1

Giovanna Mariani

UNIVERSITY OF PISA

DEPARTMENT OF ECONOMIA E MANAGEMENT

THE BUSINESS PLAN PROCESS

A PROJECT

ELECTRONIC FUTURE

Dott. G.Mariani

THE ROAD ACCIDENTS ARE A MAJOR SOCIAL COST

'THE POOR VISIBILITY (FOG) OR OTHER EVENTS WEATHER ARE

FREQUENTLY THE CAUSE

IN PUBLIC OPINION THERE IS THE NEED TO INCREASE THE SAFETY OF

DRIVING IN BAD WEATHER CONDITIONS

THE BUSINESS IDEA SATISFYS THIS NEED OF GREATER SAFETY,

Dott. G.Mariani

ANTI-COLLISION RADAR

ELABORATION

SENSOR SENSOR

ELABORATION

Display

iINFORMATION

Dott. G.Mariani

MARKET SHARE

Dott. G.Mariani

*Direct interviews with wholesalers, journalists at the Motorshow

*Direct interviews with wholesalers

*Direct interviews with managers of stores specializing in car

accessories

*Direct interviews with dealers

MARKET SURVEY

Dott. G.Mariani

CUSTOMER PROFILE

*owner of the car to upper-medium segment

*male

lives in regions characterized by frequent foggy formations

*good level of income

*interested in high-tech items

*attracted by innovation

*habitual reader of journals

*attending trade fairs in the sector

*Sustainable price (900€)

Dott. G.Mariani

WHERE WE CAN FIND OUR CUSTOMER??

1. WHAT ABOUT POTENTIAL MARKET

2. SEGMENTATION PARAMETERS

3. WHAT ABOUT POTENTIAL SALES

Dott. G.Mariani

REGIONS

N. CARS (1998)

PIEMONTE 2.572.800

VALLE D’AOSTA 102.000

LOMBARDIA 5.177.300

TRENTINO 478.500

VENETO 2.501.100

FRIULI 709.500

LIGURIA 818.000

EMILIA ROMAGNA 2.389.600

TOSCANA 2.051.200

UMBRIA 496.100

MARCHE 837.200

LAZIO 3.076.700

ABRUZZO 658.900

MOLISE

CA

146.300

CAMPANIA 2.927.000

PUGLIA 1.784.500

BASILICATA 264.900

CALABRIA 905.700

SICILIA 2.507.400

SARDEGNA 802.800

ITALIA 31.207.500

Fonte: ACI-Statistiche automobilistiche

Dott. G.Mariani

NUMBERS OF CARS IN CRITICAL REGIONS

(13.930.800)

REFERENCE MARKET QUALIFIED

Dott. G.Mariani

CLASSES

EXAMPLE N. CARS % CLASS

ON TOTAL

INNOVATION

BEHAVIOUR

A. Super Economy Car

Fiat Panda, Ford Ka, Nissan Micra, Peugeot 106, Renault

Twingo, Seat Arosa

1.295.564 9,30 5%

B. Economy Cars Fiat Punto, Ford Fiesta, Lancia Y, Opel Corsa, Peugeot 206,

Renault Clio, Polo

6.561.407 47,10 7%

C. Medium Cars Alfa Romeo 145, 146, Audi A3, Fiat Bravo, Brava,

Lancia Delta, Mercedes serie A, Opel Astra, Peugeot 306,

Reanult Megane, Rover "serie 200", Vw Golf

3.315.530 23,80 10%

D. Upper-Medium

Fiat Marea, Ford Mondeo, Lancia Dedra, Opel Vectra,

Peugeot 406, Renault Laguna, Rover "serie 400" Vw

Passat.

1.518.457 10,90 15%

E. Executive Class

Alfa Romeo 156, 164, Audi A4/S4, BMW serie 3, Citroen

XM, Opel Omega, Renault Safrane, Rover serie 800,

Saab 9-3, 9-5, Mercedes serie C, Volvo S40

585.094 4,20 18%

F. Prestige Cars Alfa Romeo 166, Audi A6/S6, Lancia K, BMW serie 5,

Mercedes classe E, Volvo S80/S70

195.031 1,40 18%

G. Luxury Audi A8/S8, Chrysler 300M, Jaguar, Mercedes classe S 27.862 0,20 17%

H. Sports Alfa Romeo Gtv, BMW Z3, Fiat Barchetta, Ford Puma,

Mercedes CLK, Volvo C70, Ferrari

431.855 3,10 16%

TOTAL 13.930.800 100,00

Dott. G.Mariani

REFERENCE MARKET QUALIFIED

CLASSES

N. CARS % INNOVATION BEHAVIOUR

n. INNOVATORS

C. Medium cars 3.315.530 10% 331.553

D. Upper medium 1.518.457 15% 227.769

E. Executive 585.094 18% 105.317

F. Prestige 195.031 18% 35.106

TOTAL 5.614.112 699.744

Dott. G.Mariani

END MARKET :

