Nepal Business College

An assignment is based on Business Plan

Submitted by:-

Nikesh Giri

LC00016000099

Submitted to:-

Mrs. Sima Karna

March 24th
Acknowledgement

Me Nikesh Giri student of Nepal Business College (NBC) is highly grateful to all

those who guided me in completing the assignment on “Preparing a business plan”

First of all, I would like to pay my heartiest thanks to Mrs. Sima Karna who provided me
such a wonderful opportunity to do this assignment.

I would like to thank my assignment guide Mrs. Sima Karna for importing her valuable
guidance to me time to time.

I would also like to thank all my loveable friends who gave me the useful tips and
suggestions regarding the assignment and also my dear friends for helping me a lot in
finalizing this assignment within the limited time frame.

Words can never express the deep sense of gratitude, I feel for our coordinator Mr. Ashish
Panday who has been a constant source of inspiration and encouragement for me.

Nikesh Giri

March 24, 2019

Contents

Acknowledgement .................................................................................................................................. 2
Statement of Purpose ............................................................................................................................. 4
Executive Summary................................................................................................................................. 4
Concept History and Background ........................................................................................................... 4
Description of Product ............................................................................................................................ 5
Goals and Objectives............................................................................................................................... 5
Marketing Plan ........................................................................................................................................ 6
Consumers and Demand:- ................................................................................................................... 6
Competition ............................................................................................................................................ 7
Geographic Market ................................................................................................................................. 8
Pricing Policy ........................................................................................................................................... 9
Legal Requirements ................................................................................................................................ 9
Form of Ownership ............................................................................................................................... 10
Financial Plan ........................................................................................................................................ 10
Initial Capitalization:- ....................................................................................................................... 10
Organization, Management, and Staffing Plan ..................................................................................... 12
Special Considerations .......................................................................................................................... 12
Statement of Purpose

This report sets out to provide both qualitative and quantitative proof that illustrates just how
profitable it would be for Korai to combine its already revolutionary Koraiphone hardware
interface with an open source software development kit that would allow third party
developers to create applications that suit both their professional and personal needs. A
software development kit of this nature would allow the Koraiphone to become the ultimate
mobile computing solution, ideally aimed at businesses worldwide.

Executive Summary

The Koraiphone is a revolutionary piece of hardware. Matching simplicity with power, it is

the epitome of what Korai does well and will certainly appeal to the company’s longtime
faithful customer base. However, Korai must be careful that it does not waste an incredible
chance to effectively access the other wireless smartphone industry with this Smartphone.
Currently, there is no hardware interface superior to the Korai Smartphone, and Korai must
ensure that its accompanying software flows along the same vein. So, it is imperative that
Korai capture a substantial portion of the rapidly expanding smartphone industry if it is to
truly bring wireless communication convergence to the world. While Korai has currently
made deals with several movie studios, it must also ensure that the Koraiphone serves as a
practical solution for businesses. While it is important that the Korai Smartphone provide
entertainment, it must also be a functional business tool, and an open source software
development kit will assure that developers will have the freedom to make sure that this
Koraiphone realizes its full potential. If Korai does appeal to businesses in this way, it is a
very realistic assumption that the company could capture at least a 30% market share and
increase its net profits by many times.

Concept History and Background

Since its initial release, Koraiphone has garnered an incredible amount of excitement
throughout the world amongst both computer enthusiasts and technophobes alike. The
Koraiphone, Korai’s first foray into the extremely competitive wireless telephone market, has
captured attention with its revolutionary user interface. With one face composed entirely of a
touch screen, the Koraiphone is able to provide its user with both a convenient and familiar
“qwerty” keyboard, and a widescreen cinema display, all at the touch of a finger.
Furthermore, Hari Shrestha recently announced during Korai’s 2008 Keynote that the
company has signed contracts with several large name studios including Disney, Paramount
Pictures, and Warner Brothers, allowing it to provide Koraiphone users a vast catalogue of
on-demand movie rentals. However, while Korai continues to offer consumers new and
innovative products that provide an experience ever closer to mobile communications
convergence, the computer manufacturer must keep in mind that entertainment is only a
portion of the information that consumers process each day.

Description of Product

The ideal companion to the Koraiphone’s revolutionary hardware interface would be a

software application set that would utilize the integrative features of the Koraiphones that
make it as comfortable and familiar as a home computer. The most widely touted
Koraiphones application running within this operating system has been Koren, Korai’s native
web browser that has been converted to the Koraiphone in order to create an internet
experience that is more computer-like than any other mobile browser yet developed.

