Business Plan Chemico
Business Plan Chemico
Business Plan Chemico
STATEMENT OF AUTHENTICITY
I have read the University Regulations relating to
plagiarism and certify that this project is all my
own work and does not contain any
unacknowledged work from any other sources.
Roman Cielik
The main objective of this thesis is to examine the current situation of the young
company entering the polish market and to work out relatively the best way to its
development in the next three years.
The whole text is divided into three areas. The first one consists of tools, techniques and
other content-related aspects presented on the basis of books, magazines and lectures
materials.
Problems discussed in this chapter relates to theoretical background of tools and
techniques used in practice to examine current CHEMICO`s performance and market
position. All those techniques are applied in chapter two.
Such theoretical introduction is indispensable in introducing readers to the background
and efficiency of the tools and techniques.
In the second area a business plan for CHEMICO is presented. That chapter is divided
into three main parts. First an internal and external audit is performed whose main
objective is to take a kind of picture of the company and its environment. Then all
important facts collected during audits are put together and processed in the
TOWS/SWOT analysis.
Detailed TOWS/SWOT analysis is considered as a tool of key importance on which
main conclusions are based.
Chapter three covers conclusions followed by suggestions regarding companys future
activity that should lead the company to success on the market.
The companys and products names were changed.
Keywords:
Competition
Competitive advantage
TEX VCI protection against rust
Corrosion
PLEX rust remover
TOWS/SWOT
VCI volatile corrosion inhibitor
by
Roman Cielik
2006
TABLE OF CONTENTS
PREFACE ......................................................................................................................... 6
LIST OF FIGURES .......................................................................................................... 7
LIST OF TABLES ............................................................................................................ 8
LIST OF CHARTS ........................................................................................................... 9
1. BUSINESS PLAN theoretical aspects ..................................................................... 10
1.1 Definition ............................................................................................................. 10
1.2. Methodology ....................................................................................................... 10
1.3. Business Plan versus Marketing Plan ................................................................. 11
1.3.1 Porters five forces analysis (Microenvironment)........................................ 13
1.3.1.1 Entry barriers ........................................................................................ 13
1.3.1.2 Supplier power ..................................................................................... 15
1.3.1.3 Bayer power ......................................................................................... 16
1.3.1.4 Substitutes ............................................................................................ 16
1.3.1.5 Rivalry within the trade........................................................................ 16
1.3.2 SWOT .......................................................................................................... 17
1.3.3. PEST (Macro environment) ........................................................................ 20
1.3.4 Stakeholders analysis ................................................................................... 21
1.3.5 Strategic group analysis ............................................................................... 22
1.3.6 Break Even Point (BEP)............................................................................... 23
1.3.7 Ratios ........................................................................................................... 24
1.3.7.1 Operating performance/profitability .................................................... 24
1.3.7.2 Efficiency/activity ................................................................................ 24
1.3.7.3 Liquidity ............................................................................................... 24
1.3.8 Cash Flow .................................................................................................... 25
1.4 Important theoretical aspects................................................................................ 25
1.4.1 Vision and Mission Statements .................................................................... 25
1.4.2. Segmentation ............................................................................................... 26
1.4.3. Differentiation, Competitive advantage, Positioning .................................. 28
1.4.4 Venture Capital ............................................................................................ 29
2. BUSINESS PLAN FOR CHEMICO .......................................................................... 32
2.1. Introduction ......................................................................................................... 32
2.2 Company Description .......................................................................................... 32
2.2.1 Background .................................................................................................. 32
2.2.2 Business activity .......................................................................................... 32
2.3. Mission and vision statements ............................................................................ 33
2.4. Internal marketing audit ...................................................................................... 34
2.4.1 Operating results .......................................................................................... 34
2.4.2 Marketing Mix Effectiveness ....................................................................... 34
2.5.Market Analysis ................................................................................................... 38
2.5.1 Market description ....................................................................................... 38
2.5.2 PEST ............................................................................................................ 39
2.5.3 Stakeholder analysis ..................................................................................... 40
2.5.4 Competition .................................................................................................. 41
2.5.5 Porters Five Forces ..................................................................................... 45
2.6. SWOT Analysis .................................................................................................. 47
3. CONCLUSIONS AND RECOMMENDATION........................................................ 50
3.1 Conclusions .......................................................................................................... 50
3.2. Recommendations ............................................................................................... 51
PREFACE
Business plan was based on data and information given by the CEO of the company as
well as stakeholders. Potential customers preferences were examined on the basis of
the business survey based on the questionnaire distributed among prospects.
Evaluation of the environment and market analysis, in general, was based on available
information included in magazines, reports and web sites. A considerable problem with
gathering data was faced regarding statistical data of VCI market in Poland and other
countries.
Special thanks to Supervisors from University of Branford and Leon Kozminski
Academy of Entrepreneurship and Management for significant support and many
valuable pieces of advice.
LIST OF FIGURES
LIST OF TABLES
LIST OF CHARTS
1.1 Definition
There are many studies available in the literature that defines and describes the
definition and methodology of the business plan. According to a standard definition a
business plan is a summary of how a business owner, manager, or entrepreneur intends
to organize an entrepreneurial endeavour and implement activities necessary and
sufficient for the venture to succeed. It is a written explanation of the company's
business model for the venture in question. (...). Business plans are used internally for
management and planning and are also used to convince outsiders such as banks or
venture capitalists to invest money into a venture. 1
The SBA says that a business plan precisely defines your business, identifies your
goals, and serves as your firm's resume. The basic components include a current and pro
forma balance sheet, an income statement, and a cash flow analysis. It helps you
allocate resources properly, handle unforeseen complications, and make good business
decisions 2
Thus a business plan is a complex description of a company and presents all important
aspects of the business activity such as mission, vision, company environment,
products, technologies and human resources as well as thorough analysis of financial
aspects. Business plan characterises the current companys activity and present future
activity with predictions regarding events inside and outside the company.
There are seven major causes being the basis of preparing business plan. Usually it is
an attempt to expand the current activity but there also some special occasions where
writing a business plan is a must 3:
New business
New investment
Attracting new investor
Implementing strategic management
Company valuation in order to sell the company
Restructuring
Liquidation
1.2 Methodology
The framework of the CHEMICO`s business plan will be based on thorough audit of the
current activity including internal and external audit as well as accurate marketing
chance evaluation.
1
10
On the basis of the wide company and market examination, the scenario of the best
predicted business actions will be developed.
The process of auditing current activity as well as the future action-planning will be
based on methods and tools available in the literature, especially discussed during the
EMBA sessions.
1.3. Business Plan versus Marketing Plan
A marketing plan is a subset of the overall business plan and focuses specifically on
how you will look for new customers 4. "You're in business to serve a customer need,"
says Derek Hansen, founder of American Capital Access. "If you're not sensitive to
customers, don't know who your customers are how to reach them and, most of all, what
will convince them to buy your product or service, get help." 5
Conclusion may be only one: customer is the number one priority. Due to the fact that
aspects regarding gaining new customers are of key importance for CHEMICO now, the
framework of the business plan used in present the thesis will be based on the marketing
plan presented during the MBA course 6:
Quinn C. (July 2006) Business Plans vs. Marketing Plans: Do You Need Both? URL:
http://womeninconsulting.org/consultants/articles/business_vs_marketing_plan.htm
5
Marketing Plan (July 2006) URL:
http://www.sba.gov/starting_business/marketing/plan.html
6
Rawel J. (2005) Strategic Marketing. Unpublished European MBA III Edition lecture
manual. Leon Kozminski Academy of Entrepreneur and Management, University of
Bradford
11
VISION / MISION
INT/EXT.
