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Executive Summary
Starting up a new business requires a detailed understanding of the market and the forces that will affect a firms operations. Kio Technical Support is a new firm that is planning to start operating in the city of London. This firm will have offices in Serbia where most of its employees shall be based. The firm will specifically help its clients in website development, website hosting, cybersecurity, CCTV installation and maintenance. These are products that are already available in the market.
However, the market research that was conducted showed that the existing firms offering these products have failed to meet the expectations of a number of their clients. Customer complaints are common, which is a strong indication that there is a gap that is yet to be filled in this market. Kio Technical Support seeks to fill this gap using high-quality products and services. The market is very competitive, and Kio Technical Support will need effective strategies to gain a competitive edge over its market rivals. As shown in the discussion, the firm will use both outward-in and inward-out approaches to develop effective strategies in the market.
When using the outward-in approach, this firm will try to understand customer needs and come up with ways of meeting them in the best way possible. It will also try to identify external environmental forces such as activities of market rivals, government policies, and other external forces and develop ways of operating successfully under these forces. Using the inward-out approach, this firm will take into consideration its resources and capabilities when defining the market segment that it will target. This company will choose the segment whose needs it can meet in the best way possible using its available resources and capabilities.
Introduction
Background
London is one of the leading business hubs not only in Europe but also at the global arena. A study by Jankowicz (2004) places the city of London as one of the top global business centres that are headquartered to some of the leading multinational corporations in the world. Starting a business in this city requires an understanding of the local market forces, coming up with what the market needs, and being able to meet these needs in a superior way to gain a competitive advantage over market rivals.
The government of the United Kingdom has created an environment that supports business growth, whether a firm is local or foreign. After conducting market research, it is apparent that organisations which operate in this city need technical support in various ways.
In a modern society where technology defines the success of firms in the competitive business environment, firms are keen on embracing emerging technologies to improve their efficiency. Services such as website creation, web hosting, and e-mail care packages, cybersecurity, and CCTV services are becoming basic needs for firms in this city. Kio Technical Support is a new start-up business that seeks to tap the market gap in the city of London.
Scenario Chosen
The scenario that has been chosen is a new business start-up as an entrepreneur. According to Saunders, Lewis, and Thornhill (2010), when starting a new business, it is important to come up with a comprehensive plan that will help in effectively managing the market forces. In most of the cases, new businesses fail within the first six months because of the poor plan put in place by the entrepreneur (Pakroo 2014). In this business plan, the entrepreneur will conduct further market research to help understand forces to expect in the market and how to effectively deal with them to enhance the sustainability of the business.
Business Opportunity
The rationale for the business idea
The city of London is rapidly growing as a business hub and the market for technological support and equipment is expanding. Firms are doing everything within their power to embrace emerging technology as one of the ways of ensuring that they remain competitive in the market.
The rationale for starting this new business has been supported by this growing need for technological support and equipment among firms in the local market. The initial market research reveals that there are firms which are already providing these products within the market. However, they do not fully meet the expectations of the clients, a fact that leaves a gap that can be filled by this firm.
Target Market, Customer and Accessibility
A study by Gruber (2014) strongly suggests that defining the target market is very critical in coming up with promotional campaigns and programmes meant to increase brand and product awareness in the market. Kio Technical Support will primarily target established firms operating in the City of London and its environs. Small firms that are also making successful inroads in the local or regional market will also be targeted. The customers will vary in terms of the industry in which they operate and their sizes. These firms are accessible as long as this firm has products which meet their needs in the best way possible.
Aims and objectives of the work
This paper aims to come up with an effective plan that can be used to implement the project of starting a new company in London. The plan should outline opportunities and threats that the firm will encounter and how to overcome them. The plan should also outline the business model that will be used in the study.
Structure of the work
This report has five chapters. The first chapter provides the background and rationale for the study. Chapter two is a detailed description of the business model that will be applied when implementing the business model. The third chapter focuses on the feasibility of the project. It looks at the ability of the business to give returns as expected. The fourth chapter focuses on the business model, while the last chapter looks at the business plan.
Business Concept
Business Opportunity
To identify business opportunities in the market, Feld and Ramsinghani (2013) state that one has to conduct comprehensive market research to identify the gaps. The researcher has come up with this business idea aftermarket research which has revealed that technological support products in the market are not effectively met in the market.
The market in London already has some players offering the products that this firm intends to offer, but clients complaints as shown in a report by Guillebeau (2012) is a clear indication that the market has a gap that needs to be addressed. The relevance of technology is growing, and this means an increase in products that the new firm will be offering in the market. As long as this firm is capable of offering high-quality products efficiently, then it will have the capacity to expand its market share as soon as it launches its operations in London.
