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Human Resource Strategy and Financial Planning of Car Customization Business (Part 05)
http://www.reportbd.com/articles/2915/1/Human-Resource-Strategy-and-Financial-Planning-of-Car-Customization-Business-Part-05/Page1.html
Golam Moula Mondal
This is Md. Golam Moula Mondal. I have completed BBA (Major in Finance and Banking) from Patuakhali Science and Technology University. 
By Golam Moula Mondal
Published on 28 October 2012
 
Human Resource Strategy, staff requirement, training, appraisal method and financial planning of Car Customization Business.

Human Resource Strategy and Financial Planning of Car Customization Business
Chapter-06
6. HUMAN RESOURCE STRAGEY AND PLANNING

Ensuring smooth operation by minimizing the possibility of inefficiency due to bottleneck problems, as different stages of our production process we would require different personnel having specialized in respective fields. Starting from the top management till the factory workers what will be our training as well as appraisal method-a brief idea of it has been given in the following table:

Job Title: CEO & Head of HR
Job Specification: MBA (HR), 5 to 8 years experience, Age 30 to 35 years
Training: Seminar participation, Training from abroad (if needed)
Appraisal Method: MBO will be followed
Salary Range: 30000 to 40000

Job Title: Head of Finance
Job Specification: Masters in Finance/MBA (Finance), 3 to 5 years experience, Age 30 to 35 years
Training: Off the job Training, Seminar participation
Appraisal Method: MBO and checklist method
Salary Range: 20000 to 30000

Job Title: Head of Marketing
Job Specification: Masters in Marketing/MBA (Marketing), 3 to 5 years experience, Age 30 to 35 years
Training: Off the job Training, Seminar participation
Appraisal Method: MBO and checklist method
Salary Range: 20000 to 30000

Job Title: Head of Manufacturing & Production
Job Specification: Diploma In Automobile engineering, 3 to 5 years experience, Age 30 to 35 years
Training: Off the job Training, Seminar participation
Appraisal Method: MBO and checklist method
Salary Range: 20000 to 30000

Job Title: Head of R & D
Job Specification: Masters in related field, 3 to 5 years experience, Age 30 to 35 years
Training: Off the job Training, Seminar participation
Appraisal Method: MBO and checklist method
Salary Range: 20000 to 30000

Job Title: Senior Sales Executive
Job Specification: Graduate
Training: Apprenticeship
Appraisal Method: Work standards
Salary Range: 10000 to 15000

Job Title: Junior Sales Executive
Job Specification: Graduate
Training: Apprenticeship
Appraisal Method: Work standards
Salary Range: 8000 to 12000

Job Title: Marketing Agents
Job Specification: Students, entry level corporate
Training: Apprenticeship
Appraisal Method: Work standards
Salary Range: Commissions on gross margins

Job Title: Promotion Officer
Job Specification: Graduate
Training: Apprenticeship
Appraisal Method: 360 degree feedback method
Salary Range: 10000 to 15000

Job Title: Production Manager
Job Specification: Graduate
Training: Computer based training off the job training and on the job training
Appraisal Method: 360 degree feedback method
Salary Range: 10000 to 15000

Job Title: Factory worker for Dice, Mixing, Heating, Shaping
Job Specification: Secondary qualification
Training: On the job training and Apprenticeship
Appraisal Method: Checklist, Work standard
Salary Range: 6000 to 8000
   
Job Title: Graphic designer
Job Specification: Completion of relevant certified courses (CAD)
Training: Computer based off the job training
Salary Range: 20000 to 30000

So in summary the training methods and the appraisal methods we will be following are

6.1 Training methods
• Off the job Training
• Seminar participation
• On the job training
• Apprenticeship
• Computer based training

6.2 Appraisal methods
• Checklist method
• 360 degree
• Work standard

6.3 Staff Requirement

6.3.1 Production and Manufacturing:  There will be a Production manager who will ensure the smooth operation in the factory premise and will also monitor the overall operation of the factory. At the lowest end, there will be Factory Workers as per requirement.

Factory Workers

Number of worker

      Dice

2

Mixing

2

Heating

2

Shaping

2


6.3.2 Production Manager: Production manager is expected to constantly monitor the overall productions and manufacturing process along with performance of the factory workers, whether they are being able to do their work accurately and within a reasonable time period, and thereby being able to pass the process to the next group. The production manager will be giving constant report about the current operation to the top management in a regular interval.

6.3.3 Factory Workers: We expect from the factory workers that they will make sure that the level of wastage during the process of mixing the raw materials, and putting it in dice- will be very low. A standard would be setup to ensure that level. To maintain the premium quality we expect strong commitment from our employees in performing their specific tasks with sincerity and with efficiency.

