Horan Automation BPlan

Title:
Business Plan
Time Scale: 2017-2019
Author: Emma Lacy
Position: Marketing Manager
Date: 1 st June 2017

1 Table of Contents
2 Introduction ............................................................................................................................... 4
3 Stage 1: Who Are We? .......................................................................................................... 5
3.1 Vision ................................................................................................................................... 5
3.2 Mission ................................................................................................................................ 5
3.3 Values ................................................................................................................................. 5
3.4 Business to Business Profile ........................................................................................... 6
3.5 Company Background and History ................................................................................. 6
3.6 Company Structure ........................................................................................................... 6
3.7 Financial Overview ............................................................................................................ 6
3.8 Key Customers, their needs now and in the future ...................................................... 7
3.9 Key Markets ....................................................................................................................... 8
3.10 Products and Services .................................................................................................. 9
3.11 Distribution/geographical coverage .......................................................................... 10
3.12 Price Positioning and Individual Pricing Policies .................................................... 11
4 Where Are We Now? ............................................................................................................. 12
4.1 Market Background ......................................................................................................... 13
4.1.1 Size: ........................................................................................................................... 13
4.1.2 Growth: ...................................................................................................................... 14
4.1.3 Structure: ................................................................................................................... 15
4.1.4 Trends: ....................................................................................................................... 18
4.1.5 Developments: .......................................................................................................... 24
4.1.6 Implications for us: ................................................................................................... 24
4.2 Horan Automation Market Research ............................................................................ 25
4.2.1 Overall Sales by Industry Sector 10 Years .......................................................... 25
4.2.2 Horan Automation Sales by Service and Year .................................................... 25
4.2.3 Horan Automation Sales by Sector and Year ...................................................... 26
4.2.4 Horan Automation Percentage Change Sales 2007-2015 ................................ 27
4.2.5 Industry Vs Horan Automation & Consulting ....................................................... 27
4.2.6 Pharmaceutical/Chemical Percentage Growth/Decline ..................................... 28
4.2.7 Beverages ................................................................................................................. 29
4.2.8 Consumer Goods ..................................................................................................... 30
4.2.9 Food ........................................................................................................................... 31
4.2.10 Metals/Plastics ...................................................................................................... 32
4.2.11 Horan Automation Sales by Sector 2016/2017 ............................................... 33
4.2.12 Sales by individual customer .............................................................................. 33
4.2.13 Industry sector as percentage of overall sales 2015-2016 ............................ 34
4.2.14 Customer Research ............................................................................................. 35
4.3 Pricing Research ............................................................................................................. 41
4.4 Robotics Industry Research........................................................................................... 42
4.4.1 Industrial Robots in United States to Cut Labour Costs .................................... 42
4.4.2 Industrial Robotics Market in the United States .................................................. 42
4.4.3 Labour Cost Savings from Robot Adoption ......................................................... 43
4.4.4 Industrial Robotics in the Food and Beverage Industry .......................... 44
4.4.5 Processing and Packaging Machinery Research ............................................... 45
4.5 Competitor Review .......................................................................................................... 50
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4.5.1 Bespoke Direct Competitors................................................................................... 50
4.5.2 Machine Suppliers for Resale ................................................................................ 51
4.5.3 Preferred Suppliers .................................................................................................. 52
4.5.4 Turnkey Suppliers .................................................................................................... 52
4.6 Customer Review ............................................................................................................ 53
4.6.1 Customer Insights: ................................................................................................... 53
4.6.2 Implications for us: ................................................................................................... 53
4.7 Our Unique Selling Point ................................................................................................ 54
4.8 Key Strategic Issues Facing Us .................................................................................... 55
5 Where Do We Want To Go? ................................................................................................ 56
5.1 External Environmental Analysis .................................................................................. 56
5.1.1 Political: ..................................................................................................................... 56
5.1.2 Environmental: .......................................................................................................... 56
5.1.3 Social: ........................................................................................................................ 56
5.1.4 Technological:........................................................................................................... 56
5.1.5 Economic: .................................................................................................................. 57
5.1.6 Regulatory: ................................................................................................................ 57
5.2 Critical Success Factors (Rate out of 100) .................................................................. 58
5.2.1 Critical Success Factor Analysis ........................................................................... 58
5.3 Key Business Objectives ................................................................................................ 59
5.4 Customer Goals ............................................................................................................... 60
5.5 Market Objectives ............................................................................................................ 60
6 How Do We Get There? ........................................................................................................ 61
6.1 Strategies .......................................................................................................................... 61
6.1.1 Strategy 1 .................................................................................................................. 61
6.1.2 Strategy 2 .................................................................................................................. 64
6.1.3 Strategy 3 .................................................................................................................. 66
6.1.4 Strategy 4 .................................................................................................................. 71
6.1.5 Strategy 5 .................................................................................................................. 73
6.2 Key Performance Indicators .......................................................................................... 75
6.3 Targets – 2 Year Sales Forecast* ................................................................................ 78
6.4 Resources......................................................................................................................... 79
7 How Will We Know When We Have Arrived? ................................................................... 80
7.1 Measurement and Evaluation ........................................................................................ 80
7.2 Tracking and Controls..................................................................................................... 81
7.3 Measurement of Key Performance Indicators ............................................................ 82
8 Risks & Contingency Planning ............................................................................................. 83
9 Budget ...................................................................................................................................... 84
9.1 Forecast ............................................................................................................................ 84
9.1.1 Key Assumptions ..................................................................................................... 84
9.1.2 Projected Profit & Loss ............................................................................................ 85
9.1.3 Projected Balance Sheet ........................................................................................ 86
9.1.4 Projected Cash Flow Statement ............................................................................ 87
10 Conclusion............................................................................................................................ 88
11 Appendix .............................................................................................................................. 88
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2 Introduction
Gerry and Kathleen Horan started an automation company over twenty years ago called Montip
which was rebranded as Horan Automation and Consulting in 2014. The company enjoyed many
years generating sales revenue of in excess of €1 million but when the recession hit Ireland, the
company’s sales fell into decline. As a result of this decline the company was forced to close and
re-open as a re-branded entity. Horan Automation and Consulting traded with only 3 staff for three
years but in 2016 the company once again began to grow as a result of the significant growth and
investment in the pharmaceutical industry in Ireland.
Horan Automation and Consulting employed a marketing manager at the beginning of the fiscal
year 2017-2018. It is hoped that through aggressive marketing the company can reach their sales
targets of €1 million in 2017-2018 and €1.5 million in 2018-2019. The business plan is a roadmap
of where the business has been, where it is now and where it aims to go. It outlines the business
objectives for the 2 year period and what strategies will need to be employed to achieve them.
The objectives are outlined as follows:
1. To generate €650,000 sales revenue from sales of pre-built machines by February 2018
2. To generate €350,000 sales revenue from sales of bespoke machines by February 2018
3. To create a marketing campaign for the business by May 2017
4. To reduce costs of manufacturing by selecting new supply partners for pre-built machines
by August 2017
5. To employ one new project engineer by February 2018
The plan also outlines the risks associated with our strategies and defines contingency plans to
counteract these. Measurement and evaluation techniques are detailed as well as resources and
financial projections.
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3 Stage 1: Who Are We?
3.1 Vision
At Horan Automation and Consulting, our vision is that manufacturing processes that should be
automated due cost, absenteeism or health and safety are done so to a high standard and at a
competitive price. Automated lines are serviced by local on the ground engineers. In this way
Ireland is on a par with the rest of the world regarding manufacturing output effectiveness.
3.2 Mission
Our mission is to demonstrate to the Irish manufacturing market that automation is the solution to
many problems. Automation can speed up production, improve quality, reduce costs, give greater
flexibility in the production process and ensure a safer working environment. If an automation
solution is not pre-existing we can then design and build such a solution to allow a customer to
reach their full process potential. Our mission is also to offer our services to the highest quality
and at the most competitive cost to the client.
3.3 Values
At Horan Automation it is crucial to us that the quality of the products and services we sell to our
customers are of the utmost quality standards. We carefully select our suppliers to ensure they
offer a quality product at a competitive price. It is important to us that our suppliers value quality
as much as we do and they offer a warranty with their products. We also feel that customer
service is crucial to the running of a successful business. Being a family owned business, we
understand that a customer needs to feel listened to and we are careful to offer on the ground
service whenever needed.
Knowledge and innovation are at the crux of our success especially regarding our bespoke
automation service. We possess a unique set of knowledge and experience to enable us to
design and build innovative solutions to manufacturing automation problems. We therefore keep
up to date with technological innovations and how they meet the needs of our target market.
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3.4 Business to Business Profile
Horan Automation and Consulting offers automation solutions for manufacturing production lines.
We service the pharmaceutical, food, medical device and manufacturing industries. Automation
solutions can be the design and construction of bespoke machinery, sourcing and installation of
pre-existing machinery, feasibility studies, consulting or servicing. The market served is in the
Republic of Ireland.
3.5 Company Background and History
Gerry Horan stared his career as an engineer working with Elopak in 1981. Here he gained
fourteen years of experience in engineering, manufacturing, installation and machine integration in
the packaging industry. Gerry then went on to start his own business, Montip, with his wife
Kathleen. Montip specialised in bespoke automation solutions for the manufacturing industry and
was re-branded as Horan Automation after 18 years. Gerry has been trading as Horan
Automation for over three years.
3.6 Company Structure
The company is run by managing director and owner Gerry Horan. Gerry’s wife Kathleen works
as the financial director. Both Gerry and Kathleen have been at the helm of the company for over
twenty years. Conor Mullally is the project manager and has worked for the company for seven
years. Emma Lacy, marketing manager has recently joined the company. Horan Automation
employs various sub-contractors on a seasonal basis. All employees report directly to Gerry
Horan, M.D.
3.7 Financial Overview
Because we are dealing with a group of retailers, it is impossible to show financial information
either individually or as a total as this is confidential information. The budget section of the
marketing plan will show projected financial information when the strategy is implemented as well
as a detailed marketing cost budget.
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3.8 Key Customers, their needs now and in the future
KEY CUSTOMERS PROFILE CURRENT NEEDS FUTURE NEEDS
Quality
Quality
Small to medium
Price
Speed
manufacturing
companies with main Servicing on-site
Increase Production
office based in Ireland.
Expansion: Turnkey
SMEs in the
Usually in food, Knowledge
automation
manufacturing
beverage or
sector in Ireland
Bespoke design and Bespoke design and
pharmaceutical construction
construction
industries. Do not have Pre-existing solutions Servicing on-site
onsite automation
Pre-existing solutions
engineers
Specialist knowledge
Quality
Quality
Multi-nationals in
the manufacturing
sector in Ireland
New business start
ups
Large multi-national
manufacturing
companies with a
manufacturing facility
based in Ireland.
Engineers are located
in regional offices.
Manufacturing
companies starting up
or re-locating
manufacturing facilities
to Ireland. Both new
products (in association
with Enterprise Ireland)
or pre-established
multi-nationals relocating
to Ireland
Speed
Increase Production
Turnkey automation
Bespoke design and
construction
Servicing on-site
Pre-existing solutions
Specialist knowledge
Knowledge
Quality
Price
Speed - lead time
Tax compliance
On-site presence
Design
Integration software
Turnkey automation
Communication skills
Speed
Increase Production
Expansion: Turnkey
automation
Bespoke design and
construction
Servicing on-site
Pre-existing solutions
Specialist knowledge
Quality
Speed
Increase Production
Expansion: Turnkey
automation
Bespoke design and
construction
Servicing on-site
Pre-existing solutions
Specialist knowledge
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3.9 Key Markets
Our key market is the business to business market. We sell to manufacturing companies who
generally then sell to wholesalers then onto retailers and finally to the end user. The industries we
sell to within the business to business market are comprised of SMEs and multi-nationals. The
sectors we service fall under the both of the industry categories and are namely food,
pharmaceutical, medical devices and manufacturing.
