This plan was made for a module called Business Game undertaken at Aston University in my second year. Part of the assessment was to run a simulation of a mobile phone company on a simulation programme called cesim. In addition, a business plan and a presentation had to be delivered to real life professionals.
My team decided to name this simulated phone company Cosmic.
Cosmic, a simulated mobile phone company run for a year in the mobile phone market. The company has been trading for a year or two but now needs a new management team.
Aim of the business plan:
• To convince the Board Cosmic have a plan that will see the business grow and become highly profitable. The Board will need to be certain that the business has a long term future.
• To convince the Board that the team is the best equipped to lead the company to success.
1. “The phone for tomorrow”
Cosmic Ltd – Business Plan 2013 - 2018
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2. Cosmic
The Team
Managing Director
Babatola Dada
dadab@aston.ac.uk
Marketing Director
Hannah Burrows
burrowsh@aston.ac.uk
Human Resource Director
Sophie Brown
browns5@aston.ac.uk
Operations Director
Sanjay Bensal
bensals@aston.ac.uk
Finance Director
Ravinder Kaur
kaurr14@aston.ac.uk
Cosmic Ltd – Business Plan 2013 - 2018
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3. Contents
Executive Summary 4
Marketing Plan 5
Operations 11
Human Resources 13
Research & Development 15
Finance 16
Risk Analysis 24
Bibliography 25
Cosmic Ltd – Business Plan 2013 - 2018
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4. Executive Summary
Our company is devoted to supply customers with mobile phones rendering high customer
satisfaction by providing high quality service, quality products and establishing brand loyalty
through affordable prices. The positioning for our products will be high end phones at affordable
prices. Our selling propositions include water resistant technology, shatter proofing and phone
security. As a business, we aim to achieve a net profit margin of 49.8% within the first year and
44% after 5 years. The investment required will be loans from the bank and the total of our share
capital. The loan will be paid back from the retained earnings from the business, and will be
collaterized by the assets of the company. The dividends to be paid to our shareholders are
forecasted at 10-15 cents per unit sold.
Organisation Background
Company: Cosmic
Slogan: “the phone for tomorrow”
Our Mission: To provide customers with durable, reliable and affordable phones through advanced
technology without affecting its quality or capacity.
Cosmic’s Aims:
Global sales and market growth within 5 years.
Increase in customer base and satisfaction.
Accountability to our customers, employees, community and shareholders.
Expansion to the European market after 3 years.
Cosmic’s Objectives:
Growth - increasing market share by the end of the 3
rd
year
Profit - increased level of profit, rates of return on investment and share earnings.
Commitment to employees - promoting, developing, attracting & retaining skilled workers.
Survival - Continuation in the business through positive cash flow.
Public Responsibility - Compliance with laws; social and ethical behaviour.
Cosmic Ltd – Business Plan 2013 - 2018
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5. Marketing
Objectives
The main marketing objective for Cosmic is to create and maintain global brand awareness through
the quality of its’ products and services. In accordance with this objective, Cosmic also aims to:
Achieve a 3% increase in global market share within the smartphone market
Achieve a customer satisfaction rate of 80%
The Market
The global smartphone market has seen rapid growth in recent years with a growth of 7.3%
predicted for 2013 alone (IDC, 2013). A reason behind this growth, according to IDC (2013:para 2),
is the “strong gains in emerging markets”, with the Asia region leading the way in terms of growth,
particularly India (Times of India, 2013).
Currently, the main competitors to Cosmic in the market are Apple and Samsung as their respective
unit sales both surpassed thirty million, whilst Samsung’s dominance of the smartphone market
remained firm in 2013. (Gartner, 2013)
(Source: Gartner (2013)
2013 Market Share (%)
32%
12%
5% 5%
5%
41%
Samsung
Apple
Lenovo
LG Electronics
Huawei
Others
Cosmic Ltd – Business Plan 2013 - 2018
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6. Company 2013 Q3 Sales (Units)
Samsung 80,356,800
Apple 30,300,000
Lenovo 12,882,000
Others 126,662,900
Total 250,231,700
(Source: The Telegraph, 2013)
However, despite this control, Apple’s share has fallen in recent years, a trend that according to
BBC News (2013) is attributed to their failure to secure sales in emerging markets, whereas firms
like Samsung, have found gains in these markets. The strength of emerging markets supports
Cosmic’s plans to expand into Asia in year 3 and coincides with their objectives, particularly the
aim of increasing their global market share by 3%. On the other hand, the strengths of both
Samusng and Apple lie within their highly recognizable brand images, which consumers often
relate to. For Cosmic, it is important that they look to grow and develop their own image and build
a connection with every single customer who purchases a Cosmic product.
