CHIDIMMA ONYEOKORO PAVITHRA GOPAL YARIK GOLUBENKO

PYC GLOBAL SERVICES

STRATEGY RECOMMENDATIONSMANAGEMENT CONSULTING

PYC Global Services

Executive Summary

Globalization is an irreversible trend. And so it should be – it drives international

specialization and accelerates the efficient international division of labor. However, the rules of the

game are changing constantly and companies have to regularly redefine their core competencies.

Reliable outsourcing partners help companies do exactly that. They allow companies to focus on

what they do best as they tap into new and changing markets. Market expansion service providers

offer a holistic, integrated and customized package of services that helps companies break into new

markets while improving their penetrations and performance in existing ones. Expanding companies

especially on an international scale use MES providers to help deal with peculiarities of local

regulatory and legal systems, to tackle cultural difference, to access local customers and to improve

their knowledge of new markets rife with fierce competition. Today, true growth potential is to be

found in the emerging economies. The fast-growing middle classes in particular fuel this growth.

Companies seeking growth and new outlets, however, need to understand how those markets can be

targeted. That expertise is the core competency of a market expansion services specialist. By

delivering highly customized, end-to-end integrated services, market expansion services providers

can generate new impetus for their clients by reshaping their business operations in a new and

unique manner.

In today’s competitive global market place, organizations are increasingly under pressure to

control operating cost against a backdrop of rising costs and constant pressure from customers to

reduce price. International Procurement Services find cost effective delivery solutions to meet

production needs, customer requirements, and business objectives of the client company. Our

company seeks to effectively combine the strength of the above mentioned services to meet the ever

growing needs of companies expanding on an international scale in Germany, Nigeria, India and the

United States.

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Venture Description

PYC Global Service is an international procurement and market expansion service that would

be based in India, Nigeria and Germany. In order to add optimal value to its clients PYC Global Service

would have 2 divisions: PYC International Expansion service & PYC International Procurement Service.

PYC International Expansion Service: This division would cater to companies that are expanding into

India, Germany and Nigeria. PYC would provide value proposition far outstripping those of traditional

outsourcing partners. PYC would occupy the premium position in the outsourcing landscape by

reducing cost and improving revenue at the same time. Companies often do not have the internal

skill or resources to manage all the challenges of international expansion. PYC would partner with

local service providers that would organize and run the expanding company’s entire value chain,

providing integrated front-end processes in marketing and sales, logistics and distribution, as well as

customer service and support. Unlike other market expansion services, PYC intends to add additional

value to its client by providing employee relocation and integration support.

PYC International Procurement Service: This division would cater to local businesses in these

countries that require production materials that cannot be sourced locally and international

businesses looking to source products from PYC’s base country. PYC would help organizations

overcome the challenges and risks associated with the sourcing internationally through its end-to-

end procurement service capability. PYC’s team would aim to deliver sustainable value to customers

through achieving the lowest total acquisition cost via network of suppliers and by aggregating

throughout the supply chain. Most procurement companies focus on a particular industry but PYC

intends to procure cost effective products based solely on the needs of its clientele. Asia offers vast

opportunities to source virtually any product a customer may require with significant cost

differentials. However, the legal, political and economic environment, along with communication

barriers, cultural differences and sheer distance from other continents all combine to make sourcing

a significant challenge. With headquarter office in India, a virtual office in Chicago and Germany and

a physical office in Nigeria, PYC would help organizations overcome this challenges and risks. PYC

would provide an end to end procurement service with sourcing capability that extends across Asia,

West Africa and Europe.

