1.

0 Executive Summary
Over Power Sdn. Bhd. (OP) is a private limited company owned by four shareholders that
innovates product that can ameliorate the standard of living of the society and provide an easier
solutions to solve trifles in daily life. Our mission is to improve consumers' lifestyle by weeding
out other redundant cards carried daily. Our visions are to become the most seamless and secure
payment card method, to create a trend by using one unique card for multipurpose and to be the
most successful company that provide creative products that is unable to replace and surpass.
However, our company aims fulfill the needs of consumers in domestic and then expand globally
together with our strong management team. But firstly, we had done an analysis based on the
payment card industry. Through the PEST analysis, we had noticed that the political in Malaysia
is stable. Thus, we had done research about the rules and regulations, such as IFSA 2013 that
needed to be followed while entering to this industry. Hence, there is an expectation on economic
growth in Malaysia due to the increase of consumer spending. Besides, unemployment rate is
controlled and Malaysia has overcame from inflation. Next, merging trends, time scarcities and
safety precaution shave caused consumers to pursue the use of payment cards. In addition,
technology such as card reader system, internet and AFC have revolutionized payment methods.
Thus, more and more people adopt payment cards. Therefore, payment card industry is believed
to be accessible and profitable.
OP Card targets on those who seek for a more convenient life. Thus, market selection can divide
into teenagers that follow the trends, working adults with stable income and senior citizens that
seek easy lifestyle. Also, buyer behavior of consumers nowadays tend to use more on credit and
debit card rather than bring a handful of cash for shopping as it is more secure. OP has three
major competitors which are MYPass, Plastc Card and Wocket. Based on the competitive
analysis grid, OP gains competitiveness in product features, price, branding, packaging,
functionality and customizability. Hence, our branding might discourage OP to compete in the
market as OP is a newbie brand in the market.
The first product which is Omnipotent Card (OP Card) will be launched in Malaysia with the
collaboration of our key partners, which contains bank institutions, public transports and other
franchisers. OP Card is a card that combines the functions of all types of card. Hence, OP Card is
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a user-friendly card that can be used in stores together with our OP Device, which will be placed
in the stores. Using value-based pricing method and different pricing strategies, price for OP
Card is allocated RM50 per unit, meanwhile the price of OP Device is RM50 paid by monthly.
OP mainly promotes OP Card and OP Device through TV and social media. For distributions,
OP cards will be distributed by direct selling, which is selling our products in OP offices and
indirect selling, which is selling our products through bank institutions. Further, OP will also
operate a counter in different regions of our cooperated banks.
OP has make assumptions on pro forma financial statements of OP for the year 2015 and 2016.
First and foremost, OP needs a total start-up budgets around RM373,810. Hence, the amount of
OP's income which is RM19,980 is projected to be earned by 2015, whereby RM38,700 is
projected to be earned by 2016. Thus, outflow of cash is expected to occur as OP is a new
established company. In order to recover OP's initial investment in terms of production, OP has
to reach at least 15166 units of sales. To obtain certain level of profitability, OP has to trade
higher than the break-even point.
In a nutshell, Over Power Sdn. Bhd. wants to create a legend of "One step, multi time".

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2.0 Company Background

2.1 General Description of Over Power Sdn. Bhd.
Our company is named Over Power Sdn. Bhd. (OP). It was established in January 2015 whereby
it is operated in March 2015. The word "Overpower" means to vanquish by superior force
(TheFreeDictionary, 2015), which symbolizes our company urges to monopoly the market by our
intensive productions. Hence, OP concentrates in innovating a brand new multifunctional
Omnipotent Card (OP Card) that will enhance the lifestyles of the society. Recently, OP had
discovered the problems and difficulties of consumers to bring redundant cards in a heavy wallet.
Thus, our company aims to provide this unique service to the public through this OP Card.
2.2 Ownership Structure
Over Power Sdn. Bhd. is a Malaysia-based private limited company (PLC) formed under
Companies Act 1965. With this ownership structure, shareholders are legally protected by law
from legal liability of the company and the liabilities are limited to the capital contributed by
shareholders. Meanwhile, shareholders are not burdened with the management of the business
and funds needed to operate the business are easy to obtain (UiTM, 2004). Furthermore, OP is
registered under the jurisdiction of Business Unit of the Companies Commission of Malaysia
(CCM).OP's founders, whom are also the shareholders include Ong Shyan Jing, Cheng Hsin
Hsien, Kok Shan Ying and Kung Jae Hann.
Figure 2.1 Proportion of share holdings among shareholders in OP

