business and sale plan

Business Sales and Marketing PlanEastern and Central DivisionPrepared by Dr Andrew G Kimmance (DoP and BDM)

Reviewed by: Abdul Faisal Al-Amoudi (Managing Director)

Approved by:

Issue date: 20th February 2012

Issue No: 01

SALES PLAN CONTENTS

Prepared by Dr Andrew Kimmance 19/20/2012

SECTIONS PAGES

PREFACE (company statement) 2Central and Eastern Division Office 3

1. Executive Summary 4Office Division Focus 4Overview of the City of Riyadh 5

Shareholders’ Equity (charts & tables) 5Office Division Objectives 5Short Term (Aims) 6Our Vision Statement 7Our Mission Statement 7Keys to Success 8

2. Business Summary 9New Office Start-up Expenses (operating tables) 9Division Office Locations and Facilities 12Office Start-up Summary (tables & chart) 13Start-Up Funding Summary (tables & chart 14

3. Products and Services 15Business Planning and Fabrication (value chain) 16Sourcing & Joint Ventures 17Technology & Further Products Value 18

4. Marketing Analysis Summary 19Riyadh Market (central Region) 20Market Segmentation & Target Forecast (charts & tables) 21Target Market (strategy) 22Market Growth, Needs & Trends 2Competitive Comparison (competition) 23

5. Strategy and Implementation Summary 24Strengths and Competitive Advantage 25

6. Sales Plan Summary 26Sales Strategy 26Literature 27Marketing& Advertising 28Sale Forecast (charts & tables) 293 years Forecast (charts & tables) 33Milestones (table) 35Web-Site Marketing Plan 35

7. Management 36Financial Plan 37Breakeven Analysis 37APPENXIX SECTION: FORMS, TEMPLATES, AUDITS 37

Al-Muwakaba Wooden Furniture & Industries Factory Co. Ltd 1


Business Development and Sales Plan

Preface (Riyadh Central and Eastern Division)

i. Where We Are

Having been at the forefront of business excellence with the remarkable success of MIDROC Holding Group, WOODROC was established from the extraordinary vision of Sheikh Mohammed Hussein Al-Amoudi. “A prominent, and legendary businessman and owner of MIDROC”, WHO; independently demonstrated that the application of persistence, patience and vision can result in a diverse group of more than 70 successful businesses from every major industry throughout the Middle East with locations in MENA, Africa and Europe, providing jobs for more than 40,000 employees.

ii. MIDROC: A Global Group

Over a quarter of century has elapsed since the inception of MIDROC group. Since that beginning, MIDROC has adopted four core principles:

1. Firstly, the creation of a business culture based on integrity, quality and financial prudence,

2. The second stresses fairness to employees, partners, suppliers and our customers,

3. The third is total commitment to maximising the utilisation of local resources and,

4. The forth is the prevention of the environment.

iii. Global Capabilities

The groups operations spread over many continents with a portfolio that includes a wide spectrum of business sectors. As a group there main activates include, but not limited to, petroleum, agriculture, real estate and construction, industrial engineering, civil engineering and construction, manufacturing services, investment, tourism and trade.

In order to gain clients and win projects in this competitive, dynamic and ever changing business environment, Woodroc will need to integrating their products with their processes, this requires integrating the business sales initiatives with the innovative advertising and marketing endeavours, as outlined in their Pre-qualification and Business Development Strategy (BDS).



iv. Central and Eastern Division Office

In order to win proposals in a competitive, dynamic and ever changing business environment, this business and sales plan incorporates the Riyadh Divisional Office approach to organisational planning, marketing and sales, with emphasis on establishing relationship with existing and potential clients, its awareness and knowledge of changing requirements and opportunities in the furniture market, the way it identifies and reaches its customers, the quality and speed of service it provides, marketing, advertising, and the selling, training, and management skills it commands.

As with the business strategy which focuses more on the corporate strategy, policy, method, pre-qualification, etc., the business development plan (BDP) concentrates more on company direction while developing tactics, target markets and trends, the procedure and processes for undertaking the marketing assessments, in order to identify the markets, competitors, relationship marketing, demand, lead generation and qualification, requirements, sales, customer and competitive intelligence gathering, and ultimately procurement and proposal writing.

With this in mind, the Riyadh Office Division will have to position their self by implementing the right business development, marketing, advertising and sales initiatives; if they are to significantly increase their chances of winning clients, while reducing the risks of losing projects.

The following business and sales plan structure is by its nature pragmatic; this is, fit for purpose and concise, but is an important guide for generating the Central Division’s direction.

select which markets to focus on (e.g., strongest products performance, KPI)

determine what kind of people to recruit (competent and qualified)

decide what type of organizational structure to build (teamwork focused)

identify which customers to seek (top-end reputable clientele)

define types of products and services for development (wooden furniture, installation)

set challenging, but realistic long term financial goals (3 year business and sales plan)

This document presents Woodroc’s business development plan for setting-up a new Eastern and Central Office Division in Riyadh, for the purpose of generating additional business sales, new markets, product development and business initiatives, so as to ensure growth of sales and maximization of company profits. The purpose of the business development and sales plan is to demonstrate an awareness and understanding of the Systematic Techniques for Analysing the Requirements (STAR Model) needed to succeed, and lead the company products into a competitive, fast-paced, dynamic and ever changing business environment.

Note:

This document will be distributed to all concerned parties, and as contents is revised or pertinent additional information becomes available, copies will be circulated for inclusion in the originally distributed document. Each recipient of the distributed revision items is to remove the superseded items and insert the revised items.



Figure 1: Shows the many elements of the Business Development and Sales Plan

1. Executive Summary

The New Office Division in Riyadh shall be formed as a subsidiary of WOODROC, a prominent furniture manufacturing company specializing in top quality wooden furniture products and inspirational designs for the high-end, residential, business resort, education, leisure and commercial markets. Its founders have extensive experience in the civil engineering, construction, retail and manufacturing industries.

Pending office fit-out, the Riyadh Office Division will operate under the umbrella of Al-Muwakaba Wooden Furniture & Industries Factory Co. Ltd., hereafter referred to as WOODROC, a lucrative production and manufacturing company sharing staff, office space, and administration costs. However, until the new office building has been established, and for the purpose of business planning, with emphasis on generating new clients and product development, we are treating the new Eastern and Central Office Division in Riyadh as a separate business consultancy establishment.

1.1 Office Division Focus

Over several years of being involved with the manufacturing and sales of prestige furniture, the company owners have seen a need for a creative product line with a broad selection of inspirational design choices, high-end finishes, along with top-of-the line organization, customer service, and quality. The new office division will continue to meet customer needs, while providing an innovative consultancy service, with the purpose of building a strong market position in the high-end Government and commercial business development segments, including the residential and resort areas of Riyadh.



1.2 Overview of the City of Riyadh

The city of Riyadh is situated in the centre of the Arabian Peninsula on a large plateau, with a population of approximately 5,254,560 people, and an urban central region with a population of close to 7 million people. The city is divided into 15 municipal districts, managed by Riyadh Municipality headed by the mayor of Riyadh, and the Riyadh Development Authority.

Currently, the furniture industry in Saudi Arabia is growing at a tremendous pace, with a further consumption anticipated to grow at a compound annual rate (CAGR) of around 12% during 2011-2014, which will sustain the country’s attractiveness for domestic as well as foreign investments. Much of this growth will take place in Riyadh, where the Saudi furniture and interiors market is forecast to grow by a vast increase of US3.5 billion (dollars), every year, for the next few years. Naturally, all this has created a wealth of investment opportunities for wooden furniture and interiors design professionals from across the region, neighbouring GCC, and the rest of the world.

In consequence, the Eastern and Central Office Division in Riyadh will be well positioned to capture a respectable share of the wooden furniture business in this growing new residential construction and government developments; including, education, leisure, business resort, and commercial market areas. Building a strong market position in these areas, the Central Regional Office can anticipate revenues to grow substantially between FY1 and FY3, and by way of maintaining an average gross margin of over 20%, the Riyadh Office Division estimates attractive net profits of over 15% by FY2.

