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1. Executive Summary
The vehicle rental industry is a multi-billion dollar sector of the global economy. Over the
course of the next few years, the industry is expected to experience accelerated growth, which
equates to an annual rate of 3.5 in the !"#" $ !"#3 period. The %iddle &ast vehicle rental
mar'et is a huge and well-established service. (n the coming years, this mar'et is expected to
grow by approximately ) per annum.
%ar'et research has identified a problem in this industry resulting in a significant amount
of revenue lea'age. *armentec aims to deliver a new, multipurpose and multifunctional
technological device with unique customer benefits and superior value, whose aim is to bring
efficiency in the vehicle rental industry. The vehicle rental industry plays a vital role in the
%iddle &ast mar'et as most countries here lac' a developed transportation system. (n the
initial 5 years of operation, +ahrain, audi rabia, &, /atar and Oman will be targeted. Our
product aims to solve the problems faced by the vehicle rental industry in the short term and
will later diversify to serve other forms of corporate organisations, such as 0*1 and 2edex. s
a business, we have developed a strong mar'et orientation with customer focus for our initial
years of operation.
ll vehicle rental companies operating in the %iddle &ast will eventually be targeted, and
we have based the positioning of our product on a real competitive cost and superior quality4
and intangible company service and reputation4 advantage. n aggressive mar'eting
approach will be adopted to target car rental companies operating in the %iddle &ast and to
advertise our product in as many ways as possible. e will be investing large amounts in
launching *armentec and its product into the mar'etplace. s well as the launch event,
personal selling and direct mar'eting will be built into our mar'eting strategy.
Through this aggressive mar'eting strategy, we intend to brea' even in the first quarter
of the second year and be profitable henceforth, with a constant gross profit of #3 through
the years. 6et profit ratio, is expected to increase from -7 in year one to 5.8 in year five.
The company is expected to have sufficient liquidity to operate through the years, with a scope
for potential expansion and diversification in the near future.
The research used in this business plan has been collected from internet sources,
9ournals, and also referred to Text boo's for our better understanding of the concepts. e
have even co-ordinated with engineers at 2ord and :ehicle rental companies in the %iddle
&ast in order to ensure that the data collected is closer to reality. e also made efforts to
ma'e this business pro9ect, as much as possible, free from assumptions.
This report encompasses primarily nine parts; &xecutive ummary,
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2. Company Overview
2.1. Company Description
*armentec aims to deliver a new, multifunctional device, whose aim is to bring efficiency
in the vehicle rental industry. The ob9ective of our commercial underta'ing is to develop and
provide a vehicle-speed reducing device, in order to assist the car rental organisations in
having more control over the vehicles rented by their customers. The device also aims to
reduce significant revenue losses faced by the vehicle rental organisations owing to the
misuse of their vehicles by the customers and employees of the organisation.
2.2. Vision
*armentec=s vision is to be the best and most successful global supplier of cutting edge
technology based products, to bring efficiency in the vehicle rental industry by optimising the
utilisation of time to begin with, thus and then, expand the hori>on of our businesses.
2.3. Mission
*armentec=s mission is to develop and mar'et advanced products and technologies that
'eep vehicle rental industries connected to their customers and to exceed our customers=
expectations in quality, delivery and cost through a continuous drive to improve.
2.4. Corporate Values
The company=s management philosophy will be based on responsibility and mutual
respect, while encouraging ownership of responsibilities to help foster personal and
professional growth. *armentec will be dedicated to designing, developing, mar'eting and
selling innovative products. The company=s goal will be to build strong customer relationships
based upon a foundation of trust while establishing a new reputation as a committed and
professional organisation. The highly innovative technological based product, produced by the
company will aim to promote and achieve these core values and enable our customers to lead
more fulfilling and relaxed lives. Our corporate values will include putting our customers first,
being professional in our conduct, striving to continuously improve and creating strong
partnerships with our suppliers and partners.