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Market Analysis

Potential in Germany:

One of the first markets our company will target is Europe. Most European Countries belong

to European Union. On the official EU website we found a lot of useful information which can be used

as a very helpful tool in creating a business plan for that particular market. “Operating as a single

market, the EU is a major world trading power. The EU is seeking to sustain economic growth by

investing in transport, energy and research – while minimizing the impact of further economic

development on the environment.” (http://europa.eu). This quote from the site resembles mission

statement regarding economic growth of the region. There are a couple of valuable points we can

extract from it. Fist, because EU operates as a single market, getting access to it would mean free

access to 27 countries which are currently members of EU. These 27 countries are not a limit since

more countries are planning on joining EU in the future (i.e. Iceland, Turkey, Serbia, Macedonia, and

some eastern European countries). Potential is huge, and it is there. Another point we could relate is

that EU is not slowing down in growth, it is constantly looking into investing into a different areas of

its economy. When investment are coming in, because of the globalization effect, more and more

qualified workforce coming from outside of the country/region to work on certain projects. Having

projects led by native residents and at the same time building international teams to create state of

art solutions is a great benefit to our business. It is a great benefit for us because each person who is

going on the assignment to a different country is our potential client. Based on the 2010 data, GDP

was bigger than of the US (around $12.5 million). Obviously, this is only average number per capita.

Some countries have much stronger economy than other. As for example, Germany has one of the

strongest economies in the EU, but at the same time Greece and Spain are struggling.

The following is noted on the website regarding trade: “With just 7% of the world’s

population, the EU's trade with the rest of the world accounts for around 20% of global exports and

imports. The EU is the world’s biggest exporter and the second-biggest importer. The United States is

the EU’s most important trading partner, followed by China. In 2005, the EU accounted for 18.1% of

world exports and 18.9% of imports.” We see opportunities in this sector too. When a relationship

between two partners is being set up, as a rule, they meet face to face one or more times. And here

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is when our company comes into play. A number of business trips needs to be done when having a

serious partnership. Any person going on such trip is again, our potential customer.

In European Union most people have service jobs. It has significantly shifted with time from

agricultural jobs. This fact also is a positive sign for our business. People working in service sector are

more likely to travel to another country. Well-developed infrastructure would also play a significant

role when looking into expansion of our business. “Europe 2020” is a growth strategy for the next 8

years. Some steps will have significant amount of money invested in them and will require

international collaboration that will lead to increase of business travels.

Based on the statistics, average cost to send US expatriate to European country is $60, 000.

(OB Management Lecture). With increasing amount of short-term and long-term international

assignments between US and Europe, we see a great opportunity in entering the business. With our

organization, companies will be able to decrease their cost and be sure that their employees will

reach their destination safe and sound and will settle in the area in no time.

In terms of outbound expatriation, as of 2009, the United Kingdom had the highest number of

expatriates among OECD countries with more than three million British living abroad, followed by

Germany and Italy ("Expatriates worldwide" JustLanded.com. 2009). Based on this data, we have

decided to concentrate on Germany as on country of entrance into European Union. You would

object saying that UK had the highest number of expatriates. We are not just looking at this statistics.

One of the deciding factors was location. Germany located in the heart of Europe. Most of the

European countries are just hours away. The office located in Germany could service all of the EU

countries in the beginning. Another reason why we chose Germany was its strong economy. Out of

the world fortune 500 companies 37 are headquartered in Germany (CNN Money, Retrieved 14

October 2012). Some of the largest and well-known companies are Aldi, Adidas and Puma, SAP,

Porsche, BMW, Mercedes, Audi, Bosch, Nivea and other. These are our potential customers.

Since Germany would be our country of choice in Europe. We would like to take a closer look

at the economy. It is worth mentioning that German economy is the fourth biggest national economy

in the world. As it is noted in the investgermany.com: In the post-world War Two era Germany went

through extensive structural and financial changes. These included a rebuilding of the economy

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through enhanced industrial efforts, professional training, and bringing the industrial and financial

sectors closer together. These steps were all aimed at one mean: Creating a steady, prosperous

economy. Since the reunification the German Model was put in question, as if failed to provide

sufficient answers to the enhanced strain on the economy. Many economists in Germany today are

supporting adaptation of the model to accumulate drastic changes and modifications.” The economy

was built by the new model to be strong. Even though it has already been built, it is constantly

improving and changing. German market has highly stable economic environment which decreases a

number of risks related with opening business in the country.

Overall, based on the information above, we believe that Germany is a perfect country to

base one of our offices in. Having such strong economy and perfect location, Germany plays a key

role in European Union. Being the largest economy in Europe eliminates any possibility of getting

separated from the EU.

