Oshkosh Hardware Ltd. Business Plan

Oshkosh Hardware Ltd. Business plan

Group Assignment 2

November 4th, 2016

Oshkosh Hardware is a new hardware company planning to open its first retail store in Oshkosh, Wisconsin by October 1, 1994. The company has come up with a detailed business plan covering all aspects of its potential business, in which its original cash-flow statement (refer to exhibit 4) shows a projected long-term debt of $160,000. For Oshkosh Hardware to quickly pay off this debt and become profitable and achieve its goals, a few recommendations were made after an analysis of the business plan.

Recommendation 1: Develop and Focus on a New Customer Segment

Oshkosh Hardware is recommended to implement a strategy that could potentially tap into an entirely new market that was not going to be accessed originally. As seen on the existing business model canvas (refer to page 2), the current target market is homeowners. With that being said, the majority of returning customers are local businesses. Currently, Oshkosh Hardware is focused on homeowners who do their own home repair, yet are established in a growing town. The potential addition of a new customer segment (refer to page 3), local businesses, could prove to be an extremely useful opportunity. This information, coupled with the fact that the company is projected to not be profitable for it’s first year (refer to exhibit 1), should be incentive enough to consider this recommendation.

The diagram below shows the increase in revenue due to some *assumptions.

Recommendation 2: Expand Online to Open Up New Distribution Channels

According to the original business plan, Oshkosh Hardware has been limiting their own growth by having just one main distribution channel (refer to page 2). This is why Oshkosh Hardware is recommended to adapt to the advancements in technology and expand online, which would create a new distribution channel, the internet. This would require Oshkosh Hardware to create a website through which they can sell their products directly to consumers. This will lead to a new, wider reaching customer segment. (refer to page 3) Along with the online expansion comes two conservative assumptions (refer to exhibit 2). With that in mind, if you compare the original projected income statement with the projected income statement with online expansion (refer to exhibit 1 & 2), you will notice that after a year with online expansion, Oshkosh Hardware will be profitable. To be clear, following this recommendation will result in a $26,000 increase in net profit as illustrated in the diagram below.

Recommendation 3: Incorporate New Promotional Strategies

Due to the previous two recommendations regarding Oshkosh Hardware’s entry to two new target markets, the company will have the opportunity to integrate some diverse promotional strategies. Although the online advertisement industry is small at the moment, it has great potential to grow and lead the company towards success in the long-run. Additionally, incorporating online promotions into our business plan will allow Oshkosh Hardware’s strong brand name (refer to exhibit 5), to be exemplified for new customers. Furthermore, through the interaction with local businesses, Oshkosh Hardware can develop a strategic relationship in which local businesses promote each other. This can prove to be very effective since the company is located in the town center, and there are many other retail outlets surrounding them. By promoting themselves through other local businesses, it allows Oshkosh Hardware to be recognized by local and foreign customers more frequently and easily. Through these new promotion strategies, Oshkosh Hardware will eliminate the limits they previously had with local newspapers and directories. (refer to page 3) Along with the growth assumed in the previous to recommendations, integrating this recommendation will only multiply Oshkosh Hardware’s overall growth and profit.

Recommendation 4: Make Adjustments to Current Production

Oshkosh Hardware is recommended to make some strategic production adjustments that will maximize both efficiency and sales. As said in the original income statement, Product 1 is the only product expected to bring in profit. (refer to table below)

This is possibly a result of the mismatch between customers’ needs and what the company has to offer. The company can implement this change by either:

1. Shutting down the production of its non-profitable products.

2. Conducting extensive market research to re-evaluate their value proposition and align customer’s needs with current products.

Option 1 simply suggests that Oshkosh Hardware stops producing Products 2-6. However, it also implies a narrower variability of products, which might upset some customers.

Option 2 (refer to the diagram below), if implemented correctly, will improve the popularity of current products and boost production, at the expense of a rise in researching costs.