1.

Executive Summary
The vehicle rental industry is a multi-billion dollar sector of the global economy. Over the course of the next few years, the industry is expected to experience accelerated growth, which equates to an annual rate of 3.5 grow by approximately ) in the !"#" $ !"#3 period. The %iddle &ast vehicle rental mar'et is a huge and well-established service. (n the coming years, this mar'et is expected to per annum. %ar'et research has identified a problem in this industry resulting in a significant amount of revenue lea'age. *armentec aims to deliver a new, multipurpose and multifunctional technological device with unique customer benefits and superior value, whose aim is to bring efficiency in the vehicle rental industry. The vehicle rental industry plays a vital role in the %iddle &ast mar'et as most countries here lac' a developed transportation system. (n the initial 5 years of operation, +ahrain, ,audi -rabia, .-&, /atar and Oman will be targeted. Our product aims to solve the problems faced by the vehicle rental industry in the short term and will later diversify to serve other forms of corporate organisations, such as 0*1 and 2edex. -s a business, we have developed a strong mar'et orientation with customer focus for our initial years of operation. -ll vehicle rental companies operating in the %iddle &ast will eventually be targeted, and we have based the positioning of our product on a real 3competitive cost and superior quality4 and intangible 3company service and reputation4 advantage. -n aggressive mar'eting approach will be adopted to target car rental companies operating in the %iddle &ast and to advertise our product in as many ways as possible. 5e will be investing large amounts in launching *armentec and its product into the mar'etplace. -s well as the launch event, personal selling and direct mar'eting will be built into our mar'eting strategy. Through this aggressive mar'eting strategy, we intend to brea' even in the first quarter of the second year and be profitable henceforth, with a constant gross profit of #3 the years. 6et profit ratio, is expected to increase from -7 for potential expansion and diversification in the near future. in year one to 5.8 through in year five.

The company is expected to have sufficient liquidity to operate through the years, with a scope

The research used in this business plan has been collected from internet sources, 9ournals, and also referred to Text boo's for our better understanding of the concepts. 5e have even co-ordinated with engineers at 2ord and :ehicle rental companies in the %iddle &ast in order to ensure that the data collected is closer to reality. 5e also made efforts to ma'e this business pro9ect, as much as possible, free from assumptions. This report encompasses primarily nine parts; &xecutive ,ummary, <ompany Overview, bac'ground information on the mar'et, external analysis, internal analysis, mar'eting mix, operations, human resources and financial data.

2. Company Overview

2.1. Company Description

*armentec aims to deliver a new, multifunctional device, whose aim is to bring efficiency in the vehicle rental industry. The ob9ective of our commercial underta'ing is to develop and provide a vehicle-speed reducing device, in order to assist the car rental organisations in having more control over the vehicles rented by their customers. The device also aims to reduce significant revenue losses faced by the vehicle rental organisations owing to the misuse of their vehicles by the customers and employees of the organisation.

2.2. Vision
*armentec=s vision is to be the best and most successful global supplier of cutting edge technology based products, to bring efficiency in the vehicle rental industry by optimising the utilisation of time to begin with, thus and then, expand the hori>on of our businesses.

2.3. Mission
*armentec=s mission is to develop and mar'et advanced products and technologies that 'eep vehicle rental industries connected to their customers and to exceed our customers= expectations in quality, delivery and cost through a continuous drive to improve.

2.4. Corporate Values

The company=s management philosophy will be based on responsibility and mutual respect, while encouraging ownership of responsibilities to help foster personal and professional growth. *armentec will be dedicated to designing, developing, mar'eting and selling innovative products. The company=s goal will be to build strong customer relationships based upon a foundation of trust while establishing a new reputation as a committed and professional organisation. The highly innovative technological based product, produced by the company will aim to promote and achieve these core values and enable our customers to lead more fulfilling and relaxed lives. Our corporate values will include putting our customers first, being professional in our conduct, striving to continuously improve and creating strong partnerships with our suppliers and partners.

2.5. Company O !ectives

-t *armentec, we have identified three types of ob9ectives that will serve as challenging but attainable goals for the company; +.,(6&,, O+?&<T(:&,;

#4 !4

To become the premium vendor in the evolving vehicle rental industry To reach profitability within one year of the companies launch

2(6-6<(-1 O+?&<T(:&,; #4 !4 @rofit %aximisation (ncrease the level of gross margin and maintain that high level by the third year

%-AB&T(6C O+?&<T(:&,; #4 !4 34 D4 2ocus on target mar'eting to increase mar'et penetration and domination &xpand target mar'ets with controlled growth &stablish brand awareness @osition ourselves as one of the leading vehicle $ speed reducing device companies in the world

3. Mar"et

3.1. #ar$et Mar"et

The %iddle &ast has been chosen as the main target mar'et for this product. 0espite the current global economic slowdown and recession and wea'er growth forecasts for many industries, the worldwide vehicle rental mar'et is anticipated to grow at a compound annual growth rate 3<-CA4 of 3.5 in the period !"#" $ !"#3. Crowth is more li'ely to come from the developing mar'ets of <hina, (ndia and %iddle &ast. The rental industry of the ., and &urope and -sia @acific countries such as ?apan and ,ingapore, are more organised and vibrant, but the recent slowdown experienced by these countries has led us to explore the emerging mar'et of the %iddle &ast.

INITIAL TARGET MARKET

Our initial target mar'et is the (sland country in the @ersian Culf, 'nown as the Bingdom of +ahrain. ,econdary mar'et research has shown that this country has diversified its economy over the past few years and possesses great potential in terms of resources, as well as modern and advanced infrastructural facilities. (n !""), a leading research institution identified +ahrain as one of the fastest growing economies in the -rab world. 0ubai ,chool of Covernment published a report on the @ersian Culf <ountry disclosing that low inflation and reasonable fiscal policies are driving economic growth in the region. +ahrain has also been named as one of the world=s !" freest economies, and the freest economy in the %iddle &ast and 6orth -frican region, according to the !"") (ndex of &conomic 2reedom. +ahrain prides itself on being a premier investment location in the %iddle &ast region. (ts internationally acclaimed strong financial regulations, economic and political stability, strategic location and strong legal framewor' have transformed it into one of the leading countries in which to set up a business. +ahrain will be targeted in the first year of operation. Once we obtain a high mar'et share and an enhanced image in +ahrain, we will move onto the ,audi -rabian mar'et, the .-& and the rest of the %iddle &ast due to the emerging economy here and eventually expanding globally.

3.2. #ar$et Customers

Our product is diverse and will be aimed primarily at the vehicle rental industry. 5e will be focusing a lot on segmentation because it is the foundation on which all other mar'eting actions are based, by customer-orientated planning, research, implementation and control. ,egmentation will allow us to focus our mar'eting on customers who will be most li'ely to buy our product and allow us to use our resources wisely. The figure below shows *armentec=s short and long term customer targets;

#%&'E# C(S#OME&S

S)O&# #E&M

LONG TERM

:ehicle Aental <ompanies

<ommercial <ompanies, <orporate Organisations 3<ourier <ompanies $ 0*1 and 2edex4

,ince we are emerging as a new business and bringing out a new product into the mar'etplace, we have decided to adopt focused mar'eting $ i.e. serve one of our mar'et segments, the vehicle rental company, in the short term and develop a single mar'eting mix and strategy aimed at our target mar'et. 5e have decided to adopt this strategy because it will be less ris'y as the product is still in its development stages and also the business is starting out with a small scale operation. 2ocused mar'eting will allow us to focus our research and development expenditure on meeting the needs of one set of customers and managerial activities can thus be devoted to understanding and catering for those needs. ,o, how did we identify there was a need for this product and find out our customers= needsE The figure below details the mar'eting research process and methods that were carried out.
,econdary research was carried out on the :ehicle rental mar'et. (nformation was gathered on the :ehicle rental industry using %ar'et (ntelligence reports and %ar'et research reports. 2urther information was also gathered on the ma9or vehicle rental companies to identify the mar'et si>e 3detailed below4.

