InFocus Corp. is a private company in the United States based in Oregon State. InFocus was founded in 1986 as a technology firm specializing the development, manufacture, and distributions of LCD projectors, software, and phones. InFocus has concentrated its operations in the United States for a long time, and the company is now ready to venture abroad. The company has chosen China as the first market to introduce its Smartphones. Infocus will target the young population customer segment because it contributes to largest sales both local and foreign technology firms operating in China. Due to the strong competition nature of the Chinese Smartphone market, Infocus will create a value proposition for its Smartphones in China by providing a high-quality products and lowering the customer cost. From the market research, the projected sales volume in 2 000 Units or $ 100 000 in the first three years of operations in the country
1.0 Executive Summary. 2
2.0 Table of Contents. 3
3.0 Introduction. 3
4.0.Business Model Canvas. 4
4.1.Customer Segments. 4
4.2 Value Proposition. 5
4.3 Customer Relationships. 5
4.4 Channels. 5
4.5 Minimum Viable Product (MVP) 6
4.6 Key Activities. 6
4.7 Key Resources. 7
4.8 Key Partners. 7
4.9 Revenue Structure. 7
4.10 Cost Structure. 8
5.0Feasibility Analysis. 8
5.1 Market Feasibility. 8
5.2 Technical Feasibility. 9
5.3 Human Resource Feasibility. 10
5.4 Financial Feasibility. 11
6.0 Appendix 1. 11
7.0 Bibliography. 13
InFocus Corp. is a private company in the United States based in Oregon State. InFocus was founded in 1986 as a technology firm specializing in the development, manufacture, and distribution of LCD projectors, software, and phones. It was a public listed company until 2009 when it was wholly purchased by John Hui. InFocus has for a long time concentrated its operations in the United States, and the company now wants to venture abroad. The company has chosen China as the first market to introduce its smartphones. China was chosen due to its status as an emerging market which attracts the company to seize the opportunity presented by the demand for technology products in the country. This business plan provides the business model canvas for Infocus and a feasibility study of the market mentioned above.
Young urban customers are the highest users of smartphones in China thereby presenting an opportunity for Infocus to target the market segment. About 70 % of persons aged below 35 years and live in urban centers own at least one or two Smartphones either from the same company or different companies (Li & Seaton, 2015).Infocus will target the customer segment because it contributes the largest sales of both local and foreign technology firms operating in China. By targeting the young urban customers, InFocus is guaranteed of acquiring and maintaining a share in the increasingly competitive and dynamic Smartphone market in China. The idea is also realistic because young people are adventurous and are likely to acquire Infocus smartphones to test their features and functionality.
Due to the highly competitive nature of the Chinese smartphone market, Infocus will create a value proposition for its smartphones in China by providing high-quality products and lowering customer costs (Joshi, Saxena&Tarkas, 2015). Infocus understands that the core value in a Smartphone is its quality and is ready to commit its resources to realize that (Jung, 2014). For instance, Infocus will introduce a smartphone that has a big screen, a fast and reliable MIUI system, and a CPU to attract customers. In addition to that, Infocus will acquire reliable suppliers such as Toshiba, Dell, LG, and Sony to supply it with quality spare parts and accessories. Infocus will also establish itself as medium-high Smartphone provider and use an online selling strategy for the convenience of customers.
Infocus will introduce a reliable and helpful customer support system to serve both prospective and current customers. Infocus will install a customer support application in each of its smartphone models through which the customers will contact the company for hardware and software related queries (Prangem 2016). Additionally, Infocus will restructure its main website to include a portal for serving customers using the company’s products in China. Prospective customers will also get an opportunity to learn about Infocus Smartphones from its website or open days organized on a regular basis. The company will also expand its 12-hour customer support (via telephone or email) to China and ensure that all customer queries are answered within the shortest possible time (Kox, 2014).
Infocus will utilize three distribution channels to sell its Smartphones in the Chinese market. First, the company will sell directly to its consumers through shops that will be established in the major towns in the country (Dong, Li, &Tse, 2013). Secondly, Infocus will sell its smartphones to trusted retailers who will then sell them to the customers. Lastly, InFocus will allow wholesalers to acquire the smartphones and then either sell to retailers or directly to consumers.
The MVP for InFocus’s smartphones is all the Android-powers phones in China. In other terms, Infocus aims to build the features of its phone to better at least 80 % of Android-powered phones in the market (Olsen, 2015). For example, the battery running time for most Android-powered phones in China is between 24-48 hours and Infocus aims to introduce similar phones with a battery running time of over 36 hours. Other features that InFocus will focus on while building the MVP for its smartphone for the Chinese market include a 8 Inch Screen, 14 Megapixel front Camera, and 6GB RAM.