External Analysis
Political
-Marketing & Advertising legislation
(Marketing must be truthful and honest)
-Important to comply with legislation in
USA, Asia & Europe. For example,
taxing, minimum wage and health and
safety regulations.
Economical
USA Growth in GDP for 2013
(The Heritage Foundation, 2013),
fluctuating exchange rate between
the US Dollar and the Yuan.
Europe Growth in GDP expected
for 2014 & 2015 (Eurostat, 2013)
Social
Pest Analysis
-Important to consider key trends in terms of
latest designs in all locations in order to find
new ways to innovate.
-Awareness of population demographics
such as; age, income level and gender.
Technological
Awareness of threat of advanced products
such as tablets.
-Remain focused on research and
development in order to deliver products
of the highest quality with maximum
innovation.
Cosmic Ltd – Business Plan 2013 - 2018
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7. Porter’s Five Forces
Bargaining Power of Suppliers
Suppliers are small compared to firms like
Apple & Samsung, reducing bargaining power.
Combined with this, industry standards are set
for components making switching costs
relatively low.
Threat of New Entrants
High entry costs, such as investment in
innovation, into the smartphone market mean
that new entrants are unlikely to enter the
market and steal market share regularly.
However, the likes of Lenovo have potential to
grow so it is important to be wary of such firms
Threat of Substitutes
Major threat comes from tablets such as iPad
mini and Samsung Galaxy Note, which are
growing in popularity year upon year. Also
important to recognise the strength of the more
standard mobile phones which still attract a
large percentage of the market. Finally,
substitute applications such as Whatsapp should
be considered with caution.
Bargaining Power of Buyers
Large number of customers in the market,
which suggests little power, however the
intense competition means that customers can
look for the best price, increasing their
bargaining power.
Intensity of Rivalry within
Industry
High intensity of rivalry within the market,
despite a small number of firms dominating
market share. This level of intensity leads to an
increased demand for innovation, increasing
costs and reducing profit as a result.
Cosmic Ltd – Business Plan 2013 - 2018
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8. Internal Analysis
-Penetration pricing strategy - Initial
price lower than major competitors
- Planned innovation and expansion
shows future of the organisation is
SWOT
-Market growth predicted for years to
-Strength of growth in emerging
The Product
Strengths
potentially strong
Weaknesses
- High initial start up costs creates
pressure to deliver profits
- Exporting of goods from USA to Asia
may increase costs
Opportunities
come
markets
Threats
- Competitors have strong brand
awareness and connection with
customers
-Competitors high profits creates scope
for internal innovation
Cosmic’s first product will be the Cosmic C1, a phone designed to take consumers into the future.
The C1 will be initially released in USA and Asia in year 1, before being distributed across Europe
in year 3. The model will have an enhanced battery life, when compared to that of its competitors,
as well as being shatterproof due to the use of Willow Glass, a stronger and thinner material (BBC
News, 2012a). Finally, with the use of Liquipel water safe technology (BBC News, 2012b), the C1
phone will have increased water resistance, compared to other smartphones available today.
Cosmic Ltd – Business Plan 2013 - 2018
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9. Pricing
Company USA ($) UK (£) China (¥)
Apple iPhone 5s 649 499 5,288
Samsung Galaxy S4 639 519 5,199
Blackberry Q10 584 469 3,999
Cosmic’s initial pricing strategy is a penetration strategy whereby the price for Cosmic C1 in year 1
will be set lower than competitors at $350 in order to build a customer base in line with the
marketing objectives. It is expected that in year 3, when Cosmic expands into Europe as well as the
planned release of Cosmic C2, that prices will again remain the same in order to build customer
relations, particularly in Europe.