,econdary Aesearch

@rimary Aesearch

0esign of primary research; (nterviews and /uestionnaires 3see appendix4 were prepared for vehicle rental industries to identify whether any problems exist with the vehicle rental system and to identify whether there is a need for improvements in this industry. &xecution of primary research; (nterview was conducted with a manager of a %iddle &ast company and questionnairesFtelephone interviews were conducted with executive managers of the ma9or vehicle rental companies and potential users of the product.

-nalysis of Aesults

Aesults from all primary and secondary research conducted were analysed and presented to identify the problems that exist, the need for a product, target mar'et for the product, mar'et si>e, growth and opportunity.

@roblem Aecognition

- problem was identified in the vehicle rental industry, through mar'et research. Aesearch has shown problems in transparency of dealings 3small, confusing contracts4, disputes about vehicle damage and problems with online boo'ings. 2urthermore, big problems have also been identified in that vehicles are never returned on time, leading to ma9or losses in revenue.

Ob9ective ,etting

-n ob9ective was set to try and identify a product that is able to overcome problems being faced by vehicle rentals. The ob9ective was to produce a multipurpose device to be fitted into vehicles, whose features would be dependent on the exact problems being faced by vehicle rental companies. The main aim of the product would be to eliminate many of the problems being faced by vehicle rental companies at the moment.

Aesults from the %ar'et research conducted can be shown below. 2irstly, an in-depth face to face interview was conducted with an &xecutive manager of 6ational <ar rentals based in +ahrain; We have very little control over the vehicle once we rent it to a customer, even though we take necessary precautions. However, the challenge still lies in monitoring the time in, time out, date in, date out, fuel levels and mileage clocked. There is major misuse of company vehicles by employees during upgrades and exchanges for the customers. The loss on sales revenue is between !"#$ per annum%. 1 This interview helped us identify a problem in the vehicle rental industry, in that there is a significant amount of revenue lea'age and misuse of vehicles not 9ust by customers but employees too. The ma9or problem currently faced by the vehicle rental companies is that about #" of customers who use a car rental service in the %iddle &ast don=t return their cars ta'e more than a month to do so. on time, of which D

,econdly, results from telephone interviews conducted with &xecutive managers of four of the biggest car rental industries in +ahrain $ 6ational, +udget, -vis and *ert> can be shown below. 2 These findings illustrate the approximate loss of revenues faced by these companies on a yearly basis;

*ame o+ Car &ental Company

%vera$e revenue per ve,icle per mont, -(SD.

#otal num er o+ ve,icles

&evenue loss /ue to misuse o+ ve,icles -0.

#otal mont,s

#otal revenue loss -(SD.

6ational

G""

8G"

#!

!!5,#!"

+udget

8""

#7G"

3.!5

#!

D3G,57"

-vis

5G"

38D"

3.7"

#!

)D8,#")

*ert>

G5"

3#!

#!

G",!""

#. 2ace to face interview was conducted with %ohammed ?affer, &xecutive %anager of 6ational <ar Aentals based in +ahrain on #"th 2ebruary !"#" !. Telephone interviews were conducted with &xecutive managers of car rentals based in +ahrain on #5 th 2ebruary !"#" %ohammed ?affer 3&xecutive %anager of 6ational <ar Aentals4, -li -bdi 3&xecutive %anager of +udget <ar Aentals4, -hmad ,aif 3&xecutive %anager of -vis <ar Aentals4 and %ahmood (>>idien 3&xecutive %anager of *ert> <ar rentals4

(n order to illustrate the effectiveness of introducing this product into the mar'etplace, we have modified the table above to show the losses suffered by four of the leading international vehicle rental organisations in +ahrain in comparison to the one-off cost they would incur by investing in this device and the amount of time it would ta'e for them to brea' even;

*ame o+ t,e Car &ental Company

%vera$e revenue per ve,icle per mont, -(SD.

#otal num er o+ ve,icles

&evenue loss /ue to misuse o+ ve,icles -0.

#otal mont,s

#otal revenue loss -(SD.

%mount spent on our /evice -(SD.

6rea" even perio/ +or ve,icle rental companies -mont,s.

6ational

G""

8G"

#!

!!5,#!"

!87, """

#D

+udget

8""

#7G"

3.!5

#!

D3G,57"

GD7, """

!#

-vis

5G"

38D"

3.7"

#!

)D8,#")

#, D58, """

#7

*ert>

G5"

3#!

#!

G",!""

#!D, 7""

!#

Thirdly, short questionnaires 3see appendix4 were sent out to &xecutive managers of car rental companies based in the %iddle &ast. (ts findings are summarised below;
1uestion 12 Does your company +ace pro lems w,en rentin$ out ve,icles to customers3
20 15 10 5 0 Yes No
Qu estion1

%ost vehicle rental companies answered yes. The main problems faced by these companies are - vehicles not being returned on time leading to ma9or losses in revenue for the company, damage to vehicles, and problems with renewing the rental of vehicles - some customers complain of a long process.

1uestion 22 4s t,ere any misuse o+ company ve,icles y employees3

14 12 10 8 6 4 2 0

%ost vehicle rental companies answered yes. 1uestion 32 4n +inancial terms5 ,ow muc, loss /oes t,e company ma"e5 on avera$e5 /ue to The main problems faced by these companies Qu estion 2 pro lems on a yearly t,ese asis3 are $ theft of vehicles by employees and damage to vehicles.
7 6 5 4 3 2 1 0 B elow5%

Yes

No

Qu estion3

7
5 !% 10 14% 15 1!% "#o$e 20%

+oth primary and secondary research identified a need for the product and ma9or vehicle rental companies are supporting the rationale of our business. *owever, only a limited number of car rental companies were interviewed and sent questionnaires, due to time constraints. -t *armentec, we want to continually provide our customers with a good quality product and service. To maintain this ethos, we will ma'e extensive efforts to continually carry out mar'et research to gain customer feedbac' and develop our product.

3.3. Mar"et Si7e an/ Opportunity

The vehicle rental industry is a multi-billion dollar sector of the global economy. Over the past five years, big vehicle and car rental companies have been wor'ing towards enhancing their fleet si>es and increasing their levels of profitability as according to industry analysts, the better days of the rental vehicle industry are yet to come. Over the course of the next few years, the industry is expected to experience accelerated growth, which equates to a <-CA of 3.5 increase in the !"#" $ !"#3 period. The %iddle &ast vehicle rental mar'et is huge and a well established service. Over the course of the next year, this mar'et is expected to grow by approximately ) . .nli'e other countries, most of the Culf countries lac' a developed transportation system. -s a result, the car rental mar'et plays a vital role to meet the transportation needs of the country and this holds good for both visitors and residents. <ars are not 9ust rented by tourists but also individuals and companies operating in the %iddle &ast. %ar'et research has shown a significant demand for the technological product to be installed in rented vehicles and there is huge scope and potential for the product to be successful, especially as many of the big rental companies are expecting to increase mar'et share through their value for money service, superior service quality and expanded networ'. 5e believe our product will add to the quality of service rental companies provide to their customers and hence contribute to the potential success of the product in the mar'etplace. 2urthermore, 5-#" of customers who use a car rental service in the %iddle &ast don=t return their cars on time, which leads to a loss of revenue. Our product aims to reduce this percentage by a significant amount. (n the initial 5 years of operation, +ahrain, ,audi -rabia, .-&, /atar and Oman will be targeted. -fter the +ahrain mar'et has been captured, we aim to realistically capture 3" expressed in the table below; of the ,audi -rabia, .-&, /atar and Oman mar'et. Their overall approximate fleet si>es are

Country
+ahrain

%pproximate 8leet Si7e -in cars.