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3.10 Products and Services
Bespoke Automation Solutions
Target: Manufacturing companies who need to automate a process but cannot find a pre-existing
machine
Features: Completely bespoke service tailored to the individual client
Benefits: Production lines are integrated with the new bespoke machine. The client can reach
optimum productivity with a bespoke machine.
Pre-Existing Machine Suppliers
Target: Manufacturing companies who want a simple pre-existing machine solution for the best
value
Features: Already exists to carry out a specific task
Benefits: The client can get the best value by shopping around. Pre-existing machines are
cheaper and have been tested so any chinks in their operation have been ironed out.
Turnkey Automation
Target: Manufacturing companies who are expanding or setting up and need a full automated
production line set up
Features: Set up of turnkey automation includes supply and installation of pre-existing machines
as well as bespoke machines if necessary. The client requires servicing and training after
completion of the project.
Benefits: The client does not have to manage the project and can simply “turn the key” on the first
day of production to see the completely automated production line set up and working.
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Feasibility Study
Target: Manufacturing companies who are looking into automating a production line but are not
sure of their options or the costs.
Features: During a feasibility study our engineer visits the site of the manufacturing facility and
assesses the production issue. He then formulates a potential solution as well as drafting a
budget quote to carry out the work.
Benefits: The client can find out what design would theoretically work to solve their production
issues and how much it would cost to implement. They can calculate the return on investment
based on the amount of staff that are currently employed to service the specific production area.
Training
Target: Manufacturing companies who currently possess fanuc robots or integrated software and
wish to receive training on how to use it.
Features: Training given on fanuc robots and how to use their programming system by highly
skilled and qualified programming engineer
Benefits: This is a unique service in high demand and can be offered to operators following the
installation of a new project. Training makes operators more effective in the long term and gives
them the knowledge to edit the machinery (i.e. to produce/package a different product)
3.11 Distribution/geographical coverage
Horan Automation currently operates within the Irish market (Rep. of Ireland). Marketing and
sales efforts have been concentrated to date on the areas outside of Dublin. Suppliers are
currently mainly located in western Europe, in Italy, France and Spain. There has been no
exporting of goods/services to date. Importing of pre-existing machinery from supply partners is a
relatively new development having begun in early 2017, prior to that the company concentrated
solely on bespoke automation.
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3.12 Price Positioning and Individual Pricing Policies
PRODUCT
Bespoke
Automation
Supply of Preexisting
machinery
PRICE
Priced individually
Priced individually
PRICE
POSITIONING
High end
unique product
serving a
niche market
Value
sensitive
market. Value
= Price +
quality.
PRICE POLICY
Take into account cost of parts
Time spent on project by staff
Perceived market value - higher end due
to unique expertise in high demand
Add value with 12 month servicing and
warranty
30% average margin
Take into account cost of machine
Source cheaper good quality machines
from Italy or China (visit factory)
Add markup based on perceived market
value
Over brand to remove prejudice of
customer
Do not undercut competitors by too much
as client will doubt quality of machines
Add value with 12 month servicing and
warranty
Turnkey
Automation
Priced individually
Mid-price
positioning
Based on bespoke and pre-existing
prices plus extra for integration, project
management and training
Feasibility Study
Free - upsell to
project
Market Value
Training €70 per hour Market Value
Service has no cost as it is used to upsell
the project if it is feasible. If not charged
at €70 per hour.
Consultancy only. Can also be included
as part of a project (training staff after
integration)
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4 Where Are We Now?
SWOT Analysis
Strengths
Unique set of skills in design and
integration
Staff knowledge, expertise and work ethic
Low overheads (premises, wages)
Proximity to major Irish cities
Full in house set of skills to integrate
robots
Opportunities
Niche Irish market with a lack of
competition (bespoke)
Marketing is not generally done well in
this industry
Exporting of services
Better margins through selling Chinese
machines
Weaknesses
Only recently pro-actively selling
Certain staff members can be over-relied on
Some key staff based not in Ireland
Until recently MD overly involved in day-today
activities
Need for strategic planning
Over reliant on certain customers
Threats
Irish agents for international competitors
selling cheaper machines in Ireland
Chinese machine quality destroys
reputation
Suppliers cut us out as middle man and try
to deal with our customers directly
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4.1 Market Background
4.1.1 Size:
Currently our market consists of the following industries in Ireland: manufacturing, pharmaceutical,
medical and food. We have mainly concentrated on the Republic of Ireland but have not actively
sought out business in Dublin. In 2015, Ireland’s manufacturing industries produced products to
the value of over €115 billion. The chart below shows the breakdown of production in Ireland from
2013 to 2015 and includes details of our predominant industries.
Production in Ireland 2013-2015
45000000
40000000
35000000
30000000
25000000
20000000
15000000
10000000
5000000
0
2013 2014 2015
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4.1.2 Growth:
According to the CSO figures for 2013 – 2015, production in Ireland has risen by 29% overall.
However this growth was not reflected in every sector. As the chart below shows, the areas that
show the biggest growth are chemicals, pharmaceuticals, metals, computer/electronic equipment
and wood/textiles. Areas of poor growth or decline include the food and beverage industry,
mining, clothing, paper, rubber/plastic and transport.
60%
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
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4.1.3 Structure:
Our market consists of the manufacturing industry which is currently broken down into three
segments; pharmaceutical/medical, food and general manufacturing. Below is a chart detailing
the breakdown of sectors of production in Ireland according the CSO figures from 2015.
Food products (10)
13%
20%
Beverages (11)
1%
5%
Textiles, wearing apparel, leather and
related products (13,14,15)
2% 0%
1%
Paper and paper products (17,18)
Chemicals and chemical products (20)
16%
Basic pharmaceutical products and
preparations (21)
41%
Rubber and plastic products (22)
Basic metals and fabricated metal
products,machinery and equipment
(24,25,28)
Computer,electronic,optical and electrical
equipment (26,27)
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4.1.3.1 Pharmaceutical/Medical
There are 114 pharmaceutical companies based in Ireland which, for a country with a population
of only 5 million, makes it a strong player in Europe. Of these 114, 49 are located in Dublin and 20
are located in Cork. 61% are therefore located in either Dublin or Cork. Of the top 10 biggest
pharmaceutical companies in the world, 9 currently have a base in Ireland. In comparison to the
United Kingdom, who would be our closest relation in terms of culture and economy, it has a
population of 65.14 million people and has 377 pharmaceutical companies based there. Ireland is
the fifth biggest pharmaceutical producer in Europe accounting for €19 billion of the total €221
billion produced. This is almost 9% of the total produced. 37% of Ireland’s exports are from the
pharmaceutical and medical industry. (Source: European Federation of Pharmaceutical Industries
and Associations http://www.efpia.eu)
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4.1.3.2 Manufacturing (non-food or pharmaceutical)
There are 295 medium to large manufacturing companies based in Ireland (Source IDA) which do
not account for pharmaceutical or food production. This accounts for the major players and hence
the majority of the producers in this market. This accounts for 36% of the total manufacturing
market. However, this 36% of manufacturing is spread across various sectors. Two main sectors
account for 29% of this 36% (80% of general manufacturing) which include Chemicals
manufacturing and electronics (computer, electronic, optical and electrical).
The chemical industry in Ireland accounts for the fastest growing sector between 2013 and 2015
at a whopping rate of 52% growth. There are 113 chemical companies listed in Ireland (Source
www.solocheck.ie). The electronic sector (computer, electronic, optical and electrical) has grown
by 38% between 2013 and 2015. Ireland supplies approximately 20% of Western Europe’s
electronics’ output and has developed a leading position in semiconductor components and ICT
equipment. International electronics companies such as Intel, Analog Devices, Dell, IBM, HP and
Cisco have located major manufacturing, R&D and Fab facilities in Ireland. (Source: Enterprise
Ireland). Enterprise Ireland have listed only 55 companies who account for manufacturing in this
highly valued and growing sector.
4.1.3.3 Food manufacturing
The food and beverage industry accounts for 22% of the total manufacturing in Ireland. Despite it
being a large sector, it has not enjoyed the same rate of growth as some of the other industries in
recent years. Irish food production grew by 8% between 2013 and 2015 whereas beverage
production fell by 8%. Despite not having achieved the same rate of growth, the food industry
remains a steady one in the Irish market, being Ireland’s most important indigenous industry. The
industry accounted for €26 billion in turnover in 2016, €11.15 billion of which were exports. Ireland
is the largest net exporter of dairy ingredients, beef, lamb and powdered infant formula in Europe
exporting over 80% of its dairy and beef.
(Source IBEC: http://www.fooddrinkireland.ie)
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4.1.4 Trends:
4.1.3.4 Manufacturing Trends Ireland by Sector
20 years (1995-2015) 3 years
1995-
2000
2001-
2006
2007-
2012
2013-
2015
Mining and Quarrying
Food products 3 4 -1 8
Beverages 6 2 -8
Textiles, wearing apparel, leather and related products -6 -17 -3 -5
Paper and paper products 4 -2 -4 5
Chemicals and Pharmaceuticals 27 7 5 50
Rubber and plastic products 0 -2 -4 3
Basic metals and fabricated metal products, machinery and
equipment -1 -1 -3 31
Computer, electronic, optical and electrical equipment 21 8 -3 37
Wood and wood products, other non-metallic mineral products,
furniture 8 4 -7 28
Transport equipment 15 -1 -2 -1
Other 4 -4 5 -5
Total 16 5 1 29
Source: Irish academy of engineering and CSO
Chart shows % change in industry production
4.1.4.1 Total Manufacturing by Sector 20 years (1995-2015)
35
30
25
20
15
10
5
0
1995-2000 2001-2006 2007-2012 2013-2015
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Total Manufacturing by Sector 20 years (1995-2015)
60
50
40
30
20
10
0
-10
1995-2000
2001-2006
2007-2012
2013-2015
-20
-30
Source: Irish academy of engineering and CSO
Chart shows % change in industry production
The above chart shows the main production industries in Ireland over the past 20 years. It is
evident that a trend exists within certain industry sectors. The industries that were strong in 1995
such as chemicals/pharmaceuticals and computers/electronics/electrical/optical continued to grow.
The final timescale, 2013-2015, although it only represents 3 years and not 5 like the others,
shows a time of excellent growth probably due to the end of the economic downturn. These areas
are also growing due to an influx of pharmaceutical companies to Ireland to capture the talent pool
and a general growth in the technology sector.
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The area of textiles, clothes and leather has remained at a steady decline due to the cheaper
sourcing of these items overseas in countries like China. There has been a slight growth in the
food sector with an increase in healthy eating and due to the success of companies like Glanbia
and Danone who are large exporters of dairy and baby food products and Dawn meats who form
part of the aforementioned 80% of beef exports.
