PACT Magazine

PACT BUSINESS CASE 

DAVID CHAPMAN, THOMAS DUFFY & 

SAM STEWART

EXECUTIVE SUMMARY 

The main purpose of this business case is to thoroughly 

investigate the feasibility and achievability surrounding the 

new product development of the Pact system, and to outline 

the business in an efficient manner to potential investors. The 

process engaged procedures to analyse and assess the many 

facets of starting a product centred business. In conjunction 

with the product development of Pact, the business case was 

generated to thoroughly outline details of the product and 

where it is situated in the market. Strategies on market entry 

were devised using several tools to holistically visualise and 

forecast the business plan. Elements of this included target 

markets, competitive advantage, IP protection strategies, value 

propositions, revenue streams, potential channels, distribution 

methods, activities, resources and partners. Following this, the 

focus shifted to funding and investment requirements through 

doing intricate costing analysis to align with the previously 

stipulated market entry strategy. The potential risks were 

assessed and recognised which aided in the formulation of 

reduction strategies.

CONTENTS 

The Team..........................................................................................01 

The Problem......................................................................................03 

The Solution......................................................................................05 

Market Size and Share....................................................................09 

Market Info.......................................................................................11 

Competitive Advantage...................................................................13 

Intellectual Property.........................................................................15 

Market Entry Strategy......................................................................17 

Business Model................................................................................19 

Funding Requirements....................................................................23 

Costing Analysis...............................................................................25 

Returns............................................................................................28 

Risk and Reduction..........................................................................29 

Business Model Expanded..............................................................31

THE TEAM 

Thomas Duffy 

Research and Development 

01 PACT

David Chapman 

Technical Production 

Sam Stewart 

Product and Digital 

Marketing 

PACT 02

THE PROBLEM 

Every person deserves the right to a safe and secure house and the peace of mind 

which ensues. But in a time of low home ownership and high rentals, a security 

system can be somewhat out of reach. The original model of a home security 

system relies on an external company to set up and monitor your security, leaving 

it in the hands of someone else. These prices and systems are not always viable 

options for low income households and people who are renting, as they can come at 

a significant cost and aren’t easily relocated when they wish to vacate the property. 

All these elements work together to set up barriers for home security, which don’t 

need to exist in this day and age. 

With household burglary being one of the most widespread crimes throughout 

Australia, at over 300 000 cases reported annually, there is a clear hole in the 

market. Reports say that Australians are aware of this, with around 36% of them 

believing that their house is likely to be burgled in the forthcoming year (Australian 

Institute of Criminology - Household burglary, 2016). 

Our target market will generally consist of people looking for an alternative 

standalone security system that is both simple and unobtrusive. This market will be 

made up of low income households, students and the rental market. Creating a 

versatile solution, allowing people to control their own security, setting up what they 

wish to monitor and when without having to rely on an external company. 

We are working to solve this problem by providing a simple to use entry level home 

security system that can be monitored and managed independently, requiring only 

power, an internet connection, a smart phone and a house you wish to secure. 

Giving users an extra layer of defense while bypassing the complications that come 

with conventional security systems and giving the consumers the peace of mind 

they deserve. 



05 PACT 

THE DESIGN SOLUTION

Pact is a standalone home security system that is based from a monitoring unit 

utilising proximity sensing, video and audio recording and a clever key system as 

well as separate monitors for extra security around the home. It operates through 

the home WiFi network and uses smartphones and an application interface to 

set up, control and monitor the system. Pact recognises when a smartphone is 

connected to the network and uses this as a smart key arming or disarming the 

security system. This eliminates the often unpleasant passcode process apparent in 

many home security systems on the market. 

Pact operates by using the home WiFi network allowing Pact to be an isolated and 

standalone system with no reliance on external resources evident in most standard 

home security systems. The installation, monitoring and maintenance processes can 

now be executed by the user where typically these were handled through external 

companies. Connecting the system is done through the application making the 

installation process simple and hassle free. Being controlled internally ensures that 

the system is secure from people outside the network and from people without 

access. The system only draws a small amount of data as a result of the uploading 

of video streamed content to the user’s phone. Other benefits of utilising WiFi 

connectivity include: automatic or user controlled software updates, the ability to 

disconnect, transport and reconnect the system without affecting the settings or 

user defined presets as well as the ability to monitor the home remotely through the 

smartphone application. 

