NEW HAIR PRODUCT Essay Example | Topics and Well Written Essays - 1000 words

NEW HAIR PRODUCT - Essay Example Marketing strategy. Initially ARG Hairs Group wanted Hair Softe to be carried by supermarkets in UK and Ireland. ARG Hairs Group also plans to open a company website wherein prospective customers can order the product on line. A separate study on the marketing strategy is being prepared to initialize the campaign. Production capability. Hair Softe Shampoo is a commodity item that is saleable for both men and women, and a target of 24,000 ml units of shampoo monthly could easily be sold in the UK market. It has a production capacity of 1,000 ml. units per day, but has the capability to increase future production. Investment plan. An investment of $150,000 and equity capital of ARG Hairs Group are needed to launch the product in the market. Owners’ capital is $65,000.00 while investors will have to provide $150,000 in form of stock equity. 1. The return on the equity of the owner is 9% on the first year of operation. The 9% return on investment is higher than the prevailing bank rate of interest in UK which is 0.5%. UK interest rate is expected to remain at the recent level because of the government’s monetary policy. (Bank of England, 2011) Monetary Policy Decisions. (http://www.bankofengland.co.uk/) 2. The cash flow statement of the company prepared for a 12 month operation shows that for the first three months there is a shortage of cash inflow to sustain all the expenses of the company and there is a need for an outside financing for its day to day operations because of capital expenses during these months. Thereafter, after March, company will have available cash to pay for its loan obligations, taxes and interest and to pay for equity. The cash flow has been prepared based on the 1,000 ml. units of production per day and operations of 24 days in a month. Sales are expected to increase by 5% a month, and profit is also anticipated along the operations. The cash flow statement present all the cash expected to be