4.1.4.2 Pharmaceutical and Chemical Trends
60
50
40
30
20
10
0
Food and Beverages
1995-2000 2001-2006 2007-2012 2013-2015
The chart above shows the trend of the pharmaceutical and chemical sector in Ireland over a 20
year span 1995-2015. A huge spike in growth is evident from 2012-2015. This is most likely due
to both the end of the financial crash and the influx of pharmaceutical companies locating in
Ireland.
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These companies located in Ireland for the following reasons:
1. Ireland has one of the lowest corporation tax rates in Europe at 12.5%
2. Companies can also avail of a 25% tax credit against research and development costs
3. Ireland also has double taxation agreements with more than 60 countries including every
major trading partner
4. Ireland is 1 st in the world for the availability of English speaking skilled labour
5. Ireland is ideally placed to trade with Europe
6. Ireland is part of Europe and the EU
(Source: http://connectireland.com)
4.1.4.3 Food and Beverage Trends
10
8
6
4
2
0
-2
-4
-6
-8
-10
1995-2000 2001-2006 2007-2012 2013-2015
Food
Beverages
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4.1.4.4 Food
Food trends remained relatively static until 2007 when they fell into a slight decline. The years
between 2007 and 2012 was when the mass market felt the sting of the recession and therefore
looked for ways to save money on everyday items. This lead to the increase in market share for
discount retailers such as Aldi and Lidl and put major pressure on other leading supermarkets like
Tesco and Supervalu to become more price-competitive.
These savings had to be passed on to the suppliers. The supply of imported food to these
discount supermarkets resulted in a decline in food production in Ireland. Now that we have
moved out of recession there has been an increase again in food production in Ireland.
Production has increased by 8% which accounts for the healthy eating and whole food craze of
the moment. Artisan, organic and additive/pesticide free are terms that consumers are seeking
now when purchasing food. However, Aldi and Lidl continue to capture market share from
supermarkets such as Tesco who remain uncompetitive in terms of price. See chart below
(Source: Bord Bia) that shows market share for Irish supermarkets more recently in 2015 and
2016.
It is expected that the rate of mass food production in Ireland will continue to decline due to the
pressure being put on suppliers by large supermarket chains. While there is a growing popularity
for niche market artisan foods, they will not impact on large scale production enough to drastically
improve the figures or counteract the mass market decline.
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4.1.4.5 Beverages
The growth of the beverage industry has been declining steadily for the past 20 years and
production fell for the first time in 2011. Production has continued to fall showing a decline of 8%
from 2012 to 2015. This is a worrying trend considering major players such as Coca Cola and
Bulmers are located in Ireland. Again, there is an emergence of artisan beers in the market but
they cannot compete with mass market producers.
The alcohol market continues to decline as it is being hit by continued economic weakness, severe
taxation increases and changing consumer behaviour. There was a continuing large decline in pub
business, which although partly offset by an increase in off licence sales, still resulted in an overall
volume decline. Independent off-licences have been severely hit and that they will continue to
experience closures and substantial volume decline. VAT and excise increases in 2012 worsened
an already very poor situation.
Almost 60 per cent of alcohol consumed in Ireland last year was sold by the off-trade. However,
despite a 3% increase in off-licence sales volumes last year, multiples, discounters and symbol
operators are absorbing this growth to the detriment of the independent, specialist off-licences,
and that the latter continues to experience closures and substantial volume declines. Since 2012,
one independent off-licence has closed on average each month.
Of the four alcohol drinks categories, beer, wine and cider had volume declines and spirits
increased. The cider decline was 3.4 %. Beer declined in volume terms by 0.9 %. Wine decreased
by 1.9 %. Spirits increased by 2.4 %. Alcohol prices increased by 0.9% in 2012 compared with
2011 based on yearly averages. Off-licence prices declined by 1.1% in 2012 and on-licence prices
increased by 1.7%. The value of the alcohol market decreased slightly by 0.2% to €6.390 billion in
2012, inclusive of excise and VAT. When indirect tax is excluded there was a larger decline in
market value.
(Source: The Drinks Industry Group of Ireland DIGI written by Anthony Foley of DCU Business
School)
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4.1.5 Developments:
Technology has been a great development for Horan Automation and Consulting as it
leads to manufacturing innovations in automation. Manufacturers wish to meet demand by
introducing new and efficient automation systems.
The rise in popularity of convenience foods has led to an increase in mass production of
food, individual packaging and microwave friendly packaging which increases for us the
demand for packaging machinery in production facilities. Other developments in the food
industry include the increase in popularity of health foods and snacks such as low fat
products and gluten free alternatives. These products again diversify the food production
market growing demand for more packaging machinery.
Ireland has become an attractive hub for manufacturing of pharmaceuticals with its tax
incentives and skilled labour force increasing. The fact that the UK has left the European
Union also impacts on trade in Ireland, especially into Europe.
Our market is also becoming more price sensitive, especially the medium sized business
customer.
4.1.6 Implications for us:
The rising demand for automation means that we are in a good position to supply all the
growing industries within Ireland and possibly Europe.
The rising demand for a variety of foods means that production is constantly changing and
factories need to update their machinery. Some factories may also need bespoke
automated machinery to quickly and efficiently meet demand for new products.
Brexit has meant that Ireland is the only native English speaking country and is best
located to trade within Europe for multinationals wishing to expand. The talent pool and
incentives mean that there is more interest in Ireland and potential business partners may
exist for us outside of Europe.
Our research has shown that cost prices of machines in China are about 30% of the prices
in Europe. By designing our machines and having them custom built to ensure CE
marking for Ireland and Europe we will be competitively priced for medium sized
manufacturing companies who wish to automate. We would also have a better margin on
these machines.
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4.2 Horan Automation Market Research
4.2.1 Overall Sales by Industry Sector 10 Years
The chart below shows Horan Automation overall sales by industry sector for the past ten years
0%
Pharmaceutical/Chemical
Beverages
Consumer Goods
1%
17%
19%
0%
3%
Dairy
Engineering Alliance companies
Food
30%
27%
Machinery
4.2.2 Horan Automation Sales by Service and Year
The chart below shows Horan Automation sales by product/service for the past ten years
2%
The above chart illustrates how dependant Horan AC is on bespoke automation.
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4.2.3 Horan Automation Sales by Sector and Year
The chart below shows the sales progression from 2007-2017 year by year by industry sector
Pharmaceutical/
Chemical
Beverages
€1,200,000.00
€1,000,000.00
Consumer
Goods
Dairy
Engineering
Alliance
companies
Food
Machinery
Metal/Plastics
€800,000.00
€600,000.00
€400,000.00
€200,000.00
€0.00
Other
(Concrete/Recyc
ling/Transport)
The above chart shows the changes in the sales by industry for Horan Automation and Consulting
over a ten year period. There were significant changes in the food, dairy and pharmaceutical
industries. We need to account for the recession that hit Ireland from 2005 onwards however as
part of the reason for the fall off in sales.
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Pharmaceutical/…
Beverages
Consumer Goods
Dairy
Engineering…
Food
Machinery
Metal/Plastics
Other…
Food/Dairy
4.2.4 Horan Automation Percentage Change Sales 2007-2015
The chart below shows the percentage change in sales by industry sector comparing two time
periods; 2007-2012 and 2013-2015. The main changes are a decrease in sales from the food and
dairy industries. This was due to the fact that in 2007 the MD came from a background in food
and dairy and acquired many customers due to his experience. Many of these dairies and food
producers closed down or amalgamated following this which reduced HAC’s sales in this industry.
8000%
7000%
6000%
5000%
4000%
3000%
2000%
1000%
0%
-1000%
2007-2012
2013-2015
4.2.5 Industry Vs Horan Automation & Consulting
The following charts compare the percentage growth from the time period 2007-2012 and 2013-
2015 by individual industry sector. The charts compare percentage growth of Horan Automation
with the manufacturing industry in Ireland (industry) as a whole, by sector.
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4.2.6 Pharmaceutical/Chemical Percentage Growth/Decline
HAC growth reflects that of the industry for pharmaceuticals so we are capturing this market
effectively
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4.2.7 Beverages
HAC decline reflects that of the industry for beverages so we are capturing this market effectively
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4.2.8 Consumer Goods
HAC decline reflects that of the industry for consumer goods so we are capturing this market
effectively
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4.2.9 Food
4000%
Horan Automation
3500%
3000%
2500%
2000%
1500%
Horan Automation
1000%
500%
0%
-500%
2007-2012 2013-2015
HAC decline contradicts that of the industry for food so there are opportunities to grow in this area
9%
Industry
8%
7%
6%
5%
4%
3%
Industry
2%
1%
0%
-1%
2007-2012 2013-2015
-2%
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4.2.10 Metals/Plastics
HAC decline contradicts that of the industry for metals/plastics so there are opportunities to grow
in this area
20%
Industry
15%
10%
5%
Industry
0%
2007-2012 2013-2015
-5%
-10%
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4.2.11 Horan Automation Sales by Sector 2016/2017
The chart below shows the breakdown of sales by industry sector for Horan Automation for the
year 2016-2017 (current period). 85% of our sales were in the pharmaceutical/chemical area so
we are highly reliant on this market. Opportunities exist within the food and plastics industries.
4.2.12 Sales by individual customer
The chart below shows the breakdown of sales by customer for Horan Automation for the current
period, 2016-2017. The chart below shows a high reliance on one customer which is not
advisable.
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4.2.13 Industry sector as percentage of overall sales 2015-2016
The chart below compares Horan Automation’s sales by industry sector as a percentage of total
sales to the percentage manufacturing by sector in Ireland in 2015. This is based on the
assumption that manufacturing equates to demand and therefore sales. 2015 is the most current
year figures are available for the manufacturing industry in Ireland.
80
70
60
50
40
30
20
10
0
Industry
Horan AC
The sales by industry for HAC and the manufacturing by industry for Ireland are mapped along a
very similar path. There are small differences in textiles and leather where HAC is selling more
than the industry would suggest as well as pharmaceutical. HAC falls short on expected sales in
the computer/electrical/optical industry as well as food and metals/plastics. This research
compliments our previous research to conclude that HAC needs to seek more sales in the food,
computer/electrical/optical and metals/plastics industries and continue serving the other industries
as they are.
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4.2.14 Customer Research
At a time of significant changes in the company in early 2017, Horan Automation and Consulting
had many growth opportunities in the industry. This led them to carry out many forms of market
research including a customer feedback survey. The questions and results analysis is below.
Source: Surveymonkey survey sent via email to database of over 500 and sent via Linkedin to
engineers.
HORAN AUTOMATION
MANUFACTURING SURVEY APRIL 2017
Results Analysis
Q1: What brands of robots are used in your organisation?
We use Fanuc robots and would have assumed that Fanuc and ABB were the market leaders.
This shows us how much scope there is in Ireland to introduce our own supplier brands into the
manufacturing industry.
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Q2: Please rate the quality of machines manufactured in the following countries
100%
90%
92%
80%
70%
60%
50%
58%
68%
81%
72% 73%
78%
40%
30%
20%
10%
0%
China
Asia
Overall
Europe
Overall
France USA Italy Germany
We would have expected that Germany would be perceived as being the best quality from
customer feedback. From watching the price sensitivity of the market, we wanted to discover how
Chinese machines are perceived in comparison to other countries. They cost 60% approximately
less than the others and can be specified, built and CE marked to the same standards so it is an
objective of HAC to introduce Chinese machines into Ireland and possibly the EU. However,
before going ahead with this strategy, the company wanted customer feedback on attitudes.
