III. Analysis of Business Environment a. Business Analysis i. Self Analysis: I think I am fit to be CEO of my own company for many reasons. I am very financially organized and keep track of my finances and will handled invested money very wisely. I know accounting and can set up clear, detailed and specific budgets for the company. As a manger I operate very efficiently, I have strong leadership skills and clearly communicate to and run large groups. I have been the leader of many business projects before and have experience assigning the correct people based on skills to the problem that most needs their unique attention. I was recently awarded a metal for placing in the top ten for my category in NY at the 2011 DECA state level. I am also very creative and can think on my feet very quickly to handle difficult business decisions. I feel this strong combination of important skills qualifies me to accept this responsibility. ii. SWOT Analysis: Strengths: My business’ strengths are it has a consistent demand and is not heavily affected by the economy. This consistent demand is a major strength for my organization. Also because my product is made to order, large storage and warehousing is not needed. Supplies can be bought and stored on an as needed basis and we do not need to worry about being over or under stocked. Another important strength is I have relatively little competition because of the uniqueness of my product line. My product line is extensive and should appeal to a large target market due to the fact that it is based on customization. Weakness: One weakness of my business is it is new and is unknown as of yet. It will need a lot of start up money because we need to buy heavy machinery in order to cut the metal needed for the caskets. Also we will need to spend a lot of money shipping out products quickly where ever they need to go. Opportunities: A major opportunity for my business would be making the casket of a famous person. Thousands of people from all walks of life pay respects to role models when they pass on. Making a custom casket for a celebrity would generate huge publicity for my business. In addition another opportunity would be teaming up with a funeral home or homes to offer customers more options exclusivity to certain locations as apposed to selling the to general public. This would make my caskets rare and exclusive “luxury” items. Threat: A threat to my business is my competition, mostly funeral homes that have a flat charge for a full package, casket included. Some homes offer a flat fee for the flowers, casket, and reception itself. They try to convince people that it is “easier this way” because the funeral home will “handle everything.” However if I get the word across the that you will save money buy purchasing from me rather than an overpriced funeral home package I think I can over come this. iii. PEST Scan: Political: Most funeral homes provide all the arrangements in a package deal rather than the client selecting options individually. However, if a client chooses to personalize the arrangements using my services the funeral home is required to accept my products in replace of their own without charging any additional fees. The Federal Trade Commission passed the Funeral Rule act on April 30th, 1984. The act regulated the funeral industry to control the exponential price growth in that area. The law stated that “package deals” that included the full nine yards from embalming to burial was a form of monopoly. The law stated that under this new standard, the “package deal” was the same as buying your car, gas, tires, fixing the car and paying highway tolls all to the same company. The law further stated that all prices must be broken down and are optional unless required by state law. Some states require the body to be embalmed and buried in a casket and others only require the body to be wrapped and buried before decay sets in. The law also states that funeral homes must have local laws in writing presented to the customer at the time of purchase stating exactly what is required by law and what is not and what options the customer has selected along with prices (like a recite). In addition the funeral homes were restricted from making “dramatic profit margins” and when listing services without an exact price the estimate must be “within reason” or the customer has the right to refuse to pay. The law closed by stating no funeral provider is allowed to make false claims regarding any process that charges a fee. This is important to my business because if I am to operate online when a customer checks out I must ask them what state the funeral will take place in and must give them a list and explanation of all charges on the bill. I will also not be allowed to advertise in the area of “quality” as the law states that all materials involved will not last indefinitely and statements regarding quality are therefore speculations and are “false” and illegal. My website will also have to be licensed with the government and I will need a legal department to handle any conflicts that may arise. Economic: My business should not be heavily affected by the current state of the economy because I provide a necessary service. My overhead cost will be affected by the price of electricity, metal, and materials such as paint and flowers. My shipping cost will also change based on weight and fuel costs. However my business should change slowly overtime and will be have resilience ageist sudden drops in the economy because my target market should stay consistent. Social: More and more people are choosing to do legal tasks online because of the privacy and speed relative to sitting down with a lawyer. LegalZoom.com is an example of a company that allows people to quickly, easily and privately create and manage a wide variety of legal documents including wills. It is predicted that in the future people will be able to carry out most tasks of their working life online. Everything from banking to shopping to even ordering food and dry-cleaning will be able to happen online. This presents an opportunity for me to advertise on websites that allow people to make wills to click on my website and lock in the price now and pay overtime as opposed to waiting and prices going up or worse, putting the responsibility on your family. Technological: Like the car industry, almost all big metal products are created using robots on assembly lines. This will allow me to not have to worry about salaries, work hours or injuries on the job. The robots ability to never make a mistake, work 24 hour shifts and work fast with superhuman strength is a major advantage to my business. They will allow me to run an entire factory without having to hire tons of employees. Computer controlled plasma cutters can customize the product without the need to hire artists and like all technology, the robots necessary will only get more advanced, smaller and cheaper. IV. Business Operations a. Organizational Structure: I will employ 19 people in total. 14 workers at the plant to monitor the machines and move the parts from the end of one assembly line to the start of another and check quality during production. The workers will make $27 dollars an hour working 8 hour overlaying shifts. The first shift 9am to 5pm then 5pm to 1am and 1am back to 9am. 4 workers will work each shift and 6 will work during the day from 9 to 5. I will then have 1 assistant manger per shift and a general manager on staff during the 9 to 5 shift. The total operating cost of the factory per a 24 hour day will be about $4,000. I will also need a lawyer on staff to add finished orders to customers wills as well as handle the legal aspects of my pricing policy. b. Proposed Location: My business will operate out of rural Delaware. This location was chosen for a number of reasons. Delaware has absolutely no sales taxes and a relatively low business license tax under 4%. State corporate income tax is fixed at 8.7% and a gross receipt tax is added and capped at 2%. This total tax rate of 14.7% is worth the convenient location equidistant from the east coast’s largest cities. Although states such as South Dakota don’t have income tax, they are not located near my target market. Delaware is the best choice for a northeastern target market. This combination of low taxes and short shipping distance is very beneficial to my company. c. Proposed Pricing Structure: My business will have a flexible-price policy. The price will be based on the specific levels of customization. To start off my business I will use penetration pricing to lure customers to by business. The prices will be lower than my competition until people start learning about it and I get a consistent flow of sales. At that point the price will be raised to match that of my competition; at that point the added profit margin can be used to possibly expand my business depending on how fast it is growing. At this point it is very difficult to judge how much my services will cost. The Funeral Rule act of 1984 limited my total profit margins and set strict guide lines. In addition it also called for extreme transparency; all aspects of the total cost must be broken down and explained. The law also limits “package deals” I am not allowed to group services together and discount them because they are buying everything through me. That means that regardless of whether the customer buys everything from me or only one thing that total cost for them will come to about $9,000. 2009 Funeral Costs Cost of regular adult funeral including following basic items. *Does not include cemetery, monument/marker costs or miscellaneous cash advance charges such as for flowers or obituaries. Item Price* Non-declinable basic services fee $1,817 Removal/transfer of remains to funeral home $250 Embalming $628 Other preparation of the body $200 Use of facilities/staff for viewing $395 Use of facilities/staff for funeral ceremony $450 Use of a hearse $275 Use of a service car/van $125 Basic memorial printed package $125 Subtotal without Casket: $4,265 Metal Casket $2,295 AVERAGE COST OF A FUNERAL $6,560* Vault $1,195 Total Cost of a Funeral with Vault $7,755 Source 2010 NFDA General Price List Survey.