Potential in Nigeria:

The growth and relative stability of the Nigerian economy over the past years has

importantly contributed to the expansion of the country’s middle class and to the attraction for

foreign investors. As the most populous country in Africa with close to 160 million habitants, the

7.85% GDP growth reported in 2010 and the equally favorable estimate for 2011 (Morgan Stanley

projects a 8.4% growth to reach US$ 268 billion, compared to US$ 46 billion 10 years ago), as well as

the important jump of income per-capita (from US$ 390 in 2001 to US$ 1,541 in 2011) reflect the

relevance of the growth and potential development of Nigeria’s foreign investment sector. In this

context, the pool of middle-class citizens has expanded to 37 million according to Renaissance

Capital, and has created an additional source of demand for international products. The disposable

income of this emerging middle-class, generally educated and ambitious, is considered crucial to

continue pushing the Nigerian economy forward, not only through its impact on the local retail

sector, but also on other sectors of the economy like banking and finance, tourism and

telecommunications.

On the other hand, investment conditions, interpreted as transparency measures,

favorable economic climate and appropriate regulation/taxation are also playing an important role in

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the development of Nigeria’s international business sector. The liberalization of the economy, the

privatization of public entities, and the limited governmental intervention, have all contributed to the

inflow of foreign capitals to the sector. For example, in 2005, $150M was set aside to improve the

airports and new minimum capital requirements of airline companies were set to improve standards;

thus Virgin Airlines, a privately owned international airline was launched to replace the defunct

Nigeria Airways. In the telecommunications sector, state controlled Nitel was privatized and two new

mobile telephony licenses were issued. As a result, subscriptions rose from 450,000 in 2001 to

24.4million in 2006. The 2003 blockage on a wide array of imported goods that included clothes,

shoes, selected foodstuffs, among others, and intended to stimulate local production (promoting, on

the contrary, illegal and cheap low-quality imports), has been progressively, but not completely,

reverted, facilitating the insertion of international brands and products, very much welcomed by the

Nigerian public. The financial services cluster has benefited from recent reforms and from increasing

FDI into Nigerian financial institution. Nigerian banks’ assets and deposits are rising at about 30% pa,

and these locally owned banks are expanding internationally. The government is currently devising

means to facilitate the expansion of the banking footprint beyond the middle class and into other

countries. Consequently, not only are international businesses expanding into the Nigerian terrain,

locally owned businesses are beginning to expand outside the shores of the country. Research done

by the Business Competitiveness Index Study indicates that there are a critical number of local

suppliers in supporting industries to all the sectors in Nigeria but the quality of service is still low thus

companies are seeking to procure these products and services from their international counterparts.

Potential in India:

India has been one of the best performers in the world economy in recent years. Indian

economy has grown by more than 9% for the three years running and has witnessed a decade of 7%

positive growth. The Economy of India is currently ninth largest in the world by nominal GDP and the

third largest by purchasing power parity (PPP). After the advent of 21st century, the performance of

service sector has been particularly significant. The growth rate of service sector was 11.18% in 2007

and now it accounts 53% to GDP. The main reason for this tremendous achievement is India’s large

number of English Speaking skilled manpower which has made India a major exporter of

procurement services and software workers. For 2011 calendar year, the FDI is expected to be more

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than 30 billion US Dollars (a continuous rise) confirming the interest and promise India holds and

delivers. While these numbers may be small in absolute sense compared to some other economies,

the trends indicate a strong positive bias

The expansion plans of some of the global companies indicate their confidence in future

based on their past success in India. It also indicates that they have adjusted to the business

environment and operations in India very fairly & easily and are gaming to play this at a larger scale.

They have progressed on the learning curve quite rapidly and feel well entrenched to capitalize on

the strong base they have built up. Almost all the major companies like Coca-Cola, Pepsico, Nestle,

Siemens, ABB, GM, Honda, Toyota, Samsung, Vodafone, Intel, AMD and many more have recently

expanded or are planning to expand their operations in India.

In addition to this market potential, consolidating a production unit or a back office in India

grants access to low-cost base to produce or outsource parts and services to compete in current

markets and a large pool of talented professionals and skilled/unskilled labor with whom to develop

a sustainable competitive edge.