The chart shows that these machines are perceived as 34% worse in quality than the leaders in
quality. However, this is comparing an unguarded and un CE marked machine with the top
performing machine. This gives the company an idea of how hard they would be to sell due to
customer perceptions.
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Q3: Please rank by importance the criteria you use in choosing a machine supplier
We thought that price and servicing would be of great importance to a customer but we also
wanted to rate the importance of the country of manufacture to see if sourcing suppliers in China
would be an option. Country of manufacture got the lowest rank at only 47% meaning it’s the least
important to our customer.
1
0.9
0.8
84%
88%
0.7
0.6
0.5
0.4
47%
55% 53%
0.3
0.2
0.1
0
Price
Country of
Maunfacture
Servicing in
Ireland
Lead Time
Length of
Warranty
Q4: How many of your packaging lines are currently automated?
2
1
2
7
0
1 to 5
6 to 9
10 to 20
More than 20
5
Q4 gave us an idea of the rate of automated machines amongst our customers. Most of them
were in the 0-5 range which complements our experience of the industry, most customers tend to
order one off machines.
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Q5: How satisfied are you with the maintenance service of your machine supplier?
Slightly Happy
neither happy nor unhappy
With this question we wanted to see if an opportunity exists to capture some of our competitors
market. We feel one of our strengths is that we have on the ground service support from
engineers so we found out here that none of our target market are actually very happy with the
service offered by their supplier. This shows an opportunity for us to be experts in this field and
better our competition.
Q6: When faced with an automation project who carries out the work?
14
12
10
8
6
4
2
0
We do it in
house
We use
preferred sub
contractors
We have
never had
any
automation
projects
Our head
office
coordinates
the project
Depends on
the project
Here we were trying to find out how our target market’s procurement system works. Most of them
have a preferred supplier list it seems so this leads us to find a way to have our company listed on
these.
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Q7: If searching for an automation supplier where would you look?
Google search
Engineering magazine
Engineering professional
institute
Word of mouth, colleagues
Word of mouth from other
industrial partners
Linkedin
Here we found out what type of market works for our target market. We deduced from this
research that there is no point in spending huge advertising budgets on newspaper or radio
advertising. The huge majority of our target market relies on word of mouth to source a supplier
whether it be through colleagues or other industrial partners (customers, suppliers, friends in the
industry). We therefore devised a marketing strategy around these results keeping advertising
costs low and concentrating on service and below the line marketing. A small amount of the
market uses the internet to source suppliers so our SEO, website and internet presence is also
important.
Q8: What automation skills, if any, does your company find hard to outsource?
3
2.5
2
1.5
1
0.5
0
Robotics Design and Build Documentation Software
Integration
These answers were based on typed responses. The purpose was to give us an idea of other
areas we could diversify into if needed. We are looking at CE marking (documentation) and all
other areas we currently service. It also allows us to identify a need in the market so that we can
communicate our solutions when marketing.
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Q9: Please rate Horan Automation & Consulting for the following attributes
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
93%
Knowledge
86%
Quality of
Work
89%
After Sales Price Range of
Services
Quality of
Machines
Q9 was to give us feedback on the company’s overall performance in the areas listed. We would
consider any score above 75% good. We were delighted with the feedback and it gives us a
benchmark for future customer satisfaction surveys.
81%
77%
85%
Q10: When calculating ROI what annual salary do you use?
1
9
6
€20-€30k
€31-€40k
More than €41k
We calculate return on investment by the amount of money saved by taking an operator away
from a station and replacing with an automated machine. We were calculating salaries at €30k but
our research showed that the actual figure would be between €35-€45k+. This is good news for
us as we can show a higher saving to the customer.
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4.3 Pricing Research
After conducting research and also from speaking with our clients we feel that the market trends
mean that machines will be imported from China. We conducted some pricing research into the
costs of such machines. We also visited a trade fair in Germany to see the machines to ensure
we are comparing like with like.
The chart below shows the difference in prices for a filling and cartoning machine between our
usual Italian suppliers compared to machines from China and Tiwan. The Asian machines would
be brought up to the same standard and the machine components would be the same.
Cost Price Selling Price Margin
Italian Cartoning Machine €144,900 €217,350 €72,450
Italian Filling Machine €144,000 €180,000 €36,000
Total €288,900 €397,350 €108,450
Filling Machine from
Taiwan €79,000 €155,000 €76,000
Cartoning Machine from
China €64,000 €130,000 €66,000
Total €143,000 €285,000 €142,000
The figures show that the cartoning machine from Tiwan is 55% of the price of the Italian one and
the cartoning machine from China is 44% of the cost of the Italian one. The cost prices of the
Asian machines include the modifications needed to compare like with like.
We also received other quotes for high quality machines (i.e. A filling machine from China for
€27k). The saving for the customer is 28% of the Italian price or €112,350 in total. Buying
Chinese machines would also give us a much higher margin and an extra €33,550. The above
case study is an actual customer and is representative of the general market.
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4.4 Robotics Industry Research
Western markets tend to follow trends of the US market so we feel it is important to research the
impact of robotics on the manufacturing industry in the US.
4.4.1 Industrial Robots in United States to Cut Labour Costs
The current average labour cost savings achieved by replacing humans with robots in the US is
17.71%. Research estimates that this figure will increase to 21.85% by 2020 due to the continuous
decline in cost of industrial robots.
4.4.2 Industrial Robotics Market in the United States
The benefits of implementing industrial robotics in the manufacturing industry have been well
documented in recent years; they can be programmed easily to adapt to new production lines,
their margin of error is less compared to humans’, and they work longer while requiring minimal
supervision. In addition, using industrial robots increase the chances of producing defect-free
products, reduces product failure and waste, and does not require additional expenditures on
healthcare, insurance, and income. These robots require minimum heating and lighting, which
considerably reduces energy consumption. It is advantages like these that are driving the market,
which will nearly double by 2020.
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If replacing human workers with robots wasn’t already tempting enough for companies, the cost of
purchasing and installing them is swiftly declining. The cost to purchase and implement a robotic
spot welder has plummeted from $183,000 in 2005 to $132,000 in 2014, with the price forecasted
to drop another 22% by 2025, according to Technavio’s lead industrial automation analysts. In
computer electronics manufacturing, it costs $4 per hour to use a robot for a routine assembly task
compared to $24 for an average worker. In the US, industrial robots in auto manufacturing are
already operating at a cost of $7.25 hourly wage after the cost of the robot is recovered. For
example: the Baxter collaborative robot from Rethink Robotics, which works alongside the human
workforce on the factory floor, only costs $22,000. These factors are attracting end-users to adopt
industrial robots in the US. Source: Boston Consulting Group
4.4.3 Labour Cost Savings from Robot Adoption
The five leading countries in the market accounted for 70% of the total industrial robots sales
volume in 2014: China (who will account for more than one-third of all industrial robotics installed
worldwide by 2018), Japan, the United States, the Republic of Korea and Germany. The United
States also ranks in 7 th in the world in terms of robot density, while the Republic of Korea, Japan
and Germany make up the top three. By 2025, labour cost savings in the United States from the
adoption of advanced industrial robots should surpass 22%. Despite the recent and estimated
decrease in robot prices, the United States is still forecasted to save less than its
competitors, Japan and South Korea.
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4.4.4 Industrial Robotics in the Food and Beverage Industry
The automotive industry dominates the market in terms of robot density; however, the food and
beverage segment is actually the fastest growing for industrial robotics in the United States. The
industrial robotics market in the US by the food and beverage industry was valued at $103.2
million in 2015 and Technavio analysts expect it to reach $218.6 million by 2020, growing at a
CAGR of 16.2%.
The usage of industrial robots in the food and beverage industry has really gained pace since
2013, when robots were used primarily for applications like palletizing and packaging. However,
over the last three years the applications of the robots have extended from packaging to handling
raw materials, pizza assembly, grading of fruits and vegetables, cake decoration, and handling.
They are also used in poultry and for deboning, trimming, and grinding pork and beef. Now the
robots are starting to make their way from the factory into the actual restaurants. Former
McDonalds USA CEO recently stated that it’s cheaper to buy a $35,000 robot than hire an
employee at $15 an hour. After seeing a decline in revenue for the first time in nine years, while
having to combat employees who are demanding a minimum wage hike to $15/hour, the franchise
decided to open 25,000 robot-run restaurants by the end of 2015. Wendy’s is now taking a similar
approach and just recently announced they will be installing 6,000 kiosks by the end of
2016. There will surely be many others that follow in the footsteps of these fast food giants, as the
fight against rising minimum wage costs in the United States has just begun.
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4.4.5 Processing and Packaging Machinery Research
Research on the UK market for processing and packaging machinery for the year 2009-2010 was
the closest we could find to our own products and market. Source PPMA http://www.ppma.co.uk/
The chart below shows the change from 2009-2010 in the industry and the average change in
sales and profit for those surveyed.
80
70
60
50
40
30
Sales
Profit
20
10
0
Increase No Change Decrease
Sales By Industry (UK) 2009-2010
The chart shows the most important industries for sales for processing and packing companies in
the UK
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4.4.5.1 UK Imports and Exports
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The import and export charts from the process and packaging survey show that Ireland exports
the following to the UK:
Imports from the UK to Ireland
Exports from Ireland to the UK
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Packaging Machinery Trade Ireland to UK 2009-2010
Process Machinery Trade Ireland to UK 2009-2010
The charts above show that for 2009 to 2010 Ireland imported a lot more packaging machinery
from the UK than it exported (an average of 25% exports versus imports). The ratio of imports
versus exports for process machinery is a little more favourable for process machinery with an
average of 62% exports to imports. We would assume from our experience that this is due to
large multinationals importing machinery through their head offices in the UK.
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4.5 Competitor Review
4.5.1 Bespoke Direct Competitors
1. Who: Modular Automation
Details: http://www.modularautomation.ie/
Location: Clare
Profile: Bespoke automation only. Large company
Positives: Do their own tooling, USA manufacturing facility, large company, good public presence,
all robot brands
Negatives: Badly described services, seem to concentrate on robotics
2. Who: Design Pro
Details: http://designpro.ie/
Location: Limerick
Profile: Bespoke automation only. Small company
Positives: Huge growth, Good new brand & website, High profile customers, award winning,
exporting, Indian office (not mentioned on website but found Indian MD on linkedin?!)