1.3 Shareholders’ Equity

The company owners of MIDROC will provide 60% capital while WOODROC will provide capital of 40% to cover the office start-up expenses in Riyadh. The Central Division currently seeks a one year commercial loan to cover the operating expenses, which will be detailed and explained in the start-up funding summary and business sales plan.

1.4 Office Division Objectives

The Eastern and Central Division objectives are:

To be a top seller and services provider of prominent furniture (supplier) to lucrative (top-end) government, commercial and residential clients, in regional and KSA markets.

Revenues to double Year1 levels by the end of Year 2.

Generate revenue in accordance with company targets of 40,000,000 while meeting company sales targets of 12 – 15% profits.

Aim to have 50% of door sales in high-end government customer segment within year 1.

Aim to have 30% of company sales in high-end residential segment within year 1.

Aim to have 10% of sales in mid-range commercial development segment within year 1.

Aim to have 10% of sales in mid-range residential and government customer segment.

To have a small showroom within year 1 in a prominent location and retail space.



Chart 1: Highlights Showing Projected Year 1 Sales

Year 1 (max) Year 2 Year 3 Year 40.00

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00

70,000.00

80,000.00

90,000.00

100,000.00

Sales (M)Gross MarginNet Profit

1.5 Short Term (Aims)

Our immediate focus is to establish a fully operational business development office in Riyadh with emphasis on:

To recruit and establish the most talented innovative business development team that will provide a comprehensive marketing and sales platform, with the aim of optimizing customer needs, and generate profitable results.

To improve current relations and communications with ABV-Roc, and develop new relationships with clients, consultant, construction contractors and design organizations, with focus on communications, honesty and commitment.

Evaluate existing markets with focus on implementing a new product development range (e.g., steel frames),

Establish intimate partnerships and joint ventures with manufacturing and hardware specialists and venders,

Aim to create a comprehensive customer database (project file) of at least 20 new clients within the first 12 months.

Generate revenue in accordance with company sales targets of 40,000,000 year 1, while meeting company targets of 12 – 15% net profits.

1.6 Our Vision StatementAl-Muwakaba Wooden Furniture & Industries Factory Co. Ltd 6


As a new company division we look to the future with a goal of educating each employee on the importance of quality, with the purpose of establishing Woodroc as the leading furniture manufacturer in the GCC. Our aim is to create a “Team First” environment and provide elegantly styled, high quality value for money furniture products, supplied and installed, using innovative state-of-the-art precision manufacturing while focusing on delivering exceptional customer service.

Figure 2: Showing the Components of the Vision Plan


Team First = Sustainability of Product and Customers


1.7 Mission Statement

To deliver high-quality products, on time, within budget, and to excellent standards, while offering outstanding services, as well as providing a fast, error free sales and ordering system.

We at the new Riyadh division will also strive to enhance the quality of life of our customers through the delivery of top quality services for clients throughout the Middle East, built upon a foundation of trust, commitment, innovation and financial strength. Our aim is to provide customer services in such a manner that distinguish us as the benchmark for excellence, and the undisputed market leader in Saudi Arabia and into the GCC. We seek fair and responsible profit, enough to keep the company financially healthy for the long term and to fairly compensate owners and investors for their money and risk.

Figure 3: Showing the essentials of the Mission Plan


Built-In

MISSION

Dedication to excellence in customer service, quality, value, and strategic partnering

Innovative

PrecisionServices

Highest

Competitive Pricing

Flexible Solutions

Division of MIDROCWoodr Manufacturing

Services, Inc.


1.8 Keys to Success

Uncompromising commitment to the quality of the end product: quality of wood, quality of workmanship, quality of design, quality of end result. We need to offer customers affordable quality furniture that will last; this includes customizing any item as requested by a customer.

Successful niche marketing: we need to find the high–end quality conscious customer in the right channels, and we need to make sure that customers can find us through well-defined sales, advertising and networking system.

Focus on assembly and installation service with emphasis and attention to the installation process: we cannot afford to ship fully-assembled furniture products, but our installation assembly must be so efficient that it makes the customer feel better about the quality, not worse.

Fully trained and experienced project team members who understand the needs and requirements of the clients.

Effective Promotions and Advertising: We cannot sell products if we are not visible to the market, client or construction contractors.

Thinking outside of the box; we will not limit ourselves to a single concept. New opportunities will present themselves and we must watch for, and be open to, them.

2 Business Summary

The Eastern and Central Office is a new company division of Woodroc operating out of Riyadh, and will be responsible for providing additional marketing and selling support, expertise and quality within the furniture suppliers market while meeting the demanding organizational, planning, scheduling, and quality needs of customers, architects, owners, designers and construction professionals.

2.1 Start-up New Office Summary

The Eastern and Central Division start-up costs consist mostly of new office premises, furniture, office equipment and tools, stationery, computer hardware/software, and related labour expenses


Built-In InnovativeHighest


are shown below. Our aim is to acquire premises that are large enough so as to incorporate a good size showroom in a high visibility location. This we feel will give us exposure to new business clients, architects, designers, contractor and home builders that are looking for our products.

The co-owners of MIDROC and Woodroc will provide the bulk of the start-up financing. At the same time, the Eastern and Central Division plans to receive a one year commercial loan facility, which will help meet the general cash flow and set-up requirements.

Table 1: Showing Start-Up Operating Expenses

Al-Muwakaba Wooden Furniture & Industries Factory Co. Ltd.Start Up Operating Expense Budget Riyadh Office

FY 2012DEPARTMENT : BUSINESS and SALES - EAST & CENTRAL

ADMINISTRATION EXPENSES Q1 Q2 Q3 Q4 TOTAL

Telephone Expense 4,000 4,000 4,000 4,000 16,000

Vehicle Fuel, Oil & Repair 2,000 2 ,000 2,000 2,000 8,000Office Supplies & Consumables 5,000 8,000 4,000 4,000 21,000

Printing & Stationery 4,000 4,000 4,000 4,000 16,000Accomm. Rent - Mgr/Consultants -Accommodation Rent - Staff -Recruitment Expense TBA TBA TBA TBA -Security Expense 1,000 1,000 1,000 1,000 4,000Land Rent/Office Rent 100,000 100,000 100,000 300,000Travel & Per Diem 6,000 6,000 6,000 6,000 24,000Training and SeminarsMiscellaneous Admin Expenses 2,000 2,000 2,000 2,000 8,000Audit & Zakat Services

TOTALS 24,000 127,000 123,000 123,000 397,000

OFFICE OVERHEAD Q1 Q2 Q3 Q4 TOTAL

Office Building Maintenance

Spare Parts CostCost of Electricity 2,000 2,000 2,000 6,000

Cost of Water Consumption 2,000 2,000 2,000 6,000

Cost of Insurance TBA TBA TBA -



Office Repairs & Maintenance 20,000 5,000 5,000 30,500

TOTALS - 24,000 9,000 9,000 42,000

MISCELLANEOUS EXPENSES Q1 Q2 Q3 Q4 TOTAL

Postage & Courier Services 2,000 2,000 2,000 2,000 8,000Government Related Expense

Professional FeesCanteen Expenses 500 500 500 500 2,000SubscriptionsEntertainmentGarbage Collection 500 500 500 1,500Pest ControlSewage Water TBA TBA TBAAccommodation Supplies TBA TBA TBAAccommodation Water TBA TBA TBAAccommodation Repairs TBA TBA TBABank ChargesMiscellaneous 2,000 2,000 2,000 2,000 8,000

TOTALS 4,500 5,000 5,000 5,000 19,500

TOTAL OPERATING EXPENSE 28,500 156,000 137,000 137,000 458,500

Table 2: Temp Office Start-Up

TEMP OFFICE CAPITAL BUDGETASSET DESCRIPTION NOS. TOTAL Cost

A-0 Printer 1 7,000Computer Desktop 4 20,000Desks, Chairs, and Cabinets 5 25,000All in one A4-3 Printers 1 3,000Photocopy Machine 1 15,000Meeting Room Table 1 3,200Meeting Room Chairs 6 4,800



TOTAL CAPITAL BUDGET 78,000

NEW STAFF NOS. TOTAL Cost

Site Engineer (project coordinator and planner) 1 8,000Sales Engineer (marketing, advertising and sales)) 1 10,000Project Manager (assistant) 1 12,000Quantity Surveyor (designer, costing and procurement) 1 10,000Cad Drawer 1 6,000Secretary (business and office affairs) 1 6,000TOTAL 5 52,000

2.2 Division Office Locations and Facilities

At present the Eastern and Central Office is located on the first floor of ABV-ROC head offices, centrally positioned in a prominent section of the city. Our short term objective is to relocate to new office premises which will provide close access to ABV-ROC new project developments (e.g., KSU, Endowment, Medical City, and Faisal), with the benefit of providing also direct access for both new customers and target markets.