The main component of this system is the Pact monitor unit which can be positioned 

anywhere in the home with WiFi connectivity. This small cylindrical tower has a 

minimal user interface with only one button on the product. Using intuitive gestures 

this button turns the device on and off, syncs the device to other monitoring units 

and temporarily disables monitoring. This is aided by a subtle, unobtrusive internal 

lighting system that provides immediate feedback and communicates the devices 

current operations to the user. Positioned at the front of the unit is a small wide 

angle camera that captures motion when the system is armed. At the rear, below 

the button is a USB Micro B connection to power the device through a rechargeable 

Lithium-Ion battery and is also used to extract any data stored on the internal 

memory. The product was designed to be integrated within any household so a 

monochromatic aesthetic combined with a contemporary minimalist form was 

employed. 


To enhance the home’s security network multiple devices can be connected. 

These can all work together within the same network to monitor access points 

throughout the house. A small remote provided with the product allows the 

user to disarm the security system if their smartphone is unable to function 

ordinarily. The low-energy bluetooth enabled remote is coded to communicate 

with the monitoring unit from which it was originally paired. An additional 

product to the Pact system is a low-energy bluetooth tag to be fitted to a collar 

of household pets. This provides the monitoring units with the proximity of the 

animal in order to not trigger the alarm yet still remain active in monitoring for 

intruders. 

At the centre of the system is an application which allows the user to control 

and define settings of their personal security system. Through this, the user has 

the ability to define what actions will happen as a result of the system being 

triggered. For example, a notification may appear suggesting a disturbance in 

the user’s apartment. The Pact application will present an array of predefined 

options which enables the user to select an appropriate course of action. Such 

actions may include activating an alarm deterrent, contacting neighbours or 

friends to check the house and even shortcuts to contact emergency services. 

From here, they can also record and stream the video taken from the hub and 

other connected monitoring units. 

Custom security modes can be created based around schedules and habits. 

Using WiFi password protocols, the system can be instructed to accommodate 

for many people who may enter or exit the house that are not paired with 

the home WiFi. Family members, regular visitors or temporary guests can 

gain access to the house or apartment without giving the Pact user constant 

notification. Through the application interface, the devices can be managed 

to perform actions such as syncing, arming, disarming, suspending as well 

as updating software. The application enables the user to have access to 

information such as instructions, warranty and also provide help through 

frequently asked questions and connections to chat, telephone and email 

support services. 



MARKET SIZE & SHARE 

In 2015 to 2016, the domestic market accounted for around 20% of industry 

revenue in the security systems market. This is influenced by both perceived and 

actual shifts in criminal activity as well as a need to feel safe and secure in one’s 

home, regardless if you own, rent or board. The security system installation and 

monitoring market and the industry as a whole has grown at 2.8% annually 

since 2011, despite data from the Australian Bureau of Statistics saying that 

over the past 5 years, crime rates have generally declined (Crime Victimisation, 

Australia, 2014-15, 2016). It is slowly becoming common place for households 

to integrate security systems with other systems within their house, but this is 

only really evident in either major renovations or the construction of new houses. 

There has been a trend leaning away from traditional security methods but this 

market is still relatively unfulfilled within Australia. Due to this, the market seems 

to be increasing, and there is expected growth of 1.9% til 2021. 

The security system installation and monitoring market in 2016 is worth $1.7 

billion, with the domestic market segments making up 20% of this market, 

giving it a value of around $340 million (Security System Installation and 

Monitoring in Australia Market Research, 2016). By definition, the domestic 

home security market is where Pact will compete, but from our research, our 

target markets fall outside of this market. Pact works to overcome the barriers of 

entry to this market that many of our target market may face. 


