ADIGRAT UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ECONOMICS

COURSE TITLE

COURSE CODE
SECTION THREE

GROUP TWO

GROUP ASSIGNMENT

GROUP MEMBERS ID NO

1. SHEGE TSGE…………………………………………03289/08
2. NURSEFA SHUKUR……………………………….
3. WORKU MENGESHA…………………………….
4. MAHDER WELDEMICHEL………………………
5. TARESA ALEMAYRHU……………………………
6. TESFAYE ABEBAW………………………………..
7. TIGIST TEKLEMARIAM…………………………..

Table of contents

Contents
Table of contents................................................................................................................................................................................ I
1. Executive summary....................................................................................................................................................................... 1
2. Company Summary ...................................................................................................................................................................... 1
2.1 Objectives .............................................................................................................................................................................. 1
2.2 Mission .................................................................................................................................................................................. 1

2.3 Vision………………………………………………………………………………………………………………………………………………..1

2.4 Keys to Success...................................................................................................................................................................... 2

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 2.5 Start up summary…………………………………………………………………………………………………………………………………2

Operating Costs ....................................................................................................................................................................... 2

Initial funding of the business ................................................................................................................................................. 3
3. Products and Services ................................................................................................................................................................... 3
3.1 Product and Service Description ............................................................................................................................................ 4
3.2 Competitive Comparison ....................................................................................................................................................... 4
3.3 Future Products and Services ................................................................................................................................................. 4
3.4. SWOT Analysis .................................................................................................................................................................... 5
4. Market Analysis Summary ........................................................................................................................................................... 6
4.1 Market Segmentation ............................................................................................................................................................. 6
4.1.1. Market Trends ............................................................................................................................................................... 6
4.2 Main Competitors .................................................................................................................................................................. 6
5. Strategy and Implementation Summary ........................................................................................................................................ 6
5.1 Marketing Strategy................................................................................................................................................................. 6
5.1.1 Pricing Strategy .............................................................................................................................................................. 1
5.1.2 Promotion Strategy......................................................................................................................................................... 1
5.2 Competitive Edge................................................................................................................................................................... 1
6. Sales Forecast ............................................................................................................................................................................... 1
7. Management Summary ................................................................................................................................................................. 2
7.1 Personnel Plan........................................................................................................................................................................ 2
8. Financial Plan ............................................................................................................................................................................... 3
8.1 Break-even Analysis .............................................................................................................................................................. 3
8.2 Projected Profit and Loss ....................................................................................................................................................... 4
8.3 Projected Cash flow ................................................................................................................. Error! Bookmark not defined.
8.4 Projected Balance Sheet ......................................................................................................................................................... 4
8.5 Business Ratios ...................................................................................................................................................................... 5

Fast Stationary Business Plan

Address Line 1 (Main production Place)

 Adigrat Town (Around Adigrat University, in front of Sillase orthodox church)

Address Line 2 (Sub-branch Production Place)

 Adigrat town(Around Piazza, near of CBE Adigrat branch)

City: Adigrat

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Telephone: +251921183118, +251930840170

Fax; 0344452220

E-Mail:Faststationary96@gmail.com

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 1. Executive summary
Fast stationary shop is a start-up business located in, Adigrat Town .The firm specializes in the sales of
home electronics, specifically including, computer, Photo copy, Laminator, printers and different printing
stationeries equipments
The firm will target people who place great importance in there, electronic equipment and own higher-end
electronics, where supply them would be more cost effective.
The company is registered as sole proprietorship owned and managed by Hagos Teklu, the Manager of
company with a Diploma in supply and material management from Mekelle College, and certificate of
business Plan preparation for 6 months from trade industry bureau of Adigrat town. He will also employ 3
workers to help with running and growing the business.
Fast Stationary will be leasing a 3,400 square foot space located in Adigrat town, around Adigrat
University, in front of Sillase Orthodox Church.