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Proportion of share holdings among shareholders (%)

11%
16%
52%

Ong Shyan Jing

Cheng Hsin Hsien
Kok Shan Ying
Kung Jae Hann

21%

2.3 Products and Services

Our products include Omnipotent Card (OP Card) and Omnipotent Device (OP Device). OP Card
is a multipurpose card that combines the functions of credit card, debit card, member car and etc.
It is more convenient for people to take only one card while going out and use it for making
payments, showing memberships and taking public transports. The OP Device enables OP Card
to insert and access to the card information by security fingerprints on the device's screen.
2.4 Mission Statement
To improve consumers' lifestyle by reducing the holding of unnecessary cards daily.
2.5 Vision
To become the most seamless and secure payment card method in the world.
To create a trend of carrying only one unique card for multipurpose.

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To be the most successful company that provide creative products that is unable to replace and
surpass.
2.6 Objectives
In short term, OP wishes to bring positive impacts to the payment card industry and create values
to the consumers by introducing and enhancing the payment system in Malaysia. Thus, OP Card
is expected to become the first and the only multipurpose card that carry by everyone in
Malaysia within the first 2 years. Nonetheless, OP aims to become the largest company and
monopolize the payment card industry in Malaysia by gaining at least 70% of the market share
within 6 years. After the saturation of OP Card in domestics, OP looks forward to expand
globally to foreign countries by 2020.

2.7 The Management Team

As the shareholders of OP, it is important to assign the board of directors to carry the
responsibility to manage and run the business. Hence, we had elect the board of directors to
assign the roles of managers and recruit our management team.
Figure 2.2 Organization chart of OP

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2.8 Key Partnership
As our company is mainly producing the exclusive OP Card, which is a multifunctional card for
individuals. Hence, OP Card will bring in cards include credit cards, debit cards, stored-value
cards and membership cards. Consequently, we will need to persuade and collaborate with
companies in different sectors. In bank sector, our key partnerships will be Maybank, Citibank,
Public Bank, United Overseas Bank (UOB), HSBC Bank, RHB Bank and Oversea-Chinese
Banking Corporation (OCBC) Bank (BankNegaraMalaysia, 2015). This collaboration enable our
OP Card to use upon payment in shops. Besides, we will then cooperate with companies such as
SaSa International Holdings Limited, Sakae Sushi, Jatomi Fitness, Watson, Tesco, Neway
Karaoke, Starbucks and so on. Therefore, OP Card also carries membership types and criteria.
Besides, we will work jointly with MyRapid to enter the public transportation sector.
Accordingly, OP Card can used to access to RapidKL LRT, monorails and bus (MyRapid,
2011).For instance, a lady goes shopping mall by using OP Card to ride on a bus, purchasing
goods and getting membership discounts in Watson at the same time with OP Card. Furthermore,
these companies will provide users of OP Card to have the rights and obligations to install
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different forms of cards in to OP Card. With these collaborations, we believe we can gain the
market shares and get first mover advantages. On the other hand, companies that have
partnerships with us will get to reduce their costs and administrative efforts as they do not need
to take into concern about the cards issued out. Lastly, they might also attract new users or
buyers to their companies as adopting a card becomes more easier and efficient with OP Card.