A significant issue that arises, however, is that while browsing the web and watching movies
are very popular consumer activities; this smartphone stands little chance competing within
the smartphone market if it does not develop applications that transcend vehicles of
entertainment. In order to compete against the most popular operating systems used by
smartphones (Nokia’s Symbian System and Microsoft’sWindows Mobile), Korai must
develop applications that integrate two of its applicable distinctive competencies, its ability to
create user-friendly, yet powerful software and its already popular hardware interface. The
most popular document formats of the business world including Microsoft Word (.doc),
Excel (.xls) and PowerPoint (.ppt). Furthermore, for reasons of Korai’s own marketing
strategies, I have created the theoretical framework that would allow third party developers
the chance to create the necessary applications that will enable Korai to acquire and maintain
smartphone market share in the long run.

Goals and Objectives

Hari Shrestha has already projected from the device’s initial release that he intends for the
Koraiphone to capture a 1% share of the smartphone market by the end of 2008.Assuming
that Jobs was honest about the amount of Koraiphone actually sold in his keynote speech (as
previously mentioned some analysts are skeptical on this point), Korai has already
accomplished 40% of its end of 2008 goal by selling 4,000,000 out of the10, 000,000 unit
target. Furthermore, according to market research firm, the Koraiphone has actually captured
20% of smartphone sales during the third quarter of 2007, a market share surpassed only by
long established Research in Motion (RIM) BlackBerry, a powerhouse that still maintains a
commanding 39%share. These results indicate that Koraiphone has already surpassed
quarterly sales of Motorola, Nokia, and Palm, an incredible feat in itself, and now has a
whole year to sell only 150% of what it sold in just six months. Furthermore, if Korai is able
to keep demand for the Koraiphone high through the use of an aggressive pricing strategy and
the creation of new applications, Korai will be able to maintain its unprecedented growth
through the decade. Given these staggering numbers, I project that with a SDK that would
allow developers a chance to tailor the Koraiphone to suit the needs of the business realm, the
Koraiphone could very likely capture a 30%market share by the end of 2010. While there are
indeed many obstacles and uncertainties that Korai will need to face and overcome by this
time (the possibility of a recessed economy, consumer price sensitivity, a widely unpopular
contract with AT&T lasting until 2009), I forecast that a sophisticated application set,
combined with an effective pricing strategy, will allow Korai to take a commanding lead in
the smartphone market.

Marketing Plan

Consumers and Demand:-

Because the Koraiphone is actually much more than a typical smartphone, functioning as
both a video and music player, it can be difficult to project consumer demand as it is
a product that spans several different markets. To solve this problem, however, my forecast
will ignore the personal music and video player markets as they are already highly saturated
with Korai products (100,000,000 koriPods sold to date) and will likely be cannibalized by
the Koraiphone, an issue that Hari Shrestha has dismissed saying, “If anybody is going to
cannibalize us, I want it to be us. I don't want it to be a competitor.” So, assuming that the
demand for the Koraiphone will essentially be linked with the demand for smartphones I will
assess the future of the smartphone market in order to substantiate projections for the
Koraiphone. Even in the presence of an impending recession, the smartphone market looks to
rapidly expand beyond its current state. The International Data Corp. research firm projects
that the worldwide mobile worker population will expand to 878 million by2009, a 30%
increase from 2004. Furthermore, this population will then compose 27% of the world’s work
force. This staggering number measures workers that have no physical office, and thereby
require an instrument that allows them to complete their work remotely. While laptops have
long been the standard for mobile workers, this workforce will undoubtedly move to
lighter and more compact smartphones once these devices become capable of performing the
necessary computer-like operations. Another way that smart phones are being practically
integrated in Japan and elsewhere is through an inventive new system of online banking
called contactless payment. In Japan, there are currently payment chips embedded into
internet-capable smartphones that not only permit users to transfer money between various
bank accounts, but also actually allow them to use their smartphones as debit and credit card
substitutes. This system has tremendous advantage over traditional plastic cards as users of
this service can simultaneous check their various balances while making purchases. So, using
this system, it is virtually impossible to overdraw an account without realizing it. Arthur D.
Little, a management consulting firm, now projects that cumulative payments using this
system will grow from an infantile $3.4 billion in 2003 to over $37 billion by the end of
2008.

It is clear just from these two examples that the existence of a smartphone that is powerful,
user-friendly, and flexible enough to run a wide range of applications would create immense
demand in both the consumer and business realms. An open source SDK would allow
flexibility of the Koraiphone platform to support various functional applications, creating
greater demand for Koraiphones in nearly every industry as technology is further adopted by
businesses to bring about higher levels of efficiency.