Business Concept
Business idea
The business idea of this new start-up company is to offer IT-related products to firms in London. The market research shows that firms are currently very concerned about the issue of cybersecurity. A report by Bryman and Bell (2011) showed that firms are losing a lot of money to cybercriminals who are using various schemes to steal from companies or demand ransoms after accessing sensitive details of their target. Financial institutions are the major victims of this crime.
London is the financial hub of the entire European market. Kio Technical Support will offer these new firms opportunity to protect their data from such criminal-minded individuals through improved cybersecurity system. The market for cybersecurity system is rapidly growing, and this business idea is likely to succeed is it is implemented in the right manner. This firm will conduct promotional campaigns in this market. The clients will contact the management of this firm for any of the technical support products that it offers.
Mission
The mission of Kio Technical Support is to continuously offer high-quality technical support products to its clients in the European market.
Vision
The vision of this firm is to become the leading technical support solution firm in the European market.
Products
The products that will be offered by this firm include creating web sites, hosting web sites, email care packages, and IT security. The new firm will also offer CCTV equipment, installation, and maintenance in various premises of the clients within the City of London.
Positioning
According to Senor and Singer (2009), positioning is very important for a firm that is planning to introduce its products into the market for the first time. How a brand is positioned will determine how customers view it in the market. This firm will be positioned as a high-quality low-cost company that offers products in a very reliable manner. The marketing strategy that will be employed will try to position this firm as a dynamic brand that understands the emerging changes and knows how to manage them to yield the expected results.
The anticipated scale of growth
The market in London has a massive opportunity for growth. However, Lyons (2016) warns that growth can only be achieved if a firm does the right thing in the right manner to meet the expectations of the customers in a superior way. The competition will be stiff as time goes by. The market already has players offering the same products, and it is expected that new firms will emerge to fight for the same market share. With a proper plan and superior product and product delivery, it is expected that there will be growth in the market. The graph below shows the expected growth in revenues expected in the first five years of operation.
As shown in the graph above, it is anticipated that there will be consistent growth in the revenues of this firm in the first five years of its operations in London. The first two years will involve structuring and restructuring based on market forces. As such, growth is expected to be relatively slow. The third, fourth, and fifth years of operations are expected to register relatively rapid growth in revenues because the firm will be expected to have a detailed understanding of the market.
Feasibility
Research Methodology
Problem formulation
Change is a force that no firm can afford to ignore. According to Feld (2012), the market forces keep on changing due to several factors, and companies have to adjust their systems and structures in line with these changes. Eastman Kodak, a film company that once controlled over 80% of the global market share in this industry, tried to avoid change and the result was devastating. The firm was overtaken by other change-sensitive firms such as Fujifilm and currently, it is struggling to operate profitably in the market it once dominated.
This firm has always been a good example to many firms that may be slow when it comes to embracing change. According to a study by Gavron (2012), large firms are currently very sensitive when it comes to embracing change. Every time they realise that there is a shift, they try to adjust their systems and structures in line with the anticipated change. In London, there are numerous firms in various industries which are struggling to manage change driven by emerging technologies.
This process is not easy because it forces these firms to have divided attention when it comes to delivering value to their customers. It has been a challenge to these firms trying to monitor the emerging technologies and their impact while at the same time trying to produce products of high quality. According to Schmidt (2014), many firms currently consider hiring other firms to help them monitor and manage emerging technologies and the changes that come with them.
The problem that most of these firms face in the market is that they are yet to find firms which can deliver the value that they desire. Some firms such as Amazon.com have registered complaints about the attacks on the accounts of their clients whenever they make their online purchases (Hoffman & Casnocha 2012). This is happening despite these companies having very cybersecurity solution providers. It is an indication that the problem is yet to be effectively addressed. Kio Technical Support intends to find a lasting solution to these problems using the latest technologies. It is expected that the approach that this firm will talk will help firms in London effectively address their current problems.
Current market research objectives
The objective of this study is to have a detailed understanding of the target market in London. This is a new firm that is getting into a new market. Lau (2005) warns that a new firm should take time to conduct thorough research that will enable it to understand the market forces of the market before launching its operations. Through such processes, the firm can know what to expect in the market, and how to deal with the forces in the environment. Through this market research, this new firm will know what to do and what to avoid while in the market. It is a part of a wider strategy to help this firm achieve market success.
Market research design
When conducting market research, a firm can take different approaches based on the resources available, the aim of the research, and other related factors. Research can take a descriptive, explorative, qualitative, quantitative, or casual approach. In this study, the researcher will use a multifaceted approach. The first approach will be the exploratory strategy where the firm will focus on the identification of the gap in the market. The study will explore what is already available in the market and areas where adjustments are needed. Of interest will be to identify products or services which the current firms do not offer satisfactorily.
