Business plan powerpoint

BEIJING INNOTREK TECHNOLOGY CO., LTD

BUSINESS PLAN

ADVANCED BROADBAND TECHNOLOGY INSTALLATION FOR

HOTELS

Contents

• Company’s Overview• Introduction to Project• Market Analysis• Competitor Analysis• Marketing Strategies and Sales• Marketing Mix• Financials• Conclusion

Company’s Overview

• Established in November 2003

• Certified by the Science committee of Beijing.

• Specializes in in the development of cable-exempted LAN construction.

• Attained Intellectual property rights and patent rights to its technology.

• All research and development were carried out according to the requirements of ISO 9000 to ensure quality of excellence of products developed.

Company’s Overview- Organisation Structure

• Main drivers for company’s businesses : Marketing Team and Technical Team

• Innotrek has a total of five stakeholders.

• Mr. Wynn Wang as Managing Director

• Mr. Tao Cheng as Technical Director

• Mr. Wu Dan as Assistant MD.

Project Description• Project: “Advanced Broadband Technology Installation Service for

Hotels”

• Makes use of “Innotrek Intelligent Broadband LAN System”, which combined Power Line Communication (PLC) with DSL technology and LAN technology

• It applied the high speed PLC technology on telephone lines and cables lines, solving problems such as the instability in connection.

• Making use of telephone lines to access the internet to realize the transformation from the “point to point” model to “point to multipoint” model, thus increasing broadband clearing rate greatly at a much lower capital.

• System omitted the need for additional wiring and construction work such as drilling into buildings for the installation of broadband network.

Project Description

• For hotels.

• Time and cost effective, as sales and other opportunity costs would not be incurred in the process of upgrading.

• no drillings and additional cabling is required in the installation of broadband network, thus not affecting any daily operations.

• “ Completing the setting up of Broadband internet for a hotel in a day, at a low rate charged per room each day”

• Emphasizes largely on the low cost of realization as well as fast speed of construction of Broadband network using our technology.

Project Description- Stage of Development

• “Innotrek Intelligent Broadband LAN System” was first brought to market in November 2003.

• Introductory Phase of the Product Line cycle

• Major efforts in emphasizing on making our technology known to the public, and bringing awareness to targeted customers.

• Projected to bring about a high sales forecast of RMB 25,000,000 in 2008, with profit reaching RMB 2,000,000.

• Based upon past historical figures and the belief that it will develop to the Growth Phase of the Product Line Cycle by the end of the year with more funding in place to create awareness through publicity, as well as to take on a larger market share with a larger management and technical team.

Project Description- R&D and Patent

• “Innotrek Intelligent Broadband LAN System” makes use of advanced technology to establish broadband networks in buildings, without the need for additional wiring or drillings into buildings.

• One-of-its-kind in the world, and is a patented product under Beijing Innotrek Technology CO., Ltd, strong barrier of entry into the market by potential competitors.

• R&D base - Beijing Jiaotong University

• Plans of development of our own research centre, should there be expansion and more capital in place. Such plans would be a form of good investment for Innotrek to accelerate company’s development in the long run.

Project Description- Production• Product

– Beijing Jiaotong University is currently the base for production and development of “Innotrek Intelligent Broadband LAN System”. The research team is headed by Mr. Tao Cheng, Technical Director of Innotrek. As business expands to meet up with the targets, a larger scale of production is required. Innotrek would outsource to overseas for manufacturing, where Innotrek will be an ODM. This would effectively save costs and raise productivity. For this, Innotrek is in the midst of contractual negotiations with Taiwan. Once agreements were made, Innotrek would shift production to manufacturing plant in Taiwan Accex Pte Ltd.

• Service

– Installation of broadband network will be done by well-trained internal staff of Innotrek. As business expands, more technical staff will be employed to cater to the growing needs. Upon establishment of network system in the hotels, hotel employees will be trained by technical staff from Innotrek to handle basic technical problems. The quality of technology service provided is maintained with efficient 24 hours customer service.

– Our project “Advanced Broadband Technology Installation Service for Hotels” is not a one-off payment product business, but rather, one that receives payment from clients on a regular basis for maintenance fees

Market Analysis – Market Size

• The market size is determined by two components: Hotel Industry and the demand for broadband service in the region.