ENVIRONMENT
CUSTOMERS
PEST / 5 FORCES
COMPETITORS
Where we are
now?
COMPANY
SWOT
MKT.
PENETRATION
NEW PROD. DEVT
MKT
DEVELOPEMENT
Where do we
want go?
DIVERSIFICATION
SEGMENTATION
PRODUCT
SUB STRATEGIES
PROMOTION
PLACE
TACTICS:
MARKETING MIX
PEOPLE
POSITIONING
PHYSICAL EVIDENCE
How do we get
there?
PRICE
PROCESS
MEASURMENT
Where did we
get to?
Source: Rawel J. (2005) Strategic Marketing. Unpublished European MBA III Edition
lecture handbook. Leon Kozminski Academy of Entrepreneurship and Management,
University of Bradford
On the basis of the above information the framework of business plan on which the
following thesis will be based on is as follows:
BUSINESS PLAN FOR CHEMICO
Introduction
Company Description
Background
Business activity
Mission and vision statements
Internal marketing audit
Operating results
Marketing Mix Effectiveness
Market Analysis
PEST
Stakeholder analysis
Competition
Porters Five Forces
SWOT Analysis
12
Economy of scale
7
The profit on a given production line occurs after specific numbers of units were
produced so it increases the risk for the new entrants of generating losses over many
years and just makes the whole investment risky.
Economy of scale is also highly related to the experience curve effect that states: the
more times a task has been performed, the less time will be required on each subsequent
interaction 8. The phenomena is connected with efficiency and an lies in the fact that
people do their job faster and better as they have greater experience. For example
assembly line workers will do their job faster and better whereby more cars will be
produced in a given unit of time, fewer complaints occur so the efficiency will be
higher.
Production Brand` power
If there exist on the market well known brands with groups of loyal clients, entering the
market by new entrant is very difficult. What is making the successful entry to new
market more probable is superiority in products features. If new products outstrips other
existing on the market there are feasible chances of success if a new product does not
bring anything new and fresh the success of entry is almost unfeasible.
Equity requirements
The more sophisticated production the higher equity required. High technology gives
the guarantee of cost reduction but is expensive and not easy to implement. Sometimes
the scale of investments needed to finance entry exceeds the new entrants potential.
Distribution channels
New product on the market needs a special way to be delivered to clients. If a company
that aims at launching its products on new market, has already developed distribution
channels (own outlets, agreements with wholesalers etc.) this barrier of entry will be not
of key importance. Otherwise, delivering goods may be a problem and may squander
the efforts that have been already put into promoting new product and even ruin the
whole campaign
New Technologies
Besides the fact that new technologies are often very expensive, sometimes they are
protected by patents. Such way of protecting the market against new entrants is popular
with companies providing computer software and hardware.
Regulations
Sometimes entering new market requires fulfilling by the company existing law
regulation. Good example is pharmaceutical market in the USA and the role of Food
and Drug Administration (FDA). The role lies in the fact that FDA licences the
companies` products within the confines of ensuring the safety of the public. The first
8
High
Low, risky income
High risky income
12
Porter Five Forces A Model for Industry Analysis (August 2006) URL:
http://www.quickmba.com/strategy/porter.shtml
16
External
Danger points
Weaknesses
Source: Rawel J. (2005) Strategic Marketing. Unpublished European MBA III Edition
lecture manual. Leon Kozminski Academy of Entrepreneurship and Management,
University of Bradford
After the matrix was worked out the company has to perform an analysis of converting
bad points into good points what results in the collection of actions to take in every
particular area of the matrix.
Table 1.3. SWOT MATRIX - usage matrix
Opportunities
Threats
Strengths
Exploit existing strengths in Use existing strengths to
areas of opportunity
counter threats
Weaknesses
Build new strengths first to Build new strengths
take
advantage
of counter threats
opportunities
to
17
Source: Rawel J. (2005) Strategic Marketing. Unpublished European MBA III Edition
lecture materials. Leon Kozminski Academy of Entrepreneurship and Management,
University of Bradford.
Such model has been developed by K. Obj and is known as TOWS/SWOT analysis
and its main objective is to diagnose which strategy included in the matrix below fits
best the current companys situation and should be chosen to implementation. 13
Threats
Conservative strategy
Defensive strategy
Defensive strategy
Trying to survive on the market and minimizing Weaknesses and Threats
Typical actions:
Costs reductions
Decreasing the current output
Investments reduction
In order to go through the model and find out which strategy fits the company best
procedure as follows should be implemented:
1. Define the list of strengths, weaknesses, opportunities and threats
2. Rank the strengths, weaknesses, opportunities and threats from the point of view how
important an individual variable is important.
3. Establish relations between strengths, weaknesses, opportunities and threads asking
such questions:
SWOT (inside outside analysis)
Do strengths will make use of opportunities?
Do weaknesses will make impossible to use opportunities?
Do strengths will overcome threats?
Do weaknesses amplify threats?
TOWS (inside outside analysis)
Do threats will weaken strengths?
Do opportunities will amplify strengths?
Do threats amplify weaknesses?
Do opportunities will overcome weaknesses?
For every question mentioned above a chart will be work out where relation between
elements of SWOT and TOWS will be examined.
SWOT relations between:
Strengths and opportunities
Weaknesses and opportunities
Strengths and threats
Weaknesses and threats
TOWS relations between:
Threats and strengths
Opportunities and strengths
Threats and weaknesses
Opportunities and weaknesses
When a relation in pairs as mentioned above would be confirmed, one should put digit
1 into the chart, if no relation one should put 0.
After that some calculations have to be done:
Sum outcomes in column and rows
19
- Political
The formal system (legislation regulating business)
The informal system (ethics and social responsibility)
- Economic
Structural changes
Cyclical change (trends)
- Social:
Population size
Age structure
Geographic distribution
Ethnic mix
Income levels
Household formation
Work
Education
Consumption
Leisure
- Technological
Research
Development
Operations
Examining the environment gives the opportunity to answer some questions regarding
the future and finally helps the company predict coming changes and develop
appropriate strategies.
Questions that help the company scan the environment are as follows:
14
Fahey L. and Randal R. M (1994) Portable MBA in Strategy. John Wiley and Sons
Inc.
20
- Political Environment
Which political party will gain or loose strength in the next elections?
What shifts will occur in governmental policies?
What decisions may affect different industries?
- Economic Environment
What is the expected inflation rate?
Will the GPD increase in the future?
Which industries will grow or decline?
Social Environment
How will the demographic structure change?
What life-style changes my occur?
Technological
What might be new applications for existing technologies?
How might current research lead to new commercial products?
1.3.4 Stakeholders analysis
In order to predict any potential influences from the company environment, the
stakeholder analysis has to be worked out. This analysis gives the opportunity to
analyse the participants who exists in the companys environment and are able to
influence the company in positive or negative way.
Stakeholders are defined as any group or individual who can affect or is affected by the
achievement of an organisations purpose 15.or as those who have an interest in the
outcome of the actions (of the business) 16.
The term stakeholder comes from the word stake that can be defined as the idea of a
stake that can range from simply an interest in an undertaking at one extreme to a legal
claim for ownership at the other extreme and stakeholder is an individual or group that
asserts to have one or more kinds of stakes in business 17.