!5 """

,audi -rabia

!"" """

.-&

#5" """

/atar

!" """

Oman

D" """

0espite the recent economic adversities, the industry and its 'ey leaders have started to regain their footing in the sector as overall sales and profit margins grow. -ll rental companies operating in the %iddle &ast will be targeted. - detailed analysis of the nature, scope and current position of our 'ey target customers $ -:(,, *ert>, +udget and 6ational is given below. -:(, -:(, &urope is a leading car rental company in &urope, -frica, %iddle &ast and -sia, where it operates the globally recognised -vis and +udget brands. The -:(, brand operates across four continents via a networ' of over !)"" locations in #") countries, through whollyowned subsidiaries in #3 corporate countries complemented by license arrangements, in a further )8 countries. The budget brand serves customers across three continents through over )"" locations in 88 countries. These are predominantly franchise businesses. (n !""G, the brands corporately owned locations had an average fleet of ##7 """ vehicles. 2urthermore, in !""G, revenues from the -:(, brand represented )8 +udget business represented D *ert> The *ert> corporation is one of the world=s largest car rental company, handling more than 3" million rentals worldwide with approximately 85"" locations in more than #D" countries and a fleet of 55" """ vehicles. The company has focused on international expansion, and in the late #))"=s *ert> rental cars were available in Aussia and all &astern &urope countries, as well as -ustralia, <anada, -frica, -sia, the %iddle &ast and 1atin -merica. +udget +udget Croup, (nc. (s a holding company that, through subsidiary companies and their franchisees, operates +udget <ar and Truc' Aental, which was the world=s third-largest of the Croup=s overall revenue and the of the Croup=s overall revenue.

#"

automobile and truc' rental system in #))G, operating in more than #!" countries and 3!"" locations. (t has a pea' fleet si>e of !73 """ cars, !! 5"" truc's and 5#"" pic'ups. 6ational 6ational <ar Aental has been one of the leading car rental organisations for over 5" years, with more than 5""" rental locations in #3" countries. (t has a fleet si>e of more than 3G5 """ vehicles. (n addition to the above, the rest of the rental companies operating in the %iddle east $ -l +ader <ar Aental, -l 2a9r <ar Aental, -l ?ahara <ar Aental, -l -rwali <ar Aental, -l 0ahiya <ar Aental, -l *amra <ar Aental <o, -l ?a>eera Transport, -l Thawad <ar Aental, -rados <ar Aental, +ahrain <ar Aental, 0elmon Aent---<ar, &urop <ar (nterrent, &xpress Aent--<ar, Colden <rown Transport, *anco Aent---<ar, *assan %ansouri, ?umbo <ar Aental, %ansoori <ar Aental, %arshall <ar Aental <o, 6oof <ar Aental, Oscar Aent--- <ar, ,ara Aent--- <ar, Tooranco <ar Aental, Toyota Aent--- <ar, .nited Aent--- <ar and Haquby <ar Aental $ will all be targeted.

3.4.

Mar"et 9ositionin$
5e have made efforts to select our target mar'et and analyse this mar'et in order to

position the product on a suitable mar'et segment. &ffective positioning will allow us to define our product, create an image and put us first in line in the minds of our target customers. (n regard to mar'et segmentation, we have ta'en certain variable factors li'e price, quality, service, distribution, reliability and value for money. The positioning will be based on a real 3lower cost and superior quality4 and intangible 3company reputation and service4 advantage. Our product is new in the mar'etplace and has a low number of competitors. 5e will be investing large amounts in research and development and technology to bring the product to a standard of high quality. These factors have influenced us to position our product where it is delivered to customers at a competitive price and quality.

4. External Environment

##

4.1.
@olitical

9ES#:E %nalysis
+ahrain is relatively easy and straightforward to set up our business in. The country

boasts a variety of incentives to potential investors. ,ignificant among these are no taxation on personal or corporate income and no withholding and :-T tax. Other advantages include duty free merchandise for re-export and duty free import of materials and machinery for manufacturing the product, low costs for energy, utilities and rents and #"" within the region and operating costs for businesses. &conomic 5hile many countries across the 5orld have been hit hard by the downturn in the global economy, for the most part +ahrain appears to have avoided the negative effects demonstrating economic stability. +ahrain has diversified its economy over the past few years and its economy loo's steady and forecast to grow this year. -ccording to figures from the (nternational %onetary 2und, +ahrain should see an increase of !.8 year, which is twice the regional average. +ahrain was named the freest economy in the %iddle &ast. +ahrain=s economic freedom is characteri>ed by improved business freedom, monetary freedom, fiscal freedom and financial freedom. 5hen compared with other %iddle &ast countries, it has maintained monetary stability despite inflationary pressure. Het, its inflation rate is low, 3.5 , compared to other %iddle &ast countries. Though 1abour productivity is increasing in +ahrain and it is home to a large highly s'illed wor'force, it still suffers from some government imposed regulations. Operating in +ahrain, a percentage of the wor'force has to be +ahrainis and wor'ers can be hard to dismiss once they are hired. Technological Our product will require high investments in research and development. +ahrain boasts an advanced information and technology infrastructure and does possess the latest technology to process or develop products. 5hile the +ahraini government is spending money to build critical infrastructure and also giving lot of incentives in order to boost the foreign direct investment in various sectors across the country. There is an influx of foreign direct investment in regard to technology and investment continues to rise. -ccelerating the diversification program, the government=s strategy targets five primary areas for expansion $ business and financial services, tourism, information technology, telecommunications, healthcare and education. 1egal in the economy this repatriation of capital and profits. +ahrain offers the best value for money $ it has the lowest living costs

#!

+ahrain has a tried and tested legal and regulatory framewor' in which investors can trust to fairly protect their interests in an open and transparent manner. ,everal legal procedures need to be adhered to for new businesses to operate. The law requires us to have a local partner or sponsor who holds the ma9ority interest or share and can therefore control the business. The local partner, be it a company or a private individual, doesn=t need to contribute to the start-up investment or participate financially at all. 2urthermore, any new business must register with the chamber of commerce and municipality for approval of starting the business and when the business is registered, we must show the ministry of commerce that we have a substantial sum of money to invest. The required sum varies and is regarded as a guarantee against liabilities. - lease agreement must also be obtained to prove the location. The process is complex and financially ris'y. 1ocal 'nowledge and consultation with a good lawyer from the outset is crucial. 6onetheless, +ahrain has produced many successful and highly profitable businesses. &xport, distribution and manufacturing industries are strongly supported by the Covernment, especially when it comes to obtaining land in which to construct the office or factory. Therefore, the +ahraini government would be more than willing to help us obtain the licenses needed. &nvironmental Our product is designed to have a positive impact on the environment as it will help control and monitor vehicles for fuel consumption, saving on fuel costs and eliminating wasteful vehicle movements. This will give *armentec a more positive image, moving towards an ever expanding Igreen economyJ.

4.2.

9orter;s 5 8orces %nalysis

Threat of entry into an industry depends on the extent and height of barriers to entry.