Negatives: Only Kuka robotics
3. Who: Ward Automation
Details: http://wardautomation.ie
Location: Galway, Sligo
Profile: Bespoke machinery. Small company
Positives: Very clear website for information, machine quality, good video on website, strong
validation documentation, good SEO presence
Negatives: Website not very exciting, use 6 axis, scara and delta robots not the popular ones
fanuc, kuka or ABB
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4. Who: BJ Automation
Details: http://www.bjautomation.ie
Location: Cork
Profile: Family run business, small
Positives: Specialists in vibrating bowl feeders
Negatives: Very old-fashioned website, not enough information, seems to be trying to branch out
from specialist product. I assume a very talented owner who doesn’t have the right supports to
grow. Might be a good company to partner with
4.5.2 Machine Suppliers for Resale
1. Who: Marchesini
Details: http://www.marchesini.com
Location: Italy but bases internationally
Profile: Huge multi-national
Positives: Large Company, well known, sales man in Ireland, can quote for big orders, good
range of specialist machines
Negatives: no service team in Ireland, high price
2. Who: Other large foreign competitors
Location: International offices operating from Europe (Manufacturers and agents)
Profile: Huge multi-national
Positives: Large Company, well known, can quote for big orders, Contacts with multi-national
customers in Ireland
Negatives: no service team in Ireland, high price, no sales team in Ireland, do not understand the
Irish culture, solutions are stringent with no engineers to look at job – no flexibility
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4.5.3 Preferred Suppliers
Who: Preferred Suppliers
Location: Ireland and international
Profile: Large companies who are tried and tested by manufacturing companies in Ireland and
who automatically get the work
Positives: Tried and tested, good relationships with customer, proven quality and service, may
avoid red tape of application process
Negatives: High prices likely due to lack of competition
4.5.4 Turnkey Suppliers
Who: Pak Automation
Details: http://pakautomation.ie
Location: Ireland
Profile: Small family owned business based in Dublin. Closest to our product and service range
in that they do packaging machinery, robot palletisers and bespoke solutions.
Positives: Based in Dublin, exporting machines all over the world
Negatives: Poor web presence, website not updated since 2010 see case studies
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4.6 Customer Review
4.6.1 Customer Insights:
Our customers need to be split into two categories due to their size; medium sized manufacturing
companies and multi-national manufacturing companies. This is because the needs, attitudes and
profile of our customer segments differ due to their size. Medium sized manufacturing companies
are currently based in Ireland and are in the food, healthcare or general manufacturing industries.
They are very price conscious and need to automate only one machine to increase production
efficiency or to solve a manufacturing problem. Most of their line is not automated and they need
lots of advice and support to make their purchase decision. They do not have an automation
engineer employed within the company.
Large multi-national companies have a manufacturing facility in Ireland but their head office may
be located elsewhere. They are very hard to get into contact with and there are many decision
makers involved in a project. They may get many quotes for a project and have a preferred
supplier list. They have a specific budget for manufacturing automation and have their own inhouse
engineers. They must present their proposal for automation improvements to their
managers before the project can be agreed so there is a long lead time from quotation to
commencement of the project. They are not price conscious; however the project price must be
such that it can be covered by the remaining budget. They will already have automated
machinery.
4.6.2 Implications for us:
The customers who fall into the medium sized manufacturing company category will be very price
conscious and will be happy to get the best value they can. This means they will not be swayed by
attitudes about German machines being the best. Because they don’t have engineering staff we
can advise and help them to choose a machine that will solve their production issues within their
budget. Service will be important to them not having any engineering expertise. Acquisition of
these clients may take longer as there are many of them and it is impossible to gauge their interest
in automation at the right time, but it will be easier to get meetings with medium sized businesses.
The factors lead us to consider designing our own machines and having them built in China with
specified high quality components.
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The machine will be the same high specification as a top quality machine from another supplier
but there will be a significant price difference. This saving will make the machine attainable for a
medium sized business.
A large multi-national however would never consider buying a Chinese machine due to the poor
reputation they have earned. However, once we specify and supervise the production of the
machines with our vetted machine manufacturer as well as check and install them, we feel that we
can overcome this issue. We have decided to market a separate range of machines to the multinational
companies sourced from Italy. They will cost around 30% more than the value machines
from China but cost is less of an issue for these customers than perceived quality. We have
already acquired some of these clients and continue to work with them. We are in search of a
business partner however to strengthen our bargaining power and economies of scale so that we
can quote for much larger manufacturing projects. This is our strategy to break onto the preferred
supplier lists as well as obtaining meetings with the decision makers in these companies.
Integration of machines with their existing lines as well as bespoke automation solutions are
important to these customers.
4.7 Our Unique Selling Point
We are one of only a handful of bespoke machine builders in Ireland. Our ability to analyse a
manufacturing issue and design, build and integrate the solution is very unique. This skill allows
us to gain a good margin on our services. In relation to our machines for re-sale, our unique
selling point is that we are able to provide on the ground installation, servicing and integration
where as our overseas clients will take a lot longer to send an engineer and will charge a lot more.
Another unique selling point we have is that we have solutions available to both the top and
bottom end of the market. We feel that it is only a matter of time before machines are
manufactured in China due to the large variation in price so we want to be ahead of the curve
while still offering a quality product at a competitive price.
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4.8 Key Strategic Issues Facing Us
The main issue is that it takes approximately 6 months lead time for sales to materialise
after a quotation is sent. Our sales have been in steady decline for the past few years and
we need an injection of sales for the company to remain trading. We employed a
marketing manager in March who has generated a great number of meetings and as a
result we have quoted for many jobs. However, it remains a waiting game until September
to ensure these sales will materialise and we will cover our costs and generate a profit by
March 2018.
While the Irish market is sufficient for the company to trade, the opportunity to expand into
Europe is prevalent at present, especially because the UK has left the European Union.
We are the only English speaking country in Europe now so we are well placed to trade
with the USA into Europe. Many of our Irish competitors are trading internationally.
To be taken seriously as a player in the filling and cartoning machine industry for the multinationals
in Ireland the company must be of a certain size. We are breaking into this
market for bespoke work but we are not even getting an opportunity to quote for the bigger
jobs. Partnering with a large international company would give us more strength to quote
for these.
Due to the significant saving on the purchase of Chinese machines, we already see clients
directly researching the purchase of them abroad. We feel that in a price sensitive market
Chinese machines will eventually put pressure on the higher priced machines much like
Aldi and Lidl gained the market share from Tesco and Dunnes stores. This realisation has
led us to create a strategy rather than lose market share when the purchase of Chinese
machines becomes the norm.
Our research has shown that much of our project engineer’s time is spent on the road and
out servicing at our client’s facilities. While this cost has been marginally built into the price
of the original project, their valuable time is not being spent in the office designing and
building machines. The 80:20 rule can be observed here, 80% of time is spent servicing
and it is only returning 20% of the revenue.
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5 Where Do We Want To Go?
5.1 External Environmental Analysis
5.1.1 Political:
The existence of development grants and attractive tax rates for multi nationals to locate in Ireland
means that 9 out of the top 10 pharmaceutical manufacturers are now located here. 60% of these
are situated between Dublin and Cork but we are centrally located to easily serve both counties.
5.1.2 Environmental:
Importing machines from China now comes with stringent rules to protect the environment. While
wooden pallets/cases used to be acceptable, now machines must be packed in a steel frame.
This is to prevent any contamination and transfer of organisms from country to country. It wold
also prevent harbouring of illegal immigrants.
5.1.3 Social:
Ireland is known for having one of the best education systems in the world and this talent pool
attracts businesses to re-locate here from abroad. Life expectancy has increased by 5.2 years
and the amount of people contracting curable sexually transmitted diseases has also grown. This
increases the need for medication and contributes to the steady growth of the pharmaceutical
industry. Source: http://www.unfpa.org
5.1.4 Technological:
Our business relies heavily on technology; be it robots or vision systems. There is a growning
demand for speed and efficiency in production. As technology constantly changes and updates, it
is crucial that we are up to date with training and are offering the newest solutions. Having good
relationships with our customers ensures that when technologies change, our customers will
return to us for upgrades.
The introduction of communications technology such as skype,
whatsapp and even Linkedin has allowed us to trade on an international platform. Working with
international suppliers and customers has never been easier. The presence of apps such as
google translate has even meant we can communicate to some extent in different languages.
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5.1.5 Economic:
The UK exiting the European Union will have trade implications on the world. Trade will be more
difficult and expensive for imports and exports. However, trade from EU country to EU country will
be more attractive putting Ireland in a better position for inter-Europe trade.
The recession that hit the world and indeed Ireland in 2005 has shifted and we are starting to see
growth in sales that are filtering to demand for manufacturing. This means that in order to reach
production targets companies are looking at automating their processes.
5.1.6 Regulatory:
Health and safety regulations are important for our industry. Issues like repetitive stress injury,
handling of chemicals or foods at high temperatures etc. cause businesses to look to automation.
Machines also need to be built with guards so that the robots will switch off if the safety doors are
opened. This means machines can be CE marked for quality and safety compliance.
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5.2 Critical Success Factors (Rate out of 100)
Success
Factors Rank
/20%
Ranking Perception for us and our competitors - a basis for benchmarking
Horan
Automation
Bespoke
Competitors
Turnkey
Pak
Machine
Suppliers for
Resale
Preferred
Suppliers
Price 16 15 16 15 12
Quality 17 17 16 20 20
Service 18 18 18 12 15
Value (price vs.
17 16
quality)
16
18 16
Scope to supply
14 16
(job size, export)
17
18 20
Total 82 82 83 83 83
5.2.1 Critical Success Factor Analysis
Above is the critical success factor chart for Horan Automation compared with our competitors.
Each of the important factors which determine our success with customers are listed on the left of
the chart and awarded a maximum of 20 points. The businesses are ranked out of 20 for their
success at achieving each. The total score is then added up at the bottom out of a maximum of
100. The poor areas that need work are highlighted in yellow.
Horan Automation scored well apart from the “Price” and “Scope of Supply” factor. This is
representative of the high marks awarded to the company in our customer satisfaction survey (see
market research). The price score is always expected to be an issue in any survey and a high
scoring price would be considered too low by the seller. The high marks for quality, service and
value suggest that the price isn’t a huge issue. Our direct bespoke competitors scored similarly
apart from in the “Scope of Supply” section where they scored 2 more than us. This is because
some of them are already exporting outside of Ireland and are able to quote for larger jobs in multinationals;
this may be because of their location in Dublin or close to their customer.
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Machine suppliers for Resale and Preferred suppliers scored higher than us for “Scope of Supply”
because they are already exporting into Ireland and/or they are already supplying a multi-national
on their preferred supplier list. These competitors scored less than us for service due to their
international location. Servicing might be available but it will take them a few days to send over an
engineer and it will cost approximately €70 per hour plus flights and accommodation. In the
meantime, production may be at a standstill in the manufacturing plant.
All the competitors scored roughly the same 82-83% so there is no clear company standing out.
We can only work on our weakest areas to compete better with the other companies, specifically
our scope to supply larger multi-national companies who want to automate larger lines over
1million and our scope to supply manufacturing facilities of all sizes outside of Ireland.
5.3 Key Business Objectives
6. To generate €650,000 sales revenue from sales of pre-built machines by February 2018
7. To generate €350,000 sales revenue from sales of bespoke machines by February 2018
8. To create a marketing campaign for the business by May 2017
9. To reduce costs of manufacturing by selecting new supply partners for pre-built machines
by August 2017
10. To employ one new project engineer by February 2018
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5.4 Customer Goals
The aim of Horan Automation is to reach a point where they are not over-reliant on one customer
to bring in the majority of sales. In 2016, one client accounted for 60% of sales which is a position
the company realises that is very risky. HAC would like sales to remain reflective of the industry
sales (i.e. demand is in pharmaceuticals and food) but for their sales to be distributed across many
clients. The company would also like to be in a position where they are contacted by potential
customers to quote for work. For the past many years all work came through word of mouth or
from an existing small database of loyal customers. The new marketing strategy would re-launch
the brand and communicate the business across new media. This should make customer
acquisition easier. HAC prides itself on offering a tailored solution to all manufacturing companies
regardless of size and budget. Our goal is to gauge the budget and needs of our customers and
come up with a suitable solution to give them the best quality automated machines at a
competitive price with great service.
