UNIQUE COMPANY FEASIBILITY STUDY

UNIQUE COMPANY FEASIBILITY STUDY

PREPARED BY: WAFAA SHAWKY AHMED EMAM ABDALLAH MOHAMED

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Table of contents
1 INTRODUCTION...............................................................................3 2 MARKETING STUDY.........................................................................4 .......................................................................................................9 3 TECHNICAL STUDY........................................................................13 4 FINANCIAL STUDY.........................................................................16 5 CONCLUSION................................................................................18

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1 INTRODUCTION
UNIQUE Company is the proposed name of a new established Import, Export, and General Trading Company specialized in the innovative products. The key edge of UNIQUE co. is to import abnormal innovative products used in our day to day life. The abnormal products should not be a totally new ones, but they may be development of traditional products in a way that make the usage of these products easier, economical, healthier, and in line with the High Tech era.

1.1

The Company Business Focus & Startegy

1.1.1 Importer of Innovative products As the Egyptians' income has increased in the recent years, the purchasing power and the willingness to buy has also increased, putting an upward pressure on the imports. This is doubled by the Chinese aggressive exporting strategies supported by the relatively attractive prices of its products. The Egyptian market may be saturated in the coming days for the normal products. However, for the abnormal innovative products, they have low elasticity of demand, as they are categorized under the luxurious products whose tendency to the demand is relatively very low. So our strategy is to find abnormal innovative products through different sources of supply. 1.1.2 Marketer of the imported innovative products After importing the abnormal products, the second question is to sell these products. Our strategy is to sell them through different channels: Ads at newspapers (Waseet / Ahram). Direct selling through sales team. Participation in relevant exhibitions and events (Clubs, Hotels, Shopping Festival,..) Corporate deals with some authorized distributors.

1.2

Mission Statement:

Our mission is to introduce abnormal, innovative, state-of-the-art products to the Egyptian market.

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1.3

Locational Study

UNIQUE company needs a premises in a well developed area within Cairo. The proposed location is Nasr city whereas many companies are operating and the monthly rent is reasonable. An administrative unit with 150 : 200 squared meter is quite enough. Also, a small store is needed to keep the imported products in. The proposed space is 200: 250 squared meter. Any area in Cairo is acceptable.

1.4

Legal Study

UNIQUE company is a Limited Liabilities Company with a capital of 50,000 LE, established under the law # 159 issued in 1981 that state the following legal requirements to establish such a company: 1. IDs of all partners 2. Power of Attorney from all partners to the lawyer 3. Bank Certificate of Deposit for 100% of the issued capital 4. Company Establishment Contract Charter 5. Rent Contract of the company premises 6. Assignment of the External Auditor 7. Commercial Register 8. Tax Card 9. Export & Import License 10. Social Insurance for all employees There are no obstacles to issue any of the mentioned documents. Nothing is needed but assigning a lawyer to proceed with all procedures. 1.5 Religious and Cultural Study

No cultural or religious constraints for such a project, as all imported products are innovative and in line with the Egyptian culture and Islamic Shariaa.

2 MARKETING STUDY
2.1.1 Business Differentiators 1- Totally new abnormal products. 2- Easier, healthier, High Tech products. 2.1.2 Market Position

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1- Sole provider of the said products. 2- Elasticity of demand is very low. 3- Main competitors are the retailers of home appliances and electronics. 2.1.3 Strategic alliances UNIQUE company will co-operate with manufacturers and exporters of the state of the art products all over the world with special consideration of China and other Asian countries. Other cooperation may be developed with wholesalers and retailers in the Egyptian market or outside to resell/distribute the imported products (Radioshack, Ogail would be a potential). 2.1.4 Market Segmentation UNIQUE company targets the medium-to-high income market segment. This segment amounts about 2,200,000 persons (about 550,000 families). 2.1.5 Product Mix Each year the marketing team will choose a product mix that target a specific price range (low priced products), as the market survey revealed that low priced products are easily sold compared to higher ones. There are some products have already selected in line with the company mission statement. These products are for the start up phase, and more products will surely be acquired during the ongoing life cycle of the company. Sample of the proposed products are presented in this section: Ice Cream Maker This product helps mothers to make Ice Cream for her children at home. Quality, safety, Healthy, Money saving are all guaranteed.