2. Company Summary
Fast stationary is envisioned to be the low cost leader in for the Adigrat area that will also be able to
eventually provide service making it the local leader in comprehensive computer, printer, copy machines,
and stationary
The company is as sole proprietorship registered in the state of eastern Tigray zone under Adigrat City
Administration and owned by Mr. Hagos Teklu. The initial facilities will contain a sales area, office room
in the back of the shop, office space and storage for parts and equipment.
The company is seeking a loan from Deddebit Micro Finance in Adigrat and Dashen Bank of Ethiopia
Adigrat Branch in order to finance the start of operations for the company. The owners will be putting up
additional capital of own as equity.

2.1 Objectives
Fast stationary is a growth-service oriented business. Its five years goal is to become a regional leader in
printing stationary and machines with shops in the Adigrat Town area. With this in mind, the objectives
over the next three years for fast stationary are sated.

2.2 Mission

The mission of fast stationary is to provide high quality, convenient and comprehensive computer, printer,
copy machines, and stationary at a low cost. The most important aspect of our business is trust. It is the
goal of our firm to have 100% customer satisfaction in regards to quality, friendliness and time to
completion, and discover new ways to exceed the expectations of our customers while doing so at the
lowest possible cost.

2.2.2 Vision
For the future the fast stationary may also offer workshops or lessons. These lessons may
range from simple familiarization with the computer to more difficult subjects. One-on-one
tutorials by the stationary staff may also be provided to clients who require the service.

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Another service that an fast stationary will offer is photo editing. The customers might have a
picture that can be scanned or digitally edited, fixed up, or restored. While photo editing can be
done at home, it takes time to do the more difficult or complicated jobs, and people would rather
pay somebody to do the job properly rather that bungle it themselves. Video editing is also
another service that will be offered by the fast stationary, in much the same way as photo editing.

2.3 Keys to Success

In the computer, printer, copy machines, and stationary supply and sale firm builds its client base one
customer at a time and mostly through established marketing practices (ads, news papers, etc.). With this
in mind, the keys to success for fast stationary are:

 High-quality work.
 Attention to professional appearances at all times.
 Knowledgeable technicians that are friendly, customer oriented, and will take the time to
explain to customers the intricate nature of our business and our work.

2.4 Start-up Summary

The data obtained for the start-up comes from marketing information gathered from Adigrat town during
feasibility study to start the business and with other small stationary shops that have started their own
business, in addition to Mr. Hagos previous experience within the industry. Inflation has been taken into
account between the estimates of these fellow business owners to start and the current prices for expensed
items.
Capital costs
Purchase price of business
Training 2000
Office equipment
Desks 2500
Chairs 2000
Safe 6000
Computers, printers 21000
Fax, phone system 7500
Vehicles 20000
Plant and machinery:
Storage 58000
Business Structure:
Registration 1000
Professional fees 22000
Reference materials:
Land 3000
Building costs: 60000
Toilets, plumbing and drainage 5000
Total capital costs: 210000

Operating Costs
Wages 17000
Advertising 6000

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Electricity and gas 600
Sales tax
Payroll tax 5200
Interests 7070
Freight 27130
Motor vehicle expenses 7000
Total 70000
Total start up cost for the business 280000

Initial funding of the business

As the sole proprietors, he has 300,000 of own money to invest in the business and the closing balance in
the projected start up summary shows that, in addition to this, some 214522 will be required over the first
year.
He also had preliminary discussions with Dashen Bank of Ethiopia Adigrat Branch manager and, subject
to the provision of a documented business plan and to Dedebbit Micro finance in Adigrat for the
provision of loan.
After the first year, starting the repayment of loan to creditor within three years

Repayment schedule Year1 Year 2 Year 3 Total

Principal 36400 36400 36400 109200
Interest 5600 5600 5600 16800
Total 42000 42000 42000 126000

3. Products and Services

Fast stationary offers a wide range of services as outlined in the detailed sections below. It is ultimately
the goal of the company to offer a one-stop facility for all stationary needs, including both sales and
printing servicing. In this way the company can offer greater perceived value for the customer than many
other shops which only offer sales.

