Good 50mw Business Planning Gidado Resources Business Plan Example
Type of paper: Business Plan
Topic: Business, Market, Company, Energy, Products, Nigeria, Strategy, Solar Energy
Issue of Need
Issue of Need is a market condition, in which the need of the product of service will be furnished in a competitive market. It often referred as Market GAP, in which the investor or planner of a business would search the market for the opportunities particularly. The thing that has perfection in the overall marketability and selling of a product is known as Market Gap through the potentials in a given market would have been analyzed in such a manner that the entire effectiveness of the market analyzed.
Solar Power is now becoming a need of the countries because the stance of expensiveness is increasing related to the electricity and physical energy. Solar power is basically referred as the conversion of sunlight into electricity, either through direct transmissions or through the Photovoltaics (PV). Currently, there is a lacking of renewable energy factor in almost every part of the world that created numerous energy based crisis for the countries. Some of the major economies of the world like India, Pakistan, Bangladesh and others have severe energy crisis in their areas. Apart from these Asian economies, there are some African countries as well which are having problem in maintaining their energy sector accordingly that can provide a betterment and improvement services within the actions of the company.
Therefore, the needs of such plants are increasing which have the tendency to convert the beam of sun into the form of renewable energy sector. Nigeria, which is one of the powerful economies associated with the African sector, is still striving very hard to maintain their position in the market, and for that purpose it is more than necessary to overcome on the energy crisis. Therefore, two important points have been highlighted in this section for the need of a 50 Megawatt (MW) Power Plant in Greater, Yola, one of the major cities of the Nigerian region. One is to overcome on the energy crisis and the other one is to provide cheap energy solutions to the citizens as well as the industries working in this particular region. GIDADO RESOURCES has the intentions to evaluate the opportunities to deploy the solar electric power on their properties and facilities particularly. This particular action of GIDADO RESOURCES to employ the renewable energy effectiveness in the market will certainly help them out to promote effectiveness in their local communities and fostering the education within the renewable energy place.
Analysis of the Off-take
This particular section of the analysis is very important as it will analyze the stance of the company to sell their products to a specific market. After making the products and services for the end users, the next big thing that associated with a company is to search out the market and the potential customer to which they would like to sell their products.
The same thing can be applied over the working of GIDADO RESOURCES as well in which they are seeking advice to sell out their products in the market of Nigeria. The products which GIDADO RESOURCES is intending to launch and sell in the market is quite unique and it might happen that the company will not get the right type of buyers in the commencement of their operations in the market.
First of all the marketing and operational department has to play their part to make some powerful strategies from which they can attract the right amount of candidate that should be used for the selling of the products. GIDADO RESOURCES has to organize some programs in which all the energy based companies as well as the Government officials are requested to participate in these programs to promote the renewable energy in the market. It will be a perfect choice for the company to get the involvement of the Government in these scenarios, as the entire selling stance of GIDADO RESOURCES based upon the action of the Government. GIDADO RESOURCES has to demonstrate the government regarding the conversion ability of the plant. Even, the Government of Nigeria can become a major buyer of the products initiated by the company.
Selling the power in the Nigerian market, with an especial emphasize on the Greater Yola market is bit difficult, because of unfamiliarity with such technological products in the market. Citizens are not in the right mood and path to get a detailed idea about the selling of energy based products in the market, however with the collaboration of the Government, this particular issue can be overcome completely. Government will be very effective and powerful in this particular action, and can promote our products to the industries working in the country for the betterment of the Nigerian market in the near future. Apart from this, GIDADO RESOURCES has the option to make powerful campaigns to furnish the information and knowledge related to the needs of the solar energy products in the market to the general public through mobile vans and physically gets on their places to make them aware with these services and its core benefits.
Nigeria, with an official name of Federal Republic of Nigeria is a federal constitutional republic that consists on 36 different states with its Federal Capital Territory with the name of Abuja. Nigeria is located in the region of West Africa, and shares its border with the Republic of Benin in the West Chad and Cameroon. Nigeria is known as the Giant of Africa, because it has the fastest growing economies in the region of Nigeria.
In the financial year 2014, the Gross Domestic Product (GDP) of the Nigerian economy became the largest in the African region which was more than US$ 500 billion. It also overtook South Africa in the same year to emerge as the 21st largest economy of the world. One of the best things that associated with the economy of Nigeria is their oil reserves that played a major role within the incremental growth of the country. With the incremental functions of the country, the need of energy is also increasing.
GIDADO RESOURCES is willing to set their plant at the Greater Yola, Nigeria. Yola is known as the Capital city of one of the states of Nigeria. Yola is located in Adamawa State of Nigeria. Yola has a total population of 336,000 people with a perfect access point to the Nature Reserves, known as the largest national park of the country. The physical suitability of Greater Yola in terms of having a detailed and big power plant is perfect and organized, in which the company will convert the solar energy to physical energy source.
