Manufacturing Sector Business Plan – KM Plastics Manufacturers
The company will produce a wide range of plastic bottles not only for consumers but for producers as well. These plastic bottles can be consumed directly by the consumers for water carriage etc. The company will also produce bottles for businesses producing filtered water, juices, and soft drinks. The company will also be able to cater the needs of the companies linked to the chemicals. The company has the advantage as there is no big brand to compete with therefore the market is quite open.
The demographical advantage is an important thing in business. The main focus of the company is on the big buyer. The companies producing products using the plastic bottles can be potential buyers so operating the company near the industrial area can bring a lot of business opportunities. Majority of small beverage industries do not produce their own bottles so targeting them can be a great idea as it can bring some big orders.
The chemical industry is itself a big industry and has a lot of brands working. The bottle production plants are not normally included in the production layout of chemical factories. They mostly buy the bottles and that can bring a whole lot of business opportunities. They mostly do contracts with the suppliers and if the quality of the bottle is up to the mark these contract run for long terms. If the bottles are serialized properly by the manufacturers it can actually be more of a competitive advantage for the manufacturing company.
There are a lot of opportunities open to being grabbed as there are no stable big brands in this field unlike most of the fields. This market has still to offer a lot of opportunities. There are companies producing juices and carbonated water which can also use the plastic bottles. These companies don’t normally produce their own bottles especially the ones operating on a smaller scale. They look for local suppliers of the plastic bottles. Lack of big brands also produces the problem of consistently good quality of the product. Local suppliers don’t normally produce the best or consistent quality product because they lack the proper planning and the quality control management. This brings out a whole new set of opportunities for the business as by making the process more efficient and well-planned it will become much easier to attract the potential customers and stay in business with them for a longer period of time.
The price levels of this product are not too difficult to compete with as well. The price and quality mismatch is seen widely in this product manufacturing. As there are only small-scale manufacturers their pricing strategy is normally not that well-thought and analyzed.
The strategy for making maximum sales and optimum marketing level is to be designed very carefully. First, it is important to finalize the market segment that has to cater. Then and only then a sound and dependable marketing and sales strategy can be designed. The product needs to be finalized and then the price is to be determined. Competitive analysis is needed at every point in designing a strategy to get maximum business output with the optimum use of the input.
Initially, the company will work on winning the contract in one market. When the company has a smooth and stable hold over one market it can move towards the relevant markets. Initially, the company will focus on making the bottles for beverages, juices and mineral water producing companies. Once the company has a strong hold over that market it can turn towards the manufacturing plastic bottles for chemicals producing companies.
4P’s analysis is always helpful when it comes to designing a strategy for the business.
The product being offered by KM Plastics is something the buyer is very choosy about. The quality of the product is very important even if there are small issues with a couple of samples whole order can get canceled. Companies producing mineral water are especially concerned about the opaqueness of the bottle they are purchasing. As the targeted market is selling the product which is edible there is always a risk or order cancellation is the quality is compromised at any point.
KM Plastics will never compromise on the quality of their product because doing so can get it into big trouble. As a small set-up, it cannot bear the weight of angry clients and canceled orders. The company will also employ the recycling technique. Recycling brings a win-win situation for the company. It helps in making the process cost efficient while there is no compromise on the quality of the product at all. This cost-effectiveness of the system gives a competitive advantage to the company over the rest of the companies. This cost-reduction helps the company in quoting a price to the buyer that is hard to compete with.
Plastic bottles are high in demand these days and a lot of small companies are producing them but the good part is that it is not that hard to out-run them. Strategies like recycling and no compromise on the quality can easily help the company beat its competitors.
The pricing strategy used by KM Plastics will be penetration pricing. The company will quote a price as low as possible. This will help company win contracts initially. As there is no brand advertisement in this industry the only thing that can bring a company in limelight for the buyers is good quality at good price. The company will mainly focus on the PET bottle orders. If the company is able to win contracts of PET bottles because of the right pricing strategy it can prove to be very fruitful for the company’s future. Orders of PET plastic bottles are considered to be premium orders in the field of plastic bottle manufacturers.
Firstly it is important to analyze the right place to start a business a survey needs to be done. The place should not only be closer to potential clients but also it should be kept in mind that the area should be such a place where the potential clients are in bulk but the suppliers are minimum. Another factor that needs to keep in mind is that the suppliers in the area being chosen should be analyzed as well. The quantity and quality they are maintaining are also to be considered. Moreover, it is also a good idea to find out how many of the potential clients are doing long-term business with one of the local and close-by suppliers. another factor that needs to be analyzed about the place is that the company will need a warehouse near the manufacturing site to store the bottles and raw material. Availability of this warehouse is important at the place where the company will start the operations.
To promote the company conventional ways can be used in addition to social media campaign. Conventional ways are to be used because the potential client base of the company is a very old school but if the company will think about extending the market towards the domestic users then social media can become a strong tool for the company. For the beverage companies, the company needs to give ads and try to get a one-on-one meeting with the higher officials to convince them that we are the best option and they should do business with KM Plastics.