Threat of 6ew &ntrants The threat of entry into this mar'et is low in the short run as the idea of such a device tailored to suit the needs of a vehicle rental organisation is unique. The product is new and differentiated in terms of quality, branding and technology. 1egal restraints are quite high as a local sponsor is required, product is expected to be patented and there are high initial financial requirements, with a lot of commitment needed for advertising and research and development. ,witching costs are expected to be high and the production process is not easily learned, which can lure away potential competitors. *owever, the threat of new entrants is li'ely to increase over the longer period. Threat of ,ubstitutes @roducts from one business can be replaced by products from another. ,ubstitutes are products or services that offer a similar benefit to an industry=s products or services, but by a

#3

different process. ,ubstitution reduces demand for a particular IclassJ of products as customers switch to the alternatives. The threat of substitutes is medium. -lternative products such as a C@, system do exist, which can be used as a trac'ing device for vehicles. 0ue to their well establishment in the mar'etplace, consumers may find it hard to ta'e a ris' on a new product. *owever, our product is multipurpose and multifunctional and can provide the consumer with many more benefits compared to other substitute products. 5e will need to wor' hard to establish loyal customers and offer them our product at a good quality and good price so they find it much harder to switch to alternatives. @ower of +uyers The power of buyers can describe the effect that our customers will have on the profitability of our business. The power of buyers will initially be high as our business will be targeting a few, large car rental companies. 2urthermore, they will have a large influence in determining the success of our product. @ower of ,uppliers ,uppliers will supply the organisation with what is needed to produce the product or service. -s well as fuel, raw material and equipment, this can include labour and sources of finance. The power of suppliers, in this case from (ndia, will be low as the inputs we require can be available from a large number of suppliers. 2urthermore, there will be low switching costs as it will be less disruptive to move from one supplier to another. &xtent of <ompetitive Aivalry This is often the strongest of the five competitive forces. The extent of rivalry is very wea' as the product is new and unique. 5hile there are currently no direct competitors, this may change in the long run as more businesses try and get into this industry and the mar'et slowly grows. <ompetitive rivalry is li'ely to be based on dimensions such as price, quality and innovation. Technological advances can protect our company from competition, as our product is a new, innovative technological device. 5e have also focused our product towards a unique mar'et segment, aiming to gain a first-mover advantage and building customer loyalty and relations to reduce the threat of rivals in the future. -s our loc' in strategy, we will also be offering two years free maintenance with the product.

4.3.

Competitors
,ince we are establishing a new, innovative product, we won=t have any direct

competitors initially. *owever, there is a chance that competitors will emerge in the long term. These competitors can be businesses who produce substitutes to our product and any highly advanced technology company that is able to develop an upgraded version of our product. The first possible competitor is the car rental companies themselves, who in collaboration with other technological companies might decide to produce their own similar

#D

branded product. -s a result, they may shun the need to buy our product. +usinesses who produce substitute products such as C@, systems can also be our indirect competitors. 2or example; Carmin 1T0 specialises in the production and selling of C@, navigation systems in the %iddle &ast. -nother source of potential threat are companies in other parts of the world, such as .B and <hina, who may decide to copy our product if it is not patented. <ompanies with a technological advantage may try and replicate our product in these areas.

5. 4nternal Environment

#5

5.1.

S<O# %nalysis

Stren$t,s
@rime, cheap, lucrative location

<ea"nesses
1ow product awareness

Opportunities
5orldwide vehicle rental mar'et to increase by 3.5

#,reats
&conomy

1ittle competition

1ac' of strong strategic partnerships with business giants

Technological advances

<hanging and developing technology

*igh quality, innovative, new product

1imited customer base

Cain onlineFecommerce presence

Threat of new entrants

1atest technology

*igh initial investment in mar'eting

-vailable governmental support

6ew government regulations

@roduction quality

%ar'et position

<ompetition wea'nesses

%ar'et slow growth or decline

%ar'eting expertise

&ntering a new mar'et

,ubstitute products

&xisting, unique mar'et segment

6o taxation and interest rates

<ompetitive vulnerability

&xclusive research and development

,cope to capture a high mar'et share

*igh operational efficiency

&xpand customer base

The above ,5OT analysis gives us a clearer picture on the potential position of our company. (t will help us to formulate a strategic plan and focus on the 'ey issues. 5e will use our potential strengths and upcoming opportunities to develop a competitive advantage. -t *armentec, we need to focus on creating a high quality product, establishing the product, entering a new mar'et and developing an effective mar'eting strategy to develop our customer

#8

base and build up our mar'et share. 2urthermore, we need to exploit the opportunities presented to us through operating in +ahrain and develop a compelling mar'eting strategy to overcome the wea'nesses and threats we might be faced with, especially in our initial years of operation.

=. #,e Mar"etin$ Mix

#G

The above mar'et research and analysis has helped us to develop an effective mar'eting mix. This is the next step in our mar'eting strategy. (t will help us to ensure our target customers and mar'et segment is reached, as well as our companies ob9ectives. The elements of mar'eting needed to carry out our mar'eting strategy are outlined below.

=.1.

9ro/uct
Our product is aimed at the vehicle rental industry, in the short term. (t is a brand new

multipurpose technological device whose aim is to bring efficiency in the vehicle rental industry. 5e understand that the need for product innovation has never been greater and winning with new products is not so easy. Only one out of four development pro9ects succeed commercially, and one-third of all new-product launches fail. (n order to ensure we develop an effective product and there is less ris' of it failing, we have identified several critical success factors. These are outlined in the table below;

Critical Success 8actor

0ifferentiated, superior product

Description
5e are aiming to deliver a new, differentiated product with unique customer benefits and superior value. 5e have ta'en steps to ensure the product is able to reach the superiority level through conducting customer studies, identifying a need for the product, researching our target mar'et, researching new technology that will give the product a competitive edge and carrying out technical and operations feasibility assessments

+uild in voice of the customer

5e have developed a strong mar'et orientation with customer focus. %ar'et research and customer reaction will be used as part of the development process via constant rapid-prototype-and-test iterations. 2urthermore, we will ensure the launch is based on solid mar'et information

&arly product definition

- failure to define the product before development begins is a ma9or cause of new-product failure. 5e have ensured that the product does not move towards the development stages without defining the product clearly including the target mar'etK product concept and benefits to be delivered, mar'et positioning strategy and the product features

-ttac'ing from position of strength

The new product will fare better when it leverages the business=s core competencies. 5e will ta'e extreme steps to ensure we have a strong fit between the needs of the product and the resources, strengths and experiences of the new team and business in terms

#7

of mar'eting, sales, distribution, technology and operations.

@lan and resource the mar'et launch early

- strong mar'et launch will underlie the success of a product. 5e will ensure a quality launch for our product $ one which is well planned, properly resourced, and well executed to ensure our product ta'es off into the mar'et with a positive image.

=.1.1.

