Developing International Business Plan for Management Perspectives

Question: Discuss about theDeveloping International Business Plan for Management Perspectives. Answer: Financial projections of the new business: No. Worksheet for the Proposed Company a The money needed for the commencing the project is $ 183,000.00, which is needed for conducting certain expenses such as Cost incurred in market research, Equipment Purchased, Website Development, Advertising, Legal expenses, Other expenses, Furniture and Fitting. b The overall capital needed for commencing the project is financed by the partners, as there are no loans obtained for starting the proposed project. c The funds need to be financed by bank loans and seed investors for commencing the project. d The fund will be needed before the start of the project, as relevant expenses needs to be conducted by the company. e The borrowing will be rapid after the completion of fifth year, as the actual income and profits from the project is collected, which reduces the preserve on delivering the loan amount. f 40% of the venture could be sold for obtaining the required level of funds for the project. g The exit route will only be open after the commencement of third year of the project, where the investor could take the money from business. h Equipments, Furniture, and Fitting can be used as the collateral for the lease of loan i No there will be no grants or loans to help finance the business j There is not further private cash that is available to invest in the business k The key risk that might adversely affect projections of the project is the volatility from external forces and economic condition. l The reduction in cost structure and improvement in selling price could be used to minimise the negative impact from these risks Listing the key assumptions that underpin the projections for the business: The key assumptions that underpin the projection of the business is sales value, sales volume, expected sales increment, variable cost, and fixed cost. The major product sold by the proposed company is Tinhorn Creek Vineyards Kerner Icewine Oldfield Series, which is priced at the levels of $29.99. Moreover, the second product Reif Estate Riesling Icewine is priced at $29.95, which relatively summarizes the overall assumptions of sales value for the new proposed project. Though, the sales volume is also assumed in the projection, where estimated number of customers new the location, online customers and tourist are estimated to detect the sales volume. The relevant estimation for increment in sales volume is also conducted where the volume will rise by 5 % each month in year 1 and 2.5% in each month in year 2 and 5% each quarter in year 3 to year 5. However, the estimation is also conducted where no increment in sales prices is observed for the project. The relevant costing estimation is conducted for you project, where variable cost for the first year is 55% of the actual sales, while from 2nd year onwards its 50% of the actual sales. Moreover, the fixed cost estimated for the project is at the levels of $80,000 for years 1 and 2, while from year 3 to 5 the fixed cost will be $125,000. The overall estimation is mainly conducted to detect the actual revenues which could be generated by the project. Listing five factors that could adversely affect sales projections: The five factors that could adversely affect sales projects of the project is current global conditions, current industry conditions, rate of inflation, marketing efforts, and past economic performance. The identified factors might affect the sales projections and reduce viability of the investment scope from the project. The factors such as inflation and current global conditions might directly affect the actual financial performance. Armstrong et al., (2015) stated that inflation plays a viable role in identifying the financial viability of an investment, as it detects the time value of future cash projects conducted from investment. Listing five factors that could adversely affect cost and expenses projection: Labour wages, raw material cost, industrial production process, and inflation is identified, as the factors, which might affect cost and expenses projection of the project. In addition, the factors might directly affect cost projection of the project, which might hamper project projection of the new project. Moreover, the factors could adversely affect the projections prepared for the project and reduce viability of the investment scope. On the other hand, Bullough et al., (2015) mentioned that without the projection of accurate cost and expenses incurred in a project, the company could not approve its commencement. Under which of the circumstances would be the plan become unviable: The plans will only be unviable under circumstance such as increment in inflation rate, economic conditions, sales projections, and cost projections of the company. Under these circumstances the project viability will relatively reduce and hamper ability to generate adequate returns from investment. In addition, under the above circumstance plan will become unviable for the company, which might hamper the actual financial performance of the project. Increment in cost could also hamper the actual financial performance of the company, while reduction in sales volume might decline the actual revenue that might generate from the project (Burns, 2016). Detecting the measures that could be used in mitigating the risk: The use of zero based budgeting system could be conducted for reducing the negative impact of above identified circumstances. The measure could help in reducing the level of risk such as cost increment in the production functions. This use of zero based budgeting system might help in detecting the cost incurred in each process and understand the actual production cost incurred in the production system. Relevant omission can be conducted on certain activities that does not contribute to the revenue generation capability of the company. This might help in overcoming the circumstance and mitigating the risk involved in operations. The risk involved in declining demand can be supported by improving the level of customer reach by the company. The use of adequate marketing measure could eventually help in improving the level of sales, which might reduce due to the negative impact of the circumstances (Cramer, 2017). Reference and Bibliography: Armstrong, G., Kotler, P., Harker, M., Brennan, R. (2015).Marketing: an introduction. Pearson Education. Bullough, A., De Luque, M. S., Abdelzaher, D., Heim, W. (2015). Developing women leaders through entrepreneurship education and training.The Academy of Management Perspectives,29(2), 250-270. Burns, P. (2016).Entrepreneurship and small business. Palgrave Macmillan Limited. Cramer, J. (2017).Corporate Social Responsibility and Globalisation: an action plan for business. Routledge. Neelankavil, J. P. (2015).International business research. Routledge. Wild, J. J., Wild, K. L., Han, J. C. (2014).International business. Pearson Education Limited.