Figure 4: Showing Map Directions and Location



2.3 Start- up Office SummaryThe Eastern and Central Office is seeking a one year start-up loan for the purpose of acquiring new office space/rent, starting inventory of administration expenses, utility connections and office improvement, office equipment, working capital, miscellaneous start-up expenses, and management – office staff.

Start-up costs are shown in three areas. The first is in the start-up table, the second is within the cash flow assumptions and the third is in the P&L.

An approximate summary of our start-up requirements include the following year 1 expenses:

Table 3: Central Division Start-Up Office Summary

Start-up Requirements SARStart-up Expenses

Administration 397,000Temp Office 78,000Office Overheads 42,000New Employees(Min + Max/2) x 9 months 396,000



Miscellaneous 19,500

Total Start-up Expenses 932,500

Start-up AssetsCash Required 60,000New Office Inventory 30,000Other Current Assets 10,000Long-term Assets 20,000Total Assets 120,000

Total Requirements 1,052,500

Chart 2: Summary of Start-up Funding

Expenses Assets Investment Loans0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

2.3.1 Start-Up Funding Summary

Excluding the initial state-up loan, the following table exhibits a summary of funding required.

Table 4: Shows Start-Up Funding

Start-up Funding SAR

Start-up Expenses to Fund 932,500



Start-up Assets to Fund 120,000Total Funding Required 1,052,500

AssetsNon-cash Assets from Start-up 60,000Cash Requirements from Start-up 60,000Additional Cash Raised $0Cash Balance on Starting Date 60,000Total Assets 120,000

Liabilities and Capital

LiabilitiesCurrent Borrowing 3,000Long-term Liabilities 0Accounts Payable (Outstanding Bills) 0Other Current Liabilities (interest-free) 0

Total Liabilities 3,000

Capital

Planned InvestmentMIDROC 60% 559,500Woodroc 40% 373,000Other 0Additional Investment Requirement 0

Total Planned Investment 932,500

Loss at Start-up (Start-up Expenses) (932,500)Total Capital 0

Total Capital and Liabilities 120,000

Total Funding 1,042,500

3. Products and Services

It is critical that all our employees are fully competent and trained in our business value chain, from the mundane to the complex, so as to cope with our customers’ complete requirement needs from tendering through to production; including procurement of projects, design, manufacturing applications; cutting, wrapping, drilling, smoothing, sanding, assembly of finishing parts, packaging, and installation procedures.



All team members will be able to offer customers a complete manufacturing service for transforming their ideas in to the finished product. The assembly processes provided by our company are rigorously inspected, and the continuous ability to supply these products to our customers shall be a testimony to the quality of the customer service, which is the foundation of the company’s philosophy.

All our products are essentially made with the very best material in our 45,000 M2 manufacturing factory premises in Jeddah, and produces wooden furniture products for an extensive range of environments such as living spaces, hospitality, and healthcare, office, and education settings. More specifically, our quality furnishings and services include the following items;

Doors and Frame Systems

Fire Rated Door Systems

Bedrooms

Living rooms

Kitchens

Office Furniture

Wooden Decorative Panels (wall and ceiling)

Education and Classroom (chairs, benches and tables)

Laboratory Furniture (universities and Colleges)

Consultancy (advisors)

Conceptual Design (interior designs)

Installation Service

Hardware Commodities and High-Tec Appliances

Each product is specially made in our factory in Jeddah with the highest quality materials available, in accordance with ISO 9001: 2008 International Quality Standards. Our team of highly trained carpenters and factory experts ensures exceptional quality is maintained throughout an exquisite combination of elegant furniture styles and superior functionality.

3.1 Business Planning and Fabrication

Our 45,000 M2 factory at Woodroc’s head office in Jeddah has the capacity to provide a complete value added planning, design and fabrication process to meet all our customer needs. The company philosophy is based on highly skilled staff, supported by a dedicated Quality Management Department, all of which are fully committed to the complete business value supply chain for providing Customer Satisfaction. Assurance of performance and quality of the products starts in the factory when the raw material is delivered; components are designed, fabricated, assembled, packed and finally distributed and installed.



Careful procurement of materials, precise door and cabinet making techniques, and continuously improving quality control and assurance procedures, all performed on carefully selected timber, using innovative technology are only the first steps toward achieving total quality satisfaction.

To achieve and maintain company targets, the Eastern and Central division in Riyadh will procure projects while taking many actions, including the numerous decisions that will characterize our business value chain and development process, reassuring our customers that we stand out from all of our competitors.

Figure 5: Eastern and Central Office Business Value Chain

3.2 Sourcing

Our current temporary office is situated on the first floor in our sister company ABV-ROC headquarters in Riyadh. It is ideally located close to various large government projects, given that our sister company ABV-ROC has been contracted to undertaking several of these projects, some of which include the Medical City, Faisal, KSU education and university developments. As a consequence, our current location offers a distinct advantage over many of our competitors, on account of various steel frame and installation contractors, furniture, hardware and raw material suppliers, are becoming aware of this relationship between Woodroc and ABV-ROC, providing a constant source of potential joint ventures or partnership opportunities. Accordingly, we have a better chance of purchasing higher quality materials and/or attaining required services than most of our competitors. Furthermore, as our sales over the last few months are beginning to improve, we have been able to buy at better prices, because of higher volumes.



We have also established several strategic partnerships and joint ventures, and currently work with a number of specialty manufacturers in veneer and woodworking for door and furniture fittings, solid wooden core panels, particleboards, high density fibreboards (MDF), and various other manufactured soft and hardwood accessories, and related purchases. Many of these have been in business for a long time, and are giving us good advice, custom, service and good prices, in addition to being experienced, respectable and stable suppliers.

Strategic Partnerships

Establishing Joint Ventures

ITCC (construction) - Installation Specialist With large Timber Workshop

HALSPAN - (Insulation products, fire specifications)

HAFELE - Hardware Specialist (American and European: door, kitchen, office)

Uni-trade – Paints, Solvents, Shipping

Metalco - Steel Product Specialists and Timber Door Manufacturer

Union Veneer - Veneer, Ply-board Specialist

Golf Timber Co – Timber Merchant: Hardwood, MDF Specialist

Glutz - Furniture Technology Specialist: Doors and Kitchen Commodities

3.3 Technology

Our anticipated sales target will depend largely on our factory production and assembly performance in Jeddah, as these are the real sellers, and also our dominance of the latest in technology of ergonomics, combined with traditional, classical and contemporary design elements of fine quality wooden furniture products. We must remain on top of new technologies in display, input and output, and communication, which is a vital element in achieving our sales target. For example, our latest door, kitchen and office models are already assuming the latest in quality hardware EN 14001 standards, LED lighting technology, and interlocking systems for office and education applications.