There are four basic types of shareholders:
primary
secondary
generic
specific
15
One of the assumptions is that the identified stakeholder or group of them may belong
to more then one type.
1.3.5 Strategic group analysis
Market analysis based for example on Porters five forces analysis treats all market
participants as more or less similar competitors. It is in fact a kind of simplification due
to the fact that competitors differs from each other as regards marketing strategies,
pricing policy, quality of products or diversification of the activity involvement in one
or more industries.
From new company point of view it may appear that more important is competition
with strategic group than competition within the whole country.
In order to create a strategic group first a collection of variables that differentiates
companies in the industry. Then a number of significant competitor has to be listed.
Finally, competitors have to be grouped around the defined earlier.
GROUP 1
Company 1
Company 2
Company 3
GROUP 2
Company 4
Company 5
GROUP 3
Company 6
Company 7
VARIABLE 1
22
FC
Q = -----------------P - VC
Q quantity of sales
FC Fixed operating costs
P- price per unit
VC variable operating cost per unit
If a company knows the sales required to cover cost, can easily answer the question
based on other assumption whether such level of sale will be possible to achieve.
Equation presented above may be used when a company produces only one product.
When there are two or more products more calculations are necessary.
In order to calculate BEP for two or more products such calculation must be done 19:
C -Contribution of each products in the whole production
WMB - weight average margin
FC
In such case BEP = ---------------WMB
Pn - VCn
P1 - VC1
WMB = ------------- + ... + ------------- ; 1...n represent products
P1 x C1
Pn x Cn
18
Foltyn W. (2005) Finance and Banking. Unpublished European MBA III Edition
lecture handbook. Leon Kozminski Academy of Entrepreneur and Management,
University of Bradford
19
Kopczyska T. (2004): Klasyfikacja kosztw dla potrzeb rachunkw decyzyjnych.
Post-diploma studies at Leon Kozminski Academy of Entrepreneur and Management,
lecture handbook
23
In order to find out what is the BEP for each product such equation must be used:
BEP1 (for the first product) = BEP x C1
BEP2 (for the second product) = BEP x C2 ... BEP x Cn
1.3.7 Ratios 20
It is necessary to calculate standard ratios in order to examine the companys current
and future financial standing. Ratios are based on the information included in financial
statements.
1.3.7.1 Operating performance/profitability
Return on investment (ROI)
Net profit before interest, tax and dividend (PBIT) / Total assets (or total assets less
current liabilities)
gross margin
Gross profit / Sales x 100
return on sales
Net profit before interest / Sales x 100
1.3.7.2 Efficiency/activity
Total asset utilisation
Sales / Capital employed
Fixed asset utilisation
Sales / Fixed assets
Credit given
Trade debtors / Total sales x 365
Credit taken
Trade creditors plus accruals / Credit purchases of goods and services x 365
1.3.7.3 Liquidity
Current ratio
Current assets / Current liabilities
Quick ratio or acid test
20
operational
financing
Foltyn W. (2005) Finance and Banking. Unpublished European MBA III Edition
lecture handbook. Leon Kozminski Academy of Entrepreneur and Management,
University of Bradford
22
Chadwick L., Campbell W. (1998) Accounting and Finance. University of Bradford
23
Doyle P.(1998): Marketing Management and Strategy. Prentice Hall Europe
24
K. Obj (2001) Strategia Organizacji. Polskie Wydawnictwo Ekonomiczne.
25
25
Industry type:
The basic way to segment potential customers is the Polish Classification of Activities
PKD). The PKD Register defines different types of industries like for example 1524
represents MANUFACTURE OF BASIC METALS.
Company size
It is undisputable that big companies` needs differ from smaller ones expectations.
Important value can be the scale of the potential order. If there is highly justified
expectation of high scale of cooperation the potential supplier should take into account
the future quantity of the orders if supplier is not able to deliver as much as the
supplier expects to it can means that the cooperation in future will be break off .
Customer location
Location can be connected with specific needs or expectations displayed by potential
customers. Important variable is impact on costs of transportation and distribution.
Operating in one specific area may lead to cost reduction in comparison with the high
cost of delivering product to many different directions all over the country. Peculiarity
of one specific area, sometimes lead to the concentration of great number of potential
customers. From the chemical company point of view, in Poland such area covers for
example Silesia region.
Company technology
Customers using highly sophisticated devices, software or hardware usually expects
their contracting parties to represent the same level of technology. Good example is
TESCO that requires suppliers to operate electronic stock control and cross-docking to
avoid retail stockholding. 29
Purchasing organisation
The way how the process of purchasing is organised by the company allows create
separated groups of customers.
Good example is the group of customers that operate a Just In Time System. Such group
of customers expect of a very quick delivery which impacts on the supplier with
reference to number of goods or products in stock. This influences financial politics in
the supplier because higher stock requires extra funds and usually impacts on the
balance sheet in a negative way.
Purchasing policies
State-owned companies are obliged by the law to purchase via bidding. The procedure
of preparing documents by the bidder requires very high care due to the fact that even
small departure from the rules results in excluding the bidder from the participation in
the tender. So it is usually justified to group the state-owned companies in a one or more
homogenous segments and guarantee the highest level of services.
29
Clarity
Consistency
Credibility
Competitiveness
Clarity
The statement on which the positioning is based must be relatively short and clear. Too
long statements will not be remembered by the potential customers owing to whom the
expected market position will not be achieved.
Consistency
Customers are rained with a huge number of pieces of information every day.
Advertisements, promotions new products etc makes it very difficult for something new
to breakthrough. So positioning decision must be well discussed by the management
before sending the massage to the market. Changing the main feature being the basis of
the competitiveness advantage and then positioning will undoubtedly results in failure
in sufficient positioning
30
Credibility
Competitiveness advantage on which the positioning is based must be credible which
means that the company should not try to convince potential customer to new view of
something when it is generally known that it is not true.
Competitiveness
Customers should be provided with a product that has features expected by the
customers but are unattainable in rival products.
1.4.4 Venture Capital
Lack of equity on beginning of the company activity is a common problem. That
problem may be solved in many ways. A company may turn to a bank and apply for a
loan. But often appears that the company creditworthiness is not sufficient to get a
credit.
Even if the credit is granted a company is force to pay regular repayments every month
or quarter what requires high liquidity and influence the companys cash flow in a very
negative way.
Other way is to get an extra stakeholder who will invest his money and will support the
company liquidity or will finance indispensable investments. However such way of
getting extra funds is risky doe to the fact new stakeholder may try to take over the
company or fight for interesting positions in the firm like CEO etc.
Another way to use is the venture capital. It is distributed by specialised institutes that
invest money in companies that are no listed on the stock exchange. Venture Capital
companies` number one priority is to increase the company value year by year whereby
the shares or stakes value goes up and finally can be sold at a profit.
The advantage of the venture capital in relation to getting extra stake or shareholder is
that venture capital intentions are usually clearly explained on the beginning of the
cooperation. A company where venture capital is engaged may count on professional
support in business from the venture capital through specialists often becoming
members of the supervisory board.
The advantages of the venture capital versus bank credit are as follows 33:
Investor participate in the risk of the business he invest his money without any
guarantee that the fund will be repaid
The main objectives are the same fighting for developing companys performance as
quickly as possible.
Investor is a professional institution with a great experience in crating and developing
company value
Venture capital is able to accept businesses and companies that have no chances for
credits
33
Liquidity of the company does not suffer due to the lack of cash because venture
capital receiver do not have to pay any interest for the capital employed
Venture capital means not only extra funds but also support in management
In order to possess venture capital some conditions must be fulfilled:
Company applying for a venture capital must operate on growing markets
Competitive advantage of products offered by the applicant has to be significant (in
relation to rival products).