The firm is highly competitive with suppliers having a great deal of power in setting and negotiating the
prices of products and services. In addition, because the customers see the service as undifferentiated and
a "commodity" with little value separation between competitors, buyer power is also very high. Finally,
the barriers to entry are moderately low, and the large numbers of competitors in this field, the pricing for
such services is very competitive. The only way to have an advantage in this firm is a low cost leadership
principal applied aggressively or to create higher switching costs through the building of strong business-
to-customer ties. It is the aim of fast stationary to create a competitive advantage through both the low
cost strategy and by offering greater value through its broader supply of product and giving service line.

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 3.1 Product and Service Description

 Supply and sale of computer

 Supply and sale of stationary.
 Maintenance and installation of printer, photo copy and etc
 Supply of Computer installation of software’s
 Future products and services that fast stationary will prepare to institute include computer, Photo
copy and internet service also investigating the possibility of offering a new product line and
Photo entertainment at some future date.

3.2 Competitive Comparison

The stationary firms in Adigrat Town are highly competitive. Each company within this field has high
labor costs, low margins, and a high intensity of competition.

Suppliers have a great deal of power in setting and negotiating the prices of their products and services to
customers. Therefore, these companies can set whatever price they wish to. Furthermore, labor is the
single most important expense in this industry, and salaries for such individuals are well known and not
very flexible.

The large number of competitors in this field including substitutes means that pricing for such services are
very competitive. The only way to have an advantage in this industry is a low cost leadership principal
applied aggressively to all aspects of the business or to build up customer relations to a point where the
switching costs are raised.

Based on this analysis, fast stationary will pursue a low cost leadership strategy as primary competitive
advantage. Furthermore, the company will simultaneously build up its product and service line to take
advantage of the limited opportunity to create higher switching costs through enhanced value creation and
to spread out costs.

3.3 Future Products and Services

Future products and services that fast stationary will prepare to institute include computer, Photo copy
and internet service also investigating the possibility of offering a new product line at some future date.

Lewam Electronics will start implementing these new products or services in the following time periods:

 Computer writing, printing and Photo Copy service (1st Qtr 2012).
 Stationary sales (2nd Qtr 2012).

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  Internet Service (1st Qtr 2013).
 Computer, printer, photo copy and laminator sales (2nd Qtr 2014).
 Photo entertainment (3rd Qtr 2015).

The capital investment needed for such expansion will primarily come from the company's accumulated
operating cash account. It is anticipated that some of these product/service expansions that require
significant inventory, such as new sales, may require additional cash inflow such as loans. The company
will be preparing proposals for various lending institutions (Dedebbit micro Finance of Adigrat/Dashen
Bank of Ethiopia Adigrat Branch/Saving and Credit Cooperative of Adigrat Town/ in anticipation of this
need.

3.4. SWOT Analysis

A SWOT (strengths, weaknesses, opportunities and threats) analysis can provide a lot of useful
information for a business. It can give direction to the business and its marketing strategies. The results
need to be concise, relevant and interesting.

Strengths Weaknesses

 technical competence of the  inefficient equipment

proprietors
 total agreement between proprietors
on their objectives
 financial resources
 good network of contacts for
potential clients, suppliers and
tradespersons
 business is located within the target
market
 proprietors have limited security with
which to raise finance for future
growth
 business is principally dependent on
one person during the formative
stages

Opportunities Threats

 rapidly growing market  poor reputation of the industry

 poor reputation of existing  potential for economic downturns
renovation businesses  existence of competitors
 availability of casual staff and  increasing cost of materials
tradespersons  in reliable subcontractors
 availability of display and  geographically diverse market
manufacturing premises within the  an increased number of Do It
area Yourself (DIY) renovations, inspired
 high disposable income within the by magazines and television
target market programs
 potential for future expansion of the
business
 possible government regulation

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 4. Market Analysis Summary
There are approximately 50,000 households in the Adigrat area and different Types of Public institutions
and universities which participate in purchasing product as customers. fast stationary segments its market
into product categories that reflect the estimated number of each stationary currently being used in the
greater Adigrat Town area. In addition the growth rate of each product emplaced in the customer is based
on the current sales growth of each product. Presently, the fastest growing product, in terms of sales, is
the computer. The company will be focusing on service of supplying new technology to the customers.