SECURITY MARKET 

IS WORTH $1.7B 

GROWING 1.9% 

ANNUALLY TIL 2021 


MARKET INFO 

With external influences from the economy, the government and employment 

affecting how and where people spend their money, less people are attempting 

to purchase a home and are continuing to rent. Renting has been on the steady 

increase over the last few years, with around 35% of Australians currently living in 

rental properties, this percentage is only going to increase as the property market 

rises. Based on Australia’s current population, that would mean that over 8 million 

people are currently renting within Australia, this market is Pact’s primary target 

market (The Australian housing market, 2015). 

The second target market Pact aims to address is low income households who can’t 

justify the expenses associated with traditional security systems but need them 

the most due to the lower socioeconomic areas they may live in. Based on ABS 

statistics from 2014, around 2 million people between 15 and 64 years of age 

lived in low income households within Australia. These households had a weekly 

equivalised disposable income of between $205 and $511 (Household Income and 

Wealth, 2016). 

The third target market to be serviced by the Pact system is students, both domestic 

and international. Australia has roughly 1.3 million people who are currently 

undertaking tertiary education, with 25% of these considered to be international 

students. Many of these students would also fall under the category of renting both 

privately and through student accommodation facilities, so they would make up a 

portion of the rental market (Student Numbers at Australian Universities, 2016). 


Once these three areas had been analysed and the non-applicable age 

demographics removed, crossovers between markets and users per household had 

been accounted for. The estimated total addressable market for the Pact system 

would sit around 5 million users within Australia. 

Due to the specialised purpose of the Pact system it would sit low range in regards 

to its market penetration rate. This penetration rate has been estimated at roughly 

3%. From this estimation, the total market volume would be estimated at 150000. 

Target customers × Penetration rate = 

Market volume 

5000000 x 3% = 150000 

From here the monetary average value of the 

product was calculated at an estimate of 

$100 per product. 

Market volume × Average value = 

Market value 

150000 x $100 = $15 million 

Based on the target customers, penetration rate, market volume and average 

product value, Pact has a market value of $15 million. This value will include both 

early adopters and laggards, due to the market and the product itself, we believe we 

will see 10% of this market value in returns within the first year. 

At this point these are still estimates. We do believe they are an accurate 

representation of our market and return forecasts but until we receive further funding 

for a more in depth market analysis these estimates will suffice. 

Further analysis would see the implementation of both best-case and worst-case 

scenarios in addition to the outlined expected scenario. These assumptions will be 

monitored and modified if needed to accurately reflect the financial expectations of 

the business. 


COMPETITIVE 

ADVANTAGE 

Pact is an affordable and simple to use home security system that allows users to 

remotely monitor the safety of their own home. As it stands, the current Australian 

home security market is focussed on semi-permanent, expensive and subscription 

based services which leaves a large and untapped market for the medium-low 

income households, students and renters. 

Pact’s home security system is a perfect solution for our target customers due to 

the convenience and peace of mind it provides with remote functionality and use 

of smart technology as opposed to the primitive services within the current market. 

Pact’s competitive advantage also lies in the staff and founding partners of the 

company. With a background and expertise in product development and innovation, 

the Pact team employs strategies and activities to ensure success which include 

research and development, production and marketing. 

When understanding a company’s competitive advantage, each company’s value 

proposition can be categorized into three value disciplines being operational 

excellence, customer intimacy and product leadership. Each of these strategies 

reflect the unique activities that provide a competitive advantage relevant to the type 

of business to which it operates. 

For a company to be competitive, it must adhere to all of the aforementioned 

competitive advantage disciplines, although excel in one. Pact aims to gain a 

competitive advantage through operational excellence as a competitive strategy as 

this strategy occurs through cost leadership. Although this strategy is not typically 

aligned with companies aiming to be ‘first to market’, it is forecasted that other 

companies will soon follow into the Australian home security market, and having 

existing relations with our target user, Pact will unavoidably be competing in this 

discipline. This strategy will also resonate with our target customer due to their lowmedium 

disposable income to which they can spend on such products. 