• Demand for Broadband Service

– In June 2007, the internet users of rural China reached 37.41 million and among the rural population of 737 million, the Internet penetration rate reached 5.1%; the internet users in urban areas reached 125 million, with the penetration rate reaching 21.6%.

– Over the years, efforts have been made to bridge the large gap in Internet development status between the rural and urban parts of China. Besides efforts has also been done in bridging the technological gap between the East and the West.

– Many see the need to keep up with IT advancement, given their improved standard of living, thus making broadband service provider a very lucrative business, be it within Beijing, or in the less developed parts of China.

Market Analysis – Market Size• Hotel Industry

– China is a big player in the world’s economy. Being a large country housing a large population of 1,321,851,888, there would be a large number of business dealings, both with domestic businessmen from all over China, as well as with international foreign business travelers. Hence there is increasing demand by local hotels to improve their IT facilities in order to attract and pull in a large customer crowd.

– Statistics from China National Tourism Administration shows that the total number of hotels sums up to 400,000, inclusive of 13,378 star level rated hotels.

– The prospective clients for the project are hotels 3 star and below, which makes up 80% of the entire hotel industry, thus, the maximum market potential for our business in China would be a total of 320,000

• The technology used by Innotrek emphasizes on the easy implementation and installation of Broadband into hotels. With the large market demand for Internet access in China, there will be a potential large market that could be explored and its already large market is expected to continue expanding.

Market Analysis – Market Growth

• Market Trends

• Market Saturation

Market Trends

Market Growth

Period Users (100 millions) Semiannual Growth (%)

Jun 05 1.03 9.6

Dec 05 1.11 7.7

Jun 06 1.23 10.8

Dec 06 1.37 11.4

Jun 07 1.62 18.2

Dec 07 2.10 29.6

Table 1. Internet Usage and Growth Statistics



– The opportunity of window for Innotrek is large, with the number of 3 star hotels with no broadband access reaching 1,124 in Beijing. In addition, with development in hotel industry within the city of Beijing, more and more new mid range, economical hotels are built, thereby expanding its market size.

– Statistics have shown, the number of new star-level rated hotels in 2006 amounted to 1370 ， an increase of 11.26 ％ from the previous year. Of which, 298 are five-star hotels, 1,400 four-star hotels, 4,998 three-star hotels, 6,027 two-star hotels and 660 one-star hotels. The market for broadband installation in the hotel industry is indeed nowhere near its point of saturation; instead, the market will drive the company’s product towards the growth phase of the product life cycle.

– Beijing Olympics Games 2008, the need for better hotel service and facilities is projected to create further upward pressure.



– Innotrek has also the intention of venturing into other parts of China, i.e., developing parts of china where there are a bigger number of hotels with no broadband, as well as a growing demand for such service. Till date, Innotrek has business in Hefei, Cangzhou, Shenyang, and many other cities, and we intend to extend further to the developing areas in China, where Internet growth is picking up, and demand for such service is increasing.

– Innotrek also has plans to expand globally, opening up markets in other developing countries in Asia, such as Vietnam etc. Figures show 9,013.4 % growth in the use of Internet, indicating the rise in the demand for Internet services in Vietnam. Such figures are important in showing the feasibility and potential market size, hence, its profitability.

– With Innotrek’s patented technology of “Innotrek Intelligent Broadband LAN System”, the increasing demand for broadband installation in hotels and its large market can even be a blue ocean of high profitability and sustainability.

Competitor Analysis• 4. Competitor Analysis• The market is in its growth stage and many big players in the telecommunications industry are showing their

interest in this sector, coming up with new packages and projects catering especially to eat into the market share of the hotel industry. We will discuss the business competitive environment as well as Innotrek’s competitive advantage in this section.

• 4.1 Competitive Environment• The competitive environment consists of big companies like CNC and China Telecom, which handles broadband

installation of buildings, including hotels.• These competitors are big players in the telecommunications industry. To cater to the emerging demand for

internet service in the hotel sector, they start up a series of internet service packages for hotels, such as Olympics Hotels, E-Hotels, and Broadband Hotels. These projects were targeted at newly built hotels and upgrading hotels as they prepare for the surge of business travelers into Mainland China. Their reputation as a well-known brand country-wide posed great threats to Innotrek’s launch of “Advanced Broadband Technology Installation Service for Hotels” into the hotel industry.