3.0 Industry Analysis

3.1 Description of the payment card industry
The products and services that our company provides are going to compete in the payment card
industry in Malaysia. The structure of payment card industry is concentrated industry, which is

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industry dominated by a few large firms that shape its direction and evolution (Business
Dictionary, 2015).
According to the Market Research Report, payment cards instrument registered in Malaysia had
a positive growth rate from 2009 to 2013, which recording a compound annual growth rate
(CAGR) of 7.09% to reach 50.5million cards by the end of 2013. In terms of transaction value,
after registering a review-period CAGR of 6.87%, payments card is valued at MYR402.9billion,
which is US$128.2billion, in 2013. However, the key driving force in the growth of payment
card industry are new product developments, improved banking infrastructure, robust economic
performance and growing acceptance of card-based payments at point-of-sale (POS) terminals
and on public transport. Moreover, with the adoption of Europay, MasterCard and Visa (EMV)
standards, and the emergence of contactless technology, the growth is continuing going
(Financial Tech Spotlight, 2014). These show that payment card industry in Malaysia is
successful.
On the other hand, the average transaction value (ATV) in Malaysia was US$141.1 in 2013,
which is considered moderate among countries. The ATVs in China and Thailand, which
recorded at US$299.1 and US$152.6, is higher than Malaysia, whereas Malaysia is higher than
Australia and India, which recorded at US$104.9 and US$59.2 respectively. Among these five
countries, the highest frequency with 100.3 transactions per card is recorded by Australia and
Malaysias was relatively low at 18.7. However, Malaysia had the highest level of penetration,
which is 4.9 cards per individual, followed by 4.4 in Australia, 3.3 in China, 1.8 in Thailand and
India with 0.5 (Financial Tech Spotlight, 2014). This shows that people in Malaysia are more and
more using payment card to do payment and used to it. However, 4.9 cards per individual is
considered many, therefore there is an opportunity to innovate a payment card that can involve
functions such as credit cards, debit cards, prepaid cards, member cards and so on.
In short, from 2009 to 2013, there is an obvious growth in Malaysian payment cards instrument,
which is grew from 38.4 million cards to 50.5 million, at a CAGR at7.09%. According to the
Market Research Reports, a forecast-period CAGR of 3.34% is anticipated to grow. With nearly
five cards per individual in Malaysia, Malaysia has one of highest card penetration in AsiaPacific. As the transaction values at POS terminal has been increasing by degree, consumer
preference for cashless transactions also rising. In other word, this trend also will prevail in other
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markets in the region too (Financial Tech Spotlight, 2014).Lastly, from my point of view, the
payment card industry shows a good prospects to investors based on the researches.
3.2 PEST Analysis
Political and regulatory changes, economic trends, social trends and technological advances are
the most important environmental trends for a company to access to new opportunities.
3.2.1 Political environment
Malaysia is a multi-ethnic, multi-religious society which surrounded by a majority Muslim
population in most of its states and an economically-powerful Chinese community (BBC News,
2013). The political parties in Malaysia are distinguished based on their differing racial
compositions. Barisan Nasional (BN) dominates the government since Independence. The BN is
an alliance of the United Malays National Organization (UMNO), Malaysian Chinese
Association (MCA), Malaysian Indian Congress (MIC), and a series of smaller parties. The
UMNO has been the dominant party in both the BN and the country (Global Security,
2015).Nowadays, Malaysia is having a politically stable environment, which lead by a
democratically-elected coalition government that committed to the development of its economy.
Through the measure of Economic Transformation Programme (ETP), the government also has
promised to implement the appropriate policies and provide its support for the creation of
favorable environment for business and investment. In other words, government is flexible
enough to accommodate needs in payment card industry (ETP, 2013).
Malaysia is one of the countries that full of the rule of laws and there are several laws, rules and
regulations that will impact the payment card industry.
Firstly, Malaysia is an Islamic country, therefore an Islamic Financial Services Act 2013(IFSA)
has been introduced to provide a stronger legal foundation to drive the growth of Islamic finance
sector. The Act provides a legal platform for development of Islamic finance in Malaysia which
is reflected upon a comprehensive regulatory framework of the various Islamic financial
contracts. In Islamic finance, Islamic banks conduct financial intermediaries using Shariah
contract and apply this in the offering of Islamic financial products and services. With this
comprehensive regulatory framework in place, there is hope that the growth of Islamic finance in
37