Promotion
Cosmic aims to have a highly aggressive promotional strategy as it looks to capture all sectors of
the market. An initial promotional budget of $100m has been set which will cover the likes of
sponsorship events, eye catching and futuristic billboards as well as direct marketing such as
targeted television campaigns within prime-time slots. Social media such as Twitter and Facebook
will also be used to promote brand awareness in line with the marketing objectives. Added to this,
Cosmic also aims to exploit several media channels to promote the brand, for example specialist
technology magazines and television programmes. In terms of distribution, Cosmic’s main channel
will be through retail and online stores such as Phones 4U and Carphone Warehouse.
Year Promotional Spend ($)
1 100m
3 240m
5 80m
In year 3, Cosmic plans to release the C2 model as well as having plans to expand into Europe,
which means that the promotional spend is set to increase to $240m, whilst in year 5 the
promotional spend will be reduced in order to enhance the chances of dividends being issued.
Cosmic Ltd – Business Plan 2013 - 2018
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10. Sales Forecasts
2.5
2
1.5
1
0.5
0
Y1
Q1
Y1
Q2
Y1
Q3
Y1
Q4
Promotional Spend (Year 1 $m)
Y3
Q1
50%
10%
40%
Sales (M Units)
Y3
Q2
Y3
Q3
Y3
Q4
Y5
Q1
Y5
Q2
Y5
Q3
Y5
Q4
TV Advertising
Billboards
Sponsorship
Sales (M Units)
The initial sales for Cosmic in year 1 is 3 million units. In year 3, an increase in sales is predicted to
6 million units due to the release of the Cosmic C2 and our planned expansion to Europe. Finally,
in year 5 sales are again predicted to rise to 7.8 million units.
Cosmic Ltd – Business Plan 2013 - 2018
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11. Operations
Manufacturing Location
Cosmic have decided to manufacture the C1 phone in the USA. Overall the USA is the best
selection for manufacturing, as its labour costs are lower than both Asia and Europe, which allows
Cosmic to save costs and therefore invest in other factors of the business, like promotion.
Smartphone’s in the US account to 56% of the market (Forbes, 2013), consequently Cosmic can
produce high units of production due to high productivity rates, grasping a foothold in the market
and creating brand awareness, in line with its marketing objectives.
Region Labour Costs
(index points)
Productivity Rates
(index points)
USA 102.64 106.16
Asia 107.10 128.74
Europe 114.00 103.80
(Trading Economics, 2013)
Units of Production
Cosmic plan to produce 5 million units within year one, as the table below shows, figures are
broken down into weekly, monthly and yearly production. There will be three production lines in
use, which means 1,666,670 units will be produced, by each production line in the first year.
Cosmic aim to produce 5.5 million units in year two and by year three 6 million units will be
produced in Asia. Cosmic are aiming for these levels of production due to the increase in sales
growth in the phone market, the USA is expected to rise from 15-20% and Asia 20-25%. Cosmic
can take advantage of this growth and produce high units of production in these markets, which can
allow high levels of sales and a gain in profits.
If demand were to increase Cosmic would adopt the short-term strategy of longer opening hours/
extra shifts to keep up with demand levels. If extra demand occurs, Cosmic will take action upon
the strategy of contract manufacturing. This allows Cosmic to gain a relationship with a
manufacturing firm based in Asia and can get a decreased price by mutual agreement, which save
Cosmic costs. The productivity rates in Asia are high, as the table states above, meaning demand
levels will be met. If demand falls, Cosmic will save costs by decreasing worker hours and produce
less depending on how severe the demand circumstances are.
Units produced (year 1) Figures
Weekly 104,168
Monthly 416,670
Yearly 5,000,000
Cosmic Ltd – Business Plan 2013 - 2018
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12. Future Plans and Distribution
In year 1 Cosmic plan to have one factory based in USA with three operating production lines.