• These companies, however, focus mainly on nationwide telecommunications, with broadband and internet connectivity installation being a small component of their entire business. They establish external connection to the entire building, while the construction of internet connection within the buildings will be done by other companies, or their subsidiaries. These companies are generally smaller in size and their technology would not have been on par with Innotrek. Innotrek uses a patented technology which could minimize instability and it does not require additional wiring. In fact, such technology is among the leading few in the world. Thus, where Innotrek faces competition with bigger, well-known companies, Innotrek has a competitive advantage in terms of the quality of technology provided. Notably, Innotrek can collaborate with these companies to gain trust from the potential customers, but such plans are still in their initial stage.

Competitor Analysis• 4.2 Competitive Advantage• More about Innotrek’s technology, the system has also transformed from a “point to

point” structure to a “point to multipoint structure”, which greatly lowers the cost of DSLAM. As there is no need to do additional wiring, it greatly reduces the amount of capital we need to invest in network wiring. In addition, time taken for construction comparative to ADSL technology is greatly reduced as well. This thus enhanced the efficiency of our service, making our technology more competitive.

• Another alternative to broadband Internet connection is wireless Internet connection. Wireless Internet allows LANs to be deployed without cabling, typically reduces the costs of network deployment and expansion. However, it constantly faces the problem of network connection instability and is most susceptible to breakable privacy encryptions. The most common wireless encryption standard, Wired Equivalent Privacy or WEP, has been shown to be breakable even when correctly configured. In addition, wireless Internet connection Installation requires horizontal and vertical wiring, and is thus not completely free from cabling work during installation.

• To conclude, in terms of technology superiority, “Innotrek Intelligent Broadband LAN System” not only leads in terms of speed of installation, but also in terms of the quality and stability of internet network provided. Table 3-1 is a comparison in the advantages and disadvantages between different access technologies used by Innotrek and various competitors in the market.

Marketing Strategies

• Segmentation, Targeting, Positioning

• Marketing Mix : Product, Place, Price and Promotion.

Marketing Strategies- Segmentation

• Innotrek segmented the market based on hotel ratings.

• There are different types of hotels catering to all types of guests. Hotel star level rating is a common method of categorizing hotels into different class levels.

• While the project “Advanced Broadband Technology Installation Service for Hotels” could serve more than one specific group of hotels, it is most useful for economical hotels.

• By segmenting based on such ratings can help Innotrek better identify where the bulk of our customers lie.

Marketing Strategies- Targeting• Niche market, narrowing down the scope to existing upgrading hotel

• Most ideal for existing hotels, as our construction of network does not require additional cabling and thus does not affect its daily operations while assists hotels in their upgrading process.

• Large market size of 80% of entire hotel industry

• Research have shown, that the average occupancy rate for hotels without broadband technology lies between 60-70% , in contrast with an average of 90%-120% for hotels providing broadband technology.

• Prepare hotels to tap into the market of increasing business travelers.

• Innotrek’s targeted clients include non rated hotels, which takes up a large and significant proportion of hotels in China. These hotels are catered for local business and leisure travelers, and “Advanced Broadband Technology Installation Service for Hotels” is customized to meet the needs of such hotels to provide better service and attract more business travelers.

Marketing Strategies- Positioning

• Hassle-free construction of broadband technology network into the entire building without the need for additional wiring and drillings.

• Competitive advantage, saves on cost of capital, reduces time of installation, minimizes opportunity costs and improves stability with its advanced technology of Innotrek Intelligent Broadband LAN System”.

• “Completing the setting up of broadband Internet for a hotel in a day, at a low rate charged per room per day.”

• Emphasizes efficiency of our operations and the low cost of realization, and suggests the profitability of our business with our capabilities to take on multiple clients simultaneously, given the technical efficiency and ease of implementation of service.

Marketing Strategies- Marketing Mix

• Product Differentiation

– Competitive advantage over the big companies in the industry in terms of the technology it is able to provide.