5.5 Market Objectives
OBJECTIVE
BY WHEN
1
To generate €650,000 sales revenue from sales of prebuilt
machines by February 2018
Feb 2018
2
To generate €350,000 sales revenue from sales of
bespoke machines by February 2018
Feb 2018
Objectives in the
next 24 months
3
To create a marketing campaign for the business by
May 2017
June 2017
4
To reduce costs of manufacturing by selecting new
supply partners for pre-built machines by August 2017
August 2017
5 To employ one new project engineer by February 2018 Feb 2018
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6 How Do We Get There?
6.1 Strategies
6.1.1 Strategy 1
Objective 1
To generate €650,000 sales revenue from sales of pre-built machines by February 2018
Strategy 1
Marketing below the line
Below the line marketing is sufficient to communicate Horan Automation’s products and services.
This has been the feedback from our customers. We will go into further detail of our marketing
strategies for objective 3.
Cold calling
It is impossible to know when potential customers may have automation needs so our strategy is
to arrange meetings with the relevant decision makers in the industry (engineering managers,
CEOs, plant managers, procurement managers etc.). Our strategy is to contact them through
targeted marketing and set up meetings from there so that we are included into the quotation
process.
Sales
The cost price of a pre-built machine would range from €100 to €250. In order to reach our sales
targets we would need to sell a maximum of 6 machines approximately. This is a sale of one
every 2 months. The best way to achieve this would be to monitor sales on a regular basis.
Sales Targets
In order to achieve our sales targets, a sales board will be drawn up and reviewed monthly. This
will detail sales in all areas including pre-built machines. We will also add a section for quotations
submitted but not yet agreed. The sales board will be located in the main office downstairs so that
all staff are aware of sales targets and contributing to the collective progress of the company.
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Networking
Networking is an important part of selling. Making connections in all walks of life can lead to
unexpected meetings and sales. Networking will be structured by joining the Tipperary Chamber
of commerce. Staff will be made aware of the importance of networking and all staff will pass
business cards etc. to contribute to potential leads.
Word of Mouth
Our survey respondents said that when looking for a supplier they would ask a colleague or an
industry partner so word of mouth is clearly crucial to us acquiring new business. In order to
continue attracting customers we must ensure that all of our success factors remain at a high
level. We must concentrate on offering a high quality product over a reasonable lead time, at a
value price and we must ensure we back up our customers with on the ground support and advice.
Word of mouth also comes from suppliers so treating all of our partners well through the chain of
supply is important to foster good trade relations.
Customers
It is easier to generate work and sales from existing clients than new business. Presently, 80% of
our quotations are going out to new clients. This shows an opportunity to re-connect with past
customers. If they haven’t worked with them in a while organising a meeting to communicate new
products or updates is suggested. If we work with them regularly a simple customer service call to
demonstrate that we support them is a good idea. Keeping in the minds of our existing customers
means they may not even get competitors to quote for upcoming jobs and they may just
commission us to do them based on their good experiences with us.
Suppliers
Currently the company works with three regular suppliers for pre-existing machinery: Comas in
Italy, Ear-flap in Spain and ET pack in France. Of these only one is progressive in marketing and
customer support, Comas. While they all offer prices that are reflective of the European market,
we are not receiving any enticing discounts to offer them exclusivity as suppliers. We need to be
partnering with suppliers who will contribute to our sales and pass us work in the Irish or European
market. We will analyse our supplier relationships in more detail for objective 4.
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Preferred supplier lists
Most of the multi-national companies have preferred supplier lists. They will only get quotations
from suppliers who are on these lists. Some medium sized companies also operate under the
same principle but unofficially, using the same suppliers for all jobs. This makes it difficult to
acquire clients in this multi-national market. Regardless of obtaining work with some of these
companies already, we are still finding it difficult to be considered for work outside of our pigeon
hole. We gain work in the same areas regularly. Our strategy to combat this is two-fold; we will
contact all of these companies to try to get onto their preferred supplier lists by contacting the
decision makers in both their international head offices, filling in their preferred supplier application
forms and contacting the decision makers in their Irish manufacturing facilities. We are also
looking for a business partner potentially in the US area who wants to expand into Europe. This
would give us more combined strength to quote for and carry out the larger jobs.
Research
In order to target the right industries we must carry out research into the industry. According to
our research, the pharmaceutical, electronic and food industries are the ones that are most
attractive. However, we have found that the pharmaceutical multi-national companies are difficult
to acquire as customers for pre-existing machines due to their preferred supplier lists. We have
therefore decided as a secondary strategy to contact the medium sized manufacturing companies
who do not have preferred supplier lists or automation engineers on staff. Our research has
shown us the industries that are unlikely to produce sales, for example the beverage industry has
been in steady decline for many years. We are more likely to generate sales if we target the
manufacturing industries enjoying growth.
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6.1.2 Strategy 2
Objective 2
To generate €350,000 sales revenue from sales of bespoke machines by February 2018
Strategy 2
Customers
Bespoke automation is a very unique service and in Ireland we are one of only a handful of
suppliers. Our customers tend to remain with us after we have designed, built and installed a
product. There is therefore an amount of repeat business that is generated from our current
database of customers.
Marketing
Marketing will be carried out the same for all market segments but there will be a change in focus
on the message to communicate what might appeal to certain businesses. Marketing will be
visited in detail for objective 3.
Sales
Our sales strategy for bespoke automation is to organise meetings with potential customers as for
objective 1. We will show customers a presentation containing videos of bespoke work we did in
the past as well as give them details of our bespoke services. We offer a free factory walk through
consultation to potential customers to assess whether we can come up with a solution to their
problem and give them a general idea of the potential cost. We then provide them with a noobligation
official quotation.
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Referrals
Word of mouth is important to our business so we need to ensure that our customers are
communicating our capabilities to their colleagues and industry partners. We sometimes find that
in a large manufacturing company there can be a number of project engineers who use different
suppliers. Our strategy is to arrange a meeting with the engineering manager and ask him to
include his staff in the meeting. We also ask him to distribute our marketing material among his
project engineers. Often, our customers are happy with our work but don’t think to pass us more
business. Asking them to do so can be useful but it is important not to appear needy or desperate
as this can ruin our reputation.
Sales Analysis
Bespoke automation has been the company’s main source of income since the beginning.
Analysing the sales figures and trends for the past decade (market research section) showed the
sectors returning the most revenue. Some of these businesses are now closed but some remain
trading. The food industry emerged as the top for bespoke automation but this could be due to our
M.D.’s contacts in this industry when he opened the business. The fact remains however that
bespoke automation is needed in the food and dairy industry. The pharmaceutical industry has
grown in importance in the past few years and has overtaken the food industry for our sales. This
research is useful to show us who to contact, what industries, what type of automation, potentially
the average cost of machines etc. when we are targeting bespoke sales.
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6.1.3 Strategy 3
Objective 3
To create a marketing campaign for the business by May 2017
Strategy 3
Business Plan
In order to carry out effective marketing, all other areas of the business must be looked at. A
business plan is essential to determine where the business has been in terms of sales and
revenue, where they are now and where they want to go. This sets targets that can be achieved
by putting marketing strategies into place. It also allows the marketing and sales team to review
the sales and marketing regularly and make short term changes. These changes will ensure that
short term targets and ultimately long term targets are being achieved.
Brochure
Brochures are a great way to showcase the company’s products and services to potential
customers. Depending on the budget, brochures can be printed and distributed. If the budget
does not allow however a digital brochure can be designed and uploaded as an interactive
brochure online (website, email newsletter, social media etc.)
Website
According to our research, apart from word of mouth and a preferred supplier list, the only other
media where engineers will search for a supplier is the internet. This means our website is a very
important tool for us to communicate through. The website must be effectively branded and
communicate the following well; our products and services, our unique selling points, the quality of
our products, some of our past high profile clients, our marketing materials, our contact details and
information about us that demonstrates we are professional and caring. Potential customers will
only remain on our website for a matter of minutes so the homepage must convey something to
catch their attention and entice them to remain longer. A promotional video or sound clip along
with the digital brochure would work well on the home page and it is crucial that the website
conveys the brand identity.
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SEO
Search engine optimisation is as important as having a good website; after all, there is no point in
having a great website if nobody can find it! Search terms must be added to the website copy to
reflect the terms typed into a search engine by a potential customer. For example, when
conducting the competitor analysis it was clear that the competitors do not call designing one off
customer specific automated machines “Bespoke automation”. This made it difficult to find our
competitors. When “Besoke automation” was typed in however, only our website turned up. The
lesson here is that our potential customers are obviously not typing in “Bespoke” either so we
need to re-word this product offering to be listed amongst our competitors. The name of the
website is also important as is the company’s presence on Googlemaps and other directory listing
websites. The effectiveness of the website can be measured using google analytics which will be
discussed under the measurement and evaluation section of the plan.
Database
It is crucial to work from a database, especially for below the line marketing. The database
provides a base for customers and potential customers who can be reminded of our brand. This
causes our brand to strengthen through repetition and encourages them to think of us first as
potential suppliers. The database will be grown regularly by adding potential customers from
targeted industries as well as customers. These will be sent both monthly newsletters and an
individual email to request a meeting.
Mailshots
A monthly mail shot will be sent to the database. This will include news updates such as new
product ranges, new brochures, videos, articles, staff etc. It will serve to strengthen our brand and
keep our customers updated. A monthly mail shot is the correct amount to ensure we are not
overly spamming our database but that we are instead remaining strong in their minds. The mail
shot will be branded and professionally laid out using Mail chimp. The campaigns will also be
measured to identify any potential interest.
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Customer Research
Customer research has indicated that decision makers do not acquire suppliers through above the
line marketing i.e. TV advertising, radio advertising, newspaper advertising, billboards etc. This is
good news for us as this type of advertising is the most costly. We will therefore concentrate on
below the line marketing i.e. database, PR, website, cold calling, social media etc. We will
continue to communicate with our customers and implement their feedback.
Networking
Networking is an important form of marketing, especially below the line. People may not have
business for us directly but can refer us business when they understand what we do. Networking
groups like the BNI are encouraging networking all over the world as it generates structured word
of mouth referrals. However, if we keep this understanding to the forefront of the minds of all of
our staff they will find that they know many people who can refer us business.
Linkedin
Linkedin is one of the only useful social media platforms for Horan Automation and Consulting.
Facebook, twitter and Instagram are targeting the mass market and because our market is
business to business, Linkedin is the best network for us. It is useful to identify and make
connections with decision makers as well as potential suppliers. It is also useful to communicate
our brand, surveys and updates as well as posting marketing information in specialised groups for
manufacturing and automation.
Affiliates
Being affiliated with other companies can translate to sales. Horan Automation has received sales
from engineering companies, our own materials suppliers and consultants over the past.
Networking can also be done in a structured was through business groups. Horan Automation
and Consulting is a member of ISME (Irish Small and Medium Enterprises) and the Tipperary
Chamber of Commerce. Both of these memberships have proven useful. We have gained a lot of
contacts through ISME for our database as well as business advice. We have made many useful
contacts through the chamber also, gained PR, entered business awards and we are currently
organising a manufacturing event for networking.
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PR
PR is a great form of free advertising. We have contacts with the local media and have been
fortunate to record a radio interview detailing our products and services which we now use for
marketing. We also had a recent article entitled “The rise of the machine” which explored
industrial automation in manufacturing and its benefits and pitfalls for society. This was printed by
many well respected manufacturing and engineering magazines. PR will be researched and
written every 2-3 months to continue increasing the company’s media profile.