<,at t,e pro/uct will mean to t,e customer

Our product will deliver a particular customer value proposition. This will allow us to show the true benefits of our product quic'ly and effectively, attracting new corporate customers and giving them a real incentive to choose our product. 5e have decided to adopt a hybrid strategy, where we will see' to simultaneously achieve differentiation and low price relative to our direct and indirect competitors. 2rom the critical success factors, we have identified the potential tangible and intangible benefits and features of the product to our target customers. (t can be summarised in the figure below;
#an$i le 6ene+its -9rimary +eatures o+ t,e pro/uct.2 #4 :ehicle immobilisation !4 &nsures that the customer adheres to the time period of the rental agreement, by allowing the device not to accept the card upon expiry of the rental agreement. ,hould the customer wish to extend their rental agreement, they must request for a second @(6 number. This will help maintain control over the usage of the car, eliminate wasteful vehicle movements and prevent loss of revenue. 34 Operation of a unique @(6 basis to allow for unique customer identification D4 -llow rental companies to move towards a Igreen economyJ by monitoring chauffeur driven vehicles for fuel consumption in order to save on fuel costs #an$i le 6ene+its -%//itional +eatures o+ t,e pro/uct.2 #4 -llow vehicle rental companies to maintain a log of their customers so they can identify their customer profiles and predict mar'et trends for the future !4 -llow for easy recording, viewing and logs on rental and lease agreements 34 %aintain logs of the physical condition of the car D4 %aintain logs of fuel consumption and odometer of the car 54 Aecord all revenue and movements of the vehicle 84 ,ervicing history of the vehicle non-revenue

4ntan$i le ene+its o+ t,e pro/uct2 #4 0evice will provide customer satisfaction !4 0evice will customer provide security to the

34 0evice will give added value to the service that vehicle rental industries will provide to their customers D4 @rice, quality and #) image differentiation strategy

One of the most critical strategic initiatives in our new product introduction is acquiring an explicit definition of customer=s requirements, in collaboration and communication with customers, which is where our mar'et research will always play a crucial role. Our mar'eting strategy and promotion will be based on advertising the above features of the product to our target customers. (dentifying the critical success factors and our products benefits will contribute immensely to our mar'eting mix and help us effectively advertise our product.

=.1.2.

Ma"in$ t,e pro/uct +it t,e mar"et

Cood mar'eting means developing products that fit the mar'et. @roducts need to be designed correctly and then developed to 'eep pace with the mar'et changes. Our product design will be based on idea generation and concept development. 5e will be hiring a highly experienced product designer who will deal with the important aspects of our product such as aesthetics, technology, ergonomics and usability to bring our product from conception to mar'et. - rough prototype of our product design can be shown below;

=.2.

9rice

!"

5e understand that price will play a critical role in our mar'eting activity. 5e are launching a new product into the mar'et, so our price will be carefully aligned with our promotional strategy. 5e will be practising a rapid penetration strategy as seen in the figure below.
@romotion *igh 1ow

*igh

Aapid ,'imming

,low ,'imming

*armentec

Price
1ow Aapid @enetration ,low @enetration

(n this strategy, we will be introducing a new product into the mar'et at a low price while spending heavily on promotion, in order to penetrate the target mar'et as fast as possible. Our main ob9ective via means of this strategy will be mar'et share and profit maximisation in the long run. The price of our product is LD"". The price will be reduced by L#" every year and we aim to introduce new features to our product to target a wider mar'et segment and maintain a competitive advantage. The initial price is based on cost-based pricing, which gives an indication of the minimum price needed to brea' even. The real value of ta'ing this approach is that it will give an indication of the minimum price necessary for our business to ma'e a profit. Our business will be able to gain a competitive advantage with a low price strategy because we are outsourcing manufacturing and building relations with suppliers. 5e have the latest technology and our own Aesearch and development staff to maintain a highly efficient process.

=.3.

9romotions an/ Mar"etin$

5e will initially adopt an aggressive mar'eting approach to target all the car rental

companies operating in the %iddle &ast and advertise our product in as many ways as possible. There are three 'ey aspects we will be concentrating on whilst launching and advertising our product $ being informative, being persuasive and being reassuring.

=.3.1.

:aunc, o+ pro/uct in t,e mar"etplace

5e will be investing large amounts in launching our product at a high class presentation and demonstration evening. +elow is detailed our mar'et launch strategy.
The product has been finalised $ manufactured, tested and is ready to be launched into the mar'etplace

!#

Two salesFmar'eting staff will be hired to call up executive management of all rental companies in the %iddle &ast and arrange meetings with them to pitch our product and invite them to our product launch evening and dinner, which will ta'e place in a 5M hotelFconference hall such as Ait>carlton

@ublic relations will play a vital role in the launch of our product and the presentation evening. 2or this reason, a highly s'illed public relations officer will write all press releases. 2urthermore, media relations tactics will be used to get some coverage of the launch to build a bu>> and win interviews if possible

1aunch evening; :ideo will be played at the start to create a bu>> about the product. @resentation will be carried out by professional mar'eters. They will spea' about the product and there will also be live demonstrations. -ll attendees will be presented with a brochure outlining the product details and they will also be given complementary samples to test the product themselves. The --N of the technology This highly expensive launch event will be part of *armentec=s mar'eting campaign. 5e of the product will be explained and qualified trained technicians will be present at the evening to want to build a positive tac'le image any with technological our customers questionsfrom as'ed the by the offset attendees. by organising an innovative

product launch. - successful product launch will require integration and coordination among multiple functional areas, accurate planning and a solid mar'eting strategy.

=.3.2. %/vertisin$ strate$y

-s well as the launch event, the following advertising methods will be built into *armentec=s mar'eting strategy; -dvertising Our company will have the following logo that will give uniqueness, personality and identity to our business and will help towards building a global image in the vehicle rental industry;

@ersonal ,elling @ersonal selling will play an important role in the promotional mix. Three salesFmar'eting staff will contact potential customers $ i.e. car rental companies directly through phone and personal visits. This will allow for a more interactive mar'eting approach as any questions can be answered and ob9ectives overcome. 2urthermore, we can build relations with our target customers. -lso, we believe that there is more loyalty and incentive for the sales staff since they will wor' directly for *armentec. 0irect %ar'eting 0irect mar'eting will further allow us to build a direct relationship with our customers. 0irect mail, telemar'eting and the creation of pamphlets are the techniques that will be used.

!!

5e will mail a pamphlet detailing the product, its features and contact information to all potential customers. This will allow our target segment to fully understand the product and how we can benefit their company. (nternet The internet medium will allow for an innovative way for us to advertise our product and create a viral mar'eting atmosphere. *armentec will have a website which details the company information, product offered and its benefits, process and quality standards, as well as pricing and contact information.

=.4.

Distri ution c,annel

&fficient and effective distribution is important for us to meet our overall mar'eting

ob9ectives. 5e will be using a direct, exclusive distribution strategy, as seen in the figure below.

HARMENTEC (BUSINESS)

VEHICLE RENTAL COMPANIES

Our manufacturing will be outsourced, yet we will deliver our product directly to our target customers. This will enable us to use our sales and advertising channels effectively to maximise sales and profits and maintain control over the distribution of our product.

-t *armentec, we aim to match our mar'eting mix with our mar'eting strategy, which will be rooted in how well our product is matched to the segment of the mar'et we are targeting. The mar'eting mix will be constantly reviewed and evaluated and changes will be made if necessary to adapt to the mar'et environment. The above mar'eting and positioning strategy will help us to position our product against competitors, emphasise our distinctive unique product benefits and affiliate our product with something the target customers 'now and value.

!3

>. Operations

>.1.

:ocation
*armentec will be registered in the Bingdom of +ahrain in the capital city of %anama.

The premises will extend over an area of G,""" sq feet with 5,""" sq feet allocated to office space. The office space will contain the corporate communications department, reception area, purchases O procurement department, 2inance department, human capital department and a meeting room. The rest of the !""" sq feet will be required for storing equipment and for the loading and unloading of devices received from the suppliers. 5e have chosen this location mainly due to the close proximity to all ma9or car rental companies. (t would cost approximately LG!, """ a year to rent these premises. 5e have decided to rent as it is simpler and more inexpensive.

>.2.