Management has to be as professional team
Development of the company must be quicker then in the whole industry
Market share is significant
1.4.5 Lean Method 34
This method was developed in 1990 by Prof. James P. Womack. The principles of such
method where included in the book The Machine that Changed the World (MIT
Press) 35.
The methods origin comes from Toyota experience in fighting with western companies
after the II World War. The main objective of the Lean Method is to lower production
cost by eliminating wastes of time, materials etc. from all available areas within the
company.
Basically, the Lean Method covers a lot tools to use in order to make the production
process more efficient. It focuses on the strict production processes like order taking,
level scheduling (orders versus demand), relations among work cells, matching parts
delivery with production demand, local quality assurance, proper placement of staff in
production etc. It also focuses on Just-in-Time systems whose shortly speaking main
advantage lies on the fact that there is no need to store parts in stockroom due to the fact
that supplier deliver appropriate amount of part on time.
Lean Method focuses also on the workplace organisation for productivity, quality and
safety. Suggestions how to organize a company according to such roles - the 5 S`s were
developed. The term 5 S`s comes from Japanese words which began with the sound of
s:
Seiri = sorting (organization) = get rid of everything useless (documents, tools etc)
and implement order in every area
Seiton = stabilisation, simplification (neatness) = make everything (tools, drawings,
files etc. clear and easy to find by every member of the particular process within the
company without extra explanations and personal assistance from other employee
Seiso = sweep, shine (cleanliness) = keep the factory clean, make legible roles for
cleaning (who, what and when)
34
Oppenheim B. (2005) Lean Methods. Unpublished European MBA III Edition lecture
handbook. Leon Kozminski Academy of Entrepreneur and Management, University of
Bradford
35
Description of the Lean Method URL:
http://www.lmu.edu/PageFactory.aspx?PageID=7437
30
31
32
The office covers the places for the whole staff and also for the laboratory where
samples for clients and prospects are prepared as well as some new products are created
and tested.
CHEMICO has already launched two products:
TEX VCI
PLEX
TEX VCI is a special agent which production is based on unique VCI (Volatile
Corrosion Inhibitor) technology. TEX VCI used on the surface emits a kind of vapour
around the surface whereby corrosion can not develop (Appendix B)
PLEX is an agent whose main objective is to remove rust from the steel, metal or iron
surface. (Appendix C)
34
During the marketing audit six companies, involved in offering rust removers were
found on the Polish market.
Prices (per litre) of their products are as follows:
Kleen-flo europe sp z o.o.
Zakady Chemiczne ORGANIKA SA
"CHEMA" Spdzielnia Pracy w Olesinie
WYTWRNIA CHEMICZNA DRAGON
Pol - Expo Eurocolor
Libella Sp. z o.o.
WD-40
CHEMICO
3,83
13,56
10,54
1,00
1,07
1,49
0,00
19,50
At present there is only one company on the polish market that offers similar product to
TEX VCI. Other companies sell combined products for example foils and papers
together with an anti-corrosion inhibitor.
Also in area of inhibitors CHEMICO`s product is much more expensive than rival one.
OTIK`s products price amounts to 21,09 per litre whilst PLEX`s price equals 39,94
per litre.
PROMOTION
Due to the fact that CHEMICO has not organised marketing campaign yet
CHEMICO`s brands (TEX VCI and PLEX) are not known on the market
For the time being two marketing action have been taken:
Mailing to prospects
Participation in fairs The art of conservation that concerned corrosion
problems of steel antiques
Mailing to prospects
During the action company leaflets and short information about the products were sent
via internet and post.
After the action some prospects responded by sending back the questionnaire included
in the mail
There where in total 45 answers (25 regarding TEX VCI and 21 regarding PLEX).
Bearing in mind the total number of prospects to which the offer was sent: 708 firm, 6,3
% of them where interested in the CHEMICO`s products.
The questionnaire being the basis of the survey prospects had some fields to fill in order
to specify their interests:
35
6%
8%
3%
32%
29%
22%
TEX VCI
cooperation with CHEMICO
demo
11%
10%
9%
22%
24%
23%
36
PERCENTAGE
60%
50%
40%
TEX VCI
PLEX
30%
20%
10%
0%
cooperation product demo arangement
with ACORR
for a
salesman visit
product
sample
technical
specification
an offer
FIELD OF INTEREST
37
By now there was quite considerable fluctuation of personnel staff six persons
employed before resigned or were fired in the course of last too years. The positions that
the persons occupied were as follows:
Chief Executive Officer (2 times)
Product Manager
Secretary (2 times)
Sales Manager
At present time CHEMICO`s staff consists of:
- Chief Executive Officer
- Logistic Specialist
- Logistic Specialist Assistant
- Network Administrator
High fluctuation of the personnel staff must be considered as a big problem. It takes a
lot of time to initiate new employee what influences the company performance in a very
negative way. As it was mentioned before one of the main causes of such behaviour are
low salaries paid them for their work. Another important reason is the lack of visible
progress in company development. No current improvement, no sales, discourage the
employees and make that they become doubtful of the company success on the market.
Besides there is no justification for such positions as Logistic Specialist or Logistic
Specialist Assistant especially as those persons that occupy those positions in fact deal
with strict chemical problems but no with logistics. This is way there is a great need
to analyse skills and competencies of employed people in order to match people to
appropriate positions.
2.5..Market Analysis
2.5.1 Market description
CHEMICO is going to operate on industrial and consumer markets. However, in the
beginning, more actions will be taken on industrial market.
The core segments on which CHEMICO focuses in industrial market are:
steelworks
steel mills
foundries
shipyards
mines
38
World crude steel production in 62 countries, reporting to the International Iron and
Steel Institute, amounted to 103 million tons in July this year. It is 14,8 % more then in
the same month last year.
Production in Poland in July 2006 was 820 thousands tons and was higher than in the
some month 2005 by about 39 % 38
According to MEPS (leading independent supplier of steel market information) 39 total
production in 2006 is to amount 1.215 million tons and it will be 7,5 % more than in
2005 and it is going to be the fifth year of continues increase (year in, year out).
Table 2.1. Sold production of industry - manufacture of metal products (in mln)
1995
2000
2002
2003
2 351,53
5 862,58
6 866,90
8 210,37
Source: Ministry of National Education and Sport (2004) Statistical Yearbook. Ministry
of National Education and Sport for school libraries
Chemical business is also doing well. In the first quarter 2006 the production sold of
chemicals was higher by 11 % then in the same month 2005 40.
Table 2.2. Sold production of industry manufacture of chemicals and chemical
products (in mln).
1995
4 190,28
2000
7 014,23
2002
7 760,76
2003
9 096,98
Source: Ministry of National Education and Sport (2004) Statistical Yearbook. Ministry
of National Education and Sport for school libraries
Also Business tendency survey in chemical industry appeared to be the highest in the
course of 2005 and 2006
Good condition of the market justifies optimistic development of future demand on
CHEMICO`s products from orders placing by targeted companies and from companies
dealing with those big (mentioned above) companies like wholesalers selling sheet
metals, producers of tools as well as other firms closely cooperating with this sector.