In a technical sense, the emerging-market companies have also sought to climb the value

chain with new products, services and brands. The most successful emerging markets in India are no

longer about low-cost manufacturing, but about competing with the west on level terms. Having no

foreign direct investment restriction, the retailers are allowed to sell products to professional users,

caterers, institutional buyers and other businesses. There is understanding and appreciation of the

factors that impact policy making, particularly in India's vibrant democracy. There are a number of

factors supportive of growth, with the catch-up potential for the economy, in a period of rapid

globalization, particularly strong. The underdeveloped trade sector, alongside low income levels and

labor costs, as well as India’s competitive edge in tradable services will be key sectors for the rapid

international business expansion.

India also enjoys favorable demographics, especially compared with China and other

countries in Asia. The growth in Working-age population is likely to slow but only very gradually over

the next decade, still remaining at above 1.5 per cent per annum even by the end of the forecast

horizon. There seems to be greater demand for supply and procurement resulting in complex

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processes and production cycles. Taking a cue from global companies, industries in India are investing

heavily in ‘Procure to Pay’ (P2P) solutions. The growing popularity of e-procurement and e-options

has resulted in these applications being implemented in Government agencies, FMCG, manufacturing

and retail chains in India.

India is one of the few economies to have weathered the recent global financial crisis and it

GDP is growing and will continue to grow in excess of 8 percent per year. Keeping the above in

perspective, it would be ideal to launch our office in India thus reducing the possibility of risks

involved in opening the business in the country.

TARGET MARKET

Multinationals: A Multinational corporation is a corporation that is registered in more than one

country or that has operations in more than one country. Multinationals are well positioned to enter

new markets and to exploit existing ones. These companies have international reach, in-house

expertise and resources, and often a robust enough balance sheet to withstand substantial risk.

Much of what MES offers today would traditionally have been categorized as part of a multinational’s

core competency. Nevertheless, even multinationals are turning to MES and IPS to take advantage of

their superior local networks, sourcing skills and knowledge, exploiting then to break down barriers

of entry into new markets or grow and source for production needs in existing ones. The companies

have noticed that using MES and IPS provider’s acquisition, distribution, relocation, sales and

marketing networks is cheaper, quicker and more effective than building their own

(www.marketexpansion.com). Thus this is a primary target for PYC Global Service.

Small and Medium-Sized Enterprises: Small and medium-sized enterprises (SMEs) often have the

same reasons as multinationals for turning to MES and IPS. However for many of these companies,

the support is far more vital. For a smaller company, entering and sourcing from new markets can be

all but unattainable because of lack of market knowledge, experience and resources. Therefore,

these small and medium-sized companies would need PYC’s broad range of market expansion and

procurement service providers which would reduce risk and overhead cost due to lack of knowledge

and experience; thereby allowing these small medium companies tap into potential customers and

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products that would be otherwise out of reach. Thus this segment is another great target for PYC

Global Service.

Healthcare and Consumer Goods Companies: Despite the seeming ubiquity of global brands from

Coca-Cola to Pampers, the consumer goods market remains highly fragmented and locally driven

(www.marketexpansion.com) . Thus it presents great challenges for companies attempting to access

eager new customers in fast-growing but widespread markets. From marketing to after-sales,

employee relocations, real estate acquisition, PYC would help these consumer goods companies

overcome these challenges and harness the opportunities created by India, Germany and Nigeria’s

growing middle class and its increased appetite for luxury goods and Western products. Together

with healthcare, consumer goods accounted for almost 85% of the global Market Expansion market

in 2010 according to Roland Berger analysis. In the same analysis, the penetration of MES and IPS in

healthcare is found to be particularly high, with almost half the healthcare industry (44%) relying on

these services, especially for sales, distribution and logistics. This high penetration rate is mainly

because these areas lie outside the core competencies of the healthcare companies, and bundling

sales and distribution allows them to leverage economies of scale in the industry’s highly fragmented

market. Moreover, these companies realize that partnering with companies that offer MES and IPS

allows them to launch new medicines more quickly, enabling them to benefit longer from the

precious patent lifetime. Europe remains by far the largest expansion and procurement service

market for healthcare products (www.marketexpansion.com).