InFocus’ key activities include Research, Innovation, and development, and marketing of the company’s products. The smartphone market has matured implying that firms need to remain vigilant and sharp to survive for a long time. Infocus will engage in constant research and development to built and update unique features for its Smartphones to attract and maintain customers. Learning from the fall of Nokia Corp. and Blackberry, InFocus will strive to maintain relevance in the Smartphone industry by constantly updating the features of its smartphones to create uniqueness and match with those in the market. In addition to that, InFocus will market its smartphones using a variety of product promotion channels to create awareness.
InFocus will require physical, intellectual, human, and financial resources to operate in China. InFocus’s core physical resource is the manufacturing plant that the company will establish in the country. Other physical resources include buildings and vehicles that the company will hire to support its operations in the country. Intellectually, Infocus will depend on its patents and copyrights, partnerships with Chinas’ Xiom Corp and Apple Inc, and customer databases to support its operations. The company will source its workforce locally and from abroad depending on availability. However, Infocus will depend on its American workforce during initial stages of entry to China. Lastly, Infocus financial resources will be tapped from its profits while operating in the United States and borrowing funds from banks and capital markets.
Due to the uncertainty of operating in a new market, InFocus will forge strategic partnerships with competitors and non-competitors. For instance, Infocus will partner with China Mobile so that the company can market its Smartphones to its wide range of subscribers in the country. Also, the company will partner with Huawei Technologies and ZTE for the companies to supply it adequate phone parts and accessories such as screens and batteries.
InFocus will generate revenue through asset sale and a viable price mechanism. Through asset sale, InFocus will earn revenue for selling smartphones, spare parts, and accessories to its customers (Mahola& Erasmus, 2015). To enjoy a stable flow of income, InFocus will adopt a dynamic price mechanism where its prices will vary depending on the market segment and market conditions. For example, the company will sell its smartphones at the minimum price during the initial stage of entry and slowly move towards the maximum as time goes.
InFocus will adopt a cost-driven structure so as minimize costs through low-value preposition and extensive outsourcing. Under the strategy, InFocus will use its production costs to determine the price of its smartphones. Infocus will determine the minimum and maximum prices for its Smartphones after assessing the production costs of each model. For China’s case where the market conditions are stiff due to strong competition, InFocus will sell its smartphones at the minimum price as determined by productions cost.
The Chinese smartphone market is worth $ 500 Billion and is projected to surpass the $ 1000 Billion in next five years (Meulen& Rivera, 2013). The industry grows at a fast rate with sales growing from 100 million Smartphones in 2006 to 500 Million in 2017(Meulen& Rivera, 2013). Since 2012, Smartphones running on Android have become popular in the Chinese market. The increased popularity is due to the ease of manufacturing android-powered Smartphones by factories in the country. The market has matured but not yet at full capacity with possibility of new entrants successfully establishing themselves by manufacturing high quality and lower cost smartphones (Zhang & Zhang, 2013). Currently, customers are getting low-cost Smartphones from local manufacturers such as Oppo and Xiaom while Apple and Samsung sell the high-priced ones. There are many customer segments differentiated by age, need, and place of residence (Meeker, 2015). 70 % of smartphone owners in China are aged below 35 and live in urban areas (Pan, Chen, & Rau, 2013). InFocus expects to sell its Smartphones to the young population living in Chinese urban centers (Maghnati, Ling &Nasermoadeli, 2012). The smartphone industry in China is under the control of the Ministry of Industry and Information technology which determines tax rates and antitrust policies in the country. Barriers to entry to the market include strong competition from existing firms such as Oppo, Apple, Samsung, and Xiaom, and high start-up capital requirement (Cecere, Corrocher, &Battaglia, 2015).
InFocus will employ commercial off-the-shelf (COTS) software to develop its smart phones. COTS is considered a better software choice than custom solution because it requires lower upfront investment, contains multiple features, and does not require hardware or software for preliminary installation. Besides, upgrades are provided at a reduced cost or for free and software support is included in the maintenance contract. Additionally, COTS package development has been amortized for numerous users thereby decreasing the cost per user to a level head (Kaul et al., 2011, p. 2207). The company will unveil an in-house chipset to consummate the Smartphone manufacture deal. This will enable the firm to streamline its production, capitalize on its personnel’s creativity, minimize Smartphone shipments, and reduce the device prices for local consumers. The enterprise’s management understands that channels of distribution are critical to success in the Smartphone industry. As a result, InFocus will utilize an assortment of wholesale, retail, and licensing to avail its products to the end-users. The development of patent pools and cross-licensing will take a center stage of distribution to develop a more coordinated dissemination, sales, and marketing approach (Malinson, 2015, p. 62). Also, licensing will be a milestone towards enabling InFocus to maintain standard-essential patents in its portfolio.