Suppliers
*armentec intends to employ and form long term relations with reliable business

partners who will provide quality inputs at competitive rates. 5e will be loo'ing to outsource the manufacturing of the product. The device and the card readers will be manufactured in the city of +angalore situated in (ndia by ,ilicon :alley systemsK the programmable card will be manufactured in +ahrain by Clobal @ayment services 3C@,4 who speciali>e in the manufacturing of chip and @(6 cards.

>.3.

9ro/uct #ec,nolo$y

!D

*armentec as an organi>ation would focus on the design, mar'eting and distribution of the product while leaving the production largely to our business partners. (n the long run *armentec would aim at adding value to the product through brand building, advertising, distributions 'now how and patents. ,trong emphasis has been placed upon controlling the cost of the product. <ertain options such as C@, technology have not been added to the device to 'eep costs under control. The product developed by *armentec is a multifunctional device which will be fitted into vehicles. (t consists of a card reader, and is controlled by a time-programmable card. The device will be used to read the information recorded on the programmable card. This card will be nothing but a simple chip card that is able to store data information. 5hen the vehicle is turned on, the device will be activated once the card is inserted into it. (n order to login to the device, each person whether a staff or an employee will be provided with a unique @(6 number, which would be entered into the device to allow the user to view the information contained in the card. &ach device comes with one extra @(6 number for agreement extension purpose, and one bac'up @(6 number for additional emergency renewal. The product will consist of three parts $ the device itself, a chip and pin card and the card reader. *armentec has held consultations with engineers at 2ord <ompany to establish the functioning of its product. The figure below describes the functions of each part of our product; 9ro/uct 9art Operation
The primary function of the device to be fitted into vehicles is to prevent unauthori>ed starting of the vehicle by employees and customers, and also to arm the vehicle with limited usage after expiry of the rental agreement period. The device will also be provided with a user interface which will display the details of the rental agreement to the customer, the historical images of the physical damages to the vehicle, the service history of the vehicle, the revenue and non revenue movements which won=t be visible to the customer but only to certain employees with unique authori>ed login (0=s and passwords. *armentec has ta'en into consideration that it would be dangerous for a vehicle to have their time periods as stated in the agreements expired and the car would lose its speed on the highway which can prove ha>ardous. 2or this very reason, the driver will be provided with an extra @(6 code that can be entered upon expiry of the rental #,e /evice agreement. The second @(6 code will authori>e the device to maintain its normal course of activity for a period of 8 hours. -s a proposal after this, the speed would reduce to a maximum of #5 mph. -fter expiry of the second @(6 code the car will not cross its speed of #5 mph. -nother important point to note is that if the driver stops the vehicle after the expiry of the agreement period, the vehicle would immobilise after which it can only be activated by an authori>ed personnel.

!5

+ahrain has a radius of approximately !"" Bilometres, which allows for an ideal location to best test and implement this business model. 2urthermore, it will be easier for a technician to reach the vehicle to reactivate it in the shortest amount of time. (n simple language the device will brea' communication with the three vital circuits of the vehicle, namely, the starter, the ignition and the fuel, which in turn will ma'e it impossible to start the vehicle. 5hen one tries to switch on the ignition, the vehicle will not energi>eK and the communication with the ignition circuit will remain bro'en. #,e c,ip an/ 94* car/ The card will store the following details $ #4 (nformation on the rental agreement which will also be displayed on the screen of the device, !4 (mages of internal and external physical damages, if any, to the vehicle, 34 1og of the distance covered by employees, D4 ,ervice history of the vehicle, 54 Aecord of the non revenue 9ourneys, by employees. #,e Car/ rea/er The information from the data card will be uploaded into the <hip reading device connected to the computer via a .,+ port.

<hanges have been made, as more research was done on the technical functionality of the product. @reviously, the unique characteristic of this device was vehicle immobilisation upon expiry of the rental agreement but, after consultation with technical engineers at 2ord .B, the proposal was changed to limiting the speed of the vehicle to #5 mph upon expiry of the second @(6 and immobilisation, once the vehicle is switched off by the driver. This hasn=t adversely affected the cost of the product in any way.

>.4.

4n+rastructure

The infrastructure required, can be categorised as follows; *ardware The hardware will include the physical components such as the chip and pin, the card updater which performs the function of topping up the rental agreement in the card based on the set tariff from a client machine and a central server system which will hold the entire information. ,oftware -s we are loo'ing to use two different technologies and trying to ma'e two different devices spea', a common understandable medium of compatibility needs to be established. 5e have identified 6ational <ar Aentals in +ahrain to test this medium with their software suppliers. 6etwor'

!8

-s vehicles can be rented from more than one geographical location, we are loo'ing to establish a lin' between more than one client system and the server. This introduces the need to setup a networ'. @rocess @rocess is the mode through which wor' should flow, enabling the feasibility of reengineering and managing the entire set up. The placement of proper processes and procedures will help governance. 2or tools can be put in performance, improve non-value ,o, diagram then the images of is added what shown
Customer c,ooses a car -8unction. Customer <al"s in to rent a car -Event.

in place wor'.

practising to

(T gauge

example;

(T(1. 1ean

them and reduce the happens when renting customerE - wor' flow
Customer is in+orme/ a out t,e c,osen car -Event.

out a vehicle to a &ustomer walks in, authori'ed needed the

Car/ an/ "eys are ,an/e/ to t,e customer -Event. %ut,orise/ person tops t,e car/ via t,e car/ rea/er -8unction.

below; the car is chosen, and personnel record all information information card via the such as and card

the rental agreement the vehicle into the reader. The card and to the customer, who the device that(s fitted customer switches on inserts the card into activates the device number, the rental will be displayed on

physical damages to keys are handed over will insert the card into
Customer wal"s to t,e car an/ unloc"s t,e car -8unction.

in the vehicle. The the the by car and a then and )*+ device entering

Customer inserts "ey into t,e i$nition -Event.

agreement information the screen.

Customer starts car5 inserts car/ into car/ rea/er an/ enters pin to activate car/ -8unction.

Customer /rives Car -Event.

%t en/ o+ rental a$reement5 Customer o tains secon/ 94* an/ enters it to re?activate car/ . Ve,icle spee/ re/uces to 15mp, -8unction.

Customer /rops car ac" to rental or$anisation -Event. !G

7.5.

9atency
-t *armentec, we plan to patent our product. 5e have contacted a @atent -ttorney

3,imon Aees4 at *aseltine 1a'e based in +ristol in order to understand the procedure of getting the product patented in the .nited Bingdom and &urope. 5e have already patented our product in the %iddle &ast. (n the long run we will be loo'ing to achieve further efficiency in our supply chain especially as we expand globally. 5e aim to produce the highest quality products at competitive prices. 7.6.

&esearc, @ Development
*armentec=s Aesearch O 0evelopment unit will be based in +ahrain due to the

availability of highly s'illed human resource and advancement in technology. Aesearch O

!7

0evelopment places a very important role in our organisation in the perspective of improvement of quality, cost effectiveness and development of our products and product line.

A. )uman &esource Mana$ement

A.1. Or$anisation Structure

)%+E' E-E)(T+.E O''+)ER %E"& O' M"R,ET+NG
ADMINISTRATION ASSISSTANT MARKETING RELATIONSHIP %E"& O' PUBLIC RELATIONS MARKETING %E"& O' %(M"N
!)