Within year 2, Cosmic will have a factory under construction in Asia and by year 3, this factory will
be operating with three production lines. The factory expansion in Asia allows Cosmic to benefit
from cheaper production costs, as material costs decrease and productivity rates increase, as shown
by the figures above, this ultimately saves Cosmic production costs.
Year 1 and 2 will involve Cosmic selling in the USA and Asia. Manufacturing and selling in USA
allows Cosmic to benefit from cheap transportation costs. Mass-producing the C1 model gives
Cosmic the benefit of economies of scale, ultimately saving Cosmic costs. By year 3, Cosmic will
expand to Asia and distribute the C2 model in the USA, Asia and Europe. Manufacturing in Asia
will save Cosmic costs due to lower transportation and production costs. Cosmic will therefore have
more expenditure, which could be used within other areas of the organisation such as in research
and development.
Costs Figures
Factory USA $300 million
Three production lines (US) $40 million each
Factory Asia $200 million
Three production lines (Asia) $25 million each
(Costs of factories)
Cosmic Ltd – Business Plan 2013 - 2018
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13. Human Resources
Human resources are an essential function of Cosmic. Cosmic has implemented its own People
Strategy in order to enhance the company as a whole. Cosmic’s long term aims are to recruit the
best calibre of staff, develop its company culture and use The People Strategy to fulfil Cosmic’s
corporate aims and objectives. The four main focus areas that’ll be enforced to achieve these aims
are staffing, diversity, competence and culture. These focus areas will be looked at in addition to
Cosmic’s proposed budgets, policies and what these mean for the company. Displayed below are
Cosmic’s planned budgets for year one, three and five;
Year 1 Year 3 Year 5
Number of Employees in USA
600
600
450
Number of Employees in Asia
_
750
900
Wages per month per
employee in USA
$2000
$2000
$2000
Wages Per month per
employee in Asia
_
$1000
$1000
Training costs per month
per employee
$200
$200
$125
Total Cost $15,840,000 $26,640,000 $23,625,000
This table displays our planned expenditure for our 600 employees in year one and 1350 employees
in year two and three. Cosmic’s finance department has devised this summary in relation to the
company’s overall financial budgets for the next five years. This includes our planned expenditure
on salaries and training costs for both USA and Asia.
In terms of salaries, Cosmic’s budget has accounted for expected costs on monetary rewards. From
researching the likes of Victor Vroom’s expectancy theory (French, 2011), Cosmic has devised
bonus schemes, teamwork bonus incentives and other company benefits. It has been observed that
an employee’s work effort is related to how they believe their own performance will lead to
rewards. We believe that offering these rewards will help motivate the employees to work harder.
Observing Frederick Herzberg’s theory (French, 2011), Cosmic has evaluated the importance of
providing non-monetary rewards such as implementing job enrichment, job rotation and
Cosmic Ltd – Business Plan 2013 - 2018
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14. encouraging feedback and communication. Cosmic’s employees should theoretically be motivated
by the opportunity given to use their skills as well as take responsibility. Cosmic has concluded that
a mixed method approach will lead to greater success of motivating, developing and retaining its
employees in addition to obtaining high productivity, efficiency and low labour turnover.
Cosmic intends to train in-house through methods of on-the-job rotation, “job write ups” and also
externally by using training organizations. We strongly feel that training employees through the
methods described will enhance efficiency and productivity thus leading to higher quality.
Cosmic aims to hire the best caliber of staff that range in diversity and can identify with and
integrate within Cosmic’s organizational culture. Cosmic’s particular focus in the recruitment stage
will be recruitment criteria, advertisement process, succession planning and affirmation action. In
terms of recruitment criteria, experience, education, presentations and psychometric tests will be
taken into account. Recruitment agencies and in-house referrals will also be used. Succession
planning for the most important positions will be implemented and affirmation action to obtain
diversity will be carried out. Cosmic believes that diversity will encourage a broad and rich range of
thinking and culture to the organisation. We intend for the employees to reflect the diversity of its
customer base.