2.5.2 PEST
The PEST analysis applied to CHEMICO gave the following scores:
38
POLITICAL
unstable political situation resulted from the risk of parliamentary elections
high risk of destroying business relation in the aftermath of new elections - a lot of
companies belonging to the group of potential customers and operating on industrial
markets, are state-owned companies whereby there is high risk of potential great
number of dismissals on the managerial positions in those companies what can result
in destroying business relation.
privatisation process in the metal sector goes on. This justifies the expectation that
efficiency of privatised companies will go up finally increase demand in the market
ECONOMIC
boom in the metal sector
low interest rates
stable monetary situation
low inflation rate
SOCIAL
high unemployment rate more opportunities to employ experts and specialist that
meet the companys requirements
TECHNOLOGICAL
production process requirements forces makes all companies dealing with steel
products and using steel as components to use anti-corrosion products. For now better
method then based on VCI has not been inverted yet.
The most important stakeholders are customers. Their expectations influence the
CHEMICO`s business activity directly.
40
2.5.4 Competition
Marketing research that has been done so far by CHEMICO revealed quite significant
competitive advantage. It comes from the fact that there are no producers of VCI
products located on the Polish market. All companies operating in Poland are only
representatives of foreign companies with headquarters located in other countries
usually in the USA (e.g. Maverick, Excor).
Localisation of production plant such long way from the client makes the whole process
of distribution very time-consuming. Moreover products offered by competitors are
produced as rather long batches so tailoring is a problem.
CHEMICO is able to customize its product and due to the know-how and great
expertise of the founders in chemical aspects, can create suitable product base on VCI
technology.
However, there are no producers of anti-corrosion products on the polish market but
there are many competitors offering wide range of standardized rival products.
List of competitors:
1. OtiK Spka z o.o.
Hutnicza 4 Street
81-061 Gdynia
http://www.inhibitory.use.pl/index.php
2. Kleen-flo europe sp z o.o.
Kunicy Kotajowskiej 13 Street
31-234 Krakw
http://www.inhibitory.use.pl/index.php
3. Zakady Chemiczne ORGANIKA SA
http://sklep.organika.com.pl
4. MAVERICK
Pozna
Wieruszowska 12/14 Street
www.maverick.pl
5. Excor sp. z o.o.
94-204 d
Jarzynowa 50 Street
http://www.excor.pl/
6. ABEST SP. Z O.O
Poselska 12/32 Street
42 200 Czstochowa
http://www.cortec.pl
7. Instytut Mechaniki Precyzyjnej
http://www.imp.edu.pl/
8. "CHEMA" Spdzielnia Pracy w Olesinie
Olesin
41
The majority of competitors offer one or two specific products, two competitors have
wide range of products (OTIK ltd and ABEST Ltd) for detailed information about the
product range see Appendix F.
42
7
6
5
4
7
3
2
12
13
11
10.000.000
< 10.000.000 50.000.000
50.000.000 <
INCOME
43
High
1
Medium
Low
INCOME
< 10.000.000
High
Medium
13
11
Low
12
< 10.000.000
10.000.000
50.000.000
INCOME
50.000.000 <
44
Those three charts presented above help to show relation between mentioned earlier
variable. We can observe how different strategies influence competitors` performance.
One particular chart not always gives appropriate answer. For example according to
Chart 2.2 we find out that some companies that offer only few anti-corrosion products
generate relatively high or low income (strategic group colour red and blue). Such
single piece of information does not allow to draw a strategic conclusion. But if we
compare that chart with other, regarding for example relations between income and
current business activity diversification, we will discover interesting link. Companies
that diversify their activity and simultaneously focus on one or two products, generate
the highest incomes.
However Chart 2.4. does not present so clear groups but also gives the opportunity to
draw a conclusion: two opposite pricing strategies (either low or high) lead to the same
company performance ( Organika versus Libella).
Thus strategic group analysis showed that highly diversified activity generates high
incomes. Moreover developing wide range of products does not increase companies`
performance. Just the opposite, focusing on one particular product and maximising the
sales, leads to strong market position and high performance.
In current situation on the market two companies clearly excel in achieving market
goals:
Zakady Chemiczne ORGANIKA plc
Libella Sp. ltd
Both this companies operates on many industries and in anti-corrosion sector and offer
one or two products.
2.5.5 Porters Five Forces 41
Barriers to entry.
From the point of view of establishing in the market new production company, market
barriers to entry are high. The most important variable is the know-how that the
potential entrant must possess.
Anti-corrosion products production process requires an expertise and permanent
support of chemists.
Also, professional equipment is needed as well as special lab must be equipped with
professional devices including special filters used in piping out chemical sewage.
Barriers to entry are lower when a foreign company enters the market via agents or
franchising. But still launching new product in the market is not an easy matter as a
result of the certificates required by the state institutions e.g. National Institute of
Hygiene.
From such company point of view, potential establishing of a subsidiary in Poland boils
down to hiring appropriate stockroom and fitting it with products imported from the
central warehouse.
Conclusion:
41
Know-how, special equipment, expertise and certificates make the process of entry
sophisticated whereby number of potential competitors is limited.
On the basis of the barriers/profitability matrix can be created. As it was mentioned
earlier this method takes into account two variables: entry and exit barriers and gives the
opportunity to predict expected profitability in the sector.
Assuming that there are high exit barriers in the chemical sector the matrix estimates
that expected CHEMICO`s incomes will be high and risky.
Substitutes
There is no substitutes that perform the same functions as the core product offered by
CHEMICO - TEX VCI
However market analysis showed that in the group of rust remover there is a great
number of substitutes.
The strongest group of substitutes are for example products based on phosphorous acid.
Such products are caustic unlike the PLEX VCI.
Conclusion: very low influence of substitutes in core product area, low/medium threat
in rust remover area.
Supplier power
Components used in production process are highly sophisticated so stocks of them are
limited even throughout the Europe. Owing to this, orders must be placed in advance
and in different countries located all over the world.
Conclusion:
High supplier power
Buyer power
CHEMICO is going to focus on industrial and consumer market. In both these segments
CHEMICO will offer its products to big companies:
- industrial market
steelworks
steel mills
foundries
shipyards
mines
Conclusion:
High buyer power
Rivalry
Competition within the anti-corrosion products is stable number of competitors has
not changed for years. The market is filled with well-known brands like WD-40 or
FOSOL and other specialist products existing on the market for years.
46
BARRIERS TO ENTRY
HIGH
SUPPLIER
POWER
HIGH
RIVALRY
STABLE
BAYER POWER
HIGH
SUBSTITUTES
LOW/MEDIUM POWER - RUST REMOVERS
NO SUBSTITUTES -VCI
0,2
0,4
0,25
0,05
0,1
WEAKNESSES
47
0,3
0,2
0,4
0,1
OPPORTUNITIES
Trying to change technologists minds to induce them to buy new, better
products to be used in the production process and to encourage them to
think more and act in anti-corrosion fields (in order to create extra needs
for products)
lower quality of rival companies` products
boom on the market in steel sector
positive respond from the market after mailing
problems of corrosion hits every company dealing with steel
corrosion generates measurable costs within company
no company in the Polish market is involved in the production of anticorrosion products
no substitutes exists in VCI area
0,15
0,05
0,25
0,05
0,15
0,15
0,15
0,05
1,00
THREATS
rival companys attack to destroy company (black PR, dumping etc.)
bureaucracy when applying for permits and certificates
unstable situation on political scene new election may destroy business
relation with potential state-owned customers.