Most of the part of Greater Yola, Nigeria covered with dessert and it is very suitable for GIDADO RESOURCES to maintain their operations. It is observed that the areas wherein the lesser greenery is there, the beam of sunlight would be found heavily. Greater Yola is a dry place wherein the normal temperature is bit hotter than other areas of Nigeria. Therefore, it is known as the best place to have the plant in this particular area. Apart from the great physical suitability, the access towards the natural resources is very easy to have in this particular region. The state in which Greater Yola exist is located near the resource based functionalities of the company which will be essential for them in the near future. In terms of land ownership, GIDADO RESOURCES has to talk to the Government of Nigeria, and they will certainly offer a great return to them in this particular provision. Land ownership is necessary in this provision, and the company has to look over this thing comprehensively.
Environmental Regulatory Issues
As discussed above that the Nigerian country is now becoming the most effective economies of the region of Africa, therefore, it is very important for them to make their environment very health for their citizens. The Government of Nigeria is very eager to overcome on the issues of Carbon Emission and the Toxics associated with the country. There are certain regulatory issues which are associated with the companies which are intending to have their recognition in the market.
GIDADO RESOURCES is operating in the Energy based sector which may be a major reason behind the carbon emission within the society and make the environment polluted. Therefore, it is very essential for GIDADO RESOURCES to comply with the regulations and standards made and implicated by the National Environmental Standards of Regulations: Enforcement Agency (NESREA) Act. Apart from that, the Land Use Act and Harmful Wastage Act are some of the major legislative acts which the company has to comply accordingly for their existence and effectiveness in the market in the near future.
After complying with the aforementioned standards, the probability of having any environmental issue is very rare, however the Government officials are required to have a fruitful audit every a certain time period to apprise the company regarding any lacking that may endanger the life of the individuals of the country. GIDADO RESOURCES has a perfect legal team under their nose which will certainly play their part to overcome on all the issues that may arise during their operations within the region.
Strategic Planning is the most important types of planning that associated with an organization to form their core effectiveness in the market. Strategic Planning is one of the most powerful elements of the managerial function that employs by an organization to strengthen its core services and actions. Likewise other companies, this particular aspect is equally applicable on GIDADO RESOURCES as well. There are three different tools which will be taken into consideration for this particular action which are SWOT Analysis, Porter’s Five Forces Analysis and Marketing Mix Analysis.
SWOT Analysis is known as one of the most powerful and incredible strategic management tool that used to identify the strengths, weaknesses, opportunities and threats of a company. Generally, it is applied over the new companies, which are strategizing to enter in a new region and flourish the market perfectly.
The concept that introduced by GIDADO RESOURCES is unique and very important for the economies; therefore it will certainly increase its effectiveness in the market. The concept is unique and powerful, and the management can attract different players towards the products of the company comprehensively.
GIDADO RESOURCES has a perfect and intelligent workforce on their head, which is more than important for a company to maintain a significant position in a market. With the help of powerful and effective strategies, GIDADO RESOURCES can place their organization in an organized and effective manner
Great Physical Suitability
Truncated Brand Image
GIDADO RESOURCES is a new company that enters in the Nigerian market with such a big objective, and it requires some time to them to capture the market of Nigeria. In the commencement of the operations, the brand image of company would be shaky, however it will gain powerful pace with the passage of time.
Nature of Work in Complex
Though GIDADO RESOURCES is providing valuable and unique product and services in the market, however their nature of work is still very complex and sophisticated, that even the employees of the company are unable to get it instantaneously. Therefore, the upper management has to make sure that proper arrangement of training and development is there to make sure that the employees are going in the right way.
Energy Demand Increases in the Region
The demand of energy is increasing exceptionally well in the Nigerian region with the incremental economic development and civilization. The growth in the energy sector of Nigeria has been envisaged from the year 2006, and it will gain robustness till the end of 2030. Hence, there are enough rooms are available for GIDADO RESOURCES to strengthen their functions in the market.
High proportion of Energy to Gross Domestic Product (GDP)
The ratio of energy utilization to GDP of Nigeria is increasing in both households as well as the Industries located in the region, which will certainly place its effectiveness for the GIDADO RESOURCES to increase its growth.
The level of regulations associated with the energy sector of Nigeria is very strict and high, and GIDADO RESOURCES has to comply with these standards in order to maintain its competitive position in the market for a definite period of time. The legal department of GIDADO RESOURCES has played its role to comply with the standards and rules made and implemented by the Nigerian Energy based authority for the Renewable energy companies.
High operational cost
Having a 50MW Plant that converts the solar energy to renewable energy is very expensive, and it will have a direct impact over the operational cost of the company. However, the amount of benefits would be highly effective on the operational cost.