Media database
In order to enjoy successful PR, a media database was compiled. Like the customer database,
this one will be continually updated. It contains the details of local newspapers, national
newspapers, industry specific print media, radio researchers and TV researchers. We are aware
that most national media will expect advertising expenditure to accompany and PR but often a well
written interesting article can be printed regardless of this.
Awards
Tipperary Chamber of Commerce in conjunction with LIT are running a business awards
competition (May 2017) which we have entered into the best SME category. The pre-requisites
are that we are an innovative company with strong marketing. The prize would be an excellent
way for us to showcase our innovative and unique products and services. It would also strengthen
our brand. The other advantages are the PR around the competition and a promotional video that
would be created for the top 3 finalists.
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Trade shows
Where our budget allows we intend on participating in relevant trade shows. We are connecting
with Rikon (Enterprise Ireland/WIT to business intermediary offering support, consultancy and
grant aid). We will be applying for a trade show grant and hope this will help us to attend trade
fairs, print brochures and a branded display stand. We will also be attending trade fairs to meet
with and recruit suppliers (Interpak in Germany, PPMA UK) where we can also arrange customer
meeting at our suppliers’ trade stands.
Branding
In March/April 2017 we overhauled our brand to communicate a more technical feel. The imagery
used for the background along with the logos etc. was translated across all media i.e. logo,
business cards, website, brochures, newsletters, social media etc. We received unprompted
excellent feedback from our customers and suppliers regarding our new brand. The brand also
communicates our values as a company.
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6.1.4 Strategy 4
Objective 4
To reduce costs of manufacturing by selecting new supply partners for pre-built machines by
August 2017
Strategy 4
Research Suppliers
As previously mentioned, two of our current suppliers are proving too expensive and not
progressive in providing us with clients or support. It is understood that these need to be replaced
but the question remains by whom. Our research has shown that we have two main customer
types; customers who are from multi-nationals who are not price driven but have preferredsupplier
lists and customers who are from medium sized manufacturing companies who do not
have expert engineer and are highly price conscious. We have concluded from this research that
we are best to serve these customers with different suppliers. The higher end customer will
benefit more from our filling machines sourced in Italy and cartoning from our Canadian partner
who can also build bespoke machinery. Quality is of more concern to this customer.
Our price sensitive customer will be served by us for bespoke machinery but for pre-built
machinery we will source suppliers in China. In order to ensure the machines are high quality we
will stipulate the components to be used for their machines and we will supervise the construction
as far as possible. We will ensure safety guards etc. are added and we will conduct a factory test.
The machines will be CE marked so that they comply with European standards. By adopting these
strategies we will ensure that we get the best margin on our sales, our customers’ needs are best
met and we keep our overheads low by outsourcing building and supply of machinery projects
without our staff costs dramatically increasing.
It is a longer term idea for Horan Automation and Consulting to create a more permanent
partnership with a supplier (such as a merger, takeover or manufacturing hub). The company is
currently in talks with a Canadian company who emulate our product, service and vision. They
wish to expand into Europe with us.
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Customer survey
We surveyed our customers as well as engineers in the field to deduce what type of supplier
profile is preferable to them. It was apparent that on the ground service is important which we
provide. Quality is very important also. China emerged as the lowest scoring country when it
came to quality perception. We feel that larger multi-national clients who employ their own
engineers would not buy a Chinese machine but that decision makers from medium sized
production companies have no preference on country of manufacture; rather they want the best
quality machine for the best price.
Quotations
The sales and marketing team have been working on recruiting reliable suppliers for both
customer segments. This involved the sales team meeting selected suppliers at a recent trade fair
in Germany. The team have gathered product, company and pricing information as well as
communicated directly with the companies to establish which of them will work best as our
preferred suppliers. Currently, there is a list of approximately 5 suppliers that will potentially work.
These include Comas, Twin Pack, CAM and AFA systems for the higher end of the market and
Haulian and Youngsun for the price sensitive end.
Expert support
In order to make a decision on which suppliers to partner with and in what context, the sales and
marketing team recognise that they need external help in terms of economics. Rikon will provide
this help from September 2017 and provide grants. In the meantime the team remain in talks with
the Canadian company, AFA systems to gauge their interest. If orders are obtained for machinery
and the shortlisted companies can supply machinery in the meantime, the team intend to use them
in a supplier capacity until they make a strategic business decision regarding partnership.
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6.1.5 Strategy 5
Objective 5
To employ one new project engineer by February 2018
Strategy 5
Revenue
It is important that in order to meet the deadline of employing a new project engineer by February
2018, we must have generated enough income to cover the increase in overhead. A marketing
manager was employed in March 2017 and sales take approximately 6 months to materialise in
the industry so we would expect to see returns from marketing by September or October. We
must also take into account he rise in overheads from salary increases.
Grants
A grant has been sanctioned towards the partial salary of the project engineer. A different grant is
available however if the staff member is on the live register prior to employment.
Organisational overview
Before making the decision to employ a project engineer, the management will re-analyse the
operational structure. This will be carried out in October 2017 to give the company a good idea of
what the sales revenue is likely to be for 2017-2018. The management also needs to analyse how
operational changes have impacted on team roles. If a supply partner has been agreed how this
affects the role of the project manager, how does delegation of sales administration and strategic
analysis to the marketing manager affect the role of the MD (sales). It needs to be decided what
shortfalls exist in terms of tasks within the organisation to decide what type of engineer will be
required.
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Job Description
The skills needed must be identified to create a job description for the new staff member. This will
be clearly communicated in the job advertisement and interview. The organisational profile will
also be analysed to identify who the staff member will report to. Whether the staff member be fully
skilled at their role or a trainee will depend on the skills needed by the organisation, the capital
available and the resources available.
Free Advertising
The job description will be outlined by the MD along with the project manager. This will be
communicated and advertised by the marketing manager. Sources of advertising will be free of
charge such as free local radio announcements, linkedin, website job posts, email to training
collages, free government jobs posting, free job posting websites etc. The job will be advertised in
November with the view to interviewing before Christmas. The successful candidate will
commence work in February/March 2018.
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6.2 Key Performance Indicators
(How will we know we’ve achieved our targets?)
Sales
We will know we have achieved our sales targets when our sales revenue reaches or exceeds €1
million. Currently in May 2017 we have quoted for over €1m in jobs and are waiting for updates on
these. This is due to the marketing of our new marketing manager as well as the sales meetings
carried out by our MD. The target of €1m includes bespoke machines and machines for re-sale.
Machines for Resale
Re-selling of pre-existing filling and cartoning machinery is a new market that we are moving into.
Our target is to generate €650k in sales revenue in the first year. This will extend to €1m in the
second year when our brand is becoming established in the market. If we reach our target of
€650k we will have achieved our goal.
New Clients
No marketing was done previously to the extent that it is now (from March 2017) so sales were
reliant on existing customers or chance contact from new customers. With the new marketing
efforts, the quotations being sent to potential clients were 80% new customers and 20% existing
customers. Following this, the marketing manager has concentrated a greater effort on
capitalising on existing customers, perhaps who have not made contact in a decade. If the sales
figures reflect 60% sales from new customers and 40% sales from existing customers the
marketing team would consider this a good ratio.
Profits
While we may reach our goal of €1m in sales revenue it is also important to monitor the
overheads. This includes staff costs, materials for bespoke machines, factory overheads, supplier
machines etc. Variable costs should be analysed to get the best prices i.e. negotiation with new
suppliers. Other avenues are being explored such as generating this income using only five staff
to reduce overheads. This would allow for greater profits.
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Salaries
In order to grow the company, the owners took a reduced salary. The new marketing manager
also joined the company at a lower salary for her qualifications under the agreement of a €10k
salary increase should the sales targets be met. If these three employees obtain a significant
salary increase at the end of the financial year 2017-2018 we will know that the team has
effectively reached their sales targets.
Enquiries
If the company begins to receive enquiries by phone, email or the website etc. rather than chasing
all the business themselves we will know that the marketing media is working effectively.
Website
If the rates of website traffic increases we will know that our internet marketing is effective. We
can also analyse the effect of other marketing through this i.e. if we send out an email shot with a
link to the website we will be able to see an increase in the traffic at the time the email was sent
Recruitment
We will know that our objectives have been met when we are in a position to recruit a new staff
member by February 2018 and can easily cover their salary.
Business Plan
When a business plan exists to focus the management on targets, to accompany funding
applications or to supplement competition entry we will know that we have achieved our strategic
planning aims.
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Suppliers
When we have narrowed down our supplier list to a handful of tried and tested suppliers who are
offering us best cost prices and delivering quality machines we will have achieved our targets. We
will be making a profit margin of approximately 25-50% on the re-sale of machines. These
suppliers will also offer marketing support (videos, sales material, images, trade show attendance,
website links etc.) and where possible forward us potential customers.
Sales Plan
We will know we have achieved our targets when we have met or exceeded our sales targets as
outlined on the monthly breakdown sales plan. We will have adhered to the plan and made short
term adjustments where necessary to ensure we reach annual revenue targets.
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6.3 Targets – 2 Year Sales Forecast*
Forecast Sales Figures by Products &Services for 2018 and 2019
Product/Service 2018 Sales 2019 Sales
Bespoke Automation €350,000 €495,000
Machine Reselling €650,000 €990,000
Consultancy €500 €500
Grants €19,000 €15,000
Spare Parts €57,000 €57,000
Service €14,180 €14,180
Total €1,090,680 €1,571,680
*Forecasts are broken down by product sales forecast for bespoke and machine re-selling as
previously discussed and actual sales figures for 2016-2017 for other products and services. The
chart shows 44% revenue growth from 2018-2019.
Forecast Sales Chart by Products &Services for 2018 and 2019
€1,200,000
€1,000,000
€800,000
€600,000
€400,000
€200,000
€0
2018 Sales
2019 Sales
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6.4 Resources
People
Skilled engineers
Strategic Owner Manger
Marketing/sales team
Financial/HR team
Service team
Design & integration team
Time
For marketing to begin to
generate sales
For quotations to generate
sales bookings
To design and build and
deliver solutions
To order and receive prebuilt
machines from abroad
Resources
required
Facilities
Premises for building
machinery & operating
offices
Vans for service calls
Raw materials: robots,
machined parts, PLCs
Office equipment, internet,
phones, heating, electricity
etc.
Tools and manufacturing
equipment
Finance
Cash flow to pay for
materials, wages, office
expenses etc.
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7 How Will We Know When We Have Arrived?