To fulfill and deliver the company’s value proposition to its customers, Pact will be 

heavily involved in research and development, production and marketing. As the 

Pact system aims to engage a new market, retaining a first mover advantage and 

staying innovative is crucial to Pact’s success. New product research, new product 

development, existing product updates, and innovation are activities which Pact 

must retain a strong focus. Remaining critical and astute, Pact must oversee the 

production process, manage production capacity and planning whilst also managing 

quality control. Market research, strategy, communications and sales support are all 

key marketing activities which are crucial to the value proposition of the company. 


INTELLECTUAL 

PROPERTY 

The protection of intellectual property is a necessary consideration in this design 

process as it can assist in the validation of the product as well as the position within 

its corresponding markets. Through looking at patents on home security solutions 

it is evident that the Pact system is perhaps not suitable to be patented in terms of 

the fundamental function of in-home security monitoring, however would be better 

suited to both a design registration and a trade mark registration. 

After preliminary research it was concluded that the Pact system, in particular, the 

central hub unit, warrants a design registration due to the contemporary design 

of the device. A registered design provides the owner protection for the visual 

appearance of the product as well as exclusive rights to commercially use, license 

or sell the design. By using a design registration, some functional elements of the 

design can also be protected. These include the wide angle lens, the user interface 

and the lighting feedback interface. In the electronic consumer market, five years of 

protection appears to be a generous amount of time due to the nature of the market, 

with products constantly being updated and evolving to keep up competition. 

The Pact brand itself permits a trade mark registration within the class in which 

it is positioned. The elements of this includes the ‘P’ logo, the logo in its entirety 

(‘P’ and ‘pact’), the name ‘Pact’ and the brand slogan ‘simply secure’. The pact 

system is positioned as a goods-class 9 product being an apparatus for recording, 

transmission or reproduction of sound or images; having the capabilities of data 

processing, computing through using computer software and performing tasks 

relating to surveying, photos, video, optical assistance, signalling and supervision. In 

the class of service category, the pact system resides in the 42 and 45 classes being 

a design and development of computer hardware and software (42) and a security 

service for the protection of property and individuals (45). 


The protection strategy involves actioning both forms of registration upon finalising 

the design prior to final production and any branding assets. Currently the name 

‘Pact’ and the slogan ‘Simply Secure’ are available in both goods-class 9 category 

and the service-classes 42 and 45 categories so this protection action is a viable 

option to pursue as it is relatively inexpensive and can last up to ten years. 

The costs associated with obtaining a ten-year trade mark include: 

Basic trademark application - $860 

Registration fee - $740 

The design registration is also a sensible option to protect the visual appearance of 

the Pact system and to obtain exclusive rights to commercially use, license or sell 

the design. 

The costs associated an individual design registration, according to the statutory 

fees under Division 81 of the GST Act of 1999, are as follows: 

Initial application cost - $250 

Examination cost - $420 

Design renewal cost (optional) - $320 

The examination period of the registration process can take up to 13 weeks so this 

will have to be factored into the timeline to account for any visual release of the 

product in regards to marketing and campaigns. 


MARKET ENTRY 

STRATEGY 

The market entry and customer acquisition strategy for the Pact system will occur 

over four main stages. These stages are Development, Support, Outreach and 

Innovation and aim to release a minimum viable product (MVP) to market through 

the expertise of strategic investment, thoughtful advertising and continuous 

innovation. 

Development 

The Pact system as it currently stands has been developed 

to exhaustion with the skills and expertise of the founding 

members. For the product to be developed further, Pact will 

need to hire professionals in both IT and software engineering. 

This intake will help completely develop our MVP. The MVP 

will follow the current design, internal wiring, and PCB layout, 

although support is needed when enabling these products 

to communicate together through an application interface. 

Developing the MVP is crucial to finding strategic investment, 

and this investment is key to the future of the Pact system. 