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Chocolatiere This product targets the chocolate lovers. It heats the raw cacao (Chocolate bars) and let it be melted, so that it can be shaped in any beautiful shape (Micky mouse, stars, figures, letters, trees). The melted chocolate may be used also in desserts and cakes.

Smokeless Ashtray This Ashtray absorbs smoke and odors. So that people surrounding the smoker will not be negatively affected by the cigarette's harmful smoke. Parents and Grand parents can smoke freely with no harm on their children.

Medicine Reminder This product helps old people to be reminded with their medicines on its due time, so that they do not miss any medicine at any time. It is very important for people who take more than one timely medicines.

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Diet Scale This product calculates calories, fat, cholesterol, fiber, protein, sodium and carbohydrates in any unit of food. It helps people who want to loose weights and manage their diet programs.

Chalk Cup This product targets children who will be very happy using this cup in a mutual use (Usual Drinking, and writing by chalk on it).

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Pedometer Step Counter This product targets people who are interested in loosing weights. By using the pedometer, each step is counted, the overall distance is calculated. Also, the calories burned are calculated.

Cup Warmer This product targets office workers clerks whose work is computerized. By using the USB Cup Warmer, any drink will stand hot for long time. .

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Cotton Candy Maker This product helps mothers to make Cotton Candy for her children at home. Quality, safety, Healthy, Money saving are all guaranteed.

2.1.1 SWOT Analysis

Strength UNIQUE Company has the following strength: No many companies are focusing on the innovative products. High profit margin products. Simple business model. No need for high experienced and qualified resources. Many different sales channels. Diversification of products mitigates the unsystematic risk.

Weaknesses Luxurious products need extra marketing activities. Costs of marketing (advertising) are high. In case of failure, the risk exposure is higher, as the products have low liquidity.

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Opportunities Bundle offers are possible (two or three products can be sold in a bundle with special price). Products relevant to some events may be imported and easily marketed (Mother day's gifts, Summer vacations, Education year launch,). Sales in other governorates outside Cairo would be possible in the future. Re exporting of some products to other countries is also possible in the future. Deals with some retailers are possible (Radio shack, Ogail, .) Threats New entrants to the market. Below certain level of weekly sales, break even would not be reached, as the advertising costs are high. Successful products may be imitated locally. 2.1.2 Competition Analysis & strategy

Competition Analysis Current Rivalry Competitors with similar business focus like Tamimah and other companies that market their products through TV ads. The cost of TV ads is very high, so that they are focusing on high priced products. For low priced products, it will not be feasible to trade in them as they will not be profitable. Competitors with similar marketing strategy are focusing on the sports equipments.

Threat of new entrants New companies may enter the market to benefit from the high margin. Existing companies may also expand their business and trade in similar products. Although the threat of new entrants, innovative products are unlimited and new products are always available to be introduced to the market.

Potential Substitutes The products can be imitated locally. However, our marketing strategy and the type of products can easily overcome the competition of potential substitutes which need some time to imitate the products.

Bargaining Power of Suppliers The current financial crisis weaken the bargaining power of suppliers, as they are all facing sales problems.

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The innovative products are produced by various suppliers, so that the competition weaken their bargaining power.

Bargaining Power of Buyers As the innovative products are luxury, the competition is low, and the demand elasticity is low, so that the buyers have low bargaining power.

Competition strategy Our competitive strategy is "Differentiation Strategy" rather than "Cost Leadership Strategy". 2.1.3 Expected stream of revenues

The Number of people attracted due to advertising will decrease as time passes. Xa= Ea. a. bt
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Years Y1 Y2 Y3 Y4 Y5
Whe re:

Ea 1.5 1.5 1.5 1.5 1.5

a 4 4 4 4 4

bt 1 0.6 0.4 0.2 0.1

Xa= Ea *a * bt 0.06 0.036 0.024 0.012 0.006

Xa: is the expected growth rate of demand caused by % change in advertising. Ea: is the partial elasticity of advertising. a: is the change in advertising spending. bt: is the arbitrary factor that measures the change in sales caused by advertising over time. Population Price growth growth R Xp 0.03 0.03 0.03 0.03 0.03 Income growth Xy 0 0 0 0 0 0.06 0.06 0.06 0.06 0.06 Advertising Annual Demand Growth growth Rate Xa Ft= R+Xp+Xy+Xa 0.06 0.15 0.036 0.126 0.024 0.114 0.012 0.102 0.006 0.096

Ft1 Ft2 Ft3 Ft4 Ft5

2009

2010

2011

2012

2013

2014

2015

R even ues
N o . O f U n its G ro w th ra te A v e r a g e S e llin g p r ic e T u rn o v e r 2 %S a l e s r e t u r n s N e t tu rn o v e r 1 3 ,7 5 0 1 5 ,8 1 3 1 7 ,8 0 5 1 9 ,8 3 5 2 1 ,8 5 8 2 3 ,9 5 6 0 .0 0 % 1 5 .0 0 % 1 2 .6 0 % 1 1 .4 0 % 1 0 .2 0 % 9 .6 0 % 142 142 142 142 142 142 1 , 9 5 2 , 8 4 2 , 2 4 5 , 7 720, 5 2 8 , 7 3 7 , 8 1 7 , 0 1 3 3 , 1 0 4 , 3 34 ,94 0 2 , 3 6 4 2 3 9 ,0 5 7 4 4 ,9 1 5 5 0 ,5 7 5 5 6 ,3 4 0 6 2 ,0 8 7 6 8 ,0 4 7 1 , 9 1 3 , 7 8 2 , 2 0 0 , 8 525, 4 7 8 , 1 6 3 , 7 6 0 , 6 7 3 3 , 0 4 2 , 2 36 ,23 3 4 , 3 1 7 2

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3 TECHNICAL STUDY Initial Cost

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Transportations
9,5 Motocycle (vespa) 1 00 0 9,50 0 9,50

Internal Design
Painting Aluminum Windows Cleopatra ceramics for floor Alfa ceramics floor for bathrooms and Kitchen we need 20 squared meter. All bathroom needs Plumbing - Toilets - Basins and Accessories Alc Two for the main hall (4horse power) each for 7000 Four for A15 3995

Quantit y
2 200 100 2

Pric e
31,3 25 5,4 60 1 00 75 31,8 00 36,9 80

Total Cost
31 3 10,92 0 20,00 0 7,50 0 63,60 0 36,98 0 139,31 3

Furniture
1,8 Manager Desk - Wooden Bolivard Meeting Room - Elegance Meeting Tables Call center - Work Stations Coffee Table - SMKG Models for Kitchen Counters Reception Drawers
NV Chairs - high back NV Chairs - Waiting NV Chairs Curtains

5,44 5 8,08 5 2,94 0 82 5 4,67 5 2,55 0 2,20 5 2,20 0 7,15 0 1,98 0 38,05 5

3 1 3 1 1 3 3 4 1 0 6

15 8,0 85 9 80 8 25 4,6 75 8 50 7 35 5 50 7 15 3 30

Equipment
Laptops
Computers
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24,15 0 6,00 0

Operating Costs for year 2011: We assume that the salaries will increase by 7% annually from 360,000 LE to be 385,000 LE, and the advertising expenses will increase by 4% from 204,000 LE to 212,160 LE. All other costs being constant, the total operating costs for year 2011 will be 740,000 LE. Operating Costs for year 2012: We assume that the salaries will increase by 7% annually from 385,000 LE to be 412,164 LE, and the advertising expenses will increase by 4% from 212,160 LE to 220,646 LE. All other costs being constant, The total operating costs for year 2012 will be 775,450 LE. Operating Costs for year 2013: We assume that the salaries will increase by 7% annually from 412,164 LE to be 441,015 LE, and the advertising expenses will increase by 4% from 220,646 LE to be 229,472. All other costs being constant, The total operating costs for year 2013 will be 813,127 LE. Operating Costs for year 2014: We assume that the salaries will increase by 7% annually from 441,015 LE to be 471,887 LE, and the advertising expenses will increase by 4% from 220,646 LE to be 238,651 LE. All other costs being constant, The total operating costs for year 2014 will be 853,177 LE. Operating Costs for year 2015: We assume that the salaries will increase by 7% annually from 471,887 LE to be 504,919 LE, and the advertising expenses will increase by 4% from 238,651 LE to 248,197 LE. All other costs being constant, The total operating costs for year 2015 will be 895,756 LE.