Engineered Products and Specialty Chemical Companies: As competition eats away at their margins,

manufactures are turning to the expertise of expansion and procurement services to reverse this

trend. To sell engineered products, companies must understand the local market and be able to gain

access to a customer’s top management level, where purchasing decisions on such valuable items are

generally made. Meanwhile the increasingly important after-sales sector lends itself particularly well

to collaboration between MES and IPS providers and engineering firms. Engineered products and

specialty chemicals represent about 15% of the global MES and IPS market according to Roland

Berger analysis. For engineered products, emerging markets like India and Nigeria account for two

thirds of the expansion services market. Specialty chemicals, which have an MES penetration rate of

about 10%, are often sold in low volume and at high prices according to the same analysis. Such

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companies rely on MES and IPS providers for their capillary networks and for specialized services,

such as testing, formulation, product innovation and applications support.

STRATEGIC RECOMMENDATION

IT/DESIGN & ENGINEERING

In this area, in addition to a public website PYC’s strategy is to make communication between

us and suppliers; and our company and the client company easier by utilizing an intranet and

extranet system. PYC’s intranet system would use Internet Protocol Technology (IPT) to share

information, operating systems and computing services within the company and outside suppliers.

The well known internet protocols will be found on this intranet system such as HTTP (web services),

SMTP (e-mail), and FTP (file transfer protocol). The objective of this intranet system is to get

information to all parties involved with minimal cost, time thus making PYC more competitive. Part

of this intranet system would be made available to the customer which would be the extranet

system. This system would extend the private network onto the internet with special provisions for

authentication, authorization and accounting (AAA protocol).

Process:-

The potential client is given access to the extranet system, when they can key in their IPS or

MES needs.

A PYC team member gets this information, contacts the client directly to discuss further and

ascertain if any more needs can be met

The PYC team member sends this information out through the intranet system to registered

suppliers with corresponding services to meet these needs.

A proposal from each supplier is sent back to PYC through the intranet system

The PYC team puts together a contract with the list of services and cost with the above

information, and passes it on to the client through the extranet system

Once contract is agreed upon, there would be constant communication between team

member and client via phone, face-to-face and extranet system and client can view update

and progress of the project via this system as well

Why Intranet and Extranet System?

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Cost-Effective- The authorized users would be able to view information and data via the web-browser

rather than maintaining physical documents which would save PYC money on printing, duplicating,

document maintenance overhead and phone communication cost. The use of the HRM Company

PeopleSoft would be more cost effective than a traditional HR system.

Time Effective- This system would allow the efficient flow of information between the PYC team,

suppliers and client thus bringing about a timely response to the client’s needs which would be PYC’s

competitive edge.

International Communication- From a communication standpoint, these systems are useful to

communicate strategic initiatives that have a global throughout the company, since PYC would serve

4 continents, this would be supremely beneficial.

MARKETING ANALYSIS

In this start-up phase it is a central task of the marketing concept to establish a name

recognition and own trade mark. Later on the strategy will primarily be targeted to gain new

customers and create customer loyalty of repeat customers. PYC’s Marketing Strategy would be to

launch an integrated marketing campaign in all the four countries, and leverage the connections the

current team members have in Germany, India and Nigeria through word of mouth and referrals with

the help of an incentive system.

Printed Advertisement & Direct Mailing- Printed advertisements in international newspapers and

magazines would be beneficial to PYC’s campaign to create awareness to potential customers and

draw attention to the range of products and services offered. 49% of businesses in the MES and IPS

industry use printed advertisements and 60% of this group regard this as the most beneficial form of

marketing (www.docstoc.com). Direct mailing is also a very effective strategy that sends out

proposals to target consumers. Since spreading cost of such mailing are very low, this marketing

element provides a useful tool for special offer promotions.

Sales Promotion Strategy- PYC would offer special discounts that would range from 30-50%

depending on the size of the project at the opening of the company. Though sales promotion

strategies have only a temporary effect; this strategy would give an incentive for potential clients to

work with PYC thereby creating awareness and increasing it by word of mouth referrals. PYC will

utilize a combination of printed advertisements, direct mailing and special offers for 4-6 months to

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acquire new customers after which efforts will turn towards creating a customer loyalty for regular

customers.