4.1 Market Segmentation

Fast stationary has segmented in the Adigrat Town area as follows:

Customers, they prioritize socializing and spend a fair amount of time entertaining in the FM Radio and
in the news paper of the products. By this method spend more on stationary equipment.

 Public institution they will spend a greater percentage of purchase on high-quality and for office
equipment.
 Private institution
 Different types of agencies.

4.1.1. Market Trends

The market demand for stationary has been relatively stable over the past decade. The market is seeing
more highly trained technicians needed. As technology progresses, long-term planners within this market
expect to see new opportunities for stationary replace quickly arise.

4.2 Main Competitors

Local competitors within a five mile radius are as follows.
 Saffron Stationary  Lewom Stationary
 Dave stationary  AMA stationary
 Haile Michael Stationary

5. Strategy and Implementation Summary

5.1 Marketing Strategy

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 1. Direct mailers. 4. Referrals through other local businesses.
2. Discounts. 5. ETV advertisement.
3. Newspaper ads.
The company's aim is to overcome the traditional small firm's passive form of advertising and promotion
by sending our message to the customer, instead of having the customer look for a firm when they need
our services. The firm plans to build market share through service awareness, value creation, competitive
price, availability, and attractive service experience, all leading to the purchasing of our services.

5.1.1 Pricing Strategy

Lewam Electronics shop exists in a purely competitive environment where each firm must be a price
taker. In other words, the firm has no ability to affect the market price of its services, regardless of how
many TVs/DVDs or VCRs it sold. In this case, therefore, marginal revenue (the revenue incurred by
producing or servicing one more unit) is equal to the price charged.

What all of this means for the company is that we must seek to charge our clients at the market price (or
lower)? As long as marginal costs do not exceed revenues, the company's method to maximize short-run
profits is to service the various electronic devices at maximum capacity.

5.1.2 Promotion Strategy

The company's promotion strategy will take the form direct mailers, price discounts, radio and TV ads
and advertisements in newspapers. TE expects to spend a large amount on marketing in the first two years
in order to build up product awareness and service value in the minds of our customers.

5.2 Competitive Edge

Lewam Electronics' competitive edge lies in its ability to provide quality and fast electronic repair and
sale at lower cost than any local small competitor. This positioning of the company provides protection
against the power of suppliers by creating more flexibility to cope with increasing costs. In addition, this
approach will provide returns even during economic downturns and when other unforeseen problems
arise.

6. Sales Forecast
Since the electronic shop sale product is, operationally, a job-shop environment, it is somewhat difficult
to estimate sales. For job-shops, each individual product or service is tailored or unique to that job, and is
only initiated once an order is made.

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The sales forecast is based on the estimated number of electronics the firm could service that are currently
and available yearly market demand for our services.

This number is then decreased by a logical amount to estimate the first three years of revenue.

Sales Forecast

Sales Year 1 Year 2 Year 3 Direct Cost of Sales Year 1 Year 2 Year 3
TVs 72936 74819 75770 TVs 7312 8000 8000
VCRs 75975 78757 79813 VCRs 7580 8600 8600
DVDs 60780 66943 70749 DVDs 6825 9200 9200
Computer 80000 82697 84966 Computer 7885 8600 8600
Refrigerator 14209 90570 92985 Refrigerator 795 8600 8600
Total Sales 303900 393786 404283 Total D. Cost Sales 30397 43000 43000

7. Management Summary
The company is registered as sole proprietorship owned and managed by Tsegaye Tonja, the Manager of
firm with a Diploma in electrical engineering from Adigrat University. And certificate of electronics
Training and business Plan preparation for 6 months from Adigrat Technician and Vocational Training
Education (TVTE). Tsegaye will also employ his son who desires to eventually take over the business and
has been attending Adigrat Technician and Vocational Training Education (TVTE) School and is
expected to graduate with a Diploma in electronics in the summer of 2012 to help with running and
growing the business.

Mr. Tsegaye is now seeking to leverage this experience into a growth-oriented business that will be able
to eventually compete with the largest firms in the industry.