A) Market survey

B) Customers characteristics

C) Competitors

D) Reputation

E) Strengths

C) Prudential behavior (innovation)

I° ANNO5% potential market

=

34.987 units

Dott. G.Mariani

1 2

3

N.

ANTICOLLISION

RADAR

34.987 36.737 38.573

POTENTIAL SALES

Dott. G.Mariani

1. WHAT ABOUT COMPETITORS

2. WHAT INFORMATION

3. HOW TO PRESENT

Dott. G.Mariani

MINUS/PLUS MATRIX

A

COMPANIES OF CAR

ACCESSORIES

B

AUTOMOTIVE

COMPANIES

C

New enter

PLUS 1) reputation

2) ditribution system

3) price competition

1) interested as

optional, with high-

level segments

1) second mover

opportunities

MINUS 1) big companies non

interested to little market

share

2) long time to market

3) potential market in

expansion

4) patent

1) offshoring

buy opportunities

1) New market

2) High risk/Low

profittability for

follower

High Innovation

Low Innovation

High PriceLow Price

Anzai – eZ-Scope

Clerad – Gamma Sup

Gem Imaging – Sentinella

Eurorad - Europrobe II

Surgicalprobe - SGP

Nuclear Fields - SRP MK II

Eurorad – Minicam II

Terarecon – MGC 500

Li Tech – IP Guardian

Electronic-future

POSITIONING MAP

SWOTStrengths

-innovation, user friendly and high quality

-excellent team

- IP

- ?

- ?

Weaknesses

- Competitors (multinational companies)

-?

?

Opportunities

- To satisfy a new need

- Outsoucing big companies

- ?

- ?

Threats

- Acquisition

- New technologies

- ?

- ?

5/21/2018 18

*MAKE OR BUY

*ASSETS

*SUPPLIERS

*PRODUCTION COSTS

*INVENTORY POLICY

Technical and productive plan

5/21/2018 19

2- MAKE OR BUY

MAKE

OFFSHORING OF SOME PARTS WITH INTERNAL ASSEMBLY WORK

TOTAL OFFSHORING WITH INTERNAL ASSEMBLY WORK

COMMERCIALIZATION

5/21/2018 20

Assets (in euro)

Intangible assets 722,910

Equipments 1,345,000

2,067,910

CURRENT ASSETS 1th yearInventory 627,264

Account receivable 2,624,025

Cash 188,929

Account payable 2,567,628

TOTALE CURRENT ASSETS 872,590

5/21/2018 21

*Employment plan

*Defining personnel costs

*Organization chart Marketing plan

Promotion Activities

Customer management

Pricing Policy

Organizational Plan

22

5/21/2018 23

• Penetration pricing

Penetration pricing includes setting the price low with the goals of attracting

customers and gaining market share. The price will be raised later once this market

share is gained

•Premium pricing

Premium pricing is the practice of keeping the price of a product or service artificially

high in order to encourage favorable perceptions among buyers, based solely on the

price. The practice is intended to exploit the (not necessarily justifiable) tendency for

buyers to assume that expensive items enjoy an exceptional reputation, are more

reliable or desirable, or represent exceptional quality and distinction.

•Price discrimination

Price discrimination is the practice of setting a different price for the same product in

different segments to the market. For example, this can be for different classes, such

as ages, or for different opening times.

5/21/2018 24

PRICE I YEAR 540 €

PRICE II AND III YEAR 550 €

PRICE FOR CONSUMER 900€ +IVA

Wholesalers mark-up 25%

Shop mark-up 30%

5/21/2018 25

FINANCIAL REQUIREMENTS

FINANCIAL STRUCTURE

BALANCE SHEET

RATIOS PANEL

FINANCIAL DYNAMICS ANALYSIS

BREAK EVEN POINT

NPV AND IRR

(Altman Z-score)

BUSINESS RISK

The possibility that a company will have lower than anticipated profits, or that it will experience a

loss rather than a profit. Business risk is influenced by numerous factors, including sales

volume, per-unit price, input costs, competition, overall economic climate and government

regulations. A company with a higher business risk should choose a capital structure that

has a lower debt ratio to ensure that it can meet its financial obligations at all times.