increase in prices of raw materials
backward integration threat
forward integration threat
0,4
0,05
0,05
0,2
0,15
0,15
Results 42
Strengths/Opportunities
TOWS
Number of interaction: 70/2
Weighted number of interaction: 11,75
TOWS/SWOT number of interactions: 136/2
TOWS/SWOT weighted number of interaction; 23,1
SWOT
Number of interactions: 66/2
Weighted number of interactions: 11,35
42
Strenths/Threats
TOWS
Number of interaction: 24/2
Weighted number of interaction: 4,65
TOWS/SWOT number of interactions: 42/2
TOWS/SWOT weighted number of interaction; 8,8
SWOT
Number of interactions: 18/2
Weighted number of interactions: 4,15
Weaknesses/Opportunities
TOWS
Number of interaction: 8/2
Weighted number of interaction: 1,7
TOWS/SWOT number of interactions: 24
TOWS/SWOT weighted number of interaction: 4,5
SWOT
Number of interactions: 16/2
Weighted number of interactions: 2,8
Weaknesses/Threats
TOWS
Number of interaction: 16/2
Weighted number of interaction: 4,3
TOWS/SWOT number of interactions: 407/2
TOWS/SWOT weighted number of interaction: 10,1
SWOT
Number of interactions: 24/2
Weighted number of interactions: 5,8
CHEMICO should implemented aggressive strategy that maximizes synergy effect
between Strengths and Opportunities (detailed analysis is included in Appendix F)
Actions to take according to the strategy:
Taking advantage of opportunities that occur on the market
Strengthening market position
Focusing resources on the most competitive products
Taking over other companies operating on the same industry
49
50
The detailed list of prospects is available for free in sites of HBI Poland URL:
http://hbi.pl/?prd=1&sekcja=bazafirm&lang=ang
44
The detailed list of prospects is available for free in the sites of HBI Poland URL:
http://hbi.pl/?prd=1&sekcja=bazafirm&lang=ang as well as on sites Panorama Firm
URL:
http://www.pf.pl/portal/YPSimpleSearch?referee=&pageaction=&finaction=YpSearc
hS&keyword=kopalnie&city=
51
present in CHEMICO do not allow to pursue the whole market or large segments of the
market.
Second way means focusing on niches that have been already are recognised on the
market.
Finally CHEMICO will be able to deal with great number of small segments that
include sectors that potentially have to face corrosion problems every day.
3.2.2 Marketing Mix
3.2.2.1 Product
Strategic group analysis revealed that the most effective strategy that results in high
scale of income, is strategy based on one or two products but not on widening the range
of products at all cost.
Two companies Zakady Chemiczne ORGANIKA SA and Libella Ltd generate the
highest income but offer just one or two anti-corrosion products. Other companies, and
especially OTIC with a wider range of product generate incomes significantly lower
then those two leaders.
Such strategy must be accompanied by other strategy: diversification of current activity
and operating on different markets.
According to strategic group analysis those companies which diversified its activity
increased their performance.
Those who focused only on anticorrosion have not achieved impressive results.
From CHEMICO`s point of view problem with strategy is a little bit complicated due to
the fact that CHEMICO`s competitiveness advantage is the ability to tailor and
customize products in order to meet customers needs. Such offer will definitely lead to
wide range of products and short batches what contradicts the results of strategic group
analysis.
So the core strategy for products must be a combination of competitive advantage and
suggestions from the market.
The best strategy should cover steps as follows:
create a need for anti-corrosion products (explain to the prospects that tolerating rust
is more expensive that protection against it)
develop well customised new product (or modification of current products) based on
customer acceptation (use company experience in chemistry and the fact the new
product may be produced in the company)
create list of companies that represent similar needs
maximise the sale of this product
As it was said, CHEMICO aim at special niches where the ability to produce highly
customised product is used. This is for example special mixtures used in the process of
machining where this liquid is used to cool the piece of metal being under the
processing. The combination of CHEMICO`s products makes the liquid that not only
cools the piece of metal efficiently but also protects the surface against rust whereby at
least one stage of production process can be eliminated.
52
53
9,54
= -------------------- = 11,92
(1 0,2)
TEX VCI
Unit cost
19,58
Mark-up price = ------------------------------- = -------------------- = 24,48
(1 desired return on sales)
(1 0,2)
3.2.2.4 Place
CHEMICO is not going to involve intermediaries in the process of delivering goods. As
personal marketing will be the main way of contacting companys every single sales
representatives will be in constant contact with each client from his portfolio. This is
why no intermediaries are necessary because at the beginning all orders will placed via
sales representatives. Letter when the number of clients will go up a Purchase Manager
will be employed and his main duty will be dealing with orders.
2.2.2.5 People
Company success will never come unless the appropriate staff is employed. Current
structure does not ensure the expected progress.
At present CHEMICO`s staff lacks some important positions such as:
Sales Manager
Sales Representatives
Product Manager
Office Manager
Besides, positions of two chemists that are currently hired as Logistic Specialist and
Logistic Specialist Assistant should be renamed into Chemist, Junior and Senior
because at present they have nothing to do with the logistics.
45
54
Sales
Manager
Product
Manager
Chemist
Comp. Network
Administrator
Sales
representative
Sales
representative
The problem now is that there no sales of products. From time to time some small
quantities of product are sold but in fact there is a great stagnation in this area.
The main cause is lack of professional staff dealing with sales. So recruiting such
people is now an urgent matter.
3.2.3 Competitiveness advantage, positioning
As it was mentioned earlier competitiveness advantage (i.e. the ability to widen the
range of products) has not been justified through marketing analysis. The fact
CHEMICO is able to produce wide range of products may appear not to be the
sufficient advantage especially that all measurements point out that it is better to focus
on one particular product. From that point of view the fact that CHEMICO is a producer
company is a kind of competitive advantage due to the fact that it gives opportunity to
imitate existing product on the market produce it and sell, trying to squeeze out rival
product.
Relatively low fixed cots are another competitive advantage due to the fact that is easy
to adjust to market requirements. It does not mean simultaneous short batches or wide
range of products. It is quite possible that when the company flexibility will allow to
create or find high demand for CHEMICO`s products whereby a mass production of
one or two core products will start.
It is important that there is no competitor who produces VCI products in Poland. All
companies operating in polish market are a kind of intermediary of companies located
outside the Poland.
55
Delivery time and standardisation lead to weakening the competitors power. Moreover
the fact that competitors operate on foreign market and are offering specific and
difficult to change range of products give CHEMICO competitive advantage of
flexibility and short time reaction to the market needs.
Thus through the competitiveness advantage CHEMICO will be focused on positioning
its products in clients and prospects minds by stressing (used in every kind of
promotion) listed below features:
high quality
short delivery time
flexibility in producing products that fit the customer`s needs best if necessary
expected product will be invented and than produced
3.2.4 Lean Method
During the internal audit the general mess has been detected within the company. All
important documents and files have not been in proper order. There was a great problem
to find such minutes from the Supervisory Board Sessions, invoices, agreements, lists of
prospects etc. In the production area which is close to the stockroom many useless parts
and things where found. Boxes, containers, cables, computer hardware etc, where mixed
in the same area with end-products, components and samples. There was even a
problem to give the exact amount of the current stock.
Such situation creates high need to implement the 5 S`s suggestions included in the
Lean Method.