7.1 Personnel Plan

Lewam Electronics' initial staffing will consist of Mr. Zerhun, his son, and two part-time technician
trainees. Accounting, bookkeeping, and marketing consulting services will be outsourced. The company's
intermediate goal is to have four full-time, fully trained technicians at the original facility, plus a full-time
office manager. However, management has decided to await future developments before determining the
best time to bring on such personnel.

Personnel Plan payroll

Personnel Plan Year 1 Year 2 Year 3

Mr. Tsegaye Tonja 18000 18000 18000
Mr. Zerhun Tsegaye 12000 14000 16000
Part-time technician 7200 14000 14000
Part-time technician 7200 14000 14000

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Part-time technician 0 7500 7500
Total People 4 5 5
Total Payroll 44400 67500 69500

8. Financial Plan

General Assumptions

General Assumptions
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00%
Other 0 0 0

8.1 Break-even Analysis

The company's break-even analysis is based on an average firm's running costs within this industry,
including payroll, and its fixed costs for such things as rent, utilities, etc. As Lewom Electronics shop
operates as a job-shop, with each task a unique, customized service, it is difficult to estimate revenue per
unit and variable costs. The reader must understand that there is a high degree of variance within these
estimates.

Break-even Analysis

Monthly Revenue Break even $17844

Assumption:
Average Percent Variable cost 10%
Estimated Monthly Fixed Cost $16059

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 8.2 Projected Profit and Loss
Pro Forma Profit and Loss

Projected Profit and Loss Year 1 Year 2 Year 3

Sales 303900 393786 404283
Direct Cost of Sales 30397 43000 43000
Other Production Expenses 0 0 0
Total Cost of Sales 30397 43000 43000
Gross Margin 273503 350786 361283
Expenses
Payroll 44000 67500 69500
Marketing and Other Expenses 19300 23000 18000
Depreciation 1496 1500 1500
Leased Equipment 6500 3500 3500
Utilities 4900 5000 5000
Insurance 6100 6200 6200
Rent 26000 27000 27000
Payroll Taxes 6660 10125 10425
Other 0 0 0
Total Operating Expenses 114956 143825 141125
Profit Before Interest and Taxes 158547 206961 220158
EBIT 114772 125965 163042
Interest Expense 12772 13996 18115
EBT 102000 111969 144927
Taxes Incurred 0 0 0
Net Profit 102000 111969 144927

8.4 Projected Balance Sheet

Liabilities and
Assets Year 1 Year 2 Year 3 Year 1 Year 2 Year 3
Capital
Current Assets Current Liabilities

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Cash 22375 44440 81188 Accounts Payable
Inventory 2540 2540 Current Borrowing
11397
Other Current Other Current
4000 5000 6500
Assets Liabilities
Total Current Subtotal Current
51980 90228
Assets 37772 Liabilities
Long-term Assets Long-term Liabilities
Long-term Assets Total Liabilities
Accumulated
Depreciation
Total Long-term
Paid-in Capital
Assets
Total Assets Retained Earnings
Earnings
Total Capital
Total Liabilities and
Capital

8.5 Business Ratios

The Business ratios give an overall idea of how profitable, and at what risk level, Lewom Electronics will
operate at. The ratio table gives both time series analysis and cross-sectional analysis by including
industry average ratios. Industry Profile ratios are based on Standard Industrial Classification (SIC) code
7622, Radio and Television Repair. As can be seen from the comparison between industry standards and
Merry Electronics own ratios, there are some differences. Most of these are due to the fact that there is a

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very large variance in assets, liabilities, financing, and net income between companies in this industry due
to the vast differences in company size. The reader will also note that there is a fair amount of variability
between the various years. This is due to the fact that the company is expected to grow quickly and have a
large variance in profitability from year to year at first.

Overall the company's projections show a company that faces the usual risks of companies in this industry
and one that will be profitable in the long-run. The company shows that it has higher advertising and
start-up costs than other competitors; however management has deliberately overstated costs and
minimized profits in order to create a "safe" or "buffer" zone in case of hard times or other unforeseeable
problems. Pre-tax return on net worth and pre-tax return on assets appears to be very high, especially
within the first two years, however again this is due to the fact that the company will be facing highly
variable revenue and costs over the first few years.