Marketing Alliance with Supplier Companies- Marketing alliance with supplier companies would be a

cost effective and efficient way to promote PYC services. This strategy would include mutual use of

marketing and web promotion events and joint promotion arrangements.

Leveraging Current Connections- PYC will have a Pre-Launch event in each of its countries which will

be attended by its current business contact/connections to create awareness through a virtual tour

of PYC’s products and services and to possibly have an optimal contact to client conversion rate. To

encourage word-of –mouth referrals by these contacts, PYC would implement a loyalty referral

program where PYC would offer significant discount on services for clients that refer potential clients.

SERVICES & PACKAGES

In order for PYC to be competitive and add value to its clients thus maintaining customer

loyalty, PYC has devised a service strategy that would robustly meet its target customer’s expansion

and procurement needs. To achieve this PYC would leverage its current connections and conduct

additional research to find optimal suppliers that would meet this need of PYC’s clientele. These

suppliers would be considered top in their field with significant years of experience and proven

excellence. Then PYC would act as liaison between its clients and these suppliers. PYC’s service

process includes:-

Strategic Sourcing- PYC would optimize product procurement and market expansion service offering

to achieve client objective by leveraging highly knowledgeable suppliers assigned to specific

categories.

Contraction Management- PYC contract professionals would support the full scope of pre-award and

post-award contracting activities with product and service suppliers through its Intranet and

Extranet system

Material/ Service Management & Logistics- PYC team would support execution of product quality,

delivery and expansion services by managing the quality and timely delivery of procurement products

and expansion services. PYC team’s knowledge of export laws would promote excellence in

international project execution.

Client After-Service Recommendations- PYC’s strategy in this phase is to have its supplier make

intelligent and timely recommendations based on long-term service contract, material demand and

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pricing trends. This would improvement efficiency for the client and would also aid the client them in

making long term cost projections.

PYC SUPPLIER SERVICES:-

Procurement- Product Suppliers, Export Shipping Agent (ACL Grimaldi); Customs Clearing Agent (U.S,

Nigeria, India & Germany); Local Door-to-Door Delivery Agents

Market Expansion- Legal, Marketing, Sales, Warehouse and Logistics, Distributor Services, Real Estate

Acquisition & Rental Agents (both for Client Company and its employees), Culture Education,

Language Education, School Admissions ( for children of relocating employees), Immigration

Compliance Agents, Local transportation, Local Travel Agents

Pricing & Packages:

Packages will be customized solely contingent on client needs. PYC’s pricing strategy would be

competitive. PYC plans to negotiate a discounted rate with its suppliers for its clients to give the

clients an incentive to work through PYC to get these services for its procurement and market

expansion needs. PYC would also have a service charge of 3-5% of total cost of procured good or

expansion budget depending on the extent of PYC’s involvement in the project. This charge is highly

competitive as the industry average is 5-7%.

FINANCIAL ANALYSIS

A sound financial strategy is a key factor for success of PYC Global Service. PYC’s financial

strategy goal is to insure that the business is always liquid, keep operational cost low and remain

ultimately profitable. Since PYC’s would act mainly as a liaison with no in-house service, initial

operational cost would be relatively low. Based on 20 businesses in this industry, the initial capital

investment is estimated to be $45, 000 to $50,000, based on procurement volume and market

expansion budget of $5,000,000 and fees of $150,000 to $250,000 (www.docstoc.com). Depending

on the initial investment sum cost and revenue estimates vary. During the initial launch of services,

costs decrease relative to sales at an initial investment of $50,000. This effect is due to the better

utilization of capacities in personnel at rising revenues at constant cost. If capacity is fully utilized

additional personnel could be recruited for PYC. According industry historical data, at service revenue

levels between $1,000,000 and $2,000,000, cost increase by the factor 1.85. PYC would take this

relationship into account when planning a gradual expansion strategy.

