankruptcy of the entire business.

However, should the company decide to sell, they could still get the assembly operations that they have already been doing. Their workers are already adept with the production processes that comes with the job and doing so would create a specialization among the workers and could create a positive image for the company as a whole which they could bank upon in the future and even exceed the possible income had they not sold the product.

 

IX. References

 

(2001) The Merchants of Cool.

KOTLER, P. (2003) Marketing Management, Prentice Hall.