Support 

After creating a suitable operational prototype, Pact will seek 

strategic investment to take the product further in terms of 

development and refinement. Pact is looking to create strategic 

partnerships with investors who can not only help us monetarily 

but with industry connections and expertise to further develop 

our MVP. Further development of the MVP will lead to the 

monetisation of the business and will allow the investors to 

receive a return on investment from both time and money. 

Examples of such investment and partnership would include 

large technology suppliers and manufacturers. This would aid in 

keeping start-up costs low whilst providing expertise in an area 

which is important to business growth. 


Outreach 

Our MVP will be our initial launched product and will be 

executed through a Kickstarter campaign. This campaign will be 

used to aid in the promotion and pre sales of the Pact system. 

We aim to set a realistic and achievable goal for the campaign 

but do not wish to rely solely on the campaign for project 

funding. We are hoping to already be funded before the start of 

the campaign and are using the crowd-funding platform purely 

as a way to advertise the product. To drive potential customers 

to the Kickstarter campaign we will implement a marketing 

strategy that utilises both web and social media marketing. This 

would be implemented to grow a unique and organic customer 

base. Once the Kickstarter has been successfully funded, 

the Pact system will be sold through the Pact website and at 

appropriate trade shows. This will work to increase the brand 

awareness and also provide a direct sales channel to provide 

maximum profitability. 

Innovation 

As innovation is the forefront of Pact’s value proposition and 

business model, routing the incoming revenue from the 3rd stage 

(outreach) towards product development is essential. Pact will 

be able to be incrementally updated with new firmware whenever 

it is to become available, working to keep the first versions of 

the Pact system as reliable and advanced as the latest. This will 

be implemented to combat product obsoletion which is very 

prevalent in the current technological landscape. 

The first foreseeable innovation to the Pact system would be to 

move away from physical SD card data storage and move to a 

cloud based storage system. Currently, the Pact system stores 

the data on a SD card, which is great unless the system is to 

be stolen or damaged. Updating the system to a cloud storage 

system would alleviate this issue as well as provide a stronger 

network for the system to run off. In regards to our MVP and 

current product development, it was decided that developing 

a cloud compatible system would be too time and resource 

consuming for our initial product offering. Although, as revenue 

is acquired throughout the product’s development, the creation 

of the cloud system is a viable option which we can seamlessly 

implement into the current system. 


BUSINESS MODEL 

Partners 

• tech support 

• manufacturing 

• suppliers 

• insurance companies 

• security services 

• developers 

Activities 

Research and development: 

• innovation 

• new product development 

Production: 

• quality control 

• capacity 

• efficency 

Marketing: 

• first mover advantage 

• strategy 

• market research 

Cost Structure 

Service cost structure: 

• in house roles to minimise costs 

Product line cost structure: 

• fixed costs via quoting 

Resources 

• in house task loading 

• software 

• product support 

• multi-skilled employees 

• cloud software 

• IP protection 

• market data 


Value Proposition 

• flexibile 

• modern 

• remote access 

• product quality 

• customer support 

• firmware upgrades 

• support network 

Customer Relationships 

• tech support team 

• online resources 

• replacment 

• email list 

Customer Segments 

• 25+ years of age 

• low income households 

• rental market 

Channels 

Direct distribution: 

• telephone 

• online 

• kickstarter 

• trade shows 

Indirect distribution: 

• physical retailers 

• large maket share 

• partnerships 

An expanded explanation of 

the business model canvas 

is located at the end of the 

business case. 

Revenue Streams 

• online sales 

• partnerships 

• brick and mortar sales 




FUNDING 

REQUIREMENTS 

For Pact to successfully launch, an in depth budget needs to be created as well as a 

realistic outline of the funding requirements. Each task/goal/process was assessed 

and was either an estimated cost or a budgeted allowance. 

