Writing a Business Plan

1 Enviromobile Inc. Business Plan Executive Summary Mission Statement Enviromobile Inc. is an electronic automobile manufacturer owned by three shareholders.

The mission of Enviromobile is to design and manufacture affordable energy-efficient vehicles.

It focuses on the middle and low-level income earners because these two market segments may not be able to afford electric vehicles.

Company Description The range of cars that the company intends to stock and sell include saloon cars, trucks, as well as vans. At Enviromobile, there will be a car for everyone. The company is geared towards ensuring that it has a product for all ends of the market to give an opportunity to the middle and low-level income earners to own environment friendly cars (Kornish, & Ulrich, 2014).

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Other services shall also include car renting services for individuals, families, or corporate who need cars on temporary terms. Such services shall be subject to the terms and conditions stipulated by the company and agreed by the customers, depending on the nature of cars they need, the duration of use, as well as the nature of work for which the car shall be rented. In addition, the services that would be offered to Enviromobile include in-house financing, which shall be provided by the banks within Hongkong Market As a result of the growing awareness of the need for the conservation of the environment, there is huge market potential for electric cars. Currently, there are no electric car manufacturers in Hong Kong, and they have to be imported from China and the United States, making them expensive. A significant proportion of the market would like to own electric cars but associates them with high costs of acquisition. Additionally, there have been a few reported cases of fraud in the process of attempting to acquire electric cars since buyers are forced to purchase them from foreign countries online. This has had victims lose hundreds of thousands of dollars to online fraudsters. In other cases, clients have received vehicles that do not meet the expected standard as advertised and ordered. Such cases often have a major financial impact on the victims, especially those earning low-level and middle-level incomes. It is this particular group of potential buyers that Enviromobile targets to help make purchases with minimum risks. These shall include teachers, bankers, nurses, farmers, as well as business people, who have a desire to own electric cars for personal use. It is therefore important to have a physical point of purchase where the customers can see and test the product prior to purchasing. Enviromobile provides

3 physical access to the showroom, for customers to have a closer look at the cars, place their orders physically, and also make payments.

Plant Location Plant location is important for a company with an intended global presence like Enviromobile Inc. The plant should be in a location that is convenient for both the buyer and seller. The most ideal location for the manufacturing plant is Lantau Island. It is the ideal location for the plant because of its proximity to raw materials due to its closeness to Hong kong International Airport. It is a good option because transport costs will be lower compared to many other areas in HongKong.

The Industry Most countries in the modern world have passed laws and regulations that govern and promote the production of environmentally sustainable products (Cooper, 2013). This includes the manufacture of electric vehicles. It is therefore a viable industry, because the need for the product will continue to grow exponentially in the future. The laws and regulations on the conservation of energy form a strong foundation upon which the business of electric cars will develop and continue to thrive.

In response to the provisions of these laws and the growing popularity of green products, the business of electric cars broke through as an idea in most parts of the United States. For example, the opening of city center galleries by Tesla Motors to give customers an opportunity to view their products and order them online, become frontrunner adventure and eye opening for many car dealership companies. The company operated as an independent entity with reference to sales and marketing of their products. However, with the rising cases of fraud in online based transactions when ordering and delivering cars and car parts in the modern-day car dealership

4 business, a new idea was born. It is at this point that Enviromobile will emerge to provide a reliable physical location from where customers could get a physical access to all their needs, ranging from new cars, used cars, auto parts, servicing, as well as deals on car renting.

Description of the Product or Service As a general overview of the car manufacturing industry, a product and service-oriented sector, it is important to note the almost stagnating state of progress in different times of economic growth phases. The fluctuating economic conditions, in tandem with the varying customer expectations and demands often make it a challenge for electric car companies to make sustainable decisions regarding the nature of products and services that can help them maintain a sales edge, as well as create a competitive advantage in the highly competitive sector. For Enviromobile, the founders opted to offer services that have a dual-purpose design. On one hand, such services shall offer financial advantages to the company, and offer a satisfying customer experience on the other hand. This challenge in making decisions on the nature of products and services to offer is the key to profit maximization at Enviromobile.

Competitive Advantages As previously discussed, there are two central ideas that contribute to the overall sense of uniqueness of this business, and consequently, the competitive advantage. One of these ideas is the fact that Enviromobile shall provide an opportunity to middle level and low-income segment of the market to own electric cars, as well as citizens from other states. The company’s business premise shall be located off the city center, unlike other rival showrooms, giving it an opportunity to lower its rental expenditures. This reduction in the overall cost of running the business shall trickle down to the customers, who shall enjoy relatively low prices, as compared to the market rates. The company aims to get down to all citizens residing in HongKong and

5 beyond to give them an opportunity to own a car at flexible terms and conditions. In addition to its strategy to attract the bigger segment of the population, who have often felt locked out by high end showrooms, Enviromobile shall also work in close collaboration with various financial institutions to offer flexible loan facilities to empower customers who wish to buy cars, or access other services available within the premises. The advantage, in this case, shall involve the possibility of professional, but friendly engagement between the customer and the financial institution through the company, as a way of providing a dual-purpose service strategy. While the company shall seek to ensure risk minimization on its end, it shall also ensure that the customer enjoys the ultimate customer experiences with each product and service delivered (Kotler, & Keller, 2016).

