Introduction
This business plan seeks to generate a significant increase in company sales and profits from the services of engineering, procurement and construction (EPC) of power generation and power delivery projects over the preceding year. This plan highlights a sales-revenue target for the next five years. This target is seen as attainable through a proactive approach, by teaming up with a project financing provider, partnering with reputable local and regional engineers, suppliers, and construction firms to reduce competition, and improving pricing while reducing risks. The required marketing budget for the duration of this plan will grow somewhat each year. Based on the company's cash flow and previous profits, the company's expansion can be carried out without any further increase in financial leverage.
The Company
Indonesia EEC was founded in 1996 and is based in Jakarta, Indonesia. The company is a subsidiary of United States Energy Engineering & Construction (U.S. EEC). Indonesia EEC offers good quality and cost effective service in engineering, design, procurement, project management, construction and construction management, environmental consulting, and other consulting services in relation to the design, building and management of electrical power plants.
In the near future, Indonesia EEC will establish a joint venture company with a reputable local company who has experience and capability in performing EPC works of power projects, as well as financial capability, and will broaden the coverage by expanding into additional service areas.
Indonesia EEC currently has an admin staff of seventeen individuals that cover sales, marketing, accounting etc. Once projects have been secured, then project offices will be established and project personnel and staff will be recruited. Project office organization and staff will encompass the engineering, procurement, and construction divisions.
The Market
At the moment there is a real opportunity to increase Indonesia's power infrastructure as the government owned power utility (PLN) has not been able to deliver a reliable and cost effective power system. However, the current situation in Indonesia is characterized by a continuing downward economic drift. It seems reasonable, however, that the company's target market sectors have strength to be credible buyers in the Indonesian power business, since their business orientation is focused in the export market. The company faces significant rivalry from a variety of direct and indirect competitors.
In Indonesia, there are twelve market sectors of power generation business in which Indonesia EEC will be seeking prospects on a focused and proactive approach.
1.1 Objectives
The financial and marketing objectives of Indonesia EEC follow.
Financial Objectives
- Sales starting at $XXXX, and growing each year to $XXXX, $XXXX, $XXXX, and $XXXX by 2003.
- High average gross margin precent of sales revenue for EPC jobs. When the joint venture company has been established and has been in operation for four years, it will also produce excellent IRR for 25 years, which will create different types of jobs: build, own, operate (BOO), build, operate, transfer (BOT), build, lease, transfer (BLT), build and rent (B&R), and energy conversion contract (ECC).
- Net income of more than XX% of sales by the fifth year.
Marketing Objectives
The financial objectives are converted into marketing objectives. If the company wants to earn its targets for gross margin and sales revenue from the EPC works then it must set an average profit margin on sales from the EPC works of average XX%. When the joint venture company has been established and has been in operation for four years, then the joint venture company will also produce an average XX% IRR for 25 years BOO, BOT, BLT, B&R, and ECC jobs. To achieve these targets, the company will have to set certain goals for customer awareness, such as proactively approaching the prospective clients including project financing providers, establishing a joint venture with a reputable local company who has experience and capability in performing EPC works of power projects, as well as the financial capability to be equal partners with Indonesia EEC.
Thus the marketing objective might read:
- Achieve a targeted sales revenue of $XXXX in 1999, $XXXX in 2000, $XXXX in 2001, $XXXX in 2002, and $XXXX in 2003 from the EPC works.
- Expand customer awareness over the planning period.
- Reduce competition, reduce risks, and lower price levels by establishing a joint venture with a reputable local company who has experience in performing EPC works of power projects, as well as the financial capability to be equal partners with Indonesia EEC .
- Pursuing not only EPC prospects, but also BOO, BOT, BLT, B&R, and ECC prospects.
- Utilizing the joint venture company as the main entity of Indonesia EEC to conduct business in Indonesia.
1.2 Mission
The mission of the Indonesia EEC is to establish a strong presence in Indonesia to implement all provisions of the Energy Engineering & Construction (EEC) mission statement with the specific mission of becoming the leading full service EPC in Indonesia. Also, Indonesia EEC's role to be the leader in the business of BOO, BOT, BLT, B&R, and ECC in the Indonesian captive power sector, will be built through a joint venture approach.
The broad mission requires the following objectives within Indonesia:
- To obtain projects in all areas of EEC services.
- Reduce the costs of performing work to the point that the Indonesian operation can provide engineering, procurement, and support services at a lower cost than those provided by the U.S. office.
1.3 Keys to Success
- Marketing power. Indonesia EEC needs to have its services on the shelves as the most reliable, high-quality, cost effective services in the industry, with enough marketing power to maintain an eight percent market share of EPC services in the Indonesian captive power sector.
- Excellence in fulfilling the promise. To realize a benefit, a claim must be made and proof presented.
- Providing clients with both solutions and value creations. Helping the clients to increase their own profit potential.
- Quality service and customer satisfaction. Everything we sell is guaranteed, so the services have to do what the customers want. Long-term customer satisfaction is critical to our survival.
- Leveraging from a single pool of expertise into multiple revenue-generating opportunities: Engineering & Architect (E&A), project consulting, project management, Engineering & Procurement (E&P), and Engineering & Construction (E&C).
- The right management team, with strong foundations in marketing, management, finance, and services development.
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