These are identified below for Pact’s first year of operation: 

Salary expenses 

Task/Goal/Process 

Budget 

Recruitment of IT and software engineering team $1000 

Salaries (founders working of minimal pay) $150000 

Superannuation $15000 

Total $166000 

Manufacturing 


Cost 

CAD development 

In house 

Prototyping $20000 

Tooling $35585 

Materials $17874 

Component sourcing/purchasing $587000 

Manufacturing $24608 

Quality control $4600 

Packaging and handling $15000 

Total $704667 


Administrative/Operational expenditure 


Budget 

Marketing & advertising $5000 

Web portal and online shop development 

In house 

Kickstarter fees 

5% of KS revenue 

Office and warehouse rental $22000 

Customer service 

In house 

Insurance $8000 

Travel expenses $6000 

IP expenses (Application, Fees, Renewals, Legal team, etc) $3000 

Accounting/bookkeeping 

In house 

Sundries $5000 

Total $49000 

For the Pact system to be manufactured, launched and to cover operating costs 

for the first year, an estimated $919667 is needed. This included manufacturing of 

50000 units. Presently, these are estimates based on manufacturing and supplier 

quotes and will be constantly updated to remain as accurate as possible. 


COSTING 50000 UNITS 

Injection moulded parts: 

Item Material Production Tooling Total Per Part 

Remote 

Top 

Remote 

Bottom 

External 

Shell 

$535 

($0.011 pp) 

$535 

($0.011 pp) 

$2,403 

($0.048 pp) 

$2,048 

($0.041 pp) 

$2,048 

($0.041 pp) 

$3,601 

($0.072 pp) 

$5,729 

($0.115 pp) 

$5,729 

($0.115 pp) 

$11,188 

($0.224 pp) 

$8,313 $0.166 

$8,313 $0.166 

$17,192 $0.344 

Base $784 

($0.016 pp) 

$2,955 

($0.059 pp) 

$10,426 

($0.209 pp) 

$14,164 $0.283 

Top Cap $535 

($0.011 pp) 

$2,048 

($0.041 pp) 

$5,729 

($0.115 pp) 

$8,313 $0.166 

Lens 

Housing 

$535 

($0.011 pp) 

$2,048 

($0.041 pp) 

$5,729 

($0.115 pp) 

$8,313 $0.166 

Internal 

Structure 

$9,275 

($0.185 pp) 

$5,413 

($0.108 pp) 

$7,167 

($0.143 pp) 

$21,854 $0.437 

Internal 

Structure B 

$3,272 

($0.065 pp) 

$4,447 

($0.089 pp) 

$6,804 

($0.136 pp) 

$14,523 $0.290 

Sub Total: $1.98 per part 

Standard Components: 

LED Ring (40mm) - Alibaba -$1.44 

Lens - Alibaba - $1.16 Per unit 

Micro B USB cable - Alibaba $0.5 

Li-Ion Battery 3.7v 2100 mah - $0.8 

SD Card - $1.8 

Sub Total: $5.70 

Hardware: 

Qty 2. M2x7mm Countersunk steel screw - $0.12 ($0.24) 

Qty 4. M4x12mm Machine steel socket cap screw - $0.08 ($0.32) 

Qty 2. M6x25mm Machine steel socket cap screw - $0.14 ($0.28) 



PCB Components: 

Microphone 

WiFi 

SD card slot 

Button 

Camera 

Bluetooth 

Cables 

Processors 

Micro B USB slot 


Packaging: 

Card tube - $0.12 

Instructions - $0.08 


Cost per unit: 

$13.92 AUD 



RETURNS 

As of April 2016, the three founding partners of Pact have accumulated $20000 

each for investment, giving the business $60000 to put towards initial prototyping 

and tech development. To get Pact to market, early-stage capital is needed from 

investors as well as some guidance as outlined earlier, this will work to accelerate 

traction and get the project to where it needs to be. 

After an in depth cost and pricing analysis, we have estimated that between now 

and getting Pact to market we would need an initial total capital investment 

of $1 million. This would work to cover salaries, manufacturing, administrative 

and operational expenditure for the first year. These costs are broken down in the 

funding requirements section of the report. After Pact’s first year, depending on the 

success of the business, a second stage of funding may be required. 