China is among the best nations in the world for Smartphone development. It has a large consumer base and is continually surging ahead in mobile utilization. InFocus aims to capitalize on the ongoing trend and gain competitive advantage in the foreign market ahead of other new market entrants. The key advantage is that China has cheap labor, readily available raw materials, and willing and able suppliers and retailers. Therefore, InFocus will spend less on shipments. China’s technology industry has pulled ahead of numerous global players and just like the West; companies are vigilant on intellectual property rights. Besides, increased electronic development has awakened environmental liability laws. InFocus has a feasible framework in place to ensure that the company is not engrossed in legal proceedings. Smartphone technology is currently transforming businesses and the way of life. The incorporation of advanced cameras, long-life batteries, and stronger screens will be the game changer for InFocus.
InFocus requires an executive body and departmental managers to oversee the successful establishment of the subsidiary in China. They will need to possess the necessary skills to make InFocus the most trusted brand among young Chinese consumers. The company ill preferably employ managers with entrepreneurial drive and prior management expertise. The most sought-after technical skills will be IT knowhow and language programming. The ownership framework at InFocus will be a sole proprietorship. The owner will be responsible for profits and liabilities incurred by the business. His primary responsibility is to serve as the figurehead of the company and the ultimate decision-maker on intricate matters. The labor requirements at InFocus embody that of any other Smartphone company. The firm will need an IT manager and staff to handle software and hardware development (Rohm et al., 2012, p. 489). Additionally, the management will employ a sales staff, distribution and delivery manager, and a chief of staff in charge of product promotion. Job positions will be advertised on the company’s website, local tabloids, and social media web pages along with the qualifications for the placements. The employees will be reimbursed for time, knowledge, skills, and position in the company hierarchy. On-site ongoing training programs on environmental sustainability and product development will be offered to employees in relevant departments. InFocus competitive and growth strategy will be the delivery of low-cost Smartphone devices to young consumers. The company will implement Total Quality Management to ensure that the products are subjected to continuous improvement to maintain a high quality.
From the market research, the projected sales volume in 2 000 Units or $ 100 000 in the first three years of operations in the country. The selling price per unit will be $ 50 which translates to a total revenue of & 100 000. The startup cost and equipment/capital cost will be $200 000. Infocus will source the required capital from ploughed back profits and loans from US-based banks and capital markets. About 50 % of the required capital will come from ploughed-back profits and the other half from loans. Infocus will aim gross margin of 24 %, net profit margin 14 %, Return on investment of 16 %, and payback and break even of less than three years.
|Start-up Costing for [InFocus Corp] – |
|START-UP COSTS||Cost ($)||EQUIPMENT/CAPITAL COSTS||Cost ($)|
|Registrations||Business purchase price||100.00|
|Business name||1000.00||Franchise fees||50.00|
|Permits||500.00||Plant & equipment|
|Domain names||500.00||Vehicles||60 000.00|
|Trade marks/designs/patents||800.00||Computer equipment||10 000.00|
|Vehicle registration||500.00||Computer software||10 000.00|
|Membership fees||600.00||Phones||5 000.00|
|Accountant fees||600.00||Fax machine||4 000.00|
|Solicitor fees||500.00||Security system||5 000.00|
|Rental lease cost (Rent advance/deposit)||2000.00||Office equipment|
|Utility connections & bonds (Electricity, gas, water)||1 000.00||Furniture||4 000.00|
|Phone connection||500.00||Shop fitout||1 000.00|
|Computer software||2 000.00|
|Stock/raw materials||40 000.00|
|Building & contents|| 1 000.00
|Public liability||4 000.00|
|Professional indemnity||3 000.00|
|Product liability||1 500.00|
|Workers compensation||10 000.00|
|Business assets||4 000.00|
|Business revenue||3 000.00|
|Stationery & office supplies||600.00|
|Marketing & advertising||5 000.00|
|Total start-up costs||$100 000||Total equipment/capital costs||$100 000|
|All figures are GST exclusive.|
|Profit & Loss for InFocus as at 2018/19, 2019/20, and 2020/21|
|PROFIT & LOSS||Year 1||Year 2||Year 3|
|Sales||20 000||30 000||50 000|
|less cost of goods sold||4 000||3 000||2 000|
|Gross profit/net sales||$16 000||$ 27 000||$48 000|
|Advertising & marketing||300.00||300.00||300.00|
|Bank fees & charges||400.00||400.00||400.00|
|Credit card fees||200.00||200.00||200.00|
|Utilities (electricity, gas, water)||300.00||300.00||300.00|
|Rent & rates||400.00||400.00||400.00|
|Motor vehicle expenses||400.00||400.00||400.00|
|Repairs & maintenance||200.00||200.00||200.00|
|Stationery & printing||400.00||400.00||400.00|
|Wages (including PAYG)||500.00||500.00||500.00|
|Total expenses||$5 500||$5 500||$5 500|
|NET PROFIT (Net Income)||$11 000||$21 500||$42 500|
|All figures are GST inclusive.|
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