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A feasibility study for starting up a technology company for industrial network-interface products / Michael D. Sims.

by Sims, Michael D.

New business enterprises

Marketing research

Operations research

Organizational effectiveness

Sales forecasting

Business enterprises -- Finance

x, 149 leaves : ill. ; 29 cm.

Advisor: Dr. Paul Hudec.

Committee members: Gene Wright, Timothy Charek.

Introduction and thesis proposition -- Executive summary -- Market analysis -- Business strategy formulation -- Sales and marketing plan -- Organizational plan -- Operations plan -- Financial analysis -- Company ownership -- Conclusions and recommendations -- Glossary -- Bibiliography -- Appendices A) Monthly sales fsrecasts B) Monthly Sales and marketing budgets C) Monthly salary budgets D) Four-year start-up schedule E) Monthly admininstrative budgets F) Monthly production budgets G) Monthly cost-of-goods-sold forecast H) Monthly operating expenses budget I) Monthly budgeted income statement J) Monthly unfunded cash budget K) Monthly cash budget L) Monthly balance sheet M) Monthly income statement with 45% gross margin.

This thesis analyzes the economic feasibility of starting up a new technology company to design and market industrial-network interface products. It determines if there is a sufficient market need for the proposed business venture, presents a detailed market analysis, and applies that analysis to develop a business strategy and supporting functional strategies. These strategies are implemented in a preliminary business plan, and the results reviewed to determine if this is a viable business opportunity.

The market analysis reviews the external and internal business environments, identifying the important strategic factors. Existing competitors are analyzed to identify their strategies and objectives. Market research is used to estimate the potential market size, identify target market segments, and determine customer requirements.

Strategy formulation applies the results of the market analysis to develop the business strategy. A situation analysis uses the strategic factors to identify the most appropriate business strategy. Corporate culture and values are defined. Based on this data, the best corporate strategy for the proposed company will be growth through horizontal integration. The business strategy will be focused differentiation for the North American market. Further refinement of these strategies results in the development of a hybrid business model. The proposed company will provide custom products to the industrial network-interface market. It will charge a nominal fee for its design services, generating profits by manufacturing the resulting custom products. The hybrid business model is unique in its application to the industrial network-interface market, and will be a strong competitive advantage for the company.

The preliminary business plan defines and implements specific functional strategies that support the hybrid business model. It includes a marketing plan, an organizational plan, and an operations plan. Financial statements generated from the sales forecast and estimated budgets are analyzed to determine profitability and the return on initial investment. Company ownership and financial sources are defined. The company will be a closely-held corporation. The required start-up funding is estimated to be $220,000. Contingency plans are presented for each functional strategy.

The results of this feasibility study indicate that the proposed company can be economically successful. The business opportunity is well defined, and there is sufficient market size and growth to accommodate a new competitor. The hybrid business model will provide a unique competitive advantage for penetrating the target market segments and growing its business. Important success factors include customer-orientation and flexibility. Customer relationships will be important to financial success, because the company will have a limited number of customers. Flexibility will be important for company employees, who will need to perform a diverse number of tasks. Manufacturing operations will also have to be flexible in order to efficiently produce a number of different custom products.

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