Malaysia will further driven and this action may be seen as an example for other key markets in
advancing the Islamic financial system together at global scale (INCEIF, 2015). In other words,
the strengthen of Islamic finance might help to boost the payment card industry.
Besides, the Payment System Act 2003 must be taken into account for payment card industry. A
legal framework is provided to ensure the efficient functioning and stability of the payments
system in the country and therefore the confidence in the payments system is preserved. Based
on the Act, Central Bank is enabled to effectively undertake its oversight activities in meeting its
policy objectives in the payments system, which in other words is to ensure the safety and
efficiency of the payments system, as well as to safeguard public interest. As the Act allow
payment systems and payment instruments to be introduced in the market speedily, the Central
Bank is empowered to prohibit the operations of the payment systems or issuance of payment
instruments that are found to be harmful to the reliable, safe, efficient and smooth operation of
the payment systems (Bank Negara Malaysia, 2015).
According to Malaysia government, Goods and Services Tax (GST Malaysia) will be
implemented effectively from 1 April 2015 and the rate is fixed at 6%. GST Malaysia will
replace the sales tax and service tax, which are 10% and 6% respectively. GST Malaysia is a
consumption tax based on the value-added concept. It is imposed on goods and services at every
stage in the supply chain including production and distribution stage (NBC GST, 2015). As
payment card industry involves both goods and services, GST Malaysia will be charge on the
cards and service transactions.

3.2.2 Economic environment

Malaysia today is a middle-income country with a multi-sector economy based on services and
manufacturing. According to the World Economic Forum, economy of Malaysia from 2014 to
2015 was one of the most competitive in Asia, which is ranked at 6 th and 20th in the world (World
Economic Forum, 2015). The Gross Domestic Product (GDP) in Malaysia has been risen 2.0
percent in the fourth quarter of 2014 over the previous quarter (Trading Economics, 2015). These
37

show that Malaysia is achieving a great success of economic growth and it is believe that will
have a more successful future.
Figure 3.1 Malaysia GDP Growth Rate

Source: Trading Economics, 2015

The GDP of Malaysia in 2014 was $746.821 billion and it is continuing to growth. A countrys
GDP show the purchasing power of consumers, which will affect Malaysian to do more spending
in buying things by using payment card. Besides, Malaysias economic is believed to have a
more improvement in the future as the GDP and unemployment rate are maintaining at a good
rate. People in Malaysia will have more purchasing power as the unemployment rate is only
2.9% in April 2009 (Trading Economics, 2014). In other words, more purchasing power provides
the opportunity for Malaysian to buy more things and also increase the usage of payment card.
According to the Trading Economics, the inflation rate in Malaysia was recorded at 1.0 percent
in January of 2015, which is from a 2.7 percent in the previous year. This is due to the cost of
transport and communication declined and rises in prices of housing and utilities and food and
non-alcoholic beverages moderated (Trading Economics, 2015).
In a contrast, Malaysias economy has entered a stabilized phase as there in an obvious growth in
Malaysia GDP. The growth of Malaysias economy has continued expansion in consumer

