Business Analysis – Blog 5
Business Analysis is the fifth
stage of the New Product Developments process; this stage of the process is
when companies review the costs, such as start-up costs and continuing costs. Sales,
such as the speed of sales and the seasonality of sales. Market share, such as
strengths and weaknesses of competitors. And demand and profit projections of
the new service or product concept to evaluate whether or not it fits the company’s
overall objectives (Kotler and Armstrong, 2012). During this process companies
also evaluate whether or not the new concept would benefit current consumers, what
is the current national economic status and whether that would have an effect
on sales and if the new concept would improve the image of the brand. (Lamb, Hair & McDaniel, 2011)
A real life sporting example of business analysis can be seen
at RA Concepts, they are a company looking to secure start-up funding to produce
and sell golf clubs. They aim to meet the ever growing demands for new
technology in the golf industry by offering a new unique "D" style
featherweight putter (RA concepts 2012). To help their bid to secure start-up
funding they have made sales and profit projections to show that their business
will be successful as the graph shows how much they expect they expect to make through
sales, Gross Margin and Net Profit(Appendix A). They have also projected how
much initial capital investment they require to start-up; this includes costs
such as machinery and raw materials. RA Concepts project they would need a
total of $126,000 investment, $15,150 would be spent on expenses, such as insurance
and rent, the other $110,850 would be spent on assets such as the start-up
inventory and long term assets (Appendix B).
When considering my Archball sports concept I will have to
consider the start-up and continuing costs, the first cost I would come across
would be the cost of patenting my concept, according to Thisismoney.co.uk, 2013
the average cost of patenting can be between £3,000 and £4,000. I would also encounter
the costs of raw materials, production and marketing costs. Once I had
projected all of those costs, it would give me a break-even amount, I would
then project the sales of the concept including sales of the Archball board and
the revenue created through facility hire. Once those figures are projected I can
combine the two to project my margins, profit potential and time scale to
break-even.
Bibliography
McDaniel, C.D. Lamb, C.W. & Hair J.F. (2011)
Introduction to Marketing 11th Edn. Ohio: South-Western Cengage Learning.
RA Concepts (2012) Golf Club Manufacturer Business Plan.
Available at:
http://www.bplans.com/golf_club_manufacturer_business_plan/executive_summary_fc.php#.UMYttXdZyUc
(Accessed 8th December 2014)
This is Money, (2013). How to protect your small business
idea. Available at:
http://www.thisismoney.co.uk/money/smallbusiness/article-1585163/Protecting-patenting-small-business-idea.html
[Accessed 8 Dec. 2014].
Appendix
A)
B)
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