Porter’s Five Forces Analysis
Porter’s Five Forces Analysis is yet another important strategic management tool used to assess the level of effectiveness of a company to exist in a new market. The porter’s five forces analysis is maintained their effectiveness on five different elements which are as follows
Rivalry Among the competitors (Low)
Nigerian market is an emerging market wherein the stance of competition among the industries is on a lower level which is a positive sign for them. Likewise other sectors, the level of competition within the market of Nigeria is on a lower scale, which will increase the level of economic opportunities for GIDADO RESOURCES to have a high market share in the market. The government will be in the favor of the company in terms of competing with its major competitors, because they are very eager to push the economic button of Nigeria and see it in the list of fastest growing economies.
Bargaining Power of Consumers (Low)
Because of the low competition in the market, the level of bargaining power of the consumers is also on a lower scale, because the customers don’t have enough options available from which they can get advantage or take the products. Therefore, it will not be a problem for GIDADO RESOURCES to decreasing their prices in the market.
Bargaining Power of Suppliers (High)
Because of low availability of identical companies in the market, the power of the suppliers of products that may assist the 50MW Plan is also high. The suppliers have their own conditions and agreement on which they will sell out their products, therefore GIDADO RESOURCES has to find a perfect supplier of the product to maintain their competitiveness.
Threats of New Entrants
Barriers to Entry (high)
Barriers to entry in this particular market is very high, which lies in the favor of the company, because the amount of the companies that about to enter in this region will be very low due to these barriers
Barriers to Exit (high)
Likewise barriers to entry, the barriers pertain to exit from the industry is also very high and deemed as a problem for the company to maintain their significance in the market. There are pre-requisites and number of regulations which have to comply by the companies before physically expel from the industry.
Threats of Substitute Product (Low)
The level of substitute electric energy product is low, and it will not hurt the company in the future.
Marketing Mix Analysis
Marketing Mix is an important tool that used by the new companies to have their marketing actions for their core effectiveness.
Product Strategy (ANALYZER)
The product strategy which GIDADO RESOURCES is intending to use during the initial years of their operations will be ANALYZER, through which the company has the options to analyze different opportunities found in the market during their operations. The main reason behind selecting this particular product strategy is simple, as continuous research and development is very important in the field of renewable energy, therefore GIDADO RESOURCES has to make sure that they operates with the same strategic behavior in the market.
Pricing Strategy (PREMIUM)
Without any doubt, pricing strategy is the most important and powerful strategy that associated specifically with an organization, as without effective and powerful strategy, no organization can have their competitive position. Customers only prefer those products which are affordable to them. GIDADO RESOURCES has unique products in their hand; therefore the pricing strategy which the company is intending to apply in this particular scenario will be PREMIUM, in which the company will charge highest price for their products. The products which GIDADO RESOURCES is selling in the Nigerian region are very powerful and unique, and it will certainly sell out completely. The company will operate with high operational cost, thus it is necessary for them to have the same pricing strategy in the market.
Place Strategy (OFFLINE)
The place strategy which GIDADO RESOURCES is strategizing to adopt for the execution of their operations will be Offline, in which the company will offer the products to their consumers directly with Zero Level Channel.
Promotional Strategy (PULL)
The promotional strategy which GIDADO RESOURCES is intending to use in the initial years of their operations will be PULL, in which the company will use both electronic and paper medium strategies for their execution in the market. The company has to contact with the government officials before physically promote their products on the electronic media, because of having some regulations in the market.
The current era has been referred as the era of technology and industrialization in which the companies are getting a perfect time during their execution. GIDADO RESOURCES has to talk to the government of Nigeria to provide them with the latest technology that will help out the company to maintain its name in the market from the commencement of the operations.
All the forecasting and analysis is in US$
Income Statement-5 Years
Income statement is an important part of the financial report, in which the entire analysis of Income will be analyzed accordingly. It is analyzed with total amount of revenue generated in a financial year, along with the information related to operating expenses. The income statement for the next 5 years of the company is as follows
Balance Sheet is the second most important item or element that found in the financial statement of an organization. It has the information of the total operational assets and liabilities of a company. The balance sheet of GIDADO RESOURCES for the next five years of its operations is as follows
The amount of liabilities as mentioned in the above mentioned analysis is very high; however the company has the ability to overcome all the expenses completely with the help of taking powerful and effective strategies into the consideration. Asset turnover of the company is also higher than the level of 30%, showing that the company is able to generate substantial amount of earning from their operational assets particularly.
Cash Flow Analysis
Apart from the balance sheet and the income statement, there is yet another important aspect that associated specifically with the cash flow statement. It is yet another important statement that deals with the cash inflow and cash outflow of a company. The cash flow for the next five years is as follows
The net cash balance of the company is in the positive node, which will be essential for them
Return on Investment and Payback Analysis
The total amount of loan which the company will borrow from the bank will be $ 2,500,000 with discount rate of 10%. The ROI and Payback of the Project is as follows