37

spending and investments. When there is support for consumer spending, the presence of
payment cards might raise (Kok, 2013).
3.2.3 Social environment
Malaysia contains a high level of heterogeneity of cultures, races, religions and beliefs. Thus,
consistently changing in demographics affect Malaysia's socio-cultural factors implies on the
current trends, lifestyles and purchasing behavior of the people (Daniel, 2010). Hence, social and
culture trends are merging and these changes may cause a major impact to business. First and for
most, payment card has became a global trend of payment method, which is also widely used in
Malaysia. In 2009, although the payment card growth has once crashed as BNM implemented
the RM50 levy. Moreover, usage of payment card in Malaysia is fairly saturated across states
now (Hishamh, 2011).In the past, Malaysian payment cards has registered a positive growth,
achieving a compound annual growth rate of 7.09% to reach 50.5 million cards in circulation by
the end of 2013 (Timetric, 2015). In other words, anyone who qualifies to get a payment card has
got one or more. Thus, the evolving trend of card-based payment methods are expected to
surpass paper-based payment methods.
Nonetheless, society is overwhelming by the lifestyle obligations. Time scarcity pressures
consumers express strong preferences for quick, efficiency and convenient products that allow
them to endure simplify lifestyles. Hence, solutions are needed to restore balance in the
consumers' life (Government of Canada, 2010). Therefore, there is an increasing demand of
payment cards as consumers can make payments instantly, transfer and withdraw money and also
monitor their cash flows easily as bank will recognize transactions and send notification to your
phone immediately.
In addition, the rising awareness of society about crimes such as robbing, stealing and fraud also
encourage the expanding of payment card industry. Nowadays, carrying a lot of cash in the
public or overseas is a huge temptation for the greedy one to commit crime. Due to safety
precautions, people prefer to replace paper notes with a card upon purchasing, especially women
and the elderly. Also, payment card gains universal acceptances that can fulfill the need of
consumers travelling across nations while card purchases are exchanged at the interbank
exchange rate at the best rate (Schlichter, 2012).
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3.2.4 Technology environment

"It has become appallingly obvious that our technology has exceeded our humanity" said the
physician Albert Einstein. Here and now, technology is an essential need in everyone's life, many
things would be materialize with this important development (Moradi, 2015).
Additionally, technology has certainly revolutionized payment methods upon transactions.
Hence, the researches revealed that the usefulness of card reader system is positively associated
with consumers intention to adopt payment card in Malaysia. The common use of card reader
such as magnetic stripe or swipe readers (MSR) is an essential part of any point-of-sale (POS)
system. MSRs can read various card with magnetic stripes, including some driver's licenses, gift
cards, and other IDs. Mobile readers are evolving too, available for on-the-go devices by
scanning cards into your application (Barcodesinc, 2015). Hence, consumers demand for more
flexible shopping by using payment cards.
Technology enhancement leads internet to become the most active trade intermediary within a
decade. Instantly, online shopping revolutionizes retailing by providing consumers to stay
indoors and buy an enormous variety of products and services over the world. Momentarily,
internet is broadly used to access online financing such as online banking and online transfer
across nations with payment card. Internet also enhances e-commerce industry, consumers can
conduct electronic payment for purchasing and selling goods and services offered through the
internet by either e-payment or e-cheque (E-payment, 2013). Also, consumers rely on payment
cards not only enjoy the ease of transferring payment through internet but also ensure the
accuracy of amount transferred, timely transactions and protection over information. Hence,
these bring a positive impact towards payment card industry.
Furthermore, technology has replaced the use of formal ticketing method into smart card
ticketing. In Malaysia, the ticketing systems in public transportation such as RapidKLLRT are
implemented with the new Automatic Fare Collection (AFC) integrated systems. This system
uses a new MyRapid Pass which is a stored value card, and tokens that can be purchased at all
RapidKL LRT counters for a single journey (MYrapid, 2011). According to Singapore
Technologies Electronics Limited, AFC is a ticketing system that designed based on contactless
smartcard-based end-to-end solution for fare collection and payment. With this system, operating
37

and maintenance cost of fare collection for transit operators can be reduced and improve
efficiency. As this system is ease-of-use, the number of passenger flow in and out of stations
increased. In other words, this system encourages passengers to use card while taking public
transportations. Therefore, the user rate of payment cards will increase (STEE, 2011).

