Aqua Pure Ltd - Kampala, Uganda

Forward

It is an honour to present the Aqua Pure Limited Business Plan. This plan is the roadmap for where our company intends to go and what we intend to do achieve over the next four years. This plan is strategic and operational in both scope and purpose, and charts the course toward our company goal to ensure availability of pure drinking water and other consumer goods and services to every where it enters.

This strategic plan is the product of a planning process that started in July 2008 and has involved a close partnership with employees, management, staff and directors of the company. Feed back from our customers and other stakeholders through our sales representatives and agents were also taken into account. It is the foundation stage of the business planning process and  

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implementation in which every head of department will produce a departmental strategy with detailed implementation plans.

Aqua Pure Limited has since its inception, established a reputation of the leading distributor of pure drinking water in Uganda. It is our goal to ensure retention of ……. percent share of any market we target and to ensure consistent growth in both revenue and profitability. We do this by upholding our values of integrity, honesty in communication; commitment to communities and customers, promotion and rewarding of new ideas and innovation and respect for individual employees. We also ensure that our actions, investment strategies and organizational structures are aligned towards achievement of our goals and objectives.

The challenge facing us today is to ensure environmentally responsive company and consistent growth in revenue and profits and organizational alignment to our vision. The plan itself is a living document- it will evolve as necessary- but it sets clear, consistent direction for Aqua Pure Limited to better position our company to make right decisions today while adapting the needs of tomorrow in a changing world.

By implementing the plan described in this document, we shall ensure that the spirit of every director, shareholder, employee, supplier, customer, community, and other stakeholders are held high and harnessed to continue our historic legacy.

Sincerely,


Charles Blake
CHAIRMAN/MANAGING DIRECTOR















1.0 Executive summary
1.1 Concept
Aqua pure Limited intends to increase its current level of operations from 55% plant capacity of (insert the number of bottles Shs 190 million) to 85% plant capacity of Shs 250 million during next financial year. The company also intends to expand the range product to include 0.5 litre and 1.0 litre bottled water in 2010 to attain sales levels of Shs 1.2 billion over a three year period. This will be possible through a strong sales force management, increase number of distribution vans and install a new line of automatic water purification facility for the disposable bottles and relocate to a spacious premises. Management estimates that disposable bottle distributions will reach a wider circulation compared to the current returnable bottles.
1.2 Company description

Aqua Pure Limited was established in 1998 as the first distributor of distilled bottled water in Uganda with a core purpose of providing safe, purified drinking water. The enterprise has since then grown both internally and externally. The liability of the company is limited by share capital currently fully owned by one director. Plans are underway to expand the share ownership through strategic partnerships.

It is located in Bukoto Hill, Plot 1365/66, Bukoto Kampala Uganda.
1.3 Mission

Aqua pure envisions being the leading supplier of purified drinking water to all categories of thirsty individuals.
1.4 Industry and competition overview

The industry is steadily growing evidenced from the numbers of firms that have joined in to the business. Examples of direct competitors include Aqua Sipi, Lifeline, Mountain Springs, Aqua Safe, Hemar beverages, Rwenzori beverages among others. Indirect competitors include crown beverages, century bottling, cheers, fresh diary milk and others. Besides that, there are several unauthorized distributors who have entered the market. The industry thus is attractive.

There are about six to eight firms producing and supplying water. In that case, the firm is experiencing stiff competition from both direct and indirect competitors and there are a number of firms in the process of entering in to the industry.

Aqua pure limited has been in the industry since 1998 as the first established producer of filtered bottled water hence became the market leader. The company has acquired a great deal of experience during the years and is in better position to offer the product. Aqua pure would like to re-gain its leading position in the market.

1.5 Description of Products & services

Aqua pure limited is a distributor of 20 ltr distilled bottled water and water coolers that comes in three differentiated service levels:

a) Gold service

The gold service sells 20 ltr purified drinking water at Shs 10,000 per bottle and dispenser unit at Shs 550,000. All the 20 ltr bottles are returnable but the buyer of the dispenser retains the title to it. The company sells the dispenser at some mark-up.