We have forecasted revenues for an outcome that sits between a conservative 

and an aggressive plan, this allowed us to understand and locate both ends of the 

spectrum as to where we believe we would sit in regards to our forecasted business 

growth and estimated returns. Based off these forecasts, Pact is estimated to break 

even within our 2nd financial year and is forecasted to grow steadily within Australia. 

Overseas scalability is yet to be considered within these calculations but they will be 

updated once we are established within Australia. 


RISK & REDUCTION 

As part of our managerial responsibilities, the Pact team have treated risk 

assessment as a highly important task. Within a business of this nature, risk is 

considered to exist in many areas, and where it is considered to be both necessary 

and practical, the risk will be factored into operating decisions. 

Pact has been designed in a way that can easily translate to manufacturing, but at 

this point is still at a prototype stage. As a result of this, there may be challenges 

and speed bumps that can potentially arise between now and product launch. These 

can potentially slow down progress but we are confident in our team and our ability 

to think around and over these barriers. 

General Risks 

The general risks that have been outlined may include but are 

not limited to product certification, tooling, manufacturing, 

distribution, component production and parts sourcing. We are 

not naive to these risks and leading up to manufacturing we 

are developing an in depth risk analysis and management plan. 

Issues that may arise have been broken down into the likelihood 

of them occurring (probability) and then the consequences of it 

happening (impact). By using this tool we are able to assess the 

risks as accurately as possible, evaluate them and appropriately 

manage them. We commit to being completely transparent 

with any issues we may face along the way, so that both our 

customers and investors can keep up to date with our progress. 

Environmental Risk 

At all times throughout growth, development and operations, 

Pact will adhere to the laws in both a legal and an ethical 

sense in regards to sustainable development. The team have 

developed and continue to develop the business and their 

manufacturing in accordance to international standards ISO 

14001 - Environmental Management Systems. This has helped 

map out a framework to monitor and implement an effective 

environmental management system so that the company may 

not fall behind present international standards in respect to 

green credentials. 

Investment Risk 

Pact stands to soon embark on a significant and somewhat 

aggressive growth phase, and due to this, the business is 

not without risk. But with the appropriate risk analysis and 

management plans, the team are confident that it will be both 

adequately monitored and managed. 


Deliverable Risks 

Pact is a product that we are proud to stand behind, and we 

hope that this will resonate with our customers. For us to 

achieve this though, we need to make sure that the product we 

deliver is as good as it possibly can be and provides the best 

possible customer experience. So to meet this, we do not wish 

to rush a product to market just to meet a deadline, we will do 

our very best to achieve what we need to in the designated time, 

but we refuse to compromise the quality of our product for any 

reason. 


BUSINESS MODEL 

EXPANDED 

Customer Segments 

The customer segments we have outlined are users who need an unobtrusive, self 

managed system. We have identified these people as 25+ years of age, families and 

homeowners of a medium to low income as well as people within the rental market. 

Value Proposition 

The benefit of the Pact system is its flexibility and modern take on the traditional 

security system. Allowing the users to wirelessly connect to and control the system 

remotely. 

As far as security systems go, the Pact system will sit outside the market of general 

security systems, as it is an affordable simple system, bypassing the complications 

that come with conventional security systems. Along with satisfying user needs 

through product quality, Pact also gives great customer support, with our customer 

relations providing ongoing support through maintenance, firmware upgrades and 

tech support. The depth of Pact’s customer relations is divided into two stages. 

Pact’s website is the first place for customers to find support for the Pact system, 

the website has FAQ’s which will solve the most common problems of the Pact 

system if they are to arise. If the website contingency plans are not able to solve 

these issues, the tech support service can. This service is able to serve more 

complex issues and is able to issue a new system should the current problems 

remain unsolved. 

Due to the WiFi compatibility of the Pact system, incremental firmware updates can 

also be rolled out to Pact devices should the user choose. This will appear as a popup 

notification on the user’s phone and keeps the company in touch as customer 

relations. 

Revenue Streams 

To monetise the Pact system, online sales providing direct consumer access will 

be implemented. Retail options of the system will also be provided through tech 

retailers such as JB Hi-Fi for a brick and mortar option. 