Chapter-07
7. FINANCIAL PLANNING

   
7.1    Start-up Requirements

Finishing tads    10000
Total Equipment    110000
Machinery (Ilydrolic f laul)    1500000
Office Equipment
AC    30,000.00
Computer (3*25000)    75000
Printer    7000
Scanner    6000
Digital camera    15000

Start-up Expenses   
Legal    20,000.00
Stationery etc.    15,000.00
Advertising    60,000.00
Training    30,000.00
Internet Web page    10,000.00
Other( Shipping expense)    10,000.00
Total Start-up Expense    145,000.00
Start-up Assets   
Cash Balance on Starting Date    520,000.00
Start-up Inventory    15,000.00
Total Short-term Assets    535,000.00
Long-term Assets
Rent Advance(for 2 years)
 Factory Office             960,000.00
Head Office    840,000.00
Total    1,800,000.00
Equipments
Oven    15000
Dice Maker    20000
Spray Machine    25000
Grease sprayer    1000
Welding machine    5000
Volumetric measure    2000
Adjusting machine    4000
Grinder    8000
paint mixture    20000
Others furniture    30,000.00
Total    163,000.00
Total long Term Asset    3,573,000.00
Total Assets    4,108,000.00
Total Requirements (Asset + Startup Exp.)    4,253,000.00
   
Financing Investment
Owner -1    1,400,000.00
Owner -2    1,400,000.00
Total Investment    2,800,000.00

Short-term Liabilities
Accounts Payable    33,000.00
Short term Borrowing    170,000.00
Total Short-term Liabilities    203,000.00
Long-term Liabilities    1,250,000.00
Total Liabilities    1,453,000.00
Loss at Start-up    (145,000.00)
Total Capital    2,655,000.00
Total Capital and Liabilities    4,108,000.00

7.2    Assumptions:

Depreciation (method : Straight-line method)
- Machinery, Economic Life 10 years, salvages value 1000000.
- Factory Equipment, Economic Life 10 years, salvages value 15000.
- Offices Equipment, Economic Life 5 years, salvages value 20000.

Growth of Sales
- Both Short term and long term forecast of sales is shown below in a schedule.
- Cost of Raw materials and Direct labor
- 20% of Sales Revenue. 
                                           
Tax rate
- Tax Holiday for first 5 Years and thereafter tax rate is 4.20% of Net Income.

Capacity of Fixed Asset
- Up to sales revenue of Tk 700,000 can be supported by initial capacity. To support sales beyond that level there is a need to expand the production capacity.

Insurance Premium
- Yearly insurance premium Tk 12000 (Net of commission)

7.3    Financial Strategy Used in Financial Planning:
- Lower Cash Conversion Cycle: Lower cash conversion cycle (CCC) is a value driver for any business. It reduces the requirement of short term working capital requirements. We setup our sales and collection policy in a way that our CCC becomes negative (for example sales will be made in cash which will eliminate the presence of account receivable turnover period from the operating cycle, thereby making the cycle less than the payable deferral period ).This negative CCC in turn reduces the need for short term loans.

- Matching Degree of Operating leverage and financial leverage: With high manufacturing, selling and administrative fixed cost our degree of operating leverage is pretty high. Therefore, to reduce the degree of total leverage (sum of operating and financial leverage) we used less debt financing and thereby reduced fixed interest expenses.

- Short Term investment of Excess Cash: Any excess cash generated from the business has been used in short term investment (e.g., short term Treasury bill) for the utilization of cash.

- Payout Ratio: A low pay out ratio (20%) has been maintained in the early years of the business because of high reinvestment requirement with the growth in sales and we then increased payout ratio to 50% from the 7th year because of less reinvestment opportunity. Moreover, we arc planning not to give any dividend in the year of net losses.

- Use of Hedging Principal: we used matching/hedging principal in financing decision which actually implies that, we financed our long term asset with long term liabilities and short term assets with short term liabilities.


CONCLUSION

The entire marketing planning process forces the entrepreneur to analyze all aspects of the venture and to prepare an effective strategy to deal with the uncertainties that arises. The marketing Plan entails-taking a long term view of the business and its environment. A marketing Plan is the written document that details the proposed venture. It must illustrate current status, expected needs, and projected result of the new business.Srilanka is developing country with having per capita income US $1400 which is near about 3 times as that of Bangladesh. Its total population is about 20,238,000 and 14% of total population are using car and about 7% have strong desire to use car. So Sri Lanka is an appropriate market for selling customized car and we have chosen it. After undergoing all sorts of strategically analysis of different functional levels, it is possible to say that this business is feasible and highly rational even though this is a new Business. This Business depends on the quality assured and the maintenance of different integrated strategies to ensure further differentiation and distinct manufacturing process.

References

Stiglitz Joseph E., Globalization and Its Discontents, 3rd edition.
www.lankabusinessonline.lk
www.autolanka.com
www.gov.lk
www.infoplease.com
www.cardekho.com
www.microcars.lk