– Unlike competitors that require additional drillings into buildings, Innotrek can better cater to existing hotels, without incurring additional opportunity costs.

– identifies Innotrek from the rest of the competitors in the market.

Marketing Strategies- Pricing• The proposed business model of “Completing the setting up of Broadband internet for

a hotel in a day, at a low rate charged per room each day” effectively summarizes the fundamental objective and significance of Innotrek’s “Advanced Broadband Technology Installation Service for Hotels”.

• The pricing strategy is to charge at pricing below competition, at a “low rate charged per room each day”.

• “Low rate” in our context refers to “one percent of the room charge” for each day of usage.

• In addition, upon installation of broadband network, professional training conducted by Innotrek’s technical to hotel staff will be provided free of charge. Should there be any network problems, this will equip hotel staff with knowledge and skills to deal with the basic situations. For more complicated network problems, our staff will be available for customer service and maintenance to ensure quality of excellence of broadband network usage. Such follow-ups are necessary and will be provided free of charge. This is a value-added service aimed at providing a wholesome broadband package for our clients.

Marketing Strategies- Promoting and Advertising

• Innotrek strengthened its brand name by collaborating with DELL Inc.

• Innotrek seeks to provide for clients, a package of good quality, by using DELL computers to deliver Innotrek’s patented technology of “Innotrek Intelligent Broadband LAN System”.

• Due to lack of funds, Innotrek’s current advertising strategy is conducted via cold calling and spreading by word-of-mouth.

• With more capital in place, more advertising and publicity would be done. Innotrek plans to invest a portion of capital on brand building, through marketing vehicles such as participations in exhibitions, demonstrations at hotel themed promotional meetings, as well as publications of articles on magazines and newspapers

Marketing Strategies- Place

• Innotrek’s main office as well as a research centre is in Beijing, where our main business and bulk of clients lie.

• There are also offices in Shen Yang, An Hui and Harbin to manage the businesses at the respective cities.

• Hence, the businesses at the various parts of China are well-managed and should there be any network problems, they could be solved promptly by the technical staff in their respective office.

• Innotrek places its main office in Beijing, the capital of China, where business and development in picking up.

Sales Target

• 80% of all hotels are three stars and below, and are categorized under mid range and budget hotels.

• Maximum market potential of 320,000, out of the 400,000 hotels in China

• Attain 10% of the market potential, which is a total of 32,000 clients in China, within a time frame of five years.

Finance• RMB 307 million

– 80% bonds, 20% stocks

• Establishment and completion of the marketing channel system

• Establishment and completion of the post-sale technical service system

• Product Authentication

• Research and development Centre

• Publicity

• Liquid Capital

• Company operating expenses

Establishment and completion of the marketing channel system

Year

PlannedIncreasein thenumber ofSalesagents

Number of hotelguest rooms to bedeveloped asrequested byeach agency

Amount ofRemunerationforServicesrendered witheach agency (RMB 10,000)

Total perannum ( RMB10,000)

Number of hotels( 100 rooms per

hotel)

T0 100 1, 000 10 1,000 1,000 hotels approx.

T0 + 1 200 1, 000 10 3,000Adds up to 4,000hotels




Establishment and completion of the post-sale technical system

Year

Planned no. ofRepresentative

establishments to beconstructed

Human ResourceFees per establishment

( RMB 10,000)Site Fee

( RMB 10,000)Total per annum( RMB 10,000)

T0 100 7.2 2.4 960

T0 + 1 200 7.2 2.4 1920

T0 + 2 300 7.2 2.4 2880

T0 + 3 300 7.2 2.4 2880

T0 + 4 300 7.2 2.4 2880

Product Authentication

Product Name CertificationEstimated expense

( RMB 10,000)Total per product

(RMB 10,000) Remarks

Inet-hswitch Intelligent switch

China Compulsory Certificate ( 3C)