4.0 Market Analysis

4.1 Market Segmentation and Selection

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Our company segmented on the market based on demographic and psychographics variables.
Malaysian consumers now are more and more emphasizing on convenient lifestyle. They want
their life to be as convenient as possible. So our company created Omnipotent Card to fulfill
consumers demands.
Our company target on almost every citizens in the country as everyone wants to have
convenient life. Our product can make their life more convenient and increase efficiency of their
life. Our company target on mostly teenagers, working adults and senior citizens. Besides that,
consumers that have stable income are our target too. Working adults tend to have more credit
cards so OP target on them.
Our product is innovated by us and is better than those usual products in the recent market. OP
are sure that our product can make the life of our consumers convenient and more efficient.
Thus, satisfaction of our customers will be guaranteed.
4.2 Buyer Behavior
Buyer behavior is the management theory component that analyzes the buying habits of people
in a country. This is primarily used for marketing purposes, an examination of perception, desire,
decision making and satisfaction are included in the analysis (BusinessDictionary, 2015).
Consumers nowadays tend to use more on credit and debit card rather than bring a handful of
cash for shopping. As it is more secure to bring just few cards than bringing a handful of cash
that might catch the attention of snatch thieves, so the card payment industry had been growing
steadily. There are a few type of cards available in the market such as credit card, debit card and
charge cards. These cards are also divided according to consumers purchasing power so that it
suits everyone.

4.3 Competitor Analysis

4.3.1 MYPass
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MYPass is a prepaid and discount card issued by Malaysias leading e-payment service provider,
Touch n Go. MYPass can be used to pay for products and services in Malaysia, such as Kuala
Lumpurs public transport, retail stores, restaurants, theme parks, tourist attractions, and
anywhere that has the Touch n Go sign displayed, throughout Malaysia. MYPass can be
reloaded in a lot of places such as convenience stores, transit stations, petrol stations and selected
retail stores (Emily, 2014).
4.3.2 Plastc Card
Plastc is an electronic card that can stores up to 20 cards including debit, credit, gift and even
security cards. It has the same size and shape as an ordinary card, but it has a sharp and striking
e-ink display. You can simply swipe through the e-ink screen to choose the type of card you
want, and swipe the magnetic stripe through the reader. Instead of carrying 20 cards in your
wallet, you can carry just one with Plastc. The connected Wallet app through your smart phones
is able to store, manage and sync cards to the Plastc card. You can also check your account
balances and transaction alerts, all available from the top seven U.S. banks that help users track
spending (Dauphin, 2015).
4.3.3 Wocket
The Wocket is smaller than a typical wallet, and can be used to carry cash via an additional
accessory. The power is supplied to the card by a coin cell battery. Then, users can start by
swiping all of their stripe cards into the Wocket, which then records the pertinent data and store
those date into its onboard memory. Besides that, other types of cards, such as utilizing barcodes,
can be scanned in. Up to 10,000 cards can be stored into one device, then being kept someplace
safe in the user's home. When a payment is in process, the Wocket's touchscreen is used to
choose the desired "soft" (electronic) card. Before the desired soft card can be accessed, the
user has to first verify their identity. This is done using a combination of thumbprints and a PIN
code. The device will wirelessly pairs directly with the merchant's payment system, as long as it
is authenticated by Wocket. There is no smartphone or internet access required. For loyalty cards,
member cards or others that utilize a barcode, when the card is selected, that code will appear on
the Wocket's screen allowing it to be scanned. Users can also manually enter and store textual
information such as their personal pass codes (Coxworth, 2014).
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Table 4.1 Competitive Analysis Grid for Over Power Sdn. Bhd.
Name

OP Sdn. Bhd.