The process will help in coming up with an appropriate market segment that this firm will target. As Hill (2002) advises, a firm needs to identify a segment of the market to target instead of targeting the entire market, especially if it is a new firm that is just getting into the market. The process of segmenting the market and subsequently identifying the appropriate segment requires an exploratory research design.
The researcher will be able to understand demographical issues such as age, gender, education, income, and occupation of the individual people that will be involved when it comes to negotiating contracts. Geographic, behavioural, and psychographic factors will also be effectively captured through explorative research. Some aspects of quantitative research will also be involved. It will be necessary to quantify some aspects of the market to help in determining the costs that should be planned for and other related factors.
Information and sources required
The time available for this study did not make it possible to collect primary data. As such, the information that will be used will come from secondary sources of data. The sources will include books, journal articles, business reports, newspapers, magazines, and other reliable sources. It means that libraries, websites, and the internet will be instrumental in collecting the data.
Data analysis method
As mentioned above, the research design chosen will be explorative and quantitative methods. It means that analysis will be conducted using a descriptive approach where certain environmental factors in the market will be described in details. The use of statistical methods will also be important to come up with graphs and charts that can help explain different market forces and their anticipated impact on this firm. Inferences can then be made from the outcome of such statistical analysis. The financial feasibility will also be conducted using statistical figures.
Formulating the findings
This research is expected to help come up with specific findings that will help in the process of decision making for the planned business. The findings must clearly explain the target market, the products that should be offered, and the level of competition. There should be an analysis of the expected market rivals and how this firm can come up with a competitive advantage.
Through the analysis of the data, the findings should state the external environmental factors such as government policies that this firm should have proper knowledge of before starting its operations in the market. When formulating the findings, the researcher will ensure that there is a detailed description of what this firm should avoid and what it should emphasize on as it starts its operations in the highly competitive business environment.
Market Research and Product Offering
Explorative research
In this explorative study, the researcher aims to identify the gap that exists in the current market and to come up with ways of finding a market in that gap. To do this, the study will investigate various sources of information about the market in London. According to Meager, Bates, and Cowling (2003), London is one of the most researched markets in the world because of its strategic importance to global companies. It is home to some of the leading multinational companies. As such, finding the required data from various sources will not be a big challenge. The figure below shows the cybersecurity skills that a given study found to be difficult to recruit in the United Kingdom.
From the above information, it is apparent that skills in implementing secure systems, information assurance testing and methodologies, and incident management are some of the rare skills in the United Kingdoms cybersecurity space. The limited skills in these areas demonstrate that if a firm finds skilled people who can help in these areas, then they can be willing to pay for their services. This is a gap in the market that needs to be filled, and Kio Technical Support intends to do just that.
Market segmentation
The cyberspace offers a wide market that Kio Technical Support, as a small start-up firm, cannot target in its entirety. It means that this firm will need to identify a section of the market whose needs it can meet perfectly. Market segmentation is, therefore, very critical at this stage. Market segmentation, according to Plunkett (2006), refers to the process of classifying customers into subsets based on their age, race, religion, gender, purchasing power, location, or any other demographical factors that make them reason differently when it comes to making a purchasing decision.
When segmenting the market, it is important to first understand the capabilities of the firm in question. This way, the segmentation will try to identify a section of the market whose needs a firm can satisfy without struggling. After identifying the market segments, a firm can classify them into different groups. The first group will be that which the firm intends to target with its current products. The other segments can be earmarked for products that will be developed by the firm at a future date. The table below shows different segmentation approaches that can be used to identify and classify customers.
Once the segmentation has been done based on the classifications above, it becomes easy to identify a segment that can be targeted based on their characteristics. It is important to note that Kio Technical Support will have different packages suitable for clients in the different demographics that will be chosen.
Product identification
The gap in the market
The market gap may be easy to identify based on the complaints from the customers as Kahan (2007) notes, but it may not be easy to meet the needs of the customers in that gap. This is so because they are demanding for something beyond what other firms can offer. It means that the new firm must be above average or identify a very special niche that existing firms have ignored. Kio Technical Support has already specified the products that it will offer.
The products are meant to help firms operate easily in the online platform without having to worry about the threat posed by cybercriminals. Firms are offering the same products in the market, but the constant complaints from customers is a clear indication that these firms are not doing a good job in meeting these needs. As such, a gap is created that this firm seeks to fill.
The market in the gap
According to Sweeney and Sweeney (2011), after identifying a gap in the market, the next important thing is to find a way of creating a market in the gap. Given that the market has a gap that is not fully addressed, then there is an opportunity that can be tapped by a firm capable of filling in the gap. Kio Technical Support can fill this gap by delivering quality products to the clients.
Products description
Kio Technical Support will offer various IT solutions to its clients in the market. The primary products have been identified as the development of web sites, hosting web sites, email care packages, and IT security. It is also clear that this firm will offer CCTV equipment, their installation, and maintenance in various premises of the clients. The figure below shows a variety of products that this firm will offer its clients.