Our assembly and installation process is an important competitive edge. We consider that no other competitor can match the way we install a door or kitchen; given that, we have to assemble and install a product, into a feature, thus all our carpenters are fully experienced. Our customer



feedback reveals that customers take the assembly and/or installation process as an enhancement to the sense of quality.

3.4 Future Products and Value Position

At present, we are introducing a new office and education line based on the market analysis, trends and future demands, currently being generated through diverse social and physical infrastructure developments in such areas as government, education, commercial and residential housing sectors. The new furniture has a different duel integrated configuration to assume easy access and interlocking features, and can easily be transformed into a variety of practical learning applications. The dual purpose of these products gives it added value by combining two distinct and useful functions, each of which can stand on its own in the marketplace.

Our new range also provides students of all ages with the equipment needed to study in a safe, comfortable learning environment whether they are in schools, colleges or laboratories, and with employees spending more time at work than in any other environment, it is extremely important that office furniture is functional and comforting.

Because of the nature of our large workshop in Jeddah, many different products could be fabricated with little extra cost. We are therefore currently evaluating market trends and opportunities for introducing a new interlocking wooden floor product range and wall/ceiling panels, with the goal of implementing towards the latter part of year 1. Wooden floor and laminated floor/wall panel systems are extensively used throughout Europe and many other international regions and with the market research analysis and product evaluation will positively identify any areas for concern.

However, since this is a start-up business, it has been decided that our strongest products, the door sets and kitchen, will be sufficient until we have determined whether or not our marketing development plans are effective.

4. Market Analysis Summary

In general, the performance of Saudi Arabia’s economy has been remarkable in recent years, especially since 2002 with the national economy more than doubling to approximately US49 billion owing mainly to rising oil revenues. The combination of additional government spending toward the on-going program of economic liberalization and greater foreign participation in the economy has sparked numerous investment projects. Saudi Arabia recently announced a US400-billion plan over the next five years aimed at upgrading energy projects, and the social and physical infrastructure in such areas as power, water, transportation, education and residential housing.

The Saudi economy did experience a period of nervousness in 2009 but has rebounded strongly, driven by the mammoth government stimulus spending. While the economy is not dependent on government spending, the boost is clearly leveraging growth that is being seen across the board.



This has prompted the government to revise their real GDP growth forecasts to 6.3% in 2011 and 4.3% for 2012. The booming expenditure on the social and physical infrastructure projects, figures published by the National Commercial Bank show the government awarded 84.2bn SAR (US22.5bn) in contracts during 2011, more than double the 33.0bn SAR allocated in the same period of 2010, a figure, which is set to double in the coming year, according to market research.

Despite the economic slowdown, the industry sustained its growth rate and achieved positive year-on-year growth throughout this term. The Saudi Arabia furniture market, and furniture consumption has rapidly expanded over the past 3 years on the back of rising affluence, influence of western culture, infrastructure, education and tourism developments. Moreover, the furniture consumption is anticipated to grow at a CAGR of around 12% during 2011-2013, and projected to maintain this growth throughout 2014, making the Kingdom one of the most attractive furniture markets in the Middle East.

Saudi Arabia’s population has quadrupled to 27 million over the past 40 years, of which 60% is under 30. As a result, an estimated 1.65 million new residential units will be needed by 2015 to meet the ever growing demand. This was acknowledged by King Abdullah, who announced in the second quarter of 2011 that he would be investing in the construction of 500,000 new homes. This continuing demand for housing units will create business for many construction and furniture manufacturing companies, suppliers, investors, property managers, real estate firms and lenders.

Accordingly, the Saudi Arabian furniture industry has come up as one of the most vibrant segments of the retail industry over the past few years. Despite the 2009 economic turmoil, the Saudi furniture industry witnessed remarkable growth opportunities and became one of the fastest growing industries in the Middle East region. With the entry of a number of giant real-estate and construction developers, and increasing demand for residential property, the housing and residential industry has witnessed tremendous growth in the past 3 years, fueled by several multi-billion dollar plans. Over a period of time, young population-base, government and education funding, a booming economy, together with other secondary factors provides the preferred platform to the furniture industry for developing new horizons.

Besides the increase in infrastructure and education government funded developments such as the KSU Endowment Towers, Medical City, and the Economic-Financial City, market analysis has also identified that the Saudi Arabia hotel industry has emerged as one of the flexible pillars of economic development. Despite challenges of oversupply in the commercial short to medium term markets, investors in the hotel industry are optimistic about future prospects with a paradigm shift from development to investment-led market. Institutional Investors are increasingly focusing on stable, secure, and more predictable income streams as opposed to short-term capital gains, which favor the hotel sector and offers them a range of income producing assets.

Market analysis has also revealed that currently, the Saudi Arabian furniture industry is witnessing a huge demand-supply gap due to the massive in-efficient and underdeveloped wood products industry. Therefore, domestic furniture manufacturers are facing a shortage of furniture raw material and parts and hence, huge imports are becoming inevitable. However, it is expected



that dependence on imports will reduce in the near future as many international furniture companies are establishing their roots in the Kingdom and raw material supply is also receiving government attention.

4.1 Riyadh Market

On the regional front, the Central region is considered a major hub for the country’s furniture manufacturing industry. Riyadh, Qasim, Hail, etc., are the most preferred regions for manufacturing furniture in the Kingdom. The area comprises of uplands, broad valleys, and dry rivers. Qasim and Kharj areas are famous for agriculture production and wood work is becoming a growing opportunity throughout these regions. Amid most favorable regulatory policies and suitable business environments, the region has showed a substantial increase in prominent developments in the furniture industry.

Furthermore, with the construction of several mega projects in the government sector, in addition to the residential, hotel and office segments are expected to fuel the growth of furniture demand in the coming years. The proposed construction of six economic cities in the Kingdom in addition to the King Abdullah Financial District in Riyadh is also expected to boost the industry developments in the coming years, providing opportunities for both construction contractor and furniture manufacturers.

Moreover, it is expected that projects worth more than US350 billion are either under way and/or planned for execution over the next few years. In both household and office market variants, the country is all set to witness one of world’s fastest demand growth for furniture products, which will inevitably lure international majors to enter the market.

Taking all this into consideration, it is feasible to forecast that it will provide current and futuristic opportunities for many construction, interior design and fit-out contractors; in addition to increasing the industry spending for retail, office, residential, education, and hotels sectors, which is making Saudi Arabia a very attractive destination for furniture industry manufacturers.

4.2 Market Segmentation

The growth of affordable furniture products in the Central region is critical to the success of the Eastern and Central Office Division. After careful evaluation of the market analysis research, our target market will focus on the government sector, such as consultants, architects, owners, and contractors in the regional areas who are involved in high-end government (university and education) projects, but not overlooking the residential, resort, and the private commercial-business development segments.

We will aggressively market our target customers who live in the Eastern and Central areas of Riyadh through the following distribution channels:

Business to Government Business to Residential Business to Commercial Business



Our main target market is the client who wants to have the finest furniture, on time, within budget, and to exceptional quality standards, using the latest in technology, combined with an old fashioned sense of fine woods and fine woodworking. This person can be in the Ministry of Interior, Education, Health, Corporate Towers, Medium Business, or in a home office. The common bond is the appreciation of quality, and the lack of price constraints.

Chart 3: Targets

Table 5: Showing Projected 4 Year Target Market Forecast

Market Forecast Year 1 Year 2 Year 3 Year 4

Potential Customers Growth CAGRHigh-end Government 9% 2 3 4 5 11.00%Mid-Range Private 8% 3 4 5 6 8.00%Commercial development 9% 2 3 5 6 9.00%Total 8.55% 7 10 14 17 9.55%

4.3 Target Market Segment Strategy

The central office will focus on contacting and meeting contractors, designers and architects that deal with the large government projects, interior, education, hospitals and residential markets. Making ourselves known to these entities will generate some strong leads with respect to the private clients, along with getting personal recommendations to the commercial business and hotel owners. There are plans to upgrade our new office space to a showroom in a high visibility location. This will give us exposure to new customers, contractors, and builders that are looking for our product.