MYPass

Plastc

Wocket

Product features

Advantage

Disadvantage

Even

Even

Price

Advantage

Advantage

Even

Even

Branding

Disadvantage

Disadvantage

Advantage

Advantage

Packaging

Advantage

Disadvantage

Advantage

Advantage

Functionality

Advantage

Disadvantage

Even

Even

Customizable

Advantage

Disadvantage

Advantage

Advantage

5.0 Marketing Plan

5.1 Marketing Mix and Strategies
5.1.1 Product

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Our product is a multipurpose card and it is known as Omnipotent Card (Please refer to
Appendix 1 for OP Card). OP Card combines the functions of credit card, debit card, storedvalue card and member card of shops. It is more convenient for people to take only one card
while going out. They dont have to bring more than one card for shopping. For example, the
user of Maybank, Citibank, Public Bank and member of Sakae Sushi or Watsons do not have to
bring those cards in their wallets. They only have to bring OP Card out and pay and collect point
by using our product. To use this convenient card, the shops or outlets need to use our specially
designed device and apps - The OP Device (Kindly refer to Appendix 2 for OP Device). They
only have to insert the card into the device and pick the card that they would like to access from
the device's screen. Besides that, after they made the payment, the devices will detect and
automatically sign in to the membership. Users do not have to provide their details for member
benefits anymore. Furthermore, OP Device is more safety than normal credit card machine.
Users have to provide fingerprint and also pin or password to access to their card. OP Card is
designed almost the same with those normal payment cards. To ensure that users are able to keep
the OP Cards in their wallets, the dimension of OP Card is using a standard card size, which is
85.60 53.98 mm (ISO, 2004). It is due to the space provided in the wallet are usually suits for
the standard card size only. To emphasize that our OP Card is the only card that available with
multifunction, the colors for the card is unity, which is only available in gold color, also known
as magnetic gold. Besides, the main component that used to produce OP Card is fibre-reinforced
plastic (FRP), which is a composite material that made of a polymer matrix reinforced with
fibres. It is also considered as one of the strongest and most durable materials in the world
(Bedford Reinforced Plastics, 2015). Therefore, OP Card is light weight with high strength and it
is resistance to bending. Furthermore, surface of OP Card can be protected from scratches as this
material improved the surface quality. To follow-up our customers, a six months warranty will be
provide for each OP Card and OP Device. If the products or components are defective, OP will
provide a free-of-charge service to repair or replace them with a new product excluding failures
caused by user. However, a small amount of service fees will be charged for repairing when the
warranty ends.
5.1.2 Price

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Value-based pricing is the most suitable approach to set the price for our product. Value-based
pricing the list price is determined by estimating what consumers are willing to pay for product
and then backing off a bit to provide a cushion. The price a company charges for its products
sends an important message to its target market. Thus, several pricing strategies are used to
attract consumers. Firstly, price skimming is used to position our product as innovative, unique,
and of a high quality. Price skimming is a pricing strategy in which entrepreneurs sets a
relatively high price for a product. Hence, our products will charge at premium price. Other than
price skimming, OP also uses perceived value pricing. Perceived value pricing is typically valuebased pricing, which is the valuation of good and service according to how much consumers are
willing to pay rather than upon a products production and delivery costs (BusinessDictionary,
2015). By using a perceived value pricing, the marketing of a product will be more effective as it
sets product pricing in line with its perceived value by potential buyers. The OP Card is
suggested to be set at RM50 which means the users who want to combine their cards into OP
Card, they only have to pay for the card and the services are free of charge. OP only charge the
owner of shop for the rental of OP Machine for RM50 monthly.
5.1.3 Promotion
OP promotes our products through TV and social media. This is because TV is a more traditional
and reliable platform to and for consumers. Advertisements made on TV must go through the
permission of government and there is restriction on advertisements, for example laws and
regulations which made them more reliable. As for social media like Facebook, Twitter, Youtube
and etc, there might be lower confidence between customers because there is no restriction and
many fake information are being spread. But, there is still benefits to promote OP's products
through social media. The number of users of social media are enormous and the cost of
advertising is relatively lower. To create public awareness, our company have created a
recognizable slogan - "One step, multi time", which means multiple tasks and payment can be
done simultaneously using an OP Card.
5.1.4 Place
OP cards will be distributed by direct selling and indirect selling through intermediaries. In direct
selling, our company will set up office in the main city and sell the products at the office to
37