4

12

When preparing netpass, there might not be a need to do 3C

certification

Netpass from Ministry of Information

Industry

8

Inet-Cswitch Intelligent switch


4

12Netpass from Ministry of Information

Industry

8

Inet Intelligent Terminal


4

12Netpass from Ministry of Information

Industry

8

R & D

ProjectEstimated Expense per project( RMB

10,000) Remarks

Site 500 Plans to purchase acourtyard in one of the

suburban countries

Human Resources 400 40 researches, averageannual salary of RMB

100,000

Facilities 500

Equipment 100

Subtotal 1500

Brand Building and PublicityProject Amount of

funds per project ( RMB

10,000)

Number of times of

participation per year

Total per year

( RMB 10,000)

Remarks

Exhibitions 1 5 5 Mainly China's hotel and computer network

exposition

Demonstrations at hotel themed promotional

meetings

5 10 50 aims to increase speed of polarisation in all areas

Media articles and advertising( mag

azine, newspapers)

1 30 30 establish brand name by creating greater

awareness from the public

Publicity Materials 5 10 50 includes advertising booklet, brochures

Subtotal 135

Liquid Capital

Year

Required product quantity ( sets) Cost Price ( RMB)

Funding Requirement

per year( RMB

10,000)

Remarks

Switch Terminals Switch Terminal

T0 1,000 10,000 2,000 300 500

Switch used is model 1/192

T0 + 1 3,000 30,000 2,000 300 1500

T0 + 2 6,000 60,000 2,000 300 3000

T0 + 3 9,000 90,000 2,000 300 4500

T0 + 4 12,000 120,000 2,000 300 6000

Operating Expenses

Year

Wages and Bonuses ( RMB

10,000)

Work Site ( RMB

10,000)

Transportation and

communications

Total per year ( RMB

10,000) Remarks

T0 1,300 150 240 1,690

T0 + 1 1,300 300 240 1,840

T0 + 2 1,300 300 240 1,840

T0 + 3 1,300 300 240 1,840

T0 + 4 1,300 300 240 1,840

Total Investment Budget Summary

Cause Total amount for 5 years ( RMB 10,000)

Construction of Sales Channel 1,000

Construction of Service follow-up Channel 3,000

Product Authentication 40

Publicity 675

Construction of Research Centre 1,500

Operating Expenses 9,050

Total investing amount 15,261

Liquid Capital 15,500

Total Funding required

30,765

Bonds Stocks

≈24,612 ≈6,153

Profit Forecast- Assumptions

• Assumption 1: The principle of building a harmonious society will be followed; there will be no serious social turmoil

• Assumption 2: Public health will develop normally and there will be no serious epidemics.

• Assumption 3: There are no acts of war that might affect the present situation

Explanation of our profit forecast

• Our company’s products mainly consist of Innotrek switch and terminal modem. We adopt the method of requesting additional processing so that production scale is not limited by productivity.

• The expense will be highest during the first year. In the subsequent years we will be developing more agencies eventually. Personnel and site fees will also increase, however it will not be comparable to the great amount of increase in our sales income in the second year. Thus, it is a profitable investment.

• Our company is also equipped with talents in international trading. Despite the fact that more liquids funds are required, the results of investments can also be seen quickly, which is beneficial to our financial flow.

Profit Forecast

Year

Service Income ( RMB

10,000)

Service Cost ( RMB 10,000) Product Cost( RMB 10,000)

Sales Profits ( RMB 10,000)

Establishment and completion of

the post-sale

technical

system

Sales agent fees

Discount allow-ances

for hotels Switch

Terminal

Uplinkages

fees

T0 3650 960 1,000 600 200 300 40 550

T0 + 1 14600 2880 3,000 2,400 600 900 160 4,660

T0 + 2 36500 4800 6,000 6,600 1,200 1,800 440 15,660

T0 + 3 69350 5760 9,000 6,600 1,800 2,700 440 43,050

T0 + 4 113150 5760 12,000 6,600 2,400 3,600 440 82,350

Profit Forecast

• Similarly, figures are computing to an average of 100 hotel guest rooms. Besides paying the sales agent 10 000 Yuan, we still provide discounts to hotels very 2 months, estimated at 6000 a year. It can be given to either the hotel manager or the hotels itself, so as to develop the customer base of hotel clients.

• We expected that the market development will enter a stable state in 5 years’ time, where Innotrek’s business maintained at 31,000 hotels, which is Innotrek’s target of holding 10% of the entire market share.

Conclusion

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