This service level includes 12 months guarantee and warrantee on the dispenser units purchased from Aqua Pure Limited. Payments are to be made in arrears within 25 days from the date of the invoice. 24 hour emergency servicing of dispensers are free of charge. A dispenser service and condition report is availed to a related department.

b) Silver service

The silver service sells 20 ltr purified drinking water at Shs 8,500 per bottle and dispenser unit at Shs 420,000. All the 20 ltr bottles are returnable except the dispenser where the buyer retains the title to it. The company sells the dispenser at some mark-up.

This service level includes 6 months guarantee and warrantee on the dispenser units purchased from Aqua Pure Limited. Payments are to be made in arrears within 15 days from the date of the invoice. Provision of routine servicing during normal office hours is availed at a fee of 15,000/= labor charges.

c) Bronze service

The bronze service sells 20 ltr purified drinking water at Shs 7,000 per bottle and dispenser unit at Shs 380,000. All the 20 ltr bottles are returnable except the dispenser where the buyer retains the title to it. The company sells the dispenser at some mark-up.

Payment terms for the dispenser units and drinking water are prior to delivery and dispenser servicing and maintenance are at normal office hours at a charge of Shs 30,000. There are no guarantees or warrantees availed at this level.
1.6 Target Market and customer needs
Customers’ needs vary depending on customer characteristics however in general terms, customers require cheap or averagely priced commodities but of good quality. Customers are health sensitive and therefore require a product that gives them the assurance of safety but at the same time stressing quality and affordability in satisfying needs.

The target market include corporate companies preferably those with branches. Corporate clients are also preferred to domestic and individuals because of high costs associated with distribution to personal homes. This does not rule out the fact that such a market should not be exploited, the strategy therefore should be that agents and retail stores be put up in different areas or towns to cut down on the transport costs, human resources and time. The development of smaller disposable bottles is expected to meet the individual customer market.
1.7 Marketing and sales strategy

Aqua pure Ltd’s marketing strategy is to represent the product as the best and most pure drinking water customers. We are positioning the company as the low-cost, highest quality, best value dealer of the product in the marketplace. The company will use a variety of marketing approaches and distribution channels

1.8 Management

The core management team includes executives with successful backgrounds in the industry:
(Provide brief backgrounds of each)

Managing Director

Human Resource & Administration Manager

Sales & Marketing Manager

Production & plant Engineer

Accountant



Management expects to expand production facility in the long run, acquire more distribution vans and relocate to a new premise in the year 2014.


1.0 Defining the business

Aqua Pure Limited is an organization dealing in the production and distribution of purified bottled water. It seeks to satisfy thirst.
1.1 Mission Statement

Aqua Pure Ltd exists to equitably supply affordable, quality purified water to all the thirst
1.2 Vision Statement

The company seeks long-term growth in both sales and profits by being the leading supplier of purified drinking water to all the thirst.
1.3 Values

• We act with integrity
• We are open and honest in our communication
• We are committed to our communities and customers
• We promote new ideas and innovation
• We respect the individual
1.4 Strategic goals and objectives

Our goals and objectives are:

• Set sales targets buy volume and by money
• Set revenue to cost ratio
• Set production targets
• Set market if easy to estimate
• Set wage rate competitively with customers



2.0 Legal status and license

Aqua Pure Limited was incorporated in 1998 as a company limited by share capital as the first distributor of distilled bottled water in Uganda with a core purpose of providing safe bottled water.

The company files annual returns in full compliance with the requirements of the Registrar of companies’ regulations.

The company is fully registered with the Uganda Revenue Authority for tax purposes and with Uganda National Bureau of Standards for standards and quality inspection purposes. Regular inspections are undertaken to ensure acceptable standards.

Aqua pure Ltd is also registered and licensed by Kampala City Council for trading purposes and health and hygiene.

4.0 Corporate governance/management

Management and Staff
The organization constitutes qualified personnel who are in various departments namely Finance and Accounting, Administration, Operations and Production, Human Resource and Marketing departments. The organization currently employs 19 personnel but intends to increase on the number to meet both internal and external demands.

The overall responsibility lies with the Managing Director. The company is in the process of appointing non executive directors to steer it to greater heights.