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PYC Earnings EstimateYear 1 Year 2 Year 3

Service Fees 220,000 260,000 350,000

Marketing Cost 40,000 50,000 70,000

Gross Profit I 180,000 210,000 280,000

Employee Costs 100,000 100,000 120,000

Gross Profit II

Operational Costs

80,000 110,000 160,000

Rent 20,000 25,000 25,000

Additional Rent Cost 4000 4000 4000

Computer Equipment 5000 5000 5000

Software Licenses 5000 5000 5000

Leasing

Tax

Insurance

Account & TaxConsulting

4000

7000

1000

6000

4000

10,000

1000

6500

4000

20,000

1000

6500

Profit/Loss 28,000 39,500 89,500

Source: Estimates were based on industry cost and earning averages

COMPETITORS ANALYSIS

PYC Global Service combines International Procurement and Market Expansion Services

together to gives its clients the added value of convenience. Thus PYC has no direct competitors in

the markets that it is located because most companies in this industry in countries focus on either

International Procurement or Market Expansion Service. PYC biggest indirect competitor is a market

expansion service provider called DKSH.

DKSH Market Expansion Service- DHSK offers an array of market expansion services that include

sourcing, marketing & sales, distribution & logistics and after sales services to companies across Asia

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Pacific. DHSK offers comprehensive market coverage in Australia, China, Hong Kong, Japan, Korea,

Laos, Malaysia, Myanmar, Singapore, Taiwan, Thailand and Vietnam.

SOURCING- DKSH has access to a wide range of markets in Asia thus can source forany products

needed during the market expansion process.

MARKETING & SALES- DKSH offers a complete array of marketing and sales services for consumer

goods, luxury and lifestyle products, healthcare products, performance materials and technology

products. From the largest international hypermarkets to the smallest mom-and-pop or sundry

stores, DKSH provides comprehensive marketing and sales coverage of consumer products outlets in

Asia. The company also boasts 3,000 strong sales and marketing team in South East Asia and Greater

China’s healthcare markets.

DISTRIBUTION & LOGISTICS- DKSH’s comprehensive scope of services to address business needs

include:- storage (ambient, cold, chilled, frozen, and bonded), inventory management, pick and pack

(full pallet, cartons and loose pick), reverse logistics, third-party logistics, co-packing, and contract

warehouse management.

AFTER SALES SERVICES- DKSH offers a broad range of after-sales services and support to ensure top

quality standards and fast problem resolution. DKSH’s team members provide customer service,

repairs and maintenance, on-the-spot training, and know-how transfer, offering added value to

suppliers and customers alike.

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SWOT ANALYSIS:

PYC GLOBAL SERVICES COMPETITVE ADVANTAGE

PYC would serve companies that are expanding into United States, Nigeria, Germany and

India, thus PYC would serve the needs of expanding companies in 4 different continents.

PYC’s acquisition of products for its procurement services is global and not limited to just 1

continent like DKSH.

PYC would offer MES and IPS services to its target consumers in a wide range of industries not

just consumer goods, luxury and lifestyle products, healthcare products, performance

materials and technology products

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Strengths1. Industry expertise and strong presence in Asia

2. Strongest Market Expansion Service in Asia Pacific

3. Offers a comprehensive robust array of services i.e. sourcing, marketing & sales, distribution &

sales, after sales service4. Has in house sales & marketing and logistics

services

Weakness1. Company only services businesses in Asia2. Offers services only to accomodate client

company's expansion by outsourcing 3. Company only offers procurement services to

its expanding client companies4. Limits its procurement capabilities by focusing

solely on Asia

Oppurtunities1. With its current capacity DKSH can expand into

markets in other continents2. Offer procurement service not just to companies

that require market expansion services3. Offer its service to companies in more industries

not just consumer goods, luxury and lifestyle products, healthcare products, performance

materials and technology products

Threats1. Companies that provide MES services to clients

in more than 1 continent2. Outsourcing virtual services in Asia which have

been proven to be more cost effective.

PYC’s pricing strategy is competitive compared to other businesses in the same industry. This

competitive pricing is made possible by the economies of scale PYC derives from it wide range

of service options.

PYC’s current team members already boasts vast business connections and relevant contacts

in the public and private sectors in Germany, India and Nigeria, thus providing the company

with the solid foundation and reducing the barrier to entry, expansion and success.