Operational strategy is very important for the sustainability of the company. if the operations are not managed properly it can cause a lot of trouble financially as well. if the company is not maintaining the operations such that the inventory and orders are being managed in the right way. Initially, the company will start with low production rate so that the inventory does not overflows. The inventory and raw material should be monitored closely in order to run the business smoothly. If the inventory rises much more than required by the company it is nothing but a waste of time, resources, and space.
The raw material, on the other hand, has to be maintained as well. if the raw material is not enough at any point of time it can cause a shutdown of production and that can be a very expensive deal for the company. if the raw material is available in much more quantity than needed it can also create trouble because it is again a waste of resources, space, and money as well.
Initially, the orders would be not as much so the company will start with a small number of workforces to maintain not so big inventory. Later when the orders start to raise the inventory would also be greater. The company will buy enough time to process the raw material into a finished product for the orders but the inventory will come handy from time to time when there are urgent orders or some small orders in which the buyer cannot wait much longer for the company to complete the production process.
In order to maintain a smooth process of operations, the company will do a sensible and proper hiring. This is important because hiring and firing the workforce again and again can get a bad reputation to the company and paying big workforce when there are not enough orders do not make any sense financially. Therefore it is important that the company maintains a decent number of workers and initially if needed some part-time jobs could be floated in market.
|Components of Project Cost|
|Amt. in Nu.|
|Particulars||Forex. Component||Domestic Components||Total Cost||Remarks|
|Construction of Plant House||609,900|
|Plant and Machinery||2,179,320|
|Miscellaneous Fixed Assets||208,325|
|Total Preliminary Expenses||–|
|Interest During Construction||–|
|CAPITAL FIXED ASSETS WITH DEPRECIATION|
|Construction of Plant House||1||792,870||792,870||23,786||1,983|
|Plant and Machinery|
|Injection Machine (HY-1500)||1||783,900||783,900||117,585||9,799|
|Plastic Dryer (XHD-100KG)||1||26,130||26,130||3,920||326.95|
|Plastic Auto loader (XTL-600 GN)||1||26,130||26,130||3,920||326.95|
|Water Chiller (5P)||1||78,390||78,390||11,759||980|
|Cooling Tower (40TON)||1||36,147||36,147||5,422||451.75|
|Preform Mold (12cavity)||1||337,680||219,492||32,924||2,744|
|Cap Mold (24cavity)||1||329,238||329,238||49,386||4,116|
|Full automatic slitting machine (cap)||1||95,375||95,375||14,307||1,192|
|Semi-automatic mould blowing machine (HY-B-I) 2||–||–||–||–|
|Stretch Blow Equipment and Rotary infrared pre-||1||174,200||174,200||26,130||2,178|
|High pressure air compressor||1||99,730||99,730||14,960||1,247|
|High pressure pipe||1||8,710||8,710||1,307||109.2|
|Air filter (2 nos)||1||9,581||9,581||1,437||119.6|
|Air cold dryer||1||39,631||39,631||5,945||495.3|
|Blowing mold (500ml)||1||15,678||15,678||2,352||196.3|
|Blowing mold (1000ml)||1||19,162||19,162||2,874||239.85|
|Miscellaneous Fixed Assets|
|Sintex Water Tank (2000l)||1||13,000||13,000||1,950||162.5|
|TOTAL NET FIXED ASSETS||3,180,515||65,760||5,480|
|PET Granules for bottle (per ton)||43,550||78||1,950||130,650|
|PP Granules for Caps (per ton)||45,640||9.75||243.75||17,115|
|Cardboard Carton (pcs)||5||162.5||4062.5||28,438|
|PARTICULARS||YEAR 1||YEAR 2||YEAR 3||YEAR 4||YEAR 5|
|PET Granules for bottle (per ton)||1,567,800||1,724,580||1,897,038||2,086,742||2,295,416|
|Cardboard Carton (pcs)||341,250||375,375||412,913||454,204||499,624|
|Inventory has been increased by 10% from second year onwards.|
|Only 25 working days has been considered for the production in each month.|
|Raw materials will be purchased from suppliers based in China, Hebei Yuyin Trade Co.|
|Machine Operator (skilled worker)||4||21,600||259,200|
|Sales and marketing person||2||10,800||129,600|
|Guard cum storekeeper||1||4,500||54,000|
|Part-time labor and others||4,500||54,000|
|Particulars||Monthly||Year 1||Year 2||Year 3||Year 4||Year 5|
|Salary & Allowances||47,450||569,400||597,870||627,764||659,152||725,067|
|Payroll (direct & salary||63,050||756,600||794,430||834,152||875,859||963,445|
|PARTICULARS||MONTHLY COST||YEAR 1||YEAR 2||YEAR 3||YEAR 4||YEAR 5|
|Credit card fees||–||–||–||–||–||–|
|Rent or lease||5,899||70,785||77,864||85,650||94,215||103,636|
|Subscriptions & dues|
|Taxes and licenses||2,925||591,373||678,226||774,081||879,860||982,758|
|Utilities & telephone||4,875||58,500||64,350||70,785||77,864||85,650|