PROJECT RISK (BEP) -> OPERATING LEVARAGE, COMPETITIVENESS

FINANCIAL RISK - > The possibility that shareholders will lose money when they invest in a

company that has debt, if the company's cash flow proves inadequate to meet its financial

obligations. When a company uses debt financing, its creditors will be repaid before its

shareholders if the company becomes insolvent. Financial risk also refers to the possibility

of a corporation or government defaulting on its bonds, which would cause those

bondholders to lose money.

FINANCIAL RISK

DEFAULT RISK

ALTMAN Z-SCORE (PREDICTION PROBABILITY OF DEFAULT)

BUSINESS RISK

ROI

ROS

ECONOMIC RISK

Operating leverage

ROS

Working capital ratios

BEP

EQUITY/TOTAL LIABILITIES AND EQUITY

OWNERS'EQUITY+NON-CURRENT LIABILITIES/TOTAL FIXED

ASSETS

TOTAL CURRENT ASSETS-INVENTORIES/CURRENT

LIABILITIES

TOTAL FIXED ASSETS/TOTAL ASSETS

LEVERAGE

FINANCIAL BORROWINGS/TOTAL LIABILITIES

SHORT TERM FINANCIAL BORROWINGS/FINANCIAL

BORROWINGS

FINANCE COSTS/EBIT

28

SOME RATIOS YEAR 1 YEAR 2 YEAR 3

EQUITY/TOTAL LIABILITIES AND EQUITY 18.02 20.28 24.88

OWNERS'EQUITY+NON-CURRENT

LIABILITIES/TOTAL FIXED ASSETS 112.91 146.24 228.72

LEVERAGE 1.80 1.30 0.68

FINANCIAL BORROWINGS/TOTAL

LIABILITIES 40.23 33.46 25.27

SHORT TERM FINANCIAL

BORROWINGS/FINANCIAL BORROWINGS 35.82 22.90 -

TOTAL CURRENT ASSETS-

INVENTORIES/CURRENT LIABILITIES 87.86 101.43 123.41

FINANCE COSTS/EBIT 1.63 0.54 0.13

TURNOVER PER EMPLOYEE 1,453 1,554 1,632

LABOUR COST PER EMPLOYEE 57 58 59

ROI 1.47 4.37 13.61

ROS 0.40 1.05 2.93

ROE - 4.72 2.51 30.31

FINANCIAL RISK

DEFAULT RISK

ALTMAN Z-SCORE (PREDICTION PROBABILITY OF DEFAULT)

BUSINESS RISK

ROI

ROS

ECONOMIC RISK

Operating leverage

ROS

Working capital ratios

BEP

EQUITY/TOTAL LIABILITIES AND EQUITY

OWNERS'EQUITY+NON-CURRENT LIABILITIES/TOTAL FIXED

ASSETS

TOTAL CURRENT ASSETS-INVENTORIES/CURRENT

LIABILITIES

TOTAL FIXED ASSETS/TOTAL ASSETS

LEVERAGE

FINANCIAL BORROWINGS/TOTAL LIABILITIES

SHORT TERM FINANCIAL BORROWINGS/FINANCIAL

BORROWINGS

FINANCE COSTS/EBIT

30

Z-scores are used to predict corporate defaults and an easy-to-calculate control measure for

the FINANCIAL DISTRESS status of companies in academic studies. The Z-score uses

multiple corporate income and balance sheet values to measure the financial health of a

company

BANKRUPTCY within two years

.

The original Z-score formula was as follows:

Z = 1.2X1 + 1.4X2 + 3.3X3 + 0.6X4 + 1.0X5

X1 = Working Capital / Total Assets. Measures liquid assets in relation to the size of the company

X2 = Retained Earnings / Total Assets. Measures profitability that reflects the company's age and

earning power

X3 = Earnings Before Interest and Taxes / Total Assets. Measures operating efficiency apart from

tax and leveraging factors. It recognizes operating earnings as being important to long-term viability

X4 = Market Value of Equity / Book Value of Total Liabilities. Adds market dimension that can show

up security price fluctuation as a possible red flag

X5 = Sales / Total Assets. Standard measure for total asset turnover (varies greatly from industry to

industry)

Altman found that the ratio profile for the bankrupt group fell at -0.25 avg, and for the non-

bankrupt group at +4.48 avg