Channels 

To address the outlined customer segments, Pact aims to incorporate a multitude 

of both direct and indirect channels. Having telephone and the internet as direct 

distribution channels provides low cost distribution to a broad customer base. Pact 

will also provide or retail option if customers prefer the physical shopping experience 

instead. 


Direct Distribution 

Direct product distribution will occur through a multitude of avenues with aims of 

both product awareness and giving convenience to the user. A Kickstarter campaign 

will be implemented to work as an advertising platform and a pre-ordering service 

for the Pact system. Following this Pact will be offered through stalls at trade shows 

and appropriate events, this will allow the product to gain traction among the target 

users and will be a great opportunity to seek out feedback for the initial product 

offering. Once the Pact system is established and fine-tuned, purchasing options 

through telephone and internet will become a more prominent means of distribution. 

Indirect Distribution 

Indirect distribution will occur through retailers such as a JB Hi-Fi and Harvey 

Norman. Although this option will carry less profit, it is a convenient option for 

customers who prefer an honest opinion and have the ability to purchase a tangible 

product. On top of this, these retailers hold a large market share within the consumer 

electronics market, and these partnerships will help steadily increase brand 

awareness and Pact’s own market share. The Pact system is designed well, carries 

an appealing aesthetic and due to the quality and price point, the product would 

position itself well amongst competitors on the same shelf. 

Cost Structure 

To define the cost structure of the Pact business, service cost structure, product 

line cost structure and customer cost structure are to be analysed to ensure sound 

accounting and a viable business posture. 

Service Cost Structure + Business Operations 

The service cost structure for Pact implements a variable cost structure due to 

staff wages. Due to the expertise and experience of the company founders, most 

responsibilities including marketing, graphic design, business management and 

product development will all be done in-house with no outsourcing. As the majority 

of channels for product distribution are from an online presence, fixed costs for 

product distribution will be from an outsourced partner who specializes in this area. 

Product Line Cost Structure 

The product cost structure will have fixed costs that incur direct labour costs with 

a manufacturing overhead. These costs will be subject to the quoted price by a 

chosen manufacturer. 


Customer Cost Structure 

The company cost structure that Pact implements will employ a small tech support 

resource with a larger online resource in relation to customer care. A web page 

devoted to FAQ’s and error responses will allow for less staff although if this option 

does not solve the customer’s needs, the tech support service is available. Should 

the tech support service not be able to solve the problems at hand, the customer 

will receive a replacement Pact system. The cost incurred from the customer cost 

structure involves web maintenance, tech support staff wages and the cost of 

product replacement. 

Activities 

The key activities which are fundamental in fulfilling the value proposition of Pact 

are research and development, production and marketing. As the Pact system aims 

to engage a new market, acquiring a first mover advantage and staying innovative 

is crucial to Pact’s success. New product research, new product development, 

existing product updates, quality control and innovation are areas primary areas for 

Pact. Key activities in production include the production process, managing and 

maintaining the production capacity, production planning and also quality control. 

Strategy, market research, communications and sales support are all key marketing 

activities which are crucial to the value proposition of the company. 

Resources 

Pact is a product driven business which relies heavily on intellectual and human 

resources. The expertise of the company founders enables intensive, in-house 

task-loading, therefore exempting the company from high outsourcing costs. Other 

key resources imperative to the business’s success include software and product 

support. The key business resources are talented, multi-skilled employees, a reliable 

cloud software base, sound IP protection and accessibility to market data to allow 

the company to continuously innovate and retain a competitive advantage. 


Partners 

As the current expertise of Pact employees mainly relies around marketing, product 

development and production, expertise is required in other important areas for 

the company’s conception. Expertise in tech support and creation of the cloud 

software base is imperative to the business’s success and these partnerships would 

be crucial to Pact’s success. Other key partners required for Pact are those who 

would greatly extend the reach of the product. Examples of such partners are tech 

suppliers, manufacturing companies, insurance companies, security services and 

housing developers.

PACT Magazine

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