Actions to be taken:
Sorting:
Remove everything what is not needed to the proper functioning of the office and the
production (useless pieces of furniture, chemicals, computer equipment etc.) available
at the moment in the company
Sort necessary equipment with w proper order:
Financial documents
Chemicals
Tools
Samples
End-products
Packaging
Perform the stocktaking
Fit the rest areas with flowers
Keep encouraging employees to follow such rules
Back up your data
Stabilize
Create visible tags to make it easy for everybody to get necessary documents and
other equipment
56
Write down visible instructions on the files and drawings on how to store it after work
(specially chemicals and special tools to deal with chemicals)
Sweep and shine
Impose duty hours (i.e. responsibility) for every employee to keep the office area
clean
Let the CEO set a good example and arrange sometimes e.g. files before employees
very eyes
Reword employees for every suggestion that leads to better cleaning
Standardisation
Use labels that emphasise employees responsibility
Generally use colours and symbols when developing the responsibility area and to
facilitate looking for needed equipment or documents
Take care of safety:
use necessary sings high voltage, fire extinguisher, escape routs etc.
mark danger zones especially regarding caustic chemicals
Force people to use safety clothing when dealing with dangerous chemicals or fire etc.
Self-discipline
Train new employee in the 5 S`s application
Control constantly if the rules are really used by employees
3.2.5 Financial Plan
(Projected statements are included in Appendices G balance sheet and H income
statement - CHEMICO `s financial year does not cover calendar year and lasts from
march to march each year).
Financial plan includes recommendations mentioned above.
In next financial years CHEMICO plans a visible progress in company performance.
Chart 2.5. Expected income in years 2006-2010
Sales Revenue
sales revenue
800 000,00
753 106,56
600 000,00
400 000,00
376 553,28
251 035,52
200 000,00
0,00
369,17
2006/2007
2007/2008
2008/2009
2009/2010
financial year
Sales Revenue
57
Assumptions for the development: there are 10.023 potential companies on the market.
After action (sending offers via internet) 5 % i.e. about 500 will respond. 10 % of the
500 prospects place an order for about $6000 (per year).
3.2.5.1 Financial year 2006/2007
No change in company performance is planned because a lot of necessary organisational
changes have to be performed first. It was assumed that financial outcomes will remain
on the same level as in previous year.
3.2.5.2 Financial year 2007/2008:
Strategic plan for CHEMICO will be put into practice in October - to the end of
financial year remains six months. By the end of September no special reorganisation is
planned - current financial year will be intended to perform indispensable changes and
reorganisation. Key task for that period is to rebuild the team, especially sales force has
to be employed. Simultaneously first step of segmentation will be done and a mailing
sent to prospects segmented according to PKD.
Such actions will exert an impact only on income statement while balance sheet will not
change significantly.
Main items to change in profit and loss account are as follows:
Salaries will go up (after new sales team will be employed)
Overhead will go up extra expenditures on current activity (stationery, letterhead,
toners, extra phone calls etc)
Sales force will get regular salary and a bonus 10 % of the gross sale
All organisational aspects will be completed by the end of current financial year, so the
main focus will be put on that area as well as on developing the sales. This is why the
sale in year 2006/2007 is planed to amount to about $17.000
58
Here are three contacts to some companies that specialise in granting venture capital 46:
Polish Private Equity Association (PPEA),
53 E. Plater Street (31nd floor),
00-113 Warszawa
phone: +48 22 458 84 30
e-mail: psik@ppea.org.pl
www.psik.org.pl
Polish Business Angles Network
393 Forodyska Street
85-766 Bydgoszcz
phone: + 48 52 34 71 481
e-mail: sekretariat@polban.pl
www.polban.pl
Lewiatan Business Angels (LBA)
6 Klonowa Street
00-586 Warszawa
phone: + 48 22 845 95 96
www.lba.pl
3.2.5.4 Financial year 2009/2010
Further increase is predicted due to stronger market position.
3.2.6 Projected Cash Flow (Appendix I)
Cumulative net cash from operating, investment and financing activities is positive in
projected periods which means that the company will have liquidity and will not suffer
from the lack of cash for current activity.
3.2.7 Break Even Point (BEP), financial year 2007/2008
FC =
WMB =
BEP
37 847,08
0,20
189 175,24
PLEX
P=
VC =
C=
BEP=
46
11,92
9,54
0,20
37 835,05
Bartczak I.D. (2006) Honour, Property and Prospects: Forbes No. 09/2006
59
TEX VCI
P=
VC =
C=
BEP
24,48
19,58
0,80
151 340,19
According to the BEP analysis in order to cover cost CHEMICO has to produce and
sale at least 189 175,24. Total sale for financial year amounts to 251 035,52. So, the
planned sale can be lower by 33 % and still cost will be covered.
3.2.8 Ratios (Appendix J)
Ratios analysis shows that current CHEMICO`a current financial situation in financial
year 2006/2007 is rather poor. Operating performance ratios are negative, liquidity
ration are below model value 1 and asset turnover (total asset utilisation) shows
relatively low sales is generated by each euros worth of assets.
The CHEMICO`s performance is improved in next periods and ROI for example equals
11 % what is at least 100 % then the highest risk free rate available on the market,
liquidity ratios exceed a couple of times minimum (1) and sales generate no less then
1,74 on every 1 euro invested in the company.
60
Name:
Roman Cielik
Project Title:
Supervisor:
Company:
CHEMICO Ltd
1 Scope/Rationale of Project
CHEMICO Ltd has just completed the process of establishing company on the polish
market. Now, it has to speed up its growth in order to reach economic objectives like
profit and market share in near future.
The project will review all aspect of the business activity and develop solutions leading
to the achievement of the goals.
In particular such areas will be analysed: products and services, market analysis,
strategy and implementation, team management, marketing 4 p, financial plan and
competition.
2 Methodology
The project main objective is to provide CHEMICO`s management with a specific and
useful tools to the implementation in real live. It is expected to be a guidebook how to
expand the business activity in order to achieve company goals.
For every company area, an internal audit will be done then specific tools, based on the
literature, will be worked out.
3 Data Sources
Primary information
Interviews with CHEMICO staff
Customers comments on products (questionnaires)
Sales Representatives reports
Secondary information
Industry/market reports
Central Office of Statistics reports
61
62
20/04/2006
30/04/2006
Gathering data
19/05/2006
16/06/2006
First draft
30/06/2006
14/07/2006
31/07/2006
31/08/2006
19/05/2006
16/06/2006
30/06/2006
14/07/2006
31/07/2006
18/08/2006
63
64
65
INCOME STATEMENT
Sales Revenue
Less: Cost of Goods Sold
Gross Profits
Less: Operating Expenses:
Selling Expense
General / Admin. Exp.
