Students Name:MOUSA HASSAN ALJANABI
Student ID: s3763715
Date:25/08/2019
Business idea
The business idea would be for Fran Motors which has been in the market in the last 11 years and plan to expand on its production line by adopting the manufacture and production of inexpensive electric cars in line with the fight against global warming (Gefen et al. 2016).
Electric cars have been on demand in the current market as far as their production is limited in the market. The project manager should decide to produce this products in the market to cater for the available market. The project manager should analyze and determine the specific electric cars that has a higher demand in the market with respect to the other cars that are in the market. The company should produce fast cars which are also affordable to the middle c;lass Americans and the other nations which would increase the demand for this type of cars in the market (van Werven et al. 2019).
Business structure
Since there is an existing firm competition in the market, a partnership would be the best and appropriate business structure that Fran Motors can adopt. A partnership with other firms in the production of the electronic cars would be appropriate as this would reduce some of the costs incurred by the company bearing that electric cars are more expensive to be manufactured (Kolk, 2016).
Measuring success of the business
The success of the organization can be measured from the analysis of the cash flow of the organization which would determine is the organization is making a profit or not. This would be evaluated after a break-even analysis has been conducted so as the company can be able to know how many units of cars it can produce for it to break-even (Galaskiewicz, 2016).
Organization diagram
Board of directors
Chief executive
Assistant
Assistant
Legal advisor
Sales manager
Production manager
Finance manager
Personal manager
Cost identification
There are different costs that would be incurred in the event of the operation. Since this cars are technological cars, the firm would be required to install the newest technology. Secondly, there would be need for supplies and the other products. The manufacturing process is also costly. Other costs includes the marketing costs which includes the supply costs and the advertising costs (Schell, 2018).
Corporate social responsibility
Fran Motors should also have a corporate social responsibility as this is a business philosophy that stresses the desire for Fran motors to operate as a better corporate citizen keeping in mind the environmental condition and the effects of pollution which is as a result of the manufacturing process of the cars. However the cars production process uses a high technology process which is aimed at conserving the environment with respect to the global warming effects.
Investors being the major stakeholders affects the CSR of the organization. The organization should therefore work to provide useful products satisfying the need of the consumers and the will of the will of the stakeholders (Galaskiewicz, 2016).
The usefulness of the product would expand the organization market base and the profits gained would also be maximized. Research and development should also be improved to improve on the production function which would also help in minimizing the cost of production as this would increase the profit margin of the organization (van Werven et al. 2019).
Break even analysis
The break-even point is the point where the expenses are to equal the revenues. Fran Motors would start realizing profits after its sales equals the revenues. Since this is a new idea, determining whether the organization is realizing profits of not is a hard even with the aid of the cash budget. This would need increasing the sales so as to minimize the margin between the expenses and the revenues (Kolk, 2016).
This is done with an aim of determining the selling price that would help in recovering the expenses would be recovered. This analysis would therefore help in evaluating the number of units that organization has to sell to recover the expenses incurred. This is the safe margin as this point no profits would be realized by the firm.
Unit price= $3,200,000 Contribution=$1200
Variable costs= $2,000,000 Fixed costs= $1,533,800
Break-even point= fixed cost/ contribution per unit
=1279 cars
Financial statement ratio analysis
Financial ratios analysis of Fran Motors would help provide an important info to the interested stakeholders about the performance of the organization. This is also a comparative tool that can help to analyze the profit, liquidity debt and the asset management of the organization.
The current ratio of Fran Motors helps to determine the firm’s liquidity. This would measure its ability to settle its dues as this is a comparison between the current assets and the current liability. The efficiency ratio would help in evaluating the ability of the firm to use its assets and the liabilities in generating more sales. The quick ratio puts more emphasis on the liquidity with more emphasis on liquid assets excluding inventory. Profitability on the other hand measures how the company converts the dollar that it earns into more profits (van Werven et al. 2019).
References
Van Werven, R., Bouwmeester, O., & Cornelissen, J. P. (2019). Pitching a business idea to investors: How new venture founders use micro-level rhetoric to achieve narrative plausibility and resonance. International Small Business Journal, 37(3), 193-214.
Kolk, A. (2016). The social responsibility of international business: From ethics and the environment to CSR and sustainable development. Journal of World Business, 51(1), 23-34.
Schell, J. M. (2018). Private equity funds: Business structure and operations. Law Journal Press.
Galaskiewicz, J. (2016). Social organization of an urban grants economy: A study of business philanthropy and nonprofit organizations. Elsevier.
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