Amazon business plan

Contents

Executive summary
Keys to success
Objectives
Potential risks

Company background
Company summary
Mission
Company vision
Stakeholders’ analysis
Organizational structure
Start-up summary

The product
The process of dehumidification
Brief product description
Competitive comparison
Brief product description
Technology
Marketing research
Competitor analysis
Market share analysis
Gap analysis
Market trend analysis
Market segmentation
Consumer analysis
Marketing strategies
Marketing mix

Project plan
Gantt chart
WBS
Set budget
SWOT analysis
Porters’ model

Financial analysis
Financial assumptions
Break-even analysis
Projected profit and loss
The expected Cash flows

Conclusions

Recommendations

References

Executive summary

Due to the dynamics of customers’ needs, competition among different organization is ever growing. Consequently, organizations are coming up with strategies of sharpening their competitive advantage. Many of these strategies are either geared towards minimizing the cost of production, maximizing the net profit, minimizing the customers waiting time or even improving the quality of products produced. Product differentiation and integration are some of the ways many organizations have been using to meet their organizational goals.

Amazon, a multinational corporation dealing with e-commerce is one of the organizations facing hard times due to global competition. As a result, it wants to venture into making dehumidifiers so as to boost its cash-flows in the positive direction. This assignment is all about a business plan developed to determine the viability of venturing into making dehumidifiers.

A dehumidifier is a device that reduces the amount of humidity in the air. By doing so, it reduces the chances of survival of moths, cockroaches, termites and fleas. Thus, it helps a lot in preventing the diseases that can be transmitted by these pests. Previous studies have shown that by use of a dehumidifier, the chances of transmission of diseases are reduced by 75%. Another advantage of a dehumidifier is that it increases conformability by reducing sweating.

This product will be safe for use and will meet all the current regulations. The advantages of this product over those existing in the market are less consumption of power and automatic defrost. Other key features of this dehumidifier are Automatic Humidistat Control, Automatic Bucket Full Shut-Off, washable air filters and Removable Water Tank. Unlike the product offered by competitors, the noise level of this proposed product is less than 49dB (A). It also has caster wheels for easy movement.

The initial capital will be used to patent, approve, test, produce, and market as well as providing the initial working capital during the inception year.

To achieve the desired growth, the following strategies will be used by Amazon:

i. Use differentiation strategy to meet the ever growing customer needs
ii. Develop a first-to-the-market strategy so that many customers can be attracted and retained during the inception years
iii. Develop an effective branding campaign to build positive perception and awareness within the target markets
iv. Use cost strategy to attract more customers
v. Responding to customers’ complaints and needs within the shortest time possible

Basing on the financial projections and analysis, Amazon will require a funding of $3,002,000. When all factors are kept constant, it is expected that by the end of the third year, Amazon will have sales of more than $850,000. The IRR is expected to be 69% and the dividends over the next five years expected to be 13%. Figure 1 below shows the expected sales, gross profit and net profit for the next three years.

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Figure 1: expected returns

Keys to success

Amazon will use the following as the main keys to their success:

i. Use customization and personalization strategy to meet the ever changing customer needs. This will ensure that every customer gets what he wants. To achieve this, Amazon will form a department called DCD (Dehumidifiers Customized Department) to deal with the changing customers’ needs
ii. Our cost strategy is in such a way that we will offer higher quality dehumidifiers at an affordable price. As compared to the price offered by LG, our prices are 27% cheaper. This will be a key element in attracting and retaining customers
iii. Use innovation and renovation pillars to meet customers’ requirements
iv. A first mover branding campaign to develop awareness to the target market within a very short time
v. Patent protection to prevent the product concept from the competitors
vi. Complementary relationship with other organizations that directly affect the production and hence the success of this organization
vii. Complementary relationship with suppliers and customers

Objectives

The objectives of Amazon are:

i. Design, fabricate and Develop a prototype by the end of April in year
ii. Test and launch the product by the end of June in year
iii. Became the customers’ choice in the united kingdom by the end of year
iv. Launch distribution channels all over the world by the start of year
v. Hit a sales margin of 850,000 by the end of year
vi. Invest heavily in R&D so that by the end of the 5th year, the sales will be more than five million US dollars

Potential risks

In any project, risks are inherent. Therefore, effective risk management measures should be put in place. The table below shows the types of risks expected to be met by Amazon during the execution of this project.

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Table 1: The table showing the different types of risks

Intellectual property risks are common in the manufacturing sector. They involve risks that can be attributed to the unauthorized use of the technology. As a result, this product will be patented (Borodzicz, 2005).

Competitor risks are risks that are encountered as a result of the competitor company gaining more customers.

In the manufacturing line, quality risks are risks that are encountered when the produced goods do not meet customers’ satisfaction.

Schedule risk measures the variance between the expected time of completion of the project and the actual time the project is completed.

The process of risk management will take place in three stages (Morgan, 1992):

i. Risk identification
ii. Risk analysis
iii. Risk evaluation and mitigation
iv. Risk monitoring

Company background

Company summary

Amazon is a multinational organization with headquarters in Washington in the United States. In terms of the revenue generation, Amazon is the largest online retailer in the world. Since its inception in 1994, the company has diversified into many products such as DVDs, CDs, MP3 players, softwares, furniture, jewelry, food and video games. The company also produces kindles. As of 2012, the company had revenues of US$ 61.09 billion and an operating income of US$ 0676 million. The company has employed 88,400 people across the world.

In the last six years, business process re-engineering has been witnessed by this organization. This has led to an increase in net sales. Figure 2 below shows the net sales of the organization for the last five years.

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Figure 2: The net sales for Amazon for the last five years

Consequently, the asset base of Amazon has been growing steadily for the last five years. Figure 3 below shows the net assets of this organization for the last five years.

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Figure 3: Trend of net sales

Mission

The mission of the wing that will deal with the manufacture of dehumidifiers is to meet the ever changing customers’ needs through continuous improvement of the designs of dehumidifiers. We intend to make maximum profit in the next couple of years so that we can maximize the investors’ return-on-investment.

Company vision

To manufacture and market the Company's products in such a way as to create value that can be sustained over the long term for shareholders, employees, consumers, the local community and all other business partners.

Stakeholders’ analysis

Different stakeholders will have different expectations from Amazon. The different expectations are as summarized in the table below.

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Table 2: Stakeholders of ABC

Organizational structure

The figure below shows the expected organizational structure of ABC.

Figure 4: The organizational structure of Amazon

The roles for the production manager will be:

i. Ensure effective utilization of resources in the production department
ii. Forecasting and scheduling the requirements within the production department
iii. Minimizing quality loss costs and material handling costs

The role of the marketing manager will be: Planning, controlling and execution of activities and the budget within the marketing department

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