A PYC team member already owns a successful IPS company that serves companies in West

Africa and United Kingdom, with procurement sourcing abilities that is global. Synergy with

this existing IPS Company would bring about rapid future company expansion.

PYC’s service strategy not only meets the needs of the company but also its employees as

well.

RISK ANALYSIS

This risk analysis will consider critical factors that may lead to the failure of PYC Global

Service.

Insufficient Demand- This is the most frequent reason that leads to business failure. This includes

permanently low demand as well as temporary collapse in demand. Such failures might come from

external shocks instead of operating deficiencies. 19% of businesses with insufficient demand go

bankrupt. 50% of these businesses report that once demand slacks they did not react accordingly

because they believed that this phenomenon was only temporary. Since the expected frequency of

customers during the start-up phase are still low a critical success factor is to focus marketing

strategy so as to generate customer loyalty early on which will minimize the effects of demand

fluctuations.

Behavior of Competition- Indirect competitors like DKSH might extend their services into PYC’s

competing territory, thus reducing PYC’s potential market share. On the upside, PYC boast a current

extensive network of connections and potential clients, these contacts from cultures that would

rather work with people that they know and are familiar with.

Personnel & Capacity Utilization- Often personnel capacity cannot be adjusted flexibly easily when

demand slows down. Currently service businesses have a capacity utilization rate of personnel of 75%

i.e. 75% of employees working hours can be directly credited to productivity. This means that 25% of

working hours arise without generating any further revenue. 12% to 13% of such businesses go

PYC GLOBAL SERVICES Page 18

bankrupt for this reason (www.docstoc.com). This is why PYC would initially keep its employee count

to the minimum and partner with core competency firms to provide its services.

Macroeconomic Conditions- In a cyclical downturn, revenue expectations may not be met. Although

this factor would not affect PYC’s in itself, it would have an impact on profitability, liquidity and

leverage. Cost would remain constant during this period but revenue typically would decrease which

would affect overall profitability. 10% of insolvent businesses report that they went bankrupt due to

macroeconomic conditions although the relevant indicators of the business looked healthy. PYC’s

strategy is to positively hedge against this risk by its location on 4 continents and it vast array of

services.

FUTURE EXPANSION RECOMMENDATIONS

PYC’s aim is longevity and sustainability in the IPS and MES industry. For this aim to be achieved

PYC would have to take strategic measures to remain competitive. These measures include-

Expanding into more services- PYC should track the trends of the needs of its clients

companies, this would enable the company ascertain significant additional procurement and

expansion needs that it does not offer. This would act as a guide to future possible service

expansion to accommodate these need, thus remain competitive

Expansion into More Countries- In the future PYC should expand into more countries within

the continents that it is currently located. DKSH has presence in Australia, China, Hong Kong,

Japan, Korea, Laos, Malaysia, Myanmar, Singapore, Taiwan, Thailand and Vietnam, this

enabled this competitor gain significant market share in Asia and remain competitive. PYC

should emulate this strategy with gradual presence expansion in West Africa, Middle

&Eastern Europe, Asia and North America.

Investing in IT Excellence- In line with PYC’s strategy for sustainability, PYC will gradually

invest in IT Infrastructure. PYC would integrate, upgrade and improve its IT backbone. This

upgraded system should offer economies of scale build synergies between countries and

Business units, increase sales efficiencies and fuel growth of the company as well as its client

companies.

Investing In In-House Service- To increase value to the customer and maintain loyalty PYC’s

long term sustainability strategy would be to invest in Research & Analysis, Marketing & Sales.

Thus PYC should offer gradually improved consulting services to its clients.

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Research & Analysis- PYC should invest in application, formulation and product development

laboratories, where it would generate new ideas for meet its clients need, develop and custom them.

PYC should work on new ingredients and technology applications, provide hands-on training, and run

acceptance tests. PYC should take the information gathered from its market activity, combine it with

its expertise to conduct feasibility studies, and turn this market insight into strategic advice for its

business partners.

Marketing & Sales- PYC should invest in In-House Marketing & Sales and brand building

services for its clients. With its potential expanding comprehensive market coverage, offering this

service in-house would aid sustainability of this company.

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