7.1 Measurement and Evaluation
OBJECTIVE
1. To generate €650,000 sales
revenue from sales of pre-built
machines by February 2018
2. To generate €350,000 sales
revenue from sales of bespoke
machines by February 2018
3. To create a marketing
campaign for the business by
May 2017
4. To reduce costs of
manufacturing by selecting new
supply partners for pre-built
machines by August 2017
5. To employ one new project
engineer by February 2018
MEASUREMENT & EVALUATION
Financial system: Our financial controller maintains financial
figures on our system, including sales by individual product and
service. These figures can be checked monthly
Sales Plan: The marketing team will create and review our
sales plan on the office board regularly with the sales team
Quotations: The list of quotations sent will measure the
effectiveness of marketing and potential sales
Live Plan: The Live Plan software system will allow us to quickly
and easily see sales, revenue, profits, expenses, projections
etc. We plan to set up our own similar system on excel using
formulas and graphs
Google Analytics: Google analytics have been set up since
April 2017 to analyse the affectiveness of the website and
measure its visitor data
Mail Chimp: Mail chimp has built in analysis software to
analyse the effectiveness of email shots showing who opened
Linkedin: Linkedin affectiveness can be measured by looking
at how many views a profile got, how many new connections and
who looked at articles and shared posts
Database: The database growth can be analysed by keeping a
record of the number of names added
PR : PR can be measured by how many media contacts actually
printed or broadcast the article
Marketing Reports: Weekly marketing reports are compiled to
show what has been completed in the department. A report will
be compiled every 3 months to show what progress has
occurred
Financial system: Our financial controller maintains financial
figures on our system, including sales by individual product and
service. These figures can be checked monthly
Live Plan: The Live Plan software system will allow us to quickly
and easily see sales, revenue, profits, expenses, projections
etc. We plan to set up our own similar system on excel using
formulas and graphs
Supplier Agreements: Agreements are in place by September
2017 regarding supplier terms
Revenue: We will know from our financial analysis if we can
afford to recruit a new staff member by October 2017
Operational Analysis: We will know from conducting an
operational analysis if there are tasks that remain undone due to
lack of staff
Staff Reviews: We will know from conducting staff reviews
what work will fall under our current employees' job descriptions
and therefore what skills we will need to source in a new staff
member
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7.2 Tracking and Controls
Apart from using the above measurement and evaluation techniques to ensure we
achieve our objectives, we will also use the following:
Customer Research Surveys: Surveys can be done to establish how satisfied customers are
with our products and services. These will be distributed via email (database), on our website and
via Linkedin. We will carry customer satisfaction surveys out every 3 years or when we are
conducting a new business plan. Such surveys can also be used for feedback at times when the
company is considering launching a new product for example.
Market Research: Keeping up to date on market trends and changes is very important. This can
be done by competitor research as well as general research of the market. This should be done at
least once every two years or when the business plan is being re-done. The aim of competitor
research would be to find out what market share competitors have and what their advantages are
over us. We need to then use this information to improve our service. Researching the market
allows us to more easily predict and meet their needs.
Website Traffic: A mechanism to monitor website traffic should be installed so that management
can identify seasonal fluctuations and other fluctuations caused by marketing, in particular
promotions. We are now using Google Analytics.
Database: A mechanism is in place to save all details of any customer who have previously
visited the website. This data is valuable for sending e-shots with promotion information. We can
also input previous and potential customers to our database. Our database is housed both on
Excel and on Mailchimp.
Media Monitoring: Keeping up to date with industry news is important to ensure we are aware of
changes, new entrants to the market, investment in manufacturing companies etc.
Time Line Planning: Making a year planner allows us to be organised and map our sales and
project design/building progress against the time line.
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7.3 Measurement of Key Performance Indicators
Sales Analysis: Have we achieved our objectives? What is the overall change from year
to year?
Expense to Sales Analysis: We must weigh up the achievement of objectives against
the amount of money we have spent to achieve them. They must not overspend to
achieve goals.
Financial Analysis: We must analyse the business operation as a whole to identify the
areas that are profitable and those that are not.
Market-based Scorecard Analysis: Measure customers in terms of new customers,
customer satisfaction, lost customers, target market awareness, relative product quality
and relative service quality. The 80:20 rule as mentioned previously would apply here.
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8 Risks & Contingency Planning
Competitors
Overheads
Over Reliance
on One Client
Over Reliance
on one staff
member
Risk
Larger national or international
competitors may recognise
Ireland's potential for
manufacturing automation and
undercut us due to their
economies of scale and size
Overheads get out of control
and sales are not consistent
to cover the costs.
Contingency Plan
Being ahead of the curve in terms of customer
service and on the ground servicing. Also
offering our clients a unique bespoke product at
our best price. Using cheaper suppliers from
China for some of our clients to prepare for
Chinese entrants into the market. We will
customise and CE mark our Chinese
machines to bring them up to European
specifications to ensure we are not undercut
and bullied out of the market.
We have employed a marketing manager at a
reduced salary to generate enough revenue to
ensure staff can be paid well and the revenue
exists to renumerate them when the time
comes. We are also building relationships with
new clients which we assume will become
repeat business
Relying on one client to
We are widening our net as regards sales and
generate 60% of sales
marketing so that we are working with many
revenue for the year (see
customers
2016-2017 sales)
Relying on one staff member Staff members must be open about what they
to bring skills or knowledge are doing so that management can easily
that can not be easily learned follow up on their tasks. Cross training of other
or replaced
staff would be recommended.
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9 Budget
9.1 Forecast
9.1.1 Key Assumptions
Our revenue forecast for 2017/2018 is based on current completed quotations. At present
we have quotations to the value of €2,500,000 with customers, awaiting a decision. We
are confident that approximately 40% of these will be converted into actual sales giving us
our sales figure of €1 million in revenue from machine sales.
We expect revenue to remain steady in 2018/2019 and then grow again in 2019/2020 as
we benefit from an increase in our marketing activity driven by our full time marketing
manager. Our direct costs will not change significantly during the period; the main
increases will be in staff costs and cost of materials due to the increased sales.
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9.1.2 Projected Profit & Loss
FY2018 FY2019 FY2020
Revenue €1,036,492 €1,518,420
Direct Costs €575,012 €1,965,012 €12
Gross Margin €461,480 (€446,592) (€12)
Gross Margin % 45% (29%)
Operating Expenses
Salary €130,858 €164,810 €209,213
Employee Related Expenses €14,067 €17,717 €22,491
Mortgage €9,996 €9,996 €9,996
Loan repay G & K + Mortg. Bal €4,800 €4,800 €4,800
General Insurance €6,450 €7,740 €7,740
Telephone €3,500 €3,500 €3,850
ESB €2,030 €2,300 €2,400
Heating Oil €1,500 €2,100 €2,200
Consumables Workshop, Water
rates
Advertising and Website &
Marketing
€13,470 €14,000 €15,000
€531 €1,000 €1,500
Software Support, Computers €5,598 €5,750 €6,000
Bank Charges & Interest & Tax €1,600 €2,000 €2,400
Sundry , Accountant, Petty Cash €7,400 €7,500 €7,800
Expenses Conor €5,400 €5,400 €5,400
Travel, Mileage, Hotel, Gerry €18,800 €18,900 €19,000
Total Operating Expenses €226,000 €267,513 €319,790
Operating Income €235,480 (€714,105) (€319,802)
Interest Incurred €2,004 €1,304 €1,357
Depreciation and Amortization €802 €2,283 €3,764
Income Taxes €29,084 (€29,084) €0
Total Expenses €832,902 €2,207,028 €324,922
Net Profit €203,590 (€688,608) (€324,922)
Net Profit / Sales 20% (45%)
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9.1.3 Projected Balance Sheet
FY2018 FY2019 FY2020
Cash €282,703 (€400,661) (€839,180)
Accounts Receivable €0 €0 €0
Inventory
Other Current Assets
Total Current Assets €282,703 (€400,661) (€839,180)
Long-Term Assets €14,808 €29,616 €44,424
Accumulated Depreciation (€802) (€3,085) (€6,849)
Total Long-Term Assets €14,006 €26,531 €37,575
Total Assets €296,709 (€374,130) (€801,605)
Accounts Payable €27,727 €85,417 €3,671
Income Taxes Payable €29,084 (€29,084) €0
Sales Taxes Payable €34,304 €51,247 €0
Short-Term Debt €32,004 €33,308 €34,665
Prepaid Revenue
Total Current Liabilities €123,119 €140,888 €38,335
Long-Term Debt
Total Liabilities €123,119 €140,888 €38,335
Paid-in Capital
Retained Earnings (€30,000) €173,590 (€515,018)
Earnings €203,590 (€688,608) (€324,922)
Total Owner's Equity €173,590 (€515,018) (€839,940)
Total Liabilities & Equity €296,709 (€374,130) (€801,605)
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9.1.4 Projected Cash Flow Statement
FY2018 FY2019 FY2020
Net Cash Flow from Operations
Net Profit €203,590 (€688,608) (€324,922)
Depreciation and Amortization €802 €2,283 €3,764
Change in Accounts Receivable €0 €0 €0
Change in Inventory
Change in Accounts Payable €27,727 €57,690 (€81,747)
Change in Income Tax Payable €29,084 (€58,168) €29,084
Change in Sales Tax Payable €34,304 €16,943 (€51,247)
Change in Prepaid Revenue
Net Cash Flow from Operations €295,507 (€669,860) (€425,068)
Investing & Financing
Assets Purchased or Sold (€14,808) (€14,808) (€14,808)
Investments Received
Change in Long-Term Debt
Change in Short-Term Debt €2,004 €1,304 €1,357
Dividends & Distributions
Net Cash Flow from Investing &
Financing
(€12,804) (€13,504) (€13,451)
Cash at Beginning of Period €0 €282,703 (€400,661)
Net Change in Cash €282,703 (€683,364) (€438,519)
Cash at End of Period €282,703 (€400,661) (€839,180)
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10 Conclusion
Horan Automation and Consulting is confident that we have completed extensive research to allow
us to make the correct strategic decisions to grow the business. We have researched the industry
and its growth sectors, the robotics industry, our customers, our suppliers and our own historical
sales. We are happy that our own customer demand has been an accurate reflection of that of the
market as a whole and if we continue to assess the market we will be able to target the right
customers. We will also be ahead of the curve in meeting customer needs.
Since embarking on our initial period of growth (2017/2018) our marketing manager has joined the
team and has already put a successful campaign in place that covers all of the elements of
Objective 3 (To create a marketing campaign for the business by May 2017). In the first two
months of her employment, the business has quoted for over €1 million in projects. This was a
joint collaboration between marketing and the fact that the MD Gerry Horan has begun to take one
to one sales meetings with potential clients. Historically, sales do not materialise for
approximately 6 months after quotations are presented to potential customers. However, this
shows positive growth since the marketing and sales changes were implemented.
Due to Gerry Horan stepping away from the engineering side of the business and concentrating
more on the sales and strategic management side, many changes are occurring in the
organisation. We have researched and identified a handful of suitable potential supply partners
form Europe and China and are working on reducing our costs. We are also engaging in
discussions with a business partner based in Canada about collaborating to target the European
market and a potential joining of our businesses in the next 3- 5 years.
We have potentially secured funding and free advice from Enterprise Ireland through Rikon which
will be used to ensure we take the best possible routes while making strategic business decisions.
Overall, much progress has been made in the organisation in the year 2017-2018 and with the
increased volume of meetings and external feedback so we are confident that we will reach our
sales targets for the coming 2 years.
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11 Appendix 1
Sales & Marketing Performance Chart
Jun-17
Sales Targets € Actual Sales €
Bespoke €29,167
Re-Selling of Machines €54,167
Servicing €560
Spare Parts €1,182
Consulting €0
€85,076
Comparison Figures
June 2016 Sales
Total Cumulative Sales Since
01/03/2017 €18,125
Quotations € Projects Target Date
Total Cumulative Quotes Since
01/03/2017 €1,464,985 Rora (1703) 07/08/2017
Number of Projects 19
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12 Appendix 2
Marketing Activity Calendars
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