Department Number of staff
Management and administration 3
Sales and marketing 3
Accounting and Finance 3
Human Resource 1
Production/operations 7
Security 2

Organization Structure




5.0 Analysis of internal and external environment
5.1 Internal Environment

The internal analysis identifies characteristics that the company can use to its advantage. Our findings are as follows:

Internal parameters Strengths Weaknesses
Organizational
Culture/structure • Organization encourages openness
• Encourages and rewards innovations
• Encourages empowerment and entrepreneurship skills.
• The firm was established in 1998 hence was the first to go in to business of producing 20ml purified bottled water thus was able to exploit the virgin market by then giving them the market leader position.
• Salaries are low
• Fairly high attrition rate
Organizational
Politics • Some good degree of collaboration among departments
• Advantage of knowledge of all local languages in the areas of operation
Processes
(Product Development and Delivery)

• Many customers are health sensitive given the current state of forgeries in this industry and will opt for a product that seems impossible to duplicate or has a good image. Aqua pure products appear original.
• Existence of the necessary infrastructure for the production and distribution.
• Low response speed in decisions on implementation of decided courses of action e.g. acquisition of delivery vans
• Frequent changes in prices
• Orders for replacement are not consistent.
• Delays in delivery of products at the branches
Size • The size is just right and capable of expanding and contracting
• The experience gained as a market leader for many years serves as a competitive edge over other firms. • The current size can be intimidated by bigger competitors
Resources • Ability to secure credit facilities
• A delivery van
• Knowledge of market area. • High investment in receivables
• Declining assets turnover
• High expenses
• Delivery vans are inadequate
• Insufficient facilities for example computers, furniture, reception for inquiries by clients
• Limited space. These not only impede operation but also give a wrong perception of the firm


Internal parameters Strengths Weaknesses
Products • Good quality products
• Good sales support services and Customer care rendered to its clientele which entails servicing of the water coolers at any time, follow up exercises and prompt services in terms of delivering the water.
• Product differentiation. Discrimination of prices basing on income levels, that is, gold, silver and bronze levels is a good sales strategy used by the firm to accommodate different income levels of clientele hence boost sales. • Shares similar brand name with Aqua Sipi and Aqua safe., Aqua coolers
Decision support systems • Financial management system is in place
• System underutilized
• Little capacity to use the system
• Little or no information to managers to assess performance
• Targets not clearly communicated
• No proper system to support costing
Location • The good location of the organization makes it enjoy a wider access to the market both urban and rural. • Distribution coverage over long distances is costly since there are no branches
• Its not located in an industrial area



5.2 External environment

The external environment identifies, opportunities for success and threats that can prevent the company from achieving its objectives. Our findings are as follows:

Parameters Opportunities Threats
Economic • Stable economic situation in Uganda
• Availability of agents to increase distribution network to create utility of place
• Availability of credit facilities
• Existence of infrastructure
• Unexhausted product lines • High cost of delivery of products.
• Poor road net work in the region.
• Lack of information about critical marketing intelligence.
• Poor shelf coverage at the points of sale like supermarkets, big bars hotels and restaurants thus giving competitors a competitive edge.
• Price wars in the industry (soft drinks industry).
• Indirect and direct competition in the industry.
• Inflation rates that affect the pattern of consumption/purchase
Political/legal • Current laws in Uganda adequate for any dispute resolution.
• Favorable government policies on local investment • Long dispute settlement
Social • Products appeal to every age group and social status.
• The product addresses health issues • Company does not provide pick and carry bottles

Technological • The products are not technologically sensitive to changes.
• Technology to produce the product exists
Competitors
• Merging opportunities
• Strategic alliances
• Difficult to anticipate competitors next move in terms of distribution systems and segmentation
• Competition both direct and indirect
• Lack of information about critical market intelligence
• Price wars in the industry
• Unauthorized distributors bearing similar brand names
Parameters Opportunities Threats
Customers/Distribution System • Majority of customers are loyal
• A number of towns are not yet served by the firm hence. Opportunity for more branches and customers.
• Easy geographic market segmentation
• Research shows that production of 500ml bottled water is more profitable because of the large customer base since it is cheaper in terms of immediate satisfaction and the bottles are portable. It is there fore an intention of the firm to go in to production of the 500ml bottled water.
• Improving the quality of bottles can create a sense of uniqueness and reduce on confusion especially with products bearing similar brand names thus more market
Suppliers • Good relationship with suppliers is expected to improve to It withstand competition
5.3 Market analysis

