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2MBA – Appendix B
Critical Risks and Problems
Development Risk– Zero
Currently assessed as zero due to the commercialization of existing working prototypes.
Manufacturing Risk– Low/Moderate
The two main issues that need to be addressed in the manufacturing are the price of the major commodity, stainless steel, and the quality and supply of the componentry. As this venture will be located in the heart of “stainless steel” country in the US, costs will be kept to a minimum due to the lower transport costs. Strong relationships will be developed with suppliers of stainless steel which will ensure favorable trading terms. Quality control checks have been introduced at all stages of assembly. To ensure only the best supplies are sourced, two or three suppliers will be sought in the early stages of the venture. There is a reliance on the technical expertise provided by Mr. Alan Rotherhan. Rotherham however has committed to the venture for twelve months. He has expertise and a wide network of contacts in the US. Skilled labor is required for the assembly of these products. Our research shows that this will be readily available in the district in which we have chosen to establish. This is a `fast growth’ venture and the supply of skilled labor to meet demand is paramount.
Financing Risk– Low/Moderate
As no traditional funds are required, this venture is not susceptible to fluctuating interest rates. However, the venture partner requires to be confident that their expected (or promised) returns are assured at all stages of the venture. In addition, the venture is self funding and it is not envisaged that further injections of venture capital will be required in the future.
Marketing Risk– Low/Moderate
The initial marketing risk is minimized because of the Nestle alliance. However, as both these products are new to the market, the broader market needs to be educated in the features and benefits of both products. This will involve time and effort but will be assisted greatly with Nestles involvement.
Management Risk– Low/Moderate
Green cards to allow the management team have been applied for by the management team. This project falls under “a new and unique product or products” category and Nestle have committed to assist in sponsoring the team and providing their corporate clout to arranging the required documents. Although there is a strong team in place, there is always a risk of human relationships souring over time. This may also be exacerbated given that the four involved will be required to relocate to America. The team are familiar with all facets of the project and are confident that, should one member be replaced, the skills required to fill that void can be found within the team. This would be a short term solution and a professional person would be recruited to permanently replace the team member who may decide to his/her position. In addition, all management team members have had bottom line responsibility and have successful track records in developing profitable business ventures.
Valuation Risk– Low
The risk that the investor pays too much for the venture is offset as
- Investor funds are in tranches, and
- The Nestle contract will be in place and provides a base from which to work.
Exit Risk– Low/Moderate
Given the forecast sales, the solid returns, and the planned IPO or Trade Sale strategy, the exit risk for the investor is assessed to be moderate to low.
|Table of Contents||Appendices|
|0. Executive Summary
1. The Offer
2. The Products
3. The Organization
4. Strategic Analysis
5. Key Strategic Issues
6. Marketing Plan
7. Production Plan
8. Organization Plan
9. Financial Plan
|A. Internal Environment Analysis
B. Critical Risks and Problems
C. SWOT Analysis
E. Production Layout
F. Action Plan
G. Team Member Details
H. Reference Sources
I. Financial Analysis Worksheets
|All information herein is confidential and belongs to 2MBA, Inc.|