Competition

The smartphone market is incredibly competitive, and Korai’s remarkably powerful initial
market entry will undoubtedly cause it to be the target of various competitive attacks.
Furthermore, the manufacturer’s peer group is also vast and many have already
begun making moves to counter Korai’s competitive strategy. Korai’s competitive peer group
consists of a broad range of companies including most notably: RIM BlackBerry’s
Smartphones, Pearl and Curve, Hewlett Packard’s iPAQ Messenger and Pocket PC series,
Motorola’ MOTO Q series, and Nokia E, N, and Tablet series. Because most of
the previously mentioned competitors have been in the industry for a longer period of time
than Korai’s, they are largely run on open platforms, often catering to large businesses by
allowing them to run their own, internally created programs perfectly tailored to suit the
individual needs of each organization. Also, with the average product price for the industry
coming in at just under $249, the Koraiphone’s $399 price tag is perceived by many,
especially cost-conscious businesses, to be extravagant. As mentioned earlier in the report,
Korai faces the most intense competition from the smartphone market leader,
RIM Blackberry. With prices ranging from $99-$499, Blackberry has a far wider line of
products than Korai, making it a viable option for a broader range of consumers.
Furthermore, with a daunting 39% market share, a figure nearly 20% greater than the second
ranking Korai, Blackberry will be a very difficult competitor to oust from the top position.
Furthermore, many companies have already aimed their sights on Korai, trying to publicly
exploit its competitive weaknesses. Nokia, as one example, has recently run an advertising
campaign aimed at differentiating its open platform from Korai’s currently closed system. In
the ad, Nokia presents two opened padlocks, side by side, accompanied by the slogans, “The
best devices have no limits” and “Phones should be open to anything.” This ad can be taken
as both a negative critique of the weakness inherent in Korai’s closed operating platform, as
well as a jab at the fact that an estimated 20% of the more tech-savvy Koraiphone users have
illegally “hacked” their phones so that they can be used with any carrier, an issue that
severally impacts Korai’s revenue streams. Generally however, this advertisement is a perfect
example of the inevitable competitive attacks Korai will continue to face in the wake of its
unprecedented market entry. Furthermore, as the proposed SDK allows developers to write
more and more applications for the KoriPod, these programs will also undoubtedly be
attacked using similar competitive campaigns.

Geographic Market

Because Koraiphones have only recently debuted outside of the country, it is likely that the
applications written using the SDK will be tailored to suit the needs of various domestic
businesses. However, Koraiphones were introduced in Europe in late 2007and are projected
to be offered in Japan in the near future, making it likely that the Koraiphone will eventually
become a global product. Because each country has very specific needs and issues, especially
pertaining to communications, it will be necessary to tailor the Koraiphone to suit the tastes
and regulations of each respective region. One very interesting, and perhaps the most
technically difficult, region that Korai wishes to enter is Japan. Because of these qualities, I
will use Japan as an example of how Korai will have to tailor the Koraiphone operating
system and applications to meet each country’s various needs. First off, all of Japan’s mobile
phones run on 3G networks, a format that supports much higher speeds than that of the U.S.
and Europe. In order to be successful, the Koraiphone must be 3G capable. Furthermore,
because internet phones have been widely popular in Japan for many years, several websites
are actually written in c-html, or compact html. This means that any browser installed on a
Japanese iPhone would have to be able to process both types of code in order to be perceived
as useful for the internet. Furthermore, Japanese rarely send emails without “emoji” (similar
to American’s smiley faces). Any Japanese email program would be very unpopular without
a feature that could insert these objects. So, while many of these issues seem minor, they
serve as an example of just how much market research will be required of Korai for each
additional geographic region it wishes to penetrate successfully.

Pricing Policy

Korai would not be advised to impose a pricing strategy. To best stimulate the creativity of
the Koraiphone developer community, Korai should offer third party developers for
free. However, a pricing strategy that is closely linked to the SDK is the amount Apple will
charge for the various applications created from the kit. Similar to the way video game
system and the T-Mobile Sidekick manufactures have done, it would be best to take a cut
from the applications that are written for the Koraiphone. In this way, Korai is able
to simplify the process of buying games for consumers. However, as more and more
sophisticated applications are released for the Koraiphone, Korai will have to price these
programs more carefully, as a mobile version of Microsoft Word would clearly constitute a
higher price than a calendar plug-in. Thankfully, as with many aspects of the Koraiphone,
Korai clearly has an advantage in pricing due to its experience releasing software and will
likely use a pricing mechanism similar to that of its computer applications since it has
continually marketed the Koraiphone as a mobile computer.

Legal Requirements

Although the legal requirements for releasing an open source SDK would be minimal, Korai
must be careful in a few areas. First off, while Korai will not have to secure copy writes on its
third party developed software, it will need to be very careful to secure its own internally
developed intellectual property as the competitive climate of the market will surely entice
contenders to take whatever advantage they can to oust Korai. The best way to go about
securing Korai’s own intellectual property would be to follow the same model that Korai has
for the past 10 years developing its own computer software. Although an aspect that is not
closely related to the SDK, Korai will also need to be cognizant of the fact that as it expands
Koraiphone distribution to other countries, many of these countries have more stringent
antitrust agencies, and do not favor Korai’s current practice of forcing consumers to sign two-
year contracts with one company (i.e. AT&T).Already, both France and Germany have
outlawed Korai’s practices of tying with only one phone company.