Our segment definition is of itself strategic. We are not intending to satisfy all customers of our furniture intended for use with personal, but, rather, only those who are most demanding. We are definitely out to address the needs of the high-end buyer, who is willing to pay more for quality. In our particular market, we also seek the buyer who appreciates two attributes: the quality of


Target Market Forecast

70% Government Projects (large developments)

20% Private Projects (resi-dential, hotel)

10% Other Projects (hospital, education, office)


furniture workmanship and the excellence of design, with an understanding of technology and ergonomics built in.

4.4 Market Needs

We understand that our target market requires more than just wooden products. The needs grew out of the special requirements and personal services to each and every customer, when combined with our door, kitchen, bedroom, and office furniture. For example, doors or kitchen installation at the correct high, integrated LED light technologies, innovative appliances such as cooker and fridge comforts, and other hardware commodities. Our target customer wants to have all of that plus good quality furniture for a competitive price. Consequently, there is a need for top quality, reassurance of design, materials, installation, and good workmanship. We do not just sell wooden furniture; we sell the whole door, bedroom, kitchen, and office environment, this includes concept design, hardware, installation and workmanship.

4.5 Market Growth

According to market research, the Middle East annual growth rate, the construction sector, which was estimated at around 20% from 2010 to 2014, will also benefit from the many hi-tech architectural projects currently ongoing. These projects are characterized by flawless design and refined materials. Further to the growth of domestic and foreign investments in the construction & fenestration-door industry in the Kingdom over the last 3 years, has led to the demand increase of 7% for window and door market substantially. Furniture consumption is anticipated to grow at a CAGR of around 12% during 2011-2013, and projected to maintain this growth throughout 2014, making the Kingdom one of the most attractive furniture markets in the Middle East.

4.6 Market Trends

Market research has indicated that customers are beginning to recognize the disparity between most of the standard door, kitchen, education or office furniture sold through other channels, and our own products. The development of top class hotels, education buildings, apartments, and the high-end office worker, office owners, and business executive is an important trend for us.

We now have people who are using modern technologies, appliances, computers and commodities who also appreciate the old-fashioned workmanship of good furniture.

4.7 Competition and Buying Patterns

The high-end furniture (door, kitchen, bedroom, office, etc.) market understands the concept of service and support, and is more likely to pay for it when the offering is clearly stated.

There are many competitors in the local market. Although each of them delivers a quality product, we feel they fail to deliver a full turnkey package. There are four factors that govern the cost of all our projects: Scope, Product, Design, and Services. Most people mistakenly think that the size of the project and the choice of brand name products will make for the best results. But it is the design and a company’s service that will have the greatest impact on the quality and value of the customer’s investment.



4.8 Competitive Comparison

Within our target niche market we currently have 5 significant competitors, these include:

1. United Wood Products Co (UWP): Established in 1988 in Riyadh, UWP is a high class manufacturer of doors and wood works in the Kingdom of Saudi Arabia, and provides a complete design and installation service. With over 75,000 square meters of factory space and state-of–the-art automated equipment similar to that of Woodroc. UWP are one of the leading manufacturers of flush doors and specialists in wardrobes and wooden product supplementary wood panels, and bedroom furniture.

2. Riyadh Furniture Industries (RFI): Established in 1975 in Riyadh, RFI has become one of Saudi Arabia’s leading manufacturers of contract furniture. With over 170,000 square meter of factory area and a full complement of “State-of-the-art” computerized manufacturing equipment, RFI is able to produce a complete range of high quality furniture using steel, wood or plastic for commercial, residential and institutional projects of any scale.

3. Metalco Middle East Wood & Metal Industries Co. Ltd: Founded in 1997, started as a door manufacturer for the local market in Riyadh. Through the years METALCO has expanded its horizons to the GCC, Middle East and Africa. It is considered to be one of the leading door manufacturers in the Middle East. METALCO manufactures standard and fire rated hollow metal doors, normal and fire rated wooden doors, and a combination of wood leaf with steel frame.

4. Sultan Allied Industries Co: Established in 1980 in Al-Qassim province, Sultan Allied Industries produce high class timber doors, complete with design, supply and installation service. With over 25,000 square meters of factory space and state-of–the-art automated equipment, Sultan Allied specialize in wood joinery for hotels and decorative doors, as well as hollow steel door and frame, and aluminum assemble process.

5. Saudi Binladin Group (SBG): The biggest construction company in Saudi Arabia, with various manufacturing factories through the kingdom offering a complete wooden furniture supply and installation service. SBG general supplies their own contracts and rarely tender for single furniture projects.

Apart from the wholesaler giants and leading competitors listed above, there are also several smaller furniture manufacturers who have the ability to produce large quantities of door products at a competitive price. As a consequence, have the capability to compete against our company at certain levels. In general, however, this competition is not in our niche target market. We compete against the large, top end furniture manufacturers, who have the capability of producing mass quantities of doors, kitchens, bedrooms, and cabinets, etc., at a competitive price, and to good quality standards, although we will be evaluating their capabilities and services, so as to appraise possible future joint ventures.

It isn’t that clients will choose the competitors instead of our products, it is that they will choose our top quality furniture and hardware items, along with the first-rate service we provide, instead of lesser quality, mainstream products and material items they offer.



5. Strategy and Implementation Summary

Riyadh is currently experiencing a substantial growth in the high-end residential, education and health markets, and there is a general consensus of continued growth in these areas. Taking part in this growth, while providing attention to the design development, ordering process, project management, and installation will put us on the road to success. The furniture industry has also undergone a great deal of change in this decade. The growth of the furniture superstores-wholesalers has made a few large brands dominant. They produce relatively inexpensive furniture that makes compromises in order to stay at the low price level.

Our overall strategy will be based on a continuous improvement process of setting objectives, measuring results, and utilizing feedback to facilitate further growth and progress. The Central office plans to rapidly develop marketing alliances with furniture and industry based leaders and pursue new sales of its services with focus on large Ministry of Interior, Health and Education Developments, not forgetting large residential and commercial contractors. Our marketing strategy assumes that we need to go into specialty channels to address our target customer’s needs. Thus, our market approach is to capitalize on Furniture World’s alliances by securing City, National, and Government contracts. We position as the highest quality, offering status and prestige levels of purchase, for the buyer who wants the best quality regardless of price.

The product strategy is also based on quality, in this case the intersection of technical understanding with very high quality decorative woodworking, specialized materials, and professional workmanship. We will focus on the special kind of customer, who wants very high quality furniture customised to work beautifully with modern design, highest quality timber, materials and technology, including high-tech items such as LED lights, kitchen appliances and hardware commodities. What is important to the customer is elegance, fine workmanship, ease of use, ergonomics, and practicality of service.

5.1 Strategy Pyramid

Our main strategy at the central office division is to position ourselves at the top of the quality scale, featuring our combination of superb state-of-the-art manufacturing, technology, installation, and fine old-fashioned decorative woodworking, for the buyer who wants the best quality regardless of price.

Tactics underneath that strategy include market analysis and research development related to new products, designs, and new technology, choosing the right channels of distribution, and communicating our quality position to the target market. Programs are mainly those listed below, some of which include new design programs, new equipment and software to keep up with design, channel networking development, channel marketing programs, our direct sales, and our continued presence in high-end catalogue channels, and new presence in the web.

5.2 Strengths and Competitive Advantage

In view of our temporary office being situated on the first floor of ABV-ROC’s headquarters in Riyadh; a large reputable civil and construction engineering company, contracted to undertaking several Ministry of Interior, Health and Education projects, our current circumstances offers a



distinct advantage over many of our competitors, with regards to being owned by “Sheikh Mohammed Hussein Al-Amoudi”. A prominent businessman and owner of ABV-ROC and MIDROC, a diverse group of more than 70 successful businesses from every major industry throughout the Middle East with locations in MENA, Africa and Europe, providing jobs for more than 40,000 employees.