2.5. Company O!ectives
t *armentec, we have identified three types of ob9ectives that will serve as challenging
but attainable goals for the company;
+(6& O+?&
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#4 To become the premium vendor in the evolving vehicle rental industry
!4 To reach profitability within one year of the companies launch
2(66
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3. Mar"et
3.1. #ar$et Mar"et
The %iddle &ast has been chosen as the main target mar'et for this product. 0espite thecurrent global economic slowdown and recession and wea'er growth forecasts for many
industries, the worldwide vehicle rental mar'et is anticipated to grow at a compound annual
growth rate
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Our initial target mar'et is the (sland country in the @ersian Culf, 'nown as the Bingdom
of +ahrain. econdary mar'et research has shown that this country has diversified its
economy over the past few years and possesses great potential in terms of resources, as well
as modern and advanced infrastructural facilities. (n !""), a leading research institution
identified +ahrain as one of the fastest growing economies in the rab world. 0ubai chool of
Covernment published a report on the @ersian Culf
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ince we are emerging as a new business and bringing out a new product into the
mar'etplace, we have decided to adopt focused mar'eting $ i.e. serve one of our mar'et
segments, the vehicle rental company, in the short term and develop a single mar'eting mix
and strategy aimed at our target mar'et. e have decided to adopt this strategy because it will
be less ris'y as the product is still in its development stages and also the business is starting
out with a small scale operation. 2ocused mar'eting will allow us to focus our research and
development expenditure on meeting the needs of one set of customers and managerial
activities can thus be devoted to understanding and catering for those needs. o, how did we
identify there was a need for this product and find out our customers= needsE The figure below
details the mar'eting research process and methods that were carried out.
8
@roblem
Aecognition
problem was identified in the vehicle rental industry, through mar'etresearch. Aesearch has shown problems in transparency of dealings small,
confusing contracts4, disputes about vehicle damage and problems with
online boo'ings. 2urthermore, big problems have also been identified in that
vehicles are never returned on time, leading to ma9or losses in revenue.
Ob9ective
etting
n ob9ective was set to try and identify a product that is able to overcome
problems being faced by vehicle rentals. The ob9ective was to produce a
multipurpose device to be fitted into vehicles, whose features would be
dependent on the exact problems being faced by vehicle rental companies.The main aim of the product would be to eliminate many of the problems
being faced by vehicle rental companies at the moment.
econdary
Aesearch
econdary research was carried out on the :ehicle rental mar'et. (nformation
was gathered on the :ehicle rental industry using %ar'et (ntelligence reports
and %ar'et research reports. 2urther information was also gathered on thema9or vehicle rental companies to identify the mar'et si>e detailed below4.
@rimary
Aesearch
0esign of primary research; (nterviews and /uestionnaires see appendix4
were prepared for vehicle rental industries to identify whether any problems
exist with the vehicle rental system and to identify whether there is a need for
improvements in this industry.
&xecution of primary research; (nterview was conducted with a manager of a
%iddle &ast company and questionnairesFtelephone interviews were
conducted with executive managers of the ma9or vehicle rental companies
and potential users of the product.
nalysis of
Aesults
Aesults from all primary and secondary research conducted were analysed
and presented to identify the problems that exist, the need for a product,
target mar'et for the product, mar'et si>e, growth and opportunity.
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Aesults from the %ar'et research conducted can be shown below. 2irstly, an in-depth
face to face interview was conducted with an &xecutive manager of 6ational
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uestion 1 Does your company +ace prolems w,en rentin$ out ve,icles to customers
%ost vehicle rental companies answered yes.
The main problems faced by these companies
are - vehicles not being returned on time
leading to ma9or losses in revenue for the
company, damage to vehicles, and problems
with renewing the rental of vehicles - some
customers complain of a long process.
uestion 2 s t,ere any misuse o+ company ve,icles y employees
%ost vehicle rental companies answered yes.
The main problems faced by these companies
are $ theft of vehicles by employees and
damage to vehicles.