Form of Ownership

Korai has been a publicly traded company since December 12, 1995, a status that will likely
remain unchanged by the Koraiphone.

Financial Plan

Initial Capitalization:-

Because korai prefers to keep much of its internal operations highly classified, it is difficult to
forecast the costs that Korai will assume in the creation of its SDK and other Koraiphone
software related products. However, as a benchmark, Google has put $10million into the
development of its open source platform, Android

ASSETS 2006 2007 % Assets

Cash & Cash Equivalents 6,392,000 9,352,000 1.50%

Short Term Investments 3,718,000 6,034,000

Projected Income Statement

As shown in the table below, the Koraiphone’s various revenue streams would
make it an extremely profitable segment of Korai ’s product portfolio.

2007 Koraiphone Sales (six months) 2007

Koraiphone Sales Revenues (Initial Purchases) Qty Sold Total Revenues

Sales at Original Price ($599) 864,000 $517,536,000

Sales at New Price ($399) 2,886,000 $1,151,514,000

Total= 3,750,000
$1,669,050,000Estimated Ending Inventory 670,000Percent Ending Inventory 18
%Provision for Cracked Phones (20%) 750,000Actual Phones Activated 2,000,00
0Estimated Phones Activated at Korai Stores 900,000

Activation Fee Revenue

$157,500,000

Korai Monthly Revenues Provided by AT&T

$180,000,000Total Estimated Revenues Realized $855,036,000

In 2007, it has been realized that although Hari Shrestha claimed that he had sold
4,000,000Koraiphones, AT&T has only activated 2,000,000 phones. So,
assuming 20% have been “cracked” for use with other carriers and 670,000
Koraiphones remain as ending inventory, it is still clear just how profitable the
Koraiphones are. Korai collects revenues in three streams, as shown: initial
sales, an activation fee that, and a $15 monthly payment from AT&T
per subscriber. It is clear then, that even as Korai has not receiving the
ideal amount of revenue due to unsubscribed phones; it still is collecting high
revenues.

2008 Projections 2008

Koraiphone Sales Revenues (Initial Purchases) Qty Sold Total Revenues

Industry Total 957,000,000Projected Korai Market Share 1%

Projected Sales

6,250,000
$2,493,750,000Estimate of Phones Activated at Korai Stores 2,812,500

Activation Fee Revenues

$492,187,500

Software Revenues

$112,500,000Cumulative Korai Subscribers 10,000,000

Korai Monthly Revenues Provided by AT&T

$1,800,000,000Total Estimated Revenues Realized $4,898,437,500

2009 Projections 2009

Koraiphone Sales Revenues (Initial Purchases) Qty Sold Total Revenues

Industry Total 1,129,260,000Projected Korai Market Share 15%

Projected Sales

169,389,000 $67,586,211,000
Organization, Management, and Staffing Plan

Because the release of the Koraiphone SDK will be largely based on independent third party
developers, Korai will be at an advantage as it will be able to reap the benefits of not needing
to manage these employees. However, there are many issues that Korai will need to face.
One such issue is the infighting of developers. Most of the third party developers are hackers,
self-employed as independent contractors. These hackers thrive within an extremely
competitive culture that often breeds vicious rivalry. Although the SDK has not even yet been
released, there has already been a rift within the developer community. After extensive
disagreement over the process and nature in which Koraiphone software was to be developed,
a group of hackers split apart from the Koraiphone Dev Team to form the Koraiphone Elite
Team. Now, the Koraiphone Elite Team creates “un bricking” codes to try to thwart the
efforts of the Koraiphone Dev Team. If Korai is to successfully stimulate its developer
community, it will need to effectively manage the volatile developer community. Aside from
the aforementioned issues, Korai already employs a solid foundation of employees to develop
its own computer software. However, most of the employees involved in cutting
edge products are required to sign confidentiality contracts, so it is difficult to estimate just
how many employees it currently has working with the Koraiphone. Either way, Korai has a
long track record of being a well-managed company and will likely stay that way.

Special Considerations

Because the Koraiphone platform is very closely based on the Koren operating system, there
is really very little that Korai will need to do in order to turn its Koraiphone into a mobile
version of its already successful computer line. While research and development and facility
needs will assuredly increase due to the increased strain of producing more and more goods,
Korai will undoubtedly be able to apply its current computer manufacturing business model
to the Koraiphone, and make it the ultimate mobile computing system.