In addition to the opportunities provided from our sister company ABV-ROC and MIDROC, we believe our competitive edge is our ability to provide high volumes and flexibility in style from our company facilities in Jeddah, while maintaining a commitment to quality products backed by excellent service.

Figure 6: Summary of our Strengths and Competitive Advantage

6. Sales Plan Summary

The sales plan provides a brief account on how the central office will market, advertise and sell Woodroc’s furniture products, and how the sales intends to meet the marketing objectives for 2012. The sales plan focuses on the furniture market in Riyadh; in what way this differs from the competition, and the steps that shall be taken, in order to meet the marketing objectives. The central office sales are based on attaining company revenue of 40 million SAR in the first year while achieving a minimum profit margin of 15%; that is, assuming 40 million is reached, the company is looking to make 6 million profits to achieve its goal. The plan will serve as our tactical sales process and company direction for achieving marketing objectives; it looks at market focus, sales strategy, and forecast, in order to evaluate possible areas for making revenue with the primary target of achieving extra business.


Qualified Personnel

Automated Machinery Market Analysis

Built-In Quality

Greater Services

Training Programs

Lean Manufacturing

Creative Designs

New Product Range

Joint Ventures


Figure 7: Showing Riyadh Division Tactical Sales Process

6.1 Sales Strategy

We will first focus on maintaining identity with the high-end buyer who appreciates the best available quality, but is also very demanding with regards to providing a full design, supply and installation service. Our strategy is to make ourselves known through the many marketing, mailing, printing and advertising concepts listed in the sales section below. This also includes direct sales through personal contact with clients, consultants, architects and contractors who are primarily involved with the design and construction of large government, commercial and residential developments.

Our sales strategy is to offer a value engineering approach by way of providing a FREE concept design, to include shop drawings, product samples (3 alternatives: high, median, low), product mock-up (on-site installation), material take off (MTO) and quotation (competitive price), and finally the contract agreement for the supply and installation of our product and services. Our services currently include design, manufacture, installation, hardware, appliances and other commodities as required by the client.

Having a showroom in a prominent location will be a sales tool in itself. A showroom will give us exposure to the general public, new arrivals to the area, government clients, manufacturing hardware suppliers and construction professionals.

Our general sales program is as follows:

Create contacts with government personnel, residential and commercial clients, architects, contractors, designers, and business developers.

Direct contact with developers of private residential and commercial properties.

Contact and training with new “company approved” warranty installation contractors, commodity and hardware suppliers of doors, kitchens and other furniture products.



Set up advertising for local and national programs, and participate at national and regional trade shows, exhibitions, see below. .

Special advertising efforts will be implemented through the many media channels and our own new Website using online Internet advertising technologies and applications.

Employment of company sales representatives.

Contact major architectural firms.

Word of mouth and Networking

The Eastern and Central division sees business networking as the way for us to make the maxim, “as it’s not what you know, it’s who you know”. We will also network through our new website, which is due to be launch in the coming months.

6.2 Sales Literature

The Eastern and Central division will provide a complete product portfolio for the target customers, which will include various catalogues, brochures, prequalification, specification sheets, and documentary of our company to facilitate business to:

For business-to-government project (B2G) sales (from large government projects)

For business-to-consumer (B2C) sales to private customers (residential, commercial)

For business-to-business (B2B) sales, including hardware specialists, kitchen appliances, commodities, installation, and other furniture companies.

The catalogues will describe our products; brochure will list the features and benefits to clients, consumers, contractors, while the prequalification and product fact sheets will give the retail business necessary information regarding design, manufacturing, other products and accessories, company facilities and details.

6.3 Selling, Marketing and Advertising

Our sales process will be used as our guideline, and when planned correctly can be effective, if used suitably for developing futuristic business opportunities, and delivers business growth via:

New products or services to existing customers,

Existing products or services to new customers, or

New products or services to new customers.



The following list of global and local advertising ideas, which with a little creativity and selective ingenuity will be carefully evaluated and developed into an effective local advertising campaign, providing a continuous pipeline of new business opportunities:

We plan to open a selective show room in a prominent location.

Promotional stall at local exhibition shows or open days, for example a stall or leafleting presence at a local relevant furniture gathering or event.

Reciprocal referral arrangements with other good local suppliers or partners, especially those who serve our target audience with different products and services (this will enable us to be a little more helpful with regards to our customers when asked to recommend other related services).

Offering existing customers, employees, partners and/or local agent’s incentives (e.g., commission or gift of some sort, or money off their next purchase order) for introducing a new customer or project.

Speaking or facilitating at a public event, local school, college or donating something - for example with economic or business education and preparing youngsters for the world of work (which gives you publicity and builds reputation).

Brochures/posters/leaflets in shop windows, on notice boards, in staff rooms of local businesses, and local trade directories - typically monthly publications distributed to the local community.

Regularly giving news bulletins and interesting pictures or company documentary about our work to media or local newspapers (see PR below), or perhaps even writing a regular column relating to our specialism in the local free newspaper or parish magazine.

Targeting special offers at local big employers, through their PR and/or HR/social activities.

Launching our Website with Internet directories and specialist search engines, which are an increasingly effective way to advertise and market our products and services.

We also have a number of current clients that we are sure will contribute in further establishing our reputation with regard to providing an excellent service, some of which include government agencies, healthcare, education, and hospitality establishments, as well as various other businesses. Our team will strive to provide an excellent service for our elegantly-designed, expertly-made, wood furniture in an attractive, practical manner. The commitment to quality does not end at invoice but also extends to comprehensive after sales services.

6.4 Sales Forecast

As this is our first year as a new office division, our sales forecast assumes no change in costs or prices, which is a reasonable assumption for the first year trading. Market research has indicated that our strongest product is our door range, which includes a complete design, supply, installation and hardware service.

The central office division will begin by utilizing its existing contacts with several major construction companies and consultants to leverage contracts through direct sales methods and



onsite sample demonstrations. A number of these companies have expressed an interest in purchasing the proposed products of Woodroc. The division’s extensive advertising campaign will be used to promote company brand and create product awareness through the use of direct marketing and advertising, and other means, as described above. At some future date, the company will seek to entice major advertising and media specialists to carry Woodroc’s brand and products once the Central division has established a firm reputation. The establishment of a new sales joint venture program will provide additional sales opportunities with customers for marketing new office and education products.

We are expecting to increase door sales enthusiastically in the next year, which is about trebling in size with current sales. The growth forecast is in line with our last year company sales, and is relatively high for our industry, especially as we are a new division, establishing new contacts, clients and developing new product openings. We are projecting significant change in the product line, or in the proportion between different project lines. The key to our growth is the growth of the new product and sale servicing channels, with our main door range and hardware.

Using a single door with frame example, and a standard price range from 2,500 (low) – 4,000 (Median), and 8,000 (high) SAR the yearly forecast shows a direct result of the anticipated compound annual growth rate (CAGR) of around 12% during 2012-2014, estimated 45% gross profit before company deductions, and projected 11% sales growth rate for year 2012. The following chart gives product projections on a monthly basis, and the table provides a yearly estimate. The variety in sales comes from the nature of projects with regards to manufacturing, supplying, and scheduling installation programs for this type of product.

The following table shows projected 1 year “standard price” forecasts for our strongest product (the door) and services provided. Costs for offering a complete service package, to include design, supply, installation, and hardware accessories are also presented. Prices have been taken from the company material purchase database and sales figures for the last year, and are subject to product type, quality design, size of purchase (amount), veneer grade/type, raw materials used, and company appraisal. Products do however; include all production facilities and delivery costs.

The first two months focused mainly on establishing the central office and will concentrated on existing projects with ABV-ROC. We have since turned our marketing efforts to new customers.

The following tables outline sales forecast data for the year 2012.