uestion 3 n +inancial terms ,ow muc, loss /oes t,e company ma"e on avera$e /ue to
t,ese prolems on a yearly asis
(n order to illustrate the effectiveness of introducing this product into the mar'etplace, we
have modified the table above to show the losses suffered by four of the leading international
vehicle rental organisations in +ahrain in comparison to the one-off cost they would incur by
investing in this device and the amount of time it would ta'e for them to brea' even;
*ame o+
t,e Car
&ental
Company
%vera$e
revenue
per
ve,icle
per
mont,
-(SD
#otal
numer
o+
ve,icles
&evenue
loss /ue
to
misuse
o+
ve,icles
-0
#otal
mont,s
#otal
revenue
loss
-(SD
%mount
spent on
our
/evice
-(SD
6rea" even
perio/ +or
ve,icle
rental
companies
-mont,s
6ational G"" 8G" D #! !!5,#!" !87, """ #D
+udget 8"" #7G" 3.!5 #! D3G,57" GD7, """ !#
vis 5G" 38D" 3.7" #! )D8,#") #, D58, """ #7
*ert> G5" 3#! 3 #! G",!"" #!D, 7"" !#
Thirdly, short questionnaires see appendix4 were sent out to &xecutive managers of carrental companies based in the %iddle &ast. (ts findings are summarised below;
7
0
5
10
15
20
Yes N
Question 1
0
2
4
6
8
10
12
14
Yes No
Question 2
0
1
2
3
4
5
6
7
Below 5% 5!% 1014% 151!% "#o$e 20%
Question 3
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+oth primary and secondary research identified a need for the product and ma9or vehicle
rental companies are supporting the rationale of our business. *owever, only a limited number
of car rental companies were interviewed and sent questionnaires, due to time constraints. t
*armentec, we want to continually provide our customers with a good quality product and
service. To maintain this ethos, we will ma'e extensive efforts to continually carry out mar'et
research to gain customer feedbac' and develop our product.
3.3. Mar"et Si7e an/ OpportunityThe vehicle rental industry is a multi-billion dollar sector of the global economy. Over the
past five years, big vehicle and car rental companies have been wor'ing towards enhancing
their fleet si>es and increasing their levels of profitability as according to industry analysts, the
better days of the rental vehicle industry are yet to come. Over the course of the next few
years, the industry is expected to experience accelerated growth, which equates to a es are
expressed in the table below;
)
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Country %pproximate 8leet Si7e -in cars
+ahrain !5 """
audi rabia !"" """
& #5" """
/atar !" """
Oman D" """
0espite the recent economic adversities, the industry and its 'ey leaders have started to
regain their footing in the sector as overall sales and profit margins grow. ll rental companies
operating in the %iddle &ast will be targeted. detailed analysis of the nature, scope and
current position of our 'ey target customers $ :(, *ert>, +udget and 6ational is given
below.
:(
:( &urope is a leading car rental company in &urope, frica, %iddle &ast and sia,
where it operates the globally recognised vis and +udget brands. The :( brand operates
across four continents via a networ' of over !)"" locations in #") countries, through wholly-
owned subsidiaries in #3 corporate countries complemented by license arrangements, in a
further )8 countries. The budget brand serves customers across three continents through over
)"" locations in 88 countries. These are predominantly franchise businesses. (n !""G, the
brands corporately owned locations had an average fleet of ##7 """ vehicles. 2urthermore, in
!""G, revenues from the :( brand represented )8 of the Croup=s overall revenue and the
+udget business represented D of the Croup=s overall revenue.
*ert>
The *ert> corporation is one of the world=s largest car rental company, handling more
than 3" million rentals worldwide with approximately 85"" locations in more than #D" countries
and a fleet of 55" """ vehicles. The company has focused on international expansion, and in
the late #))"=s *ert> rental cars were available in Aussia and all &astern &urope countries, as
well as ustralia,
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automobile and truc' rental system in #))G, operating in more than #!" countries and 3!""
locations. (t has a pea' fleet si>e of !73 """ cars, !! 5"" truc's and 5#"" pic'ups.
6ational
6ational
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4.1. 9ES#:E %nalysis
@olitical
+ahrain is relatively easy and straightforward to set up our business in. The country
boasts a variety of incentives to potential investors. ignificant among these are no taxation on
personal or corporate income and no withholding and :T tax. Other advantages include duty
free merchandise for re-export and duty free import of materials and machinery for
manufacturing the product, low costs for energy, utilities and rents and #"" repatriation of
capital and profits. +ahrain offers the best value for money $ it has the lowest living costs
within the region and operating costs for businesses.
&conomic
hile many countries across the orld have been hit hard by the downturn in the global
economy, for the most part +ahrain appears to have avoided the negative effects
demonstrating economic stability. +ahrain has diversified its economy over the past few years
and its economy loo's steady and forecast to grow this year. ccording to figures from the
(nternational %onetary 2und, +ahrain should see an increase of !.8 in the economy this
year, which is twice the regional average.