T o ta l C o s t o f th e P r o je c t A v e r a g e C o s t p e r u n it N o . O f U n its C o s t o f G o o d s o ld 5 % C o m m i s s i osm n f S a l e n o e 1 Co s t do ef l i v et roy c u s t o m e r 0 Feasib i l i t y S t u d y c o s t in itia l c o s t T o t a s tc o l

57 57 57 57 57 57 1 3 ,7 5 0 1 5 ,8 1 3 1 7 ,8 0 5 1 9 ,8 3 5 2 1 ,8 5 8 3 ,9 5 6 2 7 8 1 , 1 3 8 9 8 , 3 01 8, 0 1 1 , 4 9 51 , 1 2 6 , 8 0 5 1 , 2 4 1 , 714, 3 6 0 , 9 4 7 0 9 5 ,6 8 9 1 0 ,0 4 3 1 2 3 ,9 0 8 1 3 8 ,0 3 4 1 5 2 ,1 1 3 6 ,7 1 6 1 6 1 3 7 , 5 0 0 5 8 , 1 2157 8 , 0 4 9 1 1 9 8 ,3 4 6 2 1 8 ,5 7 8 9 ,5 6 1 23 2 0 ,0 0 0 2 5 3 ,3 7 8 2 7 3 ,3 7 8 7 1 0 ,6 9 0 4 0 ,0 0 0 7 7 5 ,4 5 0 8 1 3 ,1 2 7 8 5 3 ,1 7 7 5 ,7 5 6 7 89 1 , 7 3 8 , 8 2 93 2 2 , 3 42 5, 1 0 6 , 7 6 42 , 2 9 6 , 2 0 4 2 , 4 8 7 ,25, 2 2 6 , 9 9 2 1, 68

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4 FINANCIAL STUDY

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UNIQUE COMPANY FEASIBILITY STUDY

2009 Revenues No. Of Units Growth rate Average Selling price Turnover Sales returns Net turnover

2010 13,750 0.00% 142 1,952,844 39,057 1,913,787

2011 15,813 15.00% 142 2,245,770 44,915 2,200,855

2012 17,805 12.60% 142 2,528,737 50,575 2,478,163

2013 19,835 11.40% 142 2,817,013 56,340 2,760,673

2014 21,858 10.20% 142 3,104,349 62,087 3,042,262

2015 23,956 9.60% 142 3,402,366 68,047 3,334,319

2%

5% 10

Total Cost of the Project Average Cost per unit No. Of Units Cost of Good sold Commission of Salesmen Cost of delivery to customer Feasibility Study cost initial cost Total cost Profit margin

57 13,750 781,138 95,689 137,500 20,000 253,378 273,378 -273,378 710,690 1,738,823 174,964 34,993 -273,378.0 -273,378 NPV IRR 958,429 80% 139,971 -133,407

57 15,813 898,308 110,043 158,125 740,000 1,922,345 278,510 55,702 222,808 89,401

57 17,805 1,011,495 123,908 178,049 775,450 2,106,764 371,399 74,280 297,119 386,520

57 19,835 1,126,805 138,034 198,346 813,127 2,296,204 464,469 92,894 371,575 758,095

57 21,858 1,241,740 152,113 218,578 853,177 2,487,522 554,740 110,948 443,792 1,201,887

57 23,956 1,360,947 166,716 239,561 895,756 2,686,992 647,327 129,465 517,862 1,719,748

20%

Tax Net Income Accumulated profit

Pay back period Profit no. of day profit per day 647,327 365 1,773.50 - 110,948 1,773.50 -62.56 Pay back period is one year and 219 days

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5 CONCLUSION
As a result of the above mentioned data, the IRR (80%) is very attractive, and exceed the average market return (RRR). Also, the NPV is positive and the payback period is relatively attractive.

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