The Road to Document Imaging in South Africa

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The Road to Document Imaging in South Africa Chelsea Tucker Marie LaRiviere Jayana Cali JJ Mulwanda Benjamin Skidmore

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The Road to Document Imaging in South Africa. Chelsea Tucker  Marie LaRiviere  Jayana Cali  JJ Mulwanda  Benjamin Skidmore. South Africa FDI Assessment: Go. - PowerPoint PPT Presentation

Transcript of The Road to Document Imaging in South Africa

Page 1: The Road to Document Imaging in South Africa

The Road to Document Imagingin South Africa

Chelsea Tucker Marie LaRiviere Jayana Cali JJ Mulwanda Benjamin Skidmore

Page 2: The Road to Document Imaging in South Africa

What: Pursue a market seeking subsidiary in South Africa (RSA), providing document imaging services to government and healthcare entities

Political: RSA is a democracy that is friendly to foreign investors and looking to develop economically

Independent Central Bank: Independent yet influenced by ruling party. Still, sufficient degree of policy stability

Economic: Growing economy; improving infrastructure; expanding from summer 2010 World Cup preparations

Currency: The Rand is free floating. This implies currency risk, but historic valuation trends make currency risk important but not preventative for entry

South Africa FDI Assessment: Go

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Potential Entrants Low saturation rate will attract entrants Kodak has first mover advantage versus US entrants Various local players already in the market

Buyer Bargaining Power Kodak has a history of strong relationships with clients Political risks with foreign investment Economic risk with recession and potentially low demand

Supplier Bargaining Power Kodak has a strong brand and global distribution network Kodak is susceptible to supplier risk due to high level of outsourcing

Threat of Substitutes Traditional document storage: filing Option to use a Kodak Independent Software Vendor or Reseller

Porter’s Five Forces Analysis

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Strong South African Market Potential

Overall market related risk: LOW

Current saturation level: LOW

Growth potential: HIGH

The Digital Imaging MarketSector Potential Customers Document Imaging Possibilities

Local Government Offi ces

Birth certificates, death certificates, professional/business l icensing records, property records, census records, genealogy records, fragile and odd-shaped historical records

Passport Offi ces Passport & Visa documents, immigration records

Judicial & Court Offi cesCase files, docket sheets, marriage and divorce records, wills & inheritance documents, arrest warrants

Police DepartmentsCriminal records, public arrest records, background checks, case investigations

Motor Vehicle Offi ces National and Regional driver cards

Treasury & Tax DepartmentsTax return files, property tax records, income tax records, audit records

Law Offi cesHistorical case files, legal filings, affi davits, subpoenas, petitions, motions, copies of correspondence, client records

Hospitals & Doctor's Offi cesHistorical patient medical records, prescriptions, medical examinations, MRI's, CAT scans, X-rays

Banks & Lending InstitutionsMortgage statements, l ien documents, historical account statements, credit card statements

Schools & UniversitiesRegistrar transcripts, student files, course catalogues, admissions applications

Small Businessescustomer account records, receipts, tax returns, loan agreements, accounting records, insurance policies & claims

Public

Private

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P&L Category Cumulative 8 Year Forecast

Key Assumptions

Revenue $113.5 Million $0.5 Billion in total market size Kodak share of market beginning at 0.5% in year 1 and growing to 4% in year 8

Gross Margin $32.7 Million(28.9% Margin)

Existing Kodak Document Imaging Business Unit Gross Margins

Selling, General & Administrative Expenses

$20 Million Starting with existing Kodak Business Unit expense composition as a % of revenue with annual improvements Initially offset by additional expenses related to set up

Earnings Before Interest & Taxes (EBIT)

$5.6 Million (5% Margin)

Continued investment in R&D tied to revenue growth (6.3% of revenue)

Net Income $3.8 Million (3.3% Margin)

33% Foreign business tax rate

We developed a range of projections based on high and low end expectations. The following is our conservative (low end) eight year estimate of potential performance

Financial Considerations/Projections

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Financial Economic translation risk Intellectual property risk Currency exchange rate fluctuations Market share growth estimations HIV/AIDS pandemic

Key Risks to Achieving Financial Goals

Political & Technology Political/Corruption Internet Recurrence of Electricity Crisis Human Capital Flight Scale Economies Process Improvements

As in all new business ventures, an overarching risk is one of Execution: Even the best plans can’t bring themselves to fruition - if we can’t

execute the plan, we will not be successful in this Emerging Market!