+ahrain was named the freest economy in the %iddle &ast. +ahrain=s economic freedom
is characteri>ed by improved business freedom, monetary freedom, fiscal freedom and
financial freedom. hen compared with other %iddle &ast countries, it has maintained
monetary stability despite inflationary pressure. Het, its inflation rate is low, 3.5, compared toother %iddle &ast countries.
Though 1abour productivity is increasing in +ahrain and it is home to a large highly
s'illed wor'force, it still suffers from some government imposed regulations. Operating in
+ahrain, a percentage of the wor'force has to be +ahrainis and wor'ers can be hard to
dismiss once they are hired.
Technological
Our product will require high investments in research and development. +ahrain boasts
an advanced information and technology infrastructure and does possess the latest
technology to process or develop products. hile the +ahraini government is spending money
to build critical infrastructure and also giving lot of incentives in order to boost the foreign direct
investment in various sectors across the country. There is an influx of foreign direct investment
in regard to technology and investment continues to rise. ccelerating the diversification
program, the government=s strategy targets five primary areas for expansion $ business and
financial services, tourism, information technology, telecommunications, healthcare and
education.
1egal
#!
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+ahrain has a tried and tested legal and regulatory framewor' in which investors can
trust to fairly protect their interests in an open and transparent manner. everal legal
procedures need to be adhered to for new businesses to operate.
The law requires us to have a local partner or sponsor who holds the ma9ority interest or
share and can therefore control the business. The local partner, be it a company or a private
individual, doesn=t need to contribute to the start-up investment or participate financially at all.
2urthermore, any new business must register with the chamber of commerce and municipality
for approval of starting the business and when the business is registered, we must show the
ministry of commerce that we have a substantial sum of money to invest. The required sum
varies and is regarded as a guarantee against liabilities. lease agreement must also be
obtained to prove the location.
The process is complex and financially ris'y. 1ocal 'nowledge and consultation with a
good lawyer from the outset is crucial. 6onetheless, +ahrain has produced many successful
and highly profitable businesses. &xport, distribution and manufacturing industries are strongly
supported by the Covernment, especially when it comes to obtaining land in which to construct
the office or factory. Therefore, the +ahraini government would be more than willing to help us
obtain the licenses needed.
&nvironmental
Our product is designed to have a positive impact on the environment as it will help
control and monitor vehicles for fuel consumption, saving on fuel costs and eliminating
wasteful vehicle movements. This will give *armentec a more positive image, moving towards
an ever expanding Igreen economyJ.
4.2. 9orter;s 5 8orces %nalysis
Threat of 6ew &ntrants
Threat of entry into an industry depends on the extent and height of barriers to entry.
The threat of entry into this mar'et is low in the short run as the idea of such a device tailored
to suit the needs of a vehicle rental organisation is unique. The product is new and
differentiated in terms of quality, branding and technology. 1egal restraints are quite high as a
local sponsor is required, product is expected to be patented and there are high initial financial
requirements, with a lot of commitment needed for advertising and research and development.
witching costs are expected to be high and the production process is not easily learned,
which can lure away potential competitors. *owever, the threat of new entrants is li'ely to
increase over the longer period.
Threat of ubstitutes
@roducts from one business can be replaced by products from another. ubstitutes are
products or services that offer a similar benefit to an industry=s products or services, but by a
#3
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different process. ubstitution reduces demand for a particular IclassJ of products as
customers switch to the alternatives. The threat of substitutes is medium. lternative products
such as a C@ system do exist, which can be used as a trac'ing device for vehicles. 0ue to
their well establishment in the mar'etplace, consumers may find it hard to ta'e a ris' on a new
product. *owever, our product is multipurpose and multifunctional and can provide the
consumer with many more benefits compared to other substitute products. e will need to
wor' hard to establish loyal customers and offer them our product at a good quality and good
price so they find it much harder to switch to alternatives.
@ower of +uyers
The power of buyers can describe the effect that our customers will have on the
profitability of our business. The power of buyers will initially be high as our business will be
targeting a few, large car rental companies. 2urthermore, they will have a large influence in
determining the success of our product.