%E"& O' *(R)%"/E 0 *RO)(REMENT/

LOGISTICS OFFICER

%E"& O' RE/E"R)% 0 &E.ELO*MENT

RESEARCH INSTALLATION ASSISTANT TEAM The organisation chart highlights the reporting structure of *armentec. The <hief &xecutive Officer and the heads that report directly to him will be placed in +ahrain ta'ing care of the head office operations. The head of the @urchase O @rocurements department will fly bac' and forth between +ahrain and (ndia every time a new order is to be placed and a consignment gets shipped to the %iddle &ast from (ndia. The Aesearch O 0evelopment head will be placed in +ahrain but will liaise with manufacturers at (ndia 'eeping them updated with any significant developments in the design of the product and any necessary changes that will need to be implemented. The head of mar'eting along with the public Aelations Officer will be responsible for the direct interaction between clients. Their bi-monthly reports will be made available and circulated amongst all the other &xecutives. The head of Aesearch O

3"

0evelopment will be based full time at the head office, in order to monitor the installation and routine maintenance wor' of the product, which will be performed by the installation team and security and maintenance personnel.

A.2. Mana$ement #eam an/ Sta++

(n order to ma'e this section convenient and easy for understanding, we have bro'en it up into the following sub sections; %anagement Team and 5or'force Ownership ,tructure and ,hareholdings *uman Aesource needs

A.2.1.Mana$ement #eam an/ <or"+orce

*armentec=s management team will consist of eight experienced individuals. *eaded by the <&O of the company, %r.6ihad, *armentec comprises of five broad departments, managed by the co-founders. The %ar'eting department will be led by %r.*issan, in association with %s.Aebbie, who is the Aelationship %anager. The 2inance and @rocurement sections will be ta'en over by %r.%ohsin and %s.<hristine respectively. %s.,aira will ta'e the responsibility for the company=s *uman <apital, aided by %s.?enifer as the @ublic Aelations Officer. 2inally, the installation team of 7 will be led by %r.<hetan, who is the head of Aesearch and 0evelopment. This is illustrated in a separate structure below and brief information on the eight individuals is also detailed in the table below;
CEO %r. %ohammed

8inance )ea/ %r. %ohsin

Mar"etin$ )ea/ %r. *issan

9urc,ase @ 9rocurements )ea/ %iss. <hristine

&esearc, @ Development )ea/ %r. <hetan

)uman Capital )ea/ %iss. ,aira

Mana$ement #eam
Mr. *i,a/

Mana$er Mana$ement %iss. Aebbie Cate$ories

&elations,ip

E/ucational 1uali+ication
+,c Operations %anagement, <ertified +usiness -ccount, 3%+-4

<or" Experience %iss. ?enefer

9&O

<&O of *armentec

! years as ,enior Operations &xecutive and @ro9ect ,upervisor at +%( +an', # year as Aesearch -nalyst at /atar (nsurance <ompany 3 years in %ar'eting ,ector

Mr. )issan

*ead of %ar'eting 0epartment

+,c in @sychology, 3%+-4

3#

Ms. &e

ie

Aelationship %anager

+,< in %ar'eting and 2inance, 3%+-4 +,< in accounting, -<<-, 3%+-4

# year in %ar'eting ,ector

Mr. Mo,sin

*ead of 2inance 0epartment

8 months in 0elloite <onsultancy

Ms. C,ristine

*ead of @urchase O @rocurements 0epartment

+,c in <hemical &ngineering, 3%+-4

8 %onths in &ngineering 2irm

Ms. Saira

*ead of *uman <apital 0epartment @ublic Aelations Officer

+,c in biomedical ,cience, 3%+-4 +,c in &lectronic &ngineering, 3%+-4 +,c in &ngineering, 3%+-4

# year in <ustomer ,ervice

Ms. Bene+er

! years in %edia and @ublishing <ompany !.5 years in &ngineering and <omputer ,oftware

Mr. C,etan

*ead of Aesearch O 0evelopment

(n addition to the above, *armentec will also have a local sponsor, who will form part of an external advisory team. This will give credibility and an additional pool of expertise to the business. Our local sponsor will be %ohammed ?affer, who has lived and wor'ed in +ahrain for over #" years, being an executive manager of one of the biggest car rental companies in the %iddle &ast. *e has a genuine interest in the business, has good lin's in +ahrain and has good experience and expertise, having wor'ed in the same industrial sector. *aving an external advisory team will give our business the foresight to see' advice and help ma'e the management team as strong as possible. The above chief members form the functional team of *armentec. (n addition to these, the company will recruit ! mar'eting officers, an assistant accountant, a logistics officer, a research assistant, an installation team of 7, and an administration unit. The administration unit will consist of a receptionist, ! drivers, and security and maintenance personnel. The overall wor'force is estimated to comprise of approximately 3" individuals. (n the long-run, *armentec will have a wor'force of 8 in each of the additional mar'ets where we plan to expand to, consisting of a regional head, a procurement manager, an accountant, ! engineers and a driver. The companyPs management philosophy will be based on responsibility and mutual respect. *armentec will maintain an environment and structure that will encourage productivity and respect for customers and fellow employees. -dditionally, the environment will encourage employees to have fun by allowing creative independence and providing challenges that are realistic and rewarding.

3!

A.2.2.Owners,ip Structure an/ S,are,ol/in$s

*armentec is a @rivate 1imited <ompany, founded by eight dynamic individuals. The total investment in9ected into the business by the owners will be approximately L37" """. -ccording to the local corporate law, 5# share of the company will belong to a local sponsor, will belong to the who will be %ohammed 9affer, as detailed above. The rest of the D) this D) . #5 and 5 of the company shares will be held each, by %r.6ihad, %r.%ohsin, %r.<hetan, of the total shares each will be held by %s.?enifer. The above shares have been allotted based on the initial %s.<hristine and %s.,aira. %r.*issan and %s.Aebbie will own #" investment with mutual consent.

company=s owners. &ach owner will have a certain percentage share for the business within

A.2.3.)uman &esource *ee/s

-s mentioned earlier, we have five departments in our organisation, which encompasses mar'eting, finance, @urchase O @rocurement, *uman <apital and Aesearch O 0evelopment. ,ince the company is starting operations on a small scale, we will recruit employees on a permanent basis. Other than our internal management team, external recruitment and selection is the source we will be using in order to fulfil our human resource needs. This tool will allow for an ob9ective and rational method to be used so we are able to match individuals and posts more closely and fairly. 5e will adopt a systematic approach to recruitment and selection. &fforts have been ta'en to describe and set out the nature of particular 9obs for recruitment and selection. The process would be as follows; ?ob -nalysis ?ob 0escription ?ob ,pecification Aecruitment %ethods ,election %ethods Training and development

?O+ -6-1H,(,; is the process of examining 9obs in order to identify the 'ey requirements of each 9ob. Through this, we can effectively plan our wor'force and its requirements, define the title of the 9ob and define to whom the employee will be reporting and is responsible to. ?O+ 0&,<A(@T(O6; This describes how a particular employee will fit into the organisation. statement will be written outlining the elements of the particular 9ob, how the 9ob fits into