Market Trends According to multiple reports on the market trends for electric car manufacturing, it is seen that for the third straight year, the overall sales for both electric cars and trucks in the world exceeded 1.5 million units. With this trend, the forecast for 2020 is even higher than 2 million units, even when the growth rates show a diminishing increase in the overall volume of sales. In 2019 for instance, there was a total of 1.4 million units of new electric car registrations, which was a decline from the 1.25 million registered in 2018. Based on these recent trends, the electric car business is expected to continue growing at a fast rate. In this case, it is possible to say that a healthy electric car market in Hong Kong stands at approximately 300,000 cars per year.

This figure is in spite of the plateauing car market trends that have been observed over the last few years that were marked by significant increase in the overall volume of sales due to economic fluctuations. For instance, an analysis of the registration trends for the new cars for during the last 3 months of 2019 showed a 1.2% decrease, which was a third quarter of these

6 slight decreases in the overall volume of car units sold in Hong Kong. However, despite the dip in recent years, it is notable that it was still almost twice as compared to the lowest point witnessed in the Great Recession in 2009.

Marketing Strategy The management at Enviromobile understands and appreciates the importance of a marketing strategy, which will provide the organization with a long-term plan on how to market the products and services of the organization, as well as sustain competitive advantage in the market. After great deliberation, the management team settled upon applying the marketing mix as the major tool for the marketing strategy. The marketing mix is a model in marketing that provides a set of tools in marketing that an organization uses so as to market its products to the right target market (Galliers, & Sheth, 2012). For this organization, the marketing mix will comprise of 7 major levels of marketing decisions that Enviromobile should use to market the various products and services that it offers. This is the 7Ps of marketing, which will include the product, place, price, promotion, people, process, and physical evidence. The management found that using the 7Ps of marketing as opposed to the 4Ps would be appropriate for a car dealership business. Below is a discussion of the 7Ps that Enviromobile will apply to make marketing decisions.

A product is an item, or service that is designed in order to fulfill the needs of a customer.

To use this element in a marketing plan, it is essential that the organization considers the requirement that a product should be one that matches the needs of the target market. As such, the management at Enviromobile considered various elements of their products and services for its marketing plan. Among the important factors was what the client needs or wants. As mentioned before, Hong Kong is slowly experiencing an increase in the number of middle

7 income families, with those in the low income demographic gradually moving into the middle class stratification. The population pyramid of Hong Kong reveals that the larger part of the population comprises of individuals aged between 20 and 60 years. This is a prime age, which informed the management at Enviromobile of the ready market, since most of the people within this age bracket can drive. To add to this, the decision to invest in Hong Kong was also inspired by the fact that the employment rate in the city is at 81%, which means that a considerable number of individuals have the capacity to own a vehicle and service it.

As such, given this important demographic and economic information, it is clear that providing the used and new cars, car hire services, and car parts from Enviromobile will be a good move since there is a ready market. As discussed before, the organization will provide its clients with new cars, used cars, car parts, as well as car hire services.

Financial Plan

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BALANCE SHEET FORECAST Current assets Cash Petty cash Inventory Pre-paid expenses Fixed assets Leasehold Property & land Renovations/improvements Furniture & fitout Vehicles Equipment/tools

[Year 1]

[Year 2]

[Year 3]

$200,000 $120,910 $418,791 $121,092

$220,400 $133,243 $461,508 $133,443

$242,881 $146,834 $508,581 $147,055

$819,829 $6,982,920 $1,198,020 $2,918,201 $1,790,921 $1,898,201

$903,452 $7,695,178 $1,320,218 $3,215,858 $1,973,595 $2,091,818

$995,604 $8,480,086 $1,454,880 $3,543,875 $2,174,902 $2,305,183

9 Computer equipment More…

Total assets Current/short-term liabilities Credit cards payable Accounts payable Interest payable Accrued wages Income tax More…

Long-term liabilities Loans More…

Total liabilities

$901,920 $2,700,987 $20,071,792

$993,916 $2,976,488 $22,119,115

$1,095,295 $3,280,089 $24,375,264

$189,801 $90,801 $903,910 $352,420 $189,280 $1,090,831

$209,730 $100,335 $998,821 $389,424 $209,154 $1,205,368

$231,752 $110,870 $1,103,697 $430,314 $231,116 $1,331,932

$4,092,020 $2,090,183 $8,999,246

$4,521,682 $2,309,652 $9,944,167

$4,996,459 $2,552,166 $10,988,304

NET ASSETS

$11,072,546

$12,174,948

$13,386,960

Conclusion With the progressive growth of the electric car industry and the public’s increasing awareness on the dangers of environmental degradation, Enviromobile Inc. is in an industry that is bound to become even more lucrative in the future. It. has the potential to stand out compared to other vehicle manufacturers for two main reasons. Firstly, it is the first manufacturer of electric vehicles in Hong Kong, and secondly, it will manufacture cars that cater to the different segments of that cater to different segments of the market. Because of the high quality and uniqueness of its products and service, it sales are expected to continue rising exponentially.

10 References Cooper, R. G. (2013). New products: What separates the winners from the losers and what drives success? PDMA handbook of new product development, 3-34. doi:10.1002/9780470172483.ch1 Galliers, R. D., & Sheth, J. (2012). The 4 A's of Marketing: Creating Value for Customer, Company and Society. London: Routledge Publishers.

Kornish, L. J., & Ulrich, K. T. (2014). The importance of the raw idea in innovation: Testing the sow's ear hypothesis. Journal of Marketing Research, 51(1), 14-26. doi.org/10.1509/jmr.12.0401 Kotler, P., & Keller, K. L. (2016).Marketing management (15th ed.). Upper Saddle River, NJ: Pearson.