@ower of uppliers
uppliers will supply the organisation with what is needed to produce the product or
service. s well as fuel, raw material and equipment, this can include labour and sources of
finance. The power of suppliers, in this case from (ndia, will be low as the inputs we require
can be available from a large number of suppliers. 2urthermore, there will be low switching
costs as it will be less disruptive to move from one supplier to another.
&xtent of
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branded product. s a result, they may shun the need to buy our product. +usinesses who
produce substitute products such as C@ systems can also be our indirect competitors. 2or
example; Carmin 1T0 specialises in the production and selling of C@ navigation systems in
the %iddle &ast. nother source of potential threat are companies in other parts of the world,
such as B and
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5.1. S
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base and build up our mar'et share. 2urthermore, we need to exploit the opportunities
presented to us through operating in +ahrain and develop a compelling mar'eting strategy to
overcome the wea'nesses and threats we might be faced with, especially in our initial years of
operation.
=. #,e Mar"etin$ Mix
#G
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The above mar'et research and analysis has helped us to develop an effective
mar'eting mix. This is the next step in our mar'eting strategy. (t will help us to ensure our
target customers and mar'et segment is reached, as well as our companies ob9ectives. The
elements of mar'eting needed to carry out our mar'eting strategy are outlined below.
=.1. 9ro/uct
Our product is aimed at the vehicle rental industry, in the short term. (t is a brand new
multipurpose technological device whose aim is to bring efficiency in the vehicle rental
industry. e understand that the need for product innovation has never been greater and
winning with new products is not so easy. Only one out of four development pro9ects succeed
commercially, and one-third of all new-product launches fail. (n order to ensure we develop an
effective product and there is less ris' of it failing, we have identified several critical success
factors. These are outlined in the table below;
Critical Success 8actor Description
0ifferentiated, superior
product
e are aiming to deliver a new, differentiated product with unique
customer benefits and superior value. e have ta'en steps toensure the product is able to reach the superiority level through
conducting customer studies, identifying a need for the product,
researching our target mar'et, researching new technology that
will give the product a competitive edge and carrying out technical
and operations feasibility assessments
+uild in voice of the customer e have developed a strong mar'et orientation with customer
focus. %ar'et research and customer reaction will be used as part
of the development process via constant rapid-prototype-and-test
iterations. 2urthermore, we will ensure the launch is based on
solid mar'et information
&arly product definition failure to define the product before development begins is a
ma9or cause of new-product failure. e have ensured that the
product does not move towards the development stages without
defining the product clearly including the target mar'etK product
concept and benefits to be delivered, mar'et positioning strategy
and the product features
ttac'ing from position of
strength
The new product will fare better when it leverages the business=s
core competencies. e will ta'e extreme steps to ensure we have
a strong fit between the needs of the product and the resources,
strengths and experiences of the new team and business in terms
#7
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of mar'eting, sales, distribution, technology and operations.
@lan and resource the
mar'et launch early
strong mar'et launch will underlie the success of a product. e
will ensure a quality launch for our product $ one which is well
planned, properly resourced, and well executed to ensure our
product ta'es off into the mar'et with a positive image.
=.1.1.
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One of the most critical strategic initiatives in our new product introduction is acquiring
an explicit definition of customer=s requirements, in collaboration and communication with
customers, which is where our mar'et research will always play a crucial role. Our mar'eting
strategy and promotion will be based on advertising the above features of the product to our
target customers. (dentifying the critical success factors and our products benefits will
contribute immensely to our mar'eting mix and help us effectively advertise our product.
=.1.2. Ma"in$ t,e pro/uct +it t,e mar"et
Cood mar'eting means developing products that fit the mar'et. @roducts need to be
designed correctly and then developed to 'eep pace with the mar'et changes. Our product
design will be based on idea generation and concept development. e will be hiring a highly
experienced product designer who will deal with the important aspects of our product such as
aesthetics, technology, ergonomics and usability to bring our product from conception to
mar'et. rough prototype of our product design can be shown below;
=.2. 9rice
!"
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e understand that price will play a critical role in our mar'eting activity. e are
launching a new product into the mar'et, so our price will be carefully aligned with our
promotional strategy. e will be practising a rapid penetration strategy as seen in the figure
below.