The market for essential commodities is made up of people or organizations with wants to satisfy, money to spend and willingness to spend it. The analysis revealed the following:

Parameters Favorable Unfavorable
Potential size • High potential
Growth rate • High growth rate potential given some untapped market
Products • All season consumer goods and for all social classes
Geographical scope • Wide and good potential
Entry barriers • Reasonably high • Low for small scale operation
Structure • Market structure fairly homogenous
Strength of customers • Price takers and week negotiation potential • Availability of substitutes


5.4 Competitive position in the industry

This analysis determines the intensity (forces) of industry competition and profitability. This was analyzed as follows:

Industry forces Favorable Unfavorable
Threat of new entrants • Not easy to cover a wide geographic network
• Huge capital investment in distributive system required • Easy to enter the market of distribution for rival products in a specific geographic area
• Profits make it attractive
• Easy to exit by small scale operators
• No legal barrier to entry
Threat of substitutes
• Availability of substitutes
• Difficult to detect counterfeit since perpetrators use the same packaging and brand names
Power of suppliers • No supplier superiority
• Agreement is mutually enforceable and negotiated
• Product not unique
• Therefore supplies position is not strong
• No threat of forward linkage
Power of customers • Are price takers • May find alternative suppliers in the market.
Rivalry within the industry • Low exit costs for small scale retailers
• Highly differentiated products
• Fast industry growth • No switching costs
• Rivalry is stiff


6.0 Marketing strategy

While Aqua Pure was an early entrant in the market, it did not maintain a first entry advantage because of low investment in plant capacity, distribution, and low product breath. The company now is in the situation of having to follow competitors and attempts to capture a market share away from them to realize its now aggressive growth strategies. It also needs to enter new markets and underserved segments early and strongly.

The options available to realize its sales targets are as follows:

No Program
Components Policy options Policy actions Resource implications/
Investments(provide est)
Product- Purified water Expand product line breath ie 500 ml, 1,000 ml




Maintain differentiated product



Maintain current product and service quality Plant expansion. Purchase additional automatic purification and bottling line

Maintain existing segmentation and differentiation

Maintain a trained production and marketing staff Shs 750m over three years for land and plant acquisition



None


Money for training and development
Price Lower or similar price relative to competitors quality since the company is now a follower in terms of relative market share May need to reduce price within the various segments

Maintain differentiated product

Accept negotiated prices for some selected clients No investment required

Ensure low cost of operations
Distribution Expand distribution channels


Expand shelve distribution in new and existing supermarkets

Target schools and hire institutions of learning for use in staff rooms Purchase more distribution vans

Negotiate acceptable prices

Increase sales force team Invest in vans- Shs






Invest in recruitment
Promotion Support sports activities as soon as small bottle production is in place Sales promotion budget
Place Maintain clean premises Clean up current plant environment and rearrange office seating
Invest in cleaning, furnishing and image building

7.0 Key success factors for the chosen strategies

Success is without question and we must therefore emphasize high performance by all those involved. The key success factors include:

• Consistent high quality products
• Investment in plant capacity
• New location
• Timely response to market place
• Innovative and competitive products
• Lowest or competitive cost structure
• Adequate employee involvement and responsive organizational structure
• Responsive customer service
• Efficient resource allocation




8.0 Operational plans

To agree milestones and capital expenditure budget for:

- Vans acquisition
- Application for credit facility
- Search for strategic partner
- Purchase of land
- Purchase of additional plant
- Training schedules and financial implications



9.0 Business risks

The risks to be discussed further into impact and likelihood but distributed in to

Internal
- Disaster recovery/business continuity planning
- Machine obsolescence
- Human resources
- Risk of not achieving sales targets
- Financing risk
- Resource inadequacy

External

- Political and legislative factors
- Consumer taste changes
- Internal price movements affecting inputs and packaging materials



10.0 Appendices

I Implementation matrix/milestones over the planning period
II Forecast financial statements especially Income statement
III Investments schedule