Table 6: Listing Standard Unit Cost Forecast

ID

Standard Unit Price Solid Semi Flush Fire Kitchen 2011 2012 2013

Growth Rate % 11% 8%1 Beach wood door/frame 5,000 4,000 2,500 5,700 20,000 5,000 5,250 5,5652 Mahogany door/frame 6,000 4,500 3,000 6,500 22,000 6,000 6,300 7,0003 Meranti door/frame 5,000 4,000 2,500 5,500 5,000 5,250 5,5654 Oak door/frame 7,500 7,000 5,00 8,000 8,000 8,400 8,9005 Cherry door/frame 8,000 8,000 5,000 9,000 9,000 9,450 10,000



6 Steel Door 3,000 2,000 1,500 3,0007 Hardware Accessories 3,000 2,500 2,500 3,000 3,000 3,150 3,3508 Installation 750 600 500 1,000 750 800 9009 Design/Sample (single) 5,000 5,000 5,000 5,500 5,000 5,000 5,500

Consultation Free Free Free Free Free Free Free

The following table outlines our current on-going projects with ABV-ROC, with focus on our wood/steel doors and kitchen sales for year 2012.

Table 7: Projected Sales from Current on-going Project Item Projects Wood Door Steel Door Kitchen Chairs Tables Others TotalsKSU Medical City1 Dental College 044 775 215 9902 Diabetic Centre 029 625 135 7603 Medical College 042 535 118 6534 Cardiac Centre 041 274 1,318 1,4225 Family Medical 043 228 64 2926 Other Medical Bldg. 224 110 335Ministry of Education7 University for Girls 80 15 95Endowment Building8 VIP Meeting Rooms 23 1 1 25Prince Sultan University9 PYD Building 22 350 372King Faisal University10 Al-Faisal Building 80 80Endowment Projects11 Tower 09-10 378 53 43112 Tower 011 390 37 427Other Projects13 Mock-ups & Samples 46 46Commodities14 Door Hardware 2387 1960 434715 Kitchen Appliances 1 116 (Installation Service) (3554) (2400) (1) (40) (5995)17 Conceptual Design 4 3 1 2 10Total Unit Sales 3558 2403 3 80 15 49 6108

Taking our standard prices into consideration, the following table outlines our anticipated products and service unit sales forecast for current project proposals, and includes wooden and steel doors, education tables and chairs, kitchen, and office sales, hardware, design and installation for the year 2012.

Table 8: Anticipated Unit Prices for Current Proposals

Sales Forecast SAR (on-going projects Material Type Unit Rate Total Unit Price



Amount Wood Steel Wood Steel Wood SteelUnit Sales and Prices Products Units (000) SAR

KSU Medical Project1 Dental College 044 (Semi door) 990 775 215 4,000 3,000 3,100 6452 Diabetic Centre 029 (flush door) 760 625 135 4,000 3,000 2,500 4053 Medical College 042 (flush door) 653 535 118 4,000 3,000 2,140 3544 Cardiac Centre 041 (flush door) 1,422 274 1,318 4,000 3,000 1,028 3,9545 Family Medical 043 (flush door) 292 228 64 5,000 3,000 1,140 1956 Other Medical Buildings 335 224 110 5,000 3,000 1,120 330Prince Sultan University7 PYD Building 372 22 350 10,000 4,000 220 1,400Endowment Building8 Endowment VIP (Solid Doors) 25 25 10,000 2509 Endowment VIP (Kitchen) 20 20 33,000 660King Faisal University10 Al-Faisal Building (flush doors) 80 31 49 2,500 3,000 78 147Endowment Project11 Tower 09-10( solid wood door) 431 378 53 4,000 3,000 1,512 15912 Tower 011(solid wood door) 423 390 37 4,000 3,000 1,560 111Ministry of Education (tables & chairs)13 University of Girls (table/chairs) 18,000 10,000 8000 400 1,200 4,000 9,600Other Small Projects14 Mock-ups & Samples 46 46 34Door Hardware Sales & Unit Prices15 Medical City (Hafele Hardware) 4347 2387 1960 3,000 3,000 7,161 5,880Installation Sales (progress cost)16 (Installation Services) (5995) (3554) 2400 750 800 2,666 1,920Conceptual Design17 Shop Drawing Services 6 5 3 5,000 5,000 25 15

TOTALSTOTAL UNIT COST 29,194 25,115

ESTIMATED TOTAL SALES COST for 2012 54, 309 ,000



Table 9: Showing Estimated Sales Forecast for the year 2012, and (subject to available company data)


adapt to suit your purposes

Mar-12 April May June July Aug Sept Oct Nov Dec 13-Jan Feb TotalVolume/Quantity of unit product/service sold 60 150 200 250 350 400 450 500 510 520 500 500 4,390 volume/quantity of product/service soldDOOR Unit Price of Product/Service Sold 9,000 9,000 9,000 9,000 9,000 9,000 9,000 10,000 10,000 10,000 10,000 10,000 113,000 unit price of product/service soldTotal Unit Sales 540,000 1,350,000 1,800,000 2,250,000 3,150,000 3,600,000 4,050,000 5,000,000 5,100,000 5,200,000 5,000,000 5,000,000 42,040,000 total salesUnit cost of product/materials Sold or Used 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 60,000 unit cost of product or materials sold or usedCosts of sales (COS) - (cost of products used/sold) 300,000 750,000 1,000,000 1,250,000 1,750,000 2,000,000 2,250,000 2,500,000 2,550,000 2,600,000 2,500,000 2,500,000 21,950,000 Costs of sales (COS - cost of products used/sold) Gross profit (sales minus cost of sales) 240,000 600,000 800,000 1,000,000 1,400,000 1,600,000 1,800,000 2,500,000 2,550,000 2,600,000 2,500,000 2,500,000 20,090,000 Gross profit (sales minus cost of sales)Percentage gross profit 44% 44% 44% 44% 44% 44% 44% 50% 50% 50% 50% 50% 48% Percentage gross profit

Employee costs (salaries ) 45,000 45,000 45,000 45,000 45,000 45,000 66,000 66,000 66,000 66,000 66,000 66,000 666,000 Employee costsPremises costs (New Offices) 500 500 500 500 500 100,000 100,000 100,000 100,000 100,000 100,000 100,000 702,500 Premises totalRates, heating, lighting, water, services 0.00 0.00 0.00 0.00 0.00 3,200 3,200 3,200 3,200 3,200 3,200 3,200 22,400 Rates, heating, lighting, water, servicesRepairs 0.00 0.00 0.00 0.00 0.00 20,000 20,000 20,000 1,000 1,000 1,000 1,000 64,000 RepairsPhone 0.00 0.00 0.00 0.00 0.00 1,000 1,000 1,000 1,000 1,000 1,000 1,000 7,000 PhonePost 1,000 1,000 1,000 1,000 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 16,000 PostStationery 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 StationeryComputer and internet charges 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Computer and internet chargesSamples and sundries 0.00 0.00 0.00 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 9,000 Samples and sundriesMotor expenses inc fuel 100 100 500 100 100 100 1,000 100 100 100 1,000 100 3,400 Motor expenses inc fuelTravel and parking 500 500 500 500 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 10,000 Travel and parkingSubsistence and accommodation 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 36,000 Subsistence and accommodationAdvertising and promotion 500 500 500 500 500 500 500 500 500 500 500 500 6,000 Advertising and promotionLegal and professional 500 500 500 500 500 500 500 500 500 500 500 500 6,000 Legal and professionalInsurance 0 0 0 0 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 8,000 InsuranceBad debts 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Bad debtsInterest and other finance charges 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Interest and other finance chargesDepreciation (write-down of assets) 10,000 10,000 20,000 20,000 20,000 20,000 30,000 30,000 30,000 40,000 40,000 40,000 310,000 Depreciation (write-down of assets)Other expenses 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000 Other expenses