(n this strategy, we will be introducing a new product into the mar'et at a low price
while spending heavily on promotion, in order to penetrate the target mar'et as fast as
possible. Our main ob9ective via means of this strategy will be mar'et share and profit
maximisation in the long run. The price of our product is LD"". The price will be reduced by
L#" every year and we aim to introduce new features to our product to target a wider mar'et
segment and maintain a competitive advantage. The initial price is based on cost-based
pricing, which gives an indication of the minimum price needed to brea' even. The real value
of ta'ing this approach is that it will give an indication of the minimum price necessary for ourbusiness to ma'e a profit. Our business will be able to gain a competitive advantage with a low
price strategy because we are outsourcing manufacturing and building relations with suppliers.
e have the latest technology and our own Aesearch and development staff to maintain a
highly efficient process.
=.3. 9romotions an/ Mar"etin$
e will initially adopt an aggressive mar'eting approach to target all the car rental
companies operating in the %iddle &ast and advertise our product in as many ways as
possible. There are three 'ey aspects we will be concentrating on whilst launching and
advertising our product $ being informative, being persuasive and being reassuring.
=.3.1. :aunc, o+ pro/uct in t,e mar"etplace
e will be investing large amounts in launching our product at a high class presentation
and demonstration evening. +elow is detailed our mar'et launch strategy.
!#
Aapid 'imming low 'imming
Aapid @enetration low @enetration
*igh
1ow
*igh
1ow
@romotion
Price
*armentec
The product has been finalised $ manufactured, tested and is ready to be launched into the
mar'etplace
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This highly expensive launch event will be part of *armentec=s mar'eting campaign. e
want to build a positive image with our customers from the offset by organising an innovative
product launch. successful product launch will require integration and coordination among
multiple functional areas, accurate planning and a solid mar'eting strategy.
=.3.2. %/vertisin$ strate$y
s well as the launch event, the following advertising methods will be built into
*armentec=s mar'eting strategy;
dvertising
Our company will have the following logo that will give uniqueness, personality and
identity to our business and will help towards building a global image in the vehicle rental
industry;
@ersonal elling@ersonal selling will play an important role in the promotional mix. Three salesFmar'eting
staff will contact potential customers $ i.e. car rental companies directly through phone and
personal visits. This will allow for a more interactive mar'eting approach as any questions can
be answered and ob9ectives overcome. 2urthermore, we can build relations with our target
customers. lso, we believe that there is more loyalty and incentive for the sales staff since
they will wor' directly for *armentec.
0irect %ar'eting
0irect mar'eting will further allow us to build a direct relationship with our customers.
0irect mail, telemar'eting and the creation of pamphlets are the techniques that will be used.
!!
Two salesFmar'eting staff will be hired to call up executive management of all rental companies in the
%iddle &ast and arrange meetings with them to pitch our product and invite them to our product
launch evening and dinner, which will ta'e place in a 5M hotelFconference hall such as Ait>carlton
@ublic relations will play a vital role in the launch of our product and the presentation evening. 2or thisreason, a highly s'illed public relations officer will write all press releases. 2urthermore, media
relations tactics will be used to get some coverage of the launch to build a bu>> and win interviews if
possible
1aunch evening; :ideo will be played at the start to create a bu>> about the product. @resentation will
be carried out by professional mar'eters. They will spea' about the product and there will also be live
demonstrations. ll attendees will be presented with a brochure outlining the product details and they
will also be given complementary samples to test the product themselves. The -N of the technology
of the product will be explained and qualified trained technicians will be present at the evening to
tac'le any technological questions as'ed by the attendees.
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e will mail a pamphlet detailing the product, its features and contact information to all
potential customers. This will allow our target segment to fully understand the product and how
we can benefit their company.
(nternet
The internet medium will allow for an innovative way for us to advertise our product andcreate a viral mar'eting atmosphere. *armentec will have a website which details the
company information, product offered and its benefits, process and quality standards, as well
as pricing and contact information.
=.4. Distriution c,annel
&fficient and effective distribution is important for us to meet our overall mar'eting
ob9ectives. e will be using a direct, exclusive distribution strategy, as seen in the figure
below.
Our manufacturing will be outsourced, yet we will deliver our product directly to our
target customers. This will enable us to use our sales and advertising channels effectively to
maximise sales and profits and maintain control over the distribution of our product.
t *armentec, we aim to match our mar'eting mix with our mar'eting strategy, which
will be rooted in how well our product is matched to the segment of the mar'et we are
targeting. The mar'eting mix will be constantly reviewed and evaluated and changes will be
made if necessary to adapt to the mar'et environment. The above mar'eting and positioning
strategy will help us to position our product against competitors, emphasise our distinctive
unique product benefits and affiliate our product with something the target customers 'nowand value.