Kio Technical Support has several experts who will be responsible for service delivery. Some of the products will be manufactured at the firms main premises in Belgrade, Serbia. Once a client makes an order, the order will be processed in the offices in London and if it needs the technical services of the firms engineers and technicians, the management will send these officers to the field. If the product needed is not readily available in the London officers, an order will be made for it to be imported as soon as possible.
Market Analysis
London is one of the most attractive markets in the world for any firm that is planning to expand its operations beyond the borders of its home country. The high population of the city, the high purchasing power of the residents, improved infrastructure, and high security are some of the factors that make this market very attractive to the target market.
The market has some marked differences when compared with the home market in Serbia. As such, conducting a detailed market analysis will be critical in making the management of this new firm understand what is expected of them. Several models exist that can be used to understand the environment that this firm intends to operate in when it starts its operations. The models include PESTEL Analysis to understand the operating environment and Porters Five Forces to understand the competitive environment.
PESTEL Analysis
The political environment in London is very conducive for any firm that indents to operate in it. The political class has been keen on avoiding any direct interference with the business environment. The leaders treat both local and foreign firms equally, which means that the market is levelled for all the players. The recent BREXIT vote that saw the Britons vote for an exit from this market may be a blow to the business community, but it may also be an advantage because it will limit the ability of other firms to get into this market.
Kio Technical Support will greatly benefit from this political environment in this country. The economic environment will also be very beneficial to this new firm given the position of the city in Europe. Since the United Kingdom is no longer the leading economy in the world as was the case before the two world wars, it is still a dominant economy globally.
The city of London is specifically one of the most affluent cities in the world. The flow of money in this city is high and firms are always willing to spend a lot to improve their operations in the market. The willingness of firms to spend and their financial power means that Kio Technical Support will have no problem selling its products as long as they meet the expectations of the clients.
The social environment is another factor that must be considered when conducting a market analysis. According to Wetherly and Otter (2013), factors such as religion and spirit of nationalism are very important when a firm is scanning a new market. For instance, there was a time when the Chinese would prefer local to foreign products, even if the foreign product is superior to the local products (Harrigan 2013). In such an environment, it may be almost impossible for a foreign firm to compete favourably with the local ones.
The social environment in London is very supportive of both local and foreign products. Customers are keen on the quality of the product offered to them, not the country of origin of the product offered to them. The technological environment is another very important factor that affects how a firm operates in the market. According to Suder (2004), technology is one of the factors that influence change in the environment the most. The United Kingdom, just like in many other developed countries, is sensitive to emerging technologies.
It will always be one of the first countries to adapt to new technologies in case it did not originate from within its borders. In the city of London, firms are often keen on embracing emerging technologies as a way of improving their operations in the market. The city has one of the most advanced technological systems in the field of information technology.
It means that this firm will benefit a lot because firms are keen on upgrading their systems based on the emerging market forces. It means that companies will be ready to purchase new technological products that it will be offering in the market as long as they are convinced that the product is relevant to their operations.
The ecology is increasingly becoming an issue in the current business environment. For a long time, companies have paid less attention to the issue of environmental attention. Palmer and Hartley (2011) say that a few decades ago, many companies did not believe that climate change and global warming would become major environmental issues that would affect their operations. However, the time has proven that scientists and environmentalists were right in their predictions.
Both global warming and climate change have become a reality, and firms are faced with situations where they have to put into consideration the impact of their activities on the environment. The city of London has one of the most stringent policies regarding climate change. The city has policies regarding the amount of carbon dioxide that a firm is permitted to emit per given period. There are also very strict policies when it comes to the management of wastes. Kio Technical Support will need to understand these waste management policies to ensure that it operates as per the expectations of the government and the general public.
The final factor in this model is the legal environment. Law is an important factor in the business environment. The government sets laws and regulations which should be followed by firms to ensure that they can relate well with other firms, with their clients, with the government, or any other stakeholder that is relevant to its normal operations.
It is almost impossible for a firm to operate freely in an environment that lacks very clear laws and regulations. These laws help in protecting a company from unfair practices that may be employed by any of the stakeholders. The government of the United Kingdom has developed a legal structure that helps firms in the country to operate in an environment that is orderly. The authorities in London city have also come up with laws and by-laws that companies have to respect when operating locally. Kio Technical Support will need to understand these laws and regulations to ensure that its operations in this city do not go against government policies.
Porters Five Forces Analysis
Porters Five Forces have been a very useful tool when analysing the competitiveness of the business environment in a given market. The model looks at various stakeholders and how they have power over the firm being analysed. The figure below shows the model.
As shown in the figure above, one of the biggest factors that should be considered when analysing the competitiveness of a business environment is the threat of new entrants.
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