display and sell our products to consumers. At our office, consumers can apply for new OP Card
and franchisers can subscribe for the device. Besides, a better customer service will be provided
as they can seek more information about our products and made complaints. Furthermore, direct
selling enable OP to maintain control on its products. Next, indirect selling through
intermediaries, which firms that sell through intermediaries typically pass the products to
wholesalers and place them in retail outlets to be sold. As there are collaborations with banks, the
products will be sold at the counters of banks. The staffs that are in charge of the counters will be
serving customers and introducing them our products. The staffs also will convince them to
apply for OP cards. Besides, selling at banks will help OP to reach our consumers directly and
gain market share more effectively. Hence, bank institution is a more trustable intermediaries
compare to others. In the future, we will also open a counter in every branch of our cooperated
bank.

6.0 Financial Projection

6.1 Start-up Budget
A
.

Capital Expenditure

RM
37

RM

Land & Building

Machinery & Equipment
Furniture & Fixtures
Vehicle - Van (hire purchase)
Renovation cost
Sub-total

105,000
40,500
10,000
40,000
34,350
229,850

B. Working Capital (3 months)

Marketing
Production/Operation
General/Administrative
Sub-total
C
.

9,000
100,000
5,500
114,500

Other Expenditure
Pre-Operating
Business Registration
Insurance
Road Tax
Sundries

1,000
1,510
650
400
3,560

Deposits
Utilities (Telephone/water/electricity)
Sub-total
Grand total
D
.

900
4,460
348,810

Add: Contingency cost (10%)

TOTAL START-UP COST

25,000
373,810

6.2 Pro Forma Income Statement for Over Power Sdn. Bhd.

37

Sales
Less: Returned goods &
discounts
Net Sales
Cost of Sales
Opening inventories
Purchases
Less: Closing inventories
Gross Profit
Operating Expenses
Stationery
Rent
Insurance
Marketing expenses
Salary and wages
Administration expenses
Discount allowed
Other expenses
Depreciation:
Office equipment
fixture & fittings

2015 Projected
RM
70,850

RM

2016 Projected
RM
92,480

(2,000)

(3,200)
68,850

16,020
17,650
(6,700)

26,970
41,880

89,280
6,700
25,000
(8,200)

700
3,900
1,500
9,000
3,000
1,100
600
490

300
3,900
1,500
11,000
4,200
2,100
1,200
1,000

1,020
590

1,160
720

Net Profit

21,900
19,980

6.3 Pro Forma Statement of Cash Flows for Over Power Sdn. Bhd.

37

RM

23,500
65,780

27,080
38,700

2015 Projected
RM
Cash flows from operating activities
Net income
Changes in working capital:
Depreciation
Increase/decrease in accounts receivable
Increase/decrease in accrued expenses
Increase/decrease in inventory
Increase/decrease in accounts payable
Total adjustments
Net cash provided by operating activities

2016 Projected
RM

19,980

38,700

1,610
930
190
10,240
(1,670)
11,300
31,280

1,880
(1,690)
480
(1,400)
3,850
3,120
41,820

Cash flows from investing activities

Purchase of building and equipment
Net cash flows provided by investing activities

(25,000)
(25,000)

(10,000)
(10,000)

Cash flows from financing activities

Capital
Proceeds from increase in long-term debt
Interest payment
Net cash flows provided by financing activities

500,000
60,000
(11,000)
549,000

(12,050)
(12,050)

Increase in cash
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year

570,280
570,280

5,600
570,280
575,880

6.4 Break Even Analysis for Over Power Sdn. Bhd.

Assumption
RM
Unit sales price
Average variable cost per unit
Estimated yearly total fixed cost
Calculation of yearly break even unit

37

50
27
348,810

Break-even point in units=

Total fixed costs

Unit sales price-Variable cost per unit

348,810
50-27

=15165.65
=15166 units

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Appendices

37

Appendix 1

Appendix 2

37