ULTIMATE ELECTRONICS BUSINESS PLAN

By focusing on its strengths, its key customers, and the underlying values they need, American Management Technology will increase sales to more than 5000.000RON in three years, while improving the gross margin on sales and cash management and working capital. This business plan leads the way. It renews our vision and strategic focus: adding value to our target market segments, the small business and high-end home office users, in our local market. It also provides the step-by-step plan for improving our sales, gross margin, and profitability. In order to implement these changes and improve profitability, we plan to borrow another 200,000RON longterm this year. The amount seems in-line with the balance sheet capabilities. In order to accomplish our objectives, our keys to success over the next three years are: Differentiate from box-pushing, price-oriented businesses by offering and delivering service and support--and charging for it. Increase gross margin to more than 30%. Increase our non-hardware sales to 20% of the total sales by the third year. We have one location--a 500 square meter store in a suburban shopping center located conveniently close to the downtown area. It includes a training area, service department, offices, and showroom area. Our support services, with which we hope to capture market share will include such services as; training, upgrade offers, installation services, network configuration services, etc. The company will seek to aggressively pursue new opportunities. UE focuses on local markets, small business and home office, with special focus on the high-end home office and the 5-20 unit small business office.

Objectives
1. 2. 3. 4. Sales increasing to more than 500.000RON by the third year. Bring gross margin back up to above 30%, and maintain that level. Sell 100.000RON of service, support, and training by 2010 Improve inventory turnover to 6 turns by 2010.

Keys to Success
1. Differentiate from box-pushing, price-oriented businesses by offering and delivering service and support -- and charging for it. 2. Increase gross margin to more than 30%. 3. Increase our non-hardware sales to 20% of the total sales by the third year.

Mission
UE is built on the assumption that the management of information technology for business is like legal advice, accounting, graphic arts, and other bodies of knowledge, in that it is not inherently a do-it-yourself prospect. Smart business people who aren't computer hobbyists need to find quality vendors of reliable hardware, software, service, and support. They need to use these quality vendors as they use their other professional service suppliers, as trusted allies. UE is such a vendor. It serves its clients as a trusted ally, providing them with the loyalty of a business partner and the economics of an outside vendor. We make sure that our clients have what they need to run their businesses as well as possible, with maximum efficiency and reliability. Many of our information applications are mission critical, so we give our clients the assurance that we will be there when they need us.

Product and Service Description

In peripherals, accessories and other hardware, we carry a complete line of necessary items from cables to forms to mousepads. In service and support, we offer a range of walk-in or depot service, maintenance contracts and on-site guarantees. We have not had much success selling service contracts.

Competitive Comparison
The only way we can hope to differentiate well is to define the vision of the company to be an information technology ally to our clients. We will not be able to compete in any effective way with the chains using boxes or products as appliances. We need to offer a real alliance. The benefits we sell include many intangibles: confidence, reliability, knowing that somebody will be there to answer questions and help at the important times. These are complex products; products that require serious knowledge and experience to use, and our competitors sell only the products themselves. Unfortunately, we cannot sell the products at a higher price just because we offer services; the market has shown that it will not support that concept. We have to also sell the service and charge for it separately.

Technology
We have for years supported both Windows and Macintosh technology for CPUs, although we've switched vendors many times for the Windows (and previously DOS) lines. We are also supporting Novell, Banyon, and Microsoft networking, Xbase database software, and Claris application products.

Service and Support

1. 2. 3. 4. 5. 6.

Our strategy hinges on providing excellent service and support. This is critical. We need to differentiate on service and support, and to therefore deliver as well. Training: details would be essential in a real business plan, but not in this sample plan. Upgrade offers: details would be essential in a real business plan, but not in this sample plan. Our own internal training: details would be essential in a real business plan, but not in this sample plan. Installation services: details would be essential in a real business plan, but not in this sample plan. Custom software services: details would be essential in a real business plan, but not in this sample plan. Network configuration services: details would be essential in a real business plan, but not in this sample plan.

Market Segmentation
The segmentation allows some room for estimates and nonspecific definitions. We focus on a small medium level of small business, and it is hard to find information to make an exact classification. Our target companies are large enough to need the high-quality information technology management we offer, but too small to have a separate computer management staff such as an MIS department. We say that our target market has 10-50 employees, and needs 520 workstations tied together in a local area network; the definition is flexible. Defining the high-end home office is even more difficult. We generally know the characteristics of our target market, but we can't find easy classifications that fit into available demographics. The high-end home office business is a business, not a hobby. It generates enough money to merit the owner's paying real attention to the quality of information technology management, meaning that there is both budget and concerns that warrant working with our level of quality service and support. We can assume that we aren't talking about home offices used only part-time by people who work elsewhere during the day, and that our target market home office wants to have powerful technology and a lot of links between computing, telecommunications, and video.

Marketing Strategy
The marketing strategy is the core of the main strategy: 1. Emphasize service and support. 2. Build a relationship business. 3. Focus on small business and high-end home office as key target markets.

Pricing Strategy
We must charge appropriately for the high-end, high-quality service and support we offer. Our revenue structure has to match our cost structure, so the salaries we pay to assure good service and support must be balanced by the revenue we charge. We cannot build the service and support revenue into the price of products. The market can't bear the higher prices and the buyer feels ill-used when they see the same product priced lower at the chains. Despite the logic behind this, the market doesn't support this concept.

Therefore, we must make sure that we deliver and charge for service and support. Training, service, installation, networking support--all of this must be readily available and priced to sell and deliver revenue.