(Overheads)
Lease Expense
Depreciation Expense
Total Operating Expenses
Operating Profits
Less: Interest Expense
Net Profits Before Taxes
Less: Taxes
Net Profit After Taxes
Earnings
Available
for
Common Stockholders
2005/2006
369,17
184,58
184,58
251,04
25 231,39
0,00
1 958,32
27 440,74
- 27 256,16
0,00
- 27 256,16
0,00
- 27 256,16
- 27 256,16
66
BALANCE SHEET
Current Assets:
Cash
Marketable Securities
Accounts Receivable
Inventories
Total Current Assets
Gross Fixed Assets (at cost):
Land & Buildings
Machinery and Equipment
Furniture & Fixtures
Vehicles
Other (Inc. Fin. Leases)
Total Gross Fixed Assets
Less:
Accumulated
Depreciation
Net Fixed Assets
Other Assets
Total Assets
2005/2006
Current Liabilities:
Accounts Payable
Notes Payable
Accruals
Taxes Payable
Other Current Liabilities
Total Current Liabilities
L / T Debt (Inc. Financial
Leases)
Total Liabilities (without
liabilities)
Paid-In Capital
Venture Capital
Retained Earnings
Total Stakeholders' Equity
2006/2007
24 153,82
0,00
6 719,42
0,00
10 155,86
3 013,42
19 888,69
376,55
376,55
376,55
17 425,79
37 691,03
24 153,82
0,00
24 153,82
45 186,39
- 31 649,19
13 537,21
67
VCI TECHNOLOGY
OTHERS
TECHNOLOGIES
RUST
RUST
REMO
PROTE
VERS
CTION
PAP
ERS
FO
ILS
POW
DERS
COOL
ANTS
RUST
REMO
VERS
ANTICORR
OSION
BATHS
OI
LS
CLEA
NERS
+
+
+
+
+
-
+
-
11 WYTWRNIA CHEMICZNA
DRAGON
12 Pol Expo Eurocolor
OTiK Spka z
o.o.
2 kleen-flo
europe sp z o.o.
3 Zakady
Chemiczne
ORGANIKA
SA
4 MAVERICK
5 Excor sp. z o.o.
94-204 d,
ul. Jarzynowa
50
6 ABEST SP. Z
O.O
7 Instytut
Mechaniki
Precyzyjnej
8 "CHEMA" Sp
dzielnia Pracy
w Olesinie
9 KENMIX
10 Ashland Poland
Sp. z o.o. Dzia
Valvoline
Polska
1
68
69
70
71
72
73
74
75
76
BALANCE SHEET
Current Assets:
Cash
Marketable Securities
Accounts Receivable
Inventories
Total Current Assets
Gross Fixed Assets (at cost):
Land & Buildings
Machinery and Equipment
Furniture & Fixtures
Vehicles
Other (Inc. Fin. Leases)
Total Gross Fixed Assets
Less:
Accumulated
Depreciation
Net Fixed Assets
Other Assets
2006/2007
2007/2008
2008/2009
2009/2010
6 719,42
0,00
10 155,86
3 013,42
19 888,69
12 551,78
40 291,20
62 758,88
12 481,49
128 083,34
12 551,78
50 207,10
58 540,64
18 827,66
140 127,18
12 551,78
142 502,37
112 965,98
37 655,33
305 675,46
75 310,66
28 115,98
0,00
103 426,63
22 492,78
376,55
376,55
35 144,97
0,00
35 144,97
376,55
17 425,79
0,00
35 144,97
17 425,79
0,00
103 426,63
17 425,79
0,00
22 492,78
17 425,79
Total Assets
37 691,03
328 168,24
Current Liabilities:
Accounts Payable
Notes Payable
Accruals
Taxes Payable
Other Current Liabilities
Total Current Liabilities
L / T Debt (Inc. Financial
Leases)
Total
Liabilities
(without
liabilities)
Paid-In Capital
Venture Capital
Retained Earnings
Total Stakeholders' Equity
2006/2007
24 153,82
0,00
2007/2008
27 260,77
0,00
2008/2009
27 599,35
0,00
2008/2009
35 149,67
0,00
24 153,82
27 260,77
27 599,35
35 149,67
0,00
0,00
0,00
0,00
27 599,35
203 338,77
50 207,10
12 615,70
215 954,47
35 149,67
253 545,88
328 168,24
Total Liabs.
Equity
&
24 153,82
45 186,39
27 260,77
153 131,67
107 945,27
- 31 649,19 - 17 164,12
13 537,21 135 967,55
22 492,78
39 472,69
293 018,56
Stakehldrs'
37 691,03
77
INCOME STATEMENT
Sales Revenue
Less: Cost of Goods Sold
Gross Profits
Less: Operating Expenses:
Selling Expense
General / Admin. Exp.
(Overheads)
Lease Expense
Depreciation Expense
Total Operating Expenses
Operating Profits
Less: Interest Expense
Net Profits Before Taxes
Less: Taxes
Net Profit After Taxes
Earnings
Available for
Common Stockholders
2006/2007
369,17
184,58
184,58
2007/2008
251 035,52
175 724,87
75 310,66
2008/2009
376 553,28
263 587,30
112 965,98
2009/2010
753 106,56
602 485,25
150 621,31
251,04
12 551,78
18 827,66
37 655,33
25 231,39
0,00
1 958,32
27 440,74
- 27 256,16
0,00
- 27 256,16
0,00
- 27 256,16
37 847,08
0,00
7 028,99
57 427,85
17 882,80
0,00
17 882,80
3 397,73
14 485,07
51 749,92
0,00
5 623,20
76 200,78
36 765,21
0,00
36 765,21
6 985,39
29 779,82
75 310,66
0,00
4 498,56
117 464,54
33 156,77
0,00
33 156,77
6 299,79
26 856,99
- 27 256,16
14 485,07
29 779,82
26 856,99
78
STATEMENT OF CASH
FLOWS
CASH
FLOW
FROM
OPERATING ACTIVITIES
Net Profit After Taxes
Depreciation
Decrease in Accts. Receiv.
Decrease in Inventories
Decrease in Other Assets
Increase in Accounts Pay.
Increase in Accruals
Increase in Taxes Payable
Increase in Other Cur. Lia.
Cash Flow from Oper. Act.
2007/2008
2008/2009
2009/2010
14 485,07
7 028,99
- 52 603,02
- 9 468,07
0,00
3 106,95
0,00
0,00
0,00
- 37 450,08
29 779,82
5 623,20
4 218,24
- 6 346,18
0,00
338,58
0,00
0,00
0,00
33 613,66
26 856,99
4 498,56
- 112 965,98
- 37 655,33
51 989,83
22 630,94
0,00
0,00
0,00
- 44 644,99
- 68 281,66
- 68 281,66
- 22 492,78
- 22 492,78
0,00
0,00
0,00
0,00
0,00
0,00
107 945,27
0,00
50 207,10
0,00
50 207,11
0,00
107 945,27
50 207,10
50 207,11
15 539,10
- 16 930,67
51 265,87
34 335,20
CASH
FLOW
FROM
INVESTMENT
ACTIVITIES
Increase in Gross Fixed
Assets
- 34 768,42
Cash Flow from Investments - 34 768,42
CASH
FLOW
FROM
FINANCING ACTIVITIES
Increase in Notes Payable
Increase in Long-Term Debt
Changes in Stockholders'
Equity
Preferred Dividends Paid
Common Dividends Paid (-)
Cash Flow from Financing
Activities
79
APPENDIX R
RATIO ANALYSIS
2009/2010
- 0,72
0,50
- 73,83
0,11
0,30
0,07
0,15
0,30
0,10
0,10
0,20
0,04
- 0,72
- 2,01
0,09
0,11
0,12
0,14
0,08
0,09
1,74
3,64
2,57
33,48
56,74
54,75
26,75
17,04
OPERATING
PERFORMANCE
ROI
Gross Profit Margin
Return on sales
Return on Total Assets
(ROA)
Return on Equity (ROE)
EFFICIENCY
Total asset utilisation
Fixed assets utilisation
Credit given
Credit taken
0,03
1,85
0,98
7,14
10
041,20
91,25
23
881,13
39,64
LIQUIDITY
Current Ratio
Quick Ratio
Total working capital
0,82
0,70
-
265,13
4,70
5,08
4,24
4,40
4
100
822,58
112 527,84
8,70
7,63
270
525,78
80
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