In addition, the four main focuses of achievement, affiliation, self-actualizing and encouragement
will enable Cosmic to enforce its company culture and also play a part in driving the business
forward.
Lastly, Cosmic’s HR department aims to work with its employees sufficiently and to operate legally
and ethically. We plan to have trained specialists within the area of HR law in order to ensure that
the company obeys the legal requirements relating to employees, pay and health and safety issues
within USA and Asia.
Cosmic Ltd – Business Plan 2013 - 2018
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15. Research & Development
R&D is the core of Cosmic and the company aims to develop and retain an excellent R&D
department in order to develop outstanding features and to discover new and innovative ways to
develop the brand.
In order to produce the features on our phone, the Cosmic C1, such as being waterproof, having
enhanced battery life, being touchscreen, sustainable and recyclable, thorough research will be
conducted by Cosmic in order to provide the best quality and lowest cost solutions.
Year R&D Planned Expenditure
Year 1
$84,000,000
Year 3
$50,000,000
Year 5
$68,000,000
The required man-days for production in year 1 will be 102,766.
Cosmic plans to have its own in-house R&D department. The benefit of this is the ability to choose
who to recruit. Also, Cosmic will be able to use succession planning and graduate schemes in order
to develop and retain talented R&D employees to the highest quality having an advantage over
other organisations.
Our R&D department aims to develop outstanding, differentiated features in the highest quality and
lowest cost in order to meet the market needs.
Cosmic Ltd – Business Plan 2013 - 2018
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16. Financial Strategy
Year 1
During the first year of trading Cosmic aims is to avoid net loss, despite the large expenses incurred
when starting up a business; buying a new factory, production lines and in house Research and
Development projects.
Expenditure plan
Details of expenditure Quantity Unit price Total cost
Launching Product - $100 $100
Factory in USA 1 $300 $300
Production lines 3 $40 $120
R&D - - $84
Total Expenditure $604
Capital Expenditure in millions
Total first year expenditure will be $604,000,000. This includes buying all new facilities and the
launch of Comic’s first mobile phone series. The pie chart below shows how Cosmic will allocate
finances between departments.
Distribution Of Finances
2%
14%
56%
11%
17%
HR
Marketing
Operations
R&D
Other expenses
Cosmic Ltd – Business Plan 2013 - 2018
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17. Sources Of Finance
Sources of finance in Millions
Offering public shares $340 090
Long-term bank loan $509 794
Cosmic will raise $849,884 million capital within the first year; this will cover the initial costs of
$420 million for purchasing of new facilities. Additionally we will pay for the launch of our first
model Cosmic C1. The company will start with a capital of $340,090 million obtained by issuing
public shares and a further $509,794 million will be acquired from external resources. The table
above explains where sources of finances will be acquired from and also the amounts.
Profitability Forecast
Turnover 1,104,827,000
Opening Stock 0
Direct Materials 405,000,000
Direct Wages 14,400,000
Variable Energy Costs 30,000,000
449,400,000
Less Closing Stock 1,843,352
Direct Cost of Sales 447,556,648
Production Training 1,440,000
Total Cost of Sales 448,996,648
Gross Profit 655,830,352 59%
A healthy gross profit margin of 59.3% can be obtained. After fixed expenses Cosmic is expecting a
net profit margin of 49.8% in the year 1. As it is Comic’s first year within the mobile phone
manufacturing industry avoiding net loss and making such a strong net profit is a huge success.