!3
HARMENTEC VEHICLE RENTAL
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>. Operations
>.1. :ocation
*armentec will be registered in the Bingdom of +ahrain in the capital city of %anama.
The premises will extend over an area of G,""" sq feet with 5,""" sq feet allocated to office
space. The office space will contain the corporate communications department, reception
area, purchases procurement department, 2inance department, human capital department
and a meeting room. The rest of the !""" sq feet will be required for storing equipment and for
the loading and unloading of devices received from the suppliers. e have chosen this
location mainly due to the close proximity to all ma9or car rental companies. (t would cost
approximately LG!, """ a year to rent these premises. e have decided to rent as it is simpler
and more inexpensive.
>.2. Suppliers
*armentec intends to employ and form long term relations with reliable business
partners who will provide quality inputs at competitive rates. e will be loo'ing to outsource
the manufacturing of the product. The device and the card readers will be manufactured in the
city of +angalore situated in (ndia by ilicon :alley systemsK the programmable card will be
manufactured in +ahrain by Clobal @ayment services C@4 who speciali>e in the
manufacturing of chip and @(6 cards.
>.3. 9ro/uct #ec,nolo$y
!D
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*armentec as an organi>ation would focus on the design, mar'eting and distribution of
the product while leaving the production largely to our business partners. (n the long run
*armentec would aim at adding value to the product through brand building, advertising,
distributions 'now how and patents. trong emphasis has been placed upon controlling the
cost of the product. ed login (0=s and passwords. *armentec hasta'en into consideration that it would be dangerous for a vehicle to have their time
periods as stated in the agreements expired and the car would lose its speed on
the highway which can prove ha>ardous. 2or this very reason, the driver will be
provided with an extra @(6 code that can be entered upon expiry of the rental
agreement. The second @(6 code will authori>e the device to maintain its normal
course of activity for a period of 8 hours. s a proposal after this, the speed would
reduce to a maximum of #5 mph. fter expiry of the second @(6 code the car will
not cross its speed of #5 mph. nother important point to note is that if the driver
stops the vehicle after the expiry of the agreement period, the vehicle would
immobilise after which it can only be activated by an authori>ed personnel.
!5
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+ahrain has a radius of approximately !"" Bilometres, which allows for an ideal
location to best test and implement this business model. 2urthermore, it will be
easier for a technician to reach the vehicle to reactivate it in the shortest amount
of time. (n simple language the device will brea' communication with the three
vital circuits of the vehicle, namely, the starter, the ignition and the fuel, which in
turn will ma'e it impossible to start the vehicle. hen one tries to switch on the
ignition, the vehicle will not energi>eK and the communication with the ignition
circuit will remain bro'en.
#,e c,ip an/
9* car/
The card will store the following details $ #4 (nformation on the rental agreement
which will also be displayed on the screen of the device, !4 (mages of internal and
external physical damages, if any, to the vehicle, 34 1og of the distance covered
by employees, D4 ervice history of the vehicle, 54 Aecord of the non revenue
9ourneys, by employees.
#,e Car/
rea/er
The information from the data card will be uploaded into the
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Customer
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7.5. 9atency
t *armentec, we plan to patent our product. e have contacted a @atent ttorney
imon Aees4 at *aseltine 1a'e based in +ristol in order to understand the procedure of
getting the product patented in the nited Bingdom and &urope. e have already patented
our product in the %iddle &ast. (n the long run we will be loo'ing to achieve further efficiency in
our supply chain especially as we expand globally. e aim to produce the highest quality
products at competitive prices.
7.6. &esearc, @ Development
*armentec=s Aesearch 0evelopment unit will be based in +ahrain due to the
availability of highly s'illed human resource and advancement in technology. Aesearch
!7
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0evelopment places a very important role in our organisation in the perspective of
improvement of quality, cost effectiveness and development of our products and product line.