Total Fixed Costs (Overheads) 67,100 67,100 77,500 78,100 80,100 203,800 235,700 234,800 215,800 225,800 226,700 225,800 1,938,300 Total Fixed Costs (Overheads)

Profit before (tax) and company repayments 172,900 532,900 722,500 921,900 1,319,900 1,396,200 1,564,300 2,265,200 2,334,200 2,374,200 2,273,300 2,274,200 18,151,700 Profit before tax and business cost expenses

Trading Forecast Summary (Profit and Loss Account Example) for Central Division Sales Units transaction (assume a standardised price SAR rate for all items combined)

SALE

SFi

xed

Cos

ts

(Ove

rhea

ds)


Chart 4: Projected Unit Sales Forecast for the 2012

6.4.1 Three Year Sales Forecast

As the new regional division gets established in the marketplace, we anticipate strong sales growth over the next three years. In view of this, contingencies will need to be in place in order to backup all products and services offered in the event of personnel issues, equipment failure, and poor material or workmanship. Direct and fixed costs, and company overheads in the Sales Forecast table reflect some of these outsourced manufacturing costs, after initial design, others include materials, hardware, metal working and fire insulation manufacturing. Consequently, one of our main goals is to establish joint ventures with other reputable furniture manufacturers, with the intention of manufacturing certain products externally, although under our umbrella and direct supervision, allowing our factory machinery, equipment and labor resources to be utilized on more profitable work. This will help with delivering our anticipated strong sales growth; on time, within budget, and to excellent standards, while considering all our clients requirements.

Our main source of strong sales growth in the next 3 years is anticipated to come from the following projects:

Project Name Client Product Type Unit SalesKSU Endowment Towers ABV-ROC (3 ) Doors & Kitchens 12,000King Faisal University ABV-ROC (2) Doors Sets 3,000New Medical City Development ABV-ROC (6) Doors Sets 50,000Ministry of Education Ministry of Education Office Furniture (various) 10,000Total Unit Sales Forecast 75,000


12-Mar

Apr May Jun Jul Aug Sep Oct Nov Dec 13-Jan Feb0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Column1Gross Profit (000) SAR


Table 10: Projected Unit Sales Forecast for the Next 3 Years

Sales Forecast SARYear 1 Year 2 Year 3

Unit SalesFurniture Products (000) 48,040 70,000 90,000Other (hardware) (000) 15,100 20,500 30,500Total Sales 63,140,000 90,500,000 120,500,000

Direct Cost of Sales Year 1 Year 2 Year 3Furniture Products (000) 26,422 38,500 49,500Other (30% profit) (000) 10,570 14,350 21,350Subtotal Direct Cost of Sales 36,992,000 52,850,000 70,850,000

Chart 5: Unit Sales Forecast for the Next 3 Years (figures subject to company financial data)


Year 1 Year 2 Year 30

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

Total Forecast Sales

Direct Cost

Profit Foercast


6.5 Milestones

The accompanying table lists important program milestones, with dates and personnel responsible, and budgets for each activity. The milestone schedule indicates our emphasis on planning for implementation.

Important Milestone Dates (SAR)Milestone Start Date End Date Budget Manager DepartmentSet-up Temp Office 1/01/2012 3/01/2012 20,000 Dr Andrew BusinessPre-qualification 4/01/2012 10/02/2012 15,000 Dr Andrew BusinessBusiness & Sales Plan 16/01/2012 20/02/2012 15,000 Dr Andrews Business/SalesEmploy Sale/Site Eng. 15/01/2012 1/04/2012 20,000 (M) Dr Andrews Sales

Acquire New Offices 15/01/2012 10/04/2012 75,000 (Quar) Tareq Amoudi Administration

Establish New Office 10/04/2012 25/04/2012 10,000 Andrew/Tareq DepartmentEstablish Showroom 2/25/2012 4/31/2012 35,000 Tareq Amoudi MarketingTotals (approx.) 190,000

6.6 Strategic Alliances

The company plans to rapidly develop marketing alliances with industry leaders and pursue new sales of its services to government, residential and commercial clients, builders and designers. This also includes setting up joint ventures with hardware specialists and established furniture manufacturers, with a view of increasing sales, while reducing risk and time to market.

6.7 Web Plan Summary



Our Web-based marketing plan is essentially the same for all Woodroc divisions, with the exception of how each division targets its clients. Our intention is to add our services offered into the marketplaces, with the aim of getting day to day information and feedback from the various paid ads we place in industrial trade magazines and Web advertising agencies, as well as other websites. The proposed Web plan is to link our products and services with as many affiliate sites as possible. When established, these marketplaces and affiliate sites will serve as a cost effective marketing tool for all the company divisions, keeping in mind that each division’s approach will be tailored towards its intended potential clients. Each division will have dedicated websites operating under the Woodroc logo and brand. With a customer database available at all times via our servers, we can easily track our marketing expenditures and customer demographics.

6.8 Website Marketing Strategy

The Central Division, once established, will develop and manage as many industrial marketplaces as possible, seeking out niche marketing that drives customers to our products and service sites. Also, we intend to embed ourselves into as many other Web sites utilizing search engine technology, affiliate marketing programs, and paid banner or commission ads.

7. Management Summary

The Eastern and Central Division will be managed by Dr Andrew Kimmance. Dr Andrews is a talented professional who holds a Bachelor of Civil and Construction Engineering Degree, Masters of Manufacturing Engineering, and a Doctors of Project Management from Loughborough University that he obtained while working full-time in the construction management field. Dr Andrews entered the world of construction in 1978 as a means to pay for his education. He quickly gained a reputation for quality and creative work. He started his apprenticeship and early training as a Builder soon progressing into Management. He later relocated to Civil Engineering and Project Management in 1992 and has worked exclusively in Construction, Manufacturing, and Business for the past 20 years.

Important issues that will need to be addressed include the following:

Organisational Structure

Management/Office Team

Management Team Gaps

Personnel Responsibilities

As the central division grows, we plan to take on the following staff:

NEW STAFF NOS. TOTAL CostSite Engineer (project coordinator and planner) 1 10,000Sales Engineer (marketing, advertising and sales)) 1 10,000Assistant Project Manager (Department Head) 1 15,000Quantity Surveyor (designer, costing and procurement) 1 10,000Cad Drawer 1 7,000



Administration/showroom assistant (office affairs) 1 6,000TOTAL 5 58,000

7.1 Personnel Plan

The personnel plan for the Eastern and Central Office shall be completed by the department Head. Office salaries will be completed by the Financial Department. Salaries will be kept to a minimum so as to help the growth of the central division. Monthly details for this year can be found in the appendix.

7.2 Financial Plan

The financial plan will be completed by the Financial Executive. Below are the initial financial goals for the central division:

Obtain an operating line of credit from the owners so as to establish all platforms.

Finance growth through retained earnings.

Operate on a 25-30% gross margin.

The financial plan for the Eastern and Central Division will be outlined in the following sections.

General Assumptions

Projected Profit and Loss (pro-forma)

Projected Cash Flow (we do not expect to have major problems with cash flow as most of our contracts will require a 50% deposit upon signing.

Projected Balance Sheet

Business Ratios

7.3 Break-even Analysis

Break-Even Analysis

A break-even analysis predicts the sales volume, at a given price, required to recover total costs. In other words, it’s the sales level that is the dividing line between operating at a loss and operating at a profit.

Expressed as a formula, break-even is:

Breakeven Sales = Fixed Cost

1 – Variable Cost

(Where fixed costs are expressed in SAR Value, but Variable Costs is expressed as a percentage % value of total sales.).



Total Expenses = Fixed =

Variable =

Include any assumptions upon which your break-even calculation is based.

As the business settles in and start-up/showroom costs are met, average monthly operating costs will increase and then stabilize. The essential insight here is that our sales level will need to be running comfortably above break-even.

Appendix Section

The appendix section will show all relevant forms, charts, tables and information associated with the Eastern and Central Division’s Business and Sales/Marketing Plan.


business and sale plan

Documents