Cosmic Ltd – Business Plan 2013 - 2018
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18. Break-Even Analysis
The following table shows the contribution margin of sales of Cosmic C1 in the first year
Average retailer price $350
Less variable costs $135
Contribution margin $215
Contribution margin ratio 61%
Break Even Point
Fixed costs are expected to be $145,840,000. Therefore the breakeven point will be as follows;
In sales 145,840,000 / 215 = 678,325.5814
In unit 145,840,000/61% = 239,081,967
1,200,000,000
1,000,000,000
800,000,000
600,000,000
400,000,000
200,000,000
0
1 2 3 4 5 6 7 8 9 10 11 12
Fixed Costs
Turnover
Total Cost
Cosmic Ltd – Business Plan 2013 - 2018
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19. Cash Flow Forecast (Year 1)
Opening Balance 0
DEPOSITS
Accounts Received 642,536,000
From Loan 509,794,000
Share/Venture Capital 340,090,000
WITHDRAWALS
Accounts Paid 221,824,000
Wages 14,400,000
Operating Costs 633,245,000
Capital Purchase 420,000,000
Interest 12,744,850
Tax Paid 0
Dividend Paid 20,000,000
To Loan 109,000,000
Closing Balance 61,206,150
In the 1st year cosmic will repay $109 million for the bank loan to ensure loan repayments are made
quickly as possible to avoid high interest rates. Also Cosmic will be paying out $20 million in
dividends equally to all shareholders who had owned a share within Cosmic for over 12 months.
Year 3
During the third year of manufacturing Cosmic aims to expand into the European market and will
purchase a second factory in Asia to keep up with rising demands. Cosmic will begin production as
soon as possible after the purchasing of the factory and production lines. The table below shows
Comic’s projected long-term assets expenditure for year 3.
Long Term Asset Expenditure in Millions
Details of expenditure Quantity Unit price Total cost
Launching Cosmic C2 - - $240
New factory in Asia 1 $200 $200
Production lines 3 $25 $75
R&D - - $50
Total Expenditure $565
Cosmic Ltd – Business Plan 2013 - 2018
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20. In the third year total expenditure will be $565 million, this will cover purchasing of new facilities,
investments and also research and development procedures. The table below shows expenditure
allocation across departments for year 3.
46%
Expenditure Allocation
Sources Of Finance
40%
4%
8%
2%
Marketing
HR
R&D
Other Expenses
Operations
We will be using retaining earning of $571,196,502 in order to cover expenses including
purchasing of new facilities, launching Cosmic C2 and in house research and development projects.
Profitability Forecast
Turnover 2,301,416,000
Opening Stock 1,843,352
Direct Materials 1,100,000,000
Direct Wages 23,400,000
Variable Energy Costs 45,896,000
1,171,139,352
Less Closing Stock 2,267,878
Direct Cost of Sales 1,168,871,474
Production Training 3,240,000
Total Cost of Sales 1,172,111,474
Gross Profit 1,129,304,526 49%
Cosmic Ltd – Business Plan 2013 - 2018
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21. The percentage of gross profit decreased by 10%, this is because of greater costs incurred, as
Cosmic will be purchasing a new factory in Asia and implementing new production lines; as
Cosmic in Year 3 will be moving into the European markets. Cosmic’s target net profit is
$312,536,000 and net profit margin of 35% which decreased by 14.8% from year 1, however
Cosmic will be seeing greater increasing in net profit by year 5.
Cash Flow Forecast (Year 3)
Opening Balance 61,206,150
DEPOSITS
Accounts Received 2,117,585,400
From Loan 0
Share/Venture Capital 0
WITHDRAWALS
Accounts Paid 478,629,000
Wages 23,400,000
Operating Costs 1,385,896,000
Capital Purchase 275,000,000
Interest 12,744,850
Tax Paid 0
Dividend Paid 0
To Loan 0
Closing Balance 3,121,700
In the year 3 we are planning to repay $12,744,850 of our entire loan in order to avoid high interest
in following years.
Year 5
In year 5 Cosmic will not purchase any new factories but will expand their production and continue
making healthy profits. Cosmic’s main objective is to repay the entire amount of the loan due and
invest in research and development projects. Therefore, in the fifth year we will not acquire any
external financing which in lead to greater dividend payout and reassurance of all loan repayments.
Cosmic Ltd – Business Plan 2013 - 2018
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22. Asset Expenditure in Millions
Details of expenditure Quantity Unit price Total cost
Promotion - - $80
R&D - - $68
Total Expenditure $148
The pie chart below presents the distribution of finances between departments within the fifth year.
Expenditure Allocation
16%
5%
14%
Profitability Forecast
20%
45%
Turnover 2,720,111,000
Opening Stock 2,267,878
Direct Materials 1,300,000,000
Direct Wages 21,600,000
Variable Energy Costs 46,134,000
1,370,001,878
Less Closing Stock 2,467,878
Direct Cost of Sales 1,367,534,000
Production Training 2,025,000
Total Cost of Sales 1,369,559,000
Marketing
HR
R&D
Other Expenses
Operations
Gross Profit 1,350,552,000 49.6%
Cosmic Ltd – Business Plan 2013 - 2018
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23. In the fifth year Cosmic forecasts to gain $816,768,526 in net profit and 44% net profit margin. An
increase compared to third year of 9%.
Cash Flow Forecast (Year 5)
Opening Balance 3,121,700
DEPOSITS
Accounts Received 2,978,695,000
From Loan 0
Share/Venture Capital 0
WITHDRAWALS
Accounts Paid 499,897,000
Wages 21600000
Operating Costs 1,428,159,000
Capital Purchase 0
Interest 12,744,850
Tax Paid 0
Dividend Paid 220,000,000
To Loan 425,489,700
Closing Balance 373,926,150
Cosmic will give out $220 million in dividends due to the high profit that Cosmic will be making
and all loan repayments will be made.
Future forecasts
In the seventh year Cosmic are planning to increase production lines in Asia and decrease production lines in
USA, which will lead to a reduction in costs to ensure higher profits; as Cosmic will be planning to launch
the third series C3 phone in year 7. Cosmic will also try to ensure 10-15cent per unit sold is giving out in
dividends equally to all shareholders, but only if they have owned a share within Cosmic for over 12 months.
Cosmic Ltd – Business Plan 2013 - 2018
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24. Risk Analysis
Cosmic will face threats when starting up. Some of these threats are uncertain market conditions, a
depressed economy, and various financial troubles that constitute legitimate risk to the success of
our firm. It is crucial we ascertain the risks that are most likely to impact their operations and
develop appropriate strategies that ensure success and continuity.
Cosmic face a market risk in which brand loyalty to competitors is very strong, giving them a
competitive advantage. This may prevent a foothold in the market. However, with our selling
proposition of water resistance technology and shatterproof willow glass, we intend to attract
customers. There is also a financial risk to Cosmic, that the firm doesn’t have the funds needed to
pay back loans or debts as well as meeting other obligations. Economic changes, such as a
recession, depression or interest rate fluctuations, could be a risk to the business. An economic
downturn may prevent consumers from buying our products as well as causing them to stop buying.
The last category reflects economic risks as well as “attribution instability risk” and is measured by
the variance in the prices that are unexplained by general economic factors (Chong, Jennings &
Phillips, 2012).
To mitigate these potential risks, Cosmic plan to segment the market and understand customer
buying behaviours (Ebben, 2005). This aids to ascertain the market potential for our product and
services. Cosmic also plan to take our credit insurance to protect against bad debts (Chen, et al.,
2013). There is bound to be unforeseen demand in the market. In such a scenario we plan to hold
spare capacity to meet this demand (Chopra and Sodhi, 2004). With regards to our staff, we plan to
have key man insurance to protect against the loss of key staff (Colter, 2008). Overall, the measures
to be taken should help mitigate the potential risks in the functional areas of the business.
Cosmic Ltd – Business Plan 2013 - 2018
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25. Bibliography
BBC News (2012a) ‘Willow Glass: ultra-thin glass can 'wrap' around devices’ [Online]. Available
at: < http://www.bbc.co.uk/news/technology-18329974> [Accessed 20th November 2013]
BBC News (2012b) ‘CES 2012: New technologies unleashed at show’ [Online]. Available at <
http://www.bbc.co.uk/news/technology-16469003> [Accessed 20th November 2013]
BBC News (2013) ‘Apple's shares fall on emerging market concerns’ [Online]. Available at:
<http://www.bbc.co.uk/news/business-24058630> [Accessed 15th November 2013]
Chen, F., Chen, X., Sun, Z., Yu, T. & Zhong, M. (2013). ‘Systemic Risk, Financial Crisis,
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