33

*armentec=s structure and its main purpose. Aesponsibilities, accountabilities, 'ey ob9ectives and 'ey tas's will all be incorporated into the 9ob description. ?O+ ,@&<(2(<-T(O6; This will accompany the 9ob description. (t will outline the specific s'ills and abilities required to perform the 9ob in hand effectively. ,'ills, personality characteristics, level of experience and qualifications required will all be detailed in the specification. A&<A.(T%&6T %&T*O0,; This is concerned with how *armentec plans to attract a pool of applicants who meet the 9ob requirements. 5e want to attract a suitable pool of candidates without incurring excessive costs, emphasising on quality rather than quantity. 1ocal press in the form of newspapers, *armentec=s own website, web portals 3on the requirement basis4 and recruitment agencies will be used to advertise our 9ob vacancies. ,&1&<T(O6 %&T*O0,; The selection process is simple and will involve initial shortlisting through manual <: analysis and a selection interview where the candidate will be assessed through a mixture of their behaviour, personality and qualifications to identify whether they will be well suited for the role. - logical decision will then be made to select the most effective candidate. TA-(6(6C -60 0&:&1O@%&6T; Our organisation believes that well trained employees are the 'ey to small business success. @roductive employees are those who have received extensive training. (n an ideal world, we would be able to hire people who possess the exact s'ills to meet our business needs. *owever, in today=s competitive labour mar'et, demand for s'illed wor'ers far exceeds supplyK that=s where training comes in. *armentec=s training will be classified into two categories, on-the-9ob training and off-site training. -ll employees hired will be invited bac' for an induction day. (nduction is a platform, whereby the employees are made comfortable to wor', by ma'ing them aware of their roles and responsibilities and providing training such as basic health O safety in order to perform their tas's. The installation team and safety and maintenance personnel will undergo further extensive on-the-9ob training. They have the responsibility to ma'e sure that unit systems are installed properly in all cars and function correctively. Their 9ob will require them to have training on the functioning of the product, installation of the product in cars $ how to install the system in transport vehicles, what equipment and procedures are required and safety needs. They should be able to detect potential and actual problems and ta'e corrective action to prevent any disruptions to the vehicle. <ontinual training is required to allow for the effective development of employees as new features will be added to the product in future years. This process helps us to chart out the requirements of our human resource needs in terms of number, tas's associated with the 9ob and the requirements and training associated

3D

to perform the particular 9ob effectively. - graded pay system will be adopted where employees will be placed on salaries according to different bands.

C. 8inancial 9er+ormance

C.1. 8inancial Mana$ement

2inancial forecasting is one of the core aspects required to run a successful business, since it forms the foundation for all other business activities. The forecasted financial

35

statements for the first five years have been prepared in accordance with the (nternational -ccounting ,tandards 3(-,4. <apital The capital required to start up *armentec is L3"",""", which will be used to setup the head office, relevant operations and partly for wor'ing capital. The source for our capital requirement will be the cash in9ected by the owners, which is expected to be about L37",""". The excess cash will be used for expansion in the following years. The @aybac' @eriod for initial investment is estimated to be around two and a half years. +udgeting The company=s strong mar'eting and technical competencies will help us capture and penetrate the mar'et in an aggressive manner. Our initial target is %iddle &ast, where we have already patented our product. The company will start its operations in +ahrain and then move on to the other countries as shown below. The company=s five year plan with the expected cumulative sales forecast, sales price and the cost is as follows;

Dear

#ar$et Countries

Sales (nit 8orecast

Sellin$ 9riceE(nit

#otal CostE(nit

+ahrain

85G"

LD""

L3)5

,audi -rabia

#75""

L3)"

L37!

/atar

3###5

L37"

L38"

.-&

3D3D"

L3G"

L355

Oman

DDDD5

L38"

L3D"

The above figures are purely conservative estimations based on thorough mar'et research. 5e will be able to reduce our sales price by L#" every year, as we will be receiving bul' discounts from suppliers, and the fixed cost per unit will decrease simultaneously with the increasing sales volume. 2ixed -ssets *armentec=s tangible assets mainly comprises of :ehicles and 2ixtures O 2ittings. The assets do not include machinery or production plant as the production will be outsourced. (ntangible assets comprise of product-development and patent costs. :ehicles are depreciated on the reducing balance basis for five years since this depends on the asset usage, whereas

38

the fixtures O fittings are depreciated on straight line method, with an estimated life of three years. (ntangible assets are amortised on the straight line basis for five years. -ssets are acquired in line with our growth strategy. 1ease and Aentals (n order to minimise the capital requirement, we will be acquiring all the tangible fixed assets on a financial lease basis. The benefit of financial leasing is that the assets are recorded in the boo' of leases and treated as their own assets, which is not the case with operating lease. *ead office and the branch offices will be rented. The rent is expected to increase by #" each year.

Operating &xpenses Operating expenses include salaries, wages, advertising, rent, insurance, sponsor fee and so on. Our sponsor will be paid yearly since it is a legal requirement in order to do business in the %iddle &ast. The sponsor fee is mutually agreed between the company and sponsor for each target country. %ar'eting will be done in-house. +esides, mar'eting agencies will be consulted for advertising if needed. These agencies will be paid a mutually agreed fee. (nsurance is paid at the rate of #.5 of the assets= value.

<orporations are not sub9ect to taxation according to the %iddle &ast government policies.

C.2. 8inancial Statements

<ash 2low -nalysis <ash flow statement is prepared on a monthly basis for the first year, and on a quarterly basis for the rest of the years. -n overview of the cash flow is as follows;

The cash flow, as seen above, is positive through all five years of operation. The reason for a decrease in the cash flow in the first year is due to an assumption made that the company sales will start only in the third month, increasing gradually over the period. %oreover, all operation expenses will be incurred from the very start of the year.

3G

The customers will be given a two-month credit period. This will also be the time of payment to our supplier. -n advance payment of D" contract for year one and 37 will be received at the inception of the of the cost price will be paid to the supplier in advance.

,ponsor fee, rent and miscellaneous expenses are paid in the successive months, whereas, all other expenses will be paid in the corresponding months. ,hort term borrowings will be obtained to partly fund the wor'ing capital requirements for the first year alone. The cash needed to meet the company start-up, and wor'ing capital requirements for the new mar'ets expansion, will be funded by the cash reserves of the preceding years. This is the reason for little cash flow in year two, since no external funding or capital in9ection by the owners will be made. *enceforth, the cash liquidity will increase consistently, till about .,0 #.G %illion towards the end of five years. @rofit and 1oss -nalysis -n overview of the forecasted profitability of *armentec is represented by the graph below;

(n the first year of operation, there is a net loss, and the company will brea' even in the start of year !. This is due to IAevenue (nvestmentsJ such as advertising, AO0, repair and maintenance, and mar'et research, which will benefit the company in the long-term. Our company will brea'-even with sales of about ##,""" units. Thereafter, the profits will increase at a consistent rate, the highest profit earned by the company being around L7)G,""".

C.3. &atio %nalysis

6et @rofit Aatio

37

-s shown above, the net profit ratio of the company will increase over the years and reach 5.7 in year five. The reason for a slight decrease in year four is that the company will be entering the .-& mar'et, and as a result, will incur a significant start-up cost. <urrent Aatio

The current ratio implies that the company will be able to pay its debts comfortably, and will not be facing any liquidity problems. &arnings per ,hare

The &arnings per share ratio is also expected to increase simultaneously with the profits. This will enable us to attract potential investors, and enhance the current shareholders= confidence. Aeturn on <apital &mployed

3)

*armentec=s policy is to pay a #"

dividend of the face value of share. <urrently, our

plan along with the mutual consent of our shareholders is to retain the reserve cash, and not pay it out, in order to allow diversification of our organisation in the near future, as represented by AO<&.

C.4. Contin$ency 9lan

2ollowing on from this, we have considered the influence on the company=s performance, in case we are not able to achieve the forecasted sales. -s shown below, even if *armentec achieves only 75 of predicted sales, the company will still be profit

C.5. Currency Exposure

-s mentioned in the operations section, our production is based in (ndia, as opposed to the %iddle &ast. Therefore, variations in the currency value between the company=s expenses and revenue will arise. <urrently the value of an (ndian rupee is about ".""7 +ahraini 0inars,

D"

and this has been observed to be quite consistent through the years because of the comparatively strong economic conditions in both these places.

D#