A. )uman &esource Mana$ement
A.1. Or$anisation Structure
!)MARKETING ASSISSTANT%E"& O'
%E"& O'
)%+E' E-E)(T+.E
ADMINISTRATION PUBLIC RELATIONSRELATIONSHIP MARKETING
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%E"& O' RE/E"R)% 0
RESEARCH INSTALLATION
The organisation chart highlights the reporting structure of *armentec. The
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0evelopment will be based full time at the head office, in order to monitor the installation and
routine maintenance wor' of the product, which will be performed by the installation team and
security and maintenance personnel.
A.2. Mana$ement #eam an/ Sta++
(n order to ma'e this section convenient and easy for understanding, we have bro'en it
up into the following sub sections;
%anagement Team and or'force
Ownership tructure and hareholdings
*uman Aesource needs
A.2.1.Mana$ement #eam an/
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Ms. &eie Aelationship %anager +< in %ar'eting and2inance, %+4
# year in %ar'eting ector
Mr. Mo,sin *ead of 2inance0epartment
+< in accounting,
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A.2.2.Owners,ip Structure an/ S,are,ol/in$s
*armentec is a @rivate 1imited
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*armentec=s structure and its main purpose. Aesponsibilities, accountabilities, 'ey ob9ectives
and 'ey tas's will all be incorporated into the 9ob description.
?O+ @&
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to perform the particular 9ob effectively. graded pay system will be adopted where
employees will be placed on salaries according to different bands.
. 8inancial 9er+ormance
.1. 8inancial Mana$ement
2inancial forecasting is one of the core aspects required to run a successful business,
since it forms the foundation for all other business activities. The forecasted financial
35
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statements for the first five years have been prepared in accordance with the (nternational
ccounting tandards (4.
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the fixtures fittings are depreciated on straight line method, with an estimated life of three
years. (ntangible assets are amortised on the straight line basis for five years. ssets are
acquired in line with our growth strategy.
1ease and Aentals
(n order to minimise the capital requirement, we will be acquiring all the tangible fixedassets on a financial lease basis. The benefit of financial leasing is that the assets are
recorded in the boo' of leases and treated as their own assets, which is not the case with
operating lease. *ead office and the branch offices will be rented. The rent is expected to
increase by #" each year.
Operating &xpenses
Operating expenses include salaries, wages, advertising, rent, insurance, sponsor fee
and so on.
Our sponsor will be paid yearly since it is a legal requirement in order to do business in the
%iddle &ast. The sponsor fee is mutually agreed between the company and sponsor for
each target country.
%ar'eting will be done in-house. +esides, mar'eting agencies will be consulted for
advertising if needed. These agencies will be paid a mutually agreed fee.
(nsurance is paid at the rate of #.5 of the assets= value.
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The customers will be given a two-month credit period. This will also be the time of
payment to our supplier. n advance payment of D" will be received at the inception of the
contract for year one and 37 of the cost price will be paid to the supplier in advance.
ponsor fee, rent and miscellaneous expenses are paid in the successive months, whereas,
all other expenses will be paid in the corresponding months. hort term borrowings will be
obtained to partly fund the wor'ing capital requirements for the first year alone.
The cash needed to meet the company start-up, and wor'ing capital requirements for
the new mar'ets expansion, will be funded by the cash reserves of the preceding years. This
is the reason for little cash flow in year two, since no external funding or capital in9ection by the
owners will be made. *enceforth, the cash liquidity will increase consistently, till about 0
#.G %illion towards the end of five years.
@rofit and 1oss nalysis
n overview of the forecasted profitability of *armentec is represented by the graph
below;
(n the first year of operation, there is a net loss, and the company will brea' even in the
start of year !. This is due to IAevenue (nvestmentsJ such as advertising, A0, repair and
maintenance, and mar'et research, which will benefit the company in the long-term. Our
company will brea'-even with sales of about ##,""" units. Thereafter, the profits will increase
at a consistent rate, the highest profit earned by the company being around L7)G,""".
.3. &atio %nalysis
6et @rofit Aatio
37
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s shown above, the net profit ratio of the company will increase over the years and
reach 5.7 in year five. The reason for a slight decrease in year four is that the company will
be entering the & mar'et, and as a result, will incur a significant start-up cost.
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*armentec=s policy is to pay a #" dividend of the face value of share.
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and this has been observed to be